captions copyright national cable satellite corp. 2008 all right. mr. levin? >> you know, in a way it's regrettable that these are the three items before us. because i think if anyone leaves here thinking our task is impossible, i hope they're wrong. because we need to act and act within the next few weeks. so let me just say, how much time do we is have on this? >> 38 minutes. >> i want all of us to have a chance. so i'll just say this briefly. i think what senator baucus, you

describe the problem very well. whether you call it a tax increase or not. we all know when the exchanges are set up, that some people are going to have to have help. and we've expanded therefore, the coverage of people. and the, the help will be based on income, which will vary from year to year. we knew that there would have to be, some return on an overpayment. that was built into the original law. what has happened is that we have increased in several cases, the amount that has to be paid back. and i think we need to look at the consequences of carrying

this one step further, as senator baucus has said. that's what we need to do. the cbo and the joint task estimated when we used it previously, that the cumulative effect would be that 465,000 people would forgo health insurance coverage. that was their estimate 679. when we're trying, some of us, anyway, i think all of us to increase health care coverage. and the likelihood is according to these estimates, the same sources, as i understand it, is that if we overdo this or however you want to describe it, if we carry it the further step, about 170,000 more people will forgo coverage of health

insurance. so in the search for -- >> will the gentleman yield for just a second? >> sure. >> that's 170 who won't take coverage through the exchange, correct? >> yeah, but, and the estimate is -- i'm glad you raised that. they don't know exactly how many of these people will be left without insurance altogether. and essentially, it will shift as we don't want to do, people getting health coverage instead of through insurance, through the emergency room. and nobody can be 100% sure of the exact number, but what we can be sure of is that more tens of thousands of people will be without health coverage. this estimate is well over half a million. that's the cbo, if you just will read the cbo and the joint task committee, analysis, that's what

they say. that's why the last time around, some of us oppose legislation because of that. so i just want to raise that and realize that as we try to, to stay on the track of finding solutions here as we might, that we don't take positions that essentially make it much more difficult. thank you. >> mr. walden? >> thank you very much, mr. chairman. i just want to remind us that we're here to find a long-term solution. the house republicans and the house were here for a one-year extension of the payroll tax cut, for working americans. a two-year fix so that senior s could have access to their doctors and a one-year extension to help people through that phase. we offered that up. the senate came back with a two-month proposal, which we ultimately agreed to, because we could never have a meeting like this, because we could never get

conferrees prior to christmas in the senate. as we look at these things, we tried to find offsets and pay-fors where we thought there was some level of common ground. this is a bipartisan offset. every democrat on the conference committee is voted to increase the maximum amount of exchange subsidy overpayments that need to be repaid. every member. hhs secretary sebelius described this offset as it was used as making it fairer for all taxpayers. the democrats' health care law fails to adequately protect taxpayers from overpayments of, we're talking federal subsidies to purchase health insurance now. when we talk about taxes, if you do quarterly with holdings and you project your income at the beginning of the year and you don't adequately with hold enough each quarter, the irs not only makes you pay what you owe, but if you're off by a certain percentage, you get to pay an interest penalty for not having

enough withheld during the year. well we're talking about here, is not too dissimilar from that. and that is, you think my income at the beginning of the year qualifies me for certain tax-funded benefits. a subsidy. and as you go through the year, you discover your income actually went up more than you thought it would. guess what, you trigger over that eligibility to be subsidized by the taxpayers. the rice and lawful thing should be you don't get that subsidy, you weren't entitled to in the first place. that's what this proposal is all about. it's about fairness to the working men and women who are subsidizing all of this by paying the taxes. if you weren't eligible to get this subsidy from the taxpayers, you shouldn't get it. and you should pay it back. now this doesn't fully require total recoupment, my understanding. it requires about half. so we're not even saying you got to go all the way. i'm still struggling with that point. because i would think, if you

weren't legally entitled to the subsidy to begin with, why do you get to keep half of it at the end of the year? which by the way the country has a real deficit problem, and we shouldn't be subsidizing people who don't have a legal right to the subsidy to begin with. this is one piece of trying to move forward. the house passed provision would reduce the deficit by about 13.4 billion. now that's less than the 19 billion subsidy recapture provision that was introduced and passed by democrat-controlled congress. considerably less than the $22 billion that was saved in the 1099 repeal and passed by the senate 87-12. this is a reasonable pay-for. so that we can move forward together. and provide the middle class continued tax cut for the rest of the year. make sure seniors can have access to their physicians and deal with those who are unemployment make sure they're covered while they're trying to find work in this economy. i'm glad to hear my senate colleagues going back and forth about various votes on budget. we in the house are just waiting

