Fred Thompson

Mr. THOMPSON

Mr. THOMPSON. Mr. President, I do intend to offer an amendment shortly. I believe it is being finalized as we speak. We will have that before the Senate in a moment. Listening to the debate, listening to the discussion this morning, I am once again reminded of what passes for policy discourse nowadays. I was reminded of the article that was written by David Broder in the Washington Post yesterday. Mr. Broder is obviously one of the most respected members of the press corps. Some refer to him as the dean. He is certainly not right of center. I don't know what you would call him except a very thoughtful, highly respected individual. As I listened to this debate this morning, I thought a few of his words would be appropriate. He says this: The Senate debate over the Patients' Bill of Rights has become, in large part, a battle of anecdotes. . . . Backers of the Kennedy-McCain-Edwards bill, the sweeping legislation President Bush has threatened to veto, come armed each day with stories about the youngsters whose brain tumor was missed because an HMO denied his parents' request for a specialist referral or the mother whose breast cancer was ignored until it was too late. Mr. Broder goes on later in the article and says: Would that the issue were that simple and straightforward. But it is not. Anecdotal evidence, no matter how powerful, gives no guidance to the scope of the problem being addressed. Later on in the article he says: Still less do the anecdotes define the proper remedy. Instead, by narrowing the question to dramatic horror stories, they pull the debate away from the genuine policy tradeoffs that must be made. I could not agree with him more. The incessant recounting of horror stories and the using of these poor and helpless people as instruments in this debate, indeed, pull us away from the genuine policy decisions that have to be made. I would like to discuss one of those briefly this morning. That is the subject of the amendment I intend to introduce. It has to do with the exhaustion of administrative remedies. That sounds to be an arcane legal issue that should not be of much interest to very many people. I think the contrary is the case. Basically what the exhaustion principle is saying is that under the law, generally speaking, if you have a remedy before you get to court, go ahead and use it before you go to court. The importance of that principle of exhausting your administrative remedies--going through the administrative process before you leap to court--is firmly embedded in our system. We see it working all the time with regard to run-of-the- mill kinds of lawsuits. We have lawsuits in State court where you have to go through a commission or some body or some bureau has a chance to make a determination--usually because that entity has some expertise in the area. We give the entity, under looser rules of evidence and a lot less expense for litigants, an opportunity to take the first pass at this problem. In the process of doing that, a lot of things shake out, a lot of frivolous claims are made obvious and are dropped at that level. A lot of times the merits of a particular claim are seen and the State or whoever it is--oftentimes it is in the State system--sees that and they settle. It is designed to have someone with some expertise, some objectivity, hash out the facts in a way that would be much faster than a court system, much less expensive than a court system, and would be to the benefit of everyone involved. It still doesn't mean you can't go to court later, but a lot of things get winnowed out in the process. We know how clogged up our court systems are in many cases. In our Federal system, under the speedy trial act, the courts have to consider all the criminal cases first. With all the drug cases we have in Federal court and everything else, sometimes in some jurisdictions it takes a long time to get your case heard in the Federal court system. So this administrative process before you ever go to court, in winnowing those cases down to the ones that really belong in court and providing expedited expertise to the litigants, is very important. In our system, also, when we go through that process and we get that determination made by those who have the first look, so to speak, with the expertise, then you give some credence to what they found. Then you can go to court, but you do not turn your back on the fact that this process has been followed and they came up with a certain result. The court can live with that result, usually, or it doesn't have to if it doesn't want to. But it is out there and it has served its purpose. That is the general, overall system we have through our system. Not everything goes through this administrative process before it goes to court, but a lot of things do. This Health Care Bill of Rights we are considering today does that. It sets up independent decisionmakers to consider these claims in a rather elaborate and detailed way before they ever get to court. The process that is set out in this bill is a good one. It sets forth a several-step process where experts who are independent and objective have a chance to take a look at a claim. We all know, with as many horror stories as are paraded around here by those who support this bill, that we cannot cover everything, all the time, for everybody, at any cost whether or not it is in the plan or it is something you have contracted for or something your employer covers or not. If we did that, the cost would be so high that nobody could afford insurance, and nobody would be covered for anything. So it is a tradeoff. It is the kind of tradeoff that David Broder is talking about. Yes, we want these pitiful people to have coverage, but we also want to have it so that people are not totally driven out of the market because the cost doesn't match the benefit for the amount of money they expend. That is the process and the balance that we are trying to achieve. We got into the health care business because the medical costs were going up at almost 20 percent. We created their managed care system. We like to deride it now, but we created it because health care costs were going up at almost 20 percent and we tried to respond to that. Assuming that, if it is not in the plan, if it is not in the deal, and if it is not in the contract, there will be some cases that are legitimately, after being looked at by all experts, not appropriate, this bill assumes there will properly be some cases that are not. If you are going to have some that aren't and some that are, what do you do? You set up a process to find out what is just. You set up a process to find out what is right. How do you do that? This bill does a lot of things. It has an internal review process. It is an internal process, first of all, to even grant or deny a claim. Let's say under the plan that someone comes in and their claim is denied. Maybe they haven't worked there long enough. Maybe they don't even work there at all. Maybe a determination is made that this is not a medical procedure that is covered or it is experimental. For whatever reasons, there are many cases that are denied. Under this bill, there is a process to review that denial, even at the internal stage when the employer still has some say-so with regard to some of these plans. Especially even at that stage, this bill begins to set up expertise and objectivity. At the internal review level, it says the person making that review cannot be associated with the prior decision. He has to be someone who is independent of that prior decision. It also says it has to be someone with expertise. It also says if it is a medical issue, it has to be a physician. Even before we get to the external review, while it is still an internal review, this bill sets up expertise and independence in the process to make sure this claim is adjudicated or decided in an appropriate manner. All right. You go through that. Let's say the claim in this external review process is still denied. This person denies the claim. Then, under this bill, there is an external review process. At this stage of the game, the person is totally independent of the plan. The legislation demands that he be totally independent, that he have expertise, and that he have nothing to do with the plan or the employers or anybody else. The bill spent several pages of setting up a procedure whereby he is objective and independent. The Secretary here in Washington has authority to review what he is doing and to look at the cases he has considered to make sure he is not prejudiced in any way, where it looks as though maybe he is denying too many claims or something such as that. There are elaborate processes to make sure this external appeals process is fair, independent, and objective. All right. Let's say we go through that level. Let's say that entity decides that there is a medical issue. Then they hand it over to yet another level of independent review. That is the independent medical review. Once again, the bill sets up someone who is totally independent, totally objective, sets forth supervision by the Secretary, and sets forth how he is to be compensated to make sure he is well qualified. That is the third level, you might say, in terms of some degree of independence and objectivity--totally at the last two levels and somewhat at the first level. You have the internal review; you have the external review; and you have the independent medical review--all set up to make sure that someone who comes with a medical claim gets fair consideration, and you don't have these big, bad, mean HMOs that we hear so much about making these decisions. They are not. These people are under this act. What we do, and what we say in this amendment that I am going to submit is, let's use it. What I have just described, let's use it. After setting up this process that ought to be used because it is a good process, this bill also says it can be circumvented at any time. It can be. A claimant can stop it if he doesn't like the way things are looking and go to court by alleging that they have received irreparable injury or damage--not that they are about to but that they have received it. There are two things wrong with that: No. 1, you obviously lose the benefit of the administrative process. For example, part of the problem could be or may be the sole problem could be a question of coverage. You have this process set up. You are maybe in the middle of it. Why not just decide whether or not you are really covered under this bill? It is a factually intensive exercise under this plan: how long you have been working here, and that sort of thing. The second thing that is wrong with the bill as it is now, and allowing them to circumvent this process that I have discussed by alleging irreparable injury--they do not use the word ``allege,'' but it is the same thing. The only way you can get into court is by ``alleging.'' That is the way you get into court. It is a low threshold. You can circumvent this plan at any time, or this process at any time along the way. The second thing wrong with it is it doesn't have a claimant in it because we are talking about money damages. To circumvent this process in order to allow a claimant to go over here in the middle of it and file a lawsuit for money damages, all he is doing is getting in line over at the courthouse. He doesn't get any expedited treatment for that. It doesn't help him. Why would you do that when you are in the midst of this, admittedly, excellent, objective, costly administrative process? I don't think that it makes any sense. Costs are relevant because it is going to show up in somebody's price for insurance. This plan costs money. This process is expensive to set up. If you are going to have it, you ought to use it. Of course, if the result goes in the claimant's favor, it is binding on the plan. But if the results of the independent process go against the claimant, then of course he can go to court. But my problem this morning or today is not that he can go to court. It is that he can go to court before he exhausts administrative remedies. My friends who oppose this--I am going to anticipate this a bit because we have had some prior discussions about this. Some of my friends have pointed out that there obviously can be a need from time to time for emergency care. What if you are in the midst of this process and you have some kind of an emergency situation that ought to justify your circumvention of it? My first answer is, the bill, as drafted now, is not going to help any claimant with regard to an emergency because, as I say, we are talking about money damages. All he can do is file a lawsuit. If that makes him feel better, 2 years later he may get into court to try his case. That might help him. But other than that, that is not going to help the person with some kind of an emergency. What will help that person, though, is in this bill. It is already provided for. In the first place, you have a provision that is in ERISA, that we adopt in this amendment, that says you have all of the coverage that is given under ERISA, which allows you to go into court at any time to recover benefits that are due you, to get a mandatory injunction or to whatever you might be entitled under ERISA, under current law. That remains. That will be the same. We have adopted that and made that clear in this bill. The second thing is, under section 113 of the bill, the claimant has access to emergency care. There is a provision in the bill that if you have an emergency--of course, the general law requires hospitals to take care of you anyway, but if it is an emergency-type situation, under this bill already, under section 113, an emergency is taken into account. What if you have a situation that is not an emergency, not an immediate thing, but you do not want to go through the administrative process for just and reasonable reasons? What kind of situation could that be? That could be a situation in the middle that is not an emergency but maybe you are entitled to an expedited review or determination. There is a provision in the bill that covers that situation also, under section 103 on internal appeals. At the internal appeals level, if the initial claim is turned down and if a person believes they are entitled to an expedited determination, even at that level, they can go forth and pursue that. Then, at the next level, at the external appeals level, if they believe they are entitled to an expedited determination, if a physician certifies that they are entitled to expedited consideration--at either of those levels--they can get that. So the claimant is covered. The claimant is covered under those situations, which allows us to go back to the basic legal proposition that I mentioned in the very beginning in relation to the exhaustion of the administrative remedies, which work so well in so many aspects of our judicial system, which is set up under this bill but then has massive carve-outs. That process should be allowed to work. There is one other point in this amendment, and then I will offer it; and that is, after you go through this process, after you exhaust your administrative remedies, after you go through the internal appeal, the external appeal, the independent medical review, and after you get a result--whatever that result is--the trier of fact, when you go to court, ought to know about that result. It is not determinative on the trier of fact--whether it be the judge or the jury in the court--but it is relevant. If you are not going to do that, you are really wasting a whole lot of time, money, and expertise and creating additional problems for yourself in terms of cost in reaching a just result. So that is what it does. I think we all agree we want doctors making medical decisions. When these claims are made, in this review process, if it is a medical claim, doctors are going to be making that medical decision. But if you do not like it, then you can go to court. But let that doctor, let that independent, qualified physician make the first determination before you go to court. Are we so desirous of speeding everything to court, with the attendant costs that we know are going to come about? And these are not costs to some HMO, these are costs to the American people. We have 44 million people who already are uninsured in this country. Even if we add just 1 million to the uninsured in this country because of what we do here, that ought to bother us. We should not be in the business of doing that. So let's let doctors make that initial determination instead of lawyers. This is one of those issues that is doctors versus lawyers. If you want to go to court, if you want to rush to court at any time in the process, regardless of what has happened--regardless of whether or not anybody independent has had a chance to look at this--you are going to decide, with a lawyers' bill, to do that. The way it is constructed right now, you can sue anytime, for anything, in any amount. We can discuss those issues later. But with regard to this issue, exhausting administrative remedies, let's let the doctor, let's let the medical people have the first crack at it. Who knows. When we get that result in, it might resolve a lot of these potential lawsuits. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. THOMPSON. I ask unanimous consent reading of the amendment be dispensed with.

