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SEN. BURR: Good morning. I'm Richard Burr from North Carolina. I'm joined today with my good friend and colleague, Tom Coburn from Oklahoma, with Congressman Nunes from California and Congressman Ryan from Wisconsin.
We're here to, I guess, be the first to launch the specifics of health care reform. I think what you will hear today is the boldest approach to health care in decades in the United States.
In simplistic terms, our plan will transform health care from a U.S. health care system that triggers when people get sick, to a health care system that embraces and incentives prevention, wellness and disease management. Those are three words you're going to hear when anybody discusses health care reform this year. But few will meet the test of actually constructing a health care model that puts the incentives in prevention, wellness and disease management.
Those members that are here today and we've been joined by Lamar Alexander, my colleague from Tennessee. Those pieces of health care, prevention, wellness and disease management are absolutely essential if we're to reduce the overall cost of health care in the United States. But in achieving true prevention, wellness and disease management, we also increase the health of the American people.
We provide incentives through private insurance that allow individuals to make healthy choices, to get the treatments when they need them and where they want them.
It embraces employer-based health care. It embraces private marketplaces and it allows individuals to not be discriminated as they are today with large group pools.
Our plan attempts to bring more people under the coverage umbrella in private insurance, therefore, spreading the risk amongst many more Americans.
Last Friday, we sent a letter to our nation's governors. We shared with them the introduction of this plan. We also made it very clear to them that this plan would present them an option, an option of folding their Medicaid population into this private sector plan.
The first real opportunity that states' governors have had to get out of the health care business, to allow the pool of insured in this country to grow and to allow those companies that are now incentified to actually be able to treat the Medicaid population without a Medicaid "M" on their forehead.
We're chasing primary care out of emergency rooms and we're creating a medical home for every American. We're setting up the avenues so that education can be done on disease management. We're also opening for Medicaid patients a new group of providers, those that refuse to take Medicaid beneficiaries before because the reimbursements were so low.
This will be a whole new world towards the quality of life for any Medicaid beneficiaries that are in states where governors choose to include them in this plan.
With me today as I said, I'm going to turn the podium over to Paul Ryan who is going to get into some more specifics about the bill.
REP. RYAN: Thanks, Senator Burr. Good morning.
What we are doing here today is we are showing that America can have a system of universal health care access without the government running it. The Patient Choice Act shows how to give all Americans access to affordable coverage where the patients and doctors are in charge, not the government.
The current tax treatment of health care, which is a relic of World War II, discriminates against the self-employed, against the unemployed and against those people who do not get health coverage at their jobs. This may have worked in America when everybody had the same job throughout their lives and throughout their careers. That's not the America we have today. A lot of people change their jobs, so the tax benefit should change and go with them and not be attached to their jobs. We want to address job lock.
So the key question that ought to be addressed in any health care reform legislation is: Are we going to continue job lock or are we going to allow individuals more choice and portability to fit the 21st century workforce?
We propose to equalize the tax treatment of health care, giving every American, regardless of employment status, the ability to purchase health insurance and if you like what you've got, you can keep it. If you like what you have at your job, you can keep it and apply your tax benefit to that. This will result for a vast majority of Americans a net tax cut.
We propose to replace this discriminatory tax exclusion with advanceable, refundable tax credit of $2,300 per individual and $5,700 per family. It's a concept that was previously championed by top economic advisers in the Obama administration.
The Patient Choice Act transforms our broken health care system. With perverse incentives and skyrocketing costs into a vibrant health care market where individuals and families reclaim ownership of their coverage and ownership of their health care decisions.
As I mentioned, if you like what you've got, you can keep it and you'll probably end up with more money in your pocket at the end of the day. For non-taxpayers, for those whom the credit is advanceable and refundable, we provide a credit in the same amount, but the funding for the credit is generated by savings and entitlement programs. On top of that, Medicaid and SCHIP populations will get additional assistance to cover out-of-pocket costs. This removes the stigma associated with second-class health care that the Medicaid population is experiencing today.
