[Congressional Record Volume 141, Number 169 (Monday, October 30, 1995)]
[Extensions of Remarks]
[Page E2063]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



               E X T E N S I O N S   O F   R E M A R K S


[[Page E 2063]]


                            THE NEW MEDICARE

                                 ______


                         HON. VERNON J. EHLERS

                              of michigan

                    in the house of representatives

                        Monday, October 30, 1995

  Mr. EHLERS. Mr. Speaker, after months of debate and thousands of 
meetings across the country, the House passed the Medicare Preservation 
Act [MPA] on October 19. Crafting the legislation, which generated 
strong feelings on all sides of the issue, was by no means an easy 
task. I am pleased with the hard work and sincere effort that was put 
forth by many people in developing a better Medicare system.
  Reforming Medicare is an urgent matter that must be addressed. 
Because of the complexity of the issue and its widespread effect on our 
Nation, it is important to understand why the system needs to be 
reformed and what our reform proposal involves. In April the board of 
trustees of the Social Security funds reported that the Medicare part A 
trust fund, which pays for hospital-related services, will be bankrupt 
in 7 years. The part B trust fund, which pays for outpatient services, 
is not in danger of bankruptcy, because almost 70 percent of part B 
premiums is paid by the Federal Government, and the rest is paid by 
beneficiaries who choose this coverage. In 1996, for the first time 
since its creation, the part A trust fund will be paying out more in 
benefits than it collects in taxes. Why? Mainly because the costs of 
providing Medicare benefits have grown at more than double the growth 
of private-sector health care costs. If we fail to address this problem 
and control its excessive costs, Medicare will collapse. It is 
critical, therefore, that we make reforms to save Medicare because 
there are thousands of beneficiaries who depend on it. Medicare has 
served us well for 30 years, but its failure to incorporate private-
sector innovations and to end waste, inefficiency, and fraud requires 
us to develop a better system.
  The MPA will expand the types of coverage Medicare offers:
  One, current Medicare coverage: A beneficiary can choose to continue 
the same Medicare coverage they have now. If they choose to do this, 
their copayments and deductibles will not be increased. They will also 
continue to pay the same percentage of part B premiums, 31.5 percent, 
with the Government paying the remainder of the premium.
  Two, MedicarePlus: A beneficiary is given choices from a new category 
of coverage, MedicarePlus. This option will allow beneficiaries to 
choose the same types of health coverage available in the private 
sector, such as HMO's and other types of coordinated care, instead of 
traditional Medicare coverage. These plans will likely offer full 
health care coverage to beneficiaries, perhaps eliminating the need to 
purchase costly supplementary insurance plans. These plans might also 
involve coverage of additional services, such as prescription drugs and 
eye care, in exchange for a more limited choice of health care 
providers. Beneficiaries would get detailed information in the mail 
each year about types of plans available in their area.
  Three, medical savings accounts: Beneficiaries could also choose 
coverage through a medical savings account [MSA]. This option would 
require beneficiaries to choose a high-deductible insurance policy paid 
by Medicare. The savings achieved through this policy will be placed in 
an individual MSA, which will be used to pay for health care expenses 
within the deductible, or to purchase long-term care insurance.
  The reforms don't stop there. The new Medicare Program will also make 
significant reforms in payments for doctors, hospitals, and other 
health care providers, in order to control costs. Government-funded 
Medicare coverage for the wealthy will be phased out, starting with 
couples with incomes above $125,000 and individuals with incomes above 
$75,000. A special commission will be created to study the effects of 
the retirement of the large baby boom generation, when there will be 
only two workers to support every retiree. Mechanisms to detect fraud 
and abuse will be strengthened, and beneficiaries who detect any 
wrongdoing in their bills will be rewarded. Finally, the plan will 
install a failsafe mechanism to monitor the reforms and ensure that 
they are achieving the savings necessary to protect the system.
  Unfortunately, during the long debate about the MPA some groups and 
individuals generated misinformation about the proposal. It is 
important to understand that these reforms were not introduced in order 
to offset tax cuts or balance the budget. If these reforms are not 
adopted, the system will simply collapse. This is not a quick fix; 
these changes are needed to protect and preserve the long-term health 
of the system.
  As is the case with any change, glitches may occur as the plan is 
implemented. While it would be ideal if the reforms were perfect, it is 
likely some may need correction. Therefore Congress will monitor the 
implementation process and correct any mistakes that may occur.
  Now that the House has given its approval, the MPA has been 
incorporated into a larger budget package. It will now move on to the 
Senate before it is sent to the President for his signature.

                          ____________________