To amend title XXI of the Social Security Act to prohibit the approval or continuation of section 1115 waivers insofar as they provide coverage of nonpregnant adults under the State Children's Health Insurance Program (SCHIP).

Mr. Speaker, I am coming to the floor tonight, like I have so often in recent weeks, to talk a little bit about health care in our country. The delivery of health care services is one of the things that may not be the first thing that registers in any poll that's taken in this country, but it's sure third or fourth, and it appears in every poll that is taken in this country.

We are, indeed, on the threshold of what might be called a transformational time as far as how health care services are delivered in this country. Certainly, over the remaining 18 months of the 110th Congress, we are going to have several different issues before us, several different times, where we will be able to talk about and debate various aspects of our health care system.

Of course, just of necessity, as a big part of the Presidential election that will occur in the 18 months time, we will deal with the issues surrounding health care and the delivery of health care services in this country. We will be deciding, what road do we want to go if we have a system in our country now where about half is delivered, half of every health care dollar that is spent originates here in the U.S. Congress, and the other half comes from the private sector, uncompensated care and so-called charity care.

What do we want to see grow? What do we want to see encouraged? What do we want to see improved? Do we want to grow the public sector or do we want to grow the private sector?

Certainly expanding the government sector and its involvement in delivery of services, terms you will hear talked about on the floor of this House, things like universal health care, health care for all--in the early 1990s, we called it ``Hillary care''--or do we want to encourage the private sector?

Do we want to encourage the private sector to stay involved in the delivery of health care services in this country, to be sure, to be certain, whether it's public or private, that the dollars that are spent are spent wisely to expand the coverage that's generally available for our citizens of this country. But these two options, and all of the questions and concerns that surround them, this is what we are going to have to decide in this House, certainly within the 18 months that remain in the 110th Congress, or very quickly after we enter into the 111th Congress.

I am hopeful that by visiting with you on some of these things tonight, providing some explanations and some insights into the directions that we might go, or we could consider going, and at its heart, at its core, I think we need to bear in mind that for all of the criticisms that are out there, and we have heard several of them here in the last hour, but for all the criticisms out there about this country and, in particular, its health care system, we do have a health care system that is indeed the envy of the world.

We have people from all over the world who come to the various medical centers over the United States to receive their care there. I believe, my position is, that we want to be certain that we maintain the excellence in the health care system that we have today, improve those parts that need improving, but don't sacrifice the excellence that exists in many areas of our country.

Some people are going to say, well, that's an overstatement that the United States health care system is a good one. They will look at, cite the numbers of the uninsured, they will start to cite the high cost of prescription drugs. There is no question that these are tough issues that this House is going to have to tackle.

Face it, you can pretty much manipulate statistics and numbers any way that you want to. The old adage is that there are lies, there are darn lies, and there are statistics. We have to be careful about how we ask the question and how we frame the question. We have to also be careful that we don't frame the question just so we get the answer that we want, and that we don't effect any improvement for the American people.

But let's talk a little bit about the history, about the background of how we got the system that we have today, how we got where we are today.

So, actually, if we go back and look at our country during the time of World War II, President Roosevelt felt that he had to do something to prevent wartime inflation from simply overtaking the economy. In an effort to do that, he put in place wage and price controls and told employers that, well, employees' wages would be frozen at certain amounts.

Well, employers were having a tough time keeping employees anyway. Many people were off fighting the war or were otherwise involved in the war effort. So employees that were here in this country and available were at a premium. So the employer wanted to do something to ensure that he kept his workforce on the job. And one of the things that they thought about doing was, what if we offer a health care benefit? Is that something that we can do that we will still not violate the spirit of the wage controls that President Roosevelt has imposed?

Indeed, they got a Supreme Court ruling on this subject, and the Supreme Court said that, no, health care benefits would be outside the scope of the wage and price controls. Health care benefits are something that you can make available to your employees, and in fact, you can make those available to employees, and neither the employee nor the employer will be taxed on those dollars that are so spent.

We came out of the Second World War, of course, victorious; at the same time, we had an economy that was just beginning the postwar boom. That economy that was so robust after the war led to the creation of more jobs, more employment. Indeed, the health care benefit was a benefit that was attractive; it was one that people liked. Indeed, it was one that stuck around and persevered and grew over time.

But we were also right at the beginning of a lot of pent-up demand as far as people starting their families, and we saw families start to have children. Boy, did they have children. This was the initiation of the so-called baby-boom generation.

The United States, like many other allies coming out of the Second World War, the United States was really in a unique position, both economically, and from the standpoint that the war was not fought in our backyard, in contrast to Western Europe, we actually were in pretty good shape coming out of the Second World War.

Contrast that to Western Europe, and even Great Britain, ostensibly a victor in the Great War, but at the same time, their economy was in much tougher shape; and when you get onto the continent of Europe, indeed, a good deal more difficulty with the economic recovery in the time immediately following the Second World War.

So a single-payer health care system of necessity was a requirement that the government needed to stand up and stand up in a hurry in order to prevent a significant humanitarian crisis that might otherwise have existed. In order to uphold the health care of their citizens, these governments were required to set up systems in a fairly short period of time.

Fast forward 20 years from 1945 to 1965, and we have the initiation of Medicare, and, shortly thereafter, of the program now known as Medicaid. These programs were signed into law by another Texas President; agreeably, of note, he was from across the aisle, but another Texas President signed these programs into law.

Today, these large government-run programs are focused. Initially they were created to focus on hospital care for the elderly and basic health care services for individuals who are less well off. Now, decades later--1965, when the Medicare program was started--decades later it was evident that the government-run program was slow to change, in need of reform, and it operated at an expense that was just unthought of at the time of the inception of the program. The expense of running Medicare was truly extraordinary.

By 2003, Congress certainly recognized the outdated model, and was called upon by the President here in this Chamber. President Bush in the first State of the Union Address that I attended as a Member of Congress stood in this House and said: The problem of providing a prescription drug benefit to our seniors is too important to wait for another Congress; it is too important to wait for another President; and it is work we are going to take up this year with this Congress, and we are going to get this done.

Indeed, the President was correct, and that happened. By the end of 2003, the Medicare Modernization Act, that did provide for a prescription drug benefit we now know as the part D section of Medicare, was signed into law, and 2 years later it began to deliver on that promise and deliver prescription benefits to senior citizens who previously had not had access to a prescription drug program.

But it was clear that the government system needed to catch up to what by comparison was a relatively robust private system that was already doing the things required, focusing on things like disease management and disease prevention.

The good work done by the people at the National Institutes of Health over the previous 40 years had certainly set the stage for what we now recognize as a virtual explosion in preventive care. The premature cardiac deaths prevented by research done and delivered by the National Institutes of Health, probably somewhere between 800,000 and 1 million lives from the mid-1960s to the present time, over that 40-year interval, probably 1 million lives that have been saved or 1 million premature deaths that have been prevented by advances in treatment and prevention of heart disease, which in 1965 was certainly a more serious illness or affected a good number of people. And the problem was that oftentimes the first symptom of cardiac disease in 1965 was sudden death.

We no longer think in terms of cardiac disease as extracting that type of toll from our citizens, and that is largely because of the benefits that are there, benefits provided by the medicines like the statins that lower cholesterol, that are able to prevent and postpone the serious aspects of cardiac disease.

So Congress passed the Medicare prescription drug plan that gives seniors coverage for medication. The program has been successful, providing greater benefits for seniors. It did not come without considerable discussion and considerable argument back and forth. But with a massive push by the Department of Health and Human Services, the success of the Medicare prescription drug program now, I think, is clearly evident. But, at the same time, the private sector also continued to improve and expand, and it kind of brings us to the crossroads where we find ourselves today.

Again, at the present time the government pays for about half of all health care administered in this country. The current gross domestic product is roughly $11 trillion, and the Department of Health and Human Services, with its Medicare and Medicaid services alone, costs this country each year upwards of $600 billion. Add to that the expense for the VA, Indian Health Service, Federal Prison Service, and clearly you can see that we are getting quickly to that number which represents 50 percent out of every health care dollar that is spent in this country originating in this Congress.

Again, the other half is broken down, with the primary weight being carried by private industry, commercial insurance. There is also some charitable and some self-pay accounting for the balance of that number.

As the numbers increase for just the overall expense of health care, and the Federal Government continues to have to put more and more of the American taxpayers' dollars into health care, we have got to ask ourselves, are we using the taxpayer dollar wisely? Is the government providing excellence as far as managing money when it spends dollars for health care? Is the government better suited to make decisions about

health care than families? Who is better suited to handle the growing health care requirements in this country?

Now, a government-only universal health care system tends to be more inflexible. In America, my concern is that it will hamper our innovation and delivery of some of the most modern health care services available anywhere in the world.

Two specific examples that a private-based system is more flexible and less expensive. Look at what goes on to our northern neighbor in Canada, a government-run system that took over health care shortly after the Second World War. It is a universal system, and the Canadians are very proud of their system, and rightly so. But there are some trade-offs, and one of the trade-offs is there can be a wait for health care services. In fact, the Canadian Supreme Court ruled in 2005 that access to a waiting list was not the same thing as access to care, and that in some instances the waiting list was, in fact, health care denied to Canadian citizens. And the Supreme Court required that the Canadian system remedy that.

But in Canada, if you find yourself with a diagnosis and a treatment, but a long time between that diagnosis and treatment, people who have the cash can certainly travel across the border to the south into the United States and find that they can have whatever it is they have been placed on a waiting list that seems interminable; whether it be a cardiac catheterization, a CAT scan, an MRI, they find they get it much more quickly than if they simply waited it out in Canada.

So, we have to ask ourselves, is our health or the health of someone in our family something with which we are willing to gamble that that length of time, that that delay won't cause problems, won't increase the morbidity for that particular disease process, won't lead to a lower expectation of a cure or salvage with whatever that particular diagnosis is?

The British Isles, where they have a similar type of system, they have a National Health Service. Again, very famous. Britons love the system. But, in fact, they also have a private system that coexists within their country. And if the National Health Service is not able to get to someone in a timely manner, and if that patient or their family has the funds available to expend, then indeed they can be seen in the private system. And for patients who are concerned that they might not survive their wait, or they are living with significant disability, this is a choice that they are willing to make.

But the reality is, again, our population is getting older and older, and if you ask someone who is in their sixth decade, seventh decade, eighth decade of life to wait for 4 months, 6 months, 8 months, 12 months or longer for a procedure or a diagnostic test, we, in fact, are consuming a significant amount of the available time they have left, and this, in fact, is not a fair allocation of health services.

So my premise would be that the private sector, with all of its difficulties, with all of its faults, is more nimble and is a more suitable and stable arena from which we can build our health care system in the future.

This is a complex relationship; and how Congress instructs the medical care in this country be done is largely going to determine if we have the best health care system possible. Certainly, it is incumbent upon Congress to promote policies that help the public sector maintain efficiency and become efficient in areas where it is not efficient, and, at the same time, allow the private sector to lead the way with innovation and development of new therapies, new techniques, and new ways of tackling old problems.

Now, one of the things that immediately comes to mind any time you have a discussion about health care is the issue with the uninsured. The uninsured population in this country is estimated by the United States Census Bureau to be somewhere around 46 million people. Now, within that group, I would argue that access to health care is not frequently the issue; it is the coverage that is the issue, because there always exists an emergency room someplace where care can be delivered urgently. But we all know the problem there is you don't always get your best result if you put off the treatment or the diagnosis until such time as it just no longer will allow itself to be put off, and we can increase the cost of health care by delivering health care under that model. But I would stress that in this country, it is not lack of access to health care, because those access points do exist, but it is lack of access to coverage that drives a lot of this debate.

Now, some of the things that have happened, and two examples that we should talk about, and, in fact, they are issues that we are going to need to take up within this Congress, because both programs require reauthorization, are the State Children's Health Insurance Program, or the SCHIP program, and Federally Qualified Health Centers.

Now, currently the children's health insurance operates as a joint Federal-State partnership. It certainly provides some flexibility for States to determine the standards of providing health care and funding for those children who are not eligible for Medicaid, but whose parents truly cannot afford health insurance. The program has been successful, and it has been successful across the board.

As we look to reauthorize the program this year, I think one of the things we can do and should do is clarify the fact that it is children's health insurance. While the intent of the legislation is clear, some States have opted to spend their funds on individuals other than children or pregnant adults. In an effort to correct this process, I introduced H.R. 1013, making certain that the SCHIP funds are spent exclusively on children and pregnant women, not on other groups. We don't cover every child who should be covered under the SCHIP program; and, until we do, it only makes sense that we restrict the funding, again, for children and for pregnant women, who are obviously going to be having a child in the near future, so that child can be covered during the prenatal period. But to take those dollars that should be spent covering children when not every child is covered in this country and spend that covering nonpregnant adults seems to undo the intent of the legislation.

Now, if our intent is to provide other coverage for other individuals, let's have that debate, let's have that discussion, let's have that vote. But let's keep those dollars that are designated to provide health care for children providing health care for children.

But SCHIP is an example where children and pregnant women can receive additional medical coverage which otherwise would not be available to them through the Medicaid program. And, certainly, there are some people who are now covered by SCHIP who previously would have fallen into the broad category as the uninsured.

Other ways of coverage for those individuals who are not children, who are not pregnant, there is access to care. If a Federally Qualified Health Center is available in the area, certainly health care can be gained through an FQHC. The patient has access to health care without insurance. In fact, 15 million of that number of the uninsured can access their health care through a Federally Qualified Health Center. A medical home, continuity of care, see the same doctor every time, in some instances have dental and other coverage, have some coverage for prescription drugs. This is real care available to real people, and it is care that should not be discounted, because it is available to all persons in the community regardless of ability to pay, and it is a program that has been up and running for 35 years. It is a program that is providing care today.

Both SCHIP and the Federally Qualified Health Center program were designed to help the poorest, the youngest, and those underserved in our communities. What about individuals that can afford to pay some of their health care services? Two programs that would assist individuals and their companies in receiving health care coverage, health savings accounts and association health plans.

Health savings accounts, previously known as medical savings accounts, are a tax-advantaged savings account that is available to taxpayers who are enrolled in a high-deductible insurance plan, an insurance plan with lower premiums and higher deductibles than a traditional health plan. Sometimes that is referred to as a catastrophic health plan, but it is with a difference, because you can put money away up to an amount that is $5,000 for a married

couple. You can put money away in a tax-deferred or tax-free savings account. That money must be used only to pay for health care services in the future, but that money grows over time and can be a significant source of health care funds for an individual or a couple as they go through life.

For the health savings accounts, the funds are contributed to the account, they are not subject to income tax, and they can only be used to pay for qualified medical expenses. But the best part of having a health savings account is that all deposits to an HSA become the property of the policyholder regardless of the source of the deposit. So that means whether it is the individual themselves or their employer who deposits that money into the health savings account, the actual policyholder is the owner of those dollars designated for health care.

And patients have a say in how and when they spend their health care dollars; any funds deposited but not withdrawn each year carry over to the next year. And the popularity of HSAs has grown considerably since their inception.

Now remember, medical savings accounts were started a little over 10 years ago in the Kennedy-Kassebaum bill that was passed in 1996. With the Medicare Modernization Act in 2003, the health savings accounts became the follow-on from the medical savings account. These were expanded. The number of companies offering insurance greatly expanded, a lot of the restrictions were removed, and health savings accounts really represent the full measure of what the old medical savings account attempted to achieve, but it just simply had too many regulations in its way to allow itself to come to fruition.

But numbers from 2005, by December of 2005, some 3.2 million individuals had coverage from a HSA. Of that number, 42 percent of those individuals or families had incomes below $50,000 and were purchasing health savings account-type insurance. The HSAs are an affordable option.

In addition, the number of previously uninsured HSA plan purchasers over the age of 60 nearly doubled, proving that plans are accessible to people of all ages. And really, the proof of that, for a young person in the mid-1990s, getting out of college, perhaps going to go into business for themselves, didn't want to go to work for a big company, no longer can be carried on their parents' health insurance, almost impossible to buy health insurance coverage at any price. I know, because I tried in the mid-1990s to do just that for one of my children.

Fast forward to the present time. Go on the Internet, your search engine of choice, type in health savings accounts, and very quickly, with a few clicks, you'll be with a menu that has a number of options available as far as health savings accounts are concerned. And a high deductible, reputable company, PPO plan in the State of Texas for a male, 25 years of age, nonsmoker, these premiums run about $65 a month.

Yes, you do have a high deductible. Yes, until that high deductible is funded with tax-deferred, pretax dollars that are going to go into that health savings account to grow over time and provide the offset for that high deductible, sure, during the first year or early years of having a health savings account, things like preventive care are not necessarily going to be covered. Those are expenses that will have to be paid for out of pocket because most people, fortunately, will not get to the limit of their deductible.

A young person needs a flu shot. They're probably going to have to write a check for that out of personal funds. But over time, that so- called medical IRA will grow and, again, it grows tax deferred and so it can begin to grow quite quickly.

Albert Einstein one time said the most powerful force for good known to man was the miracle of compound interest. That money will grow over time. So for a young person especially, starting that type of account, again, that that can be very powerful.

Now, of the 46 million Americans who are uninsured, nearly 60 percent of them are employed, and they're employed within a small business. Some of these individuals prefer a more traditional health plan than a HSA, but their employer, the small business for whom they work, find offering a health benefit is either nonexistent or just quite simply too expensive for them to provide.

To take some of the burden off of the small employer who wants to provide insurance for their employee, Congress has devised the concept of what is known as association health plans. This allows small businesses a similar business model, or business plan, to band together to get the purchasing power of a much larger corporation in order to provide more cost-effective insurance coverage to their employees.

A group of realtors, for example, or a group of Chambers of Commerce, or medical offices or dental offices or insurance offices, these groups would be able to form a purchasing unit that would be able to purchase health care, again, get the purchasing clout of a much larger group than a small office could ever provide by itself.

This legislation has passed the House of Representatives twice in the 108th Congress, twice in the 109th Congress. It never could get through the Senate, and I believe it is still an important concept and one which we need to come together and work on.

We heard the group before me talking about how important it was to have a bipartisan effort on these issues, and I certainly welcome that spirit, and would suggest we do need to have a bipartisan effort on working out these types of problems for the American people, because association health plans might not bring down the number of uninsured acutely, right away, but it will certainly help stem the number of small employers who are finding it increasingly difficult to provide insurance for their employees.

So it will bend that growth curve of the uninsured that has gone inexorably upward. It will bend that growth curve of the uninsured in a much more favorable direction.

But I think we also heard from the President this year when he talked in the State of the Union address, he talked a little bit about perhaps providing some tax relief to individuals who are self-employed, who would purchase insurance but, gosh, I've got to buy it with after-tax dollars, and that just adds to the expense. So the President was talking about providing some measure of tax relief for individuals who wish to have their own insurance policy.

He also talked about putting a cap on the upper limit of insurance benefits that would be able to be offered by a company to an employee and come to that employee as an untaxed benefit.

One of the things in addition to the issues that the President brought up and one of the things that I think this Congress should look at as perhaps a follow-on or extension to what the President was talking about, would be to provide, whether you call it vouchers, whether you call it tax credits for people who lack insurance, whether you call it premium support, to buy down the cost of the premiums so that a person who is employed, but says those health insurance premiums are just too expensive for me to afford. If we can help that individual pay that premium cost, that keeps the individual off of the Medicaid rolls. So it keeps them from being a governmental expense and allows them to participate in their employer's insurance plan, which has an advantage of keeping the insurance plan that the employer offers a viable one because more employees will be participating; and over time, perhaps that employer will find that they can indeed reach a stage in their employment where they are, in fact, able to carry the cost of the premium expense themselves.

But the concept of premium support not mentioned by the President during his State of the Union address, but one which I feel very strongly is an issue that should be explored by this Congress, it is a concept that we should study, and I think come up with a solution that would be a benefit for the American people.

Well, one of the other things that I do want to talk about in the context of all of these things that I've discussed with health care is, we've got to be careful we're not putting the cart before the horse. A conversation with Alan Greenspan about a year and a half ago, just as he was leaving the Federal Reserve Board, the obvious question came up, how in the world is Congress

ever going to pay for Medicare in the future?

He thought about it. He said, at some point, when the time comes, the Congress will do the right thing and figure out a way to pay for Medicare. He paused and then said, what concerns me more is, will there be anyone left to provide the services that you desire when you get to that point? And that is a very valid observation, and certainly one that drives a lot of my thinking when I study the issues surrounding health care and health care delivery in this country. Because the question legitimately can be asked, is our country heading into what might be described as a crisis in physician staffing, a crisis brought on by a physician shortage in the country?

