Pete Stark

Mr. STARK

Mr. STARK. Mr. Speaker, I yield 3 minutes to the distinguished gentlewoman from Connecticut [Mrs. Kennelly].

Mr. STARK. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, this bill is called the Health Coverage Availability and Affordability Act, but it ain't. Because of the medical savings accounts and other provisions in here, the Republicans have managed through some legislative legerdemain to turn a silk purse into a sow's ear. The Democratic substitute will, in fact, bring back the Roukema- Kassebaum-Kennedy bill with some technical corrections to make sure that it limits preexisting conditions, and would by far be a better bill, a truly bipartisan bill, one that will pass in the Senate and one that would in fact be signed by the President. Now, if the Republican intention is to fill up prime time with a bill that they know will pass, it is to me a very sick trick to play on the seniors. First of all, this bill purports to increase the deduction for self- employed, but really it only does it for 50 percent, and that is in 2003. The Democratic alternative does it at 8 percent, and it does it right up front and pays for it. It is not flimflamming the American public into thinking they are getting something that they are not. It is also a bad bill because the insurance reforms are weaker. It limits individuals to just one policy and guarantees issue only to small firms of less than 50 people. The rest are out on the street. It spends over $2.5 billion of Medicare money on MSA tax breaks. We should save easy anti-fraud money for Medicare trust fund relief. Not only are the MSA's a bad policy, they are a payoff to the Golden Rule Insurance Company who has contributed almost $1.5 million to Speaker Gingrich's political operations. If that is not bad enough policy, I do not know what is. This bill actually increases costs in traditional insurance pools. The MSA's, the mean ones, will drive up the rates for most people. The GOP has mislabeled their bill, I suspect intentionally. The GOP anti-fraud provisions contain 3 pro-fraud loopholes: advisory opinions, harder proof for civil monetary penalties, and they are allowing kickbacks in managed care plans. The CBO, the Republican CBO, says their plans will cost the system a billion dollars. There is also a payoff to American Family Life. It takes out the Medigap anti-duplication laws, will return us to the days of ripping off seniors by unscrupulous insurance salesmen. The payoff to the AMA is in the malpractice caps that reward doctors. I would remind Members that it was released today that there are over 13,000 doctors convicted of sex crimes and other crimes who are still practicing in this country, who will go untouched if the Republicans remove the malpractice caps. Mr. Speaker, the GOP expatriate language is too weak. We should keep it simple. We should support the Dingell-Spratt-Bentsen substitute, and give the people true portability and true reform. Mr. Speaker, I reserve the balance of my time.

Mr. STARK

Mr. STARK. Mr. Speaker, the last minimum wage adjustment made in 1989 has been completely eroded by inflation. However, we can learn from the experience of that last increase to help assuage the fears that another increase will be detrimental to employment opportunities. According to analysis by Richard B. Freeman, the preeminent labor economist from Harvard University, studies done on the 1989 minimum wage increase show ``that moderate increases in the minimum (wage) transferred income to the lower paid without any apparent adverse effect on employement. * * *'' Translation: the 1989 minimum wage increase did not cost jobs; it did boost the incomes of affected workers. Mr. Speaker, the 1989 increase was overwhelmingly supported on a bipartisan basis in both the House and the Senate before being signed into law by President Bush. It is time for this Congress to address the wage erosion for low-wage workers with a meaningful minimum wage increase. It is time that the people's House began addressing the real concerns of people.

