[Congressional Record Volume 140, Number 101 (Thursday, July 28, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 28, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                           HEALTH CARE REFORM

  Mr. DURENBERGER. Mr. President, I am going to speak briefly this 
morning on health reform and some of the issues that we talked about 
Tuesday morning in terms of cost containment and coverage.
  At the end of it, I hope to have a couple of comments relating to the 
subject that my colleague from Florida discussed also in terms of State 
flexibility, and they will probably be very different from my 
colleague, but it does not in any way reflect on the respect that I 
have for him because, in many ways, we are of one mind on the failure 
of this Nation to sort out responsibilities between various levels of 
government in order to meet the needs of people.
  But in health care and in the reform of health care, particularly 
when we are talking about access to medical services, I think it is a 
very, very different problem, a different situation, which calls for a 
different solution, and the Federal missions become very, very 
important. Even though they are not well understood, they really are 
very, very critical.
  Let me begin where I left off on my comments on Tuesday with trying 
to distinguish in the whole debate about health care reform, what is 
reform or change and what is an extension of coverage?
  As we all know, there seems to be a great deal of confusion here not 
only in this town but I suspect across this country, as to whether or 
not reform is all about extending coverage or whether reform is about 
changing the current system. It seems to me that most problems people 
are experiencing are with the current system. Obviously, what they like 
is also in the current system. Trying to balance that right now is the 
challenge of health care reform.
  But the reform and all of the efforts of the reform, no matter whose 
plan you might choose, is designed to reduce the costs in this system, 
maintain and enhance the quality, and increase the affordability; in 
other words, make it possible for every single American to have what 
the wealthiest of Americans believe they can have simply because they 
can afford to buy it. That is reform.
  The coverage side means to expand the benefit of this high-quality 
care, to every single American.
  Yesterday in the Washington Post there was an interesting article by 
Steven Pearlstein entitled ``Containing Spiraling Medical Costs Isn't 
Popular Topic With Reformers,'' and points out the obvious, which is 
most Americans--and I will just quote the cut line under the Reischauer 
picture. Bob Reischauer of CBO says, ``Cost containment hurts * * * 
access makes people happy.''
  We all know that in this town, change or the prospect of change 
creates apprehension. Promise of more creates good feelings.
  That is the real challenge that we face in reforming the current 
system.
  There are two basic ways, as this Steven Pearlstein article points 
out, to contain costs of health care or medical care or practically 
anything else in this country. One is to increase competition among 
providers and increase choices on the part of consumers. And the other 
one is to have the Government control the prices. Those are the two 
basic choices.
  In America, if I were to try to state a goal that we would hold out 
for ourselves in health care, we would say we want access for all 
Americans to the highest quality care at a lower cost than we are 
presently faced with today.
  So you can contain the costs under either of these two options: 
Competition, choice, markets; or Government. But under the Government 
approach, you simply cannot get the high quality because the only way 
you can get to have more and have better at a lower cost is through 
productivity, doing things better. And Government productivity is an 
oxymoron, two mutually inconsistent words.
  So the only way you can get more productivity and more affordability 
is from competitive markets where consumers have the leverage of 
informed choice. Government price controls simply are not an option.
  Now, the article in the Post points out very succinctly that 
President Clinton last year tried to have it both ways.
  He advocates more choice and more competition, but then he regulates 
the new system that is designed to do it--premium control, fixed 
expenditure budgets, government alliances, employer mandates, 
Government boards and commissions, overlaid on top of what he describes 
as a new functioning market. It does not work.
  The premium controls are gone in most plans. In most of the plans 
that I have seen, the budgets are gone, government alliances are going, 
employer and individual mandates, we hope, are gone.
  So what does that mean? That those of us who advocate competition and 
choice can declare victory and go home? No. No, we cannot. Why? Because 
we cannot get to our new goal unless we also change the Government-run, 
price-controlled system that today in America drives the health care 
costs right here in the current U.S. system.
  Now to understand this, Mr. President, you must understand this: At 
about the same time 30 years ago when the first Canadian Province went 
to universal coverage by creating a single-payer system, the provincial 
government decided they would set fees for the doctors, they would set 
fees for the hospitals, and they would pay the bills. About the same 
time the first Canadian Province did that, a single-payer system in 
Canada, we did the same thing in the United States of America. And 
while Canada now has a government-run, price-controlled system for the 
whole country, we, unfortunately, installed a system only for people 65 
and older, for the disabled, and for welfare dependent low-income 
persons.
  We know that Government program, the Canadian system, in the United 
States as Medicare and Medicaid. The unfortunate thing is that it is 
run in the heart of every community in America. Unfortunately, it is 
surrounded by an American system in every one of these communities. And 
in the American system in each of these communities, the Government 
does not set the fees for the services. The Government does not control 
the prices to be paid.
  So in every community in America today, we have one-fourth of our 
citizens in a Canadian system and three-fourths in an American system.