And I reference back in my home State of Texas. The Texas Medical Association puts out a magazine every month, a periodical every month, called Texas Medicine. I stole the cover of their March issue because it really says what Mr. Greenspan was telling us that day. The title of the lead article in the periodical last March was, Running Out of Doctors. And that is a concept that I think this Congress, we need to pay some attention to that. And if we don't, I think we put the system in this country in greater peril than it needs to be.

And we need to ensure that the doctors who are in practice today stay in practice, that they stay engaged, they stay there providing care to their patients. These are doctors who are at the peak of their clinical abilities, they're at the peak of their diagnostic abilities. We want them to remain active in their practices and providing services and, honestly, services to the patient who have, who provide them with their most complex medical challenges, our senior citizens.

So what steps do we need to take to ensure we have an adequate physician workforce going forward into the future and ensure that the doctors of today stay engaged in the practice of medicine, and that the young people of tomorrow come to realize that a career in health care is one that is not only viable but one that is going to be rewarding for them as well?

Well, tackling a problem that has plagued the medical community for years and years revolves around the issues of medical liability. My belief is that we need a commonsense medical liability reform to protect patients, to stop the escalation of costs associated with lawsuits, and to make health care, to keep health care more affordable and thereby more accessible for more Americans, and to keep the necessary services in the communities that need them the most.

My belief is that we do need a national solution. The State-to-State solutions that have grown out of necessity do leave vast populations in jeopardy, and have the undesirable effect of actually increasing health care expenditures in this country all of the time that we leave that condition unsolved.

I like the system that was developed by my home State of Texas that placed caps on noneconomic damages in medical liability suits. I think it is one that certainly is worthy of study by this body, and perhaps worthy of consideration by this body. Texas brought together all the major stakeholders in the discussion, doctors, hospitals, nursing homes and patients. The State was able to have these discussions and bring the stakeholders to the table and come up and craft legislation that really put the brakes on the escalation that was going on in medical premiums; and just as importantly, to keep medical liability insurers involved in writing policies in the State of Texas.

We'd lost most of our medical liability insurers from the State. They had simply closed up shop and left because they could not see a future in providing medical liability insurance in Texas. We went from 17 insurers in 2000 down to two in 2002. Rates were increasing year over year. In my personal situation, before I left medical practice, my rates were increasing by 30 percent to 50 percent each year.

So, in 2003, the Texas State Legislature passed a medical liability reform based on a much older reform passed in the State of California. California, in 1975, passed the Medical Injury Compensation Reform Act of 1975, which essentially put a cap on noneconomic damages in medical liability suits, and it has worked extraordinarily well in the State of California.

The Texas law was modified a little bit, I'd say made ready for the 21st century. Instead of a single $250,000 cap, there is a $250,000 cap on noneconomic damages as it pertains to a physician, a $250,000 cap on noneconomic damages as it pertains to a hospital, and an additional $250,000 cap as it pertains to a nursing home or a second hospital, if one is involved, for an aggregate cap of $750,000.

So the question is, how has the Texas plan fared? It actually came into law September 12th of 2003, and remember, I said the State had dropped from 17 medical liability carriers down to two because of the medical liability crisis in the State. Now we're back up to 14 or 15 carriers. And most importantly, they came back to write business in the State of Texas without an increase in their premiums. This is, indeed, a significant reversal.

More options mean better prices and a more secure setting for medical professionals to remain in practice and certainly provides physicians the certainty that they need to keep their practices open in Texas. And one of the most astounding and unintended beneficiaries of this was that of the small, community, not-for-profit hospital that was self- insured for medical liability. These small community hospitals have been able to take money out of those escrow accounts that they were having to hold in abeyance in case they found themselves involved in a liability suit, and have been able to put more money back into their community hospitals, been able to spend money on capital expenses, been able to spend money on nurses' salaries, precisely the types of things you want your small, community, not-for-profit hospital to be doing, rather than just holding money against a day where they might be involved in a large damage suit.

So I took the language of the Texas plan and worked so it would fit within our legislative structure here in the House of Representatives, and actually gave this legislation to the ranking member of our Budget Committee, and he had that bill scored by the Congressional Budget Office. So the Texas plan, as applied to the Texas house of representatives, to the entire 50 States, would yield an average savings of $3.8 billion over 5 years.

Not a mammoth amount of money, but when you are talking about a $2.99999 trillion budget, this savings would amount to moneys that we could use on any of the other number of spending priorities that we hear so much about in this Congress.

And consider this: A study done in 1996 by Stanford University revealed that in the Medicare system alone, the cost of defensive medicine was approximately $28 to $30 billion a year, 10 years ago, Mr. Speaker. I suspect that that number is significantly higher today. Defensive medicine, those additional tests and procedures that are ordered by doctors in order to help them provide a good defense should they have a bad outcome and should the case go to litigation in the courts, again, moneys expended on medical care not for the care of the patient, but to provide the best possible defense for a physician if a case is taken into court.

Another consideration is young people getting out of college who are considering a career in the health professions, whether it be medical school, nursing school, dental school, or one of the allied professionals, the current system keeps young people out of the practice of health care for their livelihood because of the burden that we put on them. One thing we have to consider: They are graduating from school with massive amounts of debt, and then immediately upon getting out and emerging on the world and starting into practice, they have to come up with another $100,000 for their liability insurance. It is an untenable position, and it drives young people away from considering a career in health care.

One of the things that I think we really need to focus on, getting back to the cover of Texas Medical Association and running out of doctors, part of ensuring that the workforce for the future includes helping younger doctors and younger students with residency programs, one of the strange things about doctors is we do tend to have a

lot of inertia. A lot of us tend to practice very close to where we did our training. Studies have shown that many doctors will stay within 100 miles of where they trained. They like to practice in communities similar to the communities in which they did their training. So it would be a great asset to look at areas in this country where there is high need for certain types of physician specialties, areas that are currently medically underserved, and encourage young doctors to get their training in these locations where they are actually needed.

Now, a bill that I am going to introduce, called the Physician Workforce and Graduate Medical Education Enhancement Act, would develop a program that would permit hospitals that do not traditionally operate a residency training program the opportunity to start a residency training program to build a physician workforce of the future. This bill would create a loan fund available to hospitals to create residency training programs where none has operated in the past. The programs would require full accreditation and be generally focused in rural, suburban, inner-urban community hospital locations.

On average it costs a hospital $100,000 a year to train a resident, and the cost for smaller hospitals can be prohibitive. Another concern stems from the 1997 congressionally passed balanced budget amendment that set a residency cap that also limits resources to nontraditional residency hospitals such as smaller community hospitals. In my bill the loan amount to any institution would not exceed $1 million, and the loan itself would constitute start-up funding for a new residency program.

As we all know, the start-up money is essential. Since Medicare graduate medical education funding can be obtained only when a residency program is firmly established, the cost to start a training program for a smaller, more rural, or suburban hospital can be cost- prohibitive because these hospitals operate on much narrower operating margins.

The overall bill would authorize a total of $25 million to be available over 10 years. The fund, of course, would be replenished because these are constructed as loans, and the Health Resources Service Administration may make the loans available to new applicants. These moneys would be repaid, and the residency slots in existing programs would continually work to bring new residents into the program and keep the program self-perpetuating.

To be eligible, a hospital must demonstrate that they currently do not operate a residency program, have not operated a residency training program in the past, and that they have secured preliminary accreditation by the American Council on Graduate Medical Education. Additionally, the petitioning hospital must commit to operating a residency program in one of five medical specialties or a combination of specialties: family medicine, internal medicine, emergency medicine, OB-GYN, or general surgery. Again, the hospital may request up to $1 million to assist the establishment of this new residency program, and funding could be used to offset the cost of residents' salaries and benefits.

The bill would require that the Health Resources Services Administration study the efficacy of the program in increasing the number of residents in family medicine. The loans would be made available beginning January 1, 2008, and the program would be sunsetted in 10 years' time, in January 2018, unless Congress voted to reauthorize the program.

Now, locating young doctors where they are needed is just part of solving the impending physician shortage crisis that will affect the entire health care system. Another aspect that must be considered is training doctors for high-need specialties.

My High-Need Physician Specialty Workforce Incentive Act of 2007 will establish a mix of scholarships, loan repayment funds, tax incentives to entice more students to medical school, and create incentives for those students and those newly minted doctors. This program will have an established repayment program for students who agree to go into, again, family medicine, internal medicine, emergency medicine, general surgery, or OB-GYN, and practice in an underserved area. The Health and Human Services Department will administer and promulgate the requirements. The recipients must practice in the prescribed specialty and the prescribed area, which is designated as a medically underserved area, and the practices may include solo or group practices, clinics, public or private nonprofit hospitals. And it will be a 5-year authorization at $5 million a year.

The bill would provide additional educational scholarships in exchange for a commitment to serve a public or private nonprofit health facility determined to have a critical shortage of primary care physicians. Such scholarships will be treated as equivalent to those under the National Health Service Corps, and penalties apply for those that take advantage but do not go into one of those practice areas.

This will establish the Primary Care Physician Retention and Medical Home Enhancement grants to help ensure that primary care physicians continue to provide coordinated care to patients in underserved areas or high-risk populations. And the reality is we can all think of areas like that back in our home States or, indeed, back in our districts.

In other areas such as the Louisiana gulf coast, where so many doctors left after the devastating hurricanes of Katrina and Rita 1\1/ 2\ years ago, it has been very hard on the doctors in this area, very hard to keep doctors in this area, very hard to encourage and entice new doctors to come to the area; and this would be one more tool, one more way, to keep the rather fraying social safety net from becoming completely undone in that area.

Every year there would be a report back to Congress about the effectiveness of the program. This would allow us to assess if we are spending our dollars wisely and getting what we thought we would get when we initiated the program. Again, oversight is going to be key to this process.

Well, so far in addressing the physician workforce crisis, we have discussed the medical liability, the placement of doctors in locations of greatest need, and the financial concerns of encouraging young people to go into medical school in the first place and to remain in high-need areas in high-need specialties.

The next portion of this has to deal with perhaps the largest group of practitioners affected in this country and certainly the still- growing group of patients, our baby-boom generation, within the Medicare program.

The baby boomers, and we have already talked about it, as they age and retire, the demand for services has nowhere to go but up. And if the physician workforce trends continue as they are today, which is downward, we may not be talking about funding a Medicare program. We may be talking about what are we going to do to take care of our senior citizens when there is no one there to take care of them? I often tell people if you see a train wreck coming, you have two options. One is to stop the wreck and avert the wreck from happening in the first place; and the other is to run home and get your video camera and be the first to get it up on YouTube. I believe the responsible approach is to avert the crisis in the first place.

Year after year there is a reduction in reimbursement payments from the Center for Medicare and Medicaid Services to doctors for the services they provide to their Medicare patients. This is not a question of doctors wanting to make more money; it is about a stabilized payment system for the services that are already rendered. And it isn't just affecting doctors. It affects patients. It becomes a real crisis of access.

Not a week goes by that I don't get a letter or fax from some physician who says, you know what, I have just had enough, and I am going to retire early. I am no longer going to see Medicare patients in my practice, or I am going to restrict the procedures that I offer to my Medicare patients. Unfortunately, I know this is happening because I saw it in the hospital environment before I left the practice of medicine to come to Congress, but I also hear it in virtually every town hall that I do back in my district. Someone will raise their hand or come up to me after the town hall is over and say, how come on Medicare, when you turn 65, you have to change doctors? And the answer is because their doctor found it

no longer economically viable to continue to see Medicare patients because they weren't able to keep up with the cost of delivering the care. They weren't able to cover the cost of providing the care because of the cuts that are happening year over year in the Medicare reimbursement formula.

Now, Medicare payments to physicians are modified annually using a formula called the sustainable growth rate. Because of flaws in the process, the sustainable growth rate formula has mandated physician fee cuts in recent years that have only been moderately averted by last- minute activity by Congress. If no congressional action is implemented, a cut goes through. And if no long-term action is taken, the SGR will continue to mandate fee cuts for physicians. And unlike hospital reimbursement rates, which closely follow the Medicare Economic Index, a cost of living index, if you will, which measures the increasing cost of providing care, physician reimbursements don't do that. In fact, Medicare payments to physicians cover only about 65 percent of the actual cost of providing patient services. Can you imagine any other industry or service or company that would continue in business if they received only 65 percent of what they spent to deliver the service? Not 65 percent of what they needed to make a profit; 65 percent of what they need to simply keep the doors open in the first place. Currently, the sustainable growth rate formula links physician payment updates to the gross domestic product, which has no relationship to the cost of providing patient services.

But the simple repeal of the sustainable growth rate formula can't happen, or we are told it can't happen, because it is too cost- prohibitive. Two hundred and eighty billion dollars is what it would cost this year to repeal the sustainable growth rate formula.

But perhaps if we approached it as something we could do over time, we could bring that cost level down to an area that is manageable. And paying physicians fairly will extend the careers of many physicians who are now in practice who would either opt out of the Medicare program, seek early retirement, or restrict those procedures that they offer to their Medicare patients. It also has an effect on ensuring an adequate network of doctors available to older Americans in this country that make the transition to the physician workforce in the future.

In the physician payment stabilization bill that I will introduce, the SGR formula would be repealed in 2010, 2 years from now, and provide incentive payments based on quality reporting and technology improvements. These incentive payments would be installed to protect practicing physicians against the program cuts that are likely to occur in 2008 and 2009. The incentive payments would be voluntary. No one would be required to participate in a quality program or the technology improvement, but it would be available to those doctors or practices who wanted to offset the proposed cuts that will occur in physician reimbursement in the 2 years until a formal repeal of the SGR happens.

Now, I do know from talking to my friends who are physicians and my friends in organized medicine that it is an alarming thought that we would have to wait for any period of time before repeal of the SGR.

If we step back and look, in terms of a long-term solution, the only practical approach is, in fact, to deal with it on a long-term basis. The reason we are in the deep depression we find ourselves in is because year over year we've only provided these last-minute fixes, which have only served to exacerbate the problem, not solve the problem.

Well, why not just do away with the SGR once and for all and get it done? Remember, the cost for doing that is going to be about $280 billion. One of the problems that we have in Congress is the Congressional Budget Office is the group to which we must petition and the group to which we must look for advice about how much things are going to cost. If we are going to be spending the taxpayers' money, how much are we going to spend, over what time will we spend it? Because of some of the constraints of the Congressional Budget Office, we are not allowed to say, look, we are doing things so much better now within the system that give us credit for that going forward so we can, in fact, reduce that number from $280 billion down to something that is more reasonable.

We all saw the Medicare Trustees Report from about 2 weeks ago. It said that in the year 2005, there were 600,000 hospital beds that were not filled as a result of improvements that have occurred because of disease management, because of doctors doing things more efficiently. These are dollars that have been saved out of the part A portion of Medicare, but it's because of work done in the part B part of Medicare, and that is, after all, where we are all focused within the part B world.

By postponing the repeal of the SGR by 2 years' time and taking the savings that occur during those next 2 years and applying it back to the SGR formula, we may actually get a number that is doable as far as releasing the SGR and replacing it with the full Medicare economic index so we can pay doctors the same way hospitals, HMOs and drug companies are reimbursed.

One of the main thrusts of this bill is to require the Center for Medicare and Medicaid Services to look to their top 10 conditions that drive the highest percentage of payment. It's the old Willie Sutton argument: He robbed banks because that's where the money is. Let's look at the top 10 drivers of health care expenditures in this country, and look at ways where we can improve the care that is delivered in those 10 areas, and look to those areas to give us the savings that will, in fact, deliver the benefit towards the ultimate repeal or retirement of the SGR.

The same conditions actually apply to the Medicaid program as well. It will be a useful exercise. It helps not only Medicare, but would also help CMS with the Medicaid expenditures as well, and will just help physicians in general provide better care for their patients.

It will include some reporting back to doctors and back to patients as to their utilization amounts; these numbers will not be made public generally, but will allow doctors to individually modify their own practices if they see there are ways where they may improve.

Health information technology, it is something which, I will admit, I have been slow to come to the table with as far as looking for improvements in health information technology to provide substantial savings. And I will tell you what changed my mind on that.

In January of 2006, with our Oversight and Investigations Committee down in New Orleans, Louisiana, to look at the recovery from the hurricane as it impacted the health care system in that part of the world, this is the medical records department at Charity Hospital, one of the venerable teaching institutions in our country. When the city of New Orleans was flooded, these records were completely under water.

Now the basement has been all but completely emptied of water. There is probably about a foot of standing water that doesn't show up in the photographs. But look at the records. This is not smoke or soot damage, this is black mold growing on these records. So how do we know that there is a patient in there that is on dialysis waiting for a kidney transplant? We will never know.

We couldn't ask anyone to go in there and go through those records, it would be hazardous to their own health. How do we know about where a person was in their cancer treatment? We will never know that information; that information has been lost to the ages. This is the kind of problem that you can get into with paper records.

You know, the youngsters of today, the college students of today, indeed, the young physicians of today, they understand this very well. They are connected, they are wired in, they all have flash drives and zip drives. They would no more imagine preparing a term paper for one of their classes and then only keeping one paper copy. No. They've got it on their hard disk. They've got it on a floppy disk. They've got it on a flash drive. They have probably e-mailed it to someone back home. The old adage of ``The dog ate my homework'' just won't wash anymore. We need to evolve into the 21st century when it comes to medical record keeping.

It costs money to do this. It is going to require a big push from both the

public and the private sectors. I prefer to think of the bonus payment as being an inducement and enticement for physicians offices to participate in this program. But on the face of it, it's just good medicine, it's just good patient care.

Now, we all heard about the troubles at Walter Reed Hospital a few months ago. I went out to Walter Reed shortly after the story broke in the Washington Post, and here is Master Sergeant Blades. And he took me around building 18, and yeah, it was a crummy building. We could certainly have done a lot better than we were doing for our soldiers on medical hold in building 18.

But the real thing that bothered Master Sergeant Blades was the fact that they had to wait so long to get in to see someone. And when they did, oftentimes their records that they had worked on and they had prepared and they had organized, sometimes those records, after they delivered them to the appropriate clinic, their records would get lost. His specific complaint to me was, I can spend 20 man-hours putting together my medical record and highlighting the areas that are of significance and importance to me. This goes over to one of the clinics. It sits on someone's desk until it is no longer retrievable, and I have to start all over again.

Now, the VA has been very forward thinking in its embrace of electronic medical records and its investment in medical technology. The problem is the Department of Defense medical records do not interface with the VistA system at the Department of Veterans Affairs. So if delivering value to the patient is of paramount importance, it is critical that we make this type of service generally available to our patients.

Mr. Speaker, I was also going to address some of the issues on health care transparency; I probably don't have time to do that. I will simply mention that I have introduced a bill dealing with health care transparency that provides for keying off what is happening in the States, and making certain that every State would have at least some level of transparency in health care pricing.

In Texas, up on the Web right now, and I realize it is going to go through several different iterations and it will evolve considerably over time, but TXpricepoint.org, available on the Internet, allows patients to compare prices on hospitals in their area.

Again, a lot of things we have to consider when we work on the transformation of the health care system in this country. There are good things as far as the public system, there are good things as far as the private system. We have got to be certain that we build on the good things present in both systems, and that we stop doing the things that no longer deliver value to our patients.

Madam Speaker, I want to also thank and commend my friends for their discussion of the suburban agenda. I am coming to the floor tonight to talk about health care, and of course they've already covered a lot of those issues in their discussion that preceded in the past hour.

I want to talk about some concerns we have in the delivery of health care services throughout the country. The future of medical care in this country is going to be front and center over the next 18 months time. The elections of 2008 will be about a lot of things, but they will also be a lot about health care.

Three bills that I want to focus on this evening as well, H.R. 2583, H.R. 2584 and H.R. 2585. The first, H.R. 2583 deals with residency programs. The second, H.R. 2584 deals with loan forgiveness and tax abatements for medical students and newly minted doctors. And the third, H.R. 2585, deals with physicians in the Medicare program who are adversely affected by reimbursement reductions every year under a formula known as the sustainable growth rate formula.

Well, as we go through these next 18 months and deciding which avenue through which our health care system is going to go, we have two choices on the table. We've got a public sector, the government side, which already has about half of the responsibility for health care in this country. And we've got that which is comprised of the private sector, as well as that care which is just simply delivered without expectation of compensation, what used to be known as charitable care.

