[Congressional Record Volume 141, Number 165 (Tuesday, October 24, 1995)]
[Senate]
[Pages S15568-S15570]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                MEDICARE

  Mr. FRIST. Mr. President, I rise today to join my colleagues who 
earlier discussed what is truly a historic budget reconciliation that 
will be coming to the floor in the morning. This is legislation that 
will balance the Federal budget in 7 years, and that is the issue 
before us; that will reform welfare, and that is the issue before us; 
that will save Medicare from bankruptcy, because that is the issue 
before us; and which will provide much needed tax relief to American 
families.
  The Social Security and Medicare programs were reviewed in a 
document. The trustees, there were six in all, three of whom were on 
the Clinton administration's Cabinet, made it very clear that the issue 
before us in Medicare is to save it from bankruptcy, to save the entire 
program--not just a part of it, not just one trust fund, but the entire 
program.
  On the first page of the report of the trustees--and, again, the 
trustees, three of whom are from Clinton's Cabinet--it says very 
clearly, ``The Federal Hospital Insurance Trust Fund will be able to 
pay benefits for only about 7 years and is severely out of financial 
balance in the long range. The trustees believe that prompt, effective 
and decisive action is necessary.'' And that action we have in this 
reconciliation package.
  On page 13 of this same report it spells it out very clearly that, 
``both the hospital insurance trust fund and the supplementary medical 
insurance trust fund show alarming financial results.'' That is part A 
and part B; not just part A, as we so often hear from the other side of 
the aisle.
  I continue reading from page 13, ``The HI trust fund continues to be 
severely out of financial balance and is projected to be exhausted in 7 
years. The SMI trust fund [which is part B, the physician part] shows a 
rate of growth of cost which is clearly unsustainable.''
  Again, reading the exact words, these words are from Sanford Ross and 
David Walker, the two public trustees, ``The Medicare program is 
clearly unsustainable in its present form.'' Not just the part A trust 
fund but the Medicare program. Again, we hear from the other side of 
the aisle we can put another Band-Aid on this program. We can do what 
we have done in the past and ratchet down a little more on the 
hospitals, because it is not a crisis. It is not all that urgent. ``We 
have seen it before over the last 10 years,'' the other side of the 
aisle says. Yet the trustees say, ``We strongly recommend that the 
crisis presented by the financial condition of the Medicare trust funds 
[both funds] be urgently addressed on a comprehensive basis.''
  These are the trustees' words. I point that out because, again, we 
hear every day and several times a day, ``Let us just put another $100 
billion into the program and that will take care of it for another 
couple of years.'' No, the trustees say we need to address part A, and 
part B, hospitals and doctors, the program overall, and not just one 
aspect of that program.
  So, we make the case. The trustees have made the case that Medicare 
is going bankrupt if we do nothing. The American people did not know 
that 1 year ago, or even 8 months ago. Now our senior citizens 
recognize that. Our individuals with disabilities recognize that. And 
they recognize that we are going to have to change the system, bring it 
up to date, to 1995 standards. It is a good program. As a physician I 
have seen that it has cared for millions and millions of our senior 
citizens in an effective way. But, as the trustees said, it cannot be 
sustained. It needs to be modernized.
  We pointed out again and again that we are going to increase spending 
in the Medicare program. Just a few moments ago we heard, when you 
adjust it on a per beneficiary, or per capita, or per person basis we 
are really not increasing it. That is not true. On a per capita, per 
person, per senior citizen, we are spending $4,800 a year this year and 
that is going to increase next year and that is going to increase the 
year after that, and increase the year after that to, by the year 2002, 
just 6\1/2\ years from now, we are going to be spending $6,700, almost 
$2,000 more than we are spending today. And that is not a cut.
  It is going bankrupt if we do nothing. We have heard no alternative, 
reasonable alternative that addresses the overall program from the 
other side of the aisle.
  Second, we are going to increase spending, not cut.
  And, third is something that I am most excited about, again because 
of my past experience as a physician, as one who has taken care of 
thousands of senior citizens. When I close my eyes I do see faces, 
individual faces of mothers, of grandmothers, of fathers, of 
grandfathers, of individuals with disabilities. We cannot just throw 
more money at the problem, more Band-Aids. We have to strengthen the 
system.
  We have not given enough attention publicly to what we are doing in 
strengthening this system, in improving it, in giving our seniors and 
individuals more options that meet their individual needs. That is 
where we are giving them the right to choose, empowering them to choose 
a plan which might better meet their needs but at the same time 
allowing them to keep exactly what they have today if they wish.
  Let me refer to this chart, just to explain what I mean by that, how 
we are strengthening the program. Just focus on the top part of this 
part. Today we have fee for service, traditional fee for service, where 
you choose your own physician, you pay your physician in a very direct 
fashion for the services delivered, and about 91 percent of the 37 
million people on Medicare today are in a fee for service system.
  About 9 percent of those 37 million people are in an HMO. It is a 
very limited model. It is a very closed model today, but that is an 
option for 1 out of 10 of our citizens. On the other hand, in the State 
of Tennessee there are no HMO's in the Medicare system. Everybody, the 
number actually in Tennessee of all those 37 million people, for the 
most part are in just this fee-for-service system.
  We are going to hear the plan laid out a little more over the next 
few days. But what does it do for our senior citizens? As I said, our 
senior citizens can stay in fee for service, keep their same physician 
today, not be forced 

