[Congressional Record Volume 141, Number 78 (Thursday, May 11, 1995)]
[Senate]
[Pages S6474-S6476]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               THE ASSAULT ON MEDICARE: MYTH AND REALITY

  Mr. KENNEDY. The Republican budget plans in the Senate and House of 
Representatives propose unprecedented cuts in Medicare, some $250 to 
$300 billion over the next 7 years. Cuts of this magnitude will break 
America's contract with the elderly. Millions of senior citizens will 
be forced to go without health care they need. Millions more will have 
to choose between food on the table, adequate heat in the winter, 
paying the rent, and medical care.
  These cuts will also be a heavy blow to the quality of American 
medicine. It will damage hospitals and other health care institutions 
that depend on Medicare and that provide essential care for Americans 
of all ages, not just senior citizens. Progress in medical research and 
training of health professionals depend on the financial stability of 
these institutions. Academic health centers, public hospitals, and 
rural hospitals will bear an especially serious burden if these deep 
cuts are enacted.
  In addition, such cuts will inevitably impose a hidden tax on workers 
and businesses who will face increased costs and higher insurance 
premiums as physicians and hospitals shift even more costs to the 
nonelderly.
  According to recent statistics, Medicare now pays only 64 percent of 
what the private sector pays for comparable physician services. For 
hospital care, the figure is 68 percent. The proposed Republican cuts 
will widen this already ominous gap even farther.
  Because of the current gaps in Medicare, senior citizens already pay 
too much for the health care they need. Elderly Americans pay an 
average of one-fifth of their income to purchase health care, a higher 
proportion than they paid before Medicare was enacted.
  Yet the reason Medicare was enacted in the first place, 30 years ago, 
was to deal with the health care crisis affecting the lives of older 
Americans at that time. How can we care any less about their needs 
today?
  Medicare today does not cover prescription drugs. Its coverage of 
home health care and nursing home care is extremely limited. We go to 
any senior citizen home in America and ask the senior citizens there 
how many of them are paying, say, $50 a month for prescription drugs, 
half the hands will go in the air. If asked how many pay $25 a month or 
more per month for prescription drugs, three-quarters of the hands go 
in the air.
  Looking at what has happened in terms of cost of those prescription 
drugs, which are so necessary for the senior citizens, we find those 
costs have been going right up through the roof. They are absolutely an 
essential part of the needs for our elderly people, and they are not 
included in the Medicare Program, and they are draining down scarce 
resources for retirees and for senior citizens.
  Unlike virtually all private insurance policies, Medicare does not 
have a ceiling on out-of-pocket costs. It does not cover eye care, it 
does not cover foot care, it does not cover dental care. All of those 
are important needs for our senior citizens.
  Yet the Republican budget cuts will ask senior citizens to pay $900 
more a year out of their pockets when the cuts are fully implemented. 
And the Republican tax bill already passed by the House of 
Representatives gives the tax cut of $20,000 to wealthy individuals 
making more than $350,000 a year. That is not right and the American 
people know it.
  The assault on Medicare is based on five myths. Myth No. 1 is that 
deep cuts are needed to save Medicare from bankruptcy. The hypocrisy of 
this claim is astonishing. A few weeks ago, the House Republicans 
included a provision in their tax bill to take $90 billion out of the 
Medicare hospital insurance trust fund over the next 10 years. We did 
not hear a word then about the impending bankruptcy of Medicare. They 
took that amount of money out of the Medicare trust funds. They did not 
have to unless they were interested in increasing the tax reductions 
for the wealthiest individuals, but they took that out of the Medicare 
trust funds.
  Now they are talking about how the Medicare fund itself is facing 
financial difficulties, when just 3 weeks ago they took $90 billion out 
of there to use it for tax cuts for the wealthiest individuals.
  It is true that an April 3 report of the Medicare trustees projects 
that the Medicare hospital insurance trust funds will run out of money 
by the year 2002. Few, if any, Republicans will be talking about deep 
Medicare cuts to cure that problem if they did not also need such cuts 
to finance their tax cut for the wealthy.
