[Congressional Record Volume 141, Number 162 (Thursday, October 19, 1995)]
[House]
[Pages H10471-H10476]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                MEDICAID

  The SPEAKER pro tempore. Under the Speaker's announced policy of May 
12, 1995, the gentleman from New Jersey [Mr. Pallone] is recognized for 
60 minutes as the designee of the minority leader.
  Mr. PALLONE. Mr. Speaker, I wanted to start out this evening by going 
over and trying to explain a little better some of the statements that 
were made by my colleagues on the Committee on Commerce with regard to 
low income seniors who, under current law, under the Medicaid program, 
are guaranteed that the Medicaid program or the Federal Government will 
pay the full amount of their part B premium.
  Part B is that part of Medicare which covers doctors' bills. And in 
the motion to recommit that we had today on the Medicare bill, the 
gentleman from Massachusetts [Mr. Markey] addressed the issue and 
pointed out that there will be no guarantee that widows and other 
seniors who are low income will receive coverage by the Federal 
Government of their part B premium in the future because of the repeal 
of that provision in Medicaid.
  The Speaker, Speaker Gingrich, later this evening spoke and basically 
criticized Mr. Markey because he suggested that that was not true, that 
somehow Medicare under the Republican proposal, under the Gingrich 
proposal, would continue to cover those recipients. Well, I do not know 
what the Speaker had in mind, but he clearly was misinformed. He 
clearly has not read the bill or had not followed what had been 
happening both in committee as well as in the Committee on Rules as 
well as on the floor of this House when the bill came up.
  The reality is that that guarantee for low income seniors, including 
the widows, was struck from the Medicaid bill in the Republican 
proposal that came out of the Committee on Commerce as well as out of 
the Ways and Means Committee. And I had actually proposed an amendment 
to bring that provision back, to guarantee that those low income 
seniors would have their part B premium paid. I brought up the 
amendment not out of the sky but because when I went back to my 
district in central New Jersey, I had many senior citizens who were 
what we called qualified Medicaid beneficiaries who received this 
benefit who came to meetings and forums that I had and were seriously 
concerned about the fact that this was being repealed.
  And so I went back to the Commerce Committee and offered that 
amendment, which was defeated on a partisan line, vote with the 
Republicans all voting against it.
  When the Medicare bill came up in the Commerce Committee, my 
colleague, the gentleman from Illinois [Mr. Rush], offered a similar 
amendment on Medicare on the theory that if it is no longer going to be 
covered under Medicaid, let us try to cover these poor seniors, these 
widows, these elderly under Medicare. And again, on a partisan line 
vote, that amendment was defeated, defeated by the Republicans, by the 
majority.
  Yesterday I went before the Committee on Rules on the Medicare bill. 
I asked the Committee on Rules to consider an amendment on the floor 
today that would have guaranteed that those seniors would be covered. I 
had a dialog with the gentleman from Georgia [Mr. Linder] and perhaps 
other members of the Committee on Rules where I explained what this was 
all about. And again, that request was denied.
  So that in fact when the Medicare bill came up today for 
consideration, contrary to what the Speaker said, it does not guarantee 
that those widows and the people, those low income elderly, it does not 
have to just be widows, it is anyone who is 100 percent of the poverty 
line whether they are male or female, whatever their marital status, it 
does not guarantee, the bill that was passed today by the majority, 
that those poor and elderly people are covered for the part B premium.