[[Page S 15569]]
out of that system at all. Or they can stay in an HMO, if they happen 
to be there and are pleased with that. But look what we are actually 
opening up to those senior citizens: A wonderful array of plans that 
can better meet their individual needs.
  If you need a lot of prescription drugs, you are not going to want to 
be in a fee-for-service system where prescription drugs are not 
covered. You might want to pick one of these other plans. You do not 
have to, but you can, for the first time in 30 years in the history of 
this program.
  Medical savings accounts; for the first time a senior citizen can 
pick a medical savings account or indemnity plan or a preferred 
provider organization or a point of service plan, or a union-sponsored 
plan. For the first time, our senior citizens are going to be able to 
opt for the plan that better meets their needs.
  Medical savings accounts--let me just take a few minutes and talk 
about medical savings accounts, because it is an example of an option 
that our seniors today have no access to, that, once this bill passes, 
they will be able to choose if they would like. The use by health 
consumers of MSA's will change provider behavior--the physician, the 
hospital--as well as consumer behavior. Why? Because it, if one chooses 
that, will decrease the role of third-party payers.
  It will also increase an individual's awareness of the health care 
costs. Today, there is really very little incentive for patients to be 
cost-conscious consumers of health care. On average, every time a 
patient in America receives a dollar's worth of care, 79 cents is paid 
by a third party--by an insurance company, or by the Federal 
Government. Only 21 cents is paid by that patient.
  The result is that we have the potential--and I believe grossly--of 
over-consuming medical services today. Everyone wants it. It is a human 
tendency. You want it for your mother, your spouse, and your children. 
Everybody wants the latest, the hottest, the most sophisticated, and, 
yes, usually the most expensive in whatever medical service it is. It 
might be the most deluxe hospital room, or it might be getting an MRI 
scan for a headache, or it might be the latest in nuclear medical 
imaging. We want the very best. This does play a role in increasing the 
cost of health care.
  Medical savings accounts--which are savings accounts that an 
individual puts money into and can draw upon for care--will help 
introduce incentives, marketplace incentives, for most cost-conscious 
behavior.
  MSA's, medical savings accounts, give individuals more choice in the 
health care market. Our senior citizen cannot join an MSA today in 
Medicare. It will help stem rising health care costs without decreasing 
availability or the quality of patient care. It empowers individuals to 
make prudent, cost-conscious decisions about their health care, about 
their health care needs, and how to meet those needs. And it will 
encourage hospitals and physicians to compete for patients on the basis 
of cost, yes, but also outcomes and quality of care.
  There is another important aspect of medical savings accounts, and it 
is really overlooked almost always by policymakers in Washington; that 
is, the effect that empowerment of individuals--37 million individuals 
potentially, although I do not think it will be that--but that 
empowerment actually changes provider behavior. It changes physician 
behavior. Doctors, like patients, are accustomed to a system that is 
not subject to market forces. Since insured patients do not have any 
incentives to shop around or ask outcome questions or compare medical 
services, whether it is based on price or outcome, physicians are not 
rewarded for providing cost-conscious care.
  Throughout much of my practice as a heart surgeon and a heart 
transplant surgeon, I would perform a heart operation, submit the bill, 
and the bill was paid with no questions asked by the patient.
  The PRESIDING OFFICER. If the Senator will suspend, under the rules 
of morning business we are operating in, Senators are limited to 10 
minutes unless the Senator asks unanimous consent.
  Mr. FRIST. I ask unanimous consent that I be allowed to continue for 
5 minutes.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. FRIST. Mr. President, traditionally no questions have been asked. 
One day an individual came to see me. He actually needed a heart 
transplant. He came with a list of transplant centers. He said, ``These 
are outcomes that I have heard about. What are your outcomes?'' He 
