[Congressional Record Volume 141, Number 200 (Friday, December 15, 1995)]
[Senate]
[Pages S18692-S18695]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           REFORMING MEDICAID

  Mr. ROTH. Mr. President, according to a familiar advertisement in the 
Nation's Capital, ``If you don't get it, you don't get it.'' Anyone who 
read the December 12 editorial in the Washington Post entitled ``Budget 
Sticking Point,'' now gets it and understands there is, indeed, a 
historic struggle being waged over Medicaid.
  Over the past several months, the local liberal spin on the 
Republican proposals on welfare, Medicaid, and Medicare, has been that 
we were not really interested in reforming these programs.
  According to the critics, the Republicans were only hunting for 
budget savings without regard to sound public policy. And to its 
credit, the Post realizes this is empty campaign rhetoric and there is, 
indeed, much more at stake.
  But while the Post concludes the Federal mandates in Medicaid must be 
preserved, Republicans believe they must end precisely for the same 
reason. Who should decide how much more than $1.5 trillion should be 
spent on health care over the next 7 years, the bureaucrats in 
Washington or the Governors and State legislatures?
  Spending $1.5 trillion represents tremendous power. The Republican 
proposal to invest this responsibility in the States represents a sea-
change in how Government works. This realization shakes Washington to 
its very core. If we are successful, Washington will no longer be the 
center of this power and that is precisely why so much effort is being 
made to scare people about the Republican proposals.

  This debate over Medicaid is just one chapter in the larger struggle 
over our system of federalism. The debate goes to the heart of our 
beliefs about 50 sovereign States united together as a nation. The 
partnership between the Federal Government and the States in running 
the current welfare system has been a pretense in the recent past. Over 
the past few years, the partnership has, in fact, been an adversarial 
relationship, based on mutual distrust, suspicion, and threats. 
President Clinton understand this when, as a Governor a few years ago, 
he joined 47 other Governors to petition Congress for a moratorium on 
new Medicaid expansions.
  Despite the pleas of the Governors, there was no moratorium. Medicaid 
costs tripled between 1985 and 1993. In 1980, Medicaid spending 
accounted for about 9 percent of all State spending. In 1990, it 
accounted for about 14 percent of State spending. Medicaid now consumes 
20 percent of State spending.
  This trend is a threat to our system of federalism. As Medicaid 
places greater fiscal demands on States, they have been forced to 
reduce their percentages of spending on education, transportation, and 
other vital governmental services. For example, the General Accounting 
Office reports that Medicaid nearly equals the State expenditures for 
elementary and secondary education combined. This is a very important 
yardstick as education has generally been the largest segment of State 
budgets. Without reform, there will be no choice about how States will 
determine priorities among important services, the funds will simply go 
to Medicaid. Washington has seized the power of decisionmaking from 
those elected officials closest to the people.
  The significance of reversing this quiet coup has been distorted by 
those who share in the power gained by it. The argument that the poor 
and the institutions which serve them will be 

[[Page S18693]]
stranded by the States is simply wrong. As the power is drained from 
Washington, all Americans, including those who depend on others for 
their access to health care, should eagerly anticipate the reciprocal 
actions to take place in the States.
  Freed from the current adversarial system, the States will be able to 
design their own unique methods to help families overcome adversity. 
States will find more innovative ways to use this money to help 
families than Washington ever imagined. Under the Republican proposal, 
State governments will be empowered to use Medicaid dollars to act in 
the same manner as the private sector to lower costs while at the same 
time improve quality.
  Medicaid reform will trigger a series of benefits throughout the 
States. Last year, President Clinton was right when he stated that 
``the health care issue is an important part of welfare reform.'' 
Although his solution was fatally flawed, he correctly identified the 
real issue before us now. The President said,

       The biggest problem we've got with welfare for a lot of 
     people is that--remember if you're poor, on Medicaid and no 
     welfare, your children get health care. If you take a minimum 
     wage job in a business that doesn't have health insurance, 
     you have to give up your kid's health care to go to work.

