Community Savings and Investment Act of 2004

Mr. President, I rise today to introduce the Medicaid and CHIP Safety Net Preservation Act, a bill to clarify existing law and to preserve the core elements of Medicaid, the State Children's Health Insurance Program, (CHIP), and our health care safety net, which provide needed health services to more than sixty million Americans. These programs, which are so critical to the health of our children, our parents and grandparents, and to our communities, have been threatened in recent years by waivers that undermine the very foundations of these programs. I am introducing this bill with my colleague, good friend, and the Ranking Member of the Finance Committee's Subcommittee on Health, Senator Rockefeller.

I have long been concerned about the inappropriate use of the so- called ``Section 1115'' waiver authority with respect to Medicaid and CHIP. Section 1115 of the Social Security Act permits the Secretary of HHS to waive provisions of the Medicaid and CHIP statutes at the request of a state if the waiver is determined to ``promote the Objectives'' of the program, and if it meets certain other criteria established in statute. The waiver authority has existed since before Medicaid's inception, and it is designed to allow states before Medicaid's inception, and it is designed to allow states to experiment and engage in pilot and demonstration programs in a variety of Social Security Act programs. It has long been used to allow States to try innovative approaches to deliver or finance healthcare for some of our most vulnerable citizens--poor children, pregnant women and parents, individuals with disabilities, and the elderly, including many in nursing homes.

But in recent years, the waiver authority has been used increasingly aggressively and, in my view, irresponsibly. I first became concerned about these waivers when I learned that waiver programs, which now affect millions of people and tens of billions of dollars annually, were being negotiated and approved in the dark. In some cases, Medicaid enrollees literally could not find what the operative Medicaid rules were in their state, because laws and rules had been waived and the new program requirements were not published in a place accessible to the public. In 2001, I and my colleague, Chairman Chuck Grassley, wrote to Secretary Thompson with our concerns that the waiver process was not adequately transparent, and that there could be no accountability without transparency.

After many months and much correspondence with Secretary Thompson, I noticed some improvement in the posting of approved waiver applications. By that time, the General Accounting Office had reported that there were serious problems with 1115 waivers. Waivers were being approved without adequate public input; waivers were being approved that used funds set aside by Congress for children's health care on childless adults; and waiver applications were being negotiated and approved with different standards applied, depending on the identity of the state applicant. Finally, and most disturbing, the GAO noted that HHS was applying a condition to one type of waiver that imposed a hard cap on Federal spending for a state's elderly Medicaid enrollees over a five-year period.

Most recently, I was deeply disturbed to read press reports indicating that HHS was inviting states to prepare new more comprehensive waiver applications that would impose enforceable, global caps on state Medicaid programs. One of the crucial elements of the Medicaid program is its unique state-federal financing structure, which requires every state dollar expended on Medicaid to be matched by at least one Federal dollar. This guaranteed matching structure provides financial stability and an incentive for states to maintain levels of health care spending in good and bad economic times. The matching structure has, over time, allowed a swift response to economic recessions, high rates of uninsurance, epidemics, disasters like 9/11, and innovative treatment advances, like the advent of expensive protease inhibitors to threat AIDS. The law does not, and it should not, allow a Secretarial waiver of such a core element of Medicaid.

Another press report indicated that one governor intended to seek a waiver to the Medicaid entitlement in exchange for accepting a hard cap on Federal Medicaid spending. In the absence of the individual entitlement, a state could turn away eligible applicants; impose waiting lists; or terminate a health care benefit in the middle of treatment for a serious illness or a stay in a nursing home. For the poor, for children, for individuals with disabilities, such as ``innovation'' in Medicaid could be devastating.

I also heard reported an instance where HHS announced in court, for the very first time, that the Secretary has waived the essential ``EPSDT'' benefit for children in one state. Beneficiaries did not even know that they were no longer entitled to the comprehensive benefit for children until they were in litigation with the State over inadequacies in the state's Medicaid program.

And finally, I am concerned about efforts to undermine Medicaid financing for Community Health Clinics and Rural Health Clinics through the use of the 1115 waiver authority. These clinics provide desperately needed care for Medicaid and CHIP enrollees as well as millions of uninsured Americans. Without fair payment from Medicaid, CHCs and RHCs have reduced capacity to see the patients who rely on them for care.

There are some features of the Medicaid program that are so fundamental to the program that they should never be waived with the stroke of the pen of one person. And I am pleased to quote the new Administrator of the Centers on Medicare and Medicaid Services, Mark McClellan, who agreed at his nomination hearing that, and I quote from a news article citing his testimony, ``federally imposed caps on spending are not envisioned as part of Medicaid's structure.'' He also said that core Medicaid principles, such as the program's state and federal funding partnership and citizens' entitlement to benefits, should not be waived.