for one of them to come on across the transom so we can take it up. with that, i yield back, mr. chairman. >> senator baucus? i don't think i have any other statements. >> let me just respond briefly. and that is, there's a lot of agreement here as to the purpose of this adjustment. when the affordable care act was passed, we wanted to provide affordability for our lower income wage earners. that's why we provided credit. the problem is, that that determination is made before we know the taxable income of the individual. so people make estimates in good faith. these are the lower-wage workers and we want to make sure as senator, congressman levin said, they are in fact encouraged to use the system to get insurance. because that's what we want them to be. we want them to be covered. so from the beginning, we recognize there was a need to do an audit at the end of the

taxable year. so that there was not a, an overcredit beyond what we thought was reasonable for people to be able to expect. so you're correct. this is part of the framework for how the credits for lower-wage workers was intended to work. and it was included in the affordable care act. we have adjusted it as has been pointed out with the payroll tax issue, with the 1099s, we needed a revenue source and we came together and said, let's make a further adjustment in that. you're absolutely correct. we did that. i guess my concern is, where is the right level? where do we set it at the right level where people are encouraged to get the health insurance so they're parf kofrt us less money. but we have a fair adjustment of the credit for the purposes of the taxpayer. ou if we had full committee hearings on this. and we, we were making decision

based upon policy rather than trying to find a dollar number to fit into this conference report. i think that's what makes a lot of us nervous. i think senator levin's point is one that we have to reflect on. if there's 170,000 less people using the exchanges to get their insurance, as a result of this proposal, that's something that we all have to pause and think about. as to what impact it has on what we're trying to accomplish by getting everyone into the system in order to have a more efficient, cost-effective health care system. i think this is a legitimate area for our discussion. i just regret that we haven't had more committee input through the regular process so that we, our policy is based, our decision is based upon good health care policy and not just try to plug in a number. >> senator reed? >> i think it's a senate republican -- turn at this

point. >> we can work it out. we're easy over here. we all trust each other. >> you want to -- you want to -- >> i think that helps with fewer numbers. >> sure. >> all right, we're trying to figure out who is to speak next. we have different rules. >> mr. chairman, a quick pointer, i think on discourse, what senator levin and, excuse me, senator cardon and congressman levin said, there's a real daker. we've used this before, but we're reaching a tipping point. where from a practical standpoint, people might very well choose to pay the penalty not to have insurance, rather than to face the danger of this significant recapture in their taxes. and that's where it leads the potential of 170,000 people. the other aspect of this is the

most likely those people who choose to avoid insurance, are the healthiest people. so you have a further situation of adverse selection, where you know, if you're, if you're ill or if you have family members who are ill, you're more likely to run the risk of paying a high penalty for income changes, if you're healthy and typically young and healthy, would just pay the money. that i think defeats the overall purpose of health care reform. which to enroll, the largest number of americans, including healthy americans, who won't be demanding significant services compared to others. and what we've done in the past, and you've pointed out, is we have used this. but i think we're at the danger, the point of overusing it. so we undercut and cause ourselves even more money. in the overall health care system. and so, with that, i think it reflects what mr. levin has said and what senator cardon says,

there's no question we've used it bn off two occasions. but i think we're reaching the tipping point where we'll have systemically adverse effects going forward and we'll end up paying more. thank you. >> okay. mr. levin? >> well, since there were two senate -- [ inaudible ] [ inaudible ] >> i think we had senate republican yield their time. and. >> you don't want to do that. >> okay, let's do it quickly. >> mr. waxman and then mr. sarin and i think mr. van helen wants to say a word. >> i'll try to be brief on all of this. >> i was always worried about means testing the medicare premium. because it could become a piggybank. so we adopted a means testing premium in the affordable care act. that made some sense, because it was a way to raise money and you raised more money by asking

upper income seniors under medicare to pay more for it. i was trying to figure out, chairman camp said, we all voted for this. well, we all voted for it, because we voted for means testing in the affordable care act for those of us who voted for the affordable care act. republicans didn't vote for that. but they voted in the house. for the house proposal. now, at what point does, do these things that we voted for become a piggybank? if we're going to increase the part b premium even more, republican proposal goes too far. in this issue of the tax increase, we're, let me give yog about. somebody who gets a, a tax credit is pretty low income. upper income don't, don't get a tax credit. but a low income people do.

