banking committee. sort of got the entire agenda of the country. we appreciate your courtesy in at least extending the mark-up rules a little bit here so that we can intersect the process. . it is extensive and complex and clearly the memo of this meeting. i was the only republican who served on this committee in 1994. it is sort of deja vu all over

again for me. there is more consensus now as to how we should go, at least in principle. there's more consensus now as to how we should go at least in principle and i agree with senator hark sxin his sense of what we need to do and it is basically three areas, our goals and one is make sure all americans have adequate insurance. so there is not an issue of some americans not being covered and so americans who aren't covered don't end up being picked up by americans who are covered and there is adequate insurance for all americans and secondly that we promote quality and choice which is very important. it's the core of our system. we do have the highest quality health care in the world even though it may be rated by some of the international groups as less than others, but i think

they use standards that's not reflective of what we do. we are the cutting edge of technology, innovation and science in the area of health care and we're the cutting edge because of the system we have because we do not have a single-payer system and a government-managed system. we have a system that encourages entrepreneurship and encourages creativity and it encourages a doctor walking into an emergency room and seeing a better way to do things and getting it done without going through a massive amount of bureaucracy. thirdly -- secondly, their we have to contain costs. it is the health of our nation. not only are we talking here about the physical health of our nation, we're talking about the fiscal health of our nation. we know that the cost of health care are driving our nation into an unsustainable situation. we have a $38 trillion unfunded liability in medicare.

we have a health care system that's consuming 17% of the dpp which 16% higher than any other industrialized nation and going up. we know that if we do not in some way get controls on the rate of cost on health care, we will basically pass on to our children a nation they cannot afford to say nothing of a nation that is healthy from a physical standpoint. it will be basically on life support on a fiscal standpoint. and so this bill that is before us that was brought forward by someone on the other side. a compendium of people meeting in the room, i presume, must be tested on those standards, it doesn't cover everyone. while we have a cbo report that says, no. in fact, when this bill is in its highest period of activity, there will still be 40 million

people uncovered. the reduction in uninsured, it takes up 16 million people of the 47 million who are on coverage today, so it doesn't accomplish that goal. we know in the uninsured community that that's not a hom jennous community. we know of the 47 million people who are uncovered today about 20 million are high-income individuals, reasonably high-income individuals who come under $75,000 who choose as a choice of lifestyle not to spend discretionary dollars if you call it that, but rather choose to do something else with those dollars and maybe get a better education and buy a home or take a vacation. i don't know, but they could afford it. of the 47 million who aren't covered, 20 million theoretically could be covered if you set up a system which pushed them toward dissipating an insurance, but this bill doesn't do that. secondly, we know that in that -- of the remaining 27

million who are uncovered, potentially you could pick up 15 to 20 million of them if they would just enroll in programs that are ready for them. medicaid and s-chip, and yet this bill somehow doesn't accomplish that according to the cbo. thirdly, we know there are 6 million uninsured people out there who are illegal immigrants which, of course, this bill doesn'taddress. on the issue of coverage, the cbo tells us this bill fails and fails if it still leaves 39 million people uncovered and it only picks up 16 million people at an aft ron om cal cost, i think the estimate is $13,000 a year for the people that are picked up. a failure. on the issue of cost containment, well, so far what we have in this bill clearly doesn't accomplish it. we haven't seen the whole bill. we haven't seen the part of the

bill that is the biggest cost driver and the cbo wasn't able to give us a hard estimate, but the preliminary estimate is the increased cost by 1.3 trillion and if it were factored in fully, in other words, if there was a lead time here before it is up and fully running. if you went up to full speed on this bill it would be a $2.3 trillion increase in spending. 2.3 trillion increase in spending without three of the major sections scored yet because it doesn't exist. it sure doesn't contain costs. on the issue of quality, well, i have severe reservations as to what this will do to quality. it sets up this super made cal board called the mac, which will say what kind of insurance people will get, what type of

insurance is covered and it will force 15 million out of their private insurance into public plans. all of this leads me to conclude that this will lead to something that will lead to delay, rationing and putting a gap between the doctor and his people and that's not quality by my definition. thr serious problems with the three tests that we lay out and there appears to be consensus on which are, does the bill cover all americans? does the bill bend the year cost curves so that we have an affordable event here for our children and does the bill increase quality and choice? all throw it appears to fail on although we haven't seen the whole bill, but i suspect the sections that are coming are probably not constructively addressing any of those three issues. i'm tempted to think that when you read this bill that's so convoluted and so intricate in its bureaucratic creation.