I am hopeful that, one day in the not too distant future, the Congress can have a meaningful debate on how to improve the Medicaid program that is now a healthcare lifeline for more than 50 million people, and how to improve CHIP and expand coverage to the uninsured. But in the meantime, we must ensure that efforts to innovate through waivers are made publicly and openly, with an opportunity for stakeholder

input at every level of decision making, and with a promise that innovation will ``do no harm'' to the foundational principles of these safety net programs. I urge my colleagues to cosponsor this bill, which will improve the integrity of Medicaid and CHIP and ensure that they remain available and responsive to the needs of so many Americans.

I ask unanimous consent that the bill be printed in the Record.

Mr. President, I rise today to join the distinguished ranking member from Montana, Mr. Baucus, in introducing the Medicaid and CHIP Safety Net Preservation Act of 2004. Medicaid and the Children's Health Insurance Program (CHIP) provide health insurance coverage to more than 50 million vulnerable Americans, including pregnant women, kids, people with disabilities, and seniors in nursing homes. Preserving the integrity of each of these programs should be one of our top priorities. The bill that we are introducing today would ensure that Section 1115 of the Social Security Act--the so-called ``1115 waiver authority''--does not erode the core objectives of Medicaid and CHIP.

Medicaid and CHIP form the foundation of our Nation's health care safety net. Without them, many more Americans would be uninsured. Unfortunately, the central objectives of these entitlement programs have been threatened in recent years by short-sighted proposals to cap Federal funding, questionable administrative rules and regulations, and inappropriate waivers that essentially waive the requirements of Federal law. The Medicaid and CHIP Safety Net Preservation Act would address each of these issues by reaffirming the core requirements of Medicaid and SCHIP.

Congress created Medicaid in 1965 as Federal-State partnership to provide health insurance coverage to low-income families on welfare. Over the years, Medicaid has evolved into a multi-faceted health insurance program that serves working families, the disabled, and the elderly. Throughout the evolution of Medicaid, two aspects of the program have remained the same: Federal guidelines for program administration and shared Federal and State responsibility for financing. This structure has served the Medicaid program well. It maintains the national health care safety net, while also allowing Federal and State policymakers to tailor the program to meet local needs.

In 1997, I was joined by Senator Chafee in introducing the Children's Health Insurance Program as part of the Balanced Budget Act. The purpose of this program has always been to help the children of families that do not qualify for Medicaid. At the time that CHIP was enacted, 10 million children were uninsured. Today, over 5 million children have coverage through CHIP; this includes nearly 23,000 children in the State of West Virginia. While we still have a long way to go in order to provide every child with health insurance, I believe the families touched by the CHIP program thus far would agree it serves its purpose well.

The legislation that Senator Baucus and I are introducing today is designed to make it very clear that certain requirements under Medicaid and CHIP are central to the overall objectives of these programs and are not subject to waiver. Specifically, this legislation would ensure that 1115 waivers are not used to impose global caps on Federal payments to Medicaid. It would protect the Federal guarantee of Medicaid for any eligible individual. Children would continue to have access to comprehensive health benefits under the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) program. Money intended for the care of children under CHIP would be used for that purpose. Finally, the process for reviewing and approving 1115 waivers would be more transparent, allowing greater opportunities for public notice and comment.

The Medicaid and CHIP Safety Net Preservation Act is a good first step toward preserving these critical health insurance programs. However, in order to strengthen Medicaid and CHIP for the future, we must also enact legislation that gives States the resources they need to cover eligible Medicaid beneficiaries, restores funding for the CHIP program, and allows states greater flexibility within the guidelines of the law. I urge my colleagues to support all of these important measures.

Mr. President, today I am pleased to introduce the Community Savings and Investment Act of 2004. This will create jobs, expand economic activity, and help to revitalize distressed urban and rural communities. It will accomplish this by providing tax relief for community-focused banks and helping to generate financial opportunities in low-income areas.

As we address the challenges many of our communities face and search for ways to help those looking to improve their standard of living, we must properly leverage the tax laws to encourage economic development. Most people and communities do not want handouts. They want the chance to find solutions and make it on their own. However, to do this they need financial resources.

The lifeblood of any economic development is capital. Too often it is difficult for people, especially those in distressed areas, to access financial resources and other banking services. Providing community banking will lead to much-needed investments in communities, allowing people to purchase homes, start new businesses, and revitalize their neighborhoods.

The Community Savings and Investment Act will improve access to banking services by lowering taxes for community banks. It also provides incentives for banks to serve distressed communities by excluding any resulting income from taxation. By lowering the costs for banks to operate in communities, we can unleash powerful new forces for economic development.

This initiative will make a significant difference in the lives of thousands of families and communities across this Nation. As we seek ways to further strengthen our economy, I urge the Senate to pass this common-sense approach.

I ask unanimous consent that the text of the bill be printed in the Record.