and suddenly, you have a job and you get a bonus. and that bonus pushes you to a point where when you look at how much money you actually made, you're over the amount for the tax credit that you got. you would have gotten less of a tax credit. so it's fair to say pay back some of that money. and that's what was in the affordable care act. but this provision, let me give you another example, somebody had good fortune, a spouse got a job. we're talking about the tax being based on filing of two years ago. so suddenly this year, your spouse got a job and you have a job. and you, and therefore, the tax credit that you got for your insurance, to be able to pay for your insurance. isn't justified because you have a higher income for the two of you. so you should pay some of it

back. we agreed to that. but then the congress already said, you should pay more back. and they did that already twice since the affordable care act. that was, when we had to pay for the, the bill to repeal that irs with holding. people didn't like it, but you had to pay for it oh, let's make these people pay a higher penalty in their taxes. then we did that when we had to continue to pay for physician fees. they said, let's make people pay an even higher penalty. so we've already gone to this group that has to pay a penalty and increased their penalties twice. we haven't even given them tax credits. so, let's keep this in perspective. and i think nor reed made the point. what may be reasonable, what may be reasonable in terms of a penalty doesn't, gets to be a point where it's unreasonable. now what do i mean by

unreasonable? if you're a person middle to low income and you know you need some help to pay for your insurance, but you heard about a friend of yours who had to pay this tax penalty, you might get so nervous, you won't even apply for the insurance. and senator reed said you're most likely not to do that if you're healthy. you're taking people out of the pool of those that get insurance coverage. and the joint tax committee said this could be 170,000, no, this is a cbo, a 170,000 over the next decade that won't even apply for insurance. if the penalty gets to be too puniti punitive. that is not a good result. it's not a good result for people who won't get their insurance. and it's not a good result for people who didn't -- didn't plan to be overcompensated in their tax credit. to suddenly have to pay so much of a penalty back that they

really, really hit with a whammy, now they're having to pay this additional tax. i think we ought to put both of these issues in perspective. we all voted for these things, republicans in this bill. and all, and democrats in the affordable care act. but don't make these people be the piggybank to pay for what has to be paid for. uninsurance compensation, a middle class tax cut. doctors to be paid for their medicare. why should we ask people who are deserve a tax cut so they can get health insurance, to pay more or seniors to pay more. so that we're not asking people who are making over a million dollars a year to pay more? that's what we mean by fairness. you don't go after low income people or middle income people to pay more, and then not, those who are the top, million dollar as year in income, pay their fair share.

if you want to pay for these things. and don't use the argument, it didn't pass the senate, that doesn't, that doesn't impress anybody. and i'm sure the american people are not impressed by it, either. yield back my time. >> all right. dr. price? >> thank you, mr. chairman. this is really surreal. i don't mind telling you. it, the question isn't whether we're going to tax folks that are of greater income more. the question is whether we're going to subsidize them less. this is an exchange subsidy recapture. the exchange was set up in the president's health care bill. it's an opportunity, supposedly an opportunity for folks to get health coverage. all of us voted against it, because we believe the health coverage is going to be compromised and have fewer choices and lower quality. that's another discussion. but the 170,000 figure that's been pointed out, if we were to enact this, that wouldn't be eligible for the exchange, those

folks are, are then -- >> they would be eligible. >> at the level that you all, at the level that the democrats, when they passed the bill said, would be perfectly capable of purchasing health coverage on their own. at the level that was described in the bill. that is 400% of the poverty level. so the subsidy, the subsidy isn't a tax, the subsidy is hard-working taxpayer money going to assist individuals below 400% of the poverty level, to be able to purchase health coverage. and recapture means that those individuals were paid more, given a greater subsidy than other folks at that same level two years before based upon their irs filings. so this is, this is the height of trying to get to fairness for all taxpayers. and so much so, that we've even

had members of this committee and members of the senate leadership, weigh in on how fair it is in a release by senators reid and baucus and mcconnell and grassley earlier. this is the quote about this proposal. the subsidy recapture. quote under this proposal for correcting overpayments, the cap on the pay-back amount would be on a sliding scale. based on the income of the recipient of the tax credit, making the policy fairer to both recipients and all taxpayers. unquote. and then at the risk of beating this a little further, another quote from senator, from senator baucus in 2010, on this policy -- >> you're good, i have to hand it to you. >> said quote, this policy does not change the tax credits for which people are eligible based on their income. instead the law will change the

way people pay back overpayments when they've received more credit than they're eligible for, because for example, they earn more money in a given year unquote. and i, i'm an orthopedic surgeon, so i like a little meat on the bones. let me put a little meat on the bones here. the -- this is, let's look at just a one example of the kind of numbers that we're talking about. a family of four earning $50,000 in 2014, their exchange subsidy would be $10,950. under current law. $50,000, the subsidy is $10,950. if, if the spouse for example went returned to work, kids are off at school, spouse returns to work. gets a job teaching school or something like that, and the income bumped up from $50,000 to

