Health Care Reform
Floor Speech
BREAK IN TRANSCRIPT
Mr. FLEMING. Sure. I thank the gentleman, Dr. Cassidy, my colleague from Louisiana for doing a Special Order today, an opportunity to speak on that very subject. Yes. What you're referring to is a case in which my companies, my nonmedical companies, seeing health care premiums rising an average of 10 to 15 percent per year, we found that to be an unsustainable increase. And we began to analyze what are the choices, what are the options. Maybe we would pay less of the premiums, perhaps we would just stop insurance all together. We really weren't sure what we could do.
And then I recall something that at that time was a brand new concept, and that is a health savings account, where you lift the deductible of the policy to a higher level, saving a premium cost, but then, in turn, put the incremental increase that comes up to what the premium would be into a health savings account. So we began that about 6 years ago. We brought the deductible up to about $3,000. And employees would get as much as $50 a month put into their health savings accounts where they could purchase any health care service or item they needed, pretax.
In explaining this to my employees, however, as we gathered together, I wanted to make sure everyone was on the same page. I suggested to them that this was the way we probably would want to go, but I wanted to get the input as to what their concerns might be.
We had a lady who said, ``Well, you know, the problem with this is my inhalers. If I have to pay for them out of my pocket or my health savings account each month, it is going to cost me $100, maybe $150 a month. And true enough, this would come out of my health savings account, but I don't know that my health savings account would be able to withstand that.''
So I said to her, ``Well, let's think this through. Perhaps you should consider doing a smoking cessation program, stop smoking altogether. You could throw away all of your inhalers; you would save money on the cigarettes; you would save money on the money accumulating in your health savings account.''
Mr. CASSIDY. If the gentleman will yield.
Mr. FLEMING. Sure.
Mr. CASSIDY. By connecting her with costs, if you will, you are incentivizing a healthy lifestyle.
Mr. FLEMING. Basically, you're absolutely right, Dr. Cassidy. What we are really doing is saving her money and saving her life because there is no question there is direct correlation, an inverse correlation, between the use of tobacco and health. By the same context, if you stop smoking, then life span increases.
So we found in very real terms that it saved premium costs--both to the employer and to the patient--by instilling the health savings account and attaching behavior with costs. And even today, we received notice on our most recent new policy for the coming year. The increase was 3 1/2 percent, which is really amazing when it comes to health insurance policies.
Mr. CASSIDY. If the gentleman will yield.
You said that all of your employees in your group are on health savings accounts now?
Mr. FLEMING. Yes.
Mr. CASSIDY. We sometimes hear that health savings accounts are only for the wealthy, yet you've heard me quote that study that found that 27 percent of people with HSAs and catastrophic policies were previously uninsured.
And so as I know--and I'll yield back now--your business is a service business so I assume that people are of moderate income, and yet this is the policy that they have all chosen. So unless you tell me that all of these folks are wealthy, I will assume indeed this is something that works for middle America.
Mr. FLEMING. This is a fast food business. It's a steep pyramid which means you have a wide base of entry-level employees and then middle management and then just a few high-income folks. Remember, the employer is putting the money into the health savings account. That doesn't mean that the patient or employee can't also put some money in, but the lion's share was put in by us. And now after 6 years or so, those who have taken good care of their health and not wasted the health care dollars now have saved as much as $15- to $20,000 in their family health savings account which is triple, if not quadruple, what the deductible is on their health policy.
Mr. CASSIDY. So what you've told me is that families have been incentivized to be wise with their health care dollars, and at the end of every year, instead of losing that dollar, it rolls over and it accumulates. Now they put that much less money for the following year. For those particular families, their cost of insurance, if you will, is decreasing annually, I would assume.
Mr. FLEMING. Of course the premiums stay even. But what happens is the cash accumulates and it accumulates to the point where there is essentially no deductible, no copayment. Whatever health care needs you have, there is always plenty of money in the bank.