it has this inner -- interweaving of new bureaucracies of control and command and control. i'm tempted to say that if -- it must have been a bill that i don't know who was sitting in the room, but -- and carl march would have gotten this product. it simply is out there somewhere, but it's a little hard to understand. the issue of what we're looking at here in the area of cost is really staggering, and i think we need to understand this. the cost of health care will bankrupt our country if it continues on its present course. we know, as i mentioned that medicare is expanding radically in its cost burden to the federal government. we than by the year 2020, 2035,

18% of the gdp will essentially be absorbed by medicare, medicaid and social security and social security really isn't a driver in this. it's medicare. we than we're looking at a health care system where the cost of health care goes up to 20% by the year 2020 and 20% of gdp and that's not sustainable under any economy because it basically absorbs the entire productivity of the nation. so we have to get this under control from a standpoint of fiscal health and we have to get it under control from the standpoint of making americans insured. what's been the republican role in this effort? well, we have put forward the substantive initiatives. there are three or four major

plans that are pending. >> we believe very strongly that all americans should have insurance, and it should be an insurance that's meaningful so that nobody is wiped out by a medical event or a physical event that causes them great injury. if someone in your family experiences some terrible cancer or is in a terrible car accident that should not threaten your financial wherewithal as a family. >> also, we believe that as senator harkin has stated that there must be a major emphasis on the initiative of prevention and wellness and healthy lifestyle, but we believe the way you do it is the way it's been -- or most of the bills on our side that have been propose side by promoting incentives for people to pursue healthier lifestyles. this is a country where money makes a difference and if you

give people a an incentive to live a healthier lifestyle, it has been shown that in instances they will, and in the instances of major employers such as safeway and they have been the case. we will reward you for going to a gym. we will reward you for having screenings that will identify potential serious diseases early. we will financially reward you for living a healthier lifestyle and yet this bill contracts that availability. contracts that availability for employers. it essentially says there can be no differential between what an insurer pays for someone who lives a healthy lifestyle and an insuree who doesn't. it makes sense, of course. we should be expanding that differential which is now 20%. . so we have put on the table and

also, in all of the proposals especially senator burris and put on the table ideas for how you get better quality by changing the reimbursement system which is a system of cost plus fee for service reimbursement to a system which says we are going reward quality. quality amongst the provider groups as versus just capacity from utilization. i think in order to understand the bill that's before us, though, think we need to go at what this isn't that's been evaluated. obviously, we come that the from different philosophical views, but let's go to a nonpartisan event here. the ceo. they're the folks, the umpire and they call the balls and the strikes. they look at this bill the way it is and they give us their assessment of it in the context of a fair arbiter.

so i want to turn to this letter because i think it's important that it be looked at into what cbo says about this piece of legislation. i'll ask if the senator can put this letter of june 15th to senator kennedy from the congressional budget office in the record. >> it will be included. >> the first -- the second paragraph says this. a mention that there are a series of tables they have. the attached table summarizes our preliminary assessment of the proposals, budgetary effect and its likely impact on insurance coverage. the proposal being the bill that came from the staff. according to that assessment enacting the proposal would result in a net increase in the federal budget deficit of about $1 trillion. that's $1 trillion. we only deal in trillions now around here, i guess. $1 trillion from 2010 to the

2019 period. once the proposal was fully implemented, about 39 million individuals would obtain coverage through new insurance exchanges. at the same time, the number of people who had their coverage through an employer would decline by about 15 million people or roughly 10%. and the coverage from other sources would fall by 8 million so that the net decrease and the number of people uninsured would be about 16 million people. so what they're saying here is it aggregates the deficit by $1 trillion ask it would say that that's a first number and it assumes savings which the bill represents, but i will be surprised if we get. secondly, it will force 15 million people who presently have insurance in the private sector off their plans which violates one of the rules which the president said which is that

