[Congressional Record Volume 141, Number 133 (Wednesday, August 9, 1995)]
[Senate]
[Pages S11976-S11978]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


               THE UNHOLY ALLIANCE TO DISMANTLE MEDICARE

  Mr. KENNEDY. Mr. President, as Congress prepares for the summer 
recess, it is important for the American public to understand what is 
at stake in the Republican Medicare cuts and who wants those deep cuts 
adopted.
  Medicare is part of Social Security. Without Medicare, no senior 
citizens has retirement security. Medicare is a promise of health 
security for every senior citizen. If Republicans break the promise of 
Medicare, they are breaking the promise of Social Security.
  For the Nation's elderly, this is more than a partisan political 
issue. The vast majority of senior citizens cannot afford to pay more 
for health care. They already pay an average of 21 percent of their 
limited income for Medicare premiums and for health costs that Medicare 
does not cover. Those who are older and sicker pay even more. Senior 
citizens today are paying a higher proportion of their income for 
health care than senior citizens paid before Medicare was enacted. And 
Medicare was enacted because senior citizens were already paying too 
much.
  Paying such a high percentage of income for health care would be a 
heavy burden for almost any part of our population. But is especially 
hard for senior citizens. The median income for elderly households is 
only $17,750. Eighty-three percent of Medicare expenditures are for 
senior citizens with incomes less than $25,000; and almost two-thirds 
are for those with incomes below $15,000.
  Deep cuts in Medicare hurt not only senior citizens, but their 
families as well. Children and grandchildren of senior citizens will 
face unexpected additional serious financial burdens, just at the time 
they are trying to make ends meet for their own families.
  Cuts in Medicare will also damage the overall health care system. The 
system as a whole will suffer because these deep Republican cuts will 
hurt hospitals and other providers, especially rural hospitals, public 
hospitals, and academic health centers.
  The Republican strategy is clear. They will refuse to put anything 
specific on the table until after the recess--and then try to pass it 
quickly before the public realizes what is happening.
  It is wrong to try to slam dunk Medicare through Congress and it will 
not work--because the key elements of the Republican program are 
already clear. First, there will be heavy additional costs for senior 
citizens in the form of 

[[Page S11977]]
higher premiums, higher copayments, and higher deductibles. Second, 
there will be a program of shrinking vouchers to push as many senior 
citizens as possible into private insurance.
  The reasons for the Republican cuts are also clear. They are taking 
$270 billion out of Medicare to pay for $245 billion in tax cuts for 
wealthy individuals and corporations. Despite its success, they still 
see Medicare as a mindless big-government program. They still want to 
dismantle it, as they have for the past 30 years.
  Worst of all, to get their way, Republicans have entered into an 
unholy alliance with private insurance companies, who see immense 
profits for themselves if Medicare is dismantled.
  Two weeks ago a new coalition was formed to try to persuade senior 
citizens to buy into the Republican cuts in Medicare. Its membership 
makes clear that Republican Medicare policy is driven by an unholy 
alliance of right-wing extremists, big businesses who know their tax 
cuts depend on Medicare cuts, and private insurance companies eager to 
get their hands on Medicare.
  The insurance companies in this coalition are of two kinds. They 
include large companies with heavy investments in managed care, and 
they include smaller companies, some of whom are well-known for 
profiteering from abusive practices in the individual insurance market, 
such as ``cherry-picking'' and harsh exclusions for pre-existing 
conditions.
  The American people should be aware of the immense profits that those 
insurance companies can reap if these Medicare cuts are enacted. If all 
senior citizens are pushed into private insurance policies, the premium 
revenues of private insurance companies over the next 7 years will 
increase by a staggering $1.25 trillion. Their profits will increase by 
$38 billion, up by two-thirds from their current level.
  If the number of senior citizens in managed care alone increases to 
just 25 percent of the total from the current level of 8 percent, 
insurance company profits will rise $10.2 billion over the budget 
period.
  During this recess, the Republicans and their allies in the insurance 
industry and corporate America will be conducting a massive campaign of 
disinformation and fear, as they try to convince the American people 
that deep cuts in Medicare are needed to save it. The anti-Medicare 
alliance is wasting its breath and wasting its money. Their greed is 
too transparent for senior citizens to be fooled.
  The American people will not support a program that coerces senior 
citizens into giving up their family doctor. They will not support a 
raid on Medicare to finance tax cuts for wealthy corporations and 
windfall profits for the insurance industry.
  Medicare is a contract between the Government and the people. 
Democrats intend to honor that contract and keep the promise of 
Medicare.
  I ask unanimous consent that an analysis of the membership of the so-
called ``Coalition to Save Medicare'' by Citizen Action be printed in 
the Record, along with a staff analysis of the potential increases in 
revenues and profits of private insurance companies under the 
Republican budget.
  There being no objection, the material was ordered to be printed in 
the Record as follows:

                                               Citizen Action,

                                   Washington, DC, August 3, 1995.

 The ``Coalition To Save Medicare''--It's Really the Coalition To Raid 
                                Medicare

       On Thursday, August 3rd at 10:30 a.m., Speaker of the House 
     Newt Gingrich and Majority Leader of the Senate Bob Dole will 
     address the so-called Coalition to Save Medicare as part of a 
     rally for proposals to cut $270 billion from Medicare over 
     the next seven years.
       But when you scratch the surface of this collection of big 
     corporations and insurance companies and look at the reality 
     behind their nice-sounding rhetoric, their true agenda is 
     revealed--to raid Medicare and the families who depend on it 
     of $270 billion to pay for billions in new corporate tax 
     breaks, loopholes and increased profits.
       Citizen Action has prepared this press background to 
     provide the public and press with information on who is 
     behind the so-called ``Coalition to Save Medicare'' and how 
     the members of this coalition will benefit by cutting and 
     gutting Medicare.
       The Coalition to raid Medicare--
       What they really think about Medicare, in their own words.
       ``There are several reasons the Chamber is opposed to 
     [Medicare]. One of these is that social security medicare is 
     not needed . . . The national Chamber recommends that 
     [Medicare] and similar proposals be rejected.''--Statement of 
     Karl Schlotterbeck for the U.S. Chamber of Commerce on H.R. 
     3920, Medicare Care for the Aged, January 22, 1964, U.S. 
     Congress, House Committee on Ways and Means.
       ``It is the recommendation of the National Association of 
     Manufacturers that Congress reject any proposals to establish 
     compulsory medical care for the aged under the social 
     security system.''--Statement from the National Association 
     of Manufacturers on Health Services for the Aged Under the 
     Social Security Insurance System, 87th Congress, 1st Session, 
     1961, U.S. Congress, House Committee on Ways and Means.
       ``Reform entails phasing out Medicare for those young 
     enough to invest privately and to accumulate enough funds to 
     provide for their own medical care upon retirement.''
       ``The only viable long-term solution to the Medicare crisis 
     lies in encouraging all Americans to save today for their 
     future health care needs. Only private solutions can reduce 
     the future Medicare cost burden. . . .''--Citizens for a 
     Sound Economy Economic Perspective: Medicare's Self-
     Destruction, January 22, 1993.
       The Coalition to Raid Medicare . . . for tax breaks and 
     higher profits.
       A review of the organizations which make up the Coalition 
     to Save Medicare reveals that this is really a Coalition to 
     Raid Medicare of $270 billion over 7 years in order to pay 
     for billions in tax breaks for corporations and increased 
     profits for insurance companies.
       Much of the $148.5 billion in tax breaks for corporations 
     will go to members of the National Association of 
     Manufacturers and the U.S. Chamber of Commerce.
       In the 1980's, before Congress passed tax reform in 1986, 
     many members of the National Association of Manufacturers and 
     the U.S. Chamber of Commerce paid zero federal income tax 
     because of tax breaks, shelters and loopholes. Many of these 
     companies could return to the days when they paid nothing 
     even in years of record profits . . . if the $270 billion in 
     cuts to Medicare proposed by Gingrich and Dole are enacted 
     (Citizens for Tax Justice, Return of the No Tax Corporation, 
     1995).
       Most of the 12,500 corporations which belong to the 
     National Association of Manufacturers and the 215,000 
     businesses affiliated with the U.S. Chamber of Commerce will 
     benefit greatly from the corporate tax breaks and loopholes 
     promised them by Gingrich and Dole in return for campaign 
     contributions, and paid for by devastating cuts to Medicare. 
     (Amounts based on estimates by the Joint Tax Committee of the 
     U.S. Congress)
       Repeal of the corporate alternative minimum tax--cost $22.1 
     billion over 7 years.
       Increased Corporate Write-Offs and Deductions--cost $47.8 
     billion over 7 years.
       Capital Gains Tax Breaks, Indexed to Inflation--cost $78.6 
     billion over 7 years.
       Total: $148.5 billion over 7 years.
       The Alliance for Managed Care, Healthcare Leadership 
     Council, and the Council for Affordable Health Insurance will 
     be the beneficiaries of Medicare provisions which compel 
     millions of seniors to enroll in managed care networks or 
     face higher out of pocket costs. This could mean billions in 
     higher profits for these companies.
       The Alliance for Managed Care is made up of four of the 
     largest managed care companies in the U.S.--Atena, CIGNA, 
     Prudential and MetraHealth. The Healthcare Leadership Council 
     is made up of the country's largest hospital corporations, 
     insurance companies and pharmaceutical companies. The Council 
     for Affordable Health Insurance is made up of some two dozen 
     medium sized insurance companies.
       As large and mid-sized corporations, the members of the 
     Alliance for Managed Care, the Healthcare Leadership Council 
     and the Council for Affordable Health Insurance will also 
     share in the $148.5 billion in new corporate tax breaks.
       Why Would Newt Gingrich and Bob Dole Help the Coalition's 
     Big Corporations and Insurance Companies Raid Medicare?
       Since 1989 through the first quarter of 1995, the major 
     PACs affiliated with the Coalition to Raid Medicare have 
     given thousands of dollars to fuel the campaigns of Newt 
     Gingrich and Bob Dole:
       The major PACs affiliated with the Coalition to Raid 
     Medicare have given $257,351 to Newt Gingrich since 1/89.
       The major PACs affiliated with the Coalition to Raid 
     Medicare have given $222,600 to Bob Dole since 1/89.
       The major PACs affiliated with the Coalition to Raid 
     Medicare have given a whopping $18,347,830 to Republican 
     members of Congress since 1/89, compared to $14,041,861 to 
     Democratic members over the same period.
       These numbers vastly understate the amount of campaign cash 
     contributed by the Coalition to Raid Medicare to Gingrich and 
     Dole because there are literally thousands of companies and 
     individuals associated with NAM and the U.S. Chamber of 
     Commerce that are not included in the amounts above.
       Also not counted are thousands in contributions to GOPAC--
     Newt Gingrich's leadership PAC, and to Bob Dole's leadership 
     PAC and presidential campaign.
       The Coalition to save Medicare--but not for senior 
     citizens.
       Given that the vast majority of the 35 million Americans 
     who depend on Medicare today are senior citizens, it may come 
     as a surprise that the Coalition to Raid Medicare 