Mr. STARK

Mr. STARK. Mr. Speaker, the health insurance bill that was approved by the Ways and Means Committee last week contains language that completely guts the laws against Medigap fraud and abuse. The following letter from a consumer advocate explains why. It is another reason the House should pass a simple, pure Kennedy- Kassebaum bill. Senior Health Insurance Issues, Scotts Valley, CA, March 20, 1996. Hon. Bill Archer, Chairman, House Committee on Ways and Means, Longworth HOB, Washington, DC. Dear Chairman Archer: I am very concerned about an Amendment by Mr. Collins that recently passed out of the Committee on Ways and Means on Duplication and Coordination of Medicare Related Plans. I have been a consultant on Medicare, supplemental insurance and long term care insurance for more than eighteen years to both state and national consumer groups. I was very active in a lawsuit brought by the Santa Cruz District Attorney against an insurance agency for overselling duplicative and overlapping coverage to seniors in 1989. We both testified repeatedly in both Houses on this issue prior to the passage of OBRA 90. While there is a legitimate reason to carve out a narrow exemption for disabled Medicare beneficiaries who have purchased guaranteed issue major medical coverage that duplicates and coordinates against Medicare, the Collins Amendment does not even address that issue. The proposed amendment language rolls back all federal and state protections since 1980 against selling multiple and duplicate policies to seniors on Medicare. This Amendment would allow companies and agents to sell seniors any amount and combination of policies on top of their Medicare and a Medicare Supplement. This practice has a long and disgraceful public history that led Congress to take action several times over the last two decades. Not only would the proposed language repeal all federal protections, it would repeal all existing state laws and prohibit the enactment of any future state laws to protect elderly consumers. In addition to allowing the sale of excessive and duplicative coverage, it would also allow companies to coordinate those benefits against Medicare and other existing health benefits. I find it very hard to believe that this Congress would allow these practices to resume and strip states of their rights to protect their own citizens from these abusive practices. Good public policy demands that seniors make the best use of scarce premium dollars and use any excess towards providing for their long term care needs, not the purchase of unnecessary duplicate coverage. I urge you to take a closer look at this issue. Sincerely, Bonnie Burns, Consultant.

