lot more time, we should accept that concept. i am confident you would be able -- it does not make sense to turn this around without them here. >> that is a good point. they are not here tonight. .

we will continue to work on the lower end of the threshold. thank you. >> i have a question about the commission, but as this remove the peace that exempted hospitals from any cuts or where any added for any other providers? >> to answer the second question first, there were no additional

carveouts added. the exemption is for providing cuts at a certain level and it is not just apply to hospitals but some other providers who were cut in excess of the productivity adjustments in a given year. that exemption and criteria remains. >>ñr another question. there is a reduction of the subsidy for the medicare drug benefit. if so, this will increase premiums on medicare patients. is that the way you see that change working out? >> no, sir. a clarification in the

modification is that the intent of this provision was to apply this commission's scope of recommendation to all parts of medicare and what this does is clarify parts c and d. >> it refers to part d premiums. >> i will refer to my colleague. >> it says federal premium subsidies to the plans. it will have the effect of increasing premiums. >> well, the point of the clarification was to suggest that there are ways of reducing the federal spending for medicare part c and d.

it is not directing the commission to do that by suggesting there are alternate ways of reducing spending. >> if you reduce subsidies, you will increase premiums. isn't that correct? >> if the commission was to choose that route, that could be the effect but this is not directing the commission to do that. >> the other point that i want to make, the amendment [inaudible] and my doing thañrby doing thate requirement of publishing a proposed rule that would be open for review and comment. it means that the commission can now proceed to make major changes in medicare with no

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>> i want to be clear on the total cost, what is the total number? >> mr. chairman, the total cost would be 11.2 billion in terms of the individual provisions and that would not include in the interactions.

we included the is with the possibility that the cbo would include these at a higher number. >> so, this is throughout the provisions. >> those other three that cost money and then there is 15 million in savings from the previous amendment that were it in the health improvement fund. the cost provisions, 4.3 for the streamlining, 5.9 billion for the excise tax, nearly 1 billion for the tax credit for a total of 11.2. the offset is 15 billion from the health improvement fund which includes the savings. the net effect would reduce the overall cost by approximately 3.8 billion pending the review of interaction a faceffects.

>> it clarifies that the commission may not propose changes to beneficiary premiums under certain sections. it shall include recommendations to reduce expenditures under part c and d such as reductions in premium subsidies isn't that a semi requirement? that is a change from the mark in terms of beneficiary -- benefits? that is one of the issues that we discussed that it would not be beneficiaries effected by the recommendations. >> that's correct. the intent of this classification is not to change the substance of what was included. it is to merely clarify and to

provide more detail of this scope of what the commission would be able to do. the words provide that the commission does not have to include recommendations but if they do, they could include such things as the federal premium subsidies or changes to the payments to medicare advantage plans. those should be available because they had broad authority to change payments to providers and the medicare program, not to change co-payments. these federal premiums are premium subsidies to the plans and that would be something within the scope. >> would that it result in increases?

within that have an increased cost to the beneficiary? >> if the commission chooses to reduce federal premium subsidies, it could have an effect. >> it is a departure from what was in the original marked up? >> it is not i. what was intended was that the commission had available and the changes and these are the primary effect of the commission's recommendations. >> i recall in our discussions that that was not the case. >> ok. >> do not we need to clarify that the modifications are being removed? >> they are not being removed.

>> what was the understanding that we reached earlier. >> we are going to work with the senators. we have to make these changes and we will work with the two senators. it is wrong to have the earlier provisions when the agency say they cannot do it. we try to make it fair, make it right. >> from what i and stand, & more now that we had information about this, the concerns that were raised can be much more amenable than the changes that are being made to the amendment. the concerns that were raised can be fixed with much smaller corrections than totally gutting the amendments. i think the terror has gone past the problem. >> i hav-- i think that to the

cure has gone past the problem. >> i would not characterize it that way. >> i want to get back to the provision. in the chairman's mark, it said the commission would be prohibited from presenting proposals that would change benefits or eligibility standards. >> very clear, isn't it? >> what is your question? >> this modification changes that and we want to be clear on that because that is a departure from what it was originally. >> in other words, a little bit more than a clarification.