  As the Medicare trustees themselves noted in their report, modest 
adjustments can keep Medicare solvent for 
[[Page S6475]] an additional decade--plenty of time to find fair 
solutions for the longer term. Similar projections of Medicare 
insolvency have been made numerous times in the past. Each time, 
adjustments enacted by Congress were able to deal with the problem 
without jeopardizing beneficiaries, and we can do the same again.
  For example, an estimated 20 percent of all Medicare hospitalizations 
could be avoided with better preventive services, and more timely 
primary and outpatient care. As much as 10 percent of all Medicare 
expenditures may be due to fraud, and that could be reduced 
substantially by the better certification procedures. This has been 
shown by the hearings that have been held by Senator Cohen of Maine 
with a series of recommendations which, fully implemented, would 
stabilize the Medicare trust fund.
  The message is clear: We do not have to destroy Medicare in order to 
save it. The American people understand that basic point, and Congress 
should recognize it, too.
  Myth No. 2 is that the Republican budget proposal is not a cut, 
because the total amount of spending will continue to grow. In fact, 
the Republican plan calls for spending $250 billion less on Medicare 
than the Congressional Budget Office says is necessary to maintain the 
current level of services to beneficiaries.
  Every household in America knows that if the cost of rent and 
utilities goes up and income stays the same, there is a real cut in 
your standard of living. If Medicare pays $80 toward the cost of your 
visit to a doctor in 1995 and the same $80 in 1996, but his fee goes up 
by $20, the value of your Medicare protection is cut by $20. Every 
senior citizen understands that.
  The irony is that our Republican colleagues accept this argument when 
they talk about defense expenditures. They know that defense is being 
cut if funds increase more slowly than inflation. Our colleagues should 
apply the same accounting rules to the needs of senior citizens as they 
do the purchase of guns and tanks.
  Myth No. 3 is that Medicare is different from Social Security and is 
an entitlement less deserving of protection. In fact, the distinction 
between Medicare and Social Security is false because Medicare is a 
part of Social Security.
  Like Social Security, Medicare is a compact between the Government 
and the people. It says, ``Pay into the trust fund during your working 
years and we will guarantee decent health care in your old age.'' Any 
elderly American who has been hospitalized or suffers from a serious 
chronic illness knows there is no security without Medicare. The cost 
of illness is too high. A week in intensive care can cost more than a 
total yearly income of most senior citizens. Low- and moderate-income 
elderly will suffer the most from Medicare cuts. Eighty-three percent 
of all Medicare spending is for older Americans with annual incomes 
below $25,000. Two-thirds is for those with incomes below $15,000.
  Imagine, average income of $15,000 and trying to make ends meet when 
a person fought in the world wars of this country, has been a part of 
the whole building of the American economy, sacrificed to bring up 
children, and is barely making it at $15,000, and then there are the 
important health care needs to be attended to that are no fault of your 
own. Those are the people that we are talking about that are going to 
be adversely impacted with these cuts.
  When the Republicans tried to cut Social Security in the 1980's, the 
American people said, ``No,'' and they will say no to these equally 
damaging proposals to cut Medicare in the 1990's.
  Myth No. 4 is that Medicare costs can be cut by encouraging seniors 
to join managed care. True, it can help bring medical costs under 
control in the long run. Enrollment by senior citizens in managed care 
is already increasing rapidly. It is up by 75 percent since 1990, but 
no serious analyst believes that increased enrollment in managed care 
will substantially reduce Medicare expenditures in the timeframe of the 
proposed Republican cut. In fact, according to the General Accounting 
Office, Medicare is now actually losing money on managed care because 
only the healthiest senior citizens tend to enroll in it, leaving 
Medicare left to pay for those more seriously ill.
  The only realistic way to save money in the short term on managed 
care is to penalize senior citizens who refuse to enroll. This option 
has already been suggested by the Republican health task force in the 
House. I say it is wrong to force senior citizens to give up their 
freedom to choose their own doctors and hospitals. It is wrong to 
penalize them financially if they refuse to enroll in managed care.
