[Congressional Record Volume 140, Number 22 (Thursday, March 3, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: March 3, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
CONFUSING THE HEALTH CARE ISSUE
Mr. DASCHLE. Mr. President, I have been asked in recent days about
polls published in a number of newspapers showing some slippage in the
support for the health plan proposed by this administration.
My answer to the queries that I have had is, I am not really
surprised. After an orchestrated campaign, the cost of which has been
more than $10 million, by many opponents of health reform, especially
those outside of Washington--the insurance industry, lobbyists, and
others--I am not surprised.
The American people are confused with the tremendous amount of
misinformation that has characterized so much of the debate so far.
There has been an orchestrated effort to mislead the people and I
think, to a certain extent, as it pertains to the Clinton health plan,
they have succeeded.
But I am also convinced that these poll numbers are temporary. What
is permanent is a desire on the part of the American people to solve
the health care crisis.
Because, in spite of the ups and downs of polls relating directly to
this plan, 86 percent of the American people, in virtually every poll
from the very beginning, want guaranteed private health insurance for
all Americans. In spite of the ups and downs on the Clinton health
plan, 67 percent of all the American people want the responsibility for
paying for it to be shared between employer and employees alike. And in
spite of the ups and downs, Mr. President, over 60 percent of the
American people say again and again that they want a specified list of
comprehensive benefits so they know what they are getting.
Those numbers do not appear to change at all. Regardless of all the
talk of alliances and specific proposals, the core feeling of the
American people is as strong today as it was at the very beginning.
That does not change.
I hope there is something else that does not change. I hope that
there is a sincere desire on the part of our Republican colleagues not
to politicize this issue. I believe that there are many on the other
side who want health reform as badly as those on this side of the
aisle. I am encouraged by their determination in much of what I see in
the Finance Committee on a daily basis--good questions, good
statements, persistence on the part of so many who have been with this
issue for so long.
But I must say this morning, Mr. President, I am encouraged, as well
as concerned, about this Republican retreat that will begin tonight. I
am encouraged because there are a large number of Republican Senators
who certainly want to devote the attention necessary to an issue of
this magnitude and have demonstrated it. Our colleague from Rhode
Island [Mr. Chafee] is the one who called for this retreat. So I know
in his mind there is a lot that can be done in another opportunity to
look very closely at an issue of this magnitude.
But I am concerned that some in the Republican caucus want to do to
health what they did to deficit reduction. They want to politicize it.
I have concluded, having been around here for almost 7 years now,
that each and every time this body politicizes an issue, we lose. It is
that simple. To politicize health would mean that Republicans lose. To
politicize health would mean Democrats lose. But, most importantly, to
politicize this issue means the American people lose.
Instead of coming out swinging, my sincere hope this morning, the
morning of the retreat tonight, is that our Republican colleagues will
come out extending--extending their arms in a real effort at
bipartisanship to resolve these problems that we all know exist.
That has been the approach this administration has used from the very
beginning. In scores of meetings here and down there one-on-one with
the President himself, with the First Lady, with every Member of the
Cabinet, in small groups and in big groups, I do not think I have ever
seen a more inclusive effort ever undertaken by any administration.
Inclusion has been the approach that this administration has used. I
hope that it is reciprocated as Republicans and Democrats attempt, in
as sincere a way as possible, to deal with this issue effectively.
I hope, Mr. President, that my concerns are unwarranted. I hope the
announcement tomorrow afternoon will be that the Republican caucus is
even more determined than ever to come up with a plan to work together.
I hope that all Senators can come to the same conclusion which many of
us have--that the less we do, the more costly the effect. That is
counterintuitive, but it is true--the less we do, the more costly the
effect.
Every single serious analytical effort that has been presented to us
thus far has demonstrated that. And of all the alternatives, they tell
us, one by one, as recently as this week, the status quo is the most
expensive. Every analysis done so far has indicated that we have to do
something to stem this incredible flow of cost into health. We all have
been told, time and time again virtually every time we get into a
budget debate about the implications of health on our budget, and the
President pro tempore knows that better than any one of us in this
Chamber--in fact the Congressional Budget Office said that--unless we
deal with health care we cannot contain our budget problems.
As they reported to Congress just a couple of weeks ago, it is the
Clinton plan that reduces costs to health, and to the budget, by $237
billion over a 10-year period of time. They reported to us just a
couple of weeks ago that the Clinton plan saves business $90 billion a
year, when it is fully implemented. And just this week the Department
of Health and Human Services released their analysis of the effect that
the Clinton plan would have, not only on our budget but on all the
budgets, State by State. Their report was very encouraging.
