Fairness in Health Insurance Act

Mr. President, today I introduce the Preserving Homes and Communities Act of 2009. I thank Senators Durbin, Whitehouse, and Merkley for joining me as original cosponsors of this bill. In the last year the Federal Government has taken decisive action and devoted substantial financial resources to shoring up financial markets, averting a potential national and global financial meltdown. However, the current foreclosure crisis continues to pose a threat to the wellbeing of individual families, local communities, and the broader economy. We must take similarly aggressive actions to stabilize the housing markets.

Despite efforts to forestall the current crisis, the number of foreclosures is alarming. A reported 1.5 million properties were in the foreclosure process during the first 6 months of 2009, on pace to surpass last year's foreclosure filings by more than a third. Meanwhile, economist Mark Zandi suggests that the number of mortgages in default could rise to 4 million this year.

The situation in my own State of Rhode Island is particularly dire. Moody's Economy.com reports that 22 percent of Rhode Island mortgages are underwater, and the State has the highest rate of foreclosure starts in New England. More than one in eight mortgages are at least one payment past due, suggesting that the situation may be getting worse. Indeed, as foreclosures dipped nationally in August, they continued to rise in Rhode Island.

These numbers are more than statistics. They represent children uprooted from schools, life savings evaporated, and families faced with the daunting prospect of starting over. For communities, these numbers can translate into cycles of blight, disinvestment, and crime that weaken neighborhoods and damage the property values of the families struggling to retain their homes.

This did not happen overnight. As we all know, during the past several years, housing prices in cities and States around the country far outpaced any increase in wages. Some families stretched themselves financially to become homeowners, but many others were steered towards alternative or exotic mortgage loan products to purchase their homes. However, as home prices have declined, many people who took out these and other exotic loans are now finding they owe more than the value of their property and that they cannot sustain the sharp monthly payment increases their alternative mortgages require.

However, as unemployment has risen, so has the number of foreclosures among homeowners with more traditional mortgages. According to the Mortgage Bankers Association, more than a third of the overall increase in the start of foreclosures in the second quarter was attributable to prime, fixed rate loans. More and more households are finding that even with a fixed rate mortgage that they could afford in normal times, they are just one pink slip away from losing their biggest investment.

I am introducing the Preserving Homes and Communities Act to address this crisis. First, it establishes a new mortgage payment assistance program to help homeowners who, with temporary financial assistance, would be able to hold onto their homes. Specifically, it authorizes $6.375 billion in formula funding to enable states to offer grants or subsidized loan funds to qualified families who have suffered significant decreases in income. My bill outlines requirements to ensure that states will carefully steward Federal dollars by evaluating applicants' prospects for future employment, targeting middle class homeowners, prohibiting payments that reward predatory lenders, and capping maximum loan or grant amounts. Yet the criteria are flexible enough that states can design programs that will most effectively meet local needs.

My bill also takes aim at the slow progress that servicers and lenders have made in implementing the administration's foreclosure prevention programs. A September report on the Home Affordable Modification Program indicated that just 12 percent of eligible homeowners with delinquent mortgages had been granted trial modifications. Too many homeowners are waiting too long--weeks, months, or longer--to get answers to their loan modification applications. In the meantime, they are still subject to costly foreclosure proceedings that can make it more difficult for them to eventually qualify for assistance.

The Preserving Homes and Communities Act creates an incentive for lenders to more quickly evaluate whether homeowners qualify for modifications by requiring that homeowners be evaluated for a loan modification that conforms with the Administration's programs before a bank can initiate foreclosure. It also states that homeowners who qualify must be offered a modification. My bill prevents costly fees from piling up while qualified homeowners wait to be granted more affordable mortgages, and no longer will homeowners be left out in the cold if their particular loan servicer chooses not to participate in the government program. And if lenders fail to follow the rules, this bill will allow homeowners to use servicers' noncompliance as a defense to foreclosure. The bill also places prudent

limits on the fees that homeowners can be charged--particularly foreclosure-related fees.