>> i think she has a point. as i recall, our discussions, this was a fairly significant point and it is important that this be cleared ouup. >> the prohibitions that she refers to remain in place. the first clarification states that commission may not propose changes to a beneficiary premiums and it adds an additional prohibition. this in no way changes the prohibition on rationing care, cautionary [unintelligible] >> it doesn't have to restate everything in the modified market. -- mark. as i and stand it, the prohibition is still in the

modified market. >> this provides clarity in terms of premiums. >> can you assure us that when this language of this amendment is added, the prohibitions that previously applied, that we had agreed to in the other discussions will still be in effect? >> yes. >> thank you. >> all in favor of the modified amendment? >> we want a recorded vote. >>upham [voting]

>> the clerk will tally the votes. >> the final tally is 13-10.

>> then it is agreed to. there's only one potential amendment remaining and that is offered by senator [inaudible] >> thank you, mr. chairman. at this late hour, our committee is about to tonight our constituents something that we as members of congress take for granted, healtchoice of health care coverage. we have more than one dozen quality plans to choose from. under this amendment, within 200 million americans are going to have no choice of health care coverage at all. all of us have heard the pledge, you can keep the coverage you will have today.

that is what free choice is all about. this amendment is that if you don't like the coverage that you have, if your insurance company is giving you a raw deal, you are going to have something else to choose from. we understand the value of choice and competition. choice is what generates competition and competition hold down health-care costs for our people. yet, we have stripped this bill of choice and competition. a typical american who works for a midsize company, if they are getting hammered by their insurer, they are stock. -- stuck.

if you work at a typical american business and you don't like what you are getting, if you don't feel you are getting a square deal, and you have no where to turn i don't think that is what the real health care reform is all about. i would like to see us put the consumer in the driver's seat. put the consumer in a position to turn the tables on the insurance industry. that is what we do in every other corner of the american economy, we put the consumer in charge and if the consumer makes a wise investment, the money goes directly in their pocket. here's how the proposal works. if your employer already offers two choices and one of them is a low-cost option, then the worker gets choice within the employer based system. if the employer is offering only

one health plan, the worker can keep the employer's plan or take the same amount that the employer spends on the workers' coverage to go out and buy another plant in the marketplace. we make sure that employers win under this approach as well. if the employers want more choices, if they're in sure is not giving the business a good deal, -- if there insurir insurs not getting a good deal, they can bring it to the market. giving americans a choice is the single most powerful way to save money. this is one of the reasons that the president identified guaranteed choice as one of the three bedrock requirements for real health reform.

in the proposal that i offer tonight, the congressional budget office has found that the taxpayers would save at least a billion dollars. the real savings. to the private sector where independent experts have found that $360 billion would be saved if businesses and consumers look for the best possible deal. small and mid sized employers like it because it would not only help their employees but the bottom line. with this provision, all americans would have the opportunity to benefit from health reform. that stands in sharp contrast to what is in the mark. it says, as written today, if you are working family and your insurance company abuses you, you are stuck, you have no other

options. i would like to see all americans have some choices, like we do as members of congress. i realize that some the most powerful interest groups in this country don't want this provision in the bill. they have been out and about talking to you and pretty much saying that if americans have choice, like we as members of congress, a western civilization will end. it is all about control. these big interest groups like the system the way it is. frankly, if anything, under what we're talking about where they are going to see americans forced to go out and buy their products, they will be able to increase their market share without having to face any additional competition that would give the consumer a better deal. some big business is like having leverage over their employees. they can use this to hold down

wages and it also keeps workers locked into their jobs. if americans had choices, premiums went down, maybe employees within of getting a raise. we have some labor folks who are saying that they don't want this as well. the fact is, if people get choice, if people get choice in the marketplace, maybe they would say, we would rather have that kind of opportunity then to have labor call the shots for their future health care coverage. the fact is, a lot of insurers don't want to be held accountable either.

can we go back to our constituents and say that while we have a health care to is, that we benefit from a system that is based on choice, they are not point to has even won choice -- they will not even have one choice? the president said the beginning of this debate that there would be well funded efforts that now they proclaim that reform is not possible, it will be eager to mislead people about what real reform means. he was right. this amendment illustrates the correctness of his concern about the power of special interest groups. this amendment is an opportunity for us to inject real reform in the bill. this is a transformational amendment because it says that we can't find a sweet spot in

between blowing up the employer based system and saying that workers should have no choice at all. -- because it says that we can find a sweet spot. what we can do in wrapping up the consideration of this legislation is that we should stick to what the president said when he came before us for the address to the congress. he said his guiding principles for choice and competition i would ask colleagues as we wrap this up, where in this bill does it give consumers a choice? we're in the bill does it allow the typical american family to have the kinds of choices that reduce competition, that hold down health-care costs? i cannot find it, colleagues. i would hope that we, in wrapping up this bill, come to the conclusion that it is not

