[Congressional Record Volume 140, Number 47 (Tuesday, April 26, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 26, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
               HEALTH CARE REFORM AND THE FEDERAL BUDGET

  Mr. DOMENICI. Madam President, I want to speak for a few moments 
about an issue that is going to occupy a great deal of our time over 
the next few months. Of course, everybody would guess that is health 
care reform. In particular, I wish to talk about health care reform in 
the context of the U.S. Government's Federal budget and the very 
difficult issue of how do we get the deficit and when might we ever get 
the deficit down to zero, because I think there is some serious concern 
about that among those who look at the future for our children and 
grandchildren in terms of our inability to get those two, the receipts 
and the expenditures of Government, to come together at zero and not 
spend more than we receive.
  Now, lest we forget, it is important to recall that last year the 
President argued repeatedly that he had a two-pronged strategy to 
attack the Nation's deficit--his budget plan, including new taxes and 
significant reductions in defense, and, the way I see it, not very many 
other cuts. So we had a tax and budget plan as one aspect of the 
President's two-pronged strategy, and, yes, believe it or not, the 
second aspect of deficit reduction was health care reform.
  Let me repeat. The President had a two-pronged strategy to get our 
fiscal house in order, and one was the tax and budget plan that was 
passed and the second part was, unequivocally, health care reform. In 
fact, the President's promise of spending cuts in the context of health 
care reform was one of the arguments used to get Congress to approve 
the budget and tax bill which included rather significant new taxes. I 
believe it was the largest new tax increase in history. Nonetheless, 
whether it was number one or not, while he was selling this plan to the 
American people on television in July, during the news conference the 
President said:

       We need to bring the deficit down to zero. To do that we 
     have to pass health care reform.

  Now, the President was right in a sense. We cannot balance the 
Federal budget with health care costs growing as they are. It is 
literally fiscally impossible to balance the Federal budget with health 
care costs growing as they are.
  Over the next 10 years, Medicare and Medicaid will grow at around 11 
percent annually.
  Now, I know some Senators listening and watching will say, ``But, 
Senator, the goal of health care reform is to get that spiraling cost 
down.''
  We will address that in a moment. In 1980, these programs that I just 
mentioned cost $48 billion, 9 percent of the budget, excluding 
interest. In 2004, one decade from now, believe it or not, they will 
cost $684 billion, 33 percent of the Federal budget, excluding net 
interest--10 years from now.
  Between 1993 and 1999, as shown on this chart that I had put up here 
on my right, the Congressional Budget Office projects that the deficit 
will decline as a percent of the gross domestic product from 4 percent 
to 2.5 percent. But the entire 1.5 percent decline can be attributed to 
increased taxes and defense cuts.
  Taxes will increase from 18.3 percent of our gross domestic product 
to 19 percent. Defense is cut by 1.6 percent of our gross domestic 
product. And with nondefense spending, the pattern is startling. 
Nonhealth-related mandatory spending and discretionary spending is 
expected to drop by almost 1 percent of the gross domestic product, 
seven-tenths of a percent. These are seven-tenths of a percent of our 
gross domestic product in excess of $5 trillion. So we are talking 
about a huge amount.
  On the other hand, health-related mandatory spending will increase by 
1.4 percent of the gross domestic product. With Medicare and Medicaid 
growing as they are, the deficit will exceed $380 billion in 2004, that 
time when I just described that the health care costs of our Federal 
Government's programs will be $684 billion as compared with the $48 
billion 20 years prior thereto.
  Clearly, it is obvious then that to get the deficit of the Federal 
budget under control, we ought to be focusing our attention on the 
health care entitlements, and what better time than while we are 
discussing health care reform.
  I want to ask a question. If not health care reform, then what? 
Unfortunately, it is becoming increasingly clear that the 
administration and many Members of Congress are determined to spend 
every bit of savings from these Federal entitlements and more on new 
health care entitlements under health care reform. At the time our 
President issued his ``vision of change'' for America shortly after his 
inauguration, he was promising his health care plan would reduce the 
deficits by $300 billion to the year 2000. But the Congressional Budget 
Office estimates that the President's health reform plan will increase, 
not decrease, the deficit by $126 billion over the next 10 years. And 
the Cooper proposal is likely to cost just as much. In fact, none of 
the major reform plans make a dent in the budget deficit at all.
  So I just came down here today to remind my colleagues that during 
the consideration of the budget resolution I propose, with Senator 
Nunn, to require a mere $20 billion in deficit reduction in health care 
reform instead of discretionary spending. I said, ``Why don't we take 
$20 billion in existing restraints in the health-care programs and 
continue them on indefinitely, thus reducing the expenditures on health 
care by $20 billion?''
  These were simple extensions of current law, mostly Medicare 
provisions that are scheduled to expire.
  These savings would have been just 1.2 percent of the combined 
spending in Medicare and Medicaid over the next 5 years. But the Senate 
rejected even that meager deficit reduction with the discussion being 
we need every cent of that for the new health care reform.
  If we are not going to reduce the deficit through health care reform, 
how are we going to reduce it? And I repeat the question. If not health 
care reform, then what? Raise taxes again? I do not believe the 
President will ask for that. I do not believe the American people will 
stand for that.
  After we just had the tax increase that I have alluded to, would we 
dare say to the American people for deficit reduction we need another 
round of new taxes? No. I think that is out. Reinvention of Government 
or reinventing Government is thought to be a way to conserve and make 
simpler and smaller. It is now clear that if there are any savings from 
this effort, they are going to be used to meet the current 
discretionary caps and not reduce them. That is obvious. What we have 
done is to create a trust fund. And it may not even carry through both 
Houses and go to the President--saying let us take $22.8 billion of 
those savings from reinventing Government and spend it on the crime 
prevention programs of the country; not saving anything; spending them 
anew within the caps established on discretionary spending, leaving the 
deficit unaddressed precisely where we talked about it a few minutes 
ago.
  Cut defense more? In just a short 4 years, and we will be devoting 
less than 3.2 percent of our gross domestic product to national 
security, a level not seen in over 50 years right before World War II.
  Now I know that is merely a comparison of dollars spent versus our 
gross domestic product. But it bears thinking about. In just a short 4 
years from now, 3.2 percent of our gross domestic product is all that 
we will be spending on national security. Not since just before the 
Second World War--50 years ago--will we be spending that small amount. 
I do not believe we can cut much more.
  Cut Social Security? I do not believe we are going to tamper with 
that program in terms of substantial reductions. And I am not sure we 
should.
  Again, if not any of those, where will the deficit reduction come 
from? I hope that I have made it clear that anyone who responds to this 
message and says we are going to reduce the spiraling costs of health 
care as part of reform, we will stand up and say, and some of those 
savings, if they accrue, will go to the deficit, because thus far, the 
delta--that is, the difference--between the current spiraling costs and 
what we intend to get it down to, if ever health care reform works, is 
all going to be spent for more health care under the health care reform 
package.