Right now, those folks on Medicaid are going into the doctor's office and being denied. They are going through health care with a second-class system. We want to give them the dignity of private health insurance that everybody else in America is enjoying and that everybody should enjoy in America.
Medicaid families would get the same $5,700 tax credit available to the rest of the population in addition to a supplemental card with up to $5,000, so up to $10,700 for low-income families to pay for health care coverage. The ongoing debate with taxes in health care represents a clear difference between the two approaches here in Washington.
The president and the Democrats discuss tax reform as a means to get greater revenues into Washington with the idea that the federal government knows best. Their government-centric approach will require massive tax increases, seeking to chase ever-higher spending with ever-higher taxes.
We believe in a patient-centered model and we remain firmly committed to directing the resources and the decision-making power with individuals. You see, we already spend twice as much per person on health care in America than all of the other industrialized countries.
The answer is not a massive new tax increase and massive new spending programs. The answer is to take the money we're already spending and spend it far more efficiently, far more effectively, to reflect the dynamics of the 21st century so that the center of this system is not politicians and bureaucrats making the decisions, the center of this system is patients and their doctors making the decisions.
At this time, I'd like to turn it over to my colleague from the House, Congressman Nunes.
REP. NUNES: Thank you, Paul.
I want to talk a little bit about how do we achieve this access? And I want to make three important points. The first point is, if you like your health care, nothing changes for you, you keep what you have. The second point is that we create state exchanges. So every state will have the ability to create an exchange where there will be an 800 number and there will be an Internet-accessible tool where you will have basic plans put on the state exchange. You still would have the ability to go out into the open market, but at the same time, you would have the ability to go on the exchange and this gets to the point of how are you going to make people aware because only ten percent of the people in this country today actually go out and choose their own health care. Everyone else has health care that's either provided by their jobs or they're on Medicare or Medicaid or some other type of government program.
And so what we are doing is we are creating easy access, easy accessibility for all Americans to access this as this plan would be enacted. And let me make the third point and I want to use a real life example of how Americans would be treated under this plan. If you are a single mother of three and you're making $16,000 a year, today, essentially, you're on Medicaid and you go to the county clinic. What this plan does is we do away with that. We do away with that. This is very powerful. You will have $11,000 to go out and choose your own plan just like I choose, just like anyone in this audience can choose, you have $11,000 to do that.
So for the first time in this country, we will empower the American people, the single mother of three out there to have access to her own doctor and her own health care coverage and I think that's a powerful statement. All the other plans that you're going to see out here today are going to be introduced in the next month will not do that. They're going to add more fuel to the fire. They're going to put more people in the county health clinics. That's not what we want to do and that's what we want to change and that's why I think this is a very powerful and innovative solution to our country's health care problems.
And with that, one of the authorities on health care, authority, another authority other than Senator Coburn, Senator Alexander, thank you for coming.
SEN. ALEXANDER: Thank you very much.
I'm here today as Chairman of the Senate Republican Conference to congratulate Senator Burr and Senator Coburn and Congressmen Ryan and Nunes on their vision for creating a health care plan that's worthy of the party of Abraham Lincoln. Abraham Lincoln used a limited government to confer opportunity and his time that meant a Homestead Act, that meant a legislation to create the land grant colleges of America, it meant a transcontinental railroad.
In our time, it means giving Americans, number one, the ability to afford their health insurance, every single American. It also means a guarantee that the patient, the American, makes the decision, not Washington, DC. That means that each of us would have a right to choose our own doctor. Each of us would have a right not to wait for tests for weeks and each of us would have a right in the end with our doctor to make decisions about our own treatment.
This is an imaginative proposal. It deserves serious consideration. It is patient-centered, not Washington-centered. In the spirit of Lincoln, it confers opportunity. It is not a command and control Washington decision. It has attracted my support and co- sponsorship. I predict it will attract the support of many Republican Senators and I believe it is powerful enough that many of its ideas will attract the support of Democratic Senators as well.
So I congratulate the sponsors for their hard work.
SEN. COBURN: Thank you. I'm Tom Coburn from Oklahoma.
