[Congressional Record Volume 141, Number 161 (Wednesday, October 18, 1995)]
[House]
[Pages H10299-H10300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  MEDICARE REFORM LEGISLATION BENEFITING INSURANCE COMPANIES, NOT OUR 
                                SENIORS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from California [Ms. Pelosi] is recognized for 5 minutes.
  Ms. PELOSI. Mr. Speaker, tonight I rise to amplify the voices of my 
constituents in two ways. First of all, I am delivering 10,783 
petitions gathered by community leaders in my district in opposition to 
the Republican Medicare legislation. These petitions say yes to 
Medicare and no to the $270 billion Republican cut in the Medicare 
Program in order to pay for tax cuts for corporations and the 
wealthiest of Americans.
  In addition to that, Mr. Speaker, I have a letter from one of my 
constituents who is a physician who very eloquently and clearly 
presents the case for many physicians who oppose the actions of the 
AMA.
  I have had serious objections to the substance of the Republican 
proposal and the process. By blanking out statements from my 
constituents and giving access to the AMA I think a disservice was paid 
to the Americans who depend on Medicare. I was particularly appalled by 
the waltzing in of the AMA and the golden handshake they received as 
opposed to the handcuffs the senior citizens received when they tried 
to make their concerns known.
  My constituents, Dr. Levine, says as follows, and in the interests of 
time, Mr. Speaker, I will place this entire letter in the Record.
  The letter referred to is as follows:

                                               September 27, 1995.
     FAX memo to: Congressperson Nancy Pelosi.
     Re Medicare ``reform'' legislation.
       Dear Congressperson Pelosi. I am extremely concerned as the 
     current Republican-initiated Medicare reform package goes 
     through Congress, and I wanted to send you this letter in 
     order to give you my perspective on the proposed legislation 
     as a practicing physician in your district.
       I have received literature recently from the AMA urging my 
     support of the package, because they believe it to be 
     ``doctor friendly.'' Certainly, certain portions of the 
     proposed legislation, such as long-overdue antitrust reforms, 
     etc., appear to be doctor-friendly. But I believe that these 
     colleagues of mine in organized medicine are fundamentally in 
     error. Their error derives from the relative lack of many 
     officials in organized Medicine with actual experience with 
     for-profit managed care. If these colleagues of mine were 
     sufficiently so experienced, they would see the Republican 
     proposals for what they really are--a scheme for forcing 
     virtually all Medicare recipients into managed care.
       I am not saying that managed care in principle is bad: I 
     would be the first to agree that many of its goals in 
     principle are wonderful. But let me share with you the 
     reality of managed care in actual practice. First, insurance 
     companies in California have been making a transition to for-
     profit managed care plans. This is because the profits they 
     derive from these products are enormous. Basically, what 
     managed care boils down to in practice is that the insurance 
     company evades the basic job of an insurance company, which 
     is assuming risk. Rather, in managed care, the insurance 
     company simply skims off a healthy percentage of the premium 
     dollar up front, and shifts all the financial risk of 
     providing health care to the physicians and hospitals with 
     which they contract. The insurance company has no downside 
     financial risk, and in California organizations such as 
     ``Wellpoint,'' into which  

[[Page H 10300]]

