that. my dad just had a sevenway heart bypass. that was something that wasn't available 30, 40 years ago. and he survived and is doing well, 88 years old. there are so many different kinds of innovations, use of radiation, which is now focused to a very, very tiny area to be able to destroy cancer, different types of drugs and things. all of this oinvation is the product of people are -- innovation is the product of freedom because as people take risks and try new ideas, new things are born and better ways to do things. it struck me, my good friend from iowa, that it was said that it wasn't until about the first world war that when you got sick and went to a doctor that you came out ahead. in other words, you go to see a doctor before, i think it was world war i, it was certainly after the civil war, that you got sick and went to see a doctor, at least 50% of the time you'd leave the doctor worse than where you started.

and that's of course a grim situation to be very sick and have to see a doctor and you've got less than a 50% chance to do better than when you started. mr. king: will the gentleman yield? how would you compare those results to the results of dealing with the pelosi congress today? i yield back. mr. akin: well, i'm afraid that america is probably less healthy under the results of the pelosi congress. if you were to judge in economic terms, you'd be talking about trillion dollar measurements of less healthy. you would be talking about excessive spending, excessive government control. i think sometimes history is so close to us we fail to grasp the significance. did you ever stop to think that the president of the united states fired the president of general motors? that is an incredible intrusion that our forefathers would have said, what, i can't believe

that. and now we're talking about -- this is not just a semi benign lyndon baines johnson talk on war. he decided to hand out food stamps, which turned out to be a very corrupt program, but he didn't try to have the government take over every supermarket and every farm in market. you have 100 million people that have good health insurance, good relations with their doctors and hospitals, getting good medical treatment, and you started saying 30 million and in your chart i see coming up is going to explain about how small -- so we're going to basically have the government take over the entire system and mess everything up for 100 million people in order to try to help 15 million? just the common sense of this, and you're talking about the pelosi congress. i tell you the patient is a lot sicker than they were six months ago, my friend. mr. king: reclaiming my time, and i thank the gentleman from missouri, and i hope we can

continue this dialogue. you inspired me to go with this other chart. some say 50 million uninsured. the highest almost is 40 million to 47 million uninsured. the president has said there are two things very compelling that we've -- we are going down this path. we spend about 15% on our g.d.p. in health care. the rest of the industrialized world is 9 1/2 percent. we can fix almost all of that with tort reform. too much question -- spending too much money can go resolved. the other thing is too many uninsured. the gentleman from missouri. mr. akin: who is it who should allow the federal government to tell american citizens whether they're spending their money in the right place? isn't that -- isn't that kind of this big government topdown

mindset that's come up with something as dumb as that? you need to try and get well. who's to tell you spent too much or too little? even the very sniff of that speaks of this big government mindset. mr. king: i suggest that it's probably people that were the predecessor of merkel, sarkozy or even gordon brown. or even they themselves. i heard it in an actual dialogue with chancellor angela merkel we spend too much on health care. they have the look over their shoulder as if to say global norms would be right. one would be the health care industry in iraq. when we went in there in march of 2003, the average annual expenditure for health care per person in iraq was 50 cents per year. so i suppose you could add that into the average, the global average. we do spend a lot of money. we get great results. i have not heard the american people complaining so much about the results because they are great results.

but if we want to take the cost down, then we take our medical malpractice. i talked to -- i talked to an orthopedic surgeon -- if my days blend together -- i believe it was yesterday, but out of their small operation they spend $1 million in premiums for malpractice and in unnecessary -- he said unnecessary tests in order to avoid the litigation. defensive medicine over $1 million out of what he considers to be a small practice, what i consider to be a great contributor to our society and civilization. that's multiplied across this country. when i hear numbers that comes from representatives that are part of the health insurance underwriters in america and they tell me that 8 1/2 percent of the overy'all health care costs are part of malpractice premiums, litigation, and i multiply that to the gross receipts of the cost of health care, that comes to $3 billion a

year unnecessarily spent because the trial lawyers have that corner of the market fixed, and there's no will on harry reid's side of this capitol building or nancy pelosi's side of this capitol building. in fact, there's a huge thing to resist addressing malpractice and the reform of lawsuit abuse. that's the best and most important thing we can do. we evaluate these bills on the part of 10-year plan. $203 billion a year, if we could fix it it's over $2 trillion. the president in fixing the health care industry that he says -- he will put another $1.6 trillion into it. we simply fix the malpractice and we have been able to fund all of the other ideas which i don't agree with. that's a component of this that needs to happen. and then we have the uninsured. mr. akin. and i would like to raise the issue about the uninsured. these 47 million -- now, this