I am a practicing physician and still get to do that, and I would remind you that health care is about people, not programs and if you look at where we are today in terms of the programs that we have for health care, the ones that are failing the most are the ones that are run by the government, whether it's VA care or Indian health care or Medicaid and certain aspects of Medicare.
So the focus has to be on individuals and it has to be on how we enhance individuals to make great choices for themselves and getting the freedom to do that.
We believe we've done that. We looked at what the private sector was doing. If you go look at Safeway and the self-insured, how did they incentivize prevention in health care and chronic disease management? How did they have only a half of one percent increase over the last four years in their health care versus others that have not incentivized those things?
So the potential of taking good ideas that are out there and making those available through access to everybody in this country in a way that's fair, that keeps the decision between the individual and their doctor, no one standing in between of that. Because it is about people.
Number two, we looked at and we considered what happened when we set up a system for Medicare Part D where we had real competition among insurance products and real innovation in insurance products and what happened is the cost came in 40 percent below what we thought there would be even this year, they are 40 percent below what we thought they would be.
So the fact is we know real competition with individuals will drive that, and we believe that we have the start and the framework for an answer. It is bold. We admit that. But we know that health care isn't what it should be in this country, even if you are insured, it isn't what it should be. And so the goal is to make sure everybody has an accessible coverage with their own choice reserved on a timely basis because delaying your time for access is the same thing as not treating it. You have time to buy a new car. You don't have time to treat a heart attack. You don't have time to treat that cancer. It needs to be available and accessible on a timely basis.
So my hope is that we will create enough inquiry that some of these ideas will be utilized, and perhaps this will be utilized.
There's a lot of details of this plan that has to be -- this is a complex area for our country, but we recognize that there has to be some change. We would be happy to take your question.
Q (Off mike.)
SEN. COBURN: Well, we've already started with some of the former governors in terms of letting them see the Medicaid plan, in terms of rolling people over, you know, if you think about the $1.3 trillion that this plan saves -- $960 billion for the states over the next ten years, where states are in such a difficult deal, it's an interesting prospect to say that we can cover all these people and save money and do it at a lower cost than what we're spending today, plus give them much better care.
So we have already approached several of the members on the Democratic Party in the Senate in terms that have previous experience as governors, so let them look at this aspect of the plan and we will be working hard to try to get everyone to consider.
We don't know who is going to agree with us or not, but what everybody agrees is we need to make major changes in health care in this country and the track record of the government doing it isn't very well. We don't have a good track record and so maybe we ought to use what's working well out there and make sure everybody has access to it, and that's what we're trying to do.
Q (Off mike) -- are you at loggerheads?
SEN. COBURN: I can't answer that; maybe some of the guys from the House can answer that.
REP. RYAN: We're going to have many ideas coming from Republicans. Republicans are going to be putting out a number of different ideas on how best to solve this problem and you're going to see those rollouts occur.
I talked to Mark Kirk who is the primary author of that plan, and there is so much we agree on how to move forward with health insurance reform.
We believe that the tax exclusion penalizes and discriminates against people who don't get health care from their job, and we also think we ought to reflect the 21st century workforce, which is people change their jobs.
So we're simply saying, let's transfer that tax benefit from being attached to your job to being attached to each worker. At the end of the day, people will get a net tax cut out of that. At the end of the day, people will have more freedom of choice and if they like what they've got, they can apply that tax benefit to what they already have and keep it.
SEN. BURR: And let me just add one thing. We might have sort of gone over this too quickly. This plan is budget-neutral. This plan does not require an additional dime in taxpayer investment to cover 100 percent of the American people. It's absolutely essential on our part that we create a health care reform model that doesn't rely on more money going into the system.
We've got to make sure that the architecture of what we design is sustainable for not just the increase in the population, but the ebb and flow that we're going to find through breakthroughs in technology and health care in the future.
SEN. COBURN: Let me make one point on sustainability, because it's a question you have to ask no matter whose plans out there. If you take everybody and just put them in an insurance plan, with insurance rising at 7.2 percent per year, are we sustainable? No. If you have a government-run plan and you allow the prices to rise at 7.2 percent, is it sustainable? No.