     Blue Cross would like to convert all of its business, 
     acknowledge that as much as \1/3\ of the premium dollar goes 
     to ``administration'' rather than patient care.
       Faced with a diminishing piece of the premium dollar pie, 
     physicians and hospitals dependent upon managed care dollars 
     for survival are constrained to deny care to those in need. 
     Primary care physicians are compensated by ``capitation,'' 
     meaning that they receive only a fixed monthly fee for caring 
     for each patient. This fact has resulted in California in a 
     lot more medicine being practiced by telephone. In addition, 
     in many plans, a significant percentage of the primary care 
     physician's capitation payment is withheld, with all or a 
     portion of the sum returned to the physician at year's end, 
     depending upon the ``loss experience'' of the group. And what 
     ``loss experience'' means is simply that the more patients 
     referred for tests, consultations, surgery, etc., the greater 
     the loss experience. So there are powerful financial 
     incentives built into the system for primary care physicians 
     who act as ``gatekeepers'' for referrals, to deny care. In 
     addition, managed care bureaucracies keep track of each 
     primary care physician's financial track record, and have the 
     right to terminate a physician whose loss experience is not 
     to their liking. Managed care organizations are under no 
     legal obligation to inform consumers of these facts when 
     giving them a sales pitch to join an HMO. And if you look at 
     the situation here in California, insurance companies have 
     been aggressively advertising Medicare HMO products with 
     offers that seem too good to be true. But in the end, in 
     practice, what for-profit managed care organizations really 
     do is to siphon money away from medical care, and redirect 
     those dollars into multimillion dollar CEO compensation 
     packages and huge bureaucracies. Do Medicare HMO's save the 
     Federal Government any money over the existing system? Look 
     for any proof of that; there isn't any.
       When I look at the Republican proposals for Medicare 
     reform, what I see first is that the deductible will be made 
     so large as to make the overwhelming majority of Medicare 
     recipients join for-profit HMO's who promise them a ``no-
     deductible'' plan. The business of other options such as 
     medical savings accounts, etc. will never amount to anything 
     in reality. I cannot understand why my buddies in the AMA 
     cannot see that. If the California experience with HMO's is 
     any indicator, there will be a merger and acquisition frenzy 
     as larger HMO's swallow up smaller ones. More and more 
     dollars will be spent on these mergers rather than patient 
     care (When, for example, Health Net and Qual-Med merged, 
     certain members of their respective boards of directors 
     shared $110,000,000 in stock and cash ``compensation''). 
     What will result is an oligopoly of three or four huge 
     insurance companies controlling all medical care. And the 
     primary factor determining success or failure in any 
     competition in this marketplace will not be quality of 
     care, but simply the profit picture of the company, which 
     is inversely related to expenditures on patient care.
       It is for these among other reasons that I am highly wary 
     of the Republican plan. I strongly suspect that the 
     Republicans are primarily doing the bidding of a few huge 
     insurance companies who plan to be the major players in the 
     Medicare marketplace once it is ``privatized.''
       From this perspective, I am also highly suspicious of the 
     provision in the proposed legislation to limit noneconomic 
     malpractice litigation awards. This may surprise you, coming 
     as it does from a physician. But according to my malpractice 
     insuror, in California the largest growth area in medical 
     malpractice suits is in litigation against the formerly-low-
     risk-specialty of primary care for failure to timely diagnose 
     and refer to specialists. Does this mean that managed care in 
     changing practice patterns in primary care as regards the 
     timeliness in which patients are referred for specialty care? 
     I don't think that it takes a brain surgeon to figure that 
     one out! Lawsuits filed against physicians are inevitably 
     filed against the HMO's as well, and particularly after the 
     75+ million dollar judgment against Health Net in the marrow 
     transplant denial malpractice case, the HMO's are quite aware 
     that they have become the ``deep pockets.'' From this 
     perspective, I view such malpractice reform as contained in 
     the Republican proposals primarily as a license for HMO's to 
     be negligent, confident in the notion that a maximum $250,000 
     liability in almost all cases represents a relatively small 
     cost of doing business. As more and more doctors become 
     virtual employees of for-profit HMO's, they will realize that 
     malpractice reform was primarily meant to benefit their 
     employers!
       Right now Medicare works well, returning a high percentage 
     of dollars spent in actual benefits to recipients. The 
     increased spending on Medicare is primarily a function of the 
     aging of the population and the fact that advances in 
     medicine have made possible the successful treatment of many 
     conditions not amenable to such treatment in 1964. While I 
     would agree that the system requires reform, I would caution 
     you that the Republican plan is simply a scheme for diverting 
     billions of Federal dollars earmarked for Medicare recipients 
     into the hands of a few at the expense of many. If you are 
     unsure of this, just try to introduce some elements into the 
     legislation that would insure that a certain percentage of 
     Medicare dollars are to be spent on patient care, and not 
     diverted by profiteering insurance giants. You will find that 
     your Republican colleagues will be spouting all kinds of pure 
     garbage in defense of their true benefactors, who would love 
     to be an unregulated industry!
           Sincerely,
                                              Marc A. Levina, M.D.

  Mr. Speaker, I now yield to the gentlewoman from Florida [Ms. Brown].
  Ms. BROWN of Florida. During the August recess I conducted 14 town 
meetings where I talked to over 3,000 of my constituents, and we in 
Florida understand that the $270 billion that the Republicans are 
cutting out of the Medicare budget to save it, we understand just what 
kind of savings that is, and in fact the 10 years I served in the 
Florida House we had a saying for it: That dog don't hunt.
  Now I have a contract that I signed yesterday in Orlando, and I 
signed it with the people of the Third Congressional District, but let 
me be clear. I signed it with the people of Florida and the seniors of 
the United States, and my commitment is to them. We do not like that 
reverse Robin Hood that has been going on since the 104th have taken 
over. You know what I mean, robbing from the poor and working people to 
give a tax break to the rich, and I know that you all do not like that 
word ``cut.'' Well, I have got a better word for you. Try ``gut.'' You 
are gutting the program.
  Ms. PELOSI. Mr. Speaker, I thank the gentlewoman for her remarks, and 
I ask our colleagues to vote ``yes'' for Medicare and ``no'' for tax 
cuts.

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