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Public Statements

Affordable Health Care For America Act

Floor Speech

Location: Washington, DC


Mr. SMITH of Texas. Mr. Speaker, I thank the gentleman from Minnesota, the ranking member of the committee, for yielding me time.

According to CBO estimates, this bill will cost $1.3 trillion and includes $750 billion in new taxes and $500 billion in Medicare cuts. It increases premiums, increases taxes, cuts benefits, and leads to health care rationing. The government, rather than patients and doctors, will make many health care decisions. The bill represents a loss of freedom and more government control for the American people.

I support health care reform to help the long-term, low-income uninsured, but it can be achieved without a government takeover of health care. The House Republicans have a better health care bill that lowers premiums for families and small business owners, cuts the deficit by $68 billion, and includes tort reform.


Mr. SMITH of Texas. Mr. Speaker, although the Democratic Leadership has had several months to address the concerns voiced by countless Americans, the latest health care reform bill is no better than the last.

I support health care reform; however, this bill goes far beyond fixing the problems we all know need to be addressed and it fails to enact true health care reform.

Skyrocketing costs have crept into our health care system, creating uncertainty about the future of health care for employers, working Americans, and the uninsured. Americans need more, not fewer, choices for something as important and personal as health care.

Americans are concerned with cost, choice, quality and access of health care and Congress should work to address these concerns. Any legislation considered should attempt to make our health care system more accountable and accessible to patients.

This legislation expands coverage with a government takeover of the health care industry funded by new taxes and massive cuts to Medicare.

The nonpartisan Congressional Budget Office and Joint Committee on Taxation estimate that H.R. 3962 would require over $550 billion in new taxes on individuals and small businesses.

CBO also estimates that this legislation will lead to $33 billion in penalties for uninsured individuals and $135 billion in penalties for employers under the government mandate or ``pay or play'' requirements.

Raising income taxes on hard-working Americans and threatening small businesses with penalties to fund a government takeover of health care is a terrible prescription for a troubled economy.

In order to pay for this government takeover of health care, Democrats also have proposed cutting more than $500 billion in Medicare spending. The plan also includes an expansion of Medicaid that will cost cash-strapped States $34 billion over the next 10 years.

I believe Congress should pursue reform in terms of costs and access, but the legislation advanced by Democratic leaders is equal parts faulty premise and flawed logic. Their legislation will increase health care spending, limit choice, and cut Medicare benefits.

The current health care proposal being considered by Congress will lead to higher costs, rationing of care, higher taxes on families and small businesses, elimination of jobs through punitive taxes on small businesses, granting of unchecked power to a new ``health care choices commissioner,'' elimination of choices for patients, tax-payer funded abortions and a government panel placed between doctors and patients.

Americans deserve the freedom to choose the type of health care that is best for them and their families.

During his campaign, then-Senator Obama promised that he would ``have all the negotiations around a big table'' and ``televised on C-SPAN'' to ``allow people to stay involved in this process.'' Yet the negotiations and decisionmaking process have taken place behind closed doors with the media and American people shut out.

That is why the bill lacks bipartisan support. In fact, there is bipartisan opposition to the House Democrats' government take-over.

Rather than increasing taxes and rationing care, the President needs to address medical liability reform, which is one of the biggest sources of waste and added cost.

Frivolous lawsuits force physicians to practice defensive medicine and carry expensive malpractice insurance, the cost of which is passed on to patients. Uncapped lawsuit awards paid by insurance companies also get passed on to patients as higher premiums.

It is a disservice to the American people that this legislation fails to include the legal reforms that are necessary to make any expansion of health care coverage financially sound.

Unlimited lawsuits enrich trial lawyers while increasing the cost of health care for everyone. Unfortunately, we now know that opposition by trial lawyers is the reason tort reform has been excluded from all the Democrats' health care proposals, including the one we will be voting on today. Former Democratic National Committee Chairman Howard Dean said the following publicly at a recent town hall meeting: ``[T]he reason why tort reform is not in the bill is because the people who wrote it did not want to take on the trial lawyers ..... and that is the plain and simple truth.''

That political opposition, which Governor Dean admitted is not based on the merits but on raw self-interest, flies in the face of the facts.

The CBO estimates that enacting tort reforms nationwide would result in a reduction of medical malpractice insurance rates by 25 percent to 30 percent. And according to the Government Accountability Office, rising litigation awards are responsible for skyrocketing medical professional liability premiums.

Lower premiums mean Americans will pay less to have better health care.

The President of the American Medical Association said ``If the [health care] bill doesn't have medical liability reform in it, then we don't see how it is going to be successful in controlling costs.''

And the President's own doctor of over two decades supports tort reform. He said regretfully that ``I once briefly talked to [the President] about malpractice, and he took the lawyers' position.''

In the handful of States that have enacted tort reform, health care costs have fallen, and the availability of medical care has expanded. In my home State of Texas, premiums fell by 30 percent, and more than 14,000 doctors returned or set up new practices in the state.

To give just one example, a charitable hospital group in Texas that serves the poor and underserved reported that since Texas enacted tort reform, its legal costs have gone from $153 million per year to just $2.3 million last year.

Doctors are so concerned about frivolous lawsuits that they order unnecessary--and expensive--tests and procedures that are of no benefit to the patient.

HHS estimates the national cost of defensive medicine is more than $60 billion. The Congressional Budget Office just issued a report that concludes it costs $54 billion. The costs of litigation and defensive medicine are then passed off to the patient in the price of health care.

If tort reform were enacted, trial lawyers would stand to lose one of their primary sources of income: medical malpractice suits, which are often just a form of legalized extortion. But all Americans would gain, and tens of billions of dollars would suddenly be freed up and could be used to help provide health insurance to the uninsured.