chart has got somebody else's software did it. i can tell you the numbers that i remember that i vet to be accurate. starts off with 47 million uninsured. we need to fix this because there are too many uninsured in america. what are they comprised of? people who don't have affordable options? no is the answer. here's what it's comprised of. this is the illegal aliens. this chart says six million. mine said 5.2 million. then you have those in the country legally that the law bars were benefits. that's the five-year bar. it's a matter of solid federal practice. they add up to 10 million. 10.2 million actually. then you have those that earn more than $75,000 a year. that's about nine million people. and presumably they could write a check and buy themselves at least catastrophic insurance. they are not in a position where we need to tax somebody to pay less. then you go down the line. those eligible for government

programs, that number is actually 9.7 million. those of that is people who qualify for medicaid but don't bother to sign up. and then you have those that are eligible for employer insurance. roughly six million people that either opt out or don't opt in to their employer-offered plan. once you add up to all of these people and you subject these numbers that i believe are not the target of this dialogue and rhetoric or the bill, you end up with 12.1 million americans that don't have affordable options. that's less than 4% of the population. this is what it looks like, mr. speaker. this is the entire population of the united states here. 306 million people. maybe 307 million right now. and these are the categories that i mentioned, illegals/immigrants, more than $75,000 a year, those who qualify for medicaid. but this little sliver in the red, those are the americans without affordable options, less

than 4%. 12.1 million people. all the rest of these people, not only are they insured but they're happy with what they have. mr. akin: so what we're saying is we're going to scrap the whole system we have, have the government take it over because of that little 4% thing? that seems to be -- i came from the engineering world, and there's one thing about solving a problem, there's another one to have a solution and just try to force your solution on something that doesn't make sense. it appears to me that the solution is we want the government to run everything. we want the government running health care. and so we're going to force a government solution just because of that little red -- that isn't a decent piece of pie. you couldn't even gain any weight on that amount. mr. king: a tiny little sliver even though 12.1 million people are a lot of people, there's still a -- they're still a small percentage of the american population. and to upset 100% of the health

insurance industry, perhaps destroy 100% of the health insurance industry and change the delivery system for the best health care delivery system in the world, all of that is -- this is an excuse for a government takeover. it's not a reason. and if there's anything that my father taught me was, he said, you know, son, there's a difference between reasons and excuses. and i'm your dad and i will tell you i know the difference and i don't have to explain it to you. i will just label them as such. well, this is an excuse, and it's not a reason. not a reason to upset the entire industry but an excuse because the people on this side of the aisle believe in big government, they don't believe in the american people, and they are zapping our vitality. mr. akin: the truth of the matter is we're not standing here defending everything about the american health care system. there's things that needs to be changed.

you mentioned on the floor the tort reform has to be a big part of it because tort reform is just using up a whole lot of money that doesn't need to be spent which could be spent on good medicine. so that's one item. but there are some other things that i think almost any american if you heard about it say, oh, yeah, that's right. for instance, there are some people in america who get to buy their health insurance using pre-tax dollars. where small business men and self-insured people have to use money after they paid taxes on the money. so that's just not justice. people are not equal before the law. we say we're a nation of laws, but that's not a just solution. what we should do is everybody should use the same equation. i think you and i would agree that we just paid for health insurance with pre-tax dollars. that would be making everybody consistent. there's a second thing that we could do. another thing is the idea of a medical savings account. you could allow people with pre-tax dollars to set money aside, they could use that money to buy health insurance or to

pay medical bills. and if they don't use it they could keep it earning interest in an uninsured account. and if they up and die they could pass it onto their kids. that makes sense too. that allows us to have americans having their own money buying health care, and that equation starts to get people to shop for prices. so that's another good idea. and there are quite a number of other ones that we proposed. you mentioned another one that makes a whole lot of sense. people say, oh, you're trying to help the big insurance companies. no, what we want is reasonable competition. and that idea of being able to shop for health insurance across state lines is a very effective and competitive mechanism, because if one state has got laws that allow the insurance to be purchased at a lower price, then why can't a citizen, particularly when we have a big metropolitan area that bridges two different areas to get their health insurance from places less expensive? to there's another idea that's been proposed.

there are other ones. i don't want to run too long on your time, gentleman, but there are a number of things we can do to make medicine better in our country. we are not going to run it down. let me tell you, do you know who votes on their feet, you get some sheek and some other place -- in some other part of the world that's loaded with millions of dollars, and they get sick, guess where they come to get their medical care? they come to the good old u.s.a. and that's because our medical system is not bad. it's producing very good results. it's just that there's a lot of cost shifting going on. and here's another idea, gentleman, this is something for you to think about. somebody summarized if there's a problem with american health care, the problem is this, that's 1/3 of americans are paying nothing for it and the other 2/3 are paying for it. and that that cost shift is the problem. that 1/3 are paying nothing, and that's part of what's causing our cost shift problem. i yield. cink --

