Health Care Reform

Floor Speech

HEALTH CARE REFORM -- (Senate - December 13, 2009)

Mr. KYL. Mr. President, given the season, maybe we should spend a little time talking about what Americans are wishing for Christmas. I don't think very many people in the Chamber have had much chance to go do their Christmas shopping. At least maybe we can consider what folks are telling us they would like to have. We have certainly heard it. They want jobs. They want the economy to improve. They want meaningful health care reform that will drive down costs and increase their access and avoid harming a full economic recovery. What they don't want is to be burdened with a litany of new taxes. Unfortunately, the health care bill we have been debating is layered with new tax after new tax.

What I hope is that the majority will eventually agree to considering more amendments, including, for example, amendments such as the Hutchison-Thune amendment which will limit the taxes in this bill, taxes that will hit families, seniors, the chronically ill, small businesses, those who use flexible spending accounts, and those, for example, who use medical devices. In total, there are 12 new taxes in this bill, many of which will take effect right after the bill passes, though the other components will not go into effect until 2014. The Internal Revenue Service estimates it would need between $5 and $10 billion over the next 10 years to oversee collection of these new taxes.

Americans know their taxes are going up if this bill passes. In fact, 85 percent believe that will happen, according to a new CNN poll. They are right. Surely that helps to account for the fact that a full 61 percent disapprove of the bill, according to that same poll, with just 36 percent supporting it. Think of that, a CNN poll, brand new, 61 percent of the American people oppose the bill, only 36 percent support it. Every week, the numbers get worse.

I spoke recently about the adverse impact of a new payroll tax on job creation, especially for small businesses. Today, I want to talk about how three additional taxes would hurt Americans: one, the new tax on the chronically ill; two, a new tax on flexible spending accounts; three, a new tax on medical devices.

First, let's talk about the chronically ill. These are the sickest Americans, the chronically ill and seniors who tend to have more medical problems. These folks would be hurt by a change in the Tax Code that actually raises the amount of money they owe the Federal Government every year.

Here is how it works. Currently, taxpayers can deduct the costs of their catastrophic medical expenses if those expenses exceed 7.5 percent of their income. The bill would raise that threshold to 10 percent. So people, especially seniors and the chronically ill, would have to spend a lot more of their own money on these kinds of expenses before they could begin to take advantage of a tax deduction.

The Joint Committee on Taxation says this change would cost taxpayers more than $15 billion over the next 10 years. We are talking about a lot of money. It would raise taxes on 5.8 million taxpayers, 87 percent of whom earn under $100,000 a year. So we are not talking about, for the most part, the wealthy. In fact, because of this problem, the Nelson amendment was adopted in the Finance Committee that would at least exempt seniors until the year 2016. Obviously, it isn't only seniors who pay the tax. Secondly, we don't want to impose it on them after 2016 either.

According to the CRS:

The deduction can ease the financial burden imposed by costly medical expenses. For the most part, the federal tax code regards these expenses as involuntary expenses that reduce a taxpayer's ability to pay taxes by absorbing a substantial part of income.

That is certainly true. Many people rely on this deduction to offset expenses beyond their control.

Under the Democratic bill, 5.8 million of the sickest Americans would get a bigger tax bill from Uncle Sam. That is not reform.

The second new tax is on flexible spending accounts. Many Americans with these flexible spending accounts would see a tax increase under the bill. How does that work? Under current law, employees can make a tax-free contribution to a flexible spending account in order to pay out-of-pocket expenses for medically necessary goods and services, things such as diabetes testing supplies, orthodontia bills for braces and tooth repair, to name a few. Right now, there is no limit on these contributions to the FSA. Most employers who offer the FSA peg it at about $5,000. The bill would cut that in half and limit by law the amount the employers could contribute to $2,500. Why? That means families would pay taxes on medical expenses in excess of that amount. That is the reason. They need more revenue under the bill. This is a very clever backdoor way to get it, limit the amount the employer can contribute to your FSA, so you end up having to pay more taxes on things that are important to your health care and that of your family.