right to deny our constituents something that we take for granted. fifth if i could yield and be in a position to respond. -- mr. chairman, if i could yield and be in a position to respond. >> discussion? >> let me say that the general idea that the senator has is one that is attractive to me, the idea that employees should be able to leave their employer

coverage and obtain their insurance elsewhere if they choose to do so. i think we have a circumstance today where we are going to pass out a bill here that requires people to obtain fairly meager coverage. in fact, i think because of the amendment by snowe, many people can obtain coverage that has an actuarial value of 50%. as i understand what you are suggesting is that to the employee who is in a plan now, they would be able to take the

funds that the employer is putting into that and they could go outside and find something cheaper. they could then keep the money. the end result of this is that you would have an awful lot of folks with a tremendous financial incentive to do this. to essentially trade down in their coverage, to obtain coverage that is much less adequate to their needs. i don't think we want to pass legislation that ends up with the whole lot of underinsured americans out there. we want to have everyone insured, we want to have them adequately insured. as i understand what you're proposing, you would have a very

substantial financial incentives for people to take reasonably good coverage which their employers are providing an to trade debt and for something substantially less -- and to trade that in for something substantially less. that would not serve the interests of the country. >> if i can respond, there are two points. how does that happen that we decide what is best for the workers? we in addition under this approach -- we see and to this approach -- the question becomes why shouldn't the worker bee in a position to make their own call?

they will have a choice of coverage. both of them are part of the menu that is specified in the bill. i think that it should be the workers' judgment rather than hours as elected officials. second, i would say with respect to whether people leave or not, the congressional budget office found that that uld no be the case. that was a specific finding of the congressional budget office. counsel, can you read that portion of the congressional budget office analysis? it responds to the argument that somehow there would be this doomsday spiral of people leaving and young people leaving. can you read that section from the report making it clear that they don't see this amendment as

destabilizing? >> i do not have that available. i apologize. >> would you yield for a question? >> the congressional budget office analysis indicated that our proposal would not have substantial effect on the number of people covered were the source of their coverage. -- or the source of their coverage. >> it is it possible that with this new-found freedom that the employee, maybe they did not like the coverage they were getting. it wasn't adequate. it was not a cadillac plan.

could they take that voucher, but some of their money in, then by a plan that was more expensive? >> they could certainly by up if that is what you're talking about. i think, both of you are raising questions. senator bingaman wants to make sure that folks that perhaps have modest incomes would not suddenly sacrifice health insurance decisions. i think the minister answers that we have in this amendment, in this bill, -- the minimum standards that we have in this bill, in this amendment, is appropriate that consumers have a choice. it should be the possibility of buying up and making that

decision. >> mr. chairman, may i be heard on the amendment? >> let me say that senator wyden is a new champion for freedom around here. i have a tendency to agree. i've not may be thought through all the consequences of the amendment but i like the idea of individual choice. i like the idea of putting that competition in. but he said earlier is, do you trust to the individual? do you put personal responsibility back in health care? can people make informed choices? i think that what the senator is saying is that he trusted the individual.

that is not a bad idea. i think that my staff is going crazy behind me that i'm talking like this but i think you raised some very valid point and this is something that we should consider. >> mr. chairman. >> first of all, let me say that i have a big respect for the commitment to this issue. he has put a lot of time into this. he has reached across the aisle, he is very creative. he has had some interesting ideas. there is no one that works harder on this issue. hi talked to some of our employers in massachusetts.

many companies are dead set against this. i want to remind my colleagues, last year at the library of congress, when we had a daylong session and we were listening to experts from all over the country, out of the session came a consensus. at of all the sessions, a consensus. -- out of all of the sessions. there was a strong consensus that one of the strengths of our system that we need to build on is the employer based system. the health committee did that. senator kennedy, senator mikulski and others spent time on this. we have built on the notion that employers would deliver health care. one of the things that comes with that is the numbers. it gives them purchasing power. it allows them to negotiate, particularly a larger company,

low rates across the board. if you take a look at employer based plans, or self-funded plans, they offer really good quality care and people go to work in many of those companies because of the quality of care. it is very appealing. all of a sudden, anything kind of gets dumped down in the process. you end up with younger workers who cannot afford a different pool because you have different ones out there. they will go out and all of a sudden you have to kind of cherry pick. you lose the strength that comes from the shared responsibility of the company having all kinds of issues. they build their plants