mr. king: i thank the gentleman for yielding. and i put this out here, mr. speaker, there are circumstances going on for a long time those that are in the pro duckive years of their lives have been paying for the health insurance, the health care of those that are retired. and we decided to do that. it's a matter of public policy. i don't hear an objection on the part of the people that are paying their taxes on their payroll to support medicare. in fact, i don't hear a complaint very much on the funding that goes into medicaid. the lower income side and generally the younger people are beneficiaries of medicaid. and the working, producing, tax-paying side. and then you have the medicare side. but in the middle those working, producing, tax paying citizens have the ability to choose a policy of their choice, buy a policy of their choice or not

buy a policy of their choice. and this bill, h.r. 3200, takes that away. and the message that i have not heard articulated it seems to be verse ralely understood is, the people paying for medicaid and medicare out of their paycheck because they're going to work every day and managing and planning, now the government is saying, you no longer have the freedom to choose your own. you have to pay for everybody else's. you've been doing that for a long time. but now they want to take away your right to buy your own health insurance policy. it diminishes freedom mr. akin: you run over them with a car and then you back over them to say you're sorry. you're getting the coming and going. first of all, they're doing what we would say is the right thing as a responsible citizen, having a job, buying health insurance and trying to take care of their own bills and now you're going to tax them for doing the very thing that you wanted them to do in the first place.

there's a basic rule of economics and that is what you tax you get less of, and what you pay for you get more of. the more people you pay for free medical care, you're going to get more and more people signed up for it. and the more you tax people who are working and paying for their own health care you're going to get less of it. so why in the world would we want to adopt a policy like that? you know, the interesting thing is, gentleman, this proposal of pelosi health care proposal in spite of the fact that a lot of major media is pushing it and the president is pushing it and all kinds of people like that are pushing it, the american public is not buying this thing i was kind of thinking in my mind, who would be against it? why is the polling data showing this is not popular with the american public? it's almost like politics in a way. how many groups of people does this pelosi plan antagonize? first of all if you're on

medicare, you're going to take $500 billion out of medicare. well, the people who are on medicare are thinking, i don't want you to take $500 billion out of the place where i'm getting my health system of the older people, who are pretty regular voters, by the way, they don't like this thing. then you've got other people. aurp successful owner of a small business. a small business -- small business guys will get soaked to pay for this plan. they're not too enthused about it. then you've got other people, they call themselves pro-lifers, they don't like this very well because there was an amendment offered that made it clear we wouldn't use this government socialized money to pay for free i abortions, that amendment was defeated in committee. it's clear this money will go for abortions, that's why national right to life says this is the wiggest threat in the pro life area since roe v. wade. think pro life people don't

like it. older people don't like it. then you've got 100 million people who have their insurance and doctors that they like and the system that's give themming good health care and you're basically creating something that's going to destroy that and they're going to have to change to a government system within some years. they're not liking this. after you start adding tose theme together, it starts to make sense why people don't like this. and particularly most americans at a fundamental level understand good health care has to start with the patient-doctor relationship. it has to start with the doctor and the patient deciding what is the right health care alternative. and we don't like it when some big insurance company sticks their nose in that relationship, and we like it a whole lot less when it's going to be a government bureaucrat. mr. king: i completely agree. as i'm listening to the gentleman from missouri, the engineer who sees things in black and white, in finite formulas that work out or else

they can be checked and balanced archaeological approach, that's the engineering approach, as i'm listening to this it's triggering in my memory some of the things about what it was like to start and run a business for 28 years and what the motivations are. my business, construction business, seasonal business. i looked at it from this concept. i wanted people that i could rely on. i wanted it to be a career. i set things up where we would keep people on all year long, even though it was a seasonal business. when things freeze up in iowa and it gets cold we move people into the shop, where we rebuild our equipment, sometimes we take on custom work fixing somebody else's, but we kept them around. kept people around 12 months out of the year, i said, i want them to have a health care package, ary re-tirmente plan a vacation plan. that's all fine when you pay the payroll but when the government interferes, for

example, the unemployment tax. if they would offer unemployment benefits and sometimes they gave unemployment benefits to somebody who just didn't want to work. but it was sometimes impossible for me to fight it. even though i had my rating at zero if you're not willing to fight it, many others would see it go up to 9%. they pay 9% of their payroll and unemployment because the government regulation had decided they knew better than the marketplace. then, i said the year-round work part of this, keep people working year round. the incentive is, if you're going to pay the unemployment at the top rate anyway, you might as well lay them off, so they become piecemeal workers rather than employees. then the government decided, you'll pay union scale and now you have people jockeying for position, undermining efficiencies and the federal government telling you how to run your business. all of that still created

inefficiencies by government regulations that bring about illogical, irrational business decisions, until you consider the government regulation, then it becomes rational within those rules. employers who have capitulated and decided they'll use people as piecemeal workers rather than employees because of too much regulation, they'll also decide, i'm not going to pay the health care, i'll pay the premium. it undermines the relationship between employers and employees. that's a component of all of this. i wanted to throw up, before our time ticks down in what i believe is about six minutes a subtle segue, mr. akin. i think most of america should know what this little, subtle, segue is. this is the pervasive influence of the corrupt criminal influence, acorn. and acorn has developed since 1970, 39 years, to be this