Mr. STARK

Mr. STARK. Mr. Speaker, medical savings accounts [MSA] will be voted on this week as part of the health insurance reform bill developed by the Republican leadership. The MSA provisions should be deleted. Everyone who thinks about them will quickly understand that they are destructive to the health insurance system, because they skim out the healthiest people in our society. Sicker and older people will be left behind in the traditional insurance pool, where rates will have to be raised to cover the costs of the more expensive people in that pool. These higher rates will, in turn, make insurance unaffordable to more people, thus increasing the number of uninsured in our society. MSA's may be good for individuals who are healthy at the present time, but they are bad for society that is trying to encourage health insurance for as many people as possible. MSA's are an every-man-for-himself, to-hell-with-society philosophy. What is not so clear is that they are a massive tax shelter. I would like to include in the Record the portions of a paper by Iris J. Lav of the Center on Budget and Policy Priorities, which details how gross this new tax break is. Republicans talk about tax reform and tax simplification, but anyone who votes for MSA's is voting for tax complication and tax unfairness: MSA Provisions in Health Care Reform Bill Creates Tax Shelter and Casts Doubt on Expansion of Insurance Coverage (By Iris J. Lav) The Medical Savings Account (MSA) provision in the House health care reform bill creates an extensive new tax shelter opportunity, the cost of which would grow over time. For people in good health, the MSA provision would be the equivalent of enacting a new Individual Retirement Account program--far more generous than the IRAs available prior to the Tax Reform Act of 1986. Healthy, higher-income people who hope to retain for other purposes the tax-advantaged funds not needed for medical care would be attracted to use the MSAs with high-deductible insurance plans. People with less good health would find high deductible insurance plans less attractive and would be become segregated into conventional insurance plan, thereby raising the cost of such plans. As a result, it could become more difficult and less affordable for employers to offer adequate health insurance to employees most in need of it-- potentially undermining the basic purpose of the health care reform legislation. The potential problems caused by MSAs can be mitigated (but not eliminated) by limiting the ability of healthier people to use MSAs as a tax shelter for general purpose saving and investment. The tax shelter potential could be lessened by: Significantly increasing the penalty for use of MSA funds for purposes other than paying medical bills. Taxing interest earned on MSA accounts annually. Recapturing foregone FICA (Social Security and Medicare) payroll taxes for amounts withdrawn from MSAs for purposes other than paying medical bills. Raising the age at which funds may be withdrawn from MSAs for any purpose without incurring a penalty to age 65, so funds must remain available to expend on medical care until the individual qualifies for Medicare. msa provisions Under the MSA proposal in the health care reform bill, qualified taxpayers (either directly or through their employers) are allowed to contribute yearly amounts to an MSA, up to a specified ceiling. To be qualified, taxpayers must have insurance coverage through a high-deductible health plan. Taxpayer (or their employers) may contribute the amount of the plan deductible of the MSA, up to $2,000 for an individual and $4,000 for a family. Amounts individuals contribute to MSAs may be deducted on their income tax when determining adjusted gross income, which means they may be deducted whether or not the individual itemizes other deductions. If MSA contributions are made by employers on behalf of individuals (presumably even if salaries are reduced to allow the contributions to be made), the amounts contributed are not counted as wages or salary for purposes of computing income, FICA (Social Security and Medicare), or unemployment taxes. The interest earned on amounts accumulated in MSA accounts also is exempt from taxation. Taxpayers may use the funds in their MSAs to pay any medical expenses that could qualify as itemized deductions on the taxpayers' income tax. Funds withdrawn from MSAs that are used to pay permitted types of medical bills are never taxed. If funds are withdrawn from the MSA for non-permissible purposes, they are subject to income taxes as ordinary income in the year they are withdrawn. If the taxpayer is below age 59\1/2\, amounts withdrawn for non-permissible purposes also are subject to a 10 percent penalty. After the taxpayer attains age 59\1/2\, funds may be withdrawn from MSAs for any purpose without incurring a penalty. msa's create a tax shelter For higher-income taxpayers who anticipate remaining healthy, MSAs represent a new, tax-advantaged way to accumulate savings. Because contributions made by or through an employer are permanently exempt from Social Security and Medicare payroll taxes and are exempt from income taxes until withdrawn, and because the interest earned on amounts remaining in the MSA is allowed to compound without yearly taxation, the 10 percent penalty on withdrawals for non- permissible purposes is not sufficient to prevent MSAs from becoming a tax shelter. Even after the penalty is paid, the after-tax return to savings in an MSA would under many circumstances exceed the return to conventional savings. Figure 1 [not printed in Record] shows the difference to a taxpayer in the 36 percent federal income tax bracket between saving $3,000 of gross earnings under current law and saving the same amount in an MSA. In each case, the deposit is held at a three percent rate of interest. Under current law, the taxpayer would have $1,742 in after-tax funds to deposit in a conventional savings account. (The $3,000 gross earnings would be reduced by a 36 percent income tax, an effective state income tax of 4.5 percent after accounting for deductibility against federal taxes and a 1.45 percent Medicare tax. Taking away 41.95% of $3,000 leaves $1,742.) If those funds remain on deposit for 10 years with interest taxed yearly, they would grow to $2,079. Under the MSA provision, however, the taxpayer would deposit the entire $3,000 and interest would compound free of tax. After 10 years, the account would hold $4,032. The taxpayer could withdraw the funds for purposes other than medical care, pay income tax and the 10 percent penalty on the withdrawn amounts, and have $2,236 remaining. In other words, after 10 years the value to the taxpayer of the funds saved in the MSA would exceed the value of conventionally-saved funds by 7.6%, even though a penalty was assessed for non-permissible use of the funds. If during those 10 years the taxpayer attained age 59\1/2\, no penalty would be assessed and the value to the taxpayer of the MSA savings would exceed the value of the conventional savings by more than 15 percent. As shown in Figure 1, the differential value of the MSA savings grows with the length of the holding period. After 20 years, an MSA withdrawal with penalty exceeds the value of conventional savings by 21 percent, while an MSA withdrawal after age 59\1/2\ exceeds the value of conventional savings by 30 percent. (It may be noted that the cost of the Treasury in foregone tax revenues also would increase over time, as growing amounts of savings are likely to be sheltered from taxation.)