Mr. THOMPSON

Mr. THOMPSON. Will the Senator yield for a question?

Mr. THOMPSON. Mr. President, I would like to speak on the Gramm amendment. I see that neither Senators Gramm nor Grassley are present. I understand there is time remaining for Senators Grassley and Gramm. I suppose the appropriate thing to do would be to ask for 10 minutes of the time on the Gramm amendment.

Mr. THOMPSON. Mr. President, we are proceeding to clear the air on this issue, and that is important. It is a very important issue. One of the things Senator Grassley pointed out was that this did not go through the regular committee process. It is a very complicated bill, and we are just now seeing the complications of it; one of those being the extent to which employers are liable, employers can be sued. Unfortunately, we didn't have a chance to work all that out in committee. So now we are here in this Chamber arguing about the exposure of employers. We are making progress because, when we first started this debate, the supporters of the McCain-Kennedy-Edwards bill basically said: We were not attempting to go after employers. That is not what this is about. Then in the fine print, yes, well, under certain limited circumstances. I think we know now that there is, indeed, extreme exposure as far as employers are concerned and that it constitutes a significant part of the effect of this bill. We are making progress. Now we can talk about the extent to which employers should or should not have exposure and liability. We have heard statements today that there are a lot of employers out there that will do the wrong thing; that even though they are not required to have health insurance for their employees, apparently there are employers out there that will set up health care plans and then do everything they can to disadvantage their own employees, and that that consideration is driving this provision of the bill. So we are, indeed, refining the issue; the lines are being drawn. The response to the issue of suing employers has always been: Don't worry about that. The main thing is we are going after the big bad HMOs. You don't have to worry about anything else. When times get really tough, we bring out another picture of some poor individual who is used to demonstrate the evilness of managed care. Our hearts go out to these people. These are people in need. But the average observer in America must be watching this and asking themselves: Why doesn't the Government just require these people to be covered for anything all the time in unlimited amounts? Why doesn't the Federal Government just take care of it? Or if the Government doesn't want to do it, why don't we make some insurance company pay somebody for any claim they make, if it is a real need, at any time for any amount? In fact, why didn't we pass the Clinton health care bill a few years ago? The average person must be asking: If that is the only issue, taking care of sick folks, then why don't we nationalize this health care system of ours? That is the logical conclusion of all that we have been hearing. The answer, of course, is that in public policy matters, there are tradeoffs to be considered. There is never just one side of the coin. We know, for example, that we set up managed care in this country because health care prices were rising up to the point of almost 20 percent a year. We knew that couldn't be sustained so we put in a managed care system. Some HMOs abused that and did some bad things. States passed laws. Thirty some States passed laws addressing some of these problems. The State of Tennessee has broader coverage than the bill we are considering today. It is not as though the States have been standing still. They are covered. Health care costs are going back up. So here we come and we are going to lay on another plan that, if passed in the current form, without question, will drive up health care costs again. My heart goes out to these poor people who are being used in this debate to demonstrate the necessity for the passage of this legislation. But I want to refer to a group of individuals myself. In fact, I want to refer to 1.2 million individuals. I don't have the space or the time or the resources to bring in pictures of the 1.2 million people who, the most conservative estimates say, will be thrown off of insurance altogether if this bill passes. The Congressional Budget Office says that at a minimum--and there are other estimates, but that is the lowest one I have seen--1.2 million people will lose insurance altogether. Who is going to bring their pictures in here to demonstrate to the American people that they are disadvantaged by the bill we might pass that will drive health care costs up so great that these small employers that some would like to demonize or large ones, for that matter, that some would like to demonize don't have to provide health care at all? What is going to keep them from just saying, as has been pointed out this morning, that the costs are too great, the liability is too great? We want to do the best we can. We are not perfect. We might make mistakes. But instead of setting up a system to rectify those mistakes, we will be opened up to unlimited lawsuits at any time, anywhere in the country, in any amount. Why should we have that aggravation? Why not just give the employees X number of dollars and say, you take care of it--and they may or may not take care of it with that money--or if you are a small employer, to drop insurance coverage altogether. Who is going to speak for that 1.2 million people who they say will wind up without any insurance at all? There won't be any arguments with any HMOs because there won't be any insurance at all. So the lines have been drawn in this debate. We have people over here needing help, needing assistance. We have set up a review process to get independent people to look to determine whether or not these employers are taking advantage of people. So far so good. Then the proponents of this bill want to lay in a system of lawsuits on top of that. We draw the line in there and say that, yes, let's have an administrative process to see whether or not employers are taking advantage of folks. Let's have an independent doctor look at it. After that, let's not lay on unlimited lawsuits against employers who do not provide the health care and expose them to liability, when we say that what we are going after is the big bad HMOs. Why expose these people who are providing health insurance? They are not providing health care, so why expose them to liability? The question remains, Do we want to sue employers? Do we want to have the right to sue employers or not? The proponents of this bill say yes, but only with regard to when they directly participate in decisionmaking. This gets a little technical, but it is very important. There is a certain resonance of the proposition that if somebody does something wrong, they ought to be held accountable. I have tried a few cases myself, and I believe in that principle. I think that is right. But the problem in the context of this health care debate, which we nationalize to a certain extent with ERISA for a portion of the population, and now we are going to nationalize the rest of it with this bill, the problem is we are setting it up so that, by definition, a large group of employers are going to be considered to be directly participating because they are self-insured and they have employees who are on the front end of these claims processes. They tell me that these self-insured plans are some of the best plans that we have. They don't go out and hire an HMO. They try to do it themselves, in-house, with their own people, looking out for their own employees, who they don't have to insure if they don't want to, but they do. I am told that they provide more benefits than the other plans. They are some of our better plans. But by cutting out the middleman, so to speak, and doing it themselves, they are going to be subject to liability under this bill. The second point of exposure has to do simply with the fact that employers have settlement value. What lawyer worth his salt, if he is going to sue anybody along the line here in this process, would not include an employer as a part of this lawsuit? An employer has a chance of deciding whether or not to go to court and stand on principle because he is not liable and spend several thousand dollars defending himself or settle up front and pay the other side in order to get out of the lawsuit. The other side says they don't want to sue employers unless they have control. I mentioned direct participation. The other key words are ``or control''--to exercise control of the health care plan. The only problem with that is under ERISA law, by definition, employers are supposed to have control over these plans. So if you just look at the definitional sections of the applicable law, on day 1 you have a large number of employers that are subject to this lawsuit. So let's not kid ourselves about that. The first part of this debate was that most employers are not covered. Most employers are not covered. Now, we know that is not true. The issue now is whether or not they should be. You say, well, what if they do something wrong? That is a good point. Why should they be any different? Why should they have immunity? We could ask the same thing about treating doctors and about treating hospitals and about any number of entities around America, including U.S. Senators. Why do we have protection for anything we say in this Chamber under the speech and debate clause? Is it because we are better than anybody else or because we don't ever go over the line and do something wrong or maybe even outrageous? No. It is because of the tradeoffs of public policy because there are other considerations, just as there are other considerations when we lash out and follow our natural instinct to sue an employer. You are going to drive costs up; you are going to drive people out of the system; and you are going to cause more uninsured. Besides, there is accountability. There is a sense of the Senate pending today that talks about the importance of the independent evaluation that this bill creates. The employer doesn't get to make a decision to cut somebody off under this bill, and that is the end of it. It goes through an independent evaluation process. It goes through an external review process. Then, if it is a medical decision, it goes to an independent medical reviewer. This bill spends pages on pages in setting up these individual entities, protecting them, qualifying them, having the Federal Government look over their shoulders. They are the final word. If the employer is wrong, they are the final word, and they don't have anything to do with the employer. There might be some hypothetical cases where some evil employer might sneak through the cracks somewhere. All I am saying is it is our obligation to consider both sides of this coin. If in trying to do that, if in trying to reach that hypothetical extreme case we drive up health care costs and we drive small employers out of the health care business and we do wind up with over a million more people uninsured, we are making a bad bargain. I yield the floor.