               Universal coverage and market-based reform

  The primary obstacle to deficit reduction in health care reform is 
the desire to achieve ``universal coverage''.
  Clearly, mandating health insurance coverage will require substantial 
subsidies--probably Federal subsidies--for low income families that 
cannot afford the premiums.
  I support the concept of universal coverage where everyone is 
required to have major medical protection because it would improve 
equity. Everyone would have insurance, so we would eliminate the cost 
shifting that occurs today when an uninsured person gets expensive care 
but can't pay for it.
  But making universal coverage the bottom line of health care reform 
is not only dangerous fiscally--it may also undermine market-based 
reform and lead to Government-run health care.
  Market-based reform is inherently uncertain--costs and coverage will 
be determined largely by private sector decisions of consumers, 
insurers, and providers.
  But to achieve universal coverage of a defined set of benefits by a 
date certain implies a certainty on costs that I am not sure is 
consistent with a market-based reform.
  Moreover, CBO and others are understandably cautious about crediting 
market-based reforms with substantial savings because it is difficult 
to isolate the benefits of market forces in today's health care system.
  I am very worried that these factors may lead some who want to 
achieve universal coverage this year to accept Government price 
controls, global budgets, or other measures that will undermine a 
market-based approach to cost control.


                Fiscally responsible health care reform

  I believe we ought to take a different and more deliberate course.
  Instead of rushing into a Government-run, universal system, I believe 
we should set in motion a series of market-based reforms that will move 
us a long way toward universality.
  In general, I would create strong incentives for cost control in the 
private market and in Federal programs; devote a substantial portion of 
the savings from reform to deficit reduction; and set in motion a 
process by which other savings and revenues are redirected toward 
expanding coverage for the uninsured.
  I ask unanimous consent that a chart that is equivalent to the one 
before the Senate be printed in the Record.
  There being no objection, the chart was ordered to be printed in the 
Record, as follows:

       CURRENT POLICY FEDERAL BUDGET ESTIMATES AS A PERCENT OF GDP      
------------------------------------------------------------------------
                                                    1993   1999   Change
------------------------------------------------------------------------
    Deficit......................................    4.0    2.5     -1.5
                                                  ----------------------
Revenues.........................................   18.3   19.0     -0.6
    Outlays......................................   22.4   21.4     -1.0
Outlays by category:.............................                       
    Defense......................................    4.6    3.0     -1.6
                                                  ======================
    Nondefense:                                                         
        Discretionary............................    3.9    3.7     -0.2
        Mandatory: Health-related................    3.5    4.9     +1.4
        Retirement...............................    5.9    5.8     -0.1
        Other....................................    1.3    0.9     -0.4
                                                  ----------------------
          Subtotal nondefense....................   14.6   15.3     +0.7
          Net interest...........................    3.2    3.1     -0.1
------------------------------------------------------------------------
Note.--Revenue increases are shown as negative because they reduce the  
  deficit.                                                              
                                                                        
Source.--Congressional Budget Office (March 1994).                      



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