  Mr. President, this is precisely why Medicaid reform is so vital. The 
present system traps families into welfare dependency. The current 
scheme is laden with perverse disincentives. Many families will return 
to work and no longer need cash assistance, if the power of Medicaid 
dollars is used in the marketplace to secure health care for low-income 
families. For example, the General Accounting Office recently reported 
that Tennessee has extended coverage to several hundred thousand newly 
eligible individuals while increasing expenditures by less than 1 
percent. State officials in four States with demonstration waivers 
estimate as many as 2 million previously uninsured individuals can be 
provided with coverage while yielding savings of about $6 billion over 
5 years.
  Over the past several years, large private employers have used their 
muscle in the marketplace. Private sector employers and, I might add, 
the Federal Government for its own employees, have been using 
competition in ways to simultaneously lower costs and increase quality.
  In Medicaid, however, we have witnessed the opposite effect. The 
Boren amendment, for example, has been used to actually bid the price 
of nursing home care up higher. Between 1980 and 1985, Medicaid 
payments for nursing home care increased by an average of 7.8 percent 
annually. In 1989, payments had increased by 8.8 percent from the 
previous year. But after a key Supreme Court decision on the Boren 
amendment in 1990, Medicaid payments for nursing home care increased by 
17 percent in 1991.
  Utah's Medicaid Program provides 30 percent more benefits than these 
provided to the average worker in the private sector. Yet the Federal 
Government has prohibited Utah from leveling the Medicaid benefits to 
118 percent to the average private sector plan. The Governor would have 
used the savings to extend coverage to people who are currently 
uninsured, but the Federal bureaucracy refused to approve this 
initiative.
  Through a decision by the Secretary of Health and Human Services, the 
working families of Utah are required to support a system which 
provides better benefits than they purchase for themselves. This is the 
system the administration insists it must safeguard. This has nothing 
to do with protecting the vulnerable.
  Medicaid reform is needed to eliminate wasteful and unnecessary 
duplication. Under current law, States, are required to screen 
individuals entering nursing homes to prevent inappropriate placement. 
California has performed 80,000 such screenings each year since 1989 at 
a total cost of $28.5 million. Only five individuals have been 
identified by this mandated program as having been inappropriately 
placed. That is a cost of $5.6 million per individual identified as 
needing a more appropriate placement. What interest does this serve? 
Certainly not the interest of the taxpayer nor the recipient. Finding 
the right nursing home setting just takes plain common sense, not the 
Federal bureaucracy.

  Those who insist on maintaining the status quo are scaring the 
elderly and disabled. In truth, these needy citizens have nothing to 
fear from the Republican proposal. The Post editorial is rooted in the 
past. For a glimpse at the future, I recommend an article by 
Massachusetts Gov. William Weld entitled, ``Release Us From Federal 
Nonsense,'' which appeared in the Wall Street Journal this past week. 
Governor Weld states that:

       Before we privatized mental health services, patients were 
     warehoused in state institutions; now we save $60 million a 
     year, and the patients live in less intrusive settings that 
     almost everyone agrees are much more humane. In case after 
     case, not only did we not hurt the poor, the elderly, and the 
     vulnerable, we managed to do a lot better by them than 
     previous administrations.