Mr. THOMPSON. I thank the Senator for addressing the issues I raised, and I ask this as a legitimate point of inquiry and not just a debating point. Mr. President, it occurs to me with regard to the Senator's first point, and that is coverage might be denied initially but later overruled, and in the interim--I think he used the example of a small child again--a child might be suffering damage, does not ERISA currently provide injunctive relief? It allows a person under those circumstances to go into Federal court for mandatory injunctive relief, and would that not address the concern the Senator has?

Mr. THOMPSON. I thank the Senator. I could not agree more with that last point. However, my experience has been that injunctive relief is designed by nature for very rapid consideration. You can get very rapid consideration, but you do have to go to court to get it. My question is, If we are not going to avail ourselves or require claimants to avail themselves of the processes if they believe they have been wronged, does that not necessarily lead to the conclusion that we must grant all claims? How does a person considering a claim know which one--let's assume they are dealing in good faith. In every case where there is an injury or potential injury going to occur, is the logical conclusion that we should see to it that all claims are granted regardless of whether or not the person considering the claim thinks it is clearly not covered under the agreement? If we do not go through the processes that are in law for people to avail themselves and to show to an independent arbiter or judge that their claim is meritorious, if we say we do not have time for that, then doesn't that mean we have to grant all of them?

Mr. THOMPSON. If the Senator will----

Mr. THOMPSON

Mr. THOMPSON. Let me make sure I understand the Senator. This bill that we have been considering has not gone through the committee process this year; is that correct?

Mr. THOMPSON. Mr. President, the Senator from Iowa has graciously agreed to let me hold forth here for just a few minutes. If no one has an objection, I ask unanimous consent that he be recognized immediately after me. I don't expect to take more than 5 minutes.

Mr. THOMPSON. The Senator mentioned the prerogative of the committee. Having been a chairman, I understand what he is talking about. From the standpoint of patients and the Patients' Bill of Rights, which we have been here discussing today and Friday in terms of who was covered and who wasn't covered, when employers had liability and when they did not, are these the kinds of things that get hashed out in committee?

Mr. THOMPSON. But not this year.

Mr. THOMPSON. What I am getting at is, is it not true that the liability parts of these bills have not been referred to the Judiciary Committee?

Mr. THOMPSON. Not only has the Finance Committee not had a chance to consider their portion, the Judiciary Committee has not had the opportunity to consider the liability portion, which is so controversial. We are hashing out right now what this thick bill means regarding liability. It has never been in the appropriate committee to go through the natural, normal committee process on a bill of this importance; is that correct?