Regrettably, the Democrats' health care bill not only fails to contain any of the tort reforms the CBO concluded would save at least $54 billion in health care costs, but also contains a provision that bribes States with Federal taxpayer dollars not to enact such reforms in the future. It explicitly prohibits tort reform ``demonstration project'' funds from going to States that put limits on damages or attorneys' fees.

Section 2531 of the Democrats' bill states that ``the Secretary [of HHS] shall make an incentive payment ..... to each State that has an alternative medical liability law in compliance with this section,'' but then goes on to say a state can take advantage of such funds only if ``the law does not limit attorneys'' fees or impose caps on damages,'' which are exactly the tort reforms the CBO concluded yield real health care costs savings.

That is not only a blow to State reform efforts. It is a federally funded bribe discouraging states from enacting real reform and a giant bailout for trial lawyers.

H.R. 3962 also contains two antitrust provisions that are within the House Judiciary Committee's jurisdiction: Sec. 262, which repeals the McCarran-Ferguson Act for health and medical malpractice insurers, and Sec. 2573, which codifies a ban on settlements between name brand and generic pharmaceutical manufacturers in the context of Hatch-Waxman litigation. Neither provision was given due consideration in the Judiciary Committee, and their unintended consequences could have significant negative impacts on the cost and availability' of both insurance and medications.

My basic concerns with Sec. 262 are its breadth, the possible unintended consequences, and the fact that the provision will do no good and may do much harm. For more than 60 years, the States have regulated the business of insurance and built a record that provides guidance about permissible activity. By inviting Federal intervention, this bill creates a dual regulatory system that only confuses the health insurance and medical malpractice industry.

The bill presents a wholesale repeal of McCarran-Ferguson for health insurers and medical malpractice insurers. Further, the protections for information gathering by a State insurance commission or other State regulatory entity that were included in the similar bill (H.R. 3596) reported by the Judiciary Committee over my opposition have been completely eliminated from the legislation.

The uncertainty caused by this provision threatens small and large insurers alike, but the smaller ones that depend on sharing information, under oversight by State regulators, are most at risk. Thus the bill threatens to reduce competition among health and medical malpractice insurers. With no demonstrable benefits and many potential adverse effects, Sec. 262 should not have been included in the bill.

Section 2573 raises different concerns. When a generic drug manufacturer files an Abbreviated New Drug Application under the Hatch-Waxman Act with the Food and Drug Administration, it indicates its intention to infringe on a brand manufacturer's patent. This means that the generic company is trying to enter into the brand manufacturer's drug market before the branded pharmaceutical's existing patent has expired. This notice usually results in a lawsuit by the brand company that leads to a settlement about the date on which the generic manufacturer can begin selling a generic version of the branded company's drug. This is nothing new. Most cases in the United States, whether civil or criminal, antitrust or patent, settle. The reasons for this are simple: litigation is expensive and its outcomes are uncertain.

The supposed problem is when a settlement in the Hatch-Waxman context involves a payment in lieu of or in addition to an agreement on the date of entry into the market by the generic manufacturer. Such payments are said to frustrate the intent of Hatch-Waxman by allowing the brand company to ``pay to delay'' entry of the generic competitor.

The proposed solution to this problem, incorporated in Sec. 2573, goes too far. The bill calls for a ban on all Hatch-Waxman settlements that feature any consideration, such as cash or an exchange of patents, in addition to the date of entry. Such a ban dramatically reduces the ability of companies to settle these cases. After all, if the parties could not agree on date of entry, then they would effectively be forced to litigate the case to the bitter end. This means that, in some cases, a settlement would have resulted in generic entry into that particular drug market much earlier than if the brand company wins its patent suit.

I fear this ban will itself frustrate the intent of Hatch-Waxman by limiting the incentives for generics to challenge these patents and for brand companies to innovate.

The best way to reach the appropriate balance is through a case-by-case analysis by a neutral third party of the competitive effects of these settlements using the rule of reason. This, in essence, is the conclusion that the majority of the Courts of Appeals, including the Second, Eleventh, and DC Circuits, have reached in these cases, and we should uphold the judgment of these courts.

The only saving grace of Sec. 2573 is that it creates a cause of action separate and apart from the antitrust laws and will not affect how those laws are interpreted in the future. This also means that the provision, as written, did not come before the Judiciary Committee, even though it remains, at heart, a competition issue. By keeping the Judiciary Committee from considering this legislation, we are eliminating the incentives for drug invention and generic competition that have served American consumers so well. Innovative new drugs, after all, are created in the laboratory, not the courtroom.

Sec. 1640 of the bill also contains a provision that allows the Department of Health and Human Services to issue administrative subpoenas to insurance companies during investigations of decisions to exclude benefits. The standard for issuing an administrative subpoena under the bill is extremely low. The information sought must simply ``relate to'' the matter under investigation.

It is highly ironic that we are considering this bill with this administrative subpoena language during the same week the Judiciary Committee approved the Democrats' revision of the FBI's authority to issue National Security Letters, which are the functional equivalent of administrative subpoenas used in foreign intelligence and terrorism investigations.

The Democrats' bill reported this week by the Judiciary Committee replaces the current ``relevance'' standard for issuing a National Security Letter with a heightened standard, requiring the FBI to show ``specific and articulable facts'' in order to seek particular information using a National Security Letter. House Democrats want to make it easier for the government to investigate insurance companies than to investigate terrorists plotting to kill Americans.

In the end, this 1,990-page bill will raise premiums and health care costs on all Americans. It imposes mandates and new taxes on the middle class and small businesses. It fails to address tort reform and it dumps a huge unfunded expansion of Medicaid on the states. Combined with budget gimmicks to hide $245 billion in costs and massive cuts to senior benefits, this is simply bad medicine.


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