                              {time}  1915

  What does this mean for these senior citizens? Well, essentially it 
means that they are going to go without physicians coverage. Part B 
pays for their doctor bills.
  Now the other side said in committee, ``Well, you shouldn't worry 
about that, Congressman Pallone, because we have included in the block 
grant that we are going to now give to the States, even though there is 
no entitlement, no guarantee that these senior citizens get their part 
B paid, we are going to send in a block grant to the State under 
Medicaid, and, as the States want to do that, they can cover them.'' 
Well, that is very nice, but the reality, as the gentleman from 
California [Mr. Waxman] said before, is the amount of money that is 
going to be available pursuant to that block grant is about 85 percent 
of what is going to be needed.
  In addition, there is no guarantee or requirement that the State pay 
that part B premium, so they are going to get 85 percent of what they 
need, but, if they decide not to spend it, not to even cover those 
widows and elderly, they do not have to. They can decide to cover 10 
percent of them, 50 percent of them, or none of them, and the 
disincentive for not having the money to do it is certainly going to be 
there, so it is likelihood that they will not be covered.
  Another reason why they are not likely to be covered is because that 
figure about how much is being block-granted to the States is based on 
the current premium, and, as we know and as the gentleman from 
Massachusetts [Mr. Markey] pointed out, the premium under the Medicare 
under the Republican bill that was passed today doubles over the next 7 
years, so instead of being 40-something dollars a month, it is going to 
be $90 a month by the year 2002. So what likelihood is there that those 
widows and those poor senior citizens are going to have the States 
covering them for their part B premium when the premium doubles, when 
the amount they are getting is based on current levels, and when they 
are getting only 85 percent of essentially what is necessary? I would 
maintain that the likelihood is almost nil.
  This, what the Speaker said today, there is no question that he was 
misunderstood, but I have very little doubt that he intends to do 
anything to make sure that those people are covered. We are going to do 
something about it though. We are going to go to the Committee on Rules 
next week on the Medicaid bill on the reconciliation bill, which the 
gentleman from Texas [Mr. Armey] said is going to come up next Thursday 
on the floor, and when the Committee on Rules considers amendments next 
Tuesday or Wednesday, Mr. Speaker, myself and the others are going to 
be before it and ask that this amendment be considered to basically 
make it so that the Speaker has to announce whether he is going to 
include this provision or not for the widows and for the poor elderly. 
I doubt that we will see it, but we are certainly going to try.
  I just wanted to point out again today when I went to the Committee 
on Rules yesterday many of us, many Members of this body, not only 
Democrats, but also some Republicans because I was there for a good 
deal of time, asked that amendments be considered today because they 
did not like the provisions of the Medicare bill that we considered, 
and I am sure it was noticed that the reality was that no amendments 
were considered. The only thing that was allowed was a substitute 
amendment, one substitute.
  We also asked for at least a week's debate because, as you know, 
there have been no hearings on this bill in any committee. The 
Committee on Ways and Means had one day of hearings on the draft of the 
bill on a press release, but there were never any hearings on the 
actual bill that we voted on today, so we asked there be at least a 
week's worth of debate. What we were given today was 1 hour on the 
rule, which was a very closed rule, 3 hours' general debate on the 
bill, and one substitute amendment in which we were allowed 1 hour of 
debate. I would maintain that the biggest problem, or one of the 
biggest problems, that exists in this whole Medicare debate and with 
the whole Republican proposal is that most of my colleagues really do 
not even know what is in the bill because 

[[Page H 10472]]

there has not been the opportunity to have hearings or to have adequate 
debate.
  Now, before I go into my concerns about how this bill is going to 
essentially eliminate and destroy the Medicare system, I wanted to 
introduce a few things into the Record, Mr. Speaker, that I did not 
have the opportunity to do in the Committee of the Whole today the way 
the rules are. You cannot do that in the Committee of the Whole. The 
first is a letter that was sent to me by three Republican State 
legislators in New Jersey from the Jersey shore who previously had sent 
a letter to all the New Jersey Members of this House indicating their 
opposition to the Republican leadership Medicare bill that we voted on 
today and who today, or earlier this week, sent another letter to all 
of my colleagues in the New Jersey delegation asking them to vote 
against the Republican Gingrich bill and also to vote for the 
Democratic substitute instead, and I just wanted to read part of this, 
or even all of it, because it is not that long, if I could, Mr. 
Speaker, because I think it says a lot about the debate and backs up 
what I have been saying today, but in this case this is coming from 
Republicans, Republican State legislators in New Jersey, and they write 
to the House Members, and they say:


                                          State of New Jersey,

                                                 October 13, 1995.
     Re: Medicare.

       Dear House Members: It is our understanding the House Ways 
     and Means Committee has voted 22-14 to send the Medicare 
     reform package to the House floor next week.
       Our 9th District Delegation, which represents the largest 
     Senior Citizen population in New Jersey in Ocean, Burlington 
     and Atlantic counties, issued a letter on September 22, 1995 
     to House Speaker Newt Gingrich and Senate Majority Leader Bob 
     Dole, urging them to scrap this plan.
       Copies of our correspondence to Speaker Gingrich and 
     Senator Dole were conveyed to New Jersey's Congressional 
     Delegation. For your convenience, a second copy of this 
     appeal is enclosed.
       Please allow our Delegation this opportunity to reiterate 
     our profound concerns about these cuts in Medicare services 
     for our elderly.
       As you are aware, alternative proposals have been offered 
     that would maintain the solvency of the Part A and Part B 
     trust funds until 2006. This $90 billion compromise package 
     would provide a decade for Congress and the White House to 
     achieve a well-planned and balanced proposal to resolve 
     Medicare's financial problems. This compromise would also 
     provide the opportunity for a bipartisan consensus.
       Our Delegation is genuinely sensitive to the difficult 
     decision you face and have had our own feet roasted by the 
     hot coals of Leadership. We feel very strongly that a rush to 
     judgment on this issue is bad public policy. America must 
     never turn its back on our parents and grandparents.
       We, respectfully, urge New Jersey's House Members to oppose 
     this $270 billion Medicare cut. Your leadership, in targeting 
     Medicare fraud, the staggering costs of health care and in 
     building a bridge to the future with the alternative 
     proposals set forth by Reps Sam Gibbons and Ben Cardin, will 
     provide the chance for Congress to seek a consensus solution 
     to preserve Medicare for our parents and grandparents.
       Thank you for your thoughtful attention to this appeal on 
     behalf of the Senior Citizens of Ocean, Burlington and 
     Atlantic counties.
           Sincerely,
     Leonard T. Connors,Jr.
       Senator--9th District.
     Jeffrey W. Moran
       Assemblyman--9th District.
     Christopher J. Connors
       Assemblyman--9th District.