What's also interesting is for whatever reason you get out of that plan and went to something else--let's say you hit 65, you went to Medicare; let's say you just decided you didn't want to have insurance anymore, whatever reason--you still keep that money. It is still there for you for health care needs. And you can use it indefinitely no matter what other health plan you might be on.
Mr. CASSIDY. If I can contrast your patient-centered approach where you put the patient responsible, the person most responsible--the patient, your employee--in charge of the dollars she would spend for her health care and in so doing she responded in rational economic way. She didn't want to spend money on inhalers so she stopped smoking, so therefore she stopped needing inhalers and the whole system saved money.
Contrast that with the bill that we passed a week ago in which now there is going to be a tax on health savings accounts.
So the example I gave, if I may continue, is where the patient asked for an over-the-counter generic instead of the prescription medicine knowing that the one was as good as the other, and one costs $20, one cost $39, and yet now by the bill that was passed by our colleagues on the Democratic side of the aisle, we are now going to tax the purchase of over-the-counter medicines when that purchase is made with a health savings account. It seems like we're going backwards in terms of incentivizing people to use less costly drugs.
I yield to the gentleman.
Mr. FLEMING. Congressman Cassidy, I have looked at this for many years in terms of being a family physician figuring out how to get the best cost care to a patient delivered--and I am sure you have in your specialist role--but also as a business. And I have concluded over the years there are only two ways to control costs in a health care system: either you do as we just discussed, you have the doctor and the patient have a stake in the cost controls for themselves or at least particularly for the patient, in which case as a dividend; you have cost savings throughout the system; or you create a giant, highly bureaucratic system that engineers, micromanages life behaviors from top to bottom
in which there is no connection between a patient and his or her behavior--or cost, for that matter--and for that system to be effective--because we see an exponential growth in consumer purchase behavior--and the infinite desire for value coming out of the system, whoever is putting the money in it, we as consumers always want to get as much out of a system as we can, especially when we are not putting anything into it.
When you have that scenario, then it puts an intense demand on the controlling entity which in this case is the Federal Government. It puts an intense pressure and burden to figure out ways of controlling costs, and there is only one way at that point to do it: that is long lines and rationing. That is the only way any system of that size has been able to control costs.
Mr. CASSIDY. Now, on the other hand--let's be fair to this bill--it does attempt to pay for its exploding costs.
Before you walked in, I mentioned the Centers for Medicare and Medicaid Services found that the bill that was passed--although 39 Democrats joined Republicans in opposing it, it still passed on basically a party-line vote--that because of that bill, health care spending will increase to 21.3 percent of our GDP compared to current law; 20.8 percent would be under current law. And bending the cost curve the wrong way, if you will, or bending the cost curve up, we are yanking on that thing. But on the other hand, they do attempt to pay for it.
If the gentleman will allow me to go forward. They are creating $730 billion in tax hikes. Some people have called this a tax bill disguised as a health care bill: $460 billion tax on small businesses and high earners; $135 billion employer-mandate tax; $33 billion individual mandate tax. You mentioned how you are a small businessman as well as a physician.
I am going to yield to you and ask you if you can comment on how these taxes would affect you as a small business person.
Mr. FLEMING. It would have a tremendous negative impact. First of all, if for whatever reason--let me back up a second.
This health care bill provides that whether it is a public option, a government-run insurance, or whether it's a private insurance plan, they all have to go through an exchange and meet certain minimum requirements and certifications. Every constituency out there is going to be knocking on our doors in Washington wanting their aroma therapies, their massage therapies, and everything else which is going to make the minimum requirements go up and, therefore, the cost.
I, as a small business owner, when I am having to decide about purchasing these required minimums and mandates, at some point I may say I can't afford it, in which case I will have to opt out of the health care plan but I will still have to pay an 8 percent of payroll tax or up to 8 percent payroll tax.
So even not covering my employees will lead to higher costs. And as soon as my costs go up, my profits go down, my ability to sustain business will fade, and the first thing I will have to do is lay people off or certainly not hire people.