Under the option to expand the government's role, the government's side, the government's sector involvement in the delivery of health care, typically that's known as universal health care. In the 1990s we called that ``Hillary Care.''

But could we also approach it from a standpoint of encouraging the private sector to stay involved and to improve their products and make them more flexible and user friendly in order to provide more for our health care dollar in this country.

My opinion, having worked in the system for well over 25 years, is the United States does have the best health care system in the world, and it is my obligation, my charge to help it remain the best health care system in the world.

Now, I know there's plenty of people in this body who would contest that statement. And there's plenty of issues around to call it into question.

My predecessor in this office, former Majority Leader Dick Armey used to be fond of saying, you know, the numbers don't lie; but if you torture them long enough, they'll admit to almost anything.

But let's talk about some of the different principles that are guiding the debate about public versus private and the delivery of health care services. And maybe we ought to spend a little time talking about the background. How did we get into this? How'd we get to where we are today?

You almost have to go back over 60 years to go back to the time coming out of World War II when the United States, of course, was the victor; came out of the war with a flourishing economy.

But during the war, President Roosevelt, in an effort to keep down trouble from inflation, put into effect rather stringent wage and price controls across the country. The employers wanted to keep employees, so a lot of employees, of course, had been drafted and were serving overseas, so those employees that were left the employers wanted to keep them working. But they were constrained. They couldn't offer raises. They couldn't offer the money that would be required; they were worried that someone across town might outbid them.

Well, they went and came upon the idea of providing a health care benefit, and, in fact, the Supreme Court ruled that that was okay; that that did not violate the spirit or the intent of the law that Franklin Roosevelt had passed governing the wage and price controls. So during the war, the concept of employer-based insurance was begun.

The war ended. The United States was blessed with the postwar economic boom that started, and what began as a necessity born out of a wartime economy continued. It was extremely popular. Health care insurance provided by the employer turned out to be one of the most popular employee benefits that has ever been seen in this country. And up until the early 1980s it just worked wonderfully.

Contrast that, of course, with Europe. Even the parts the Europe that were victorious in the Second World War, the battles were fought in their back yard. Their economies were devastated. They needed to quickly stand up a health care system that would take care of a population that had been deprived by 5 years of war or longer. And these countries decided to promote the single payer system that you see that's so prevalent in Western Europe and in England today.

But that was born of necessity also, because, again, the country's economies were devastated or, in fact, they had not been victorious in the war, they had lost the war, but they needed to quickly stand up a system that would take care of their citizens.

We go from 1945 to 1965. Presidency of another Texan, Lyndon Baines Johnson. During that time, President Johnson enacted the Medicare statute, a little over 40 years ago. The Medicare and the Medicaid programs were signed into law during his administration. These were large government-run programs that were created to focus primarily on hospital and physician care for elderly and basic health care services for the people who were this poverty.

Decades later, almost 40 years later, it was evident that the government-run Medicare program, extremely slow to change, very difficult to change a large government program; and anything that that caused any change within the program was going to be incredibly expensive.

Already difficult to operate.

But in 2003, in fact, my first year to serve in this Congress, my first State of the Union message that I heard the President deliver in this House, he talked about how the need for, or the time for a Medicare prescription drug benefit had arrived; and this was too important an issue to be left to another President or another Congress. It was work that we were going to take on that year, 2003, and get that benefit delivered to the American people. And indeed we did.

We worked on that bill in various committees throughout the year 2003. Right at the end of the year we passed the bill. There was initially a prescription drug discount card that was available, but over the next 2 years the Centers for Medicaid and Medicare Services put together the plan that we now know as the Medicare Part-D plan. And in spite of all of the problems that it had getting started, arguably it is one of the better functioning government-run health care programs ever seen to date.

But the government needed to catch up to a private system that was already focused on prevention, timely treatment of disease and disease management. So finally Congress put the Medicare prescription drug plan, that focused on giving seniors access go needed medications forward, and the program has been successful and provided benefits for seniors. It's come

with, obviously, considerable discussion, and a big push for success, a lot of it delivered by the private sector.

So here we sit at the crossroads today. Again, the government pays for half of the health care administered in the country with a current gross domestic product, the GDP of 11 to $12 trillion.

The U.S. Department of Health and Human Services, through their Medicare and Medicaid services alone, pay $600 billion. Add to that the VA system, add to that the Federal prison system, the Indian Health Service, and you have about half of the health care expenditures in this country.

The other half of health care is broken down with the primary weight being carried by private insurance. There is some charitable and there is some self-pay accounting for the rest. I think you'd probably include bad debt in that other 50 percent.

Well, as the numbers increase, the overall cost of health care for the entire country, as that number increases the Federal Government continues to funnel the American taxpayers' dollars into these efforts, and we have to ask ourselves, what is the wisest and best use of taxpayer dollars?

Is the government doing an excellent job of managing your money?

It's not their money. It's your money. Do you think the government is better suited for your health care needs?

Whose going to handle or who is better equipped to handle the growing health care problems crisis, if you will, in this country?

The government only or the universal health care system, to me, almost is unsustainable. And it certainly is likely to hamper innovation, and hamper the delivery of some of the most modern health care services that the world has ever known.

Now, two examples of that, one very close to home, that would support the notion that a private-based system is better equipped and more flexible and less expensive than a government system, look to our north. Look at Canada.

Canada boasts a universal health care system. But what it fails to highlight is the tremendous wait for treatment that its patients must endure. In fact, in either 2004 or 2005, the Canadian Supreme Court ruled that access to a waiting list did not equal access to care because the waiting times were so long in that country. Their access to care is limited by the length of time that one must wait for care.

Now, in Canada they actually have a pretty good safety valve, and that safety valve is called the United States of America. One of the longest borders in the world is our northern border with our northern neighbor of Canada. And, in fact, if someone has the means to pay outside the system and feels that the wait is deleterious to their health, they can leave Toronto and go to Henry Ford Hospital in Detroit and have that MRI, have that CAT scan, have the stint placed in a coronary artery if they don't feel the wait is in the best long-term interest of their health.

So you can take your money, cross the southern border of the United States, and receive care almost immediately, waiting for bypass surgery where you go to the hospital that puts you on a waiting list or puts you in a hospital and put you in a cath lab and gets the problem fixed. When it comes down to your health and a serious health problem, who wants to gamble?

Also, look at the National Health Service in Britain. They really have developed within their country a two-tiered system. Indeed, the wait times are a significant problem within the National Health Service. You can go outside the National Health Service, stay in the country of Britain, go outside the National Health Service and go to one of the private physicians. Physicians work in their offices at the time they are required by the government and then operate a private practice on the side. Some of the most expensive health care in the world is available right alongside the free system in the National Health Service. And the fact that it is able to run, the fact that it is able to go, certainly speaks to the fact that it is serving a need that people want filled.

The other thing you have to ask yourself, if you have someone who is going to have to wait 6 or 8 months for a CAT scan or an MRI, if you have someone who is going to wait half a year or a year's time for replacement of an artificial hip and that person is nearing the age of 80, a year's wait is a significant period of time of the number of days that that person has left in their life. It is a sad reality but, nevertheless, true.

Again, I come back to the notion that the private sector is more nimble and more financially responsible and it is the better way to build the future of our health system. It is a complex relationship. And how Congress should do its job to ensure that we have the best health care system possible is going to be the central part of the debate that we have over the next 18 months. In my opinion, Congress has to promote policies that keep the private sector leading the way with some interaction that leads to a well-run government system.

You can hardly talk about health care in this country without coming up against the problem of the uninsured. The Census Bureau right now estimates that some 46 million people in this country are uninsured.

Now, uninsured does not always mean lack of access to health care because we all have heard stories about people who use the emergency room for relatively modest problems. It is one of the more expensive ways to get care. There is also a disadvantage too in that if you wait until a modest health care problem becomes an emergency, then you are oftentimes not going to get the best health care bargain or the best bargain for your health care dollar. You are also possibly going to jeopardize the health outcome. So no one would argue that just simply relying upon our Nation's overstretched emergency rooms are a method of dealing with the problem of the uninsured. But I think it is important to point out that doctors and nurses in hospitals on the front lines every day see people and take care of their medical needs, fully recognizing that there may not be a reasonable expectation of payment for those services. And we owe those individuals a debt of gratitude for continuing to do that, sometimes in the face of some rather severe Federal regulations and an extremely hostile medical liability climate.

One of the other things that we will talk about, in fact, we are required to do in this Congress is the reauthorization of what is known as SCHIP, the State Children's Health Insurance Program. This is a program that was started some 10 years ago. It had a 10-year authorization and requires that the Congress reauthorize it this year.

The two gentlemen who were here before me talking about the slow pace of things in this Congress could have added the slow pace of the reauthorization of the current SCHIP language to that list of things that they were concerned about. This is legislation that, again, Congress is required to reauthorize prior to September 30 of this year when the authorization expires. There is no continuing resolution. There is no IOU or Band-Aid we can put on this program. We simply must reauthorize the program if we want it to continue. And it has been a good program, and I would argue that virtually everyone within this body wants it to continue.

Not to say there are not some areas for improvement. A bill that I introduced earlier this year, H.R. 1013, the purpose of this legislation was to ensure that the SCHIP funding that Congress has made available be used to cover children and pregnant adults with this coverage. Right now we have four States that are covering more adults than they are children with their SCHIP funding. That stands the whole program on its head. It is cheaper to cover children with health insurance than it is adults. In fact, the ratio is it costs about 60 cents to provide what otherwise would cost a dollar's worth of health care insurance for adults. So we get a lot of mileage for our dollars when we put that coverage into children. If we take that coverage away from children to then cover adults who otherwise would not belong in the system but get in through some type of waiver, we are not doing a good job with the moneys that we intended to put forward to cover children. And the reality is until we have covered all the children who need coverage in this country, we shouldn't be taking those dollars away from the children to cover

adults in the system. Once we have covered all the children in the country, then perhaps it is time to talk about a waiver. If we want to cover other nonpregnant adults, let's find another program to do that. Let's not steal money from the SCHIP program to provide that coverage.

Another thing that we don't really talk about a lot on the House floor, last year in my committee, the Committee on Energy and Commerce, we reauthorized the federally qualified health center statute. We never got that completely finished in the House. We should take it up again this year. It should be taken up by the Senate, and this is a program that fully deserves reauthorization by this Congress.

The federally qualified health center statute provides in federally qualified health centers coverage for about 15 million uninsureds. That is access to medicines, access to a medical home, access to mental health services, access to treatment for substance abuse, a significant set of services that are available to people who otherwise would not have access to medical care. Federally qualified health centers do a good job. Both SCHIP and the federally qualified health center system deserve to be taken up and reauthorized by this Congress. If there are improvements that we can make, then by all means let's have the debate and make those improvements necessary, but let's not let those two programs languish and by default be sunsetted and not continue.

Now, the two gentlemen that were here talking earlier were talking about some of the problems that people get into when they lose their health insurance and wanting to extend COBRA benefits, a noble exercise. One of the things that I have really thought is a forward- looking way to go with health insurance, and it kind of gets at what they were talking about, that is the individual ownership of an insurance policy.

The point made by Mr. Kirk of Illinois, gone are the days where a person gets out of high school or college, works in one job, one factory, one manufacturing plant for the remainder of their work life, then retires and gets a gold watch and goes off to a well-deserved retirement. People change jobs in today's economy. Their health insurance ought to be able to be flexible to change with them, to move with them. One way to ensure that is to allow an individual to own their health insurance policy.

Back in the days when I was practicing medicine in the middle 1990s, this Congress passed a bill called the Health Insurance Portability Act of 1996, the Kennedy-Kassebaum bill. In it, it provided for a demonstration product for what were then called the medical savings accounts. Bill Archer, chairman of the Ways and Means Committee at the time, was a champion of the old MSA. I had an MSA when I was a practicing physician. It allows you to build a tax-deferred savings account that is dedicated to your medical expenses. You buy an insurance policy that is yours. You do pay for it with after-tax dollars, but the advantage is that since it has such a high deductible, it typically has a lower premium.

Now, there are some problems with the previous MSAs that were first passed by this Congress. This Congress put a lot of regulations on those insurance policies, and as a consequence, in my home State of Texas, we only had two insurers who were willing to take people on with a medical savings account. When we did the Medicare bill that I referenced earlier in the talk, back in 2003, when we did the Medicare Modernization Act, included within that language was language that allowed for a significant expansion of what we now call health savings accounts. The central concept is still there. It is a high deductible insurance policy owned by the individual, not the employer, or the individual can own the policy. Some employers have now begun to offer health savings accounts. A high deductible policy with a lower premium, and you put money into a tax-deferred savings account. Remember Albert Einstein said there is no power in the universe as strong as the miracle of compound interest. Put that as a pretax expense, and that can be something that grows significantly over time. Imagine that. A health-based IRA or a health savings account, an account that is dedicated only to your health care needs. Start that when you are young. It grows over time, and that can be an incredibly powerful tool to combat problems that might occur with health later in life.

But even if someone has a high deductible policy in their younger years and maybe they don't have quite as much stored up in that health savings account that would cover the deductible, still you get into a catastrophic situation, or it doesn't even need to be a catastrophic situation. In today's environment you have a single car accident and the medical costs can just be astronomical after spending an afternoon in the emergency room, a couple of hours in the CAT scanner, maybe a day or 2 in the intensive care unit, 3 or 4 days in the hospital, and by the time you get out, you have got a bill that will literally shock you. And a health savings account would provide that type of catastrophic coverage.

Why is this important? Say a young person just getting out of college decides they want to go off on their own and they want to be the next Bill Gates. They want to be an entrepreneur. They want to develop their own company. They don't want to work for a large company with its attendant benefits and health care insurance. They just want to go out on their own. Ten years ago you went into the private individual market and said, I want to buy some health insurance because I am going to work for myself and start a small business and be my own boss, you couldn't get anybody to talk to you for any price. There just wasn't a policy available.

Fast forward to the present time, and with the changes we made with health savings accounts in the Medicare Modernization Act of 2003, you can go on the Internet. You can type in ``health savings account'' into the search engine of your choice. And in my home State of Texas for a male age 25, just out of college, nonsmoker, you can pick up a high deductible policy in the range of $65 to $75 a month. Not an astronomical expense. Sure, there is a high deductible associated with that. So if you want a flu shot next fall, you are probably just paying for that out of pocket. But if you get pneumonia and you end up in the hospital in the ICU for several days, you are going to have coverage for that so-called catastrophic event because, even though it is a high deductible, your medical expenses will quickly exceed that. So that is a good thing to have so that you do have coverage.

For a young family where a husband and wife want to have the coverage, want to do the responsible thing if they have small children, a health savings account may provide the way to do that and have that coverage beginning at an early age. And over time the money will grow in the actual savings account portion of that. It grows tax deferred. It can accumulate quickly. And as a consequence, the specter of having a very high deductible is something that is now not such a big deal because there is easily money within that health savings account to pay for those health care needs. Even the routine care if someone chooses to do that, the dollars are there to be spent for that purpose.

The popularity has grown a lot. When I first got mine back in 1997, my old Archer medical savings account, I worried because they said we're going to put a cap on this; we're not going to allow more than 750,000 of these to be sold in the United States of America. I thought golly, I better get out there and get one fast or they are going to all be snapped up. It turned out I didn't need to worry because those original insurance policies, probably less than 100,000 were sold.

But the health savings accounts, when the conditions changed in 2003, have been significantly popular. The last year for which I have accurate and verifiable data is 2005. But by December of that year, the end of calendar year 2005, 3.2 million individuals had coverage through a health savings account; 42 percent of those individuals had families with incomes below $50,000 purchasing an HSA type of insurance. Certainly that is indicative that this is an affordable option. In addition, the number of previously uninsured HSA plan purchasers over the age of 60 nearly doubled, proving that the plans are accessible to people of all ages. And again, out of that number, over 3 million, probably about 40 percent of those

individuals were previously uninsured. So it did have the effect of, at least temporarily, bending the growth curve of the uninsured in this country.

Of those 46 million people that we talked about before that are uninsured, over half, 60 percent, are employed in small businesses. Some of these individuals prefer a more traditional health plan. They would like to have what we talked about earlier, an employer-derived health insurance. But their employers, their small business employers look at those premiums going up every year and they say, you know what, I just cannot do it anymore, and so they drop the benefit because it is simply too expensive.

Now, Congress has had before it, over the last 4 years I think we've had at least three votes on this concept; it has always passed the House of Representatives; it always stalled in the Senate. I don't know if we will take it up this year, but I think we should because I think it is fundamentally a good idea. And maybe at some point we will get some cooperation from the other body.

But to unburden small business owners, Congress has devised the concept of what are called Association Health Plans, essentially allowing a group of small businesses with a small business model to band together to get the purchasing clout of a big corporation. It is really not too hard a concept for most people to understand. It is, again, something that has passed this House at least three times that I am aware of. It is a sensible solution. It allows the spread of the insurance risk amongst a larger group. A small employer, say a realtor in your hometown who has 3 or 4 people working in the office, very difficult, very expensive for them to get insurance, if they can find it. Well, imagine if you let all the realtors in Texas band together and form a single group that was negotiating for the sale of insurance. Now imagine that you couple that with the realtors in Oklahoma, Louisiana and New Mexico. Then you've got a group of people that really is beginning to have some significant financial clout and may be able to get a much better price in the group health insurance market. Well, all of this, from the insurance side, is extremely important. You've got to worry though, are we putting the cart before the horse?

About a year and a half ago, Alan Greenspan, just as he retired as Chairman of the Federal Reserve Board here in Washington, D.C., met with several groups. He met with a group of us one morning, and he was asked the inevitable question, well, Chairman, what about the ability of the Federal Government to pay for Medicare in the future. He alluded to how that was going to be a problem that was going to have to be faced. But at the end of it all, he felt that Congress would be able to come up with an equitable solution to that. And he paused and he said, what concerns me more is will there be anyone there to provide the services that you want when you get there. That is a pretty profound statement, certainly something that has stuck with me since that time.

No question about it in my mind, our country faces a crisis in health care manpower, a physician shortage, if you will, in the future. We need to ensure that the doctors who are in practice today, those physicians I like to call ``mature physicians'' at the peak of their clinical abilities, at the peak of their diagnostic abilities, at the peak of their surgical expertise and abilities, we've got to be sure that they stay in the game, that they continue to practice, that they don't retire early, that they don't wander off and do something else. We need to keep them involved.

At the same time, we need to ensure that the younger physicians, the doctors of tomorrow, those that are in residency programs today, those that might be thinking about going to medical school or into nursing, that those individuals stay involved and in fact pursue their career dream of working in health care.

The first issue that always comes to my mind when I think of what are some of the things that drive doctors out of practice or keep people from going into the practice of medicine, and that is, of course, the conundrum of medical liability. Again, we faced it in this House of Representatives probably four times in the time that I have been in Congress. It is an issue that has never gotten through the other body. Again, I believe we need to continue to push that as an issue because in so many ways we just need some commonsense medical liability reform to protect patients, stop the escalating costs associated with lawsuits that are not well-grounded, and to make health care more affordable, ensure that health care is in fact even available to Americans all across from coast to coast in Alaska and Hawaii, and make sure that those physicians stay in the game and continue to provide the needed services.

I believe we do need a national solution. State to State coverage is always going to be tenuous. My home State of Texas did a great thing as far as medical liability reform is concerned back in September of 2003, but you worry every time the State legislature comes into session every 2 years, is something going to happen that undoes those great steps forward that were taken back in 2003.

I do think that modelling after the concept that was developed, actually originally in the State of California back in 1975, the Medical Injury Compensation Reform Act of 1975, signed into law by Governor Jerry Brown, a great step forward that put a cap on noneconomic damages in medical liability suits.

Fast forward to 2003, and the Texas plan came forward. Indeed, the basis of the program or the basis of the reform does lie in a cap on noneconomic damages, but I like to say it's got a 21st century angle to it. There is a $250,000 cap on noneconomic damages for the doctor, a $250,000 on noneconomic damages for the hospital, and a third cap of $250,000 for noneconomic damages from a second hospital or nursing home, if one is involved. In fact, the original cap legislation that worked so well in California, in Texas it has been trifurcated. It is in the aggregate of a $750,000 cap.