We are not competitive globally. So you have to have a plan that looks at the sustainability of it in an area where we can afford. Health care inflation should not be as high as underlying inflation, if anything, it should be less because of efficiencies in technologies, what we have is a third of the money that's being spent in health care not going to help anybody get well and not preventing anybody from getting sick.
Q (Off mike.)
SEN. ALEXANDER: We're all working toward a similar goal, which is to change health care this year and to make sure everyone can afford health insurance. The advantage of the Burr-Coburn proposal in the Senate, along with that of the members of the House is it injects powerful different ideas into the debate.
So we'll be having, for example, there's a breakfast tomorrow morning with about 22 bipartisan members of the Senate who will be considering different ideas and hearing from Peter Orszag, who has expressed concern in his writing about the Medicaid program's effect on states that Tom and Richard have talked about.
So this puts Republican ideas into the middle of the fight into the debate about how do we do the best job for individuals and we hope Democrats are impressed by the power of the ideas.
Q (Off mike.)
SEN. COBURN: There is a minimal, basic plan, which is the lowest FEHB plan. That's the only mandate --
Q (Off mike.)
SEN. COBURN: If you offer a plan, we leave most of this to states, in other words, we really believe in the Tenth Amendment and we really believe there are 50 different areas out there where they could experiment, but what we do is we set it up to allow states. We don't mandate that any state has to do any of this, but they're all going to want to do something and what we're going to do is create the freedom for them to do what is best for their state.
Look how many states are struggling, trying to get through CMS to get a program to fix their Medicaid? It's ridiculous. They've got to come and ask Washington so they can do what's smart for their states?
So what we've done is we've said, here's ideas, here's incentives. If you fix tort reform, here's some more money. We don't tell you how you have to fix tort reform. We just say if you'll fix tort reform in your state where you take some of the $200 billion we're spending a year on tests that nobody needs and you'll change that, we'll give you more money in terms of your Medicaid block grant or Medicaid assessment, the $5,000 per family that will come along with the $5,700 tax credit per family.
So the only mandate is we don't want anybody to be without basic coverage, but we also allow this to be able to go around the states that have 180 mandates that caused people to pay for something they're never going to use.
SEN. BURR: We also learned from Part D Medicare that when the American people are offered a choice, not everybody can choose. So we do allow states in those instances where somebody gets a tax credit, chooses not to opt in to coverage. Those states can auto-enroll them into a catastrophic policy.
At the end of the day, we want to make sure that we can say to the health care delivery system, everybody has the means or the coverage to take care of their health care needs. Our attempt again is to reinforce the fact that we don't want to deliver primary care in the emergency room. We want to deliver primary care at a medical home.
Q Senator Coburn?
SEN. COBURN: Yes.
Q If I can ask a question on another subject --
SEN. COBURN: Outside of health care?
Q Outside of health care.
SEN. COBURN: Well, we'll take that question afterwards. Let's stay on health care.
REP. NUNES: Let me make one point to the question you asked. This is not a conservative plan. It's not a moderate plan. But I believe it's a credible plan. This plan provides universal access. It's zero cost and it solves the unfunded liability of Medicaid. It does those three important things, and I would challenge as this debate heats up next month in Washington that when people lay out their plans, if they meet those three criteria.
Q Can I follow up?
REP. RYAN: I'll just add here. You asked a big question, mandates and things like that, universal coverage. Rather than having a federal mandate that everybody must buy health insurance, we believe giving the states the tools and the incentives to have auto-enrollment will get us to that goal without mandating it on people.
The state exchanges where states have the freedom to set up, different options on how to make sure people with preexisting conditions get health care will have as one of their requirements on the standard Blue Cross Blue Shield standard option that we in Congress have as one of the available benefits for people to choose from if they choose to get their health insurance through a state exchange.
Q (Off mike.)
SEN. COBURN: We have the incentives to change insurance to truly being insurance. Right now, insurance is pre-paid medical expense. You pay them money. Somebody pays them money for you and they pay your bills. We're never going to get out of our hole until we manage chronic disease.