Mr. THOMPSON. Mr. President, I have been listening to the debate, and it sounds to me as if we are making progress with regard to this employer issue. We started out without a recognition that this bill provided substantial exposure to employers. The statements that were made by the sponsors of the bill were that they really didn't intend to hold employers liable, except under very limited circumstances. Now, apparently, they agree that perhaps there was more exposure there than was originally intended. So, as I understand it, some discussions are taking place now to, hopefully, bridge the difference and provide additional protection for employers because what we are doing--what I understand the purpose of the legislation is--is to provide some judicial access, judicial relief against health care plans and against HMOs, and that the thrust of this legislation was not to hold employers liable because employers don't even have to provide these plans if they don't want to. While it is all well and good to suggest that we give people new remedies and rights, we have to balance that out with the realization that it is going to have some repercussions. If we go too far and do too much to penalize employers, they are going to walk away from health care coverage. Instead, as pitiful as some of these stories are that we have heard over the last several days about what has been done to individual patients, I hope we do not come back in a couple of years and have to listen to people who have no insurance at all because of legislation we passed driving employers-- and small employers--out of the health care business. That is a real possibility, and nobody wants that. We need to be careful. I suggest that if we really want to carve employers out of the lawsuit business, if we did not mean to cover employers, all we need to do is say so. All we need to do is provide an exemption for employers the same way we provide exemptions for doctors and the same way we provide exemptions for treating hospitals. We provide blanket exemptions for them, but we have to go through all these various pages of rigmarole and definition to try to figure out when an employer who is providing this health care coverage can be sued and when he cannot be sued. The law of Texas has been upheld. The President's name has been invoked. The law of Texas has been used as an example. The law of Texas exempts employers from their plan. The concern is there is a group of employers who are basically self- insured who handle these claims on the front end themselves. They do not hire this out. They do it themselves. I believe if you talk to professionals in the industry, they will say that some of the best plans with some of the most comprehensive coverage of any of the plans out there are these self-insured plans. One of the reasons may be that they cut out the middleman. They do not have an HMO to deal with at that stage of the game, and they provide good, comprehensive coverage for their employees. By definition, they are making decisions on the front end. By definition, under this bill, from the day it is passed, they will have exposure. One might argue that is a good thing or one might argue that is not a good thing, but there is no question with regard to those plans, some of the better plans out there--because employers decided to provide these plans, they wanted to cover their employees, they wanted to do it themselves--that they will be exposed. One has to ask oneself, what are they going to do the day after this legislation is passed? Are they going to continue to hold themselves for this kind of additional liability? Are they going to contract it out to a third person and pay the additional freight to get them to assume the liability, driving up costs all along the way? I do not know what they will do. I know what they will not do. They will not stand pat. The things we do in this Congress have an effect on the lives of the American people, whether it be raising taxes, lowering taxes, or whatever. There will be some repercussions in terms of the behavior of these employers. I hope it is not to wind up with less coverage and fewer of these good plans. One says: They are not going to have anybody to sue if you do not have HMOs and the employers are involved on the front end of it. This bill has set up an elaborate external review entity. My colleagues say we do not talk enough about patients. This legislation sets up a review entity that allows an independent qualified individual or group of individuals to make decisions with regard to whether or not that employee is being treated fairly. That is a strong move in the direction for patient protections. If we stopped right there and did not do anything else, that would be a major move in this legislation, away from the simple ERISA coverage we have right now. This bill spends 10, 12 pages setting up this external review process and the external review entity on how they have to be qualified, how they have to be independent, how we have the Secretary looking over their shoulder, all of which is designed to protect the patient. Under this system, if the entity rules against coverage, then they can go to court and sue, or if he rules for coverage, it goes to another independent individual who is the independent medical reviewer. So there is another level of independent protection for the employee. It is not as if they are out there hopeless and helpless and totally at the mercy of the employer. The employer may have had some discretion on the front end for sure and made some decisions for sure, but then he goes through this independent appeals process where people who have no relationship with the employer make the decisions as to whether or not there is coverage. We have exempted doctors. We have exempted hospitals. HMOs are not different in this country from many other entities and entities that have been created in this bill. We exempt States from certain lawsuits. We exempt the Federal Government from certain lawsuits. The Senator from North Carolina and I are exempted from the things we say in this Chamber. We are protected because there are tradeoffs. Everybody knows that. We make decisions because of public policy reasons to make tradeoffs. If we want to encourage certain conduct, we are willing to make tradeoffs the other way. It is unfair, when we are in the context of a particular area, legislation dealing with health care, to pick and choose as to among whom we are going to make those tradeoffs, especially if we are giving exemptions to the people who are providing health care--doctors and hospitals--and we do not give exemptions for the people who are providing the health coverage, the employers. That is the gist of what we are dealing with, and hopefully we can work out some agreement. My bottom line is, if you do not want to cover employers, and if you believe we may be in danger of causing some good folks to say it is not worth the additional headache, it is not worth the additional exposure, it is not worth the additional expense to set up different entities to protect ourselves, if we are concerned about that, we need to take that into consideration with any resolution, not to mention the exposure this bill has under other provisions of ERISA. We have not even talked about that. At least I have not. I have not heard any discussion about that. Employers have exposure under COBRA, under HIPAA, under other areas of ERISA that have nothing to do with health coverage. They have employer exposure if they make any mistakes in dealing with that. Remember we debated Kennedy-Kassebaum, and we decided people needed to have more portability with their insurance. We decided the fair thing to do was to give them more portability for their insurance and included a penalty of $100 a day plus injunctive relief for an employer who did not behave himself. We debated this liability issue then, and we decided not to do it. Now what we are doing parenthetically in this HMO bill is bringing back Kennedy-Kassebaum and bringing back COBRA and saying in addition to these penalties we put on the employers when we considered that, we are now going to open that up to litigation and lawsuits. That is a major step, and it should be done only with maximum consideration, and it must be considered in the context of any treatment of employer liability in any compromise we might fashion. I yield the floor.