[[Page S11978]]
     has only one member that purports to advocate for the interests of 
     senior citizens--the Seniors Coalition. The Coalition to Raid 
     Medicare has even named Jake Hansen, chief lobbyist for the 
     Seniors Coalition, a cochair of the group.
       But the seniors Coalition is a sham . . . here's the 
     reality behind the Seniors Coalition and Jake Hansen:
       The Seniors Coalition--Expert Advocates for the Interests 
     of Seniors?
       ``Hansen confirmed that the coalition's three-member board 
     was still largely made up of experts in direct mail fund-
     raising: two board members are experts in direct mail fund-
     raising, the third in printing'' (Milwaukee Journal, May 16, 
     1993).
       The Seniors Coalition was founded in 1989 by arch-
     conservative direct mail guru Richard Viguerie and Dan and 
     Fay Alexander, a couple under investigation by the U.S. 
     Attorney, the U.S. Postal Inspection Service and the FBI to 
     determine if they used ``the non-profit, tax exempt group for 
     their personal gain.''
       The Fay's teenage daughter Susan Alexander served as 
     president of the Seniors Coalition for its first three years 
     because, according to the New York Times, ``Mr. Alexander 
     said this was because it was hard to find outsiders of any 
     stature to serve on the board in view of his criminal 
     record'' (New York Times, Nov. 12, 1992 and National Journal, 
     Sept. 4, 1993).
       The Seniors Coalition has been investigated by the Attorney 
     General of New York as part of a network of organizations 
     involved in ``a pattern of fraud and abuse,'' (New York 
     Times, Nov. 12, 1992). The organization was fined by the 
     Pennsylvania State Attorney General and forced to contribute 
     $9,000 to a legitimate senior's charity organization, the 
     Pennsylvania Alzheimer's Association (PR Newswire, Oct. 30, 
     1993). The Seniors Coalition is barred from soliciting in the 
     state of Maryland for failing to disclose financial data as 
     required by law (Washington Post, Oct. 6, 1992).
       Hansen was hired in 1990 as the organization's lobbyist 
     after serving as, among other things, director of the NCPAC-
     related ``Anybody But Church'' effort which targeted pro-
     senior Senator Frank Church for defeat in 1980. Hansen later 
     directed a coalition which opposed the ``Catastrophic 
     Medicare Coverage Act of 1988'' and whose scare tactics 
     included dire direct mail warnings that Medicare 
     beneficiaries would pay higher taxes to cover AIDS patients 
     under Medicare, a claim he later was forced to admit was a 
     gross exaggeration (St. Petersburg Times, ``Scare Tactics 
     Used Against Catastrophic Coverage Law,'' Oct. 22, 1989).
       A few things you should know about who else is behind the 
     Coalition to raid Medicare.