My legislation provides $80 million as an incentive for more States and local governments to create strong mediation programs, an additional tool to help homeowners facing foreclosure. Mediation programs allow homeowners and servicers to meet, face to face, to try to find an alternative to foreclosure. These programs have shown promise in several state and local settings for helping homeowners avoid foreclosure, and this legislation will provide matching funds to help establish new mediation initiatives. This bill also sets aside $5 million for the creation of a Federal database on defaults and foreclosures to improve oversight of public and private efforts to sustain homeownership.

Finally, we know that these tough economic times are impacting renters as well. Competition for already-scarce affordable housing has increased. With the poverty rate at its highest level in 11 years, more individuals and families with limited incomes are at risk of homelessness. For this reason, the Preserving Homes and Communities Act uses proceeds from the warrant provisions I crafted for the financial rescue package to capitalize the National Housing Trust Fund. These warrant provisions are allowing taxpayers to benefit from the upside of our investments in faltering financial institutions. My view is that some of these returns from providing a firmer foundation for our financial institutions would be put to good use by providing a firmer foundation for affordable housing in our country. The National Housing Trust Fund, which I worked to establish in the Housing and Economic Recovery Act, will enable the building, preservation, and rehabilitation of affordable housing.

I am introducing the Preserving Homes and Communities Act because when homes get foreclosed on, it does not just affect individual borrowers and lenders. Whole neighborhoods pay the price. Housing industry experts estimate that for every foreclosure within an eighth of a mile of a house, two and a half city blocks in every direction, the property value of surrounding homes drops by about 1 percent.

I believe that the Federal Government has a role to play in ensuring that millions of Americans, including neighbors who avoided risky loans and have sacrificed and saved to pay their bills on time, are protected from further declines in property values and the blight of abandoned homes.

This legislation is targeted relief that will help more families keep their homes and protect communities from even greater losses. The Preserving Homes and Communities Act will set us on the path to stabilizing the housing sector as a foundation of lasting economic recovery. I hope my colleagues will join me and Senators Durbin, Whitehouse, and Merkley in supporting this bill and other foreclosure prevention efforts.

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

Mr. President, I am pleased today to introduce the Fairness in Health Insurance Act. This bill will hold health insurance companies accountable by requiring that at least 90 percent of your premium dollars go toward health services, not profits or administrative waste. As we move forward in health reform, it is essential that health insurance companies know that their top priority must be serving beneficiaries, not taking care of shareholders or CEOs.

This bill is inspired by the unique culture of health care in Minnesota, which includes the Mayo Clinic, cooperative models like HealthPartners, and visionary public health leadership from State legislators. Heath care in our State is also distinguished by the fact that 90 percent of Minnesotans are served by a nonprofit health plan. These plans outperform their national peers and are able to put 91 cents of every premium dollar toward actual health care services.

In other plans throughout the nation, though, you may find less than 60 percent of your premium is put toward health care; the rest is for overhead, marketing and profits. By taking the profits out of the health insurance industry, Minnesota health plans do a better job helping our residents to live healthier, longer lives. The Fairness in Health Insurance Act will help us hold all health plans to the same standards we've set in Minnesota by requiring that 90 percent of premium dollars actually pay for health services.

But while millions of Americans struggle to pay for health care, insurance executives continue to make obscene salaries. Last year, three top health insurance executives saw boosts in their total compensation--some of them making almost $10 million. I believe in fair competition but I do not support companies making obscene profits off of health care. The Fairness in Health Insurance Act will force insurance companies to prioritize health services for beneficiaries over bonus packages for CEOs.

In fact, the current reality is that most of us don't know where our health insurance premiums go. It's challenging enough to understand a billing statement from your health insurance company, much less track where your money is being spent. The Fairness in Health Insurance Act also requires transparent reporting of how health insurance companies are spending your money. This transparency is especially important as we move to cover all Americans in health reform. Clear reporting will help us hold insurance companies accountable for every dollar we invest in health insurance.