Mr. CASSIDY. So lay people off. It is projected, I see, using the methodology of the White House Council on Economic Advisors, that the tax hike, $730 billion in tax hikes to address this cost--which, by the way, inadequately addresses it--would kill 5.5 million American jobs.
Mr. FLEMING. If the gentleman would yield for one other point on that.
The taxes on the business doesn't stop there. With the Bush tax cuts expiring very soon, the marginal tax rates will go up from 35 to 39 percent and then this bill provides for another excise tax of over 5 percent. So marginal tax rates on small business owners will increase from 35 percent to 45 percent plus the 8 percent that we talked about, taxes that will occur on payroll even if the employer does not have or are able to purchase health care insurance.
So just an explosion of costs without any return on investment. And therefore, the business owner, in order to remain competitive, will have to reduce his workforce.
Mr. CASSIDY. So there's mandates on businesses and individuals, there is a loss of freedom; there's $730 billion in new taxes, and there's 5.5 million American jobs lost.
Mr. FLEMING. Yes.
Mr. CASSIDY. That is a trifecta of disaster.
Mr. FLEMING. Absolutely.
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Mr. FLEMING. I want to add that apparently Puerto Rico and, I believe, Guam or Northern Mariana Islands had the 99th District, which I don't think they have but one district, but they are already up to 99th District with all of the jobs, the fake jobs, the artificial jobs that were created.
There is really, again, a two-tiered approach to increasing aspects to care. One is to do what this bill that just passed does, and that is to say we are going to cover as many people as we can and we will worry about costs later on. Another would be to attack cost first, create a more efficient system, such as we talked about a little earlier, and then organically you are able to cover more people because there is more money to go around.
So I really am concerned that we have started off in the wrong direction here. Of course, the Senate has some kind of bill, although we haven't seen the details of it from the majority leader, but I think it still attacks this whole problem in a sort of government takeover way.
If you look at the statistics, Mr. Speaker, what you find is that the American people oppose, and it depends on which poll you look at, but either by a slim margin or by a large margin, they oppose the government takeover of health care. The American people get it. Republicans in the House and in the Senate get it, so why can't the White House and the Democrats in Congress get that government has never proven to run anything well when it comes to a business-like, cost-effective, and efficient manner. So why are we going to take over one-sixth of the economy and do just that?
Mr. CASSIDY. I think that was the message from the town hall meetings in August. In August, the people spoke. They came out in droves to say we want reform, but we want reform that doesn't concentrate power in Washington, DC, doesn't raise taxes by $737 billion and still does not do enough to control costs, doesn't kill 5.5 million jobs. No, we want something which you and I would call patient centered, something which recognizes there is a heck of a lot of money in the system now. If we just create the economic model in which people are incentivized, as your employee was, to live a healthier lifestyle, thereby saving her and the system money, thereby saving small businesses money, we can accomplish something.
So I think the American people spoke loudly and clearly in August. The only question is will they be heard.
I will compliment my Democratic colleagues. Thirty-nine of them heard and joined with Republicans voting against this bill which sacrifices personal freedom, which increases taxes by $737 billion, which is estimated to cost 5.5 million jobs and still does not control costs. So I think the American people are, frankly, where you and I are.
Mr. FLEMING. We covered the cost that is going to occur to small businesses and to individuals, perhaps those who opt out of insurance, having to pay 2.5 percent of their adjusted gross income or a $250,000 fine or 5 years in prison. But what about the States? You know, the States, Mr. Speaker, cannot have legal counterfeiting of money the way we in Congress do. They can't create a currency that doesn't exist. And all of a sudden we have a mandate by increasing Medicaid from 100 percent of poverty to 150 percent of poverty.