insidious operation of now according to a government reform report issued by mr. issa of california on july 23, 361 affiliations. affiliations that have been engaged in shaking down lenders. across this country in 120 cities. think of this, put in it your mind, mr. speaker. chicago. chicago politics, chicago hardball politics, that make a deal. this is shakedown. the health of -- the head of acorn who recruited president obama and is proud of the relationship, bragged about going into lenders' offices and shoving the banker's desk against the wall and intimidating that lender into making bad loans in bad neighborhoods. mr. akin: acorn maybe as an engineer, i'm thinking cause and effect.

acorn is more closely associated with the central nerve cent and hub of what created the housing crisis and the housing bubble in america. they're the ones that basically started all these bad loans, which wall street then lied about, saying they were good loans, packaged them up and sold them all over the world, creating the current economic crisis system of if you want to look at the epicenter of what created for many of us, who lost 30%, 40% of our life savings in this economic mess, you're looking at that symbol of that acorn. i'm glad you've got a line through it. we don't owe them any favors. mr. king: these are the people undermining american freedom more aggressively than any other. they're in many, many walks of life. their influence is pervasive. they are at the core of the mortgage meltdown crisis. the intimidation factor the

shakedown in the cities of the lenders and at the same time the lobbying effort where they spent millions in this congress to push, to lower the underwriting standards in the secondary market of fannie mae and freddie mac. the chairman of the finance committee has been lowering and fighting off capitalization requirements of fannie mae and freddie mac. that was lobbied by acorn. if you look at the crisis, acorn sat the core of that, the president of the united states has been at the beginning of this, his entire political career, he's been part and parcel tied to acorn. he has said so and the videotape is available. mr. akin: the interesting thing is, our judicial system should be punishing lawbreakers, yet what we saw a few weeks ago was a couple of courageous, i don't know if they were college students sorge gal with some pretty legs going in with a camera to acorn and getting all

the financial information necessary and legal information how they could set up a house of ill repute, bring in underage illegals to work, write them off as dependents, that the taxpayer is paying some of the tab so that this guy could run for congress because he started this illegal brothel this whole thing is on tape yet we've got the justice department and all these institutions of law in america that should have been cracking down on this organization, instead you've got a couple of courageous kids that are barely out of college taking some videos and capturing the attention and building the rage of the american public. it is just mind-boggling that our government is so inefficient and so unable to stop this organization that passed out money like it was water down here in washington, d.c. mr. king: and the crimes they were promoting and sub oning in those cities, -- su borning in

those cities, five major cities, including san bernardino and san diego, california, and brooklyn. president obama said he didn't know anything about this 4e knew who professor dwates was he says he doesn't know what was going on in acorn, though i've seen the videotape of the president speaking to acorn, telling them, we've walked this walk together. acorn involved in promoting a whole series of crimes within these five cities, including promotion of child prostitution, illegal immigration, violations of the mann act, helping facilitate mortgages for a house of ill repute and telling them how to avoid taxes, report only 10 cents on the dollar, qualify for the earned income tax credit and for the child care tax credit for little children prostitutes. were these mothers sitting behind the desk at acorn?

they're recruiting girls to be prostitutes while girls are being raised in the background. those things happen, with some similarity, in five cities across america. that's not the whole spectrum. the voter registration fraud, the voter election fraud, today in the state of nevada, acorn as an entity is under prosecution right now, the trial is going on right now, about acorn's fraudulent voter registration and troy, new york, fraudulent votes. mr. speaker, this has got to stop. i ask unanimous consent to introduce this acorn into the record. mr. speaker, i'll withdraw that request and simply be open to a motion. the speaker pro tempore: the question son the motion. to -- question is on the motion to adjourn. mr. king: i move the house do now adjourn. the speaker pro tempore: those in favor say aye. those opposed, no.

the ayes have it. accordingly, the house stands

>> this is only 2% less than the

insurance industry claims they are already doing. the problem is, therefore, you could say it is not a very big amendment. but the problem is we do not know what they are doing. and we do know that they are merging their large bird -- large business customers and their small individual markets and small group markets, they are merging all of those together to make figures look as favorable for them as possible. they say, heck, we are on the 2% less than what you are suggesting today. again, the german mark provides $450 billion in subsidies to the insurance industry and health- care consumers. -- health care to consumers. i think we are required to be serious about that. and this bill is saying that they can only keep six to $9.8