  Now I point this out, Mr. Speaker, because that is the way I voted 
today. I voted against this terrible Medicare bill, and I voted for the 
Democratic substitute sponsored by the gentleman from Florida [Mr. 
Gibbons] and also the gentleman from Michigan [Mr. Dingell], and it 
just pleases me to see not only that there are three State legislators 
at the Jersey shore that agree with that position and clearly 
understand why my position is accurate, but also that I believe that 
they and others like them in New Jersey influenced four of my 
colleagues on the Republican side, half of our New Jersey Republican 
delegation in Congress, to cast votes against the Gingrich Medicare 
plan today, and I think that we have worked very hard and essentially 
the vote today against the Medicare plan, against the Gingrich plan, as 
far as New Jersey goes, was really on a bipartisan basis.
  Mr. Speaker, I am very proud of that fact. I hope that in the future 
we will see more Republican Congressmen coming out against this 
proposal and also more State legislators coming out against the 
proposal.
  I want to yield, if I could, some time to the gentleman from Texas 
[Mr. Doggett].
  Mr. DOGGETT. Would it be appropriate at this time to touch on another 
subject? Have you concluded most of your remarks?
  Mr. PALLONE. Yes.
  Mr. DOGGETT. I note first in this great Medicare debate, as I pointed 
out earlier today, we are about to substitute for the Medicare card a 
giant maze that looks somewhat like the maze that our Republican 
colleagues criticized President Clinton on last year on health care for 
the company. We are about to have a maze of that type presented to 
senior citizens. I wonder if some of them are not going to need to go 
back for a little late life education to get and understand the full 
maze of this, and I know you are familiar with this from your work 
there on the Committee on Commerce, but there are new commissions set 
up under this bill; are there not?
  Mr. PALLONE. Yes, I wanted to commend the gentleman because I think 
he has pointed out that this bill has created such a bureaucracy over 
and above what, you know, what we have already, and I am glad he is 
pointing it out.
  Mr. DOGGETT. This is the organizational chart. We will now have at a 
time we have been told we need less government we are now going to have 
a new baby-boom commission set up. We will have a variety of other new 
commissions, and boards, and agencies, and our seniors of course will 
face a wide range of new choices.

  What it all boils down to, of course, is the choice to pay more and 
get less, but the way it is spread out, it is an organizational chart 
that is really an organizational nightmare. The lines that seem to me 
to be the most important though are the taking from the two funds that 
the gentleman is familiar with, part A and part B of Medicare, the 
taking from those funds, and taking that money out and really giving 
it, as you have been saying, to a tax cut for the most privileged 
members of our society, and I wanted to add to this very important 
debate, but I also would like at this point to comment on another topic 
that really related to my district.
  Mr. PALLONE. Sure, I yield to the gentleman.
  Mr. DOGGETT. This is about that we have been involved in a great 
debate today about the Medicare system and many of the important public 
policy issues. It is about another great debate and another debator.
  Like many of the Members of this body of Congress on both sides of 
the aisle, Republican and Democrat, I had an opportunity early in my 
life to participate in the forensic program, and I rise tonight with 
the unhappy task of calling attention to a recent tragedy that befell 
members of the Texas Forensic Union, an award-winning debate and speech 
team of my alma mater at the University of Texas, Austin.
  On a single weekend students were participating from the University 
of Texas along with their colleagues at debate tournaments in Kentucky 
and in Nevada. Unfortunately as one group of these young Texas students 
were returning from Nevada, their van was involved in a terrible 
accident just outside of Las Cruces, NV. A young man was killed in that 
mishap, Jason G. Wilson of Boca Raton, FL.
  Mr. Speaker, although I did not have the good fortune of knowing 
Justin personally, I know that the hearts of people in this body, as 
were my friends at the University of Texas, go out to his friends at 
the University of Texas, go out to his family, and to his friends, and 
to the entire University of Texas community.
  This was from all of the reports that I get from my friends at the 
University of Texas an exceptional young man, an excellent student, 
well liked by his peers and a very noteworthy debater who one day might 
have been participating in the Halls of this Congress. Justin's life 
was tragically cut short.
  Mr. Speaker, all too often these days we hear of slipping academic 
standards, of deterioration of education, and a 

[[Page H 10473]]
lack of caring by our colleges and universities. By contrast, the young 
people who are involved in this tragedy, and particularly Justin 
Wilson, embodied a real commitment to excellence. He should be honored, 
and I know that he will be missed.
  Justin and his colleagues were returning from intercollegiate 
competition, and I can remember attending similar events at an earlier 
time that were really significant in my life and in the lives of many 
others.