Mr. CASSIDY. Reclaiming my time, just for those watching who are not familiar with Medicaid, Medicaid is the program where States put up some money and the Federal Government puts up other money and it covers the poor. Right now in many States they are either having to raise taxes to cover the cost of it or cut back services to the poor. And yet what this bill does is says that you shall, the States shall increase the percent of their population that they are paying for medical services with Medicaid. The Federal Government will pay for a portion of that, but not all, and the State taxpayer has to pay the rest.
In our State, Louisiana, it is estimated that will cost $610 million extra State dollars that will come out of roads and highways and schools. I think Schwarzenegger in California said $6 billion for California.
Mr. FLEMING. Yes, and that money is not going to come off the backs of our children and grandchildren as it does here in Washington. That is going to come directly out of taxpayer pockets. That is going to be roads that aren't going to be built, bridges that aren't
going to be built, projects that aren't going to go forward, things that would stimulate job production. That is money sucked out of the economy.
And remember, as you expand Medicaid to higher and higher income levels, you are pulling people off of private insurance where premiums are being paid by employers and the families, to some extent. You are pulling them into Medicaid which is now 100 percent government paid for. And again, we are concentrating power in the government and cost on top of the taxpayer, really a terrible combination of things in an era where we are looking at pushing above a $12 trillion limit where our deficit spending has quadrupled within 1 year, where even the Chinese who lend us the money we live off, our credit card, if you will, have become terrified of our spending as well. I don't know where this ends, Mr. Speaker.
Mr. CASSIDY. I think people back home are concerned that in this Chamber we are too partisan. That is why I am trying to make it a point to not speak from a Republican viewpoint, but to quote The Washington Post and The New York Times, which says that this bill does not do enough to control costs. To quote the Centers for Medicare & Medicaid Services, which is a Federal agency: In aggregate, we estimate that for the calendar years 2010 through 2019, national health expenditures will increase by almost $290 billion.
Most of the provisions in H.R. 3962 that were designed in part to reduce the rate of growth and health care costs would have relatively small savings.
Again, some of my colleagues, Democrats, said: I fear this bill will not reduce long-term costs and our debt and deficits will suffer and balloon in the years ahead.
Another Democrat colleague: My primary concerns have been that the legislation does little to bring down out-of-control health care costs, which is what burdens families and small businesses and also leads to our skyrocketing budget deficits.
The Congressional Budget Office, an independent agency, says that the cost has grown at about 8 percent per year, which more than doubles cost. If you compound 8 percent per year, when the President says the cost of doing nothing is that the cost will double, in this case the cost of doing this something, costs will more than double, according to the Congressional Budget Office.
On balance, during the decade following the 10-year period, the bill would increase Federal outlays for health care and the Federal budgetary commitment to health care relative to the current amount. That does not include the State dollars that we have been referring to.
Mr. FLEMING. What we are talking about may sound theoretical, but we actually have a model by which, on a much more microscopic level--we actually have many, but one that I think is the best is Medicare itself. Medicare is a government-run health care program. Those who are served by it like it, but there is a good reason why they like it, because they get a lot more out of it than what they actually put into it. It is heavily subsidized in different ways. It is running out of money. I believe the estimate today is that it will be completely out of money in 8 years. The cost today, the annual cost of Medicare is exponentially greater, magnitudes greater than the estimates ever were in the past. It has always run much higher in cost than was ever predicted. And yet, we somehow think we are going to be able to take a much larger health care system controlled by a much larger governmental set of agencies, 111 new bureaucracies and mandates, and that what we couldn't do with a much smaller system that was a lot less complex, somehow we are going to miraculously do with a much bigger, more costly system. And even if it didn't, we don't have the money as it is. We are living on our future, our descendants, if you will. We are living off their dime at this point.
Mr. CASSIDY. We have spoken about the irony, about how the bill we have to pass in order to control costs is more expensive than status quo. We spoke about the irony about the bill we had to pass to rescue jobs will cost 5.5 million American jobs.