  So you say, ``What's wrong with it?'' Well, nothing, until about 10 
years ago. So long as the Government paid the same fees for the same 
services for the Canadian system that the employers and private 
insurance companies were paying in the American system, there was no 
problem. No problem. But in 1983, right here on the floor of the 
Senate, we passed something called the Prospective Payment System, and 
we said in the government-run Canadian system we are now going to set 
fixed prices for all the 468 hospital procedures. That meant that the 
Government was going to control prices for the elderly, disabled, and 
low income for all of the hospital procedures. At that point, the 
problems began. Now, the hospitals were only going to make so much 
money for all of these patients.
  So what happened? The doctors saw their patients someplace else and 
they got paid under the second part of the Canadian system, here in 
Medicare called part B. If you put your patient in the hospital, you 
could only get so many dollars from the Government. But if you saw your 
patient somewhere else under part B, you could get as much as you 
wanted. Whatever you charged you got paid. And what happened? The 
hospital payments under part A started to level off and our payments, 
our subsidy payments, under Medicare part B exploded.
  So when the Government froze part B payments in 1985 and 1986, the 
doctors all responded by seeing twice as many patients or doing twice 
as many procedures. That is what happened. So that is the effect of 
price controls in a Government-run system.
  What happens then, let us say you try to see twice as many patients 
or do twice as many procedures. You can get away with that only so long 
and as the Government starts to reduce its payments to you, as compared 
with what your actual costs are. You can make up some part of that by 
doing twice as much, but at some point in time you run out of hours and 
you have to see patients who are not in the Government system.
  So the smart thing is, you see only so many Government patients, and 
then you see the people that are in the American system. And then what 
you do with this difference between what it costs you to open your 
doors and see people and what the Government will pay you, you take 
that difference and you add that to the bills of the American system 
patients that you see. And that is what has been going on.
  Doctors will see the one-fourth of their patients in the Government 
system at 59 percent of what they get for other patients, which is what 
the Government pays the doctors, and they pay the hospitals about 71 
percent. As a result, the doctor and the hospital take that difference 
and try to put it over on their private-paying patients.
  So when we in the Government decide we are going to save Medicare 
money or Medicaid money when we want to get budget savings by cutting 
Medicare and Medicaid, what happens? We make this cost shift even worse 
because we are reducing the payments to the doctors and the hospitals 
and accentuating the shift, where it is possible, over on to the 
private-paid patients.
  Late in the 1980's, all the employers, or many of the employers, 
said, ``Hey, stop. We have had enough of this. It is enough to pay the 
bills for our own people, our own workers. Don't add on everybody 
else's payments on top of it.''
  So since then, we have seen a change. And let me just show you on 
this chart the nature of that change.
  In the 1980's, the payments were roughly the same in both of the 
systems, but clearly starting in the early 1990's, the lines started to 
diverge. And if you follow this line, this is the growth in the cost of 
the Government-run system, just one of them. That is Medicare. And up 
to 1993, it goes up at the rate of about 10 percent and after that it 
is now going up at the rate of 11.5 percent a year.
  Remember, this is a price control system. The growth in expenditures 
is not because we are giving providers 11.5 percent more money. It is 
simply because, in order to see these patients, they are going to do a 
lot more services and procedures, they are going to charge the system 
as much as they possibly can in order to pump money into this system.
  By contrast, what is going on in the American system? Here is the 
private insurance line. That line is starting to come down. Here is the 
Mayo Clinic, which has 1,100 doctors in a huge system, coverage for 
much of America, but providing care for many of Americans. That line, 
since the 1990's, has been averaging about a 3.8-percent-a-year 
increase and in the last 2 years it is less than 1 percent.
  So you see, in the American system where three-fourths of the people 
are, the costs are coming down. But in the Government-run system--the 
one we run for the elderly, the disabled, and the low income--the costs 
are going up even faster, even though our payments to the system may 
not be.
  And so, I tell my colleagues to take a look at this, as we get close 
to the end of health care reform; that if we really want to reform this 
system, one of the essential ingredients is to do something about the 
President's promise that every American could have a private health 
plan that could not be taken away from him.
  It is essential to reform that we end the Canadian system that we are 
running in America--not overnight; allow the people to help us do it. 
But at least give people in our communities the option to get out of 
the Canadian system in their community and into an American system that 
will hold the costs down at a pace as good as the Mayo Clinic to less 
than 1 percent a year.
  Mr. President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Nebraska [Mr. 
Kerrey].
  Mr. KERREY. Mr. President, I have a speech I will give. I just want 
to point out that what the Senator from Minnesota has done with his 
speech, and what I will attempt to do with mine as well, is to refocus 
attention away from this current public question, which is, ``Are we 
going to have a soft trigger, hard trigger--what kind of mandate might 
be in there?''
  I must say, though I find myself arguing against the mandate of 
insurance, what is far more important is whether or not the bill we 
discuss and the bill we debate and the bill we write will reduce the 
regulatory requirements of the Federal Government and give the market 
an opportunity to work. There will be many people who are already 
coming to us asking to be protected from the market, asking to be 
protected in some way, shape, or form. I believe strongly we cannot 
make the mistake of driving initial Government demand into the system 
while simultaneously restricting the supply by protecting people in one 
way, shape, or form. So, far more important to me in this legislation 
the majority leader is drafting right now--far more important than the 
question of a mandate, which I have already indicated I do not like--
far more difficult for me will be the presence of lots of regulations 
that make it difficult for the market to work.

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