Now, although Minnesota outperforms most states in health care, I know we can continue to do better as well. When I talk with Minnesotans, I hear again and again that people are living in fear about health care. They are afraid of losing their health insurance, or worried about getting sick and going bankrupt. The reality is that 50 percent of bankruptcies today are caused by health costs and 80 percent of these Americans actually have health insurance.

Passing national health reform this year is my top priority because I have listened to Minnesotans across the State. They have told me, loud and clear, that the current health insurance system is not working for them. The Fairness in Health Insurance Act of 2009 is an important part of my health reform strategy that also includes cost containment, simplifying paperwork, focusing on prevention, pushing for a public option and making

sure that all Americans have access to affordable, secure health insurance.

I urge my colleagues to work with me to ensure that these commonsense strategies are included in our health reform bill when it comes to the floor. Taken together, these elements will bring our country into a new era in which high-quality--and affordable--health care is a reality for all Americans.

Mr. President, I ask for unanimous consent that the text of the bill be printed in the Record.

Mr. President, I am pleased today to introduce the Fairness in Health Insurance Act. This bill will hold health insurance companies accountable by requiring that at least 90 percent of your premium dollars go toward health services, not profits or administrative waste. As we move forward in health reform, it is essential that health insurance companies know that their top priority must be serving beneficiaries, not taking care of shareholders or CEOs.

This bill is inspired by the unique culture of health care in Minnesota, which includes the Mayo Clinic, cooperative models like HealthPartners, and visionary public health leadership from State legislators. Heath care in our State is also distinguished by the fact that 90 percent of Minnesotans are served by a nonprofit health plan. These plans outperform their national peers and are able to put 91 cents of every premium dollar toward actual health care services.

In other plans throughout the nation, though, you may find less than 60 percent of your premium is put toward health care; the rest is for overhead, marketing and profits. By taking the profits out of the health insurance industry, Minnesota health plans do a better job helping our residents to live healthier, longer lives. The Fairness in Health Insurance Act will help us hold all health plans to the same standards we've set in Minnesota by requiring that 90 percent of premium dollars actually pay for health services.

But while millions of Americans struggle to pay for health care, insurance executives continue to make obscene salaries. Last year, three top health insurance executives saw boosts in their total compensation--some of them making almost $10 million. I believe in fair competition but I do not support companies making obscene profits off of health care. The Fairness in Health Insurance Act will force insurance companies to prioritize health services for beneficiaries over bonus packages for CEOs.

In fact, the current reality is that most of us don't know where our health insurance premiums go. It's challenging enough to understand a billing statement from your health insurance company, much less track where your money is being spent. The Fairness in Health Insurance Act also requires transparent reporting of how health insurance companies are spending your money. This transparency is especially important as we move to cover all Americans in health reform. Clear reporting will help us hold insurance companies accountable for every dollar we invest in health insurance.

Now, although Minnesota outperforms most states in health care, I know we can continue to do better as well. When I talk with Minnesotans, I hear again and again that people are living in fear about health care. They are afraid of losing their health insurance, or worried about getting sick and going bankrupt. The reality is that 50 percent of bankruptcies today are caused by health costs and 80 percent of these Americans actually have health insurance.

Passing national health reform this year is my top priority because I have listened to Minnesotans across the State. They have told me, loud and clear, that the current health insurance system is not working for them. The Fairness in Health Insurance Act of 2009 is an important part of my health reform strategy that also includes cost containment, simplifying paperwork, focusing on prevention, pushing for a public option and making

sure that all Americans have access to affordable, secure health insurance.

I urge my colleagues to work with me to ensure that these commonsense strategies are included in our health reform bill when it comes to the floor. Taken together, these elements will bring our country into a new era in which high-quality--and affordable--health care is a reality for all Americans.

Mr. President, I ask for unanimous consent that the text of the bill be printed in the Record.