billion of those subsidies -- $69.8 billion of those subsidies. let's say, $70 billion. they will get $70 billion for over half profits. is that not sufficient? is that not sufficient? when we are asking to spend money on health care for their people. to close, i want to reiterate that while reporting of medical loss ratio is is an important first step, it is only that. we must require a minimum medical loss ratio for all plans at some point. that receive subsidies through the exchange. if we include the magnitude of subsidies for private insurance in this mark, with no requirement that a significant portion of over -- almost half a trillion dollars in premium

subsidies actually goes towards coverage, then i do think this could be a can -- a significant government giveaway to private insurers and wall street. i made my point. you can disagree or agree. but i think this is extraordinarily important and i reiterate -- yeah, that is the first chart. i reiterate, again, medical loss ratio, what does it mean according to the national association of insurance commissioners? it measures the relationship between premiums earned and claims incurred. 85% is a fair amount. i originally had it at 90% of the house has 85% on, so i took it back to 85%. i think this is an important

amendment. i realize it is a heavy hitting amendment, but on the other hand, it is only 2% more than what they are already doing. so, they should not be too worried about it if they are telling the truth. >> mr. stabenow? -- senator stabenow? >> i appreciate very much what senator rockefeller is bringing to our attention. this one goes to the heart of the challenges that we have with a primarily for-profit insurance system for which we provide health insurance for people. i have always felt it was concerning when providing a a or a hearten providing a surgery or some other health care for somebody is viewed as a loss by the health care provider -- it is a loss. i understand in car insurance if someone has an accident, well, that is the paid out viewed as a

loss, or if you have home insurance and there is a fire, that is a loss. but when your summoned to provide health care, the purpose is to provide health care. that should not be viewed as loss. i think is very important that we define what we expect, that in our system we are, again, opening this up for more customers with the insurance industry. it is important that the majority, i do not think it is too late to say we should expect that 85% of what they have, what they spend goes to actually providing health care for people. if they're going to be participating, we should be requiring that they be spending their funding on providing health care for people. thank you, senator rockefeller, for the amendment. >> mr. chairman? >> senator grassley.

>> i presume the amendment is well-intentioned, but as i look at it icn that in a strip of nightmare that is going to do considerable harm to a lot of progress that we have tried to make the delivery of health care. and i will try to explain that, but i also want to ask staff some questions of the process. one thing i can find fault with senator rockefeller is there is going to be greater transparency. i am always is supporter of transparency, and so i do not object to making some of this information public. although, i think it is important to point out that a lot of people think is important to use the medical loss ratios for policy and efficiency. a matter of fact, i want to " newspapers and magazine health

affairs. "the ratio is an accounting monstrosity that distorts the policy discourse." i do have concerns about who is doing a good job and who is doing a bad job. i also have some concerns about setting an arbitrary medical loss ratio standard that all health plans met -- must adhere to, and adhere to regardless of where they're located, regardless of their risk pool, and regardless of the medical utilization in the to kadhir area. medical loss ratios dictate the premium dollars that have to be spent on medical care. , put simply, it involves the government using a highly questionable measure to dictate how private companies manage

their operations. i have concerns about the federal government's, which clearly has some problems of its own in keeping its own house in order being involved in the daily activities of private companies. and i will tell you at town meetings, you're about the nationalization of banks and you hear about the nationalization of general motors and it is not a very popular thing to have the federal government getting that deeply involved. and i do not propose that is what senator rockefeller is trying to do, but it had some unintended consequences that occur as a result of this amendment and i am worried about those. just to see if those concerns are justified, some questions. do we know why the amendment uses 85% as inappropriate medical loss ratio for all plans to meet? which one of you folks are qualified to answer that? do we know where the 85% comes from?

>> i think it was mentioned that the current industry average is 87%. >> so, it is your view of a legitimate breaking point, i presume. i will just leave it at that because a lot of times you have to be arbitrary. but let's say that it is arbitrary and. let me ask another question. disease management programs encompass both administrative spending and medical spending. how would we differentiate between medical and administrative spending in these types of programs? >> senator, i think senator rockefeller mentioned that the national association of insurance commissioners has a working definition for medical loss ratio measures. i am not familiar enough with that definition to tell you. >> but at least there is -- i guess, i respect that organization. they do do someç work in this area. >> they do work in this area, but the amendment actually defers to the secretary of hhs

to develop a standard definition. i assumed there would be some relation, but i'm not certain. >> well, whether it is arbitrary or something in the first question to say the 85% is arbitrary in the place of the other, there might be some intellectual basis for it. but i guess it causes me to worry about undermining these programs that we have out there. the we have made a lot of progress in the last few years to improve, for instance, the use of health information technology, for providers and health plans. actually, the chairman has in the market been expanding on those avers through some of those administrative simplification provisions. i would ask you, with the use of health information technology be considered medical or administrative spending? >> again, i cannot say. the amendment defers to the

secretary of hhs to develop a standard definition. i cannot say what would be included in that. >> do you know as a state commissioner -- has the state commissioner worked in that direction? " not familiar enough. >> -- >> i am not familiar enough. >> there is a chart that comes in based on price waterhouse coopers analysis in which the industry says that they are already spending 87 cents on every dollar. it just so happens that i do not believe that. i do not believe that. what i am saying is that i want 85 cents. they say they already do 87 cents. this should not be that much of if threat if they are doing what they're saying they're doing. would the senator not agree with that?