They indicated that States could save $39 billion in Medicaid costs
alone between the years 1996 and 2000; that they would save $6.3
billion a year at the end of the decade just as an employer. That is
per year, by the end of the decade.
Health and Human Services say business, too, are big winners, saving
more than $59 billion a year, that comes out to $605 a worker. And
working families would save $29 billion a year, $293 per worker.
That is the kind of analytical information many of us asserted all
along ought to drive this debate. We can truly provide the universal
coverage, this guaranteed access to private insurance that we want for
all Americans, at the same time we reduce costs.
It is such a remarkable study I would like to share it with my
colleagues. I ask unanimous consent to have it printed in the Record at
this time.
There being no objection, the report was ordered to be printed in the
Record, as follows:
[From the U.S. Department of Health and Human Services, Feb. 28, 1994]
Impact of the Health Security Act on States
I. summary, impact of the health security act on states
The Health Security Act will reduce the cost of insurance
in states through universal coverage, cost containment, and
the elimination of cost shifting.
Employers who currently offer insurance will save on
average of $605 per worker (1.6% of payroll or $59.5 billion
on total) on premiums in the year 2000.
Workers who are in firms that currently offer health
insurance will save an average of $293 per worker ($29.9
billion in total) on premiums in the year 2000.
As a purchaser of health care coverage for their employees,
states will save approximately $5.6 billion in premium
payments for active employees in the year 2000 due to slower
growth in overall health care costs. Additionally, states
will save an estimated $704 million through federal support
of health care for early state retirees in the year 2000.
State expenditures for Medicaid and community-based long-
term care are projected to decrease in the aggregate under
the Health Security Act.
Between 1996 and the year 2000, states will save an
estimated $43.6 billion in state Medicaid expenditures under
the Health Security Act; an estimated $31.9 billion
represents coverage of Medicaid recipients through regional
alliances, and approximately $11.7 billion will be saved
through the new community-based long-term care program. In
the year 2000, state Medicaid programs will save
approximately $22.3 billion--$3.3 billion results from the
new home and community-based long-term care program.
When taking new state spending for the new community-based
long-term care program into account, states will save, on
net, nearly $7.6 billion on community-based long-term care
expenditures between 1996 and 2000 under the Health Security
Act. In the year 2000 alone, states will save $1.1 billion on
community-based long-term care.
States will save $39.5 billion between 1996 and 2000 under
the Health Security Act, $7.6 billion from the community-
based long-term care program, and $31.9 billion from the
remaining changes in the Medicaid program. In the year 2000,
this represents $20.1 billion, $19.0 billion in Medicaid
savings excluding home and community-based care and $1.1
billion in savings from the home and community-based care
program.
IMPACT OF THE HEALTH SECURITY ACT ON STATES: YEAR 2000
----------------------------------------------------------------------------------------------------------------
Expenditure categories Without reform Reform Savings
----------------------------------------------------------------------------------------------------------------
PURCHASING HEALTH COVERAGE UNDER THE HEALTH SECURITY ACT
----------------------------------------------------------------------------------------------------------------
Employers' share of the premiums:
Total employer premium $303.5 billion.......... $275.5 billion.......... $28.0 billion
payments--all firms.
Total employer premium $303.5 billion.......... $243.9 billion.......... $59.5 billion
payments--employers currently
offering insurance.
Premium payments as a percent 8.2%.................... 6.6%.................... 1.6%
of payroll--employers
currently offering insurance.
Premium payments per worker-- $3,086 per worker ($257/ $2,481 per worker ($207/ $605 per worker ($50/
employers currently offering month). month). month)
insurance.
Families' and individuals' share
of the premiums:
Total worker premium payments-- $73.6 billion........... $53.7 billion........... $19.9 billion
all firms.
Total worker premium payments-- $73.6 billion........... $44.7 billion........... $28.9 billion
workers in firms currently
offering insurance.
Worker premiums--workers in $748 per worker ($62/ $455 per worker ($38/ $293 per worker ($24/
firms currently offering month). month). month)
insurance.
New Federal funds for discounts\1\ ........................ $81.0 billion........... ........................
State expenditures on active State $15.8 billion........... $10.2 billion........... $5.6 billion
employees.
State expenditures on early State $1.3 billion............ $0.6 billion............ $0.7 billion
retirees.
----------------------------------------------------------------------------------------------------------------
MEDICAID
----------------------------------------------------------------------------------------------------------------
State Medicaid expenditures, $123.3 billion.......... $101.0 billion.......... $22.3 billion
including savings from community-
based long-term care.
State Medicaid expenditures, not $123.3 billion.......... $104.3 billion.......... $19.0 billion
including savings from community-
based long-term care.