                              {time}  1930

  I can remember the camaraderie, the mutual respect that characterizes 
these events, and the opportunity to compete and achieve excellence is 
really very important to the future of our democracy. Our sympathies go 
out to all of those who were involved in this tragedy. It is an event 
that reminds us that every year there are thousands of committed young 
students of all types of political philosophies and outlooks, and their 
coaches and their faculty members representing with pride their 
particular college or university, individuals like Justin Wilson that 
try to make a difference in the academic community and in the broader 
life of democracy in our country.
  Ironically, in my year of debating, the subject was whether the 
United States should have a Medicare System. Today, we have been 
debating this same topic, as the other young debaters like Justin were 
participating in considering topics of important national interest this 
year.
  These individuals make great sacrifices. They often go unnoticed, but 
their work is very important. Justin's too-short life is appropriately 
remembered here tonight in the halls of our Nation's Capitol. We strive 
to be more aware of the contribution that these unique students, and 
particularly Justin Wilson, have made to our country. I thank the 
gentleman for yielding.
  Mr. PALLONE. I thank the gentleman.
  Mr. Speaker, when I left off, I was talking about the letter I had 
received from the three Republican State legislators at the Jersey 
shore indicating opposition to the Medicare bill that was passed today, 
and asking all of our colleagues in New Jersey to vote against it, and 
to vote for the substitute.
  I believe that those State legislators and others influenced, as I 
said, half, four of the eight Republican Members from New Jersey, to 
vote against the Gingrich Medicare bill today, because they realize it 
is not in the interests of the State of New Jersey.
  Mr. Speaker, I also wanted to enter into the Record a letter from the 
National Conference of State Legislatures, in which they express 
serious concerns about certain provisions in the House Medicare 
legislation.
  Mr. Speaker, I also wanted to point out that one of the reasons New 
Jersey Members opposed this Medicare bill, essentially on a bipartisan 
basis today, is because of concerns that were expressed in the State 
legislature in Trenton earlier this week about how much money the State 
would have to provide if we wanted to continue making sure that our 
senior citizens were to receive adequate health care.
  If I could just read some excerpts from an article which appeared in 
the Asbury Park Press, which is my hometown daily, wherein the 
Democratic leaders in the State legislature, on October 18, basically 
pointed out that the Republican plan to slash Medicare and Medicaid 
funding ``* * * would force New Jerseyans to pay far more for health 
care.''
  In the attack they made on the GOP proposals, assemble minority 
leader, Joseph Dorian, and Senate minority leader, John Lynch, Mr. 
Lynch happens to be from my district, ``* * * insisted that the cuts 
could force State taxes to soar because of New Jersey's commitment to 
offer health care for all residents.''
  What Senator Lynch is essentially saying here, we have two choices in 
New Jersey if this bill becomes law. We either provide the services for 
the seniors at the level of care they have been accustomed to, and we 
pay more in State taxes to do so, or we do not offer the health care.

  What Senator Lynch is saying, essentially, is that New Jersey, 
because of its tradition of wanting to provide quality health care to 
all its residents, is likely, and hopefully would opt to continue to 
provide the same level of care, but that is going to cost more in State 
taxes.
  If I could just quote from Mr. Doria, the assembly minority leader, 
he says, ``The cuts as presented are unreasonable and irrational.'' He 
urged the State's congressional delegation to vote against the 
gentleman from Georgia, Newt Gingrich, and the madness, to vote against 
the mean-spiritedness. He even said New Jersey should not become 
``Newt's Jersey,'' as I quoted.
  Obviously, many of my Republican colleagues on the other side today 
felt strongly they did not want New Jersey to become Newt's Jersey, and 
thankfully, decided to vote against this very ill-advised piece of 
legislation.
  Mr. Speaker, I just wanted to, if I could, in some of the time that I 
have here, to go over some of the reasons in a little more detail about 
why the Medicare bill that was passed today, the Republican bill, is so 
damaging to senior citizens and to the Medicare System, and to the 
health care system in general, and why the Democratic substitute, which 
I supported, would have corrected many of those problems that the 
Republican Medicare bill presents for the future of seniors' health 
care.
  The biggest item, of course, and this is one of the things that my 
colleagues on the Democratic side have continued to stress, is that 
this leadership proposal, this Republican leadership proposal, 
essentially cuts $270 billion out of Medicare to pay for a $245 billion 
tax cut, mostly for the wealthy.
  I know my colleagues on the other side have said, ``We are not really 
doing a tax cut. This is not budget-driven.'' It is simply not true. We 
know that the trustees that the Republican leadership cite often, the 
Medicare trustees, basically said that there was only a need to save 
about $90 billion in the Medicare program over the next 10 years in 
order to keep the Medicare program solvent. The trustees have basically 
indicated that repeatedly.
  The substitute that the Democrats had would have saved $90 billion. 
The rest of the money, the rest of that $270 billion cut, is going for 
tax cuts, tax cuts mostly for the wealthy. Also, seniors are going to 
have to pay more under this bill. Essentially, they are going to be 
paying more to get less. The part B premiums will double without a 
penny of that increase going back into the part A Medicare hospital 
trust fund.
  There are essentially two parts to Medicare: There is the hospital 
trust fund, which the trustees have said does face problems over the 
next few years unless something is done, and then there is the part B 
program, which pays for physicians or doctors' bills, which is not 
really in any trouble at this point.
  Here we have the Speaker, the gentleman from Georgia [Mr. Gingrich] 
and the Republicans redoubling the premiums on part B, which is not 
facing insolvency. The only reason they are doing that is so they have 
money left in order to pay for a tax cut.
  The other thing that is extremely troubling about the bill is that 
seniors will ultimately be forced into HMO's and other managed-care 
systems, and that means in many cases they have to give up their own 
doctors. Again, my Republican colleagues have said, ``We are not 
telling the seniors they have to go into an HMO or a managed-care 
system,'' and that is true.
  The law does not say that they have to choose the HMO, but the 
reality is that the amount of money that is being cut here is 
disproportionately hitting the traditional fee-for-service system, 
where people go to any doctor that they choose and the doctor gets 
reimbursed.
  Therefore, this money that is being cut out of the system, this $270 
billion, is being distributed in a way over the next 7 years, so that a 
significant amount of it goes to pay for HMO's and managed care, but 
less and less of it will go to pay for the traditional Medicare system, 
where you can choose your own doctor.
  Therefore, even though the Republicans are not saying that you have 
to join an HMO, what you will find happening is that less and less 
seniors will find that their own doctors will stay in the traditional 
fee-for-service system, because they will not get reimbursed enough for 
it to be worth their while to continue to operate that way, so fewer 