Well, how does that work? Did that fix the problem that the State of Texas faced the year I ran for Congress 2003? Well, in Texas, we've gone from 17 medical liability insurers down to two. My personal situation, running my own practice, really having not had a problem that would take me into the courts, but my rates were increasing by 25, 30, 40 percent a year. Well, in 2003, the Texas legislature passed medical liability reform based off that California law, again, updated for the 21st century, for an aggregate cap of $750,000. What has happened since then? Well, remember I just said, we dropped from 17 liability insurers down to two because of the medical liability crisis. We are back up to 14 or 15 carriers. And most importantly, those carriers have returned to the State of Texas without an increase in their rates. They have held their rates down.

My old insurer of record, Texas Medical Liability Trust, between rate reductions, rebates and dividend payments to physicians over the 3\1/2\ years since this law was passed, the actual net effect is a 22 percent reduction in premiums for physicians across the board in the State of Texas. Again, remember premiums were going up by 20, 25, 30 percent or more a year, now they are coming down, and over the last few years they have come down 22 percent.

One of the most significant, unintended benefits of this was what happened with the small not-for-profit, community-based hospitals, those hospitals that were essentially self-insured for medical liability. They have been able to take money that was in those escrow accounts against the uncertainty of the medical liability climate that they faced in 2001, 2002 and early 2003, now that money has been able to go to hiring nurses, capital improvements, just the very things you would want your smaller not-for-profit, community-based hospital to be able to do. This is certainly one of the good news stories. And again, the smaller hospitals were not the intended beneficiary of this legislation when it passed in the State of Texas.

I took the language of the Texas-passed medical liability reform, worked it into the type of language that we have to have here in the House of Representatives, ran it through legislative counsel and offered it to Mr. Ryan, Paul Ryan, the ranking member of the Budget Committee on the Republican side, when we were doing our budgetary work in March. He had that bill scored by the Congressional Budget Office. And the Texas plan, as applied

through the House of Representatives language, applied to the entire 50 States, would yield a savings of $3.8 billion over 5 years. Now, not a mammoth amount of money, but when you are talking about a $2.999 trillion budget, savings is savings. And these are monies that we are in a sense just going to leave on the table in this budgetary cycle that could have gone to some of the other spending priorities, some of which I have already alluded to in the SCHIP and the Federally Qualified Health Center statutes. But anything, even those things not dealing with health, $3.8 billion, as the old saying goes, you keep leaving that amount of money on the table and pretty soon you're going to be talking about some real dollars.

And also consider this: A study done in 1996, that's over 10 years ago, out of Stanford University, revealed that in the Medicare system alone, the cost of defensive medicine was approximately $28 to $30 billion a year. The cost of Medicare, not the entire cost of the health care infrastructure of the United States of America, the cost to Medicare was $28 to $30 billion a year 10 years ago. I submit that that number has likely increased today. We can scarcely afford to continue this trajectory that we are on with regards to medical liability in this country.

And again, remember when I started this part of the discussion talking about are we going to have anyone there to provide the services when we want them. And another consideration is that young people today entering college, in college, just getting out of college, who wanted to consider a career in health care, are looking at the crisis that we face in medical liability in this country, and it's keeping them out of the game, and that's not right. One of the obstetrics residency directors from a big New York program was down here actually a couple of years ago now, and I asked her, is the medical liability crisis, is it having an effect on your residency classes that you're recruiting? And she told me that right now we are taking people into our residency program that we wouldn't have interviewed 5 years ago. In other words, we are lowering the class and the capabilities of those people who are willing to go into obstetrics as a specialty. Well, these are our children's doctors, these are our children's children's doctors that are being trained in the residency programs today. I fail to see how it advances the case for patient safety and the well-being of Americans to continue to allow this condition to exist without addressing it.

Again, we voted on the bill several times in this House over the past several years. My understanding is the bill was just recently reintroduced last week. I hope we will have a chance to address it in this House. And I hope we can get some activity from the other body. I am not optimistic, but I believe this is so important that we have got to continue to try to get this done.

This brings me to one of the things I initially spoke about, one of three health care bills, H.R. 2583, the so-called Physician Workforce and Graduate Medical Education Enhancement Act of 2007. There is a Washington-type title that everyone can love. Well, part of ensuring the future health care workforce in this country is going to be to make certain that there are the types of residency programs in the types of communities in which we want doctors to consider going into practice. You know, the funny thing about physicians is they do have a lot of inertia. They tend to stay where they're dropped; that is, they tend to work and have their practice in communities where they trained or close to where they trained.

A lot of us have followed that trajectory, and I suspect there is nothing unique about that. It will continue to be the way physicians behave for probably well into the future. So the bill introduced just last week was designed to get more training programs in areas that are underserved, like rural areas, inner-city areas, to get young doctors- in-training in locations where they are actually needed.

The Physician Workforce and Graduate Medical Education Enhancement Act of 2007 would develop a program that would permit hospitals that do not traditionally operate a residency training program that will allow them the opportunity to start a residency training program and in fact build that physician workforce of the future on site in those communities where they are in fact needed.

On average, it costs $100,000 a year to train a resident, and that cost for a smaller hospital is clearly prohibitive. Because of the cost consideration, the bill would create a loan fund available to hospitals to make residency training programs where none has operated in the past. The programs would require full accreditation and be focused obviously in rural and suburban inner-urban or other smaller community- type hospitals. I can think of several communities in the congressional district that I represent that might benefit from such a program.

Clearly, it is one thing to say we are just going to educate more doctors, but to get them to practice in the areas where they are needed, and, boy, an area that comes to mind is the area around New Orleans, Louisiana. They have lost doctors. The wholesale loss of doctors since the twin hurricanes of August of 2005, it is going to be very difficult to encourage people to come back to that area. But the reality is if someone trains in that area, the likelihood of them staying in that area is increased.

It is all well and good to create new residency programs, but if you don't have anyone interested in filling that residency slot, it is not going to be really something that does all that much good. So the second bill, H.R. 2584, the High Need Physician Specialty Workforce Incentive Act of 2007, would help locate young doctors where they are needed to solve part of the impending physician shortage crisis that likely could affect the entire country.

We have got to consider training doctors for high need specialties. This act will establish a mix of scholarships, loan repayment funds and tax incentives to entice more students to medical school and create incentives for those students and newly-minted doctors to help them go into healthcare. The program will have a established repayment program for students who agree to go into family practice, internal medicine, emergency medicine, general surgery or OB/GYN, and practice in underserved areas. It will be a 5-year authorization at $5 million a year and it will provide additional educational scholarships in exchange for a commitment to serve in a public or private nonprofit health facility determined to have a critical shortage of primary care physicians.

Again, the Gulf Coast area comes to mind, but there are plenty of areas in my home State of Texas, West Texas and in fact East Texas, that would fit the bill for something like that. It is very similar to what used to be called the Berry Plan. The armed services used to offer a scholarship and some loan forgiveness to encourage physicians to go into one of the branches of service. This is modeled after those plans that were so popular in the early 1970s. Again, it is an important step in getting doctors into the communities where they are actually needed.

The third bill of the three that I introduced last week, H.R. 2585, really deals with the heart of the problem, which is stabilization of the current physician workforce.

When we talk about the current physician workforce, discussing things like medical liability, placement of doctors in locations of greatest need and financial concerns, encouraging doctors to remain in those high-need specialties, the next step is to fix on that largest group of doctors in the country and certainly the largest and still growing group of patients, those baby-boomers that you heard Mark Kirk talk about in the last hour.

Baby-boomers are going to continue to age. They are going to retire, and the demand for services has no where to go but up. If the physician workforce trends continues as they are today, we may no longer be talking about trying to fund the Medicare program. We may be talking about trying to find the Medicare physician. We may be talking about the fact that there is no one there to take care of America's seniors.

Year after year, there is a reduction in reimbursement payments from the Center for Medicare and Medicaid Services to doctors for services that they provide their Medicare patients. This is not a question of doctors just simply

wanting to make more money. It is about a stabilized repayment for services that are already rendered. It is about a question of fundamental fairness. And it is not just affecting doctors. It is affecting patients, and it becomes a real crisis of access.

Not a week goes by that I don't get a letter or fax from a physician back in Texas who says, you know what? I have just had enough of this, and I am going to retire early. I am no longer going to see Medicare patients in my practice or I am going to restrict the procedures that I offer to Medicare patients.

In fact it happened to me while we were home on the Memorial Day recess. A woman came up to me, someone I had trained with, and said, look, I just can no longer do these long, involved operations and be paid literally a pittance for the service, when I could spend my time doing other things that would actually pay for the cost of running my practice.

I certainly understand that. I certainly sympathize with that. It is a difficult situation for doctors to find themselves in, because they want to do right. These are difficult operations that they trained for years to be able to provide for people. Now, the fact that they are so poorly compensated by Medicare, they are simply having to turn their back on these challenging, technically difficult procedures, and say I will just see the well patient in the office and stay out of the operating room. I saw it happen in the hospital environment before I left the practice of medicine to come to Congress.

But I hear it in virtually every town hall that I do back in my district. Someone will raise their happened or come up to me afterwards and say, how come on Medicare, you turn 65 and you have to change doctors? The answer is because their doctor found it no longer economically viable to continue to see Medicare patients because they weren't able to cover the cost of delivering the care rendered. They weren't able to cover the cost of providing the care.

Medicare payments to physicians are modified annually. They use something called the sustainable growth rate formula. A lot of the people around here call it the SGR rate. Because of flaws in the process, the sustainable growth rate formula, mandated physician fee cuts in recent years have only been moderately averted by last-minute machinations and fixes that the Congress has provided. In fact, if no long-term congressional action is implemented, the SGR will continue to mandate cuts for physician reimbursement as far as the eye can see, cuts in aggregate between 35 and 40 percent over the next 10 years.

Now, unlike hospitals, who are reimbursed under essentially a cost of living adjustment every year known as the Medicare Economic Index, physicians are reimbursed under the SGR, which says there is a fixed amount of money to pay for all of the doctor-derived healthcare in this country, and there is more demands on that volume, then the slices of that pie are just going to get successively thinner year after year.

Medicare payments to physicians cover only about 65 percent of the cost of providing the patient services. That doesn't figure in anything for the doctor's take-home pay. That is the cost of providing the services. That is the office rent. That is the nurse's salary. That is keeping the lights on. That is paying for the medical equipment. That is buying the syringes and the medicines that might be administered in that office.

Can you imagine any industry, any business, any company that would continue in business if they received only two-thirds of the cost of what it costs them to provide the services? Currently the sustainable growth rate formula links physician payment updates to the Gross Domestic Product, which actually has no relationship whatsoever to the cost of providing those services.

But simply the repeal of the SGR, one of the big stumbling blocks for that is it is very, very costly when figured in the overall Federal budget. But the reality is we have to do it. Maybe if we do it over time, perhaps we can bring that down to a level that is in fact manageable.

Paying physicians fairly will extend their careers for many of those doctors now in practice and those who would otherwise opt out of the Medicare program or seek early retirement or restrict those procedures that they offer to their Medicare patients. It also has the effect of ensuring an adequate network of doctors available to older Americans as this country makes the transition to the physician workforce of the future.

In the physician payment stabilization bill, the SGR formula would be repealed 2 years from now, in 2010. There would be some incentive payments based on quality reporting and technology improvements installed to protect the practicing of physicians against the 5 percent cut that will likely occur each in the years 2008 and 2009. Those things would be voluntary. No one would have to do them. No one would be required to participate in the quality program or the technology improvement, but it would be available to those doctors and those practices who wanted to offset the proposed cuts that would occur in physician reimbursement over the 2 years until a formal repeal of the SGR would be allowed to happen.

Now, for most doctors, that is unacceptable. They say, well, I want the SGR repealed now, not 2 years from now, and I want it repealed this year and I want a positive update or I am going to stop seeing Medicare patients.

The reality is that possibly if we do this over time, we will be able to get it done. The other reality is I wish we had started this when I first got to Congress 4 years ago, and we might be well on our way or well past the where we would have in fact solved this problem. So, it is time to begin that journey of 1,000 miles with the very first steps, and we do have to focus on the fact that this is a long-term solution.

A lot of people say why do it that way? Why not just bite the bullet and get the SGR out of the way and get it repealed? It costs a tremendous amount of money. The other unfortunate aspect of that costing a tremendous amount of money is it may make the premium for the Part B recipient, it may make that premium go up significantly.

In Congress, we are all required to submit legislation to the Congressional Budget Office to find out how much it costs. If we are going to spend the taxpayers' money, how much are we going to spend, over what time will we spend it?

Because of constraints at the Congressional Budget Office, we are not allowed to do what is called dynamic scoring. We are not able to look at changing a program or a new program and say if we did things this way, we would save money in the future. That is well and good, but we can't claim those future savings to offset the cost of doing it a new way. And that is what static scoring tells us, and that is why dynamic scoring would be so beneficial in a situation like this. But we are not able to use that.

If we look at some of the things we have done already in the Medicare system we can say, you know, if we do it this way, we are actually going to save some money. We are not allowed to capture those savings.

The Trustees Report that came out just a few weeks ago, there were 600,000 hospital beds in the year 2005 that weren't filled because of things that doctors and hospitals are doing better, improvements that have been made in the healthcare system. 600,000 hospital beds that weren't filled. Do we get the financial credit for those 600,000 hospital beds that weren't filled? No, we can't claim that. That is just something that is absorbed by the system, and we go on and reset things for the next year and continue on our merry way with the SGR.

But the reality is if we could capture those savings, if we could aggregate those savings, it is not just in hospital beds, there are other areas where savings are occurring at the same time, if we could capture those savings, aggregate those savings, and use those savings to offset the cost of the SGR repeal, we might very well come down to a much more manageable number.

The old bank robber, Willie Sutton, was famous for saying he robbed banks because that is where the money is. Well, let's go after the procedures where most of the money is spent in CMS, identify where the savings are in delivering the care for people who are in those diagnostic groups, and let's keep that money, capture that money, and use it to offset the cost of the SGR.

I think that is the greatest return on investment that we could expect from those savings that we are likely going to see from Medicare in the future.

The same considerations apply to the Medicaid program as well. Again, it could be a useful exercise to go through and identify the top 10 conditions and see where the easy savings are in taking care of patients with those conditions. How can their care be better managed? How can things be prospectively managed? What types of intervention might keep a patient out of an expensive hospitalization or away from an expensive dialysis unit? These are the times of savings we need to gather.

I see that I am going to run up against some time constraints. I just want to mention health information technology is something that we do have to pay some attention to.

In the SGR reform bill that I introduced, there is some language about moving us down the road on information technology, embracing information technology. I haven't always been a big proponent of that. When I was practicing medicine, if someone had come to me with proposals like that, I would say, you know, that is going to increase the number of hours I spend every day, not increase my payments to any great degree, and I just don't see how it is going to be economically useful to me as a physician.

That was before I traveled to the City of New Orleans for the second time in January of 2006 and was taken into the records room at Charity Hospital shortly after they had gotten all of the water out of the records room at Charity Hospital.

It looked like the records room of any big city hospital. There were rows and rows, perhaps hundreds of thousands of records in this large room, tens of thousand of square feet devoted to the storage of medical records. They were ruined. They had been ruined by the water and by the black mold growing on the manilla folders. There was not enough protective gear to protect someone to go in and pull the charts out of the racks and begin to go through them to get the patient's medical history.

Clearly, the time has come where we need to have the concept of computerized access to medical records. It is something this country needs to embrace.

The old adage when I was in college, you could say, the dog ate my homework. No student today would do a report, a term paper and keep one single paper copy. They have it on a flash drive, on a hard drive, on a floppy disk. They have printed it out several times. They live in the electronic age. It would make no sense to the medical student of today to have a single paper copy of a term paper or lab report that they would have to turn in for a grade. It would never cross their mind.

Some of the other things, the interoperability of our systems is key. Right after the Walter Reed story broke, I was there visiting. Yes, the physical conditions were one thing; but one soldier told me the biggest concern he has is as he prepares his records, he is on medical hold and as he is looking to go back to join his unit or be discharged, he has to put in order his medical records to make the case for staying in the service or get the disability to which he is entitled if he is discharged from the service.

The biggest fear they have is they will spend hour after hour putting records together and highlighting critical areas, have them sit on someone's desk until they are lost, and then have to start over again. Their biggest concern was the inability of the Department of Defense and the Veterans Administration to interact with each other on the transfer of medical records. Clearly, that is a concept whose time has come.

Price transparency. I have talked about HSAs. If we are going to have health savings accounts work for Americans, we are going to have to be able to allow them to access information about price, cost and quality of medical care and procedures. I introduced legislation dealing with price transparency earlier.

My home State of Texas has gone a long way in this regard, providing information up on the Internet about the costs at various hospitals throughout the State and how they compare to other hospitals in the State. There is a lot of information. It is technically complex. It may even be boring to listen to, but nonetheless it is part of an incredibly important story. The story of how the most advanced, most innovative health care system in the world itself is in need of a little attention.

The last chapter should read happily ever after. How do we get there? The last chapter may read private industry leads to a healthy ending. We are in a debate that will forever change the way health care is delivered in our country. The next 18 months will spell that out for us. We have to understand what is working in our system. How do we make it work better, and how do we extend that to areas where we don't find excellence in our system, whether those areas be public or private. We can't delay making changes to bring our health care system into the 21st century.

I believe the only way this can work is to allow the private sector to lay the foundation for further improvements. The pillars of the system we have have to be rooted in the bedrock of a thriving public sector, and a thriving private sector, not in the shaky ground of a public and private system always at war with each other, and many times are inefficient.

We need to devote our work in Congress to building a stronger private sector in health care. History has proven this to be a tried and true measure. We can bring down the number of uninsured, increase patient access, stabilize physician workforce and modernize technology if we simply have the political and institutional courage to take the steps necessary.

Mr. Speaker, this evening, I wanted to come to the floor of the House to talk once again a little bit about health care. Health care in this country is going to be something that is on the front pages during the next 18 months until the next Presidential election, I suspect, and something we're going to devote a great deal of time and energy to on the floor of this House, perhaps even this month.

As we debate the future of medical care in this country over the next 18 months and through the Presidential election that will follow in 2008 and the Congress that convenes in 2009, we've got to decide on the avenues through which our health care system will be based. And essentially, Mr. Speaker, right now we have a system that is based part on the government, part on the public sector, and partly on the private sector.

The issue before us is, do we expand the public sector? Do we expand the government's involvement in health care? Do we expand the government's involvement in the delivery of health services, as popularly referred to as universal health care, and back in the 1990s, it was termed ``Hillary care,'' or do we encourage and continue the private sector involvement in the delivery of health care? The two options bring about a significant number of questions and a significant number of concerns addressed on both sides of the aisle. But I'm hopeful that as we continue to study this problem and debate this problem in this body, we will shed some light on the direction that we should be taking.

And Mr. Speaker, I don't think there is any question that the United States has developed one of the best health care systems in the world. Access can be an issue, but the quality of health care practiced in this country is second to none. You have people coming from all over the world. When I was a medical student at the Texas Medical Center down in Houston, Texas, you would have people coming from all over the word to avail themselves of the medical care that was available at Texas Medical Center. And close to my district in north Texas, you have Southwestern Medical School in Dallas, a number of Nobel Laureates on the clinical faculty there. Unbelievable sources of talent and knowledge that are available to training the young physicians of tomorrow. So these are the types of things we've got to be certain that we preserve, protect and defend as we do things that will perhaps alter the way medicine is practiced in this country.

Now, there are a lot of people who take issue with the fact that I maintain that the United States has the best health care system in the world. Plenty of people here in this body would say that's an overstatement. They would say, you've got a large number of uninsured people in this country, or prescription drugs cost way too much. The issues are there, but you know what, Mr. Speaker? The old saying is that numbers don't lie, but if you torture them long enough, they'll admit to almost anything.

We've got to dispense with a lot of the platitudes and the soundbites and try to get to really what is causing the problems that we have here, and how can we best go about correcting those problems? Well, how about applying some American ingenuity to getting those problems solved.

So, tonight, in talking about the different principles that guide the debate about public versus private in the delivery of health care services, it's important to concentrate a little bit on the background on how we got to the system that we have today.

The idea that we have a problem to solve is not new. Secretary Leavitt, I certainly agree with him when he made the remarks in a speech not too long ago that tackling the division between the two philosophies, public versus private, recently the Secretary said in a speech and in an op-ed piece, he posed the question, should the government own the system, or should the government be responsible for some organization in the system and leave the proprietary standpoint to someone else?