----------------------------------------------------------------------------------------------------------------
NEW LONG-TERM CARE PROGRAM
----------------------------------------------------------------------------------------------------------------
State community-based long-term $9.9 billion............ $8.9 billion............ $1.1 billion
care expenditures.
----------------------------------------------------------------------------------------------------------------
\1\Total discounts minus states' maintenance of effort
NOTE: For display purposes only, the Medicaid savings due to the new community-based long-term care program are
shown under both the Medicaid and the New Long-Term Program sections. ``State Community-Based Long-Term Care
Expenditures'' also reflects changes in state-only spending for the severely disabled and state funds directed
toward the new long-term care program. Numbers may not sum to totals due to rounding.
ii. health security act: major policy changes affecting states
The following is a brief description of some of the major
policy changes under the Health Security Act that affect
state expenditures.*
Footnotes at end of article.
Universal coverage and cost containment under the Health
Security Act
The Health Security Act guarantees all American citizens
and legal residents private insurance coverage for a
comprehensive package of benefits. Coverage continues with no
lifetime limits regardless of a change of employer,
employment status, marital status or medical condition.
The Health Security Act relies on the requirement of shared
responsibility for the purchase of health coverage. It
strengthens the private, employment-based system and augments
it with a commitment to make the purchase of coverage
affordable through discounts to small business and families.
The Health Security Act carries out the commitment to
control the rising costs of health care by:
(1) Consolidating the purchasing power of consumers so that
private payers in a competitive market can slow the growth of
health insurance premiums. This process is backed up by a cap
on the growth of insurance premiums.
(2) Reducing the rate of growth of the Medicare and
Medicaid programs without reducing benefits or quality of
care.
Premiums under the Health Security Act
Under the Health Security Act, health coverage is purchased
in two shares: the individuals or family share and the
employer share. Each individual or family purchases a health
plan designed to cover one of four categories by family type:
(1) A single adult policy;
(2) A policy covering two adults;
(3) A policy covering a single parent with children; or
(4) A policy covering two parents with children.
Employers' share of the premiums
Generally, employers pay 80 percent of the weighted average
premium calculated on a per worker basis within a regional
alliance for the appropriate family type policy.**
Additionally, an employer may choose to pay part or all of
the family share of the premium.
Employers' premium payments within regional alliances are
capped. At full implementation, employers purchasing coverage
through regional alliances will pay no more than 7.9 percent
of payroll for health coverage for their workers. Businesses
with fewer than 75 workers receive discounts that cap their
payments to a sliding scale (3.5% to 7.9% of payroll) based
on size and average wage.
Families' and individuals' share of the premiums
The family or individual pays the difference between the
employer share and the actual premium of the health plan in
which they choose to enroll. Those who choose to enroll in a
lower-cost plan will pay lower premiums than those who choose
higher-cost plans.
For families and individuals, as well as employers, premium
payments are capped. Families with an annual income of
$40,000 or less pay no more than 3.9 percent of their income
toward their share of the premium. Those with incomes below
150 percent of poverty receive discounts toward their share
of the premium.
Medicaid under the Health Security Act
Under the Health Security Act. Medicaid recipients under
the age of 65 enter the alliance system to obtain the
guaranteed comprehensive benefit package.
People not on cash assistance who now receive Medicaid
choose their health plan and may qualify for discounts based
on income, like other eligible individuals and families.
States contribute toward discounts for their residents by
maintaining current Medicaid spending efforts for this
population.
Individuals who qualify for cash assistance (Aid to
Families with Dependent Children or Supplemental Security
Income) also choose their own health plans through regional
alliances. The federal and state governments make premium
payments for these individuals based on current state and
federal Medicaid expenditures.
For low-income children under the age of 19, a new program
is created to provide services currently offered under
Medicaid but not included in the comprehensive benefits
package, such as hearing aids and non-emergency
transportation. States maintain current spending for children
receiving cash assistance.
State expenditures on Medicaid will decrease under the
Health Security Act for several reasons:
Coverage of current cash eligible Medicaid recipients
through regional alliances: Acute care spending for cash
eligible Medicaid recipients decreases because of their
inclusion in regional alliances, where costs will not grow as
rapidly as under the current system. States pay a premium for
these services that is based on 95 percent of current
expenditures for this population. In addition to this
reduction in expenditures, states no longer make
disproportionate share payments for their cash-eligible
populations.
Coverage of current non-cash eligible Medicaid recipients
through regional alliances and the new program for children's
supplemental services: Expenditures for non-cash eligible
Medicaid recipients, like those for cash eligibles, are
reduced due to their inclusion in regional alliances.
Although the states make maintenance of effort (MOE) payments
based on current expenditures for acute care services and
disproportionate share for this population, these payments
will not grow as rapidly as under the current system.