The Joint Committee on Taxation estimates this provision would cost taxpayers $15 billion over 10 years or, to put it another way, it is one of the ways they raise revenues in the bill to pay for the high cost of the legislation, another $15 billion.

Who would be affected by this increase? The Employers Council on Flexible Compensation estimates that the median income for the 35 million Americans holding FSAs is $55,000. That is the median income--half are above, half are below. Think about that. Half the people who would be impacted by this make less than $55,000 a year. Many middle-income families will lose money on medical expenses because of this provision.

Finally, the medical device tax. The Democratic bill imposes an annual nondeductible tax on medical device makers that would cost $20 billion over 10 years. The reason for this, again, is to generate revenues to pay for the high cost of the bill; otherwise, why would you tax something that can be a lifesaver for people? I have said before that I could see, I suppose, taxing liquor or tobacco, but why would you tax this? This helps save lives. Thousands of products--wheelchairs, surgical equipment, contact lenses, stethoscopes, hospital beds, artificial heart valves, diabetes testing equipment--all of these are the kinds of medical devices targeted by this tax. It will even hit cutting-edge technologies such as CT scanners. Why would we do this?

American taxpayers are the ones who will foot the bill for the tax because, according to the CBO, the medical device tax ``would increase costs for the affected firms which would be passed on to purchasers and would ultimately raise insurance premiums by a corresponding amount.''

Congress taxes a device manufacturer. They pass the tax on to the cost of the item that takes care of the individual. And since the insurance companies usually have to pay for that, their premiums go up to reflect the increased costs--another reason why, under this bill, insurance premiums don't go down, they go up. This tax means increased costs for health insurers, which in turn pass it on to patients in the form of higher premiums. This would go into effect immediately, even though subsidies for government-mandated insurance are not available until 2014. The net impact would be an $8 billion increase in patient premiums in 2010, 2011, 2012, and 2013, before any of the subsidies in the bill take effect. Is this really what we want--to drive up patient premiums with new taxes? We know those are not the kinds of reforms Americans are asking for.

To reiterate, the taxes I have discussed include a tax increase on the chronically ill and seniors, a tax increase on holders of flexible spending accounts, mainly middle-income families, and a tax on medical devices that would drive up insurance premiums.

Many of the 12 total taxes would take effect immediately even though the rest of the bill wouldn't take effect until the year 2014. That is part of the budget gimmickry used to pay for this Federal leviathan. Your taxes go up in 2010 but nothing to show for it until 2014. That is why the Democrats claim to have a budget-neutral bill that comes in at less than $1 trillion. Washington will be sitting on a pile of money 4 years in advance of full implementation of the bill. But when you take a look at the true 10-year cost beginning in 2014, the price tag is an astounding $2.5 trillion, a figure confirmed by the chairman of the Finance Committee.

Because I disapprove of these budget gimmicks and the imposition of these taxes, I support the Hutchison-Thune amendment, an amendment which says that new taxes will not be enacted until the rest of the bill is.

I urge my Democratic colleagues not to object to voting on the pending amendments and to take up additional amendments such as the Snowe amendment, which will come later, and the Hutchison-Thune amendment, which would at least address the problems I have discussed. The American people don't want a slew of new taxes for Christmas.

The PRESIDING OFFICER. The Senator from Illinois.

Mr. DURBIN. Mr. President, this would be the perfect moment for me to say to those who are following this debate: That is the critique of the Senator from Arizona of the Democratic bill. I would like to offer a critique of the Republican plan for health care reform, but I can't do that. It is impossible because it doesn't exist.

This bill, 2,075 pages, has been worked on for a year. It is not easy. It is complex. We have prepared a bill and brought it before the Senate. The Republican side of the aisle has had the same year and has produced nothing.