Mr. Speaker, during World War II, this country was faced with some significant problems, and one of the problems was the specter of inflation. So Franklin Roosevelt said, look, we're going to have wage and price controls in this country so that inflation doesn't get out of control. Employees found themselves highly sought after because a lot of the workforce was overseas fighting the war. Employers wanted to keep their employees happy. They wanted to keep them employed. They wanted to keep them loyal to their respective companies, but they were unable to raise wages because there was a Presidential decree that we were under wage and price controls. So the Supreme Court rendered a decision that benefits, things we talk about now

as a benefits package, health care, retirement, these things could be available and would not violate the spirit of President Roosevelt's wage and price controls. Thus, the era of health insurance benefits or employer-derived health insurance was born. And Mr. Speaker, it worked tremendously well, so well that it persisted well after the end of the Second World War.

Now, a lot of people will look at Western Europe and say, they've got a government-run system. Why don't we do what Europe did? How did Europe develop a system, a single-payer, government-run system? Even though some of the countries in Western Europe were victorious at the end of the Second World War, the war was fought in their back yard; their economies were devastated. It was important for their governments to stand up a medical care system quickly to avert a humanitarian crisis. That is what led to the institution of single-payer systems that you see in many countries in Europe today.

But America, by contrast, came through the war with a benefits package, if you will, that was available to employees. Employees like it. Employers liked it because the employees were happy. The employees stayed, to some degree, healthier and were able to work more effectively and less time off for sick leave. So the American system persisted and did very well for a number of years.

Now, fast forward some 20 years from the end of the war to the middle of the administration of Lyndon Johnson, fellow Texan, fellow House Member, albeit on the other side of the aisle, but during the tenure of President Johnson, he signed both the Medicare and the Medicaid programs into law. This was a large government program and represented a fundamental shift. It was the first time that the government got involved in a big way in running the practice of medicine. But it was created to focus on the elderly, to focus on their hospital care and their doctor care, and certainly make sure that persons who were then to be covered by Medicare weren't left in poverty in old age because of mounting medical bills.

But then fast forward another 40 years to the 108th Congress, and we had the Medicare system that was big and expensive and was very, very slow at change. It was like trying to turn a battleship. In 2003, in this House of Representatives, the President came to us, in the very first State of the Union message that I attended as a Member of Congress in my first term, and the President said he was going to, or this Congress was going to bring a Medicare prescription drug benefit to Medicare, that people had waited too long for this; it was too important to wait for another President or another Congress. And indeed, Congress set about the work of providing what we now know as the Part D benefit. And within the year, we voted on that package, and within the next year, it was, indeed, starting to be run. But the government system needed to address some of the inefficiencies that were built into the system.

Now, the Medicare prescription drug plan has given seniors access to medications that, quite frankly, they just didn't have available before. And when you look at how medicine has changed from 1965 to 2005, when the Medicare drug plan took effect, the changes that had been brought about by the advances in medical research, my dad was a doctor as well, and I used to tease him that, back in 1965, doctors only had two pharmaceutical choices, penicillin and cortisone, and they were regarded as interchangeable. My dad didn't think that was very funny. But the fact is, you come to 2005, look at the lives that have been saved by the introduction of a medicine like statin, medicines that are used for reduction of cholesterol. Dr. Elias Zerhouni of the National Institutes of Health estimates that 800,000 premature deaths have been prevented between 1965 and 2005 with the introduction of medicines to manage cholesterol and lipid levels in patient's blood. That's a tremendous change. In 1965, some people simply had the heart attack and died. In 2005, 2007, that no longer happens. But they are required, in order to maintain that state of health, to be maintained on a medication. Well, if the medicine is too expensive for the patient to buy, they don't take it, and they suffer the health consequences. And as a consequence, the system becomes more expensive because people end up utilizing the system more frequently and the outcomes for disease management become much worse.

The Medicare Prescription Drug Program has been successful. There have been a certain number of people who have been critical, but it has been a great benefit for seniors. And the fact that it is up and running now well into its second year, there is a great deal of satisfaction, and the penetrance into the number of people who have had prescription drug benefits who are covered by Medicare is now at an all-time high.

Now, in this country, as I mentioned earlier, the government pays for about half of our health care expenditures. We have a GDP of roughly $11 trillion in this country. The U.S. Department of Health and Human Services states that Medicare and Medicaid services alone, in fact when we vote on our Labor-HHS appropriations bill this year, it will be significantly north of $600 billion.

So that is about a half of what we spend in health care.

The way the other half is broken down, primarily the weight is borne by commercial insurance, by private insurance. There is a significant number of dollars that are contributed as charity care or uncompensated care. Certainly there are some individuals who do still simply just pay for their medical care out of pocket, but about half are from the Government source and half from private sources or the goodwill of America's physicians.

The numbers are going to increase because the overall dollar expenditure in health care is going to increase. The baby boomers are aging. There are more and more advances discovered with every passing month. The Federal Government is going to continue to funnel taxpayer dollars into Medicare. We have to ask ourselves, are we getting value for the dollar? Are we doing the best that we possibly can do with that money? Is the government doing an excellent job of managing our health care dollars? Do we think that the government is better suited to be the arbiter of a person's health care needs, or are those decisions better left up to an individual and their family? And who, at the fundamental end of it all, who is better able, who is going to be able to handle the growing health care needs in this country?

I would argue that if you have a public only, a government-run system, a universal, single-payer system, that in America it is going to be a significant problem. In fact, it will have the perverse incentive of hampering our innovation and perhaps even hampering the delivery of the most modern health care services available.

As an example, I would suggest that we have a model that we can examine, and that is our neighbor to the north in Canada. Canada has a completely government-run system. The Supreme Court in Canada in 2005, however, said that the waiting times in Canada were unconscionable and access to a waiting list did not equate to the same thing as access to care.

Now, in Canada they actually have a safety valve, because if somebody needs a medical procedure or needs a medical test done, they actually do have an area where there is a surplus of medical care available, and that would be on their southern border, the United States of America. So if somebody has the ability to pay and wants to come from Canada and cross the border to Henry Ford Hospital in Detroit, they are very capable of doing that. I am certain that the good folks at Henry Ford Hospital welcome their neighbors from Toronto all the time to sell essentially excess capacity that they have, whether it be an MRI or a CT scan or even a mammogram, heart surgery, or an artificial hip. The things that are on the waiting list in Canada that might take months or even years can be accessed relatively quickly simply by crossing the border. The waiting list is significantly long for some procedures.

If we look across the ocean to the country of Great Britain, the National Health Service, of course, has long been established in Britain. The citizens of that country regard their health system with a good deal of affection. But there is, in fact, a two-tier system in England. If someone is on a list for a hip replacement and has the

money to pay for it, they can go outside the system to a private orthopedic physician and have that surgery performed. Obviously, someone who doesn't have the means to provide that for themselves will simply have to stay on the waiting list. You get into a little trouble with the fact that when it takes so long, if someone is of a certain age, another year or two wait is a significant percentage of their remaining expected life years. In many ways that is not fair either. A sad reality that exists, but it is true.

So, in both instances, you can see that where the single-payer, government-run system has been oversubscribed, where they have a private system, either here in the United States for the country of Canada or a two-tiered system in the country of Great Britain, they have a private system to act as a backstop.

So, the question that I would ask is, if the private sector is more nimble and more able to provide care on a timely basis, why in the world would we do anything that would interfere with that system? It is a complex relationship.

How Congress does its job and how we react to the situation can, in fact, have a significant impact on making sure that we have the best health care possible. Certainly I think it is incumbent upon Congress to promote policies that keep the private sector involved in the delivery of health care in this country.

Now, you almost can't talk about health care in this country without talking about the problem of the uninsured. Regardless of the number you use, whether it is 42, 45 or 46 million, it does become a question of access for people without insurance.

But I would also point out that health care is rendered all the time in this country to people who don't have insurance or don't have the means to pay for it. It is not always rendered in the time frame that would be most propitious for the best health outcome, and certainly it is not always administered in the time frame where it is the least expensive type of care, but access to care in this country is, in fact, something that is generally available. But it can become very expensive and the time involved can be significant.

Now, we have a program in this country. It is about to turn 10 years old. In fact, it is a program that we have to reauthorize this year or it will expire at the end of September. This is a program that provides health insurance for children whose parents earn too much money for them to qualify for Medicaid and not enough money to purchase health insurance. So we have the SCHIP program that operates as a joint Federal-State partnership. It does provide some flexibility to States to determine the standards for providing health care funding for those children, again, who are not eligible for Medicaid and whose parents have not been able to get private insurance. The program has been very well thought of. It has been very successful across the board.

This year, in fact, before September 30, we have to reauthorize the State Children's Health Insurance Program. There is going to be a lot of debate. I suspect there will be a lot of debate this month. Certainly, in my Committee on Energy and Commerce and the Committee on Ways and Means, there will be a lot of debate on the best way to go forward with that.

One of the things I have had a problem with since coming to Congress and examining the SCHIP system is the fact that it is a program that was designed to cover children, but, in fact, we have some States that cover adults. Pregnant women, okay, it is reasonable to have them covered under the SCHIP system. But nonpregnant adults, it strains credulity to have a system that is there to provide health care for children, and in four States in this country we actually have more adults covered under the SCHIP program than we do children.

Certainly, where you have a State where all of the uninsured children have been covered by the SCHIP program, it may be appropriate to cover some adults. But until that trigger point is met, until that condition is met, to me it makes less sense to cover adults, when there are children who would benefit from having the coverage from the State Children's Health Insurance Program, to have them remain uncovered while we cover a population where the money was never intended to be used for that purpose.

A bill that I introduced, H.R. 1013, would make certain that SCHIP funds are spent exclusively on children and pregnant women and not on any other group. I hope to be able to have that concept considered when we go through the reauthorization of the SCHIP program.

Last year in Congress we also debated and got through the committee process the reauthorization for Federally Qualified Health Centers. We did not finish the work on that legislation, so we are likely to have to take that up again this year.

But about someone who is not a child, not a pregnant woman, who doesn't have access to health insurance, there are many places in the country where Federally Qualified Health Centers exist that give the patients access to health care without insurance; gives them a medical home, gives them continuity of care, a place they can go and see the same health care providers, whether it be a physician or nurse practioner, can see that person over and over again; provides primary health, oral and mental health and substance abuse services to persons at all stages in the life cycle.

Federally Qualified Health Centers take care of 15 million people in this country every year, typically someone who does not have insurance and so would be counted as one of the uninsured, but the reality is that they do have access to the continuity of care, just as someone who has insurance. Both the SCHIP program and the Federal Qualified Health Centers are designed to help the poorest, youngest and neediest in our communities.

But what about for individuals who can afford to pay some for their health services but just choose not to? We need to get past that point, and certainly there are two things that would improve the access to health insurance for people who do have the ability to pay something for their health care, health savings accounts and health association plans.

Health savings accounts are a tax-advantaged medical savings account available to taxpayers who are enrolled in a high-deductible health plan, a health insurance plan with lower premiums and a higher deductible than a traditional health plan. In the old days we used to refer to this as a catastrophic health plan.

Now, about 1996 or 1997, long before I ever thought about running for Congress, I was a physician in practice back in Texas. The Kennedy- Kassebaum bill was passed by the House and Senate and signed into law. It had in it what was called a demonstration project that would allow 750,000 people in the United States to sign up for at that time what were called medical savings accounts.

I subscribed to one of those. I purchased one of those for my family. The primary reason I did it was not even so much cost considerations but because it kept me in control of making health-care decisions. Those were the days when HMOs and 1-800 numbers were the order of the day, and I wanted to be certain that the health care decisions made in my family were made by my family and not by a bureaucrat or an insurance executive at the end of a 1-800 number.

The medical savings account proved to have a lot of restrictions on them. For that reason, a lot of people shied away from them. So I don't know that they ever got to their full enrollment of 750,000, but to me it was another very viable form of insurance.

Again, the premiums were lower because the deductible was higher, and you were able to put money into an account like an IRA, called a medical IRA, that would grow tax-free. The interest in it would grow tax-free year over year. This money could be used only for legitimate medical expenses, but if you found yourself in a situation where you needed to pay for medical care, yes, you had a high deductible, but now you have saved some money that can offset the high deductible.

When the Medicare Modernization Act passed in 2003, we also did away with a lot of the regulations and restrictions on medical savings accounts, and the follow-on for that are what are called health savings accounts or HSAs.

For an HSA, the funds contributed to the account are not subject to the income tax and can only be used to pay

for medical expenses. But one of the best parts about having an HSA is that all deposits stay the property of the policyholder. They don't go to the insurance company. They don't go to the government. They stay under the control and ownership of the person who has put those funds, regardless of the source of the deposit. So even if an employer makes a contribution to that, the funds belong to the person who owns the insurance policy. Additionally, any funds deposited that are not used that year will stay in the fund and grow year over year, different from the old use-it-or-lose-it programs that were so prevalent and popular during the 1990s.

The popularity of health savings accounts has grown considerably since its inception. The latest numbers I have are, unfortunately, a couple of years old. They are from 2005. But by December of that year, 3.5 million people had insurance coverage through an HSA. Of that number, 42 percent of the individuals are families who had income levels below $50,000 a year and were purchasing an HSA type of insurance. Additionally, about another 40 percent were individuals who previously had not been insured. So this allowed a way for people who were previously uninsured to access insurance. A good number of those folks were between the ages of 50 and 60, taking away some credence to the myth that HSAs are only for the healthy and wealthy.

These programs have been well-subscribed. Again, the numbers that I have are from 2005. I suspect they are much more robust at this point.

Well, when you consider a young person just getting out of college, roundabout age 25, if they don't want to go to work for a major corporation and therefore have employer-derived insurance, what are their options? I will tell you, 10 years ago, you didn't have many options. In fact, I tried to purchase a health insurance policy for an adult child just in that situation. You almost couldn't get an insurance policy for a single individual, regardless of the price you were willing to pay.

Fast forward to 2005 or 2007. You can go on the Internet, type ``health savings account'' into the search engine of your choice, and very quickly you will be given a plethora of choices from a variety of different health plans. In my home State of Texas, a male age 25 looking for health insurance can find a high-deductible PPO plan from a reputable insurance provider for between $60 and $70 a month. So that is eminently affordable.

Sure, there is a high deductible involved with that. That means every fall, if you go get a flu shot, you are probably going to pay for that flu shot out-of-pocket, or if you have money in your health savings account, you can make a draw on that.

So that type of expense is not going to be covered, but if that individual is in an accident and ends up spending 3 or 4 hours in the emergency room and a day in the intensive care unit, they will be covered because those expenses will rapidly exceed their deductible. That individual will be covered with health insurance. That is a concept that we need to make people aware of, that there are options. Even though you may work for a company that doesn't provide insurance or you are self-employed and are a small group and otherwise would not have access to employer-derived health insurance, the concept of a health savings account is available and marketed over the Internet, and there is a lot of competition for those products. As a consequence of that competition, the price on those has come down in the years since they were introduced.

Mr. Speaker, another concept that we have debated in this House at least every year I have been here is the concept of association health plans. Association health plans allow small employers to band together to get the purchasing power of a larger corporation when they go out and price insurance on the open market.

To date, we have passed that legislation four times that I can recall in the House of Representatives. It never passed in the Senate. I would like to see us take up and at least discuss that as a possibility this year. I don't know in fact if that will happen. But association health plans may not bring down the number of uninsured directly, but it certainly would help bend the growth curve that is going upward of the number of people not covered by insurance because it allows for small employers to get access to much more economic leverage in the market for buying insurance policies and allows them to be able to offer that insurance policy to their employees in the small group market.

It means that a group of perhaps Chambers of Commerce or a group of realtors could band together and offer health insurance to their employees where otherwise it might not have been available. All of these things are important.

Another factor to consider, and we have to be careful here, about a year and a half ago, Alan Greenspan was talking to us just before he left his position at the Federal Reserve. Someone brought up the topic of Medicare, and where is the funding going to come from? Mr. Greenspan said he was confident at some point in the future Congress will come to grips with this problem and will solve this problem.

But he went on to say what concerns me more is, will there be anyone there to provide the service when you require it? Those words really struck me. What he is talking about, are there going to be doctors there in the future? Are there going to be nurses in the future to provide for us when we are the ones who are relying on Medicare for our health services?

Back in my home State of Texas, the Texas Medical Association puts out a journal called Texas Medicine, and last March they had a special issue called, ``Running Out of Doctors.''

Our country faces a potential crisis with a health care provider shortage or a physician shortage in the future. So when we work on health care issues in this body and on both sides of the aisle, this is going to be important; when we work on health care issues in Congress, we have to be is certain that we retain the doctors of today, that we encourage the doctors who are in training today, and that we encourage those young people who might consider a career in health care, that we encourage them to pursue that dream and realize that dream.

Certainly the doctors of today, those at the peak of their clinical abilities, it is incumbent upon us to make certain that they remain in practice and they continue to provide services, services to our Medicare patients and services to patients who typically have one, two, three or more medical problems. Some of the most complex medical issues that can face a practitioner today will occur in the Medicare population.

Well, what steps do we need to take to make certain that we have doctors in practice, that we have people there able to deliver those services that Alan Greenspan was talking about a year and a half ago? Well, Mr. Speaker, you almost can't have this discussion without talking a little bit about medical liability. Now, in the 4 years prior to this Congress, every year, again, we passed some type of medical liability reform bill in the House of Representatives. It never got enough votes in the Senate to cut off debate and come to a vote. I feel certain it would have passed had it come to an up-or-down vote, but they were never to muster the 60 votes.

We need commonsense medical liability reform to protect patients, to protect patients' access to physicians, to stop the continuous escalation of costs associated with medical liability in this country. And in turn, this makes health care more affordable and more accessible for more Americans because we keep the services available in the communities as they are needed, when they are needed.

Mr. Speaker, I believe we need a national solution. Our State-to- State responses to this problem, some areas, like my State of Texas, have gone a long ways towards solving the problem, but there are many areas in the country where the problem persists, and it does remain a national problem.

We have an example, I think a good example, in my home State of Texas of exactly the type of legislation that we should be considering in the House of Representatives. Texas, in 2003, brought together the major stakeholders in the discussion, included the doctors, patients, hospitals, nursing homes, and crafted legislation that was modeled after the Medical Injury Compensation Reform Act of 1975 that was passed in California in 1975. There were

some differences with the California law, but basically it is a cap on noneconomic damages. In Texas, we had a significant problem as far as medical liability was concerned. We had medical liability insurers that were leaving the State. They were simply not going to write any more policies. They closed up shop and left town because they couldn't see a future in providing medical liability coverage in Texas. We went from 17 insurers down to two at the end of 2002, the year I first ran for Congress. The rates were increasing year over year. Running my own practice in 2002, my rates were increasing by 30 to 50 percent a year.

In 2003, the State legislature passed medical liability reform, again based on the California law of 1975. The California law in 1975 was also a cap on noneconomic damages. They had a single cap of $250,000 on all noneconomic damages.

In Texas, the cap was trifurcated. There was a $250,000 cap on noneconomic damages as it pertains to a physician, a $250,000 cap on noneconomic damages as it pertains to the hospital and a $250,000 cap on noneconomic damages as it pertains to a nursing home or a second hospital; so an aggregate cap of $750,000 on noneconomic damages.

How has the Texas plan fared? Remember, we had gone from 17 insurers down to two because of the medical liability crisis in the State. Now we are back up to 14 or 15 carriers. And most importantly, those carriers have returned to the State without a premium increase.

In 2006, 3 years after the passage of the medical liability reform, an insurance company called Medical Protective, I had a policy with them for years and years, Medical Protective company cut their rates 10 percent, which was the fourth reduction since April of 2005.

Texas Medical Liability Trust, my last insurer of record when I left practice in Texas, has had an aggregate cut of 22 percent since the law was passed.

Advocate MD, another insurance company, has filed a 19.9 percent rate decrease. Another company called Doctor's Company has announced a 13 percent rate cut. These are real numbers, and they affect real people in real practice situations in Texas. It is a significant reversal.

The year when I first came to Congress, we lost one-half of the neurosurgeons in the metroplex because of the medical liability expense problem. The doctor looked at the renewal bill and said, I cannot work enough to pay for this and pay for my practice and support my family, so I will go elsewhere. The net effect is it put the whole trauma system in north Texas at risk because one neurosurgeon was going to have to do the work of two, and you cannot physically work 24 hours a day, 7 days a week, delivering that type of care. So the whole trauma system was put at risk before this law went into effect in Texas.