Mr. THOMPSON. Mr. President, I was listening to the description of the sense of the Senate and I wish to compliment my colleague from North Carolina for introducing it. It is extremely important in the administrative process that the procedures we set up are guaranteed to be qualified and guaranteed to be independent. This bill goes a very long way towards doing that. Obviously, I have some problems with this bill. With regard to the provision setting forth these independent entities, the qualified external review entity is established. That means when we have these cases where there is an issue as to whether or not there is coverage, it is the independent person who decides. We hear about a lot of terrible cases. We get letters from people. We talk to people when we go back home. We hear about people who are sick; in some cases there is absolutely nothing anybody can do, and certainly not us. We hear about people who have terrible accidents. We hear about people who are victims of crimes. We hear about a lot of misfortune. But, in the health care area, we have a system in this country where people can get insured for a lot of things. The deal is, your employer provides this for you. The deal is, your wages are affected by it, of course. The deal is, we are going to provide you insurance to cover certain things in exchange for a premium that the employer is going to pay. If you cover absolutely anything, and you have a contract--which has never been drafted--that says whatever happens to you, however you get sick, however much it costs, however onerous your injuries, we are going to cover you, no questions asked--the premium for that would be astronomical. Nobody could afford that. It is unfortunate. It doesn't make that person any less sick. It doesn't make that person any less deserving. But that is just the way it is. We got into managed care because we, in this body, encouraged the creation of these HMOs. The reason for that wasn't because we liked HMOs. The reason was that health care costs were becoming astronomical and people were losing their health care. As tragic as these stories are, they would have been just as tragic had their employers never bought the health insurance. There would not be any dispute over whether or not there was coverage. This would not even be a policy to start with. That would not help these poor people. So we have a system where certain things are covered for a certain premium. In a free market, those things work out. If somebody is messing up on one side, the other side will take care of it. That is the way the system works. As I say, if you are going to have a system where the Federal Government says that, regardless of whatever the claim is, it has to be paid, you can have a system like that. Nobody has suggested that. I wonder why no one has suggested that. Our hearts go out to people because of these stories. Our hearts go out for all these sick people. Why don't we just say the Federal Government will see to it, either directly out of the Federal Treasury or we will make an insurance company take care of whoever is sick for whatever reason? It is a nationalized health care system. You can debate that. You can argue that. Some people would argue on behalf of that. Nobody is suggesting that. Why not? Because we do not want to take care of these people? Of course not. It is because we know the effects of that. Because for everything we do, for which we can make a case, to help people and give rights and give benefits and make other parts of our society give third parties of our society certain rights and benefits so the Federal Government doesn't have to do it--we make other citizens, other companies, do it for us--we can do all that, but there are always effects from that. We were elected to look at all that and try to balance it and try to come up with something that is reasonable. Not something that will come up and cover every hypothetical case that may ever come about, because that cannot be done, but something that will reasonably balance the coverage we want people to have, I want my family to have, something the average person can afford, something the average small employer can afford. Otherwise, they are not going to buy any insurance at all. The point I am getting to is that there are some cases, where coverage is at issue, in which everybody is operating in good faith. It is not a matter of the big guy and little guy and the big guy is always wrong and the little guy ought to be paid. It is a matter of reasonable people sitting down and having a consideration, discussion, and sometimes a disagreement as to whether or not a particular procedure is medically appropriate. Honest doctors disagree about that all the time, whether or not a particular procedure is experimental or not. If a policy covered all kinds of experimental things that we did not think would help you-- there is a 99-percent chance it is not going to help you any, but it is experimental; we can spend $1 million to see what it is; policies just don't cover that--prices would be astronomical. Nobody could afford that. So you get into the question, Is it medically called for? Is it an experimental thing? Honest people can disagree about things such as that. We do it all the time. We are talking about lawsuits, and that is what happens in lawsuits. You would not have any lawsuits in the medical area, in the malpractice area, unless you had doctors on both sides of the cases taking different views of these matters. We have to resolve these matters. We cannot just predetermine that because a case is meritorious and our heart bleeds for an individual case, all of it is covered any time for anything. Nobody could afford it. It is a practical, hard part of life with which we have to deal. And we are doing a disservice to our constituents if we do not remind them that there are tradeoffs and there is a bigger picture with which you have to deal. Here is where we are going. We are getting down to the fact that, as I said, we have in some cases a dispute as to whether or not something is medically called for. What this bill does, and what this resolution supplements, is that it says when you have a situation such as that, let's set up an independent person, an independent entity. In the bill it is called a qualified external review entity. It is external because it is not a part of any employer's process; it is not a part of the employer's deal. The employers do not control this. The bill takes several pages setting up, I think very skillfully, an independent entity that is highly qualified, that is very independent, that is monitored by the Federal Government to make sure they take a look at that issue to see whether or not there is coverage on an individual incident. Once again, if you were going to say on the front end everybody who needs coverage has to be covered, regardless of whether or not it is in the insurance policy or anything else, you would not need this external review and your premiums would go through the ceiling and everybody would be calling for nationalizing the health care system in this country. But we are not doing that. This bill calls for this external review process. That entity determines whether or not this is a medically reviewable decision or not. That entity determines whether or not there is coverage. If that entity decides that it is a medically reviewable matter, there is coverage, it goes to another independent level. And this bill sets up an independent medical review. This first reviewer doesn't have to be a doctor, necessarily. But on the second review it has to be a doctor. He is independent. He has nothing to do with the employer. He is qualified. He is supervised and overseen by the Federal Government. He takes a look at it and he makes a decision. So far so good. Again, this is a reasonable response to these sad, sad stories that we know people tell and we all hear about from time to time. If you are not going to say: Cover everything all the time and we are going to, depending on how sick a person is, determine coverage--if you are not going to do that, you have to have some way of reasonably and fairly deciding what is right. This bill sets up two levels of independent review. I think that is an appropriate way to balance the need to cover people for what they contract for, for what coverage is for--for which you are paying a premium commensurate with the coverage, on the one hand, and a need to make sure there is at the end of the day some coverage that is affordable for somebody so we do not add to the 40 million people who have no insurance at all. So far, so good. The problem I have is not with the bill I just described. The problem I have is not with this resolution which reinforces the idea that we need independent review. The problem I have is that you can go through that entire process and, if a claimant is turned down, they can ignore that entire process and still sue in State court, they can still sue in Federal court, and they can still sue in any jurisdiction where the defendant has a place of business or is doing business for unlimited damages. They can still sue an employer who gave them the insurance. That is what I have trouble with--not that we are setting up an independent review process. It is that we are not honoring the independent review process. We are saying we are going to set it up. But if it turns out one way, we are going to adhere to it. If the claimant wins, then it is binding on the employer. But if these independent entities decide that the claimant does not win, because it is one of those 99 percent deals, and it is an experimental thing: we just do not cover that; our heart goes out to you, but you just didn't pay for that much--if they decide that, then it is as if all of that independent stuff doesn't count. Here is where the lawsuits start. That is the problem I have with this bill. We must recognize that there are tradeoffs for everything we do in this field. It is easy to give new rights, and establish new rights, either out of the Treasury of the Federal Government or making some company pay for something else. But it has an effect on people's conduct. People do not just sit still. If you triple somebody's taxes, it is going to affect their behavior. If you cut their taxes in half, it is going to affect their behavior. If you place new liabilities on employers--some of them are small employers trying to furnish decent health care packages to their employees--they do not have to. But if you make things tough enough on them, they are just going to say: We are either going to drop coverage or we are going to give you some money. You go get your own health insurance and I don't have any liability. And that employee may or may not take that money and buy health insurance; he can do whatever he wants to with it. What we do affects people's behavior. It is not enough to talk about sad story after sad story and say that is fact. We all agree to that. All of us are looking for a way to balance the approach so people can be properly covered to the extent possible where folks can still afford coverage in this country. Health care prices are already going up at double-digit rates before this bill is passed. If we make the lawsuit liability so great that people can't afford coverage, it is going to go up even higher. We already have 40 million people in this country who have no insurance at all. Our job is to try to come up with a balanced approach so that we don't add to those 40 million people. We can't just sit out here and talk about one sad story after another without considering the effect of the public policy we are putting into place. We had before this body, before I got here, when President Clinton was President, the Clinton health care plan. It had noble motives, too. We heard about people who needed help and needed coverage, and so forth, at that time. The whole Nation did. This body considered that bill. This body decided not to go in that direction because in many people's minds it was a nationalizing of our health care system; that as much as we have instances sometimes where things fall through the cracks, on the whole, people do not fly to England in order to get their medical coverage. The rich people of the world fly here. We have the best overall medical system in the world. We didn't want to nationalize our health care system. We turned that down. It wasn't because our heart didn't go out. It wasn't because there were some pitiful stories out there where people needed more help than they were getting. But it was, on balance, because we didn't believe it would be good for those same people if we nationalized our health care system. I do not know if we have changed our minds about that or not. I don't think so. But that is what we are doing here with this bill the way it is now drafted. We are nationalizing our health care system in a significant respect by other means. We are doing it by an unfunded mandate on corporations. The Government is not sending people checks for their health care, but they are requiring other people to. We can't think we can do things such as that without having an effect on people's conduct. Health care costs got out of hand in this country. We responded with a managed care response to it and tried to make that balance to provide enough care that would cover people in most cases but would not be so costly that it would drive people out of the system. It didn't always work. There were some excesses. Some of these HMOs did some bad things. States got into the act. My State of Tennessee covers more things than the McCain-Kennedy bill does in many respects--it is not as if the States are not addressing these issues--and in response to that, health care costs went back up a little bit. We can live with that. But now we are coming along and laying a whole new Federal layer on top of that, double-digit increases in health care costs being present today. And we have no idea what that is going to do to costs when we are saying we are going from a system where there is no redress, right past the system of independent review, which would be a major beneficial change where independent doctors would be deciding the right to unlimited lawsuits. We have no idea what that is going to mean to the cost of health care in this country. If we think employers are going to sit still for that, that small employers are not going to change their conduct, that prices are going to remain the same and that these HMOs are not going to protect themselves in terms of price increases to cover their new exposure, we are fooling ourselves. I am not saying we shouldn't respond to current circumstances. I am just saying we are hearing too much of this side of the story and nothing about the other. We are doing the American people a disservice. It doesn't take a lot for Members of this body to grant new rights and extend our sympathy. Sometimes it takes a little more to say that is a relevant part of this discussion. But let's talk about the effects of what we are about to do. I hope we don't have this debate 2 years from now and we have these same sad stories coming in about my problem wasn't that we got into a dispute over coverage and they were not covering it, but they cut me off. My problem was I didn't have insurance to start with because my employer couldn't afford it. I commend the Senator for offering the sense of the Senate. I think these independent entities ought to be strong. We have set them up now in this bill. My problem is we don't use them. They can be circumvented without exhausting the administrative remedies. It goes straight to court. Or we can go through and use them, but if you get an adverse decision and the best independent minds look at this and say, sorry, but there is no coverage, it doesn't matter; it is as if they didn't exist. You can then begin a whole realm of lawsuits against HMOs, against employers in some cases, and even against these independent entities that have made the determination. Both the external reviewer and the doctor can be sued because they decided against coverage. There is in this bill a higher threshold of proof against them to prove they are guilty of gross misconduct. But when we use these independent entities that we are bragging about and we are talking about how strong and important they are, let's use them. Let's not just use them as a starting place and a debating point and go through a year or two of that and a decision that everybody admits was objective and untainted, and then totally treat it as if it didn't exist because we want to open the door to unlimited lawsuits for unlimited amounts for everybody in sight. That is not helping those poor people. That is not going to help those poor people who need medical attention and medical coverage. They have exempted doctors and lawyers. A lot of doctors support the bill because when they get sued, they want the HMO also to be right there beside them. I understand how that works. So the doctors support them. The doctors were exempted. The doctors are exempted in this bill, and so are the hospitals. People who are giving the health care have been exempted. But the people who are furnishing the health care, the employers, have not been exempted. It doesn't seem right to me. I yield the floor.

Mr. THOMPSON. Will the Senator yield for a question?

Mr. THOMPSON. I will speak about 5 minutes and then the Senator from Iowa will speak for himself on how long he wants.

Mr. THOMPSON. In 1999, were there any liability provisions in that bill? I don't believe there were any liability provisions in that bill.