specifically around that. we have 130 million americans who love the coverage and they want that. one of the problems in this debate has been the whole issue of the americans who already have coverage. they are worried that what we're going to do is somehow shift the cost to them and make it more difficult for them to keep the coverage they have. i am convinced listening to a lot of different players to offer plans on which our system is built, some self funded, some large companies. they are really worried that they will have people shifting in and out of their plans and they will lose the current stability they have or the purchasing process and for the bargaining process and they will wind up not being able to offer the quality of plan that they

have today. that is spiral that people talk to. i've come to believe that that is real. human behavior is such that if people can kind of shoes and you have some people out there who are part of a tick of the plan, you will lose the strength of the shared responsibility that we get from what we decided was [inaudible] of the american system. >> the senator has raised a couple of very important issues. i do have the language to give my colleague that does go into the specifics stipulation. the cbo does not think that there would be the destabilizing of the system. there would not be substantial effects on the total number of people with insurance coverage

or the sources of that coverage relative to the chairman's mark. that is the finding of the cbo on this argument that the lobbies are bringing. let's talk about the worst-case analysis. what you are saying happens, even though cbo says they don't believe it will happen. what we have put in this marke s very robust risk adjustment. what that means is that if you were to have something cbo believes will happen, young people leaving in great numbers.

periodically, the exchange would make a payment to on employer who had the older, sicker workers left at the worksite if the young people departed. so, the cbo says they don't believe it will happen. if it were to happen, we do believe with risk adjustment and reinsurance and you happen to be one of our experts. that is how you adjust for risk. >> we are not putting enough money into it so we will not do that. >> the cbo says it will not happen, we can talk about different funding. colleagues, the last point i would make. we should wrap this up. this is not blowing up the employer based system. that is not even my original legislation. this is taking the chairman's

mark and importing the concept of choice into the employer based system. as i said, if an employer offers two choices and most of them don't offer a choice, then the worker gets choice within the employer based system. things really wrapped up at that point. it is only if there is a choice that you go to the next level through this concept that i believe empowers the consumer through a voucher. this amendment doesn't raise taxes a dime, not a dime. this is about creating consumer choice for the american people. for all of us, not just people who are unemployed, under insured, areor happen to hold an election certificate. >> first of all, i want to say i

don't know anyone other than the chairmen u.s.-made a more dedicated, sincere commitment to reforming the health-care system. one of the great tensions that exist here is the system that we currently have is the employer based system. the senators said cr's concept s based on a different concept. if we were starting from scratch, i am not at all sure that the senator from oregon doesn't have a better concept of how to build a system if we are starting from a blank page. we have a circumstance in which we have an employer-based

system and the questions that senator bingaman has raised. is the cbo analysis that was referenced, is that a cbo's 4 of this amendment or was that an analysis of the bill? >> it was an analysis of just this amendment. i would say to colleagues that the analysis of this amendment -- i wrote a piece of

legislation, i was interested in a different approach. yet, what i said when the chairman chose a different routes, i would work within that framework. i have done that. we have had many amendments, i supported ideas from both sides of the aisle and spent the better part of 10 days and did not once mention the original bill. i do believe that it is possible to import a choice in to the employer-based system. there's something in between blowing the system up and saying that we will tell other people to what they have even though it is a crummy products. that is what we are same. -- saying that we will tether people to what they have a. that i what they aris what we ae

saying. we have this safety valve of risk adjustment and reinsurance where this doomsday scenario is something that would have to be done with. 2009 is different than the 1950's. keeping the original system in 2009, when people change their jobs 11 times. i think that we can do better. until we can do better in terms of affordability and choice and that there is something in between blowing the system up and saying the cannot improve it. that is what this does. i hope that my colleagues will vote for choice, both for competition, vote for principles that make the american economy work in every other half sphese.