  I will add, in the debate we had on the health care measures of last 
year, that particular option was preserved for our senior citizens and 
it ought to be preserved in any health care reform.
  Myth No. 5 is that the deep, unilateral cuts in Medicare are 
necessary to balance the budget. As President Clinton told the White 
House Conference on Aging last week, 40 percent of the projected 
increase in Federal spending in coming years will be caused by 
escalating health costs.
  What this Republican budget fails to recognize is that the current 
growth in medical care is a symptom of the underlying program in the 
entire health care, not a defect in Medicare alone. In fact, Medicare 
has done a better job than the private sector in restraining costs in 
recent years.
  Since 1984, Medicare costs have risen at an annual rate of 25 percent 
lower than comparable private health care spending. Slashing Medicare 
unilaterally is no way to balance the budget. It will simply shift the 
costs from the budget of the Federal Government to the budgets of 
senior citizens, their children, and their grandchildren.
  If Medicare is cut in isolation, senior citizens will also face 
greater discrimination from physicians and hospitals, who are less 
willing to accept the elderly as patients, because Medicare 
reimbursements are much lower than the reimbursements available under 
private insurance.
  We know that previous cuts in the Medicare reimbursement have led to 
serious cost-shifting, as physicians and hospitals seek to make up 
their reduced income from Medicare patients by charging higher fees to 
other patients. The result has been higher health care costs and higher 
health insurance premiums for everyone, as cost-shifting becomes a 
significant hidden tax on individuals and businesses.
  The right way to slow Medicare growth is in the context of overall 
health reform that will slow rising health costs in the economy as a 
whole. That is the way to bring Federal health costs under control 
without cutting benefits or shifting costs to working families, 
comprehensive reform, to try to make available to our seniors good 
health care, preventive care programs to provide the services to keep 
people out of the hospitals so they do not go into the high-cost 
facilities, and to try to do something in terms of home care, 
community-based care, which is much more satisfactory for our seniors 
and can be done at considerably less cost. And to build upon the 
nurses, nursing profession, to assist with skilled nursing attention 
some of the needs for our seniors.
  In the context of broad health reform, the special needs of academic 
health centers, rural health centers, inner-city hospitals also can be 
addressed. Deep Medicare cuts alone, by contrast, will undermine the 
availability and quality of care for young and old alike.
  We are talking about the kind and quality of trained health personnel 
that Medicare participates in. We are talking about necessary 
institutions, academic institutions which are the center for much of 
the research that benefits our senior citizens. We are talking about 
diminishing the kinds of research that has to take place in those areas 
as well.
  President Clinton has emphasized he is willing to work for bipartisan 
reform of the health care system, but the Republicans have said no. The 
only bipartisanship they seem to be interested in is the kind that 
says, ``Join us in slashing Medicare.'' That is not the kind of 
bipartisanship the American people want. It is not the kind of 
bipartisanship that senior citizens deserve.
  It is especially telling that Republicans are proposing these harsh 
cuts in Medicare at the same time they support the massive tax cut that 
will disproportionately benefit the richest individuals and 
corporations in our society. The Republican tax plan that has 
[[Page S6476]] already passed the House will reduce Federal revenues by 
$250 billion. Without that tax cut for the wealthy there would be 
virtually no need to cut Medicare in order to achieve a balanced budget 
under their plan. The Senate Budget Resolution reserves $170 billion 
for tax cuts. Without that allocation the Medicare cuts could be 
reduced by two-thirds without any increase in the deficit.
  The arguments used to justify deep cuts in Medicare cannot pass the 
truth-in-labeling test. They will not fool the American people. As the 
ceremonies on V-E Day earlier this week commemorating the end of World 
War II in Europe reminded us, today's senior citizens have stood by 
America in war and peace and America must stand by them now. The senior 
citizens of today are the veterans of the Army, the Navy, the Air 
Force, the Marines, and the hard-working men and women on the home 
front. They pulled us through that terrible war. We cannot pull the rug 
out from under them on Medicare now.
  I urge the Senate to reject these unwise Republican proposals.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BURNS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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