[[Page H 10474]]
and fewer doctors will be available to seniors, and take Medicare, 
under the traditional fee-for-service system.
  The Republican plan also essentially destroys the high quality of 
care that we have in America's hospitals, because so much of the 
savings is in cuts to the reimbursement rate for hospitals, hospitals 
in inner cities, hospitals in suburbia, hospitals in rural areas. It 
depends to what extent those hospitals are dependent upon Medicare and 
Medicaid.
  In other words, if you have a hospital, as you do for most of the 
hospitals in my part of New Jersey, where the majority of the money 
that they receive comes from either Medicare or Medicaid, if they are 
heavily dependent on Medicare and Medicaid and they have to face severe 
cuts in their reimbursement rates, they are going to be squeezed so 
much that essentially many of them will close, we estimate about 25 
percent, and the others are going to significantly cut back on 
services. That is how the quality of care will suffer. That is how what 
probably is, and I would say is, no doubt in my mind, the best health 
care system in the world, probably the best health care system that has 
ever existed on this planet, will all of a sudden see significant 
cutbacks in quality of care.
  Again, none of this would be necessary if the Speaker was not 
insisting on this tax break, primarily for wealthy Americans. I wanted 
to point out, if I could, that the Democratic substitute, which I 
supported today, which unfortunately did not pass, basically cured 
these problems, and addressed each of the concerns that I just brought 
up tonight about the Republican Medicare bill, and still managed to 
keep Medicare solvent and whole for the next 10 years.
  Basically, what the Democratic substitute says is that, ``We will cut 
$90 billion out of the Medicare Program and we will save $90 billion, 
instead of $270 billion,'' which is exactly the amount that the 
trustees say is needed to shore up the trust fund for the next 10 
years, but a consequence of that is that much of the tax cut for the 
wealthy is eliminated.
  The Democratic substitute, which I supported, again, also eliminates 
the dramatic increases in part B premiums that double under the 
Republican plan. This is the thing, this is the part of Medicare that 
is going to hurt seniors on fixed incomes, because they are going to 
have to pay twice as much as they pay now.
  Under the Democratic substitute, the premiums for part B will 
actually increase less than the current law, and so there is an effort 
to really ease the problem for seniors on fixed incomes.
  Mr. DOGGETT. Mr. Speaker, will the gentleman yield on that point?
  Mr. PALLONE. I yield to the gentleman from Texas.
  Mr. DOGGETT. Under that substitute, would the gentleman have 
essentially provided the same amount of security for the Medicare trust 
fund that the Republicans claim they were providing?
  Mr. PALLONE. Absolutely, there is no question that not only Secretary 
Rubin, Secretary of Treasury, but also several other trustees, I think 
there were four that put out a letter saying that $90 billion was 
necessary to shore up the trust fund.
  Mr. DOGGETT. How in the world could you do it for $90 billion when 
they said they would need $270 billion to assure that the Medicare 
trust fund was there? How is it that you are able to do it for one-
third the cost that they say they need in billions of dollars from 
Medicare?
  Mr. PALLONE. It is very simple. As the gentleman from Texas [Mr. 
Doggett] has pointed out, and previously, they are using that extra 
money for a tax cut. It is primarily going to the wealthy Americans.
  Mr. DOGGETT. So you could secure the entire Medicare trust fund for a 
third as much of what they took out today?
  Mr. PALLONE. Over the next 10 years, that is right.
  Mr. DOGGETT. Under your plan, the substitute, would seniors have seen 
this rapid increase in their premiums, and when the Senate finishes, an 
increase in deductibles? Would they have had out-of-pocket costs if 
your $90 billion had been adopted today?
  Mr. PALLONE. Absolutely not. The way the current law provides, I 
would estimate that the monthly part B premium by 2002 over 7 years 
would go up to about $60 a month. It is now about $46, I think.
  Under the Gingrich plan, it goes to over $90 a month. Under the 
substitute, it would be less than the $60 under current law, so we 
would actually be providing for less of an increase in the premium than 
current law.
  Mr. DOGGETT. You are advancing, then, a proposal that would cost less 
to seniors than they would be facing under existing law, and yet it 
would provide every bit of the security of the Medicare trust fund that 
we heard one person after another out here proclaiming that they were 
the defenders of, and that though these reports had come out year after 
year after year, they just discovered them this year, right after they 
raided the Medicare trust fund for millions of dollars, and added to 
its insecurity, but you have a way to secure it fully, to the extent 
the Republicans are securing it, at a third of the cost and without 
costing seniors any additional premium; in fact, less premium than they 
would face under existing law?