There is another irony here. Medicare, a great program but going bankrupt in 7 years, according to the folks that run it; Medicaid, another Federal program which is bankrupting States, is now going to be rescued by a third public program which is based upon the one and expands the other. So two going bankrupt or bankrupting will be saved by a third which builds upon those first two.
To go back to Scripture, you are building a house upon a foundation of sand. In this case, it is a fiscal foundation of sand which should concern us, as it concerns newspapers like the Post and the Times which wonder if it does enough to control costs.
Mr. FLEMING. It is clear that all of these things--Medicare that exists today, running out of money; Social Security that exists today, running out of money; Medicaid already out of money and bankrupting States; jobs, killing jobs, and jobs are what keep our current health plans in place; $13 trillion in debt and rising--many, many dollars spent right here in this House that we have absolutely no way of paying for, and we see a confluence of events here, costs that are coming rapidly together that very quickly just the interest alone will begin to squeeze out all of the other services that we look to government to help us with, like common defense.
What are we going to do when we don't have the money to protect our country both internally and externally? What are we going to do when we don't have money for some of the programs that we use as kind of a safety net for Americans today who don't make enough to live off of, or used to be employed but became unemployed because of our spending? What are we going to do? We have to change direction.
I just spoke at a TEA party this weekend, and people are absolutely--they are past angry. They are actually terrified at this point.
You mentioned, Dr. Cassidy, this summer, all of the town halls, and of course TEA parties have sprung up during that period of time. I think we have to look at that as sort of the canary in the mine shaft. That is the early warning sign that the citizenry out there is fed up with the irresponsible spending that we are doing here. It is time we begin to look at reinstating individual choice and individual freedom rather than the government controlling and micromanaging our individual lives and taking our own money away from us to give back to us in order to control us.
Mr. CASSIDY. I think the point just hit upon, we all want reform and we know the goals of reform are to control cost and to expand access to quality care.
Now, there are some who think that to do that you have to sacrifice freedoms, you have to raise taxes, kill jobs and still not control costs.
But you and I know from our practice and our life experience that you can do it differently. You can actually increase freedom by giving that person the ability to control her account that she can use to spend or not spend, to seek value. In so doing, you lower the administrative costs. You kind of cut the insurance company out of the deal because now she has her own account, and she doesn't have to submit a payment claim. She just pays for it with a debit card.
You can control costs in a patient-centered way, one that incentivizes a healthy lifestyle. And in so doing, the patient becomes healthier; and by becoming healthier, you control costs, not by 111 different bureaucracies, boards, and commissions. It stays with conservative values of individual responsibility, limited government, and free enterprise. It actually works in this segment of our economy as it does in every other segment.
I yield.
Mr. FLEMING. I thank the gentleman. I absolutely agree. And, again, it looks like, from what you've presented today, The New York Times, The Washington Post, and I read today from Reuters, and CMS just came out--all of these groups, very nonpartisan in many cases, and certainly no one can say that The New York Times is a Republican or even conservative publication--all of these groups, these publications, these boards, editors are coming out with great anxiety over the cost of this.
And you might say, well, why are they complaining after the fact? Well, remember that we debated for weeks on H.R. 3200, but we only had 1 day really to vote on H.R. 3962, which really doubled in size and doubled the number of bureaucracies virtually overnight. And I think now that all the celebration is over in the House, we may have a little hangover going forward.
Mr. CASSIDY. I think that people are waking up. Again, if we're going to achieve our goals of reform for all, health care accessible and at affordable costs, you can't have it with a program which drives up costs and drives up costs despite the high taxes and the loss of jobs. So we're not through yet. The American people still have time to weigh in on this, to weigh in as the bill goes through the Senate side and then comes back to conference.
But what I challenge the American people to do is to do as they did in August, to contact those Representatives that voted for this bill and express their concern regarding the cost, the taxes, the loss of jobs, but also to contact their Senators and to say that they want reform, but they want reform that doesn't kill jobs, raise taxes, or deprive us of personal freedom. I think in that way we can have a bill which serves the American people without sacrificing our values.
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