Mr. THOMPSON

Mr. THOMPSON. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. THOMPSON

Mr. THOMPSON. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. THOMPSON

Mr. THOMPSON. Mr. President, we have heard several anecdotes concerning individuals who are having a problem with their coverage. We must ask yourselves, would those individuals have been any better off if they had no coverage at all? And should an employer be penalized for making the decision to have insurance coverage which may or may not present problems from time to time? That is what we are trying to resolve, and we will be discussing that issue for several days as to how best to resolve it. But we need to remember the front end of the process. It is always set up because some employer, either a large employer or a small employer, chooses to have insurance and set up an insurance plan for his employees. That is what we are dealing with here with regard to the amendment offered by the Senator from Texas. This is a very important amendment. I think this is fundamental. This is what we will be discussing today and Monday and Tuesday. It is the fundamental question of whether or not we want to sue not only HMOs for their transgressions, but whether or not we want to sue employers, whether or not we want to sue the people who do not have to set up these insurance plans and can walk away from them if they want to, can have no insurance if they want to for their employees, or they can give employees a certain amount of money and say you go take the headaches. I am talking about those individuals. Do we want to subject them to unlimited liability in lawsuits, too? We, of course, are focusing on the HMOs. We will have a chance to discuss how far we can go in penalizing these health care providers without driving up the costs so that we uninsure a bunch of people. As heartrending as some of these stories we hear are, I hope in a couple of years we don't have heartrending stories of people whose employers walked away from insurance, leaving them with no insurance, and stories of people dying in emergency rooms awaiting treatment because they had no insurance at all. Those could be logical outcomes of what we do if we go too far. We are going to deal with that issue--with what to do with HMOs. But in the process, the sponsors of the bill on the floor have tried to make it clear, I think, that that is the focus, and they are not after the ability to sue, for example, attending physicians. They have been carved out of this bill. They are not interested in suing attending hospitals. They have been carved out of this bill. They are not interested in applying ordinary liability to the external review people and the medical reviewers who are set up in this bill to make objective determinations on coverage and what-not; they only have liability if they engage in gross misconduct. So all along the way, whether or not you are talking about people who are set up to review these matters, whether you are talking about attending physicians, or whether you are talking about hospitals, the sponsors of this bill have either totally or partially carved them out of the process and said we are not after them, we want to hold the HMOs accountable. They also say they are not after employers, but they are not willing to carve them out. That is what we are here to discuss today. This basically goes to the heart of the amendment that has been proposed. As I understand the sponsors of the bill, they say they are not interested in suing employers. Finally, they get down to the other parts of the bill and say, well, there are some instances where employers can be sued if they are directly participating in the decision, for example, to deny coverage, or if they fail to perform any other duty under this act--whatever that might be. Then they go on for 2, 3, or 4 pages in the bill to describe what direct participation means and what it does not mean--leading one to believe right off the bat that it obviously is not crystal clear as to when an employer might be subject to liability. What does direct participation mean? My understanding is that in the front end of the process that has been set up to handle claims under this bill, the internal claims in the initial stage of the game, oftentimes in some of these plans you have representatives of employers involved that would be agents, from a legal standpoint, of the employer involved in the front end of this making decisions on coverage issues. If that is the case, we have built in exposure from the very beginning with regard to this bill. That may or may not be a good thing. But on the issue of whether or not employers are exposed, I think the answer under this bill is undoubtedly yes. Even if they do the right thing, they don't engage in any willful misconduct, do their best, have some of their employees perhaps involved in the initial stage, and it goes on up through the appeals process, the internal appeal and the external review, and you bring in the independent folks and medical people to analyze it and everybody does their best, still at the end of the day they are subject to being sued, as I read the bill as currently drafted. I believe everyone who has any experience either on the giving end or the receiving end of lawsuits in this country realizes that if there is any potential exposure at all for the employer, whether or not he is ultimately found liable after a long trial, perhaps, or a motion to dismiss, or a summary judgment motion, he is going to be sued initially. Why in the world would they sue the HMO, and maybe someone else, for punitive damages, let's say, for gross misconduct, for the medical review, or anyone else in the process, and not bring in the employer to take discovery to see the extent to which he may have directly participated? How much would it cost that employer, who ultimately was exonerated, who didn't do anything wrong? How much would it cost him to buy his way out of that lawsuit, settle his way out of it, or go through the process of a trial and win at the end of the day? That is what employers are faced with--employers who have chosen to set up a medical system to cover these employees to avoid some of these stories we have heard concerning people who are being denied coverage. This is the result at the end of the day. If you are an employer, you have to ask yourself--and we are not talking about General Motors here alone, we are talking about not only large employers, we are talking about small employers. If you are looking at that kind of a possibility, if this bill is passed as it is, where everybody else besides the HMOs are exempted out except them, and you are looking at that kind of expense, what is going to be your natural reaction to that? I am afraid many people are going to opt out. There is no question that health care costs have gone up; they are going up already. We are already in double-digit increases in terms of health care costs in this country. That is the reason we set up managed care. We obviously want the best of both worlds. Health care, once upon a time, was going up astronomically. We said, we can't have health care for everybody on demand, or it will drive us all bankrupt and we will leave a shambles for the next generation. One of the things we did was set up managed care. We talk about managed care now as if it were some kind of evil enterprise. We set it up; Government set it up. We encouraged it in many different ways in order to bring some cost control to the process because we wanted more people to be covered with insurance. So some of the HMOs that engaged in egregious activities got caught doing things they should not have been doing. States responded to much of that. The State of Tennessee has more coverage now for many of these things than the bill that is on the floor does. Most States have their own system they have set up. This bill comes along and totally wipes all that out and says there is only so much the States can do. Tell me what it is that needs to be done that the States can't do if they choose to do it. So now we are at the point--after having gone through the high health costs and the response to that of setting up managed care, the response to managed care abuses by the States--that health costs are now going back up. So what do we do? We come along and nationalize the rest of the system, which, under the most conservative estimates, will throw more than a million people off insurance. More than 1 million people will not have these problems, these terrible situations they find themselves in about choosing hospitals, the nearest hospital, and all that. What hospital are they going to choose if they have no insurance at all? We cannot fool the American people into believing we can always have all of our cake and always eat it all at the same time. There are costs connected with everything. What we are trying to do is achieve a rational balance so people have reasonable protections, reasonable coverage at a cost that is affordable and will not drive people out of the market and leave more and more people uninsured. That is what we are struggling for. In that sense, does it make sense to hold employers who may or may not choose to set up these plans, especially small employers, liable? I am sure some will say: Why not make an employer liable because of some kind of egregious activity? As my friend from Texas said, we can all come up with some kind of potential egregious activity. Suppose an employer called up somebody connected with the plan that he controlled who worked for him, let's say, at the front end of the process when they were processing a claim, and gave them some instructions. It would be a bad thing to do. I could ask the same question with regard to a treating physician. What if a treating physician, because he has not been paid on time or otherwise, was negligent, sloppy, or just angry, decided not to supply all the medical records for his patients to the plan in order for them to properly consider coverage? That would be a deliberate act, too. They have been carved out of this process. One can come up with deliberate acts of misconduct for other entities already carved out because we are not primarily looking at them. We do not want to drive them out of the system or place undue burdens on them. If something such as that happened, the person on the receiving end of the phone call is definitely liable. The HMO would be liable under a situation such as that. As Senator Gramm pointed out, the final decision is not with anyone who is subject to being influenced by an employer. This bill spends 12 pages under the original version setting up this independent review process and qualified external review entity to make sure he is qualified, to make sure he is independent, to make sure he cannot be swayed by anyone, to make sure the Secretary is looking over his shoulder at all times and having to report back to look at statistics to make sure he is not going too far with the employer in too many cases. He is the guy who will be making the final decisions in most of these cases, not someone the employer is going to be able to call up. Incidentally, it raises another interesting question in this bill. It is not directly related to the employer issue, but they will be caught up in it like anyone else. There is an excellent review process that is set up by this bill. It has the internal claims process, and then it has an internal review process. Then it goes to this qualified external review entity, which is set up as I just described--high qualifications, high degree of independence, high degree of supervision. They take a look to decide whether or not there is coverage in this case. We could pass a law that says everybody is covered in every case. That would be the logical extension of some of the rhetoric we hear around here, but everybody knows we cannot do that for obvious reasons. But we have this entity set up to make that decision. If he makes that decision totally objectively, not subject to corruption, then a person can go to court and totally ignore everything that has happened up to that point. Not only is that process I just described not binding, it is not even relevant to the court lawsuit. Let's take it a step further. Let's say this independent reviewer who I just described decides it is a medically reviewable question. This bill sets up an independent medical reviewer, and he or she is independent also. The bill goes to great lengths to make sure this is a qualified medical independent person. It describes how their compensation is set up, it puts in all these safeguards so we know we have somebody who is a qualified professional doing the best he can to make an objective determination on questions such as whether or not this is really an experimental operation for which they are asking coverage, whether or not it is medically appropriate under these circumstances--issues such as that. Then let's say he answers no. So you are going through the internal claims process, the internal appeal process, the qualified external review entity has gone through his process. Then it has been handed over to the independent medical reviewer, and he goes through his process. If it goes through all of that and everybody looking at all the relevant documentation and listening to all the experts concludes there is no coverage, the claimant can still go to Federal court and not only is all this process not binding on the court, it is not even relevant to the court. As best I can tell from this legislation, it is not even admissible. The defendant in that lawsuit cannot even bring in the fact that they spent the last year in this review process with all these independent, objective, qualified experts looking at it. And we won, the defendant says, but then you can set it all aside. Even if we want to subject an HMO to that process because they are all evil, is this a process we want to subject an employer to? Is a small employer going to take a look at that kind of deal and say: This is something of which I want to be a part? We are going to be asking ourselves that question because we can do some good with this legislation and at the same time do some bad through some unintended consequences in a very complex area where people do not sit still when Congress passes broad, sweeping legislation. People react to the laws that are on the books at the time. People look at their own self-interests, and they figure out ways to protect themselves. One of the easiest ways for a small business to protect itself from a process such as that is to get out of it. As I said, as I have seen so far, the most conservative estimate says that, under this bill, over 1 million people will lose their insurance because prices will go up so much further on top of the increases we are already seeing even before this legislation is passed. Medical prices are going to go up even further, and a lot of people are going to say: I do not need this kind of aggravation. Mr. President, I conclude by reiterating what I said in the beginning. This is a very important amendment. We have heard about the salutary effects of the Texas law. Next week I want to talk about lawsuits in Texas. But Texas has been held up as an example, obviously, because that is the President's home State and people get a kick out of using Texas as an example. Let's use it as an example in this case. If the sponsors of this bill really are not interested in targeting employers and including small employers, then why do what Texas did? Let's just carve them out the way we did attending physicians, the way we did hospitals, the way we did partially with qualified external reviewers, the way we did partially with independent medical reviewers, carving them out partially or totally. If we are really not after employers, let's carve them out, too. This is going to be an interesting debate and an important one not only for the future of this legislation, but I think for the future of the country. I yield the floor.