A young perinatologist whom I met during my first year in office, had gone on and gotten specialized training to care for those high-risk pregnancies, well, you can imagine what his medical liability premiums were. Mine were high as an obstetrician. His were even higher as a perinatologist who specialized only in high-risk cases. And, in fact, at a lecture in Texas, he came to me and said, you know, I am going to have to leave the practice of medicine altogether because I simply cannot get insurance.

Well, how are we furthering the cause of patient care if we take a young person who is very dedicated to taking care of the highest-risk pregnancies in the metroplex and we say, sorry, you can't practice because we can't get you insurance anywhere. Happily, in Texas, that situation reversed, and that doctor, I know, is in practice.

The problem with the neurosurgeon, because of the straightening out of the insurance in Texas, has been reversed. Our trauma system is protected, as is the young man who is practicing high-risk obstetrics and saving babies even as we speak.

One of the unintended beneficiaries of the legislation was the benefit for community, small, mid-sized community not-for-profit hospitals who were self insured as far as medical liability was concerned. They had to put so much money in escrow to cover potential bad outcomes that that money was just tied up, and it was not available to them. Now they have been able to back some of that money out of escrow because of putting stability into the system with the cap on noneconomic damages, and now they are able to use that money for capital expansion, nurses' salaries, exactly what you want your small community not-for-profit hospitals to be engaged in. They can, once again, participate in those activities because of the benefits from the medical liability plan that was passed in Texas.

So, Mr. Speaker, I took the language of the Texas medical liability plan, worked with legislative counsel and made it so it would conform with all of our constructs here in the House of Representatives. And although I didn't introduce that legislation, I offered it to the ranking member on our Budget Committee last spring when we offered our Republican budget here on the floor of the House.

Mr. Ryan, the ranking member, had that scored by the Congressional Budget Office, and the Texas plan as applied by the House of Representatives legislative counsel and applied to the entire 50 States would yield a savings of $3.8 billion scored over a 5-year time span. That is not a mammoth amount of money when we talk about the types of dollars we talk about in our Federal budget, some $2.999 trillion, but $3.8 billion over 5 years is not insignificant. And it is basically money that we left on the table because we did not include the language of that medical liability reform in the budget that was passed this year.

Now, when I say the problem, although the problem in Texas is measurably better than it was when I took office here, consider a 1996 study done at Stanford University that revealed within the Medicare system alone the cost of defensive medicine, that is medicine that you practice so that you tone the chart and you look good if something goes wrong and the case is brought to trial; if you have practiced satisfactory defensive medicine, you will be able to defend yourself in the case of a medical liability suit. A couple of doctors and economists at Stanford got together and said, what does this cost Medicare? What does it cost for doctors to practice this type of defensive medicine? And it cost about $28 billion a year back in 1996. I would submit that the number is probably higher today if they were to revise and redo that study.

So that is a significant amount of money, and the Medicare system is the one that pays for that. Remember, Medicare runs about $300 billion a year. That's almost 10 percent of its budget that is being spent on defensive medicine because of the broken medical liability system we have here in this country. We can scarcely afford to continue on that trajectory that we're on with the medical liability system in this country.

Another consideration, Mr. Speaker, I talked a little bit about young people who are perhaps considering a career in medicine or nursing, and the current medical liability system is a deterrent for going into the practice of health care because they look at the burden that's placed on young doctors and nurses for the payment for medical liability insurance, and we keep people out of the system and it's something we have to consider because, again, remember, we're talking about physician workforce issues and how we keep the doctors of today in practice, but how do we encourage that young person who's in middle school or high school today who's thinking about a career in one of the health professions, and we want them to be able to pursue that dream.

But currently, they get to the end of college and they look at the expense for getting medical training, they look at the money they will have to put up front to purchase their medical liability policy when they get out, and they say maybe it's not worth it.

And the problem, Mr. Speaker, with that is these are our children's doctors and our children's children's doctors who perhaps are not going to go into the healing professions because of problems within the medical liability system. I could talk about that a great deal longer, but let me get to three specific pieces of legislation that really get to the core of dealing with the physician workforce issues and I think the

problems that we're going to face in the future if we don't get our arms around this problem.

A recent piece of legislation that I introduced is H.R. 2584, the so- called Physician Workforce and Graduate Medical Education Enhancement Act of 2007. Part of this legislation is to ensure this workforce in the future by helping young doctors with the availability of residency programs.

One thing about physicians is we tend to have a lot of inertia. We tend to go into practice where we did our residency. We tend to not go too far from home when it comes to setting up a medical practice.

So with that in mind, and in fact, that was one of the main thrusts of the article that was included in Texas Medicine, is to develop more residency programs in the communities where the medical need is greatest and develop those residency programs with the type of physician that's needed in those medical communities: primary care to be certain; obstetrics to be certain; general surgery; again, the types of physicians that we want to be on the front lines practicing in our medium-sized communities. We need to get young doctors in training in locations where they're actually needed.

This bill, the physician workforce bill, would develop a program that would permit hospitals that do not traditionally operate a residency training program the opportunity to start a residency training program and build a physician workforce of the future and build it from the ground up, start at home, start right where it's going to be needed.

On average, it costs $100,000 a year to train a resident, and that cost for a smaller hospital obviously can be prohibitive. Because of the cost consideration, my bill would create a loan fund available to hospitals to create residency training programs where none has operated in the past. The program would require full accreditation and be generally focused in rural suburban inner community hospitals and focus on those specialties that are in the greatest need, and that will, of necessity, be some of the primary care specialties that I just mentioned.

Well, what about those people who may not yet be in medical school but may be contemplating a career in health care? Locating young doctors where they're needed is just part of solving the impending physician shortage crisis that I think will affect the entire health care system nationally. Another aspect that must be considered is training doctors for high-need specialties.

The second bill, H.R. 2583, the High Need Physician Specialty Workforce Incentive Act of 2007, will establish a mix of scholarship, loan repayment funds and tax incentives to entice more students to medical school and create incentives for those students and newly minted doctors to stay in those communities.

This program will have an established repayment program for students who agree to go into family practice, internal medicine, emergency medicine, general surgery or OB/GYN and practice in a designated underserved area. It will be a 5-year authorization at $5 million per year. It will provide additional educational scholarships in exchange for a commitment, a commitment to serve in a public or private non- profit health facility determined where there's a critical shortage of primary care physicians.

Well, in addressing the physician workforce crisis, looking a little bit at residency programs, looking a little bit at medical students and, of course, medical liability but the placement of doctors in locations of greatest need and the financial concerns of encouraging doctors to remain in high-need specialties, the next bill, H.R. 2585, will address perhaps what is the largest group of doctors in this country, what I like to call the mature physician, and certainly the largest and still growing group of patients, our baby boomers, those who are just on Medicare and those soon to be on Medicare.

Now, before I get too far into this, I'm joined by my friend from Pennsylvania. Did you wish to weigh in on this subject this evening?

I'm happy to yield to my friend from Pennsylvania for a few minutes and give him time to talk.

I thank the gentleman for his input. Certainly, the ability to recruit doctors to Texas from Pennsylvania has been greatly enhanced by the passage of the Texas medical liability bill, but you point up a very real problem that the physicians in Pennsylvania face. And, again, it points up the need for a national solution to wait and have the process work its way through every State legislature, State by State. It costs an enormous amount of money, costs an enormous amount of time, and just the effort, the efficiency of those doctors affected is going to be diminished.

So I really appreciate the gentleman taking the time to come down here and add his thoughts about what is happening in his home State of Pennsylvania.

Mr. Speaker, let me go on and talk just a little bit about H.R. 2585. That will address some of the problems that are faced by the physicians who are in practice now, the physicians who are the primary source of care for our Medicare patients. As baby boomers retire, the demand for services is going to go nowhere but up, and if the physician workforce trends of today continue, we may not be talking about a Medicare funding problem. We may be talking about why there is no one there to take care of our seniors.

Year after year, there's a reduction in the reimbursement payments from the Center of Medicare and Medicaid Services to physicians for the services they provide for Medicare patients. It's not a question of doctors just simply wanting to make more money. It's about a stabilized repayment for services that have already been rendered, and it isn't just affecting doctors. The problem also affects patients. It becomes a real crisis of access.

Not a week goes by that I don't get a letter from a physician from somewhere in the country or a fax that says, you know what, I've just had it up to here, and I'm going to stop seeing Medicare patients. I'm going to retire early. I'm no longer going to accept new Medicare patients in my practice, or I'm going to restrict those procedures that I offer to Medicare patients.

And, unfortunately, I know this is happening because I saw it in the hospital environment before I left practice 5 years ago to come to Congress, and I hear it in virtually every town hall that I have in my district. Someone will raise their hand and say how come on Medicare, you turn 65 and you've got to change doctors. And the answer is, because their doctor found it no longer economically viability to continue to see Medicare patients because they weren't able to pay for the cost of delivering the care. They weren't able to cover the cost of delivering the care.

Now, Medicare payments to physicians are modified annually under a formula that is known as the ``sustainable growth rate.'' Because of flaws in the process and flaws built into the formula, the SGR-mandated physician fee cuts in recent years have only been moderately averted at the last minute; and if long-term congressional action is not implemented, the SGR will continue to mandate physician cuts.

Now, unlike hospital reimbursement rates which closely follow the consumer price index that measures the cost of providing care, physician reimbursements do not. I have a graph here, again from the Texas Medical Association, that shows based on various calendar years what the cuts in the SGR formula have amounted to as far as physician reimbursement versus what the cost-of-living adjustment has been for Medicare Advantage, the Medicare HMOs, for hospitals, for nursing homes, for pharmaceuticals now would be the same type of formula.

Only physicians are asked to live under this formula. In fact, ordinarily Medicare payments do not cover or only cover about 65 percent of the actual cost of providing the patient services. Can you imagine going to any industry or company and ask them to continue in business when you're only paying them 65 percent of what it costs them to stay in business?

The SGR links physician payments updates to the gross domestic product and the reality is that has no relationship to the cost of providing patient services. But simply the repeal of the SGR has been difficult because it costs a lot of money; but perhaps if we do it over time, perhaps we can bring that down to a level that's manageable.

Paying physicians fairly will extend the career of practicing physicians who would otherwise opt out of the Medicare program, seek early retirement or severely restrict those procedures that they offer to their Medicare patients. It also has the effect of ensuring an adequate network of doctors available to older Americans as this country makes a transition to the physician workforce of the future.

In the new physician payment stabilization bill, the SGR formula would be repealed in the year 2010, 2 years from now, but would also provide incentive payments based on quality reporting and technology improvements. These incentive payments would be installed to protect the practicing physician against that 5 percent cut that is estimated to occur in 2008 and 2009.

Note that this would be voluntary. No one would be required to participate in either program that dealt with quality improvement or technology improvement, but it would be available to doctors or practices who wanted to offset the proposed cuts that would occur in physician reimbursement until the 2 years time the physician repayment formally can be repealed.

Now I know that a lot of the doctors don't like the concept of postponing the SGR by 2 years. In fact, in the bill 2585, by resetting the baseline of the SGR formula, a technique that we used in this Congress back in 2003, by resetting the baseline, the amount of cuts contemplated for 2008 and 2009 are actually modified significantly, and, in fact, there may not be a cut at all in 2008 or 2009. This could translate into an actual positive update for physicians in those 2 years.

But the critical thing, in my mind, is that we have to be, regardless of what we decide to do over the next 2 years, we have got to be working on a long-term solution to get out from under the tyranny of the SGR formula.

Now, why do it this way? Why not just bite the bullet and get the SGR out of the way and get it repealed once and for all? The problem is, it costs a tremendous amount of money to do that. The problem we have in Congress is, if we are required to submit all legislation that we propose to the Congressional Budget Office to find out how much something costs, we are going to be spending the taxpayers' money, we have got to know how much we are going to spend, over what time will we spend it.

Because of the constraints in the Congressional Budget Office, we are not allowed to do what's called dynamic scoring. We can't look ahead and say, you know, if we do this, we are going to save money. The Congressional Budget Office doesn't work that way.

That's why postponing the renewal of the SGR by 2 years, take that savings that is going to occur over those 2 years, sequester it and aggregate that savings and put it towards paying for the repeal of the SGR and replacing it with a cost of living index, the Medicare, economic index that would be fundamentally much fairer.

One of the main thrusts of the bill is to require the Centers for Medicaid and Medicare Services to do just exactly that and to look at the 10 diagnostic codes for which most of the monetary expenditures are rendered. You know the old bank robber, Willie Sutton, when he was asked why he would rob the bank, he said, that's where the money is. Let's go to where the money is. Let's go to those top 10 procedures and diagnoses that spend the greatest amount of Medicare and look for where the greatest amount of savings can be found within that.

The same considerations actually apply to the Medicaid program as well, so it will be useful to go through this process in identifying those top 10 conditions and trying to modify things so that the delivery of care for those top 10 conditions actually ends up costing us less.

With the time that remains, I know I have talked about a lot of stuff tonight, a lot of it is technically very complex. I will admit it, a lot of it is actually very boring to listen to. But it is an incredibly important subject, and it is an incredibly important story that we have to tell here in Congress. It's a story of how the most advanced, most innovative and most appreciated health care system in the world actually needs a little help itself.

The end of the story should read, ``happily ever after,'' but how are we going to get to that conclusion? In fact, the last chapter may well read, ``private industry leads to a healthy ending.''

At the beginning of this hour, we talked about the debate that will forever change the face of health care in this country. Again, I think it's important to understand, that we understand here in Congress, that we understand what's working in our system and what is not. We can't delay making the changes and bringing health care into the 21st century.

I believe the only way we can make this work is if we allow the private sector to be involved, to stay involved and, in fact, lay the foundation for the improvements that we all want.

The pillars of this system are that we are going to have, be rooted in, the bedrock of a thriving private sector, not the tenuous ground of a public system that has proven costly and inefficient in other countries.

I believe we need to devote our working Congress to building a stronger system and involving the private sector within that system. History has proven this to be a tried and true method. We can bring down the number of insured. We can increase patient access. We can stabilize the physician workforce, and we can modernize through technology, and we can bring transparency into the system. Each of these goals is within our grasp if we only have the foresight and the determination, the political courage to achieve each goal.

Again, I referenced when I was a medical student in Houston, people would come from around the world to come to the Texas Medical Center for their care. There is a reason that people come from around the world to the United States for their health care and for their treatment. We are the best, but we must make adjustments to remain at the top of the game.

Mr. Speaker, I come to the floor tonight to talk a little bit about health care. Of course, we are enmeshed in the great State Children's Health Insurance Program debate here this week, that load having been taken by the Senate at the end of last week, the bill being sent off to the President, we expect a veto, and probably sometime before this week is over, we will, one more time, test whether or not that veto will be overridden or sustained. I suspect the numbers will not have changed from the last time when the veto was sustained. So we are going to continue to have this debate in front of us for some time.

I do want to talk about the State Children's Health Insurance Program in some detail. But I want to put it in context. I want to put it in the context of what is happening in American medicine today, the transformational process that is going on in American medicine today and how those rapid advances in science are being affected by the policies that we craft here in this body and indeed how that has happened several times during the last hundred years, and we may expect it to happen in the future, but why the decisions we make today in this body are so critical for the future of health care in this country not just for next November, not just for a year from now, but for decades into the future.

Mr. Speaker, it is so critical, so critical that we develop a near- term, a mid-term and a long-term plan or strategy when it comes to crafting our health care policy. Sadly, I don't think this House has really been engaged in that process. We have been more fascinated by the political aspects of the fight.

Mr. Speaker, indeed, medicine is at a critical crossroads. This is a time of great transformation within the science. Down one of these pathways is a whole new genre of personalized care, changes in information technology, changes in the study of the human genome, changes in protein science, changes in imaging, the speed of information transfer; and indeed a time of rapid learning all serve to increase value for the patient.

Late last week at a conference downtown, Dr. Elias A. Zerhouni, the head of the National Institutes of Health put it in terms of the four Ps. He described a type of medicine in the future which will be predictive, personalized, preemptive, and participatory.

Now, Mr. Speaker, down the other path leads to the continued expansion of the reach and grasp of the Federal Government. Could this path equate to increased value for the patient? Well, the answer might be yes, but history has not been kind to that experience so far for this type of trajectory. The trend tends to become process driven, intensely process driven to a greater and greater degree rather than creating a true patient-centered environment.

Medical care, in fact, could be rationed in some of the most insidious ways that medical care can be rationed, and that is in the treatment room itself. That is by not paying for the care, not paying for the imaging, not paying for the physician services,

having the physician not be there for the patient in the treatment room. That is the type of rationing that we may be talking about.

It becomes all about the transaction, very little attention being paid to delivering value for the patient. And, Mr. Speaker, no secret about it, I am a physician. I practiced for 25 years back in my home State of Texas. I will tell you, this is also injurious to providers. It is injurious to doctors. And that, in turn, increases an already existing problem with the physician workforce and aggravates an already existing supply-and-demand inequity. This, in turn, creates a further imbalance between workforce required versus workforce produced.

Prices are then set administratively rather than by the marketplace, and this disconnect heightens the insensitivity to market demands, and indeed, we end up with a system much as we see today where physicians are anesthetized as to the true cost of delivering the care that they deliver, and, in turn, the patient is unaware of the cost of the care that they receive. And this becomes a true hindrance to the transformational process itself. Again, the process becomes entirely transactional, and this hinders, or reverses, the transformational process.

Now, Mr. Speaker, I would like for us to consider three events, or three epics in the last hundred years where health care policy and changes in science kind of came together to alter, fundamentally alter, the way medicine is practiced and alter it forever into the future.

The first time would be early in the last century, 1910 to 1920, where significant advances in medicine including new discoveries related to immunizations, advances in public hygiene, discoveries of anesthesia and modern blood banking weren't too far removed from that era, but they did occur a little bit earlier. That was such a far cry from the way medicine had been practiced up even into the late part of the 19th century. Back then, the order of the day was burning, bleeding, and blistering; and those were accepted as scientifically proven ways to deliver value or to deliver care for the patient. So there was a rapid change in the science that was going on, and there also occurred that intersection of a sudden change in public policy that, again, altered the direction of medical care forever after then.

In fact, now the policy that was developed we pretty much regard as a State function. And it is ultimately a change in State policy. It did originate at the Federal level with the commissioning of what became known as the Flexner Commission, which subsequently delivered the Flexner Report. This report, delivered to Congress in 1910, characterized the uneven structure of medical schools across the country. Indeed, the variability of medical schools was truly startling. As a consequence of the Flexner Report, there was a standardization of medical school curricula at a time when the science was, indeed, rapidly advancing. This set the stage for the transformation of medicine literally out of the Dark Ages into the illumination of the 21st century.

Then let's skip forward several decades, Mr. Speaker, to the 1940s. And again we see vast changes occurring. Penicillin had been discovered a little bit before that. Back in 1928, Sir Alexander Fleming, we all know Sir Alexander Fleming, there is a big statue erected to him by the bullfighters because he obviously changed the way bullfighting injuries could be treated, but penicillin was discovered in 1928. It was really little more than a laboratory curiosity at first, this substance produced by a mold that would inhibit the growth of bacteria on an agar plate in a Petri dish, but only small amounts could be produced, and it was fairly labor intensive and extremely expensive. So it is a compound that showed great promise, but there really was no way amenable for treating large numbers of patients so its social impact was really quite, quite muted.

But then came the discovery of new fermentation techniques in this country in the 1940s. Suddenly, penicillin moved from a laboratory curiosity to a compound that was readily available, readily available in the clinics and dispensaries across the country, readily available and the price subsequently came down significantly. This new life- saving antibiotic was even available to treat our soldiers who were wounded during the invasion and the landing in Normandy in 1944. For the first time battlefield medicine had a way of combating infected wounds which obviously had a significant impact on saving life and limb.

Now, a similar story could be told about cortisone. It had been discovered prior to the 1940s, but the production of cortisone was very labor intensive. In fact, you had to derive it from the adrenal glands of oxen so it required someone going down to the slaughterhouse and collecting these glands and then doing whatever extractive process that was required to pull the cortisone out. So you can imagine that there just wasn't a lot of cortisone available and what was available was pretty expensive to produce.

But a bright young scientist name Percy Julian, and parenthetically, Mr. Speaker, we honored Dr. Julian here in this House in the last Congress, an African American scientist of great renown and turned out to be responsible for a great number of discoveries in the 1940s, 1950s and 1960s. And it was appropriate that this House honored his memory.

