[Congressional Record Volume 140, Number 128 (Wednesday, September 14, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 14, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
         CONCERN OVER MAINSTREAM COALITION'S HEALTH CARE POLICY

  Mr. MOYNIHAN. Mr. President, the mainstream coalition is to be 
commended for its relentless efforts to construct a bipartisan health 
care reform bill. The coalition began its work in the Finance Committee 
and did so with my encouragement.
  But let me note, Mr. President, that there are now only 15 working 
days before the October 7 target date for the sine die adjournment of 
the Senate. And all that Senators have seen to date is a 31-page 
outline called the ``Mainstream Coalition Proposed Agreement.''
  There is, this September 14, no mainstream bill, and there is no CBO 
analysis, not even preliminary CBO cost estimates, of the mainstream 
proposal.
  We are told the deficit will be reduced by $100 billion over the next 
10 years.
  There will be subsidies for families with incomes up to 200 percent 
of poverty, and for pregnant women and children with incomes up to 240 
percent of poverty. When fully phased in by the year 2004, and if fully 
funded, about 75 million persons would be receiving subsidies.
  Mr. President, the Finance Committee spent 6 months working on a 
bill, and the Congressional Budget Office determined that the bill that 
the committee reported on August 2 was fully paid for and, indeed, 
would produce a modest deficit reduction of $13 billion.
  Members of the Finance Committee know that was not an easy 
achievement.
  I am concerned that as this body has attempted to repair the health 
care financing system it has become apparent that there is an 
unbridgeable gap between what we wish to provide and what we may be 
willing to pay for. The likelihood of an imbalance in spending and 
revenue flows will increase as Senators try to craft a sweeping reform 
plan at the 11th hour on the floor of the Senate without benefit of 
committee deliberation.
  Mr. President, as chairman of the Senate Finance Committee I am 
concerned about the implications of the mainstream coalition's proposal 
for national health policy, particularly its lack of support for 
research and medical education.
  And, Mr. President, as the senior Senator from New York I am 
concerned about the implications of the mainstream coalition's proposal 
for the New York State Health Care System.
  The Mainstream Coalition proposal would be a step backward for New 
York and other progressive states that have already taken actions to 
expand coverage and contain costs.
  For example, New York now has an all-payer hospital reimbursement 
system established more than 10 years ago. This system, which regulates 
hospital rates and helps cover the hospital costs of the uninsured, 
makes health care accessible and affordable for millions of New 
Yorkers, and protects our hospitals from the financial burden of 
charity care and other uncompensated care.
  The New York System is now under a barrage of lawsuits which contend 
that Federal ERISA law prevents States from regulating hospital 
charges. These lawsuits do not assert that there is anything 
necessarily wrong with the way New York is regulating rates, just that 
ERISA prevents States from regulating hospital rates at all because it 
infringes on employer sponsored health plans.
  In my judgment this conclusion follows only from a strained reading 
of the statute. Without a clarification that ERISA was never intended 
to prevent this type of State regulation, these lawsuits are likely to 
bring the New York System crashing down. As a result, millions of New 
Yorkers would lose coverage or see their insurance premiums skyrocket.
  The mainstream proposal, unlike Senator Mitchell's proposal, provides 
neither a waiver from nor a clarification of the ERISA law. In a 
September 12, 1994, letter to me, New York's Governor Mario Cuomo put 
his reaction to the mainstream proposal simply and, I am afraid, 
accurately: ``We will have chaos.''
  The failure to enact national reform should not be allowed to prevent 
States from moving ahead with their own reforms. In fact, in the 
absence of universal coverage you must allow State flexibility, 
fostered by ERISA waivers, so that States can equitably finance 
uncompensated care.
  At this late date the mainstream coalition's proposal raises more 
questions than it answers.
  How will the subsidies be financed?
  How will deficit reduction be financed?
  And if, under the fail-safe mechanism, deficit reduction takes 
precedence over subsidies will there be any subsidies at all?
  And if there are no subsidies, what will happen to insurance coverage 
and the flow of payments to providers?
  Is it possible that cuts in Medicare and Medicaid will just be used 
to finance deficit reduction, but will not improve the Health Care 
System?
  And what do we know about those Medicare and Medicaid cuts?
  The mainstream document specifies neither the level nor the substance 
of the proposed Medicare cuts. Will the mainstream cuts directly affect 
Medicare beneficiaries by increasing co-insurance payments and 
deductibles? Or will they indirectly affect beneficiaries by limiting 
payments to providers and potentially affecting access to providers? 
And how will these cuts affect the financial stability of hospitals?
  The answers to these questions are important, affecting the health 
care received by 36 million Medicare beneficiaries. Yet today--this 
September 14--there are no answers.
  And what about the Medicaid Program cuts? The document issued by the 
mainstream coalition does not spell out the cuts that would be made in 
Medicaid. But it is difficult to imagine how a reform proposal that 
includes Federal subsidies for low-income families could go forward 
without any reductions in current Medicaid spending. The question is, 
what will these Medicaid cuts be, how big will they be, and how will 
they affect the ability of our 50 States to provide care for low-income 
individuals and families?
  The Finance Committee bill had about $700 billion in Medicaid savings 
over 10 years. These reductions were phased in, and were in the context 
of a fully funded low-income subsidy program and the integration of 
most of the Medicaid population into a reformed health care system.
  If the Senate should be asked to vote on the mainstream proposal some 
days from now, Senators may be voting on significant cuts to Medicaid 
that they may have had no opportunity to study. This is not the way to 
adopt policies that will affect the more than 11 percent of Americans 
who receive their health care through the Medicaid Program. New York 
hospitals that serve those with low income--like hospitals in every 
other State--are rightly opposed to the mainstream's Medicaid cuts 
because they have no accompanying guarantee of universal coverage or 
even a guaranteed subsidy program.
  The mainstream proposal makes no mention of academic health centers 
and graduate medical centers. As such, it appears to be a worst-case 
scenario for academic health centers and teaching hospitals.
  It is silent on a premium tax dedicated to academic health centers 
and teaching hospitals, thus providing no offset for losses of private 
funds for teaching hospitals resulting from increasing competition.