>> well, i guess, than what is the beef? >> the beef is that they have used -- and i wish the senator were on the commerce committee because we had people come before us and testifiey about -i mean, it was astounding, the purging, the incentivizing people who work at insurance companies to find reasons to cut people off. look, what is insurance? insurance is that you make money on some people and lose money on others. new make money on healthy people and lose money on the less healthy people. what they have done systematically over the years -- and the high executive for 20 years of stagnant came and told us this because he could not live with it anymore -- but the

cigna came and told us because he could not live with that anymore. they have cut off millions for arbitrary reasons. then you get back to the stuff ribordy describe your -- the stuff we have already described here. there was the mail that was discovered to have gallstones -- and this is a true example. if a male has gallstones, my guess is that he is going to know that, he is going to feel that. i do not have gallstones, they say. well, the insurance companies says, yes, you do, and we are cutting you off. the same has been used with acne. a person had acne. oh, that is a revelation. .cotherefore, we are cutting you

off. >> so, there are abuses, senator rockefeller. nobody denies that there are probably abuses. when one of the main point of almost every bill here, including a lot of republican bills is to eliminate a lot of those abuses within private health care, but it seems to me your amendment does not deal with those abuses. your amendment goes beyond this. can i please proceed? >> of course. >> one other question. maybe you have to give me the same answer, but i want to ask it anyway. when it comes to understanding what health care efforts to reduce waste, fraud, and abuse -- and by the way, let me say before i ask the question, waste, fraud, and abuse, private insurance companies do a heckuva lot better than medicare does in that area. can you imagine the billions of dollars that comes out every spring in a report that we get about waste, fraud, and abuse

within medicare? you do not hear that much in the private plans because they put a great deal of effort into reducing it. would this be considered administrative spending? >> again, it is not that it is left to the secretary. i cannot really answer the question. >> with the senator yield for another question? >> yes. >> what is the objection for setting in medical loss ratio floor? what is the objection? 85% is already the law. state law in california. i do not know of any insurance companies fleeing that state. they have got a lot of customers there. this is not original, not novel. this is trying to, particularly in view of the loss of the competition, the public

option, etc., trying to find some way to grow them into what they're doing and not focus so much on profits. and perhaps that is radical enough to think about trying to provide medical services for people. >> and maybe i can ask the senator a question in exchange. does this 85% mean that any company below 85% is not providing enough medical care? or is doing a bad job? i do not think so. what if they are implementing reserves or implementing a more sophisticated disease management program, as more progressive companies would be trying to do. you are going to create an opportunity for incentives and improvements. you're going to try to micromanage every company in the country. >> senator, i am not and i think the senator, with all due respect, knows of my great admiration for him even during

election time thinking knows that. i think you are stretching. i think you are trying to find -- trying to make up situations which undermine this. what is wrong with having a basing footing set like they do in california? what is wrong with that? >> by the way, next year is no election year. mai-mai need those repeated. >> and you will get them -- i might need those repeated. >> and you will get them. >> i have some statements from health experts, at least the magazine is considered an expert, so i raise these concerns. i said i had a great deal of respect for transparency, nothing wrong with that. what i have asked in questions are for a few examples of initiatives that a lot of us support that could be discouraged if we put in place an arbitrary medical loss ratio

requirement. if health plans are told that health i.t. disease management, reducing waste, fraud, and abuse all count towards higher administrative spending, they will naturally cut back on those efforts. this amendment, i do not think, provides enough detail on how we would differentiate between medical and administrative cost and also uses questionable measures to tell private companies how to run their business. i think it is a bad amendment trade -- a bad amendment. >> just briefly, i think we all know one of the main clot -- causes of health care inflation is over utilization. i think one of the strong things in this market is trying to realign incentives, but individual incentives as a senator carper and senator ensign try to do with their men and last night, to encourage people to do the right thing personally.