But Percy Julian discovered a way of producing cortisone in large amounts using precursors that he derived from a plant product, from soybeans. Thus, again, a medicine which had heretofore been only a laboratory curiosity or a research oddity became readily available, became readily available in large supply, and the price fell to within reach of the average patient.

So in the 1940s, we see the near-simultaneous introduction of large- scale quantities of an anti-infective agent, penicillin, and an anti- inflammatory agent, cortisone; and that was to forever alter the landscape of medicine.

But, at the same time, we saw the intersection, again, of a major policy change and how that policy change has affected and has impacted the practice of medicine now for decades into the future. In some ways, in many ways, Mr. Speaker, that change in policy, that social change that occurred in medicine at that time had just as profound an effect as the scientific advances of the 1940s. Of course, during the 1940s we were a country at war. The Second World War was raging. Because a lot of the workforce was tied up in fighting that war, there weren't many people left to do the manufacturing work in this country, but it was work that was required because, after all, they were producing for the war effort.

So, employers wanted to keep their employees working, they wanted to keep them happy, they wanted to keep them healthy, but the President issued wage and price controls so employers were not able to pay higher and higher wages. The President did this with all good reasons, to prevent an inflationary spiral from getting out of control. With wage and price controls on, employers looked around: Well, how are we going to improve things for our employees so they will want to stay here working for us and won't go off looking for work in some other location? They hit upon the idea of providing benefits to their employees, both health insurance benefits and retirement benefits.

Well, there was a lot of controversy over whether or not that violated the spirit and the context of the wage and price controls. So they did what all good people do; they went to court and eventually it worked its way up to the Supreme Court. In 1944, the Supreme Court ruled that indeed these health benefits that were being provided to employees could be provided without violating the spirit and the intent of the wage and price controls. Moreover, that these benefits could be supplied to the patient with pre-tax dollars; that is, they were not a taxed benefit given to the employee.

So, simultaneously, we had the era of employer-derived health insurance ushered in, which has proved to be exceedingly popular and endures to the present time. Although it has experienced some problems recently, it is still a very popular way for people to obtain their health insurance coverage. Also, near simultaneously, we began the time of the uneven tax treatment between employer-provided insurance as opposed to individually owned or individually provided insurance, which is paid for with after-tax dollars.

So then, Mr. Speaker, we fast-forward to 1965. Again, there were vast changes occurring in the science and medicine. At that time, new antipsychotic medicines were introduced, and for the first time the mentally ill could be treated with medication as opposed to simply restraining someone or holding someone in an incarcerated environment. So it truly changed the landscape of medicine in the mid-1960s.

Also, at that time you had the introduction of antidepressant medications. Although the antidepressants have undergone many, many changes since that time, for the first time medication was available to treat a condition of depression, and this opened up whole new worlds for treatment of patients in the 1960s.

Newer antibiotics were introduced to fight more aggressive infections. There was the beginning of the understanding that biochemistry played in the development of coronary artery disease, why high cholesterol had an impact and was important in the subsequent development of coronary artery disease. And, Mr. Speaker, conditions like malignant hypertension, which had claimed President Franklin Roosevelt the generation before, now saw newer medications that were available to treat this malady, medications that had not been previously available.

But, Mr. Speaker, again, there was that intersection of public policy which combined with rapid changes in the scientific arena to forever alter the landscape of the practice of medicine. In 1965 we saw the introduction of a program that we now know as Medicare, and then subsequently the Medicaid system was introduced in the years that followed. Now, for the first time, for the first time the Federal Government had an established role in paying for health care. Again, the medical world was forever altered.

Mr. Speaker, now in the present time we find ourselves in a highly political year. Health care is foremost in a lot of people's minds, particularly those that seek to lead the country via the office of the Presidency. The next administration is likely to be under significant pressure for the expansion of the Federal role in delivery of health care. Indeed, we see evidence of that now with the debate that is occurring over the State Children's Health Insurance Program.

Before we get to the State Children's Health Insurance Program, Mr. Speaker, history tells us that policy makers will, we will put the emphasis on the transactional and the administrative aspects of health care reform and we'll ignore the transformational process as it is occurring all around us.

Mr. Speaker, I think it is helpful to consider what is the unit of production of this vast American medical machine that is all around us. In its simplest terms, the unit of production is the interaction that occurs between the doctor and the patient in the treatment room. That is the widget. That is what the American medical system produces.

So all of our focus, all of our focus should be directed at driving up or delivering value at the level of the doctor-patient interaction. But all too often, all too often, our attention is diverted into other things. This, in turn, degrades the doctor-patient interaction.

Now, at the health fair's 25th anniversary symposium downtown last Thursday, Dr. Mark McClelland, former Director of the Food and Drug Administration, former Director of the Center for Medicare and Medicaid Services, started off his talk with: We want to know what works best at the lowest cost for each patient. In a nutshell, that is what personalized medicine is all about.

Right now we don't know. We don't know. But that concept defines a whole new era of the type of medicine that will be practiced in the latter part of our lifetimes, and indeed in our children's lifetimes and certainly in our children's children's lifetimes. That's the type of medicine that we will be practicing. Short-term gains in affordability, unfortunately, could lead to long-term stifling of patient access and interfering with the supply-demand relationship that occurs and exists in the medical marketplace. Certainly accountability may suffer with the subsequent reduction in quality because, quite frankly, the best and the brightest may self-exclude themselves from the medical workforce. Thus, we could have a situation where care is delivered by those who do not represent the best and brightest physicians or perhaps physician extenders or other paramedical personnel, and the overall quality of medical care to what, arguably, is the most challenging group of patients, our seniors, that might be further eroded.

Advancements in medicine might be placed in peril. Indeed, it is some of the tension in the current system, that hybrid system that is part public and part private. It is partly the tension that exists in that system that is a dynamic for change. Not all the change is good, but generally, generally it moves in the right direction.

Mr. Speaker, I'd ask us to consider for a moment the dilemma of health information technology. When I first came to Congress in 2003, the Department of Health and Human Services said it's going to develop a platform for the establishment of a national information technology effort. In fact, please, Congress, don't do anything right now because we are going to do this. We are going to establish this platform. We are going to get it right, and industry will follow what we do. Unfortunately, that reality has yet to be delivered.

Now, there are some bright spots. There is advanced informational technology within the Veterans Administration, but it lacks the interoperability with the system used by the Department of Defense, and this lack of interoperability may well have been the root cause for some of the problems encountered by our soldiers on medical hold at Walter Reed Hospital. Let me just give you an example of that, Mr. Speaker.

Mr. Speaker, of course The Washington Post broke the story, I believe, in January of this year about some of the treatment being received by some of our soldiers at Walter Reed Hospital. So, like many Members of Congress, within a week I took a trip out to Walter Reed Hospital, and indeed the physical characteristics of Building 18, the building in question, were deplorable, and the building was appropriately decommissioned and those soldiers were moved into more reasonable accommodations actually inside the campus of the Walter Reed Medical Center.

Building 18 was outside the garrison, it was outside the actual confines of the campus of the Medical Center, and, as a consequence, that made it desirable for some individuals. But the reality was the building itself was just not up to standards, not up to code, and realistically our soldiers on medical hold should not have been there.

What happens too, Mr. Speaker, is soldiers on medical hold, they are trying to decide if the injuries that they are there for which they are being treated are serious enough that they will now be discharged from the military and their care will transition over to the Veterans Administration system so it will be more of a disability-type of assessment that they undergo, or are their injuries such that they can in fact rejoin their unit. The individuals in that situation are placed on what is called medical hold, and there were facilities outside the garrison at Walter Reed Hospital to house those individuals on medical hold.

Now, here is a picture of Master Sergeant Blades, who took me around and showed me the rooms in Building 18 that were the point of some contention. But Master Sergeant Blades told me when I was there that the real problem he and his men were encountering, yes, the accommodations were crummy, but the real tragedy was the work that went into preparation of this medical record, the Department of Defense medical record, in getting it ready to send over to the Veterans Administration to perhaps make the case for the disability, make the case for what the disability allowances should be, what the disability payments should be, what care could be available at the VA hospital.

He said that he would spend hours and hours and hours preparing his medical chart, highlighting things with a yellow highlighter. This large chart in front of him, it looks about the size of the Washington, DC phone book, would then go sit on a desk for 2 weeks and then be lost and he would have to start all over again.

I said, well, wait a minute. I thought the VA system had this new fancy computer equipment and that this should no longer be a speaker. But as it turns out, Mr. Speaker, the Department of Defense can't speak to the computers in the VA system, and, as a consequence, it depends entirely on a hand-prepared record, and you see Master Sergeant Blades there preparing it as we visited that day at Walter Reed Hospital.

Here in Congress, the legislative process dealing with health information technology is completely stalled. We had a chance to act last year in the last Congress. The bills we were considering were to provide either grants or buying equipment outright for medical practices. But in the end, we couldn't get our work done, and the current legislative attempts that we see this year seem even more desperate and futile from those of last year. We have gone from bad to worse.

Considerable expense could be borne by individuals in private practice, physicians in private practice, trying to purchase or upgrade equipment. These informational systems and costs and learning of the operating of these new systems are significant barriers to entry.

Relaxation or moderation of what are known as the Stark laws could allow for hospitals and doctors to be cooperative and involve themselves in the investment in this type of technology. But barriers to entry for physicians are that the equipment is expensive. And in addition to the initial cost and the cost of maintenance and the cost of software and the cost of software upgrades, there is a problem: If there is no established criteria for interoperability, how is a guy out in private practice or a lady out in private practice who goes and buys a computer system from a vendor, how are they to know that they are making the correct purchase at all?

Now, that is the public sector. That is the government working on this. Remember one of the things I first said, the change of the speed of delivery of information is one of the things that is going to transform medicine. We are kind of stuck here and have been stuck here for 4 or 5 years.

What is happening on the private sector? Consider the experience of Aetna Insurance Company. A single company employing 34,000 individuals and has 15 percent of its workforce involved with information administration and maintenance. In fact, according to their CEO, if the Aetna Information and Technology Department was a standalone company, it would be one of the largest software development firms in the United States of America.

They have developed a Web-based electronic health record, not an electronic medical record controlled by the doctor, but a Web-based electronic health record that is controlled by the patient, the access is controlled by the patient, and that is available then to a patient anywhere in the country where they have computer access.

So, if they are traveling and they have got a medical condition that is under pretty tight control and good control at home and they have a problem, that information can be handed over to the treating physician in an emergency room at a distant location, because all that information is going to be available to them up on the Web. And when that patient returns home and returns to their doctor at home, the information derived, the testing done by that doctor in the different location, will be available to the patient when they return to their home for care.

Mr. Speaker, I have to tell you, I haven't always been a big believer in things like computerized medical records. Sometimes they are hard to learn. There is a learning curve associated with them. It takes some time to get up to speed with them. No one is interested in paying for the time it takes to get up to speed.

But in January 2006, taking my second trip down to the City of New Orleans after Hurricane Katrina came through there, all of the water came in, this is the basement of Charity Hospital. The water has been removed. You can't see in the picture, but there was still water about ankle deep. This is just one of hundreds of rows of charts as you might imagine a hospital of that size might contain.

This black here, they haven't been burned, this is mold growing on the medical records. This vault now is a hazmat site. Someone wanting to review a record for a patient would have to take extraordinary precautions not to inhale the spores from the mold when they opened the record. These records are unusable and unavailable and no one knows what has been lost here. There might be someone's leukemia, childhood asthma; those records are lost forever. This changed my mind on the concept of having an electronic medical record or, as Aetna has developed, an electronic health record that is owned and controlled by the patient and is Web-based.

Mr. Speaker, I ask which system now, remember my fundamental criteria: Do we deliver value to the doctor-patient interaction in the treatment room? Which system is delivering value to the doctor-patient interaction in the treatment room right now? Is that what we are doing at Health and Human Services, where we are trying to get things up and running, develop a national platform and one of these days we are going to roll this out? Or in the Halls of Congress, we are going to craft legislation if we can get the pieces right. But watch out, the unintended consequences of that legislation may turn around and bite you when you try to practice medicine a few years in the future.

Or the experience at Aetna U.S. Health Care. You have one system that is mired in entrenched bureaucratic wrangling, and the other one providing real data for real patients and advancing their health. Which system is making the maximum capital investment at the same time demanding accountability to deliver value for its covered individuals? Which system continues to hamper the growth and development of the technology that everyone acknowledges is necessary to bring medicine into the next generation?

I talked about a short-term, mid-term and long-term strategy. That long-term strategy is the explosion in health infomatics that is going to bring us the type of personalized care we want in the future.

Now, Mr. Speaker, the American medical system takes a fair amount of criticism from around the world. I want to bring to the attention of this House the Washington Post and the Wall Street Journal today, two stories in two different newspapers today talking about some things that are happening when you export American medicine, American know- how, American technology half the way around the world.

From the ``World in Brief'' section under the heading of Afghanistan: ``Six years after the Taliban's ouster, medical care in Afghanistan has improved such that nearly 90,000 children who would have died before the age of 5 in 2001 will survive this year.'' That's thanks to the efforts of the United States Agency for International Development that has brought modern American medical technology to the country of Afghanistan. They still have a long ways to go, but I thought I would share that with the House.

Another story from the Wall Street Journal about how we export American technical medical know-how to other countries. This is actually in the ``Marketplace'' section of today's Wall Street Journal. The title is: ``Health care building booms in the Persian Gulf.'' It says that the region's families are recruiting brand-name U.S. medical institutions and private investors with plans over the next 20 years to more than quadruple the estimated $12 billion spent annually on health care. They are essentially trying to duplicate Harvard Medical School and its residency programs at the Massachusetts General Hospital in the City of Dubai.

As I stated previously, we are at a transformational time in medicine. There are changes occurring on many fronts. At the same time, we have the intersection of changes in public policy which can vastly affect the practice of medicine for years, decades into the future.

Mr. Speaker, there is a risk here. If health care policies are based on political expediency, and if they are not patient-centered, there is a risk of continuing to be beholden to the special interests and not empowering patients. There is a risk of delivering for the status quo and not delivering for the future.

Indeed, the transactional could triumph over the transformational. Prevention of this scenario will require development of, certainly with physician leaders within the house of medicine, they have to be engaged for their patients and not for the enduring bureaucracies or special interests. We do have some relatively new products that have emerged on the scene in the last several years. Health savings accounts and their precursors, medical savings accounts, are just a little over 10 years old, and they show some significant promise by putting purchasing power back in the hands of the patient and rekindling that doctor-patient relationship that has been so many times stifled by the current system.

Improvements to the health savings accounts could include methods for paying for preventive care and adding new coverage to include disease management for chronic conditions. In other words, move health savings accounts from the type of patient that is only going to purchase one because they don't think they will get ever get sick, to the type of patient who knows they have a medical condition but they want the power over their medical condition, and a medical savings account is a way to do that in an affordability fashion and still retain power over their illness.

Mr. Speaker, we should encourage new thinking by third-party payers. At some companies that is going on already. It could help move borders for affordability. A business that provides a premium reduction for individuals who engage in preventive practices and periodic screenings would represent a reasonable way to deliver increased affordability. It is a way of delivering value for the patient.

If the legislators and Federal agency personnel have the vision and discipline to focus on the long term, we may yet see delivery on the promise of the pending transformation in American medicine.

Mr. Speaker, former Speaker of this House, Newt Gingrich, in his book on transformation, I think his second principle of transformation where he asserts real change requires real change. What does he mean by that? He means in order to affect real change, you have to walk the talk. There has to be a culture and leadership not just embracing of the concept of change, but they have to act on it. They have to live it and breathe it and work it every single day. That is a valid concept, and I think the Speaker is right on the money when he brings that concept up.

But look at it another way. Real change requires real change. There is real change occurring in medicine, whether Congress knows it or not, whether Congress likes it or not, and whether Congress helps it or not. Real change is occurring in American medicine right now. Because of that real change that is occurring in the science part of medicine, real change is required here in this Congress, in the other body as to how we approach our health care policy so, again, we don't let the transactional become the enemy of the transformational.

Mr. Speaker, a short-term, a mid-term and a long-term strategy are essential, and we must avoid sacrificing this concept and giving it all up for short-term political gain, which brings us back to the subject of the State Children's Health Insurance Program. When I think of health care policy, I try to put it in the context of what is delivering value for that doctor-patient interaction in the treatment room, not the cost, but what delivers value to that interaction.

What diminishes value? What happens if we have a significant negative effect on the physicians who are providing the care for our pediatric patients? Is there a cost to providers for shifting populations from commercial insurance onto public insurance? Well, I believe there is.

Mr. Speaker, I don't really know why and where insurance companies get the idea it is okay to only partially cover the cost of providing care, but I have a suspicion they get that because that's the way the Federal reimbursement structure works. That is the way it works in Medicare and Medicaid; and if we expand the reach and grasp of the Federal Government in the SCHIP program, I think we will find to the detriment that process is alive and well and subsequently we have the negative effect on the physician workforce.

Mr. Speaker, before I yield to other speakers, let me bring up this slide from the American Enterprise Institute. This points out at successive income levels, and these are rated at the percentage of the Federal poverty level, so here is between 100 and 200 percent of the Federal poverty level. This is about $41,000 to $42,000 a year. Here is between 200 to 300 percent of the Federal poverty level, so that is up to just over $60,000 a year. And 400 percent of poverty would represent a figure of over $80,000 a year.

So in the group between 100 and 200 percent of poverty, and this is the group that SCHIP was originally designed to cover, about half of those children have private coverage. If you move into the 300 percent of Federal poverty limit, they earn up to $60,000 a year, three- quarters of those kids already have health insurance. And nine out of 10 and 95 percent have health insurance. Why do we want to go and take these children who are already covered and bring them back into the SCHIP program? Are we delivering value to the patient? Are we furthering the concept of good patient care?

Mr. Speaker, I would point out that on the floor of this House 2 weeks ago when we had the debate on the new State Children's Health Insurance Program bill that we passed which was exactly like the one that the President vetoed and we sustained, when we were debating the new bill, I asked the chairman of the Committee on Energy and Commerce to enter into a colloquy with me, and he graciously did. We talked about State income set-asides. If the bill said that the maximum amount available for coverage under the program was 300 percent of the Federal poverty limit, so a little over $60,000, where again three-quarters of those children already have insurance, if that is our upward limit of coverage, were there income exclusions available to the State that could take that upper income level even higher, and I asked specifically about the cost of housing. And indeed within the bill was the language that States could exclude $20,000 of annual income involved in housing. And States could exclude $10,000 of annual income that is there for clothing. And States could exclude $10,000 of annual income that is available for transportation. Mr. Speaker, we are already over $100,000 in annual earnings for a family of four when we talk about this bill that was introduced and passed by this House.

Mr. Speaker, I am just a simple country doctor and there is so much about the budgeting process that I don't understand that I am so grateful that I have been joined by the gentleman from New Jersey (Mr. Garrett) who sits on both our Budget Committee and our Committee on Financial Services. I think he is going to provide us all with some valuable insight as to some of the numbers involved in this process.

So I do now want to yield the floor to the gentleman from New Jersey (Mr. Garrett).

Yes. You're very kind to point that out, and those writings, as well as several other musings and lamentations are available on my Web site. The bulk of the writing on the Web site is devoted to health policy because obviously that is one of my interests and one of my passions. So

there's a good deal of information available; www.house.gov/burgess will take, scrolling back through the previous stories will give someone an insight as to what's available on the Web site.

One of the points that I probably did not make eloquently enough tonight is that the practicing pediatrician, not the pediatrician in an academic setting, not the pediatrician in a federally qualified health center, but the pediatrician is out there with a mix of different payer groups in his practice or her practice.

The average reimbursement for a child on the SCHIP program is about 30 percent less in my State of Texas than it is for one of the commercial insurances. If we take those children off of commercial insurance and move them to an SCHIP program, we are negatively impacting the bottom line of the pediatrician who is providing the care. We can only do that for so long before they will decide that they have got something else that they might do.

One of the things before the time completely leaves us, I just want to draw attention to a recent poll put out by U.S.A. Today that does show that the plurality of Americans, a majority of American citizens, believe that the benefits in the SCHIP program should go to poor children first, and that's not to the children at the upper-income levels that we were showing on the other slide. That is the group of children for which this program was originally intended, that is children whose parents make too much money to qualify for Medicaid, yet not enough money to reliably afford their health insurance.