Additionally, the federal government assumes the costs of
supplemental services for Medicaid eligible children. Because
the MOE payments for cash eligible children's supplemental
services will grow at a slower rate than do current
expenditures for these services, states achieve savings.
New long-term care program under the Health Security Act
The Health Security Act creates a new home and community-
based long-term care program for individuals with severe
disabilities regardless of income or age. The program is
financed by:
Federal Government: New federal funds are allotted to
states based on a formula that includes the number of persons
with severe disabilities among other factors. Additionally,
current federal Medicaid expenditures for these services for
the severely disabled will be used to fund the new program to
the extent that current Medicaid eligibles are served in the
program. The federal share of public costs ranges from 78 to
95 percent when fully phased in.
States: State spending for the new program will be matched
by the federal government at a rate substantially higher than
that of the current Medicaid program. Part of the state funds
will come from the transfer of Medicaid expenditures for
community-based long-term care for the severely disabled. At
the most, states will pay between 5 and 22 percent of the
public program costs.
Individuals: Participants whose income is greater than 150
percent of the federal poverty level will contribute based on
their income.
States have the flexibility to organize services to meet
their populations' diverse needs; at a minimum, states must
provide personal assistance to eligible individuals needing
assistance with activities of daily living. States have the
option to continue to provide community-based long-term care
services under the state Medicaid program.
Public health initiatives under the Health Security Act
The Public Health Initiatives under the Health Security Act
will provide states and communities with new funds to create
partnerships among government, alliances, health care
providers, and communities that will:
Enhance the capability of communities to protect the health
of their populations and to address high-priority local
health problems;
Increase the number of minorities in health professions,
support graduate nurse training initiatives, and expand
training projects for primary care physicians and physician
assistants;
Assure access to essential health services for all
Americans, particularly low-income, isolated, hard-to-reach
populations; and
Provide the knowledge and information systems necessary to
prevent disease and provide medical care more appropriately
and efficiently.
Due to universal coverage under the Health Security Act,
most personal health services now provided the Public Health
Service will be paid for by insurance.
III. BACKGROUND: STATES AND HEALTH REFORM
Over the past decade, state governments, residents, and
employers have faced rapid increases in the already high
health care costs.
Between 1980 and 1991, spending in states for hospital
care, physician services, and prescription drug purchases in
retail outlets rose at an average annual rate of 10.5
percent.\1\
In 1993, states spent more on health care than on tax-
financed higher education.\2\
Between 1988 and 1990, the average annual growth in
Medicaid expenditures was 15.7 percent,\3\ and it is expected
that state Medicaid spending will nearly triple between 1990
an 1995.\4\
------------------------------------------------------------------------
Statistics
United States--Health care environment
------------------------------------------------------------------------
Percentage of population covered by Medicaid (1991)\5\...... 10.6%
Medicaid payments per recipient (1992)\6\................... $2,937
Average annual growth in Medicaid expenditures (1988-
1990)\3\................................................... 15.7%
Infant mortality rate per 1000 live births (1991)\7\........ 8.9
------------------------------------------------------------------------
Footnotes at end of article.
States have taken several steps to control the rise in
health care costs and to increase access to health care for
its residents.8, 9
Almost all states have initiated or enacted measures to
improve access and contain costs.\8\
Fourteen states have enacted or proposed legislation
designed to provide universal coverage for all state
residents.\8\
Twelve states have enacted or proposed legislation designed
to contain costs through managed competition or purchasing
pools.\8\
Forty-seven states have enacted or proposed small group
insurance reform; eighteen states have enacted or proposed
insurance reform for individuals.\8\
Examples of state health reform initiatives include:
Expanding access to health care for targeted population
groups, such as pregnant women or children, through public
sector, private sector, or a mixture of both, interventions.
This often includes expanding Medicaid eligibility for
coverage and services beyond Medicaid's traditional income
restrictions.\8\
Small group and individual market reforms including
guaranteed issue and renewal, limits on pre-existing
condition exclusions, rating restrictions and benefit
mandates.\8\
Containing costs through the use of managed competition or
purchasing pools, provider rate setting, insurer premium
caps, and global budgets.\8\
Acting alone, states are hampered in their efforts to
control the growth of health care costs. The Health Security
Act will enable states to control the growth of health care
expenditures and assure access to care for its residents.
Universal coverage, achieved through a federal/state
partnership, will reduce the burden on state and municipal
programs and providers that today help finance and deliver
services to the uninsured and under-insured.
Federal grants will help states provide special assistance
to underserved rural and urban areas. States will be able to
strengthen and improve essential public health efforts.