Mr. THOMPSON

Mr. THOMPSON. Mr. President, I rise in support of the nomination of Howard Baker for Ambassador to Japan. I, first of all, compliment my colleague, Senator Frist, for his eloquent remarks which encapsulated Senator Baker's career and his character. It is very gratifying to hear so many favorable remarks about someone whom we hold so dear. This was the case this morning as we had the hearing on Senator Baker. We heard so many from both sides of the aisle--Senator Biden, Senator Byrd--say so many nice things about the Senator. It is a very personal matter to me in many respects. Many years ago, I, with shaky hand, dialed a telephone number in order to return a call from Senator Howard Baker. He had asked me to come up as counsel to the Watergate committee when he served as minority leader of that committee. Today that is the telephone number of my office because I have the privilege of occupying the chair. As I said earlier today, no one will be able to fill the shoes of Howard Baker, but I am privileged to occupy what we call the Howard Baker seat. I am sure others who have held that seat would not begrudge me referring to it in that way. I would probably not be in politics were it not for Howard Baker. I left a job I dearly loved as assistant U.S. attorney many years ago, as a young lawyer, to go and manage middle Tennessee for Howard Baker, as if anyone could manage him, or as if he needed managing. A young lawyer by the name of Lamar Alexander, later to be Governor of Tennessee, came to me and suggested this to me and suggested it to him and put us together. I asked how much the job paid and they said nothing. So with my usual business sense, I said that sounded good to me. I took on the job. Of course, he was the first popularly elected Republican in the history of Tennessee. During Watergate, I had an opportunity that I know no other young man or young lawyer has ever had; that is, to sit at the right hand, literally and figuratively, of a man such as Howard Baker during the most tumultuous time in our generation and in American history. I saw him and the difficulties he encountered. We were dealing with a President of the United States who was a friend of Senator Baker. We were dealing with members of the Cabinet such as John Mitchell, who were friends of Senator Baker. I saw the agony that he went through as he tried to be fair. But he also tried to be steadfast to the Constitution of the United States. He walked that line and he showed the ethical and moral dimensions of his character. He gave an example not only to this young lawyer at the time but to all of America of what it meant to be a statesman. In fact, I think the word ``statesman'' was coined for individuals such as Howard Baker because he demonstrated to all of us that it matters not only what you do but how you do it. It is a great pleasure to see how revered he is by those who served with him, not the least of which, of course, is Senator Byrd of West Virginia, who served as the majority leader when Senator Baker served as minority leader. I heard them talk earlier today. I am looking forward to hearing Senator Byrd again on the floor, but I sat there and thought what two strong men, what two great men, oftentimes disagreeing but working together for the benefit of their country, what an example they set for us doing their job with mutual respect and only one thing in their minds--ultimately, serving their States and their country. Senator Baker said earlier today that essentially, after all is said and done, he is a man of the Senate. Of course, the same could be said of Senator Byrd. I compliment President Bush for making this appointment. Senator Baker--I assume; I have never really talked to him about it--was not an intimate of the Bush campaign, although I know he was a hard worker for it. I assume, looking back on it, that former President Bush and he were somewhat friendly competitors, as they were coming along about the same time. President Bush, the current President, obviously, has the good judgment to reach out and get the best for this most serious appointment. This is a troubled part of the world. It is probably going to create more trouble for us in the years to come. We have a very unusual, ambiguous relationship with the country of China right now, as in many respects China is progressing in terms of its economy and in terms of its economic openness, while at the same time it is increasing its military might and has 300 missiles along its coast pointed toward Taiwan. It, clearly, has designs on being the predominant player in that part of the world, whether it be Taiwan or the South China Sea islands or various other parts of that area of the world. It is extremely important that we maintain the best of relations with our friends and our allies in that area. There is none more important than the country of Japan. Japan is undergoing its own internal changes that at this point we are attempting, while not being an overbearing friend, to be a helpful friend, whether it be with regard to reform of their banking system or the other aspects of their economy, and to go through those tough changes, that we and other countries have had to go through, to get to where they need to get. It is a very delicate time. They are undergoing a change in their leadership right now. For all of these reasons, it is going to take a wise person, a steady hand representing us in that part of the world. Thank goodness we have a man such as Howard Baker to take on that job. We make it very difficult nowadays for people to come in and serve their country. Our nomination process takes too long. It is too intrusive. The rewards oftentimes do not outweigh the benefits. But, thank God, we still have people such as Howard Baker and so many others who are willing to give a portion of their time to serve their country. I am totally content that Senator Baker is going to serve as another in a long line of illustrious predecessors who have held this job and made America proud. America and the world will be better because he has served. I yield the floor.