  Mr. PALLONE. Exactly, and not only that, I would point out that the 
substitute also does not decrease the quality of health care from the 
point of view of the hospitals, which I talked about before, because 
even though that $90 billion is coming from the reimbursement rate to 
hospitals, the reduction in the reimbursement rate is less than half of 
what the Republican Gingrich bill proposed today. The hospital 
association and the various hospitals that I have talked to in my area 
have indicated that they could absorb that level of cut, unlike the 
level of cut in the Republican proposal.
  Mr. DOGGETT. I know you have put in a long day and have been 
participating here on the floor all day during this debate, and I want 
to thank you for your efforts. I know with the kind of leadership that 
you have provided today, that New Jersey will never be Newt Jersey. In 
fact, it was interesting to see that even at least one of our 
Republican colleagues from the apparent Newt Jersey, who had voted in 
favor of the Newt plan in committee, apparently had a change of heart 
our here today, perhaps hearing the words of the many Republicans who 
have spoken out from New Jersey saying that they would exercise their 
independence and would stand up for seniors. If we can just get the 
Members of the Senate to do the same thing, there is yet hope, and if 
President Clinton will stand firm on this, there is yet hope that our 
seniors will not find themselves plucked clean.
  Mr. PALLONE. I want to thank the gentleman. I think the gentleman 
also brings up an important point, which is that I think a lot of 
people think that today was the end of this process. In fact, today is 
the beginning of the process, because the Medicare bill, the Republican 
bill, still has to be addressed in the Senate. It will still go to 
conference. The President has already said that he intends to veto the 
bill. It will come back to the House, back to the Senate, and we will 
probably be here for several weeks, if not several months, continuing 
to debate this issue, and hopefully there will be an opportunity to 
persuade more Members from the other side of the aisle to either not 
support this, or change it, consistent with the Democratic substitute.

                              {time}  1945

  The other thing I wanted to point out about the substitute is that 
this whole shifting, if you will, of seniors into HMO's or into managed 
care where they do not have a choice of doctors is basically 
eliminated. There is no forced choice, because the system under the 
Democratic substitute is not changed in that there is no discrepancy in 
the reimbursement rate and the amount of money that is going to go, 
whether you are in an HMO or you are in the traditional fee-for-service 
system. So doctors will still be available under the traditional fee-
for-service system and will continue to accept Medicare.
  The other thing that I think is so important about the substitute, 
which has not really been debated a lot because so much of this debate 
on the Republican side has been subject-driven, is that the substitute 
seeks to include more of what I call preventive measures in Medicare.

[[Page H 10475]]

  I was hopeful, maybe I was naive, that when I took up Medicare reform 
this year that, rather than focus on the budget aspects and have a 
whole debate be driven by budget dynamics, that we would try to look to 
include in Medicare preventive measures which ultimately save money, 
because they prevent senior citizens from having to be hospitalized or 
institutionalized.
  Now, just to give you an example, the Democratic substitute today 
makes a good start in that direction, because it includes programs like 
prostate screening. The whole idea is, let us do some things, whether 
it is prostate screening or it is other kinds of tests, so that we can 
detect problems that seniors might have at an early date so that they 
can have treatment on an outpatient basis, so that they can stay home 
and not have to be institutionalized.
  So much of the cost, not only to the Medicare system but also to the 
Medicaid system, which we will be dealing with next week comes from 
having to institutionalize senior citizens in hospitals, nursing homes. 
Something like 70 percent of the money that the Federal Government 
spends on Medicaid in the State of New Jersey goes to pay for nursing 
home care.
  If we could include preventive measures like this Democratic 
substitute that unfortunately was defeated today in our Medicare 
program, we could save a lot of money and come up with a better system 
without having to make the drastic changes and negative changes that 
the Republicans have proposed.
  Mr. Speaker, I just wanted to bring up a couple of other points on 
the Republican bill today in the time that I have left, because 
oftentimes, obviously, since debate was limited to only 3 hours today 
and only half of that was on the Democratic side, there were several 
points that were made by Republican Members that I just thought were 
inaccurate or at least did not give a true picture of some of the 
things that are in this bill that the Republicans passed today.
  One of the things that I thought needs to be addressed is this whole 
issue of fraud and abuse. In my committee, the Committee on Commerce, 
there was at least one day or perhaps several days of hearings not on 
this bill but just on the problem in general of fraud and abuse; and I 
know that I attended at least one of those hearings where a lot of 
attention was paid to the fact that tremendous amounts of money could 
be saved in the Medicare program and we would not have to cut other 
aspects of the program if we could weed out the fraud and abuse.
  But, lo and behold, when the bill came up in the Committee on 
Commerce, we found that there were some provisions in the bill that, if 
anything, made it more difficult for the Federal Government, the 
prosecutors, the investigators, to go after fraud and abuse in the 
Medicare system. Specifically, we had testimony at an alternative 
hearing. Since we were not allowed to have a hearing before the 
Committee on Commerce, some of the Democrats got together and had their 
own hearing; and we had testimony from the inspector general, June 
Gibbs Brown of the Department of Health and Human Services, and she 
pointed out some major flaws in the bill in terms of the effort to weed 
out fraud and abuse.

