[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.

                          ____________________