  It makes Medicaid and Medicare cuts that would likely further reduce 
payments to teaching hospitals.
  It assures continued large numbers of uninsured individuals, many of 
whom will receive uncompensated care at teaching hospitals.
  It would force teaching hospitals to shift the cost of the unfunded 
Medicare Graduate Medical Education balance onto other private payers, 
thereby further disadvantaging teaching hospitals, and threatening the 
quality and accessibility of services provided to Medicare 
beneficiaries.
  The mainstream proposal would tax employer-provided health care plans 
that cost more than 110 percent of the average-priced plan in the area. 
The unavoidable result is that employees who have bargained for high-
quality health care in exchange for wage concessions will see their 
overall after tax compensation reduced. Employers will either reduce 
cash wages to offset the higher cost to the employer of providing 
coverage, or substitute taxable wages for previously untaxed health 
benefits.
  The stated goal of the mainstream tax on health benefits is to create 
incentives for employers and employees to shift to ``more efficient'' 
health care plans. However, many health plans are more expensive than 
average for reasons other than inefficiency. For example, plans that 
cover employees in certain industries--such as mining--or in small 
companies that happen to employ 1 or 2 workers with a serious illness 
may be more expensive than average not because delivery systems are 
inefficient, but because employees in these firms--by necessity--
consume more health care.
  So rather than taxing ``Cadillac'' health coverage, the tax often 
will act as a wage tax on workers who have bargained for high-quality 
care, or who work in high-risk industries or in small companies with a 
few sick employees.
  Preliminary assessments of the mainstream proposal have been made by 
two respected health organizations in New York State, the Health 
Association of New York State [HANYS] and the Greater New York Hospital 
Association [GNYHA]. Their analyses highlight the difficulty of trying 
to restructure the flow of payments to health care providers.
  The Greater New York Hospital Association makes the point that 
disproportionate share hospital [DSH] payments ``should only be reduced 
on a hospital-specific basis commensurate with a dollar-for-dollar 
increase in revenue associated with newly insured patients.''
  And there-in lies the dilemma. While cuts in Medicare and Medicaid 
payments made in order to fund subsidies will reduce the flow of money 
to health care providers, there is no assurance that the increase in 
revenues, associated with newly insured patients, will offset the loss 
of these funds precisely where the loss actually occurs.
  In fact, the Healthcare Association of New York State estimates that 
under the mainstream proposal revenues for New York State hospitals 
will be reduced by $8.1 billion for the period 1996-2001, even after 
accounting for the increase in revenues from newly insured patients. 
For hospitals in New York City, net payments would be reduced by $5.9 
billion.
  The Healthcare Association argues that under the coalition plan 
``Persons qualifying for subsidies may find it difficult to meet their 
part of the payment. Meanwhile, the support for uncompensated care * * 
* will be reduced by two-thirds.''
  In its evaluation of the Coalition proposal, the Greater New York 
Hospital Association notes that ``Since New York City is the center of 
several public health epidemics, such as AIDS and tuberculosis, the 
average health care costs of its residents is higher than in other 
areas.''
  In addition, the Hospital Association argues that ``Since the poverty 
rate * * * is not adjusted for regional cost-of-living differences,'' 
too few New Yorkers would qualify for subsidies.
  Based on the work of Dr. Dutch Leonard and Monica Friar of the 
Kennedy School of Government, the number of New Yorkers with below-
poverty income would reach 3.3 million or 18.1 percent of the New York 
population, if the poverty rate were adjusted for State differences in 
the cost of living. This is 500,000 more than under the official, 
unadjusted rate.
  The Hospital Association also notes that New York State guarantees to 
its residents ``universal access to state-of-the-art hospital inpatient 
and outpatient care.'' The Association argues that ``The mainstream 
coalition bill would undercut that guarantee by drastically cutting 
Federal Medicaid and Medicare disproportionate share funds. Moreover, 
by not granting an ERISA waiver, the bill would eliminate the only 
viable mechanism that the State has found * * * to raise money for 
hospital bad debt and charity care.''
  With these points in mind the Greater New York Hospital Association 
suggests that proposals such as the mainstream's ``begin to resemble 
little more than deficit reduction bills in the guise of health care 
reform legislation.''
  The mainstream coalition admirably wants to achieve deficit reduction 
of $100 billion. It does so by cutting Medicare and Medicaid. Last 
year, the Omnibus Budget Reconciliation Act of 1993 reduced Medicare 
spending by $56 billion and Medicaid spending by $7 billion for fiscal 
years 1994-98. I believe those cuts represented necessary reductions in 
spending to achieve the deficit reduction goal.
  Deficit reduction was last year's goal and we did achieve it. Health 
care reform is this year's goal. For health care reform legislation I 
have had one clear guideline in mind at every stage of our 
deliberations: the first principle of the Hippocratic oath ``primum non 
nocere''--First Do No Harm. In my view, the mainstream proposal fails 
to meet that elemental standard, Mr. President, and therefore I cannot 
support it.

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