  Mr. Speaker, I just wanted to quote some of the things that she said 
that I thought were most important.
  She said that we believe that H.R. 2425 contains several provisions 
which would seriously erode our ability to address Medicare and 
Medicaid fraud and abuse. Most notably, these troublesome proposals 
include the following:
  One, the bill would make the existing civil monetary penalty and 
antikickback laws considerably more lenient.
  Two, the bill would substantially increase the Government's burden of 
proof in cases under the Medicare-Medicaid antikickback statutes. For 
the vast majority of present-day kickback schemes the proposed 
legislation would place an insurmountable burden of proof on the 
Government.
  Next, the bill would create new exemptions to the Medicare-Medicaid 
antikickback statute which would be readily exploited by those who wish 
to pay rewards or incentives to physicians for the referral of 
patients.
  Finally, a fund was created directing moneys recovered from 
wrongdoers under the bill, but instead of the funding of that money 
going to fund law enforcement, the moneys could go to private 
contractors. No funds would be made available to enhance existing 
government law enforcement activities.
  I know that on the other side today they tried to, and did, in fact, 
include some provisions to try to improve on the fraud and abuse, but 
not every one of these concerns that was addressed by the inspector 
general was addressed, and so the bill, in my opinion, continues to 
provide loopholes and make it more difficult for us to enforce fraud 
and abuse. I think that is totally unconscionable in the context of the 
fact that we are trying to squeeze so much money out of this Medicare 
Program in order to achieve a tax cut.
  Mr. Speaker, the other thing that I wanted to point out is a lot of 
attention was paid by Republicans today to the medical savings 
accounts. It was termed by my colleagues on the other side that this 
was a new and innovative program that was going to sort of be the wave 
of the future. I forget all of the adjectives that were used to say how 
wonderful the Medicare savings accounts were going to be.
  I would point out that there is no question in my mind, first of all, 
that these medical savings accounts are not going to be available to a 
lot of senior citizens, but also, that it essentially is going to cost 
more for the program. In other words, the Medicare savings accounts 
will not save the Medicare Program money, they are going to cost the 
program more money.
  The CBO, the Congressional Budget Office, estimates show that medical 
savings accounts would essentially rob the program of $2.3 billion over 
7 years. In other words, it would cost that much more to the Medicare 
Program to have these Medicare savings accounts in effect.

  It says that under the MSA's, as they are called, under the medical 
savings accounts, the Medicare Plus voucher could be used to buy a 
catastrophic health insurance policy with a deductible as high as 
$10,000. Any difference between the cost of that policy and the voucher 
amount will be placed in a tax-deferred medical savings account. But 
only the wealthiest and healthiest seniors could afford to gamble with 
such a high-deductible policy. When these individuals buy MSAs, the 
average costs of those remaining in Medicare would increase.
  So what essentially we are saying here is that the people that are 
going to take advantage of these medical savings accounts are the 
healthiest and wealthiest seniors, the ones that essentially we are not 
paying a lot of costs for under the current Medicare law in order to 
cover. If they are taken out of the system and the system has to pay 
out money into these medical savings accounts, what is going to happen 
is that the cost to Medicare is going to be more and not less, because 
the healthiest people that cost Medicare the least amount of money are 
the ones that are going to opt for it.
  Mr. Speaker, the CBO says that. I mean it is not something that I am 
making up; it is something that is clearly indicated by the 
Congressional Budget Office.
  The last thing I wanted to say, Mr. Speaker, because I think my time 
is almost up, is that there were many suggestions, most notably by 
Speaker Gingrich this evening when he gave his speech on the floor, 
that this whole idea that Democrats were saying, and that I say, that 
this $270 billion in cuts to the Medicare Program is going to be used 
for a tax break for the wealthy, the Speaker said that that is simply 
not true. He said that we are not going to do that, that is not our 
intention, and so forth and so on.
  Well, my contention, Mr. Speaker, is that if that were not true, if 
this whole debate was not budget-driven for the purpose of creating 
these tax cuts, then there was absolutely no reason for this Medicare 
reform, as it is termed, to be linked with the budget reconciliation, 
which it will be next week. Next week we are going to take up the 
budget reconciliation and we are told that the Medicare is going to be 
clearly linked to that. Although it was voted on separately today, that 
is essentially a ruse, because it will be included in the budget 
reconciliation.
  If the Speaker and the Republican leadership were going to be honest 
with us and say that they are not going to 