I am sorry, that is not true. They have produced press releases and speeches and charts and a handful of bills which attack sections of this bill. But they have not produced a bill that has been cleared by the Congressional Budget Office, as this one has; that will reduce the deficit; that will, in fact, reduce health care premiums for the vast majority of Americans, at least the growth in premiums. They haven't produced a bill that will mean 30 million more Americans will have health insurance. They haven't produced a bill that is going to finally give consumers a fighting chance against health insurance companies. They haven't done it. They have produced speeches and press releases. That is where we are today, after 1 full year.

Obviously, the other side of the aisle is happy with the current system of health care and doesn't want to change it. If they did, they would offer a comprehensive health care reform bill. They failed to do that. They have come before us and said: We have a lot of our own bills. We call them Republican bills. Not any of those bills have been subjected to the kind of scrutiny this bill has been subjected to by the Congressional Budget Office. They may have good ideas. I can't say that they do or don't. But by and large, they are just taking potshots at this bill because they don't have a bill.

You listen to the Senator from Arizona. He talks about taxes. He fails to mention one or two critically important things.

First, this bill has $441 billion in tax cuts in the first 10 years for average people trying to pay their health insurance premiums. I don't know if the Senator from Arizona thinks that is a good idea or not. He has never spoken to that, at least that I have heard. I think it is a good idea. If you are making less than $80,000 a year, we want to make sure you have insurance, and this bill wants to make sure we give you a helping hand. It is a tax cut.

Secondly, this bill provides tax relief for small businesses with fewer than 25 employees.

Those are ``mom and pop'' small businesses, where they find it hard to buy insurance, and it is expensive when they find it. This bill gives a tax break to those businesses. So when the Senator comes up and speaks about this little tax and that little tax, he fails to step back and look at the big picture. The big picture is this bill changes health care in a positive way. It keeps the good things we have in America's health care system, but it changes some of the things that need to be changed.

This bill makes health insurance more affordable, and that is something every American wants. I have yet to hear a proposal from the other side ofthe aisle which does that--certainly nothing that has been subject to the scrutiny of the Congressional Budget Office.

This bill also expands health insurance to 94 percent of the American population. That is an all-time high. We have never had that many people insured in America.

The Senator from Arizona just talked about a tax on medical devices. Why would industries such as the hospital industry or the medical device industry or the pharmaceutical industry agree to pay more money to the government as part of this? For one very simple and fundamental reason: 30 million more Americans will have health insurance. They will be using more medical devices and paying for them with their insurance policies. They will be using more pharmaceuticals. More hospitals will get paid instead of relying on charity care.

So many of these providers have stepped up to us and said: If the goal is to expand the base of people insured paying into the system, our industry, which provides medical services, medical devices, and that sort of thing, is willing to participate, to come up with the money to make this work. That is the part the Senator from Arizona did not make a note of, and he should have. It is a very critical and important part of this.

So I would say that although none of us like to see taxes increased, if at the end of the day we believe our health insurance premiums will come down, that more Americans are going to have the peace of mind of health insurance; if they believe at the end of the day there will be more people insured and paying for more services, you can understand why the health care industry is participating in this conversation about this bill.

As for the tax cuts, for those making $80,000 a year or less, I think it is a good idea. It is one of the biggest tax cut packages we have had, and we pay for it.

This bill will generate a surplus in the Treasury in the first 10 years of $130 billion, in the second 10 years of another $650 billion. It is the biggest deficit-reduction bill ever considered on the floor of the Senate, according to the Congressional Budget Office, and the Republicans have nothing to offer which comes even close to that.

This is a rare Sunday session. The rest of the day will be spent with speeches like this on the Senate floor about this issue. But I can tell you, we have never considered one more important. This is an issue which touches every American, every American family, and every American business. We have worked long and hard to bring this to the floor. I know it is not perfect; no bill ever is. But it is a good-faith effort that has gone through the scrutiny of the Congressional Budget Office.

For the critics on the other side--and there are many--my first question to each and every one of them is, Where is your comprehensive health care reform plan? Where is a plan that has gone through the scrutiny and review that this plan has gone through? The answer is, it does not exist.

So I welcome their critique, but I understand it is a critique without an alternative.

Mr. President, I yield the floor.

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