>> senator, i really appreciate your right here. yet come to me many times to get my assistance. -- you come to me many times. i really appreciate that. one thing that has struck me, if we look around the world at countries trying to address health-care reform, a lesson learnt is that almost every country has attempted to institute something, no country did so. every country realize that if they're going to get something that works, they have to build

upon their countries' systems, organizations, and make it work better. people in different countries know what they have, they know what their employers do or to not do. that has generally worked in countries. that is work in britain, switzerland, france. there are people who say, i have been tempted to to think along these lines as well, that if we were to do this all over again, start from scratch, we might not have an employer based system today. back in the 1960's, the employer

based system starts to take form basically because the exclusion is an the wage price controls [inaudible] we got it going. various organizations, unions, when negotiating contracts and were very interested in health care benefits as well as wages. to move away from the system would be destabilizing. it would cause such consternation and what we know is a country. the cbo has not scored this amendment or analyze this amendment. i just checked a few minutes ago.

one has to look at it and see what happened. under this amendment, an employee would take a voucher, the employee could then shop around. who would tend to do the shopping? those that was shopping probably be younker, healthier employees. -- those that were shopping would probably be younger. what is left? it means that the pool has diminished which causes a deep destabilizing strain on the company's health insurance system.

second, those remaining would be less healthy. this further destabilize is the pool. >> i don't think that that is something that we want to do. with all respect to my good friend from oregon, the cbo has not analyzed this amendment. one will have to look and see what the consequences would be. we should not throw the baby out with the bath water here. the fact of this is that you cannot keep the insurance company plan that you have if you like it. the companies are going to start dropping employees. they will start dropping them. they will say, hey, i have a smaller pool, my people are

sick, i will start dropping them. i cannot think of a major member so opposed by both business and labor. we are trying to improve the market by reforming the health insurance system. delivery system reform. think of all of the good things that are in this bill. this is transformative. i think it would be

transformative in the wrong direction. there's destabilization that would diminish the polls and make the polls sicker. -- to miss thdiminish the poolsd make them sicker. i don't think that this amendment is the right thing to do. >> mr. chairman, we have checked with cbo and i think that there is confusion. here's what we just got back, all we score was giving employees the option. we have not soured a voucher peac -- forwascored the doctor

peice. -- piece. this has the risk of undermining the pool. who is most likely to take that down to her and got side of the pool -- take that voucher and go outside of the pool? it is the younger workers.

some say that if this is done, the pool will be destabilized. we are in an awkward position here because there is a part of your amendment i'm very attracted to, a part that i am nervous about, part that we have to score, part of it that we don't. >> i think is where important to clear this up. i sent one version and one version only to cbo and 8 included the voucher -- and it included the voucher.

this was relative to the chairman's mark, this would reduce the net impact on federal deficits by about $1 billion over 10 years. there would not be substantial effects on the sources relative to the chairman's mark. i want colleagues to know that i sent one version, it had a voucher. i am reading verbatim what the cbo analysis was. i must cbo sends up a different version -- unless the cbo cents a different version, that should count for something. >> this is a note from cbo, from still ellphil ellis. "all we scored was not giving

them the option, we have not scored the voucher peaciece." they did look at giving employers the option, they did not look at the voucher. that is directly from mr. ellis. i don't know what to say but i absolutely believe you that you submitted the whole thing. they are telling us now that they did not score the voucher peaciece. >> i am concerned about the words here that says there would not be a substantial effect. i don't know what the definition

of substantial is. it does not say anything about quality. all this says is a number of people with coverage. it doesn't say what that coverage would be. the whole theory is the market and that is what we have to look at. >> the hour is late and i will not take a couple of minutes to wrap up. >> briefly, there are some pretty tired people here. >> millions of americans have no choice in health care system. that is the fact. we can go back and forth about cbo scoring, what is indisputable is over 200 million

americans, 200 million americans, if they're getting hammered by their insurance company, if they are getting lousy service, we are saying that you are stuck. you don't get to go out into the marketplace. that is in defenses. that is indefensible when people are going to say, if you are taking advantage of in september of 2009, january 2010, you get access to more than a dozen good choices. -- this is indefensible. i understand the influence of the special interest groups. i understand this is transformational change. we will regret the 900 of millions of americans choice

without the debate. -- we will regret nindenying million americans choice. >> i have an amendment. i believe very strongly in flexible spending accounts. people use this, especially those with chronic conditions that have to go to the doctor a lot.

in the chairman's mark, they lower the cap down to $2,500 in flexible spending. what this amendment would do would take whatever the amount is that is left over, whatever that is, we've raised a flexible spending account to that amount. it is dollar for dollar. we can get to the american people something that they have been looking for and they can continue to purchase things like classes, dental care, prescription drugs. >> thank you. i think it is important to have reasonable caps. i think it is important to keep that $4 billion for adjustments. we want to make sure that to this bill is deficit