[Congressional Record Volume 141, Number 131 (Monday, August 7, 1995)]
[Senate]
[Pages S11729-S11730]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                MEDICARE

  Mr. WELLSTONE. Mr. President, first of all let me ask unanimous 
consent that the editorial today in the Washington Post entitled 
``Cutting Medicare'' be printed in the Record.
  There being no objection, the editorial was ordered to be printed in 
the Record, as follows:

                            Cutting Medicare

       A new report suggests the congressional goal of cutting 
     Medicare costs by a quarter of a trillion dollars over the 
     next seven years could be even harder to achieve than 
     previously believed. The theory had been that large savings 
     could be had if only the government would begin to manage 
     Medicare the way the private sector has been managing its 
     health care costs in recent years. The commonly cited 
     evidence was that Medicare costs were rising much more 
     rapidly than the health care costs of private employers, 
     which were showing signs of being brought under control. The 
     principal explanation was that Medicare remained essentially 
     an old-style fee-for-service system while the private sector 
     was turning more and more toward some form of managed care.
       But the new study by Urban Institute researchers says that, 
     properly accounted for, Medicare and private sector costs 
     have been rising at pretty much the same speed in recent 
     years. The suggestion is that there aren't large, painless 
     savings available simply by shifting the system by which care 
     is delivered. It's true, the study found, that in the past 
     few years aggregate Medicare costs have been rising faster 
     than the aggregate cost of private insurance. But a major 
     reason has been that Medicare enrollment has been steadily 
     rising--there are more older people in the society--while the 
     number of privately insured has been declining.
       If you look, however, at per capita costs for the same 
     kinds of basic health care services, there's been little to 
     choose between Medicare and private-sector growth rates, the 
     study says. In the private sector there have been some one-
     time-only gains by virtue of shifts to managed care; the 
     private sector is becoming a shrewder buyer of health care. 
     But it isn't clear those gains can be sustained--and Medicare 
     is already a better buyer of health care than the 
     government's reputation might suggest. The government has 
     used its buying power to force down what it pays providers, 
     so that Medicare already pays hospitals less than the cost of 
     treating many Medicare patients. In some respects, the 
     private sector is catching up with cost-cutting steps that 
     Medicare already has taken.
       Just about everyone agrees that (a) there's a need to 
     reduce the rate at which Medicare costs are rising, and (b) 
     there's room for significant reform in the program. And, yes, 
     a shift toward managed care can help. But there isn't a magic 
     wand that can be waved to achieve large and lasting cost cuts 
     painlessly. In the long run, if the government is going to 
     pay appreciably less, the program is likely to provide less 
     or the recipients will have to pay more.

  Mr. WELLSTONE. Mr. President, what the Urban Institute has come out 
with really should not surprise anyone who is a student of health care. 
And what the urban institute has said is that the kind of conventional 
wisdom in Medicare costs have been rising at a faster rate than private 
health insurance costs is simply not true once you look at the capital 
expenditure.
  That is, a matter of fact, what is happening with Medicare which is, 
of course, part of the success of Medicare--that more and more people, 
thank God, live to be 65, and more and more people, thank God, live to 
be 80. That is really what you have to look at.
  So it is not this sort of promise of shifting everything from fee for 
service to managed care and, therefore, reducing the costs, which needs 
to be questioned. 

[[Page S 11730]]