nobody would have to give up their own plan and it only picks up 16 it goes on to say, important caveat regarding this preliminary analysis -- first, this focuses exclusively on the major initiatives. they did not have the whole bill. no one has it. this focuses only on title 1. that is all $1 trillion increase in cost, 16 million people covered of the 47 million uncovered. although other provisions in total one along with those in the other five titles of the legislation would have significant budgetary effect, the analysis in this letter and its attachments is limited to the provisions in subtitles' a through d regarding health

insurance. a through d regarding health insurance which essentially says that there are a couple of giant holes in here and they're getting to a hard number, but the initial number of $1 trillion has to be grossly understated because they're still missing so many big numbers in this bill. second, cbo and joint tax debt have not completed modeling all of the proposed changes related to insurance coverage. for example, proposal would allow parents to cover children as dependents until they are 27 years old, and our analysis has not yet taken that provision into account. although this analysis reflects the proposal's major provisions, taking all of these provisions into account could change our assessment of the proposal's effect of the budgetary and insurance coverage rates. now that's -- that basically means that we don't have hard numbers yet, but it was what they're saying, you know, even though we're being asked to mark it up, we don't have hard

numbers yet. next paragraph and i'm going to read just a section of it because i think it's the important thing. although our reading of the draft language has informed our houses and we have not had time to complete a thorough review of the language which has not had effects on the subsequent analysis. so they're saying they don't really have hard language and these are preliminary numbers. fourth, some effects of the insurance proposals that we have modeled have want yet been fully captured and we've not estimated the administrative costs of implementing the proposals or thcost of establishing or operating the exchanges. that's a pretty big number. it's not in here. the administrative cost of the federal government. they're not in their assessment because they can't figure it out yet. what is the effect on coverage. under current law, the number of non-elderly resident, those under age 65 with health

insurance coverage will grow from 217 million in 2010 to 228 million in 2019 according to our estimates, the cbo's estimates. over the same period the number of non-elderly residents without health insurance at any given point in time will grow from approximately 50 million people to 54 million people. constituting about a 19% of the non-elderly population. because the medicare program covers nearly all legal residents over the age 65, our analysis has focused on the effects of the proposal on the nonelderly. >> let him go a little bit here. >> so they're saying that there will still be during the period somewhere in the range of 54 million potentially uninsured. according to preliminary analysis, once the proposal was fully implemented, the number of people who are uninsured would decline to 36 of the 37 million representing about 13% of the non-elderly population. so after you net out the

different issues here, you go from 54 milon to 34 million and that's where you get the million people pick up. you still have people uninsured which basically undermines the basic thrust and the purpose of the bill which was to insure the uninsured. on the budgetary impact of the insurance budget provisions. on a preliminary cbo tax estimate that the major provisions of title one of the affordable health choices act with the healthy insurance coverage will result in the net increase of the federal deficit of 1 trillion for the fiscal year of 2010 to 2019. that estimate preliminarily reflects the subsidies provided to the purchase coverage through the new insurance exchanges that would amount to $1.3 trillion. the average subsidy per exchange in enrollee would rise to $6,000 in 2019. now there are savings that are calculated in here so the net

number becomes $1 trillion. the proposal would not change the tax treatment of health insurance premiums, nevertheless, the reduction in the number of people receiving employer-based health insurance coverage relative to the current law projections would affect the government's tax revenues because the total compensation costs are determined by market forces. cbo and joint task staff estimate the wages and forms of compensation would rise with the health insurance costs. employers' payments for health insurance are tax deferred, but most of those off-setting changes in compensation would come in the form of taxable wages and salaries. as a result, the shift in compensation which brought about by the proposal would cost tax revenues to rise $257 billion over the ten-year period. in other words, they're saying essentially netting out the 1.3 trillion in additional spending

would be $257 billion increase in taxes which would essentially be a funk of people no longer having tax-exempt insurance. so this letter which is a fair arbiter says that on the three issues that are at the core of our concern here which is insuring the uninsured, increasing quality and reducing costs on two of those issues, the insuring the uninsured and the cost issue, it doesn't comment on quality, of course, because that's not their role, that the -- as an umpire, they're calling box, the bill box on those two issues and the advance or at least the number of uninsured advances and the cost to the taxpayer advances. there is a second letter which they've sent out which i would also ask to be included.