Mr. THOMPSON

Mr. THOMPSON. Mr. President, I rise today to introduce the ``Citizens' Privacy Commission Act of 2001.'' This legislation will establish an 11-member commission to examine how Federal, State, and local governments collect and use our personal information and to make recommendations to Congress as we consider how to map out government privacy protections for the future. The Citizens' Privacy Commission, whose members will include experts with a diversity of experiences, will look at the spectrum of privacy concerns involving Federal, State, and local government, from protecting citizens' genetic information, to guaranteeing the safe use of Social Security numbers, to ensuring confidentiality to citizens visiting government web sites. As we all know, Americans are increasingly concerned about the potential misuse of their personal information. A variety of measures intended to address the collection, use, and distribution of personal information by the private sector have been introduced in Congress. Recent events, however, suggest that government privacy practices warrant closer scrutiny. For example, details surfaced last summer about the FBI's new e-mail surveillance system--Carnivore. Civil libertarians and Internet users alike continue to question the legitimacy of this ``online wiretapping.'' Also last summer, after the White House Office of National Drug Control Policy was found to be using ``cookies'' on Internet search engines, I requested that GAO investigate Federal agencies' use of these information-collection devices on their own Web sites. GAO only had time to investigate a small sample of Federal agency sites, but they found a number of unauthorized ``cookies,'' including one that was operated by a third-party private company on an agency Web site under an agreement that gave the private company co-ownership of the data collected on visitors to the site. As a follow-up to the GAO investigation, Congressman Jay Inslee and I worked together on an amendment to require all agency Inspectors General to report to Congress on each agency's Internet information- collection practices. Fewer than half of the Inspectors General have completed their investigations, but the preliminary findings are cause for concern. In audits performed this past winter, sixteen Inspectors General identified sixty-four agency Web sites that were violating the privacy policies established by the last Administration by using information-collection devices called ``cookies'' without the required approval. Last fall, Congressmen Armey and Tauzin released a GAO report that revealed that 97 percent of the Web sites of Federal agencies, including the Federal Trade Commission, weren't in compliance with privacy standards that the FTC was advocating for private sector Web sites. On top of all these examples, there is the issue of computer security at Federal agencies, which has been notoriously lax for years. GAO and Federal agency Inspectors General report time and time again that sensitive information on citizens' health and financial records is vulnerable to hackers. Just this spring, GAO issued a report which explained how easily their investigators were able to hack into IRS computers and gain access to citizens' e-filed taxes. Not surprisingly, a recent poll shows that most Americans perceive government as the greatest threat to their personal privacy, above both the media and corporations. Last year, Senator Kohl and I sponsored the Senate companion bill to the Hutchinson-Moran Privacy Commission Act. This bill would have created a commission to study privacy issues in both the government and the private sector. The House bill failed a suspension vote by a narrow margin. There was a lack of consensus on whether a commission was warranted for the private sector issues being deliberated by the Congress. There was no disagreement, however, on the need for a commission to study the government's management of citizens' personal privacy. Many privacy advocates believe that the Privacy Act of 1974 and other laws addressing government privacy practices need to be updated, but we need a better understanding of the extent of the problem and of what exactly needs to be done. Federal, State, and local governments collect, use, and distribute a large quantity of personal information for legitimate purposes. Yet because governments operate under different incentives and under a different legal relationship than the private sector, they may pose unique privacy problems. Unlike businesses, governments collect personal information under the force of law. Furthermore, governments do not face the market incentives that can discourage information collection or sharing. With the power and authority of government and the breadth of information it collects comes the potential for mistakes or abuse. The risk of privacy violations could also threaten to undermine the public's confidence in e-Government, our effort to make government more accessible and responsive to citizens through the Internet. In fact, according to a recent Pew Internet and American Life report, only 31 percent of Americans say they trust the government to do the right thing most of the time or all of the time. The last Federal privacy commission operated over 25 years ago, from 1975 to 1977. Since then, there have been enormous leaps in technology. Today, a few keystrokes on a computer hooked up to the Internet can produce a quantity of information that was unimaginable in 1975. The question we must answer today is the same question Congress addressed in 1975: ``How can government achieve the correct balance between protecting personal privacy and allowing appropriate uses of information?'' The technological advances and other changes that have occurred since the 1970's, however, demand a reevaluation of the government privacy protections that we currently have in place. While we have passed laws laying out a framework for the Federal government, it is time to reassess the laws designed to safeguard citizens' privacy in light of the current state of technology. The Citizens' Privacy Commission will help us find the balance between protecting the privacy of individuals and permitting specific and appropriate uses of personal information for legitimate and necessary government purposes. The Commission will be directed to study a wide variety of issues relating to personal privacy and the government, including the collection, use, and distribution of personal information by Federal, State, and local governments, as well as current legislative and regulatory efforts to respond to privacy problems in the government. In the course of its examination of these issues, the Commission will also be required to hold at least three field hearings around the country and to set up a Web site to facilitate public participation and public comment. After 18 months of study, the Commission will submit a report to Congress on its findings, including any recommendations for legislation to reform or augment current laws. The Commission's report will be available for consideration by the next Congress. It is my hope that we all can work together to pass the Citizens' Privacy Commission Act of 2001 to help us make informed and thoughtful decisions to protect the privacy of the American people. I would like to thank Senator Kohl, who has worked with me on a privacy commission bill for some time, as well as Senators Voinovich, Levin, Thurmond, Collins, and Fitzgerald for joining us as cosponsors. I urge my colleagues to support this important legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. THOMPSON

Mr. THOMPSON. Mr. President, I rise today to introduce the ``Citizens' Privacy Commission Act of 2001.'' This legislation will establish an 11-member commission to examine how Federal, State, and local governments collect and use our personal information and to make recommendations to Congress as we consider how to map out government privacy protections for the future. The Citizens' Privacy Commission, whose members will include experts with a diversity of experiences, will look at the spectrum of privacy concerns involving Federal, State, and local government, from protecting citizens' genetic information, to guaranteeing the safe use of Social Security numbers, to ensuring confidentiality to citizens visiting government web sites. As we all know, Americans are increasingly concerned about the potential misuse of their personal information. A variety of measures intended to address the collection, use, and distribution of personal information by the private sector have been introduced in Congress. Recent events, however, suggest that government privacy practices warrant closer scrutiny. For example, details surfaced last summer about the FBI's new e-mail surveillance system--Carnivore. Civil libertarians and Internet users alike continue to question the legitimacy of this ``online wiretapping.'' Also last summer, after the White House Office of National Drug Control Policy was found to be using ``cookies'' on Internet search engines, I requested that GAO investigate Federal agencies' use of these information-collection devices on their own Web sites. GAO only had time to investigate a small sample of Federal agency sites, but they found a number of unauthorized ``cookies,'' including one that was operated by a third-party private company on an agency Web site under an agreement that gave the private company co-ownership of the data collected on visitors to the site. As a follow-up to the GAO investigation, Congressman Jay Inslee and I worked together on an amendment to require all agency Inspectors General to report to Congress on each agency's Internet information- collection practices. Fewer than half of the Inspectors General have completed their investigations, but the preliminary findings are cause for concern. In audits performed this past winter, sixteen Inspectors General identified sixty-four agency Web sites that were violating the privacy policies established by the last Administration by using information-collection devices called ``cookies'' without the required approval. Last fall, Congressmen Armey and Tauzin released a GAO report that revealed that 97 percent of the Web sites of Federal agencies, including the Federal Trade Commission, weren't in compliance with privacy standards that the FTC was advocating for private sector Web sites. On top of all these examples, there is the issue of computer security at Federal agencies, which has been notoriously lax for years. GAO and Federal agency Inspectors General report time and time again that sensitive information on citizens' health and financial records is vulnerable to hackers. Just this spring, GAO issued a report which explained how easily their investigators were able to hack into IRS computers and gain access to citizens' e-filed taxes. Not surprisingly, a recent poll shows that most Americans perceive government as the greatest threat to their personal privacy, above both the media and corporations. Last year, Senator Kohl and I sponsored the Senate companion bill to the Hutchinson-Moran Privacy Commission Act. This bill would have created a commission to study privacy issues in both the government and the private sector. The House bill failed a suspension vote by a narrow margin. There was a lack of consensus on whether a commission was warranted for the private sector issues being deliberated by the Congress. There was no disagreement, however, on the need for a commission to study the government's management of citizens' personal privacy. Many privacy advocates believe that the Privacy Act of 1974 and other laws addressing government privacy practices need to be updated, but we need a better understanding of the extent of the problem and of what exactly needs to be done. Federal, State, and local governments collect, use, and distribute a large quantity of personal information for legitimate purposes. Yet because governments operate under different incentives and under a different legal relationship than the private sector, they may pose unique privacy problems. Unlike businesses, governments collect personal information under the force of law. Furthermore, governments do not face the market incentives that can discourage information collection or sharing. With the power and authority of government and the breadth of information it collects comes the potential for mistakes or abuse. The risk of privacy violations could also threaten to undermine the public's confidence in e-Government, our effort to make government more accessible and responsive to citizens through the Internet. In fact, according to a recent Pew Internet and American Life report, only 31 percent of Americans say they trust the government to do the right thing most of the time or all of the time. The last Federal privacy commission operated over 25 years ago, from 1975 to 1977. Since then, there have been enormous leaps in technology. Today, a few keystrokes on a computer hooked up to the Internet can produce a quantity of information that was unimaginable in 1975. The question we must answer today is the same question Congress addressed in 1975: ``How can government achieve the correct balance between protecting personal privacy and allowing appropriate uses of information?'' The technological advances and other changes that have occurred since the 1970's, however, demand a reevaluation of the government privacy protections that we currently have in place. While we have passed laws laying out a framework for the Federal government, it is time to reassess the laws designed to safeguard citizens' privacy in light of the current state of technology. The Citizens' Privacy Commission will help us find the balance between protecting the privacy of individuals and permitting specific and appropriate uses of personal information for legitimate and necessary government purposes. The Commission will be directed to study a wide variety of issues relating to personal privacy and the government, including the collection, use, and distribution of personal information by Federal, State, and local governments, as well as current legislative and regulatory efforts to respond to privacy problems in the government. In the course of its examination of these issues, the Commission will also be required to hold at least three field hearings around the country and to set up a Web site to facilitate public participation and public comment. After 18 months of study, the Commission will submit a report to Congress on its findings, including any recommendations for legislation to reform or augment current laws. The Commission's report will be available for consideration by the next Congress. It is my hope that we all can work together to pass the Citizens' Privacy Commission Act of 2001 to help us make informed and thoughtful decisions to protect the privacy of the American people. I would like to thank Senator Kohl, who has worked with me on a privacy commission bill for some time, as well as Senators Voinovich, Levin, Thurmond, Collins, and Fitzgerald for joining us as cosponsors. I urge my colleagues to support this important legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.