asked, ``What are your infection rates, and how much do you charge for 
heart transplants?''
  To be honest, nobody had ever come in and asked, ``How much do you 
charge for a heart transplant?'' What I did was actually turn around 
and go back to my transplant team, and say, ``Let us see exactly what 
we charge. Let us be able to answer that question why we charge what we 
charge as well as look at the outcome data and how our results were 
compared to other people,'' not only with my own practice and my own 
transplant team, but the other transplant teams in my center.
  I brought them together, and sure enough, we looked at quality 
standards. We got those out to the community. And, yes, we lowered our 
prices for how much we would charge for transplantation. Just because 
of one empowered patient who came forward and asked the right 
questions, I think we improved quality, we improved care, and we gave 
more cost-effective care.
  Because someone else usually pays the bills, many patients forget 
that they are consumers. They do not ask providers to be accountable. 
If one individual can make such a difference, just imagine what impact 
we can make when we empower thousands of individuals similarly.
  Because I strongly believe that empowerment of individuals will help 
reform--not totally reform the system but help reform, the delivery of 
health care--I recently introduced a bill, S. 1249, which provides for 
establishment of a little bit different type of MSA. Under this bill, 
just to use an example, an employer would deposit up to $2,500 in a 
tax-free savings account for an employee and would also purchase a 
catastrophic-type health insurance policy to cover the cost of 
extraordinary medical expenses. Routine expenses, like eye glasses, 
annual checkups, possibly prescriptions and dental work would be paid 
by the employee using that medical savings account. If you did not use 
all those funds, that medical savings account would accumulate from 
year to year. Self-employed and uninsured individuals would also be 
able to establish an MSA link with a low-cost insurance plan under this 
bill.
  Unlike the other MSA proposals introduced in Congress, my bill allows 
for greater flexibility in benefit design. S. 1249, unlike some of the 
other more restrictive MSA's, allows managed care companies to offer a 
low-cost plan based on higher cost sharing rather than just a large, 
rigid deductible. Restricting plan participation to the size of the 
deductible may work fine in today's market, but as we learn more and 
more about how individuals purchase health care services under an MSA, 
the market may need greater flexibility which can be accomplished under 
our plan.
  Indeed, many insurance plans today have modified their benefit and 
cost-sharing design over time to alter consumer behavior. Some critics 
of MSA's are concerned that individuals may forego preventive care to 
save money. I personally believe that greater control over your health 
care dollars will encourage more preventive care in this environment.
  In my MSA proposal, we would allow a plan to possibly stretch the 
effect of cost-conscious purchasing by requiring a 50 percent copayment 
for the first $5,000 of services in a year as opposed to the 
traditional high deductible plan. My bill would allow this flexibility.
  Mr. President, in closing, we, in America, are fortunate to have the 
absolute highest quality health in the world. When leaders of the world 
become seriously ill, they do not go to Great Britain or Canada to seek 
treatment. They come to the United States. While there are those who 
would like to stifle our technological advances and allow bureaucrats 
to tell us how much and what kind of health care we can receive, the 
American people have loudly and clearly rejected this notion. 

[[Page S 15570]]

  No one can predict what will happen in medicine over the next 50 
years. Over the last 50 years, there have been tremendous changes. The 
technological advances are simply mind-boggling. The challenge for us 
in health care is to maintain the highest quality of health care in the 
world and at the same time to continue to make it available to all 
Americans, but this can be done only if we change that basic framework 
through which medical services are consumed.
  A medical savings account, again, is not the answer to these 
problems. But it is an alternative. It is an option which will go a 
long way to empower individual consumers.

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