And so what we do is we disincentivize cherry picking in this bill. It becomes painful for an insurance company to not cover somebody who has a chronic disease because they're going to pay for it anyway, if, in fact, the state utilizes this exchange method, it's called risk readjustment.
Now, none of the insurance companies want us to tell them how to run their business. We don't want to tell them how to run the business. But what we recognize as a national priority, unless we're going to incentivize wellness and unless we're going to incentivize prevention and unless we're going to incentivize the management of chronic disease, we aren't going to be able to afford any health care, whether the government runs it or it's in the private sector.
So we want to set up the competition so that by managing chronic disease, an insurance company actually makes more than ducking the patient with a chronic disease, and that's what we've done.
Q (Off mike.)
SEN. COBURN: Yeah. Everything takes time. Setting up a government plan and then showing how incompetent it's going to be is going to take time, too.
Q (Off mike.) A large portion of this country has employer- based coverage that's substantially more -- (inaudible) --
SEN. BURR: $5,700 is the credit and that credit can be used to access health care or to pay the tax consequences that might exist from now making the health benefits supplied by an employer taxable in income. Well, it doesn't take a very tough mathematical calculation to say that $5,700 covers the tax consequences of an employer provided portion of health care benefit up to close to $17,000. That's well above the federal government's level of participation for federal employees.
Q So your contention is that -- (inaudible) -- will have to pay more for health insurance?
REP. RYAN: Will get a net tax cut.
SEN. BURR: And the benefit is that for those of us that are federal employees where the federal government shares $11,000 to $12,000, we've got money left over that goes in a prevention account and that prevention account can be used for anything that's not paid, preventive or by the insurer or to cover eye care or dental care, which we do see as an important preventive piece of health care.
The first time we've expanded one coverage to do all of them.
I just want to sort of give you the principles that guided us as we put this plan together and it may answer some of the questions that some of you might still have, one, do we guarantee that every American can get affordable coverage? Yes. Two, do we demand that we get more value for our health care dollar rather than imposing a new tax or passing a new obligation to the future generations. I think when you have an opportunity to see that, you'll see that we do it.
Do we transform the health care system so that we focus on keeping people healthy and well instead of only treating them when they get sick? Hopefully, we've answered that question.
Do we make health care coverage affordable for those with preexisting conditions? We have the most novel approach on the back end to accomplish that that anybody has come up with.
Five, do we end the current discrimination in the tax code that benefits the wealthy and corporations, but fails the poor and those who can't get coverage through their employer? I think we've answered that.
And six, do we guarantee that health care is accessible when people want it, where people want it and by whom?
I would tell you those are the six elements that every plan that's introduced will be held to and I would tell you that -- Tom mentioned the seventh, which is it sustainable? Can we sustain this for the future? And I think the answer is yes.
Q (Off mike.)
REP. RYAN: That's just not the case. Look, employers under our plan will still be able to deduct the provision of health insurance to their employees off of their taxes. So employers still have the tax benefit to offer health insurance to their employees. That's point number one. Point number two is they're not losing the tax benefit. The tax benefit is simply being transferred to them, themselves, instead of being attached to their jobs.
One of the things they can do under this bill is they can dump their entire tax credit into their health savings account and pay premiums out of that health savings account, pay their out of pocket costs that they incur with their employer-sponsored plan out of their health savings account and when you do the math, the vast, vast majority of Americans will be better off, will have higher wages and more money in their pocket to go toward health care or whatever they want it to go to.
So we're simply saying, instead of discriminating against people who don't get health care from their job, and, look, a lot of firms are dropping health insurance, they're cutting back on it and so fewer and fewer Americans are actually benefiting from this tax policy, which was a 20th century relic.
We want everybody to be treated the same, and we believe by giving this tax benefit to the person, they get to take it with them from job to job. It's not locked with their job. If they lose their job, they have the same tax treatment. They can take their health insurance with them and then employees of firms get to choose, do I want to keep what I have? Great. They can. And they have more tax money to deal with it or if they want something else, they can do that as well, so the individual has the tax benefit and the freedom to make their own choice.