Mr. STARK

Mr. STARK. Mr. Speaker, over the years, I've received many letters from around the Nation on the need for national health insurance reform. Many of these writers would be helped by a provision in Kassebaum- Kennedy: the right to buy an individual policy after leaving a group policy, and not having one's pre-existing conditions excluded permanently. Many insurance companies oppose this provision but passing this law is the least we can do for our constituents. The following letters make the case: Dear Mr. Congressman, I am a 50-year-old male who was recently laid off due to a corporate merger. I have continued Cobra health insurance program through my former employer, for myself and wife, at my own expense of $281 per month. I have accepted a position with a small company and applied for the medical insurance offered by them with John Alden Life Ins. Co. This has been in process for several weeks, and I have now received this enclosed letter refusing us coverage due to my ``condition''. I have had a seizure disorder since my late teens which is totally controlled by medication and has not incapacitated me at any time. I am periodically checked by the doctor and lead a perfectly normal and active life. This is the first time during 30 plus years in the work force with previous employers that I have ever been refused medical coverage. It imposes an extreme financial burden on us, and the ultimate horror is that we could be wiped out should there be any medical crisis which can happen to anyone at anytime. What, Mr. Congressman, can be done about something like this, and where do we turn when suddenly judged uninsurable? A Man From California.

Mr. STARK

Mr. STARK. Mr. Speaker, they say Japan learned about quality and modern manufacturing from the United States, but we clearly have things we should learn from Japan about how to create a sense of society and community. The following column by Thomas Friedman from the New York Times of February 25 explains how Japan avoids the job massacres that mar American businesses so often and so casually. [From the New York Times, Feb. 25, 1996] Japan Inc. Revisited (By Thomas L. Friedman) Tokyo.--I found the source of our trade problems with Japan. I went shopping at the Mitsukoshi Department Store, the Bloomingdale's of Tokyo, and when I walked in the front door I counted 14 sales clerks in the jewelry department alone. They bowed politely and offered to help with any purchases. The American in me immediately said: ``What a waste of labor! Who needs 14 sales clerks? This store needs downsizing immediately!'' But that is not the Japanese instinct. And that's one reason why we have a structural trade deficit with Japan. Let me explain: Unlike the U.S. or Western Europe, Japan long ago decided that is top priority was not to have the lowest prices for its consumers, not to have the highest dividends for its corporate shareholders, but to keep as many of its people (particularly the men) employed in decent paying jobs--preferably for a lifetime with the same firm. The Japanese understand that a job gives dignity and stability to people's lives and pays off in much greater social harmony. Just walk the streets of Tokyo: few homeless sleeping on grates, no muggers lurking in the shadows. But to maintain such high levels of employment, to keep 14 clerks behund one store counter, Japan basically had to fix the game. Japan had to regulate its economy in a way that would protect its domestic companies from foreign competition, by controlling access to is markets. That way Japanese companies could maintain a duel price system. They could charge high prices at home, in a protected market, in order to maintain full employment, while charging lower prices abroad in order to get into everyone else's market and export like crazy. That is why those who think that Japan's trade barriers will easily give way, or that is economy will be ``deregulated'' as its Prime Minister keeps promising, are fooling themselves. Many economists argue that in an integrated global economy, Japan will have to become more like America. Its corporations will have to cut costs and downsize to remain globally competitive. Maybe. But for now, the Japanese are resisting that. Despite five years of zero growth, Japan still has only 3.2 percent unemployment. The sort of job massacres that have become the norm in America--like 40,000 workers at AT&T in one chop--have been unheard of here. ``I am sure that eventually we will be somewhat forced to think American, but we are moving very slowly in that direction,'' says Yotaro Kobayashi, the chairman of Fuji Xeros. ``For social and moral reasons, we will try to avoid going all the way to a U.S. model. We will look for a middle ground.'' How? In part it will be by trying to maintain hidden trade barriers. But in part it will be by trying to maintain Japan's unique corporate values. For Japanese executives, says Glen Fukushima, vice president of the American Chamber of Commerce in Japan, ``laying off employees is the last option they look for, not the first,'' And far from being rewarded for layoffs, corporate executives here are censured for them, by both peers and the press. The first priority of a Japanese company is its employees, then come its customers and last its shareholders--just the opposite of the U.S. corporate mentality. Instead of ordering massive layoffs, Japanese companies cut overtime, they freeze the hiring of college grads, they freeze dividends, they offer early retirement packages, they shift workers to subsidiary companies, they shift low-skilled jobs to cheaper labor markets in Asia and keep the best jobs here, they inhibit mergers and acquisitions that lead to layoffs, they buy up U.S. high-tech companies to maintain the competitive edge that their own regulated economy sometimes stifles and the even (are you ready?) order pay cuts for top executives--anything but lay off people. That's why Pat Buchanan is only partly right. Yes, American workers are being hurt by unfair trade barriers erected by some foreign countries, including Japan, and the U.S. should fight hard to bring those barriers down. But U.S. workers are being hurt just as much, if not more, by the skewed sense of priorities that now dominates the U.S. business community, where executives get bonuses for massacring their employees. Maybe the economists are right. The Japanese will have to become like us. But they are sure trying not to, and its' worth watching to see if the they can pull it off. This is one economic war I'm rotting for Japan to win.