$79,800, their subsidy would go from $10,950 to $750. that's the same amount that any family of four making $79,800 would be eligible for. so the subsidy goes from 10,950, down to $750. under this proposal, under this proposal instead of paying back the $7700 of difference, we're asking them to pay back $700 of the difference. keeping $37,550 in subsidy. that the family of four, making $79,800 at the beginning of the year, doesn't receive. so this, and again, every single person on this conference committee has voted for this idea. talk about fairness, fairness means that a given american making a certain amount of money

and another american making a certain amount of money is subject to the same opportunities and subsidies and taxes as the other. this attempts to equalize that. and again, this is a, this is something that we actually compromise on because those on this side of the table don't agree with the exchange. at all. so the compromise is that we're putting on the table here are very clear. and i would urge my colleagues on the, on the other side to please look back at your voting record, look back at your statements and let's move forward in a positive way on this, which we can clearly agree upon. i yield back. >> senator baucus? >> i don't -- my troops are dwindling. they're scattered. they're depleted here. it's -- i think, i think each

side expressed their view pretty well. >> i think we're close to concluding. >> by restating them. >> i'm prepared to conclude this issue, if i think everyone has had an opportunity to speak out on it. you want to e on each side then? will that -- >> if you have to -- >> we want to use our time, and have a few spekds. >> yeah, all right. >> this proposal could end up costing some $700 to a family, midden-class family, which would essentially wipe out any tax cut they might get through the payroll tax cut. so it would like the other proposals, balance or pay for the cost of this proposal on the backs of modest and middle class families.

their first proposal, which is controversial, would have put the cost of extending the payroll tax cut for middle class families on the backs of about three million middle class workers, wiping out their tax cut, payroll tax cut and in fact exceeding that. and actually taxing them beyond. and the second proposal that we discussed, on medicare, would put the cost of extending the payroll tax cut on the backs of some two to three million seniors in america today, who aren't millionaires, let's be clear. they are not millionaires. $80,000 in income is not a millionaire. and in future years, not far from now future years, that would be reduced because of the bracket creep that would occur. so that if you're looking at today's dollars, you're looking at a senior making about $40,000 who would now be paying more, and it would, this would now approach some 10 to 15 million seniors, who would be paying more in benefits for medicare.

to cover the cost of this payroll tax proposal. so whether it was the first, second or last proposal, so far the only folks that have been asked to contribute are modest and middle income families, who has not been asked to help the very wealthy, and simply put, if we asked millionaires, and by the way, when we talk about asking those who are millionaires to contribute, we're asking folks who are one-fifth of 1% of all of america's taxpayers. and remembering that, some 7,000 of those millionaires last year paid not a single cent in income taxes. >> so if we're asking who has contributed, the workers at three million or so workers that are being asked to pay for this, they've already had their pay frozen. they've contributed. seniors, some have mentioned, they didn't get a social

security cost of living increase. they have contributed. americans who are without decent health insurance, they've been paying for a long time. what many of us are saying if you did a simple surcharge on the wealthiest in this country, the one-fifth of 1% wealthiest, you could avoid putting this on the backs of seniors, avoid putting this on the backs of middle class families. and senator craypohl said something important, he said we should find adjustments that have the least amount of pain. i agree completely with that statement. he said we should try to be fiscally responsible. i agree with that statement. there's no reason why we can't be fiscally responsible. make the adjustments that have the least amount of pain. without putting the burdens on our seniors and our middle class. and so there may be some cases where some of these proposals moved in some cases for other reasons. but as the 20 of us try to figure out how to do this best, i would hope that we would realize that we're trying one,

to keep the mission of advancing our economy, rewarding the middle class and those who work very hard. and coming up with common-sense solutions, common-sense solutions. with that, i yield. >> thank you, mr. chairman, i will be brief. i think it's been a good discussion today on a lot of issues. i would just ask us all to keep in mind, as we proceed, the issue of balance. that we take an approach that i think is perceived by the american people, to be fair. the president's recommendations were cited several times today. the recommendations he made to the joint committee. and i just want to stress that at the time the president made those proposals, this was in a speech of september 19th, he made it clear that his proposals that would require some changes that have been mentioned today in medicare, for example, were contingent on making other changes like closing corporate tax