>> can i inquire? >> there are a lot of people that want to be heard. i don't want to cut you off, but i want to get to them. >> understand that, but this is the most significant issue. >> understand that. >> we'd like everybody to be heard. >> i presume opening statements will go on for a while on all sides, and i've got a few more comments i want to make and i'll try to expedite to help the other folks. this was with senator conrad and myself and it was in response to my question of senator conrad and myself about how you would retain costs and their point and i would read one line in this. it does go into what you can do to contain it. large reductions in spending will not actually be achieved without fundamental changes in the financing and delivery of health care. the government can spur those changes by transforming payment policies and federal health care programs and by significantly

limiting the current tax subsidy for health insurance. what they're saying is that you've got to incentivize quality and cost through payment system and you've got to decent viez over not having the tax law in overutilization. and yet as i look at this proposal there is nothing in it that addssees those two points made by cbo as you start and then the cost curve that has become the nomenclature of the time. interestingly enough, the president has sent us to a series of suggestions as to how you could best do the reimbursement issue side. they represent on $350 billion of potential reductions in the cost of health care and none of them are included in this bill. granted, some of them deal with

medicare, but still, it would have been -- it should have been at least sort of a -- some sort of a statement or overarching commentary that, yes, this is where you can go to get some savings. and i have not heard any great enthusiasm yet from the other side of the aisle from any of the president's proposals in this area. it's proposed that we incorporate productivity adjustments in medicare payments and we reduce subsidies for hospitals for treating the uninsured that we adopt the medpac recommendations for nursing facilities and long-term care facilities and there are interesting ideas and they're real savings. so i would ask that they be included in the record. >> without objection. >> this gets us to the question of a couple of specific points in this bill which i think have to be highlighted because the concern is so critical on these. the first is this medical

advisory council. he has for those of us here in 1994, this is really -- this just is deja vu all over again. this is hillary care plus. i mean, this is -- this is the elite of the elite side and how everybody else will get health care in this country. this is. you set up a group of folks here in washington who are going to unilaterally decide what type of health coverage people are going to get across this country, and it's -- it really is the center of this bill when it comes to top down, centralized management of health care. it is, you know, some of us are concerned about the slippery slope, the single payer, this is a greased slide to single payer. it's not about the issue of

care. it's not about the issue of coverage. it's more about the issue of control. if it were about the issue of care or coverage then we would have had a bill that proposed coverage and we would have had a bill that addressed quality care. when it's about, really is centralizing control right here amongst folks who think that they really know how to run something from a central system and this medical advisory committee is the precursor of that with authority to basically accomplish that. we have a 500% increase in this bill. we have a bill which basically subsidized up to 500% of poverty premiums. that means people of $110,000 of income get a subsidy. that's -- that's a staggering concept. if you make $110,000 in this country, you have a right to have the rest of the taxpayers in this country support your

health insurance. it's not appropriate, in my opinion and it's excessive, to say the least. the bill as i mentioned earlier limits the ability of people to put in place incentives for a better lifestyle. i think one of the most substantive things we can do around here is to encourage healthy lifestyles and then there are the missing sections. there's the employer mandate that's missing. huge impact employer mandate. there's the issue of the government plan which is miss g missing. another huge impact and the by on logics which will have a very big impact on what happens relative to research and development in this country which is critical to quality of care and, of course, there's the issue of what this costs which

the ceo makes clear is not clear. so the bill is not ripe for mark-up, in my opinion. major sections are missing, costs haven't been realized and implications haven't been fully been thought out and we're premature to move forward at this time, but if we're going to move forward, you have to presume on our side that we'll come back to the principles that as the bill said it should cover all americans. it should increase quality, protection choice of americans and it should not create a government plan which puts the government between you and your doctor and creates delay in rationing and it has to lead to controlling the cost of health care in the out years. >> thank you, senator, very much. senator mckullski.

>> thank you. thank you very much, mr. chairman. well, this bill has just been accud of being somewhere between a combination between goldberg and carl marx. however our current system is a combination of adam smith, darth vader and the invasion of the body snatchers. so i like our plan better. >> do i look like a body snatcher? >> don't ask that question. >> mr. president, this is not the place -- this is really a historic meeting, and when i got up this morning to come here, i was really excited to join here with our colleagues on both sides of the aisle for really what i consider a rain day view with destiny. our great country h