SEN. BURR: Let me also point out one specific thing in the analogy that you used, comparing two plans. We've said throughout this that without addressing successfully a health care system that actually invests in prevention, wellness and disease management, it's unsustainable, health care. So we may have some similarities or some differences as to how we pay for what we're doing. But structurally, we reform health care. We transform it from one that triggers when you get sick to one that incentivizes healthy decisions.
I'm not sure that anybody is on that pathway to successfully accomplish that. That's going to be the distinction between plans.
Q (Off mike.)
SEN. COBURN: Well, let's say I'm on Medicaid, all right, in my family. Right now, in Oklahoma, I get a card and I can go to about 55 percent of the doctors, primary care doctors and about 25 or 30 percent of the specialists and they'll see me. Now, I'm not a priority in their office because my payment rate is about 35 percent lower than what I could even get from Medicare or private insurance.
So, first of all, I'm limited in terms of the numbers that I have and I'm not a priority when I come because my payment mechanism is way down the list.
What we do is we say, there should be no difference that anybody, any provider sees between the person with the best health care plan and somebody that needs our help. So, all of a sudden, we elevate a Medicaid patient to the same status that everybody else has, in other words, they don't know that you're a Medicaid patient because you've got a health insurance card.
So, first of all, we take away the differential. The money and I guarantee you in Oklahoma, I can't remember, $190 million a year saved by the state of Oklahoma under this plan on their Medicaid, $1.9 billion over the next ten years. I believe that's the number. I may have to correct that and have my staff correct that. Well, what would that do to Oklahoma in terms of helping with education if we had this plan in where we had them all covered on insurance? Remember, of this large group of people that aren't covered today, there is a segment, about 20 to 24 percent that are people with chronic diseases, but the vast majority of them are young and healthy people who don't have insurance.
So when you add that large number and truly get an indemnified program that includes Medicaid and everybody else, all of a sudden, the total cost for everybody goes down because you're putting the health into the mix and we don't see any discrimination in terms of them being able to access the care they want and the doctor they want for their children or themselves as they enter the health care market.
Q (Off mike.) Where do you see areas of agreement in your proposal --(inaudible) --
SEN. COBURN: Well, first of all, let me tell you where we don't see areas of agreement. I don't believe we need to tax one penny more to fix health care in this country. All you have to do is look at us compared to the rest of the world and look at how much of our GDP we spend and how much we spend per person. The system has to be reformed. It's not more money. So we don't agree with that.
Number two, we don't believe in a pay or play where you're going to tax the small business in this country and ruin job creation through pay or play.
Now, if you think we can set up a national insurance plan over here and have all these insurance companies compete to bid for that and it's at a better value and a lower price, why would anybody buy insurance where it's higher when they can buy it from the government?
So that means the little numbers are going to be absolutely correct, about 120 million people are going to go to a government plan except we know how we run health care and we will not sustain it and so the price will be that this will collapse on itself. It may not collapse originally, but look at Massachusetts? Where are they? Look at their model in terms of what it costs versus what they thought it was going to cost. And they're doing an insurance model as well.
So I believe what has been outlined by my colleagues here that a better way to go is the direction that we're going, which says, let's get more value for everybody and let's make sure everybody gets access and has care that they need and it's the same care.
Q (Off mike.)
SEN. COBURN: Well, that we have a health care problem in this country and we ought to be addressing it. Yes.
SEN. BURR: And we believe that we all have to cover every American.
SEN. COBURN: Yes.
SEN. BURR: We're going to get the hook because our colleagues --
Q Senator Coburn, will you please explain to me how credit card rights bill, there's a provision to allow us to conceal weapons in national parks.
SEN. COBURN: Easy. The Tenth Amendment and the Second Amendment mean something in this country and have been blocked for two years from getting that amendment, even though it was promised by the majority leader that we would have a vote. Since we weren't going to have a vote, we added that to it.
It's not about guns. It's about states' rights, being able to determine what is in the best interests of them and it's about the Second Amendment and it's not about bureaucrats telling Americans when their rights will be taken away. That's the answer to your question.
SEN. BURR: Thanks.