  The conclusion of this editorial is that in the long run, if the 
Government is going to pay appreciably less, the program is likely to 
provide less, or the recipients will have to pay more.
  Mr. President, let me just be clear about this in response to so much 
of what I heard this morning on the floor of the Senate about Medicare.
  The Medicare Program, which passed in 1965, and the Medicaid Program, 
which passed in 1965, made the United States of America a better 
country. And this legislation, this public policy, was a response to 
the real pain of elderly people in our country. Half of the elderly 
population prior to Medicare had no health insurance. It is that 
simple. People are no longer working. They do not have their jobs. So 
they do not have their coverage. In addition, when people are not 
working their employment earnings drop precipitously.
  Today 36 million elderly and disabled Americans, including more than 
630,000 Minnesotans, are protected by Medicare.
  Mr. President, I only have about 8 minutes. But I just want to kind 
of respond to some of what I heard said this morning in one, two, 
three, four fashion.
  First, the concern of my colleagues about the Medicare trust fund and 
the need to finance Medicare would be more credible to me if we were 
not juxtaposing with the $270 billion in cuts in Medicare the $245 
billion of tax cuts for wealthy people. It is a little bit suspicious, 
especially since the vast majority of the tax cuts--some 80 percent--go 
to families with incomes of over $100,000 a year.
  Mr. President, there is an important change being proposed here. As 
opposed to Medicare being a universal health insurance program--that is 
what it has been about for elderly people, senior citizens--now the 
proposal is to have a fixed amount of cash for each Medicare 
beneficiary that they can use to purchase coverage in the marketplace. 
And the difference between the value of that voucher and what happens 
with medical inflation, that needs to be made up by the recipient.
  Mr. President, there is something profoundly wrong with the direction 
we are going in. First of all, understand that what has made this 
program so successful--and it has been a huge success--is that it is 
universal for all citizens 65 years of age and over.
  Understand, second of all, that we are not talking about a high 
income profile. Elderly people pay four times as much out of pocket as 
those 65 years of age and less. Some 75 percent of the Medicare 
expenditures go to families or households with incomes of $25,000 a 
year or less. And I am not even talking about the, roughly speaking, 
$40,000 a year that have to be paid for nursing home expenditures which 
is the catastrophic expenses that so many elderly people have to phase 
in at the end of their lives which wiped out savings.
  Mr. President, the other point that my colleagues did not want to 
make is that while, on the one hand, we have the Medicare per person 
expenditure inflated to rise under 5 percent per year, the private 
health insurance expenditures are slated to go up over 7 percent a 
year. Who makes up the difference? Mr. President, there are some 
problems with this proposal that are really quite profound. And they 
ought to be laid out, and I have yet to hear anybody on the other side 
of the aisle respond adequately.
  No. 1, if you are going to cut $270 billion a year, then quite 
clearly beneficiaries are going to have to pay more, and many cannot 
afford to pay more. In addition, you are going to have, roughly 
speaking, 50 percent of those cuts go in the form of less reimbursement 
for the care givers or for the providers. But, Mr. President, No. 1, 
many elderly people cannot afford to pay more. And, No. 2, in greater 
Minnesota or greater Idaho where 70 or 80 percent of the patient mix 
are elderly people, those hospitals and clinics which have a tough time 
making a go of it right now will go under. That is the case in 
Minnesota. That is the case in rural America.
  This policy will not work. This is slash and burn.
  Third of all, Mr. President, what will happen is it is the same shell 
game. We have talked about this over and over again. I can assure you 
that when the providers can transfer the costs--and they can do that in 
some of the metropolitan areas--they will do so.
  So if the doctors or clinics or hospitals get less in reimbursements 
than the cost of providing care, shifting it to private health 
insurance, premiums go up for employers, who then in turn drop 
employees, and we have more employees dropped from coverage--hardly a 
positive change, hardly a reform for health care.
  Mr. President, we do not know how we are going to finance medical 
education since that right now, much of it, is out of Medicare. What 
happens to our hospitals, our teaching hospitals?
  Mr. President, as a Senator from Minnesota, what happens to my State, 
which is a State which has already reduced much of the fat in the 
system, which has weeded out many of the inefficiencies? We are at rock 
bottom. This slash-and-burn approach will not work for rural Minnesota 
and it will not work for metropolitan Minnesota.
  Mr. President, the fact is we are not talking about reform. If we 
want to talk about reform, I say to my colleagues, do not have the tax 
cuts, $245 billion.
  Second, why are we spending $7 billion more on the Pentagon budget, 
but we are going to cut health care for the elderly people?
  Third, why are we leaving all the subsidies for the oil companies, 
the pharmaceutical companies, the tobacco companies, but we are going 
to cut benefits for Medicare recipients?
  And finally, if you want to have cost containment, do it systemwide. 
Why not get back to health care reform. Why not move forward. This is 
not an effort to take us into the 21st century. This is an effort to 
move us back into the 19th century.
  Systemwide cost containment? Yes. Universal health care coverage? 
Yes. Focus on home-based health care so elderly people and people with 
disabilities can live at home in as near normal circumstance as 
possible with dignity? Yes. Health care reform but with financing for 
medical education? Yes.
  We can have health care reform, colleagues, but this is slash and 
burn. And no set of speeches will be able to ignore that reality.
  And so, Mr. President, this morning was the beginning of the debate. 
I look forward to much more of that debate, but I wish to be crystal 
clear what is at stake here. This is a program which made a huge 
difference in our country. As a Senator from Minnesota, I am going to 
fight very hard to maintain the integrity of this program.
  I yield the floor.
  

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