                      citizens for a sound economy

       In addition to being a longtime foe of Medicare (see page 
     5) and one of six members of a 1993 anti-health care reform 
     coalition called Citizens Against Rationing Health (CARH), 
     among Citizens for a Sound Economy's most generous backers is 
     David Koch, chairman of CSE's foundation, and cochairman of 
     Koch Industries, ``the nation's second largest, privately 
     held company, with its hands in everything from refining to 
     ranching'' and ``the silent giant in the oil and gas 
     industry'' (Houston Chronicle, Dec. 27, 1992). Between 1986 
     and 1990, the three charitable foundations controlled by Koch 
     Industries contributed $4.8 million to CSE (Milwaukee 
     Journal, May 16, 1992).
       The Board of Directors is made up largely of corporate CEOs 
     and conservative activists, suggesting that the 
     organization's true name should be Corporations for a Sound 
     Economy. Koch Industries and the rest of CSE's board stand to 
     gain millions in new tax breaks and loopholes at the expense 
     of cuts to projected Medicare spending.


                        national taxpayers union

       In 1993, the National Taxpayers Union was an integral part 
     of a coalition called ``Citizens Against Rationing Health 
     (CARH), a far right organization whose mission was to defeat 
     health care reform, and affiliated with arch-conservative 
     Floyd Brown (creator of the infamous Willie Horton TV spot in 
     the 1988 Presidential race) and Richard Viguerie, the far-
     right direct mail guru (see Seniors Coalition, above).


                council for affordable health insurance

       The Council for Affordable Health Insurance is made up of 
     some two dozen small and mid-size insurance companies who are 
     responsible for the worst type of practices that rob 
     Americans of health care security, including: cherry-picking, 
     dropped coverage, exclusion for pre-existing conditions, 
     redlining, refused claims and exorbitant rate hikes. A chief 
     goal of the Council for Affordable Health Insurance: 
     ``Preserving medical underwriting and eliminating proposals 
     that would force insurers to cover all that seek coverage'' 
     (Health Manager's Update, April 1, 1992).
       The history of the member companies of the Council for 
     Affordable Health Insurance does not suggest they are well-
     prepared to be part of an effort to ``preserve and strengthen 
     Medicare'' as part of the Coalition to ``Save'' Medicare, as 
     some examples demonstrate:
       The Golden Rule Insurance Co. of Lawrenceville, IL sought 
     an annual rate hike of 86 percent in one year for individual 
     major medical coverage (Indianapolis Business Journal, April 
     10, 1989).
       The Life of American Insurance Co. of Houston, TX was rated 
     one of the 15 worst insurance companies in Texas for two 
     years running (Houston Business Journal, May 20, 1991).
       The American Chambers Life Insurance Co. of Naperville, IL 
     dropped coverage in 1993 for infants stricken with congenital 
     abnormalities (St. Louis Post Dispatch, Feb. 28, 1993).
       The GEM Insurance Co. of St. Lake City, UT has repeatedly 
     denied coverage for preexisting conditions, which millions of 
     seniors citizens on Medicare will have (BNA Pensions & 
     Benefits Daily, April 13, 1992).
                                                                    ____