  It has been the States which have protected the dignity of so many by 
helping disabled individuals to live with their families. The States 
understand disabled individuals need a continuum of care and a variety 
of services including medical care, income support, nutrition 
assistance, education and training, transportation, and social 
services. Devolution of authority will improve the coordination and 
quality of services. Advocacy is strongest at the closest point of 
service. While Washington works to protect programs, the States are in 
a superior position to protect the interests of people. It is the 
arrogance of Washington, as Governor Weld describes, that prevents the 
States from serving our citizens even better.
  Mr. President, the Washington Post was correct to point out that the 
Medicaid debate is not just about money, although we must not overlook 
the importance of our securing our economic future through achieving a 
balanced budget. The Post prefers to promote the current Medicaid 
system above the interest in restoring the balance of power between the 
States and the Federal Government. In doing so, it has failed to 
recognize that Medicaid is drawing resources away from education and 
other vital services. Moreover, the future ability of the States to 
preserve their constitutional role in our system of federalism should 
not be so lightly dismissed. In a landmark case about federalism, 
Supreme Court Justice Sandra Day O'Connor warned, ``all that stands 
between the remaining essentials of State sovereignty and Congress is 
the latter's underdeveloped capacity for self-restraint.'' Our system 
of federalism is truly reaching in crossroads and Medicaid is one of 
the landmarks which will guide our choice.

  At its core, the Republican proposal to reform Medicaid is about 
rediscovering our fundamental principles about Government by consent. 
Franklin Roosevelt once stated that:

       It must be obvious that almost every new or old problem of 
     government must be solved, if it is to be solved to the 
     satisfaction of the people of the whole country, by each 
     state in its own way.

  Mr. President, this simple statement captures so clearly and so 
precisely what the Republicans are proposing to the American people. 
There is no greater threat to our democratic institutions today than 
the consolidation of power in Washington. It is time to free the States 
and our citizens from the chokehold of the Federal Government. The Post 
has this much right--the fight is not just about the Federal budget. 
There is indeed so much more at stake.
  Mr. President, I ask unanimous consent a copy of the Washington Post 
editorial and a column by Governor Weld be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, Dec. 12, 1995]

                         Budget Sticking Point

       If the current budget talks break down, the hang-up likely 
     won't be money. The parties will split instead on the ancient 
     question: To what extent should the federal government 
     guarantee a minimum standard of living, or minimum level of 
     benefits, to the poor? The crucial battle-ground in this will 
     be Medicaid, by far the largest federal ``welfare'' program 
     through which the federal and state governments together help 
     pay the health care bills of lower-income children and the 
     needy elderly and disabled--all told, about a seventh of the 
     population.
       The money issues won't be easy. But Congress deals with 
     money issues all the time, and the differences between the 
     parties are already starting to melt. The Congressional 
     Budget Office has freshened the economic and programmatic 
     assumptions on which its 

[[Page S18694]]
     estimates of future deficits are based, and more than $100 billion of 
     the problem has disappeared. An agreement to adjust Social 
     Security benefits and such features of the tax code as the 
     personal exemption and standard deduction by less than the 
     full inflation rate for a number of years could raise many 
     billions more. If the Republicans will then backoff their tax 
     cuts a little while the Democrats ease their opposition to a 
     Medicare cuts, you're close to home. Except for the basic 
     question: What should be the future federal role, 
     particularly with regard to assisting the poor.
       The Republicans basically think the federal government 
     should do less, and the president has already done a fair 
     amount of retreating on the issue. The current welfare 
     program embodies a federal guarantee of aid to needy single 
     parents and their children; he has indicated he would sign a 
     welfare bill dropping that. He has indicated a willingness to 
     limit future housing aid by capping the appropriations on 
     which it depends as well.
       That leaves three other major federal programs for the 
     poor--Medicaid, food stamps and the earned-income tax credit, 
     which stretches the wages of lower-income workers with 
     children. On these the president has said to Democrats and 
     advocacy groups unhappy with his welfare and housing 
     concessions that we will not give major ground but will hold 
     the line. The Republicans, though they've proposed deep cuts 
     and assorted structural changes in all three of these 
     programs, have indicated that on food stamps and the tax 
     credit they don't care that much; they themselves are 
     divided.
       On the structure of Medicaid, though, they have said there 
     will be no give, and there you are. They want to go to a 
     system of block grants, cut projected federal spending 
     sharply, cut what the states must put up to get their federal 
     funds, and largely