[[Page H 10476]]
use this for a tax cut, then they would have supported some of the 
amendments that we made in the Committee on Commerce and also tried to 
get included in the Committee on Rules that would have not allowed the 
savings to be scored for budgetary purposes.
  We had such an amendment in the Committee on Commerce, and again, it 
was defeated along partisan lines with the Republicans voting against 
it, because they do, indeed, intend to score these Medicare savings of 
$270 billion to pay for the $245 billion in tax cuts. Those tax cuts, 
again, will go mostly to wealthy Americans and other corporations.
  Mr. Speaker, I think it is a very tragic day for America's seniors 
that this Medicare bill was passed, and that the Democrat substitute 
was defeated, but hopefully, there will be more debate, if not here, 
then certainly in America as a whole over the next few weeks and the 
next few months to bring to light how terrible and devastating this 
bill, this Republican bill is, and that we will eventually see changes 
so that it does ultimately make it possible to continue to have a 
quality health care program for the poor senior citizens in this 
country.
         National Conference of State Legislatures, National 
           Association of Insurance Commissioners,
                                                 October 18, 1995.
     Hon. Newt Gingrich,
     Speaker of the House, The Capitol, Washington, DC.
       Dear Mr. Speaker: On behalf of the National Conference of 
     State Legislatures (NCSL), and the Special Committee on 
     Health Care Reform of the National Association of Insurance 
     Commissioners (NAIC), we are writing to express serious 
     concerns about provisions in the House Medicare reform 
     legislation currently under consideration. In particular, we 
     urge you to reconsider provisions in the bill that exempt 
     provider-based organizations (sometimes called provider-
     sponsored organizations (PSOs) or provider-sponsored networks 
     (PSNs)) from the requirements of state regulation.
       The proposal presents significant problems for the states 
     and the current privately-based health insurance market in 
     two fundamental respects. First, consumers could be harmed 
     greatly by the loss of state-level protections resulting from 
     the bill. Secondly, the proposal could eviscerate state 
     regulation of health insurance overall.
       By preempting state laws that otherwise apply to PSOs, in 
     one fell swoop, the proposed legislation completely blocks 
     the application of state insurance laws to these entities. 
     These laws currently include financial and market conduct 
     requirements, as well as other consumer protections, for many 
     types of health plans which are similar to, if not identical 
     in form and operation to, PSOs. Thus, state requirements--
     which have worked effectively for a substantial period of 
     time--would be entirely eradicated for a growing and 
     substantial segment of the health insurance market.
       In order for the federal government to begin to provide the 
     consumer protections deserved by all health care recipients, 
     it must create a bigger and better Health Care Financing 
     Administration to oversee these new organizations. This would 
     result in bifurcated and potentially duplicative state and 
     federal regulatory system. Further, consumers currently 
     benefit from the necessary protections within current state 
     law. It is highly unlikely that the proposed federal 
     regulatory structure would come close to providing elderly 
     consumers with the ability to lodge complaints currently 
     available for enrollees in state licensed plans. Most 
     significant of all, it is unlikely that a new federal 
     bureaucracy could deal effectively with solvency problems, 
     thus leaving the financial stability of the entire system at 
     risk.
       Contrary to the assertions of some, the requirements in 
     state law are not a stumbling block to market innovation. 
     Many provider-sponsored entities already operate and compete 
     under the existing state regulatory structure. We question 
     the viability and quality of those entities which could not 
     withstand the test of state regulation.
       Second, it is perplexing that the 104th Congress, which is 
     to be commended for championing the states in so many 
     respects, would intrude in this instance on states' rights--
     particularly in an area where the states clearly have 
     superior expertise and experience: insurance regulation. The 
     proposed legislation exempts association plans, as well as 
     PSOs, from state regulation. Presently, both types of 
     entities are largely subject to state law.
       You must recognize the threat to the state insurance 
     regulatory mechanism that this provision in the reform 
     legislation presents. The proposed uneven regulatory playing 
     field where PSOs are subject to different, and possibly less 
     stringent, requirements is a discriminatory system. Once 
     created, it will not be easily stopped. Every other type of 
     organization in the health care delivery system will want the 
     same treatment. Importantly, under the terms and definitions 
     of the bill, this will be easy. All entities will reconfigure 
     themselves or form subsidiaries to become PSOs. We urge you 
     to avoid this prospect that could lead to the effective 
     federalization of health insurance regulation.
       In summary, we strongly object to any provisions in 
     Medicare reform legislation which exempt PSOs from state 
     regulatory authority. All Medicare beneficiaries deserve the 
     same protections afforded other citizens of the states. The 
     erosion of traditional state authority contained in the 
     proposal is simply not justified and could worsen, rather 
     than improve, the health care system.
       Thank you for your consideration. Please contact us if you 
     have any questions.
           Sincerely,
     Bill Pound,
                                         Executive Director, NCSL.
     Lee Douglas,
      President, NAIC and Chair, Special Committee on Health Care 
     Reform, Commissioner of Insurance, State of Arkansas.

                          ____________________