    Fact Sheet--Insurance Industry-Republican Alliance to Dismantle 
                    Medicare: A Question of Profits

             (From the Office of Senator Edward M. Kennedy)

       Powerful special interests with a stake in the Republican 
     plan to cut Medicare and force senior citizens into private 
     insurance recently formed the so-called ``Coalition to Save 
     Medicare.'' Two major groups of insurers are among the 
     charter members: the Alliance for Managed Care and the 
     Council for Affordable Health Insurance. The Alliance for 
     Managed Care consists of the four largest insurance companies 
     in the U.S.--Aetna, CIGNA, Prudential, and Metrahealth, all 
     with major investments in managed care. The Council for 
     Affordable Health Insurance is composed of small and mid-
     sized insurance companies who sell group and individual 
     insurance policies. Its membership includes companies such as 
     the Golden Rule Insurance Company, which are well-known for 
     profiting from abusive practices in the individual insurance 
     market, such as ``cherry-picking'' and the use of broad pre-
     existing condition exclusions.
     Insurance Company Revenues and profits
       If all senior citizens leave conventional Medicare to buy 
     private insurance polices, insurance company premium revenue 
     would increase by $1.25 trillion over the next seven years--a 
     66-percent increase.\1\ If 50 percent buy private insurance 
     polices, the revenue increase would be $625 billion.
       Private insurance company profits would increase by $38 
     billion over the budget period if all senior citizens join 
     private insurance plans. Profits would increase by $19 
     billion if 50 percent join.\2\
       If insurance companies achieve the same return as the 
     Golden Rule Insurance Company is able to reach on its 
     individual insurance business, insurance industry profits 
     would increase by $76 billion if all senior citizens join, an 
     increase of 133 percent.\3\
     Profits for Managed Care Insurance Companies Like Those in 
         the Alliance for Managed Care
       If the number of Medicare beneficiaries enrolled in managed 
     care increases to 25 percent of all beneficiaries, profits of 
     managed care companies would rise by $10.2 billion over the 
     budget period.\4\
       If the number of Medicare beneficiaries enrolled in managed 
     care increases to 50 percent, profits of managed care 
     companies would rise by $26.3 billion over the budget period.
     Profits for Companies Offering Medical Savings Accounts
       The Golden Rule Insurance Company is an industry leader in 
     promoting medical savings accounts. Republican plans include 
     MSAs as an option for Medicare beneficiaries.
       If 10 percent of all Medicare beneficiaries enroll in 
     catastrophic plans with MSAs, the profits to private insurers 
     such as Golden Rule would rise by $6.1 billion over seven 
     years.\5\
       If 40 percent of all Medicare beneficiaries enroll in 
     catastrophic plans with MSAs, the profits to private insurers 
     would rise by $24.5 billion annually.


                               footnotes

     \1\Projected Medicare spending under the Republican 
     Conference Report, 1996-2002, less projected spending on 
     Medicare enrollees already enrolled in HMOs (CBO March 
     Baseline). Current annual premiums of private insurance 
     companies from HIAA Sourcebook of Health Insurance Data, 
     1994, trended forward.
     \2\Assumes insurance industry target profit figure of 3% of 
     revenues (American Academy of Actuaries, Testimony before the 
     Subcommittee on Commerce, Consumer Protection, and 
     Competitiveness, House Committee on Energy and Commerce, 
     November 16, 1993.)
     \3\Golden Rule has a six percent profit margin (Wall Street 
     Journal, September 20, 1994).
     \4\Assumes 5.1% profit margin for HMOs with substantial 
     Medicare enrollment (greater than 20%, Prospective Payment 
     Commission, unpublished 1993 data). If the profit margin were 
     that typical of all HMOs (2.5%), additional profits would be 
     $5 billion.
     \5\Assumes premium of $3,700 per year (``Medical Savings 
     Accounts for Medicare Beneficiaries,'' Jack Rodgers of Price 
     Waterhouse and James W. Mays of the Actuarial Research 
     Corporation for the Henry J. Kaiser Family Foundation, August 
     1995) and Golden Rule profit margin.

  Mr. KENNEDY. Mr. President, I yield the floor and suggest the absence 
of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. CRAIG. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________