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Public Statements

Statements on Introduced Bills and Joint Resolutions - S. 529

Location: Washington, DC

March 5, 2003


S. 529. A bill to amend the Internal Revenue Code of 1986 to exclude from gross income loan payments received under the National Health Service Corps Loan Repayment Program established in the Public Health Service Act; to the Committee on Finance.

Ms. CANTWELL. Mr. President, I rise today with Senator CRAIG THOMAS to introduce legislation that would exclude loan repayments made through the National Health Service Corps from taxable income. I am pleased that Senators LEAHY, SMITH, WYDEN, SNOWE, DURBIN, HAGEL, ROBERTS, and CHAMBLISS are also cosponsoring this important legislation.

There have been many developments in the area of health care in the last few years from managed care reform, to increases in biomedical research, the mapping of the human genome, and the use of exciting new technologies in both rural and urban areas such as telemedicine. In fact, it seems that almost every day we hear of astounding new scientific breakthroughs. But unfortunately, while we are making great strides in the quality of health care, we are losing ground on the access to health care for so many.

The sad truth is that there are currently 38.7 million Americans without health insurance coverage—9.2 million of whom are children. In Washington, before the recession, 13.3 percent of the population, and 155,000 children, lacked health insurance. That is undoubtedly higher today.

Access to health insurance for the uninsured is of the utmost importance—we know that at the very least, health insurance means the difference between timely and delayed treatment and at worst between life and death. In fact, the uninsured are four times as likely as the insured to delay or forego needed care—and uninsured children are six times as likely as insured children to go without needed medical care.

But even insurance isn't enough if there are no available providers. Hospitals and other health care providers across the country are facing an increasingly uncertain future. The sad truth is that it is increasingly more difficult to recruit health care providers to work with underserved communities—especially in rural areas. In addition to economic pressures, rural areas must overcome the environmental issues involved with recruiting a doctor who may have been raised, educated, and trained in an urban setting.

The National Health Service Corps was created in 1970 by Senator Warren Magnuson, one of the most distinguished Senators to come from Washington State. He saw the need to put primary care clinicians in rural communities and inner-city neighborhoods, and developed this program to fill that need.

Since then, the Corps has placed over 22,000 health professionals in rural or urban health professions shortage areas. There is no doubt that National Health Service Corps has been extremely successful. In fact, the most recent available data show that more than 70 percent of providers continued to provide services to underserved communities after their Corps obligation was fulfilled—80 percent of these health care providers stayed in the community in which they had originally been placed.

During the last August recess, I had the opportunity to travel throughout Washington State and held 15 community discussions on health care. I met patients who would not have access to health services but for the providers there through the Corps and I met many doctors who have been living in our rural communities for years because of their Corps' placements. And because it has been so successful—right now in Washington State there are 75 physicians or other health professionals working in underserved areas that would not otherwise be here—we must do everything possible to support this program.

Under current law, the National Health Service Corps provides scholarships, loan repayments, and stipends for clinicians who agree to serve in urban and rural communities with severe shortages of health care providers. In 1986 the IRS ruled that all payments made under the program are considered taxable income. Understanding the immediate detriment to scholarship recipients, who were forced to pay the tax out of their own pockets, Congress eliminated the scholarship tax in 2001. And while the scholarship program is now not considered taxable income to the IRS, the loan repayments and stipends are.

By statute, the current loan program awards also include a tax assistance payment equal to 39 percent of the loan repayment amount, which is to be used by the recipient offset his or tax liability resulting from the loan repayment "income." This means that nearly 40 percent of the Federal loan repayment budget goes to pay taxes on the loan repayment "income" alone. If these Federal payments were not taxed, and the funding was freed up, more health professions students could take advantage of the loan repayment program, and could be placed in shortage areas, thereby increasing access to health care in both urban and rural areas.

This is not a new problem. The tax burden that accompanies the National Health Service Corps loan payments is a significant deterrent to increasing the number of clinicians enrolling in the Corps. I do not want to see a situation where, as happened several years ago, over 300 applicants actually left underserved areas because the Corps could not fully fund the loan repayment program.

The legislation we are introducing today, the National Health Service Corps Loan Repayment Act, would address this disincentive, making the Corps available to more medical and health professionals, and thereby bringing more providers into underserved areas. If loan repayments are excluded from taxation, the National Health Service Corps will have greater resources to provide aid to health professionals seeking loan repayment, and will be able to increase the number of providers in underserved areas.

There is no doubt that strengthening the National Health Service Corps is a win-win situation. Corps scholarships help finance education for future primary care providers interested in serving the underserved. In return, graduates serve those communities where the need for primary health care is greatest.

The bill is supported by over 20 national organizations including the National Rural Health Association, the National Association of Community Health Centers, the Association of American Medical Colleges, and the American Medical Student Association. I am especially pleased that the Washington State Medical Association is supporting this bill. I ask unanimous consent that the complete list be included in the RECORD after my statement.

I understand that there are no easy solutions to the health care problems we are facing right now. But we need to do something—even if it is taking small steps forward, and come in at this problem from many different angles.
I urge my colleagues to look at this bill and to join us in expanding this vitally important and immediately successful program.

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