When this program was first enacted in 1997, by a Republican Congress with a Democratic President when this program was first enacted, that was a group of children that the Congress was trying to help. The concept of poor children first is one that the American people embraced.

In fact, I introduced legislation earlier this year, H.R. 1013, that would have put the children back in SCHIP and removed adults from the program. Now, I am grateful, very grateful that the Democratic majority has now embraced that concept and at least their

latest iteration of the SCHIP reauthorization bill said that there will be no adults on the program within one year of the enactment of the bill.

It's a bittersweet victory because there are so many other aspects of the bill that are flawed that Mr. Garrett has just alluded to. The funding mechanism absolutely disappears in the fourth year of the program. The funding mechanism itself is based on a belief that there will be an increasing number of smokers in this country, and public policies that I support to decrease the number of smokers and decrease the number of young people who begin this habit.

It makes no sense to be saying we are going to fund this entire program based upon that type of tax and, on the other hand, try to put our maximal effort behind trying to reduce the number of smokers in this country. It is certainly a conflicted mindset that the Democratic majority seems to be propounding here.

One of the other things that I do want to bring up just before we close, another poll from U.S.A. Today that the American people are concerned, are concerned that the program as proposed would pull those children off of private health insurance and put them onto a government plan.

Then as Mr. Garrett so eloquently pointed out, then the funding dries up, and where are you then? At the same time, if you have driven pediatricians out of practice because of lower reimbursement rates, you have now the trifecta, the triple whammy, where health care for children may be seriously jeopardized in the mid-term or the long-term because of the fact that we are sacrificing for political expediency today.

Mr. Speaker, I do have a lot of material to cover in the time that is available.

I thought it was appropriate, as we end this legislative day here in the United States House of Representatives, that we talk a little bit about health care, because health care will be one of the central arguments, one of the central themes that consumes this country over the next 16 months as we lead up to the presidential election. Indeed, you are already hearing presidential candidates talk about their various visions for health care.

One of the things that concerns me greatly is the issue of the issue of the state of our physician workforce. In my home State of Texas, the Texas Medical Association puts out a periodical every month. In March the title of the magazine they put out was ``Running out of Doctors,'' a great concern of mine.

A year and a half ago Alan Greenspan came and talked to a group of us right before he left as Chairman of the Federal Reserve board. And someone asked him about Medicare and about how we are going to pay for Medicare in the future. He acknowledged that it was going to be difficult, but at the appropriate time he felt that Congress would be able to step up to the job of doing what was going to be necessary to pay for Medicare. He paused, and he said, well, what concerns me greatly is will there be anyone there to provide the services that you need?

That's what I would like to address this evening. I think if I could, I am going to confine my remarks to the limited time I have to four areas. I want to talk a little bit about medical liability, I want to talk a little bit about the status of the physician workforce in regards to the developing physician, the person who may be in college or high school considering a career in health care, I want to talk about the physician in training, and I want to concentrate greatly on what I call the mature physician, the physician who is in practice, and some of the effects of current governmental policy where we reduce payments to physicians year over year and the pernicious effect that is having on the physician workforce.

First, just touching on liable, my home State of Texas had a significant problem with he had some call liability. In 2003, the State legislature passed a medical liability reform based off of a prior California law, the Medical Injury Compensation Reform Act of 1975, which was passed by California, but we updated it for the 21st Century.

Indeed, the law passed by the Texas Legislature in 2003, was based off the California law, that had as its basis caps on noneconomic damages, but in California, that was a fixed $250,000 cap for all noneconomic damages. As you can see from the visual aid, Texas trifurcated the cap. We have a $250,000 cap on physicians for noneconomic damages, $250,000 cap on a hospital for noneconomic damages and a $250,000 cap on a second hospital or nursing home, if one has been involved.

Well, this was passed back in 2003. How has the Texas plan fared? The year I first ran for Congress, 2002, we had dropped from 17 insurers down to two. It was almost impossible to get medical liability insurance at any price because of the effects of the legislation passed. There are now 14 insurers back in the State, and most of those have come back in without an increase in premiums.

Three years after passage, the Medical Protective Company had a 10 percent rate cut which was their fourth since April of 2005. Texas Medical Liability Trust, my last insurer of record, declared an aggregate cut over the past 4 years of 22 percent. Another company called Advocate MD filed a 19.9 percent rate decrease. And another company called Doctors Company announced a 13 percent rate cut, real numbers that affect real people and affect real access to care.

Probably one of the most significant unintended beneficiaries of this legislation that was passed in 2003 in my home State of Texas was the smaller not-for-profit community hospitals. These were hospitals that were self-insured and had to put large amounts of cash up as a cash reserve against a potential lawsuit. What has happened since this law has past is these hospitals have found they have been able to take more of that cash and invest it in capital, invest it in nurses' salaries, exactly the kinds of things you want your smaller, not-for-profit community hospital to be doing in your community.

Mr. Speaker, I took the language of the Texas plan and modified it so it would work within the constructs of our language here in the House of Representatives and actually offered this language to the ranking member of our House Budget Committee, who had the bill scored by the Congressional Budget Office. And the Texas plan, as applied to the House of Representatives to the entire 50 States, would have yielded a $3.8 billion savings over 5 years. Now, not a mammoth amount of money in Congress speak; but when you talk about a $2.99999 trillion budget, any savings that you could manage is in fact significant. And this is money that could have gone for a pay-for for many of the other things that we talk about doing for health care in this body.

Mr. Speaker, a lot of people ask me: Well, if Texas has solved the problem, so why are we even concerned about it on the national level? One is the savings that was demonstrated by the Congressional Budget Office. Another is this, Mr. Speaker: consider the cost of defensive medicine.

A 1996 study, 11 years ago, done by Stanford University revealed that in the Medicare system alone, just Medicare, not Medicaid, not the Federal prison system, but in the Medicare system alone the cost of defensive medicine was approximately $28 billion to $30 billion a year. Ten or 11 years ago it was at that expense, and I submit that that number is significantly higher today if anyone would rework those numbers.

Another consideration is young people getting out of school. They look at the cost of professional liability insurance and say, you know what, I am going to stay out of those higher risk specialties because it is just not worth it to me.

Now, I do want to draw my colleagues' attention to a bill, H.R. 2583. This bill addresses graduate medical education. It is an enhancement for graduate medical education, and would develop a program that would permit hospitals, hospitals that do not traditionally operate a residency program, the opportunity to start a residency program to help again build physician the workforce of the future. On average, it costs $100,000 a year to train a resident, and that cost for a smaller hospital can actually be an impossible barrier to entry. But because of this bill, that would create a loan fund available to hospitals to create residency programs where none has operated in the past; and it would require full accreditation and be generally focused in rural suburban or inner urban communities.

Another bill that I would direct my colleagues' attention to, H.R. 2584, this bill is designed to help medical students and those who have just recently graduated from medical school with a mix of scholarship, loan repayment funds, tax incentives to entice more students into medical school and create incentives for those students and newly minted doctors. The program will have an established repayment plan for students who agree to go into family practice, internal medicine, emergency medicine, general surgery, OB/GYN, and practice in an underserved area. It is a 5-year authorization. It is fairly modest at $5 million a year and would provide additional educational scholarships in exchange for a commitment to serve in a public or private nonprofit health facility determined to have a critical shortage of primary care physicians.

Mr. Speaker, in whatever time I have left, I do want to address again the group that I call the ``mature physician,'' and I want to address that from the perspective of the formula that is called the ``sustainable growth rate

formula.'' That is the formula under which Medicare reimburses physicians.

Why is that important? Let me show you this. If we look at how Medicare pays for the administration of care in this country, we have a situation where doctors are paid under a different formula from hospitals, from insurance plans, from drug companies, from nursing homes.

And look at this graph, Mr. Speaker. What you see is that physicians receive cuts year over year, unless Congress steps in at the last minute and does something, which we did for several years here right after I first got to Congress. But compare that with Medicare advantaged hospitals and nursing homes where every year there is a cost-of-living update, the Medicare economic index, if you will, that adjusts payments upward. But year over year there is a reduction in reimbursement, and the Center for Medicare and Medicaid Services for Physicians provides this cut for physicians who take care of the patients.

It is not a question of doctors wanting to make more money; it is about a stabilized repayment system for services that have already been rendered. And it is not just affecting doctors; it affects patients. Not a week goes by that I don't get a letter or a fax from some doctor, usually in my home State of Texas, oftentimes in my district but sometimes it is someplace far afield. But they say, You know what? I have just had enough of what Medicare is doing to my reimbursement schedule and I am going to retire early. I am no longer going to see Medicare patients in my practice, or I am going to restrict the procedures that I offer to Medicare patients.

In fact, I had a young woman come up to me that I trained with at Parkland Hospital and tell me what Medicare was doing to her wasn't right and, as a consequence, she was not going to be offering a certain set of high-risk procedures to her patients any longer.

And the question is, where will those patients go for that treatment? I saw it in the hospital environment before I left practice to come to Congress and, again, I hear it in virtually every town hall that I hold back in my district. Someone will come up to me, either as a question in the formal part of the meeting or afterwards, and say, how come in this country you turn 65 and you have got to change doctors? And the answer is, because the doctor they were seeing found it no longer economically viable to continue to see Medicare patients because this was happening to them, and year over year they weren't able to pay the cost of delivering the care, never mind taking a paycheck home to support their family.

Medicare payments to physicians are modified annually under this SGR formula. The process is flawed, it needs to be repealed, because it mandates physician fee cuts that have gone on in recent years be continued indefinitely, and they become quite substantial over time.

Now, the quandary that you always hear quoted is that simple repeal of the SGR is cost prohibitive. But we could, Mr. Speaker, consider doing that over time. We could consider setting a date in the future by which the SGR would be repealed and perhaps bring that cost down to an attainable level.

The bill that I have recently introduced, H.R. 2585, would repeal the SGR in 2010. Now, in the new physician payment stabilization bill, 2 years from now the SGR formula goes away. But there are incentives provided to physicians in the year 2008 and the year 2009 based on some quality reporting and technology improvements.

More importantly, by resetting the baseline of the SGR formula, the CBO estimates that the practical effect of my bill would bring a 1.5 percent update in 2008 and a 1 percent update in 2009, and a complete elimination of the SGR by 2010. The CBO score calculates a savings of $40 billion off the total price tag of an SGR elimination.

Again, there are also in addition to essentially what is a Medicare economic index update for 2008, a little less than that for 2009, and then elimination of the formula and a full MEI update starting in 2010, which would be a significant change from where we are now. In addition to that, bonus payments for physicians who are willing to voluntarily do some quality reporting and bonus payments for physicians who are willing to voluntarily participate in some health information technology upgrades, computerization of their practice, if you will.

One of the main thrusts of this bill, Mr. Speaker, is to require the Center for Medicare and Medicaid Services to look up, to ascertain the top 10 conditions that drive the highest percentage of payments, and then require CMS to adopt reporting measures relating to those conditions. In fact, those have already been developed. We are not going to reinvent the wheel here. The American Medical Association Physician Consortium has already developed those reporting measures that are driving spending so high.

Mr. Speaker, the old bank robber Willie Sutton, when he was asked, Why do you rob the bank? He said, Because that's where the money is. Mr. Speaker, let's go where the money is. Let's go to those top 10 things where the greatest amount of money is spent, those top 10 diagnostic codes or top 10 diseases where the major amount of money is spent in Medicare, and it amounts to about 70 percent of the savings in Medicare, because that is where the greatest amount of savings is going to occur.

If we can deliver more care in a timely fashion and we can improve outcomes, you are actually going to spend less. And, again, that is the thrust of this bill. That is why you postpone the repeal of the SGR by 2 years, to get that savings that is going to happen by doing things better, quicker, smarter, the same types of things we saw when we began to provide a prescription drug benefit under the part D part of Medicare. Those costs that were originally projected by CBO and the Office of the Management of the Budget of the White House, actually, those scores were way too high.

The actual figures for the first year of the operation of the Medicare prescription drug program came in lower. Why did it come in lower? Partly because of competition and partly because the cost- effective thing also turns out to be the right thing to do oftentimes in the practice of medicine. A lot of savings are in fact available in this system if we only again have the courage to do that.

Let me just speak briefly about health information technology, because it does receive a lot of attention. Here in the House of Representatives we worked on several bills last year. We will probably have an opportunity to have several bills this year. Indeed, a reform in health information technology is part of the bill that I introduced, H.R. 2585, to repeal the sustainable growth rate formula.

But let me just point out a couple of things. I don't know that I was a big believer in electronic medical records when I left the practice of medicine and came to Congress. They are expensive, a big cost for a small practice to set it up. They slow you down. When you are in practice, it adds minutes to each patient; and if you are seeing 30 patients a day and you add 2 minutes to each patient, that is an extra hour. How are you going to be compensated for that extra hour that you spend?

Mr. Speaker, this is a picture of the medical records room at Charity Hospital in New Orleans. It was taken in January of 2006, 5 months after Hurricane Katrina hit there. And this had been completely under water, of course, when the city was flooded. When the Corps of Engineers got the water out, this is what was left. And you see a typical medical records room with all of these paper charts. But this black discoloration is not from smoke or soot; that is black mold that has grown on these charts. It is not safe to let anyone go in there and try to retrieve data from those charts because of what has happened with the mold contamination.

All of those records are lost, tens of thousands of patients. A patient who might have been waiting for a bone marrow transplant or a kidney transplant, a patient who is in the middle of their cancer therapy, All of that was lost in those records.

Mr. Speaker, in January of this year we heard a lot of stories about Walter Reed Hospital, and I went out to Walter Reed to look for myself about what was happening with the treatment of our soldiers who are on medical hold. And Sergeant Blades took me around the complex and showed me the things that had been in all of the newspapers.

And then he said, You know what bugs me even more than anything else. I could live with all of the other stuff, but here is the real problem I have. He was trying to assemble his medical records so he could make his case to the VA about a disability claim he had.

He had been in the service for a number of years, he had suffered some injuries during his time in the service, and he wanted to be able to make his case for disability payments. He said he will spend probably 20 to 24 man hours on his medical records making the case, going through it with a yellow highlighter. And then he said, It goes and sits on someone's desk for 2 week's time and then it is lost. And the reason for that is there is not an electronic medical records system that the Department of Veterans Affairs and the Department of Defense can communicate with each other. So he has to go back and reconstruct the paper trail of his 20 years in the service and document all of the problems that he has had with his injuries over time in order to make his case for a disability claim.

And that is what was concerning him more than anything else that day, was that it took so much time to get these things assembled and he was at the mercy of someone misplacing that record off their desk, and he would have to go back to square one. His medical hold would be either extended or denied, and he would have to start all over again with assembling his medical record. He advised his men to make two or three copies of their medical records before they submitted it to the appropriate person in the infirmary.

Mr. Speaker, I know our time is about up. I appreciate the indulgence of the time this evening. Again, health care is an important topic. We are going to spend a lot of time on it in the weeks and months to come. And, again, it will be part of the central theme of Presidential elections on both sides of the political spectrum. And to be sure, I will be back here on several occasions talking about some of the things that I think are most important. But when you look at the problem with losing physicians, when you look at the problem with how we treat our Medicare physicians, the problems they have in getting their payment rates straightened out, what happens if you don't take care of that? You lose doctors. Patients don't have the physicians to see.

What will Congress do in that event? I don't know. Parliament over in Great Britain decided it was in their best interest to bring physicians in from overseas on visas and give them waivers. Someone else paid for their education and they worked cheap. But we also saw in Scotland over the 4th of July weekend, that didn't turn out to be a good idea.

Health Care

Introduction

This evening I will address my concerns about the delivery of health care services in this country. The future of medical care in this country will be hotly debated in Congress and especially over the next 18 months as we approach the 2008 Presidential elections and the 111th Congress that convenes in 2009.

We will be deciding the avenue through which our system will be based--on the table exists two choices. First is to expand the government or public sector's involvement in the delivery of services-- popularly referred to as ``universal health care'' or termed in the early 90s as ``Hillary Care.'' Or second, whether we encourage and continue the private sector involvement in the delivery of health care. These two options bring about a plethora of questions and concerns, and I am hopeful that my explanations tonight will shed light on the direction we should be taking to have the United States remain as the best health care system in the world.

Now some people may feel that is an overstatement. They will cite uninsured numbers of the cost of prescription drugs. But while these issues abound, they are statistics and the old adage remains, ``there is truth, there are lies, and then there are statistics.'' You can make the numbers say whatever you like or the outcome of polls can be manipulated just by massaging how you ask the question. So I will dispense with these avenues and simply explain the situation at hand and the solutions currently available.

I'll be discussing different principles guiding the debate about private versus public delivery of health care services, but let me give you a background on how we got to the system we have today. The idea that we must solve this problem is not new. Secretary Leavitt has even remarked the necessity tackling the decision between these two philosophies. As he said in an op-ed recently, ``Should the government own the system or should we organize the system.''

History

Coming out of World War II, the United States had a flourishing economy and an upsurge in the birthrate clearly coining the phrase ``Baby Boom'' generation. The U.S., unlike many of our allies coming out of the war was able to benefit from the economic prosperity by developing a hybrid system for the delivery of health care including both a public and private involvement. Europe, in contrast, was suffering from depleted resources and fatigue after World War II. It was clear from the outset that their economies, in particular that of Great Britain, were unable, from the private sector, to uphold the delivery of health care. The government had to run the health care system.

Next we fast forward roughly 20 years to the mid-60s and the Presidency of Lyndon Baines Johnson, a fellow Texan from across the aisle. During his tenure, both Medicare and Medicaid programs were signed into law. These large, government-run programs were created to focus on hospital care for the elderly and basic health care services for the poverty-stricken respectively.

Decades later, it was evident that the government-run Medicare program was slow to change, a behemoth to operate and extraordinarily expensive. By 2003, Congress recognized that the outdated model of providing largely hospital-only care to the elderly was insufficient. The government system needed to catch-up to the robust private system that was already focused on prevention and disease management. Finally, Congress passed the Medicare Prescription Drug Plan that gave seniors coverage for the medications. While the program has been successful, and has provided greater benefits for seniors, it did not come without considerable discussions and a massive push by the success of the private sector. And here is our crossroads today.

Currently the government pays for nearly half of all health care administered in this country. With a current GDP of roughly $11 trillion, the U.S. Department of Health and Human Services states that Medicare and Medicaid Services alone cost $600 billion. The other half of health care is broken down with primary weight being carried by the private industry, and charitable and self-pay accounting for the rest.

As these numbers increase, and the Federal Government continues to funnel the American taxpayer's dollars into its coffers, we must ask if this is the best use of taxpayer dollars? Is the government doing an excellent job of managing your money? Do you think the government is better suited to care for your health care needs? Who is better to handle the growing health care crisis in this country?

I argue that the government-only, or universal health care system, is unsustainable in America and will hamper our innovation and delivery of the most modern health care services available.

I can site two specific examples that support my premise that a private-based system is better equipped, more flexible, and less expensive (being driven by the market) than a government-based system. First we can look to our northern border at Canada. Canada boasts a universal health care system but what it fails to highlight is the tremendous wait list for treatment that patients must endure. Their access to care is limited. Now this is not a significant problem if you are a wealthy Canadian because you can take your money, cross the southern border in the U.S. and receive care immediately. If you were waiting for bypass surgery, would you prefer to get into the hospital as quickly as possible or be placed on a waiting list that could take months? Is your health, or the health of your loved ones something that you can take a gamble with?

My second example stems from the British Isles where they suffer so of the same fate. The British National Health Service is a 2-tier system that faces continued allegations of ageism. The system can simply no longer treat patients over 80 because the system recognizes that the patients at this age will simply not survive their wait time. It is a sad reality, but it is true.

So I return to my premise that the private sector is more nimble and financially a more stable arena from which to build our future health care system. Noting this complex relationship, how should Congress do its job to ensure we have the best health care system possible? Congress must promote policies that keep the private sector leading the way with some interaction by the well-run government programs.

Uninsured

One issue that springs to mind concerns the uninsured population, which the U.S. Census Bureau estimated at some 46 million back in 2005. Now I want to be specific . . . access to health care is not the issue. Those individuals classified as ``uninsured'' means they are not covered by a specific plan; it does not

mean they cannot seek health care services. In fact, no one is denied health care services in this country. Two specific examples of where access is available through the State Children's Health Insurance Program and Federally Qualified Health Centers.