Mr. STARK

Mr. STARK. I will be happy to yield.

Mr. STARK. I thank the gentleman for his suggestion. In all seriousness, the collection of health data has been an important facet in the Medicare Program, which has been the perhaps leading social legislation since 1965, when Lyndon Johnson and a Democratic Congress and Senate enacted Medicare. And we have kept much in the way of health data. We have talked about outcomes research, which is a data bank which will not, I believe, he repealed in this bill. That is good. But we do need a data bank to see, as I mentioned, nails in coffins, we passed nursing home legislation some years back. We have records of data banks, if you will, of the number of---- parliamentary inquiry

Mr. STARK. I yield to the gentleman from California.

Mr. STARK. My pleasure. I will try and keep my nexus in focus. I am not sure I know what a nexus means, either. But I will do my best.

Mr. STARK. Now, there are other data banks. We keep data banks on the income of seniors who qualify under QMB. That is a poor senior with low income.

Mr. STARK. I yield to the gentleman from Texas.

Mr. STARK. Mr. Speaker, I yield myself such time as I may consume. I, too, support this legislation. It is a provision of 1993 which the House reluctantly accepted in conference as part of a package from the other body, and at the time, then-chairman of the Committee on Ways and Means predicted we would be back repealing it at some later point, and it is appropriate that we are doing so today. In addition, the administration has been unable to implement the law, and the administration also supports the repeal as a necessary correction. It is interesting that we are here today to talk about data banks, because the data bank is, Mr. Speaker, a record, just so that my colleagues understand; this is very arcane computer talk, and this gentleman from California is no expert, but I understand that a data bank is a record, a record not unlike this Congress under the Republican leadership which has passed no legislation. That is a data bank, and I am sure that it is one that the Republicans would like to repeal at some point so they do not have to run on the data bank that they have established in this Congress. There are lots of data banks that perhaps are needed, and I hope that none of my colleagues will feel that doing away with this data bank, we should forego all data banks in the future. Somebody a while ago mentioned nails in a coffin. Now, I would like to have a data bank on how many coffins will be nailed shut by the Republican Medicare plan, how many poor people would be denied. Parliamentary Inquiry

Mr. STARK. Mr. Speaker, could I inquire whether the time for these points of order come out of my time?

Mr. STARK. Mr. Speaker, in the spirit, I happen to agree with the gentleman's statement, but I think that I cannot find the nexus for the gentleman of Texas's question.