and we want to encourage providers to go through -- to go before value over volume, as what we said. my information is to ensure that profits on a national basis are roughly 3 cents on every dollar. i think senator kyle pointed out insurance companies are wonderful to hate. nobody likes insurance companies. but the fact of the matter is insurance is based on the contract. contracts are enforceable by not only the parties of the contract, but here we have pointed out that there -- enforcement can also be undertaken by the insurance commissioners, by the attorneys general, and by private individuals under state consumer protection laws. in texas, for example, i am advised that the small group loss ratio is below what the

distinguished senator would set, but the large group is higher at 90%. nationally, roughly 88%. first, i do not understand the need for the amendment. second, i doagree with senator grassley. i do not see a need for intervention into what is a private relationship between an insurance and insurer -- insured and an insurer the excise tax we are putting on companies, the $60 billion in fees on insurance companies, and now trying to micromanage their medical loss ratios, i just wonder if we are not likely to run many insurers are of business so that we have less and less opportunity for people

to make choices about their health care. those are concerns i have and i urge my colleagues to oppose the amendment. >> the senator bingaman. and >> mr. chairman, i am reluctantly compelled to speak against the amendment and vote against it. i do agree with senator rockefeller that there are all kinds of abuses that have been amply demonstrated by the industry and i believe this legislation will correct the worst of those abuses. and developing a forum for the legislation in the future, but i think the legislation does a good job of identifying the abuses we know about and correcting them. in addition, as i think his amendment points out, there is a requirement in the chairman's mark for health plans to report the proportion of premium

dollars that they spent on items other than medical care for their medical loss ratios, and i think that is a very good provision and i hope that information is taken by the secretary and widely publicized and that it will help people to choose which companies to purchase insurance from to the extent that they decide to purchase insurance from private sources. but the proposal to put in law a strict limit of 85% of their earned premiums having to go to medical claims, i think, is a very major change in the way we have tried to regulate insurance, and particularly health insurance, since we have begun to try to regulate it. as i see it, this is very analogous to what we do with utilities.

when i was attorney-general of my state we represented the state of new mexico wrotbefore e public regulation commission, which have the job of essentially looking at the various utilities that were doing business in the state and ensuring that the rate of return was appropriate and that their charges were a corporate. it was a much, much different structure than what we have ever had in the area of insurance, at least at the national level. i am not saying that i would not be open to argument that we should go to some kind of a utility model in the future, but i do not think the case has been made that we should, and if we did go to a utility model for the regulation of the health insurance sector, i think the most -- the more appropriate

course would be to set up a national commission and give them the kind of responsibility instead of saying, by the way, this is another responsibility of the secretary of health and human services. i do think this is a very major undertaking and a lot of companies in this country sell health insurance at the current time. i would not want to just have this be one additional responsibility that we would just load on to the secretary. with are more understanding of the import of it and what it would do to the insurance market. for that reason, i would not support the amendment. >> mr. rockefeller. >> not quite making the closing argument here, but i am forced to look at the west virginia medical loss ratios as reported by the insurance industry'.

and they say for individuals is only 65% of their premium goes to health care coverage. the rest goes for other things. and i am forced to report that in the small group market, which is called small business, etc., that the ratio is 75%. and the rest goes for whatever it goes for. yes, in the large group market where things are much more certain the percentage is much higher. i will just put this to my colleagues. we have put over half of the money in this bill into subsidies for insurance companies. and i asked my colleagues, why is it so difficult to be like california, and perhaps other states that i do not know about

to say that 85% ought to go to health care? i mean, this is a serious part of health reform. we're giving a lot of money to insurance companies who are already making a lot of money, hundreds of billions of dollars. and they may say it is 3%, but it is a fortune. why wouldn't we do that? if we are spending all the money in this health care bill and it is meant to encourage medical coverage of people, but we're not doing that. the we are deciding evidently that we're not going to do that, we're going to let things go on as they have been, status quo. with some modification from the chairman's mark. i find this unacceptable. i can count the votes and i will not ask for a vote on this, in

part because we do not have a cbo score, although i am confident that it is budget neutral. but you know, the argument of the day is that it does not work. and you have got to have a cbo's court and we will have to wait for that. they have not been given much time, in their defense. -- and you have got to have a cbo score and we will have to wait for that. they have not been given much time, in their defense. >> the amendment is withdrawn. haut any further amendments? -- any further amendments? we can finish tonight. we do not have to wait for all of these amendments, you know. [laughter] >> mr. chairman? >> senator kyl. >> i believe the next amendment of mind is f-6, as modified.

this relates to flexible spending account -- spending caps. >> i do not know if this is fair because i understand that you have the same offset -- maybe you have a different of said, but in the interest of comedy -- >> i'm sorry, i thought that this had been amended to admit the stabenow concessions. senator stabenow, the one that you had so graciously noted, i think, eight times. >> oh, yes, the one cutting middle class -- >> it was, the perennial, will that work? >> yes. >> it is like customs user fees. >> yes. [laughter]

except there would actually be real money with this one. . . it hurts the people they utilize these arrangements. people can make tax-free contributions for medically necessary goods and services to pay at a pocket costs. there is no limitation, as i said, right now on the amount that can be contributed.