The Health Security Act will control the increase in health
care costs by introducing greater competition into the health
care delivery system.
IV. IMPACT ON THE PRIVATE SECTOR\10\
A. Premium payments under the Health Security Act
Total Annual Premium Payments: Year 2000
Without reform, employers who currently offer insurance
would pay an estimated total of $303.5 billion in premiums in
the year 2000. Under the Health Security Act, all firms,
including those that do not currently offer insurance, will
pay $275.5 billion in premium payments for their employees.
Firms that currently offer insurance to their employees will
pay an estimated total of $243.9 billion in premium
payments--$59.5 billion less than they would pay without
comprehensive reform.
Workers who currently work in firms that offer insurance
would pay an estimated total of $73.6 billion in premium
payments in the year 2000 without comprehensive reform. Under
the Health Security Act, workers, including those who are not
currently covered through firms offering insurance, will pay
a total of $53.7 billion in premiums in the year 2000.
Employees in firms that currently offer insurance will pay an
estimated total of $44.7 billion in premiums in the year
2000, almost $29 billion less than they would without
comprehensive reform.
Employer Premium Payments as a Percent of Payroll: Year 2000
The Health Security Act will reduce the percent of payroll
that employers who currently offer health insurance will
spend on premiums from 8.2 percent to 6.6 percent, a
reduction of approximately 20 percent due to reforms in the
Act.
In the year 2000, all employers will spend an average of
6.4 percent of their payroll on premiums under the Health
Security Act.
Average Annual Premium Payments per Worker: Year 2000
For all employers, the average premium payment per worker
will be an estimated $2,245 in the year 2000 under the Health
Security Act. Employers that currently offer health insurance
will pay an estimated $2,481 in premium payments for
workers--$605 less than they would pay if there were no
comprehensive reform.
Under the Health Security Act, workers will pay an average
premium share of approximately $437 in the year 2000.
Employees in firms that currently offer insurance will pay on
average $455. This is an estimated $293 less than they would
pay in premiums if there were no comprehensive reform.
Savings will be even greater for those workers who currently
purchase health insurance directly from insurance companies.
B. Discounts under the Health Security Act--Year 2000
Qualified small and low-wage employers, low-income
families, and early retirees will receive an estimated total
of $104 billion in the year 2000 for premium and out-of-
pocket payment discounts under the Health Security Act.
States' residents and businesses will receive an estimated
$81 billion in federal funds for discounts in the year 2000.
The approximately $23 billion remaining will come from
state funds, a substitute for the $27.8 billion that states
would have paid for services for non-cash Medicaid recipients
without reform.
V. impact on the public sector
A. States as employers under the Health Security Act--Year 2000
As purchasers of health care coverage for their employees,
states will benefit from slower growth in overall health care
costs.
Federal support of health care for early retirees will
produce large savings for state employee health benefits
programs. Under the Health Security Act, the federal
government will cover the 80 percent employer share of the
early state retirees' premiums. The state will assume the 20
percent family share.
States will spend an estimated $10.2 billion on their
active employee health benefits in the year 2000 under the
Health Security Act. This represents an estimated savings of
$5.6 billion when compared to the estimated spending without
reform of $15.8 billion in the year 2000.
States as employers will save an estimated $704 million on
its premium spending for retirees between the ages of 55 and
64 years in the year 2000.
B. State Medicaid spending under the Health Security Act
Medicaid Growth: 1996-2000\11\
Under the Health Security Act, states save approximately
$43.6 billion between the years 1996 and 2000. These savings
will result primarily from the inclusion of Medicaid
recipients in regional alliances, where health care costs
will not grow as rapidly as in the current system.
MEDICAID EXPENDITURES: 1996-2000\1\
[In billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year
1996 1997 1998 1999 2000 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medicaid spending without reform........................ 77.6 87.3 98.0 109.9 123.3 496.0
===============================================================================================
Health Security Act spending............................ 76.8 85.1 94.1 95.4 101.0 452.3
-----------------------------------------------------------------------------------------------
Acute care Medicaid................................. 47.9 49.3 44.0 38.1 39.3 218.6
Long-term care Medicaid............................. 27.0 29.3 32.0 34.9 38.2 161.3
Maintenance of effort............................... 2.0 6.5 18.1 22.4 23.4 72.4
===============================================================================================
Change in State Medicaid spending....................... (0,8) (2.2) (3.9) (14.5) (22.3) (43.6)
Change in State Medicaid spending less community-based
long-term care savings................................. 0.5 (0.2) (1.5) (11.6) (19.0) (31.9)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Estimates of the impact of the Health Security Act on all States assumes that States implement reform in January of 1996, 1997, or 1998, as specified
in the act.