Mr. STARK. Mr. Speaker, I thank the chair for his admonition, and would request my colleagues to join with me in joining in the spirit of his request.

Mr. STARK. Mr. Speaker, the gentleman is quite correct, because as the number of layoffs continue and as the Republicans continue to do nothing to provide health insurance for the unemployed or extended COBRA benefits, which cost no one anything, except the Republicans do not like it because it would be a Federal involvement, we do not have the data. This data would not be useful to fulfill what I believe the gentleman has in mind, and that is how can we, as the Democrats would like, assure people who would pay for their benefits and be cut off by the Republican indifference, how can we insure that people could continue their health insurance even if they were willing to pay for it? Without the data, and I think it is important that we emphasize that this bill repealing this one limited data bank should in no way prejudice the establishment of a data bank as the number of people, for example, climb from some 37 million to now almost 45 million uninsured, you have not heard one mention of that out of the Republican presidential candidates or certainly from that side of the aisle in this house. They do not care about the uninsured in this country. they only care about the rich and the big insurance companies. That is who is getting protected. This data bank that we are repealing would not be helpful in following our democratic precept of assurance that people have a fair chance to purchase insurance at a fair price.

Mr. STARK. Mr. Speaker, reclaiming my time, if I may respond, the gentleman makes a very good point. These particular bills are brought to the floor under a euphemism referred to as ``correction day.'' Now, I think we need a correction week. As a matter of fact, for some folks we might need a correctional institution. The fact we are ignoring this piddling little data bank, which somebody had to fuss around to find to make into a bill to bring to the floor today, is not the important issue. Data banks contain tremendous amounts of information. They contain information, for example, on quality in hospitals. A nonpartisan group of experts the other day, PROPAC, said that maintaining updates as low as the Republicans would do in their Medicare bill would have a severe impact on hospitals. point of order

Mr. STARK. Mr. Speaker, on the point of order, before you restate it, it is beyond the capacity of this gentleman to explain Republican strategy and whether or not it is germane. I would choose not to answer the question, because I am sure it is one of those mysteries of the universe that deny intelligent response. However, inoculation is germane to this because many of these employers kept records or were to keep records of who was paying for the inoculations in the Republican Medicare plan, so many people will be denied inoculations. It is, in fact, very important that we point out that the inoculations they are talking about are not the same inoculations that little children are not going to get when the Medicaid cuts come down from the Republicans.

Mr. STARK. Mr. Speaker, will the Chair tell me how much time I have consumed in establishing my nexus?

Mr. STARK. I will be glad to yield one more time.

Mr. STARK. I thank the gentleman. It is this data bank or collection of records that will tell us how well we have done with regulating nursing homes and the data bank will illustrate for us the number of lives that have been saved, the number of senior citizens that are no longer medicated into being zombies, the number of senior citizens in nursing homes in various States who are living in unhealthy conditions, and this data bank will illustrate for us what will happen if we were silly enough to pass the Republican Medicare plan. parliamentary inquiry

Mr. STARK. I am relatively indifferent, but I can find nothing to oppose it. If it came to a vote, I would vote for it.

Mr. STARK

Mr. STARK. Mr. Speaker, last week, the chairman of the Ways and Means Committee delivered a speech on the 1996 schedule of the committee. The first three pages talked about how horribly complex the current Tax Code is and how the chairman wants to tear the code out `by its roots,' substitute a kind of sales tax, and make the IRS unnecessary. The last two pages talks about what the committee is going to do in March in the health sector: pass medical savings accounts, which are an elaborate and complicated new type tax deferred savings plan, and increase the tax deductibility of health insurance for the self- employed, but not their workers. Hello. I am sure that the chairman writes his own speeches, and if I did not know that, I would say that two different people who had never met wrote that speech. How can you start a short speech saying you are going to abolish the current Tax Code and greatly simplify it, and end that speech saying you are going to add two new special incentives that will add pages of regulations and forms to the law?