so employers generally create their own limitations at $5,000. the mark would limit that to $2,500. this limit would raise $15 billion over 10 years. i note that the average fsa election in 2008 was $1,086, an amount substantially under the cap. there are some who would incur higher out-of-pocket expenses that would exceed the proposed $2,500 limit for elements like diabetes, often, even things like purchasing -- diabetes, optimisautism, even things like purchasing braces. they could spend up to $4,400 a year. the 35 million people who use that fsa spend 43% on physician

visits, 26% purchase restrictions and over-the- counter drugs, 24% use dental, and a 10% used vision. it is important to emphasize that, relative to current law, the cap is still an increase on people with chronic diseases who spent more than $5,500. when you have a tax benefit today and we're taking that away by imposing this limit, you're imposing a tax liability of people that did not exist before. i had previously used a different offset, the one that we had been precluded from using it, and that is the reason for

using the other rock said. mr. chairman, i am having a little -- using the other offset. mr. chairman, i am having a little trouble thinking. i want to close by saying that we have a long list of expenses that can be reimbursed by fsa's. these are really important. if we're talking about families that have chronic conditions that are over $4,400 in expenses, i would hate to put a $2,500 limit on the amount. dental treatment, i surrender, all kinds of madison, oxygen, -- dental treatment, i surgereye s, all kinds of medicine, oxygen, [unintelligible]

>> is there a discussion? what is the average income for a person significantly using day flexible payment account? >> we don't have good information on fsa use by a come that i could give you an answer that would be consistent with the distribution table. but i can tell you that's fsa's are more prevalent in large firms. large firms tend to be higher wage firms. the figure that he cited was $55,000 per year. that is with a plausible range.

>> well with the income be for those who meet the caps? >> that is the more difficult part for us to determine. the tape separate among eligible employees is less than 20%, although we predicted that is growing somewhat over the budget period. that is one of the reasons we do not have really good information on how this matches up. >> mr. chairman, on that point, a majority of the fsa's testified that he never of

americans is growing. health insurance does not cover adequately, as senator pell has pointed out. -- as center powell has pointed out. -- as senator powell has pointed out. i cannot give you a specific criteria or bubble that that came from, but during that particular hearing can -- or bible that that came from, but during that particular hearing, this affects middle-income families. >> i had an amendment to -- to $5,000, but i did not have the offset. -- i had an amendment to raise it up to $5,000, but i did not have the offset.

>> the bureau of labor statistics they survey for 2006 on the income level. i agree that we do not have the detaile specificsd on income level, but they did do a breakout between people who make the above $15 an hour and people who make below $15 an hour. for those who make above $15 an hour, 45% of them have access to fsa. those who make the low $50 an hour, only 21% have access to fsa. >> thank you. there are all kinds of statistics on this. according to a mercer consulting service firm, the average contribution is $1,235 among

employees at all firms participating. the average account was 1000 units $61. -- was $1,261. all the numbers i see, there's nothing that shows that there is a big bump to propose a 25 that -- propose a $2,500 cap. for the vast majority of people, they will be able to utilize these flexible savings accounts. second, it does make some sense to put a cap on this. we're trying to bend the cost. we're trying to do it fairly.

what is too light, what is to lose, etc. my judgment is that the $2,500 cap is well within reason and will not have much effect if any. it may have some, [unintelligible] i think richard -- >> mr. chairman. >> who is paying for this amendment? i will just repeat myself. it is paid for by middle-income and lower-income people. they're the ones who are paying for this. the people utilizing these tend to be a little bit higher income and the pay tends to be for those in the lower income. i don't to overdramatize the point or overstate the point,

but if you look at this proposal, that is basically what the shift will be. as middle and lower income people in this amendment will be paying for the higher and middle-income people, and that is if it is realized that much anyway. >> i remember a friend of mine bought an old vehicle one time and it was kind of rusty and he wanted it painted. we went to a place called grohl shive -- and i don't to -- what took place called earl sheib -- and i do not mean to put it down -- but he estimates it was. he said it was $19.95. he said, will it cover it? >> he said it will cover $19.95 worth. >you said that it is not a huge demand and so on. but it is $14.6 billion.

that is a tax increase. somebody is clear to have to pay $14.6 billion. now who is it? the median means that half the people are above and half the people are below. so have the people are below $55,000 in income and half the people are above 55 millet -- $55,000 in income. it is hard to know exactly what income level benefits from this more or less. but we do know what kind of folks, in terms of medical expenses, and it is folks with chronic medical expenses to take advantage of this and are being benefitted. it is a little bit like the deductions above 7.5%. we determine the long time ago and the irs treated this way that folks that have a

catastrophic medical condition, of the irs does not treat that as an intentional act, but has unintentional consequence as in life and we tend to treated in a tax way as a more benign condition. here, too, we give people a bit of a tax break if they have a chronic condition that puts them into that $4,400 a year expenditure because of a chronic condition. that is to this really helps. some of them are going to make more than 55,000 lives a year and some will make less. but the total impact is $14.6 billion. finally, senator robert points out that i don't think this amount is indexed. for a long time, it is not -- it will that be worth anything at all.