Overall, states will save an estimated $43.6 billion on
Medicaid expenditures between 1996 and 2000 under the Health
Security Act. An estimated $31.9 billion in savings results
from coverage of Medicaid recipients through the regional
alliances and other policy changes under the Health Security
Act. The remaining $11.7 billion in Medicaid savings results
from the new community-based long-term care program.\12\
Medicaid spending on acute care, which includes premium
payments for cash assistance recipients and wrap-around
services for adults, will be an estimated $39.3 billion in
the year 2000. This will be lower than the acute care
spending under the current system because of slower growth of
health care costs under the Health Security Act.
Medicaid spending on long-term care under the Health
Security Act will be approximately $38.2 billion in the year
2000. This includes coverage of institutional long-term care
and continuing Medicaid community-based long-term care.
States will contribute an estimated $23.4 billion in the
year 2000 in maintenance of effort payments that will be used
for discounts for their low-income residents and small
businesses.
C. New Long-Term Care Program Under the Health Security Act
STATE EXPENDITURES FOR COMMUNITY-BASED LONG-TERM CARE: 1996-2000
[In millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year
1996 1997 1998 1999 2000 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Spending without reform............................. 5,199 7,694 8,314 9,208 9,949 40,363
-----------------------------------------------------------------------------------------------
State Medicaid spending\1\.............................. 3,893 5,856 6,359 7,154 7,819 31,081
State-only spending on severely disabled\2\............. 1,306 1,838 1,955 2,054 2,130 9,283
===============================================================================================
Health Security Act spending...................... 3,764 5,786 6,601 7,756 8,870 32,776
-----------------------------------------------------------------------------------------------
New program spending:\3\
State spending to match new Federal funds........... 869 1,504 2,106 2,804 3,551 10,835
State spending to match Medicaid transfer........... 276 446 540 645 737 2,644
State spending on continuing Medicaid............... 2,618 3,836 3,954 4,306 4,581 19,297
===============================================================================================
Change in State spending on community-based long-term
care................................................... (1,436) (1,907) (1,713) (1,452) (1,079) (7,588)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Projected Medicaid spending for home health, home and community-based waivers, personal care, frail elderly, and community-supported living
arrangements (CSLA).
\2\Includes estimated spending for persons who are likely to meet the eligibility criteria for the new program.
\3\Assumes full state participation in the new program. The new program is not fully implemented until FY 2003. These net savings include some of the
Medicaid program savings presented in Section B (State Medicaid Spending). The Medicaid offset estimate reflects more recent data than were available
at the time that the FY 1995 Budget was prepared. Numbers may not sum to totals due to rounding.
Source: ASPE.
States will save an estimated $7.6 billion on community-
based long-term care spending under the Health Security Act
between 1996 and 2000, $1.1 billion in the year 2000 alone.
Without comprehensive reform, states would spend an
estimated $9.9 billion in Medicaid and non-Medicaid (state-
only) funds on home health, personal health care services,
and home and community-based waivers in the year 2000.
Under the Health Security Act, federal expenditures for
community-based long-term care have two sources: new federal
funds and Medicaid offset amounts. States will spend an
estimated $3.6 billion in the year 2000 to match new federal
funds appropriated for the new program. Additionally, states
will spend approximately $737 million to match Medicaid
offset amounts.
States will spend an estimated $4.6 billion in the year
2000 for community-based services that continue to be offered
through Medicaid.
Total savings for states from Medicaid policy changes
($31.9 billion) and the new community-based long-term care
program ($7.6 billion) will be an estimated $39.5 billion
between 1996 and 2000.\13\
FEDERAL EXPENDITURES FOR COMMUNITY-BASED LONG-TERM CARE FOR STATES: 1996-2000
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year
1996 1997 1998 1999 2000 Total
----------------------------------------------------------------------------------------------------------------
Spending without reform\1\........ 4,787 7,200 7,818 8,796 9,613 38,214
=============================================================================
Health Security Act spending 9,021 14,647 18,509 23,207 28,061 93,445
-----------------------------------------------------------------------------
New program spending:
New Federal funds for program. 4,500 7,800 11,000 14,700 18,700 56,700
Estimated Medicaid transfer\2\ 1,429 2,311 2,819 3,380 3,882 13,822
Federal spending on continuing
Medicaid community-based long-
term care\3\................. 3,092 4,535 4,690 5,127 5,478 22,923
=============================================================================
Change in Federal spending on
community-based long-term care... 4,234 7,447 10,691 14,412 18,447 55,231
----------------------------------------------------------------------------------------------------------------
\1\Projected Medicaid spending for home health, home and community-based waivers, personal care, frail elderly,
and community-supported living arrangements (CSLA).
\2\Federal Medicaid spending on persons with severe disabilities who are expected to be transferred to the new
program. Assumes that no more than 75 percent of the new program's expenditures will be used for the Medicaid
severely disabled during the phase-in.
\3\Medicaid with federal matching funds for home and community-based long-term care continues for the non-
severely disabled and the severely disabled not served through the new program.
Program is not fully implemented until FY 2003.
The Medicaid offset estimate reflects more recent data than were available at the time that the FY 1995 Budget
was prepared. Numbers may not sum to totals due to rounding.
Note.--Please refer to the Key Assumptions listed in the Methods Paper for this report.
Source: ASPE.
In the absence of comprehensive reform, the federal
government would spend an estimated $9,6 billion in Medicaid
funds on home health, personal health care services, and home
and community-based waivers in states in the year 2000.
Under the Health Security Act, states will receive an
estimated $18.7 billion in new federal funds in the year 2000
for the new program for persons with severe disabilities.
Additionally, states will receive an estimated $3.9 billion
in federal Medicaid offset amounts to reflect Medicaid
savings from the new long-term care program.
States will receive an estimated $5.5 billion in the year
2000 in federal Medicaid funds for community-based services
that continue to be offered through Medicaid.
Between 1996 and 2000, federal spending for home and
community-based long-term care will increase by an estimated
$55.2 billion under the Health Security Act.
D. Public Health Initiatives Under the Health Security Act
PUBLIC HEALTH SERVICE FUNDING FOR STATES: 1997-2000
[In millions of dollars]
------------------------------------------------------------------------
1997 1998 1999 2000 Total
------------------------------------------------------------------------
New PHS funds.............. 3,630 4,005 3,955 3,555 15,145
----------------------------------------
Health services and workforce
funding\1\.................... 2,630 2,905 2,855 2,455 10,845
Health research funding\2\..... 1,000 1,100 1,100 1,100 4,300
========================================
Offsets\3\..................... 1,582 2,510 2,729 2,729 9,550
========================================
Total funds.................... 2,048 1,495 1,226 826 5,595
------------------------------------------------------------------------
\1\Federal funds for health-related services and workforce are allocated
to States based on the state's percentage of its population beneath
the poverty level in 1992.
\2\Federal funds for health research are allocated to states using
proportional distribution based on total fiscal year 1993 AHCPR and
NIH funds to each State.
\3\Offsets are allocated to States based on fiscal year 1993
distribution of funds from HRSA, SAMHSA, CDC, IHS, and NIH.
Numbers may not sum to totals due to rounding.
Note:.--It is assumed that all States will implement reform in 1997.
Source: OASH, PHS.
Between 1997 and 2000, Public Health Initiatives of the
Health Security Act will provide the states and its
localities with an estimated $5.6 billion in new funds for
its community health centers, training of primary care
physicians, core public health functions such as
immunizations and disease prevention, and health research,
among other programs.
With universal coverage, payments from health plans will
replace (offset) the current Public Health funds for the
personal health services, totalling approximately $9.6
billion between 1997 and 2000.
footnotes
*Note: This analysis includes the major ways that states will
be affected by the Health Security Act; other sectors that
will be affected such as hospital and local governments, are
not described in this report.
**The weighted average premium is the average of the accepted
bids for all health plans in the alliance, weighted to
reflect enrollment of eligible individuals among the plans.
\1\ Health Care Financing Administration, as published in
Levit, et al., ``Health Affairs,'' Fall 1993.
\2\National Association of State Legislatures, 1993.
\3\Health Care Financing Administration, Office of the
Actuary. Per capita from 1992. As cited in Office of
Management and Budget Health Reform Briefing Book. October,
1993.
\4\National Association of Budget Officers, 1993.
\5\Congressional Research Service. Medical Source Book, 1993
Update. Prepared for the Committee on Energy and Commerce,
U.S. House of Representatives. January 1993. P. 48.
\6\Health Care Financing Administration, as compiled by The
Urban Institute, 1993. As cited in Office of Management and
Budget Health Reform Briefing Reform Briefing Book. October,
1993.
\7\Centers for Disease Control and Prevention. ``Monthly
Vital Statistics Report,'' 42(2s). August 31, 1993.
\8\Blue Cross and Blue Shield Association. State Legislative
Health Care and insurance issues, 1993 Survey of Plans.
\9\Office of Management and Budget Health Policy. Health
Reform Briefing Book: States. October 1993.
\10\The Congressional Budget Office (CBO) has produced a
higher premium estimate than the Administration's. The CBO
also estimates larger employer discounts. On balance, both
the CBO and the Administration predict the Health Security
Act will reduce business spending compared with current
policy by similar amounts. (CBO. ``An Analysis of the
Administration's Health Proposal.'' February 8, 1994, p. 54.)
Source: ASPE and the Urban Institute's TRIM2 Model,
benchmarked to HCFA's National Health Accounts.
\11\Estimates of the impact of the Health Security Act on all
states assume that states implement reform in January of
1996, 1997, or 1998, as specified in the Act. Please refer to
the Key Assumptions listed in the Methods Paper for this
report.
Assume that: States will continue their spending on non-cash
adult wrap-around services; sources of revenue for Medicaid
disproportionate share remain and funds were used for
uncompensated care.
Estimated savings will change slightly due to normal baseline
revisions which accompany new economic data.
Numbers may not sum to totals due to rounding.
Source: HCFA OACT, OLP and ASPE.
\12\Medicaid savings for community-based care reported here
differ from community-based term care savings reported in
section C because Medicaid savings do not include non-
Medicaid (state-only) spending or the new program spending.
Please refer to the Key Assumptions listed in the Methods
Paper for this report.
Assume: States will continue their current spending level for
non-cash adult wrap-around services, current state sources of
revenue for Medicaid disproportionate share remain and funds
are used for uncompensated care.
Long-term care includes both institutional and community-
based long-term care. These estimates include offsets due to
the new community-based long-term care program (see next
section).
Maintenance of effort payments include expenditures for
alliance-covered services and disproportionate share for the
non-cash population and wrap-around services for cash-
eligible children.
Numbers may not sum to totals due to rounding.
\13\This assumes universal coverage in 1997; Medicaid savings
will be larger if states adopt universal coverage during
1996. Please refer to the Key Assumptions listed in the
Methods Paper for this report.
Mr. DASCHLE. I hope we will have a serious discussion about cost
savings and I hope we can agree on one thing as it relates to cost. I
hope we can all agree we will not support any plan which fails to
produce at least the savings that have been laid out in the Clinton
plan. Let us use that as the base, the threshold. Let us assume we
cannot provide any credibility to any other plan that does not at least
achieve the savings in the Clinton plan.
The Health and Human Services report breaks down the costs between
employers and employees. It raises the issue, as well, of an employer
mandate; the ``M'' word--mandate. There are those who would have us
believe we could avoid the ``M'' word, this mandate. But those who do
ignore the mandate we have in our current system. We have a mandate in
our current system that is often overlooked. It is there every day, and
we are blind to it so often, but it is there in the most inequitable
way.
I ask unanimous consent for 3 additional minutes.
The PRESIDENT pro tempore. Is there objection? The Chair hears no
objection.
The Senator is recognized for 3 additional minutes.
Mr. DASCHLE. The mandate I am referring to, of course, is the status
quo mandate, the mandate that says those who pay will pay for those who
do not pay.
If we had ever designed a new system and somebody had come to this
Chamber and proposed that method of financing, I think we would
probably have laughed them out of the Chamber. That Senator would not
get one vote for the mandate that exists in the system today: Those who
pay, pay for those who do not pay.
How inequitable could it be? Yet there are those who suggest we keep
that current mandate, that we keep the current system, that we allow
what they would call a volunteer system to prevail. Yet that volunteer
system is no more than an euphemism for the status quo mandate that
exists right now.
There are those who suggest it is inequitable, but that the
alternative ought not involve the employers; that it is too burdensome,
somehow, for the small employer. My question to those advocates of a
shift in the responsibility onto the family is, if it is too expensive
and too burdensome for a small business, how is it not so burdensome
for small families, for young families just trying to get started? How
is it that a family mandate is more politically acceptable than a
small-business-shared responsibility?
What we are suggesting is that businesses and families share this
responsibility, as we have for generations. Yet there are some who
argue that there ought not be any shared responsibility, that the
entire brunt of the costs of health be put on the shoulders of every
working family. So they would propose we shift from a status quo
mandate to a family mandate. I do not think that is any more
acceptable. I hope we have the chance to talk about that a lot more in
the future.
So, let us be clear about what the polls really say. They say the
American people want us to solve this problem. They say the American
people question we have what it takes to do it. That is what they say.
They say they want us to solve this problem. So let us look at the
opportunity that is now before us in the coming weeks and months as
just that, as an opportunity to provide private health insurance to
every American family; to demonstrate our ability to govern; to tell
the American people that there are times when we can put politics aside
as Democrats and as Republicans, and do it right.
I yield the floor.
Mr. WOFFORD addressed the Chair.
The PRESIDENT pro tempore. Under the order, the Senator from
Pennsylvania [Mr. Wofford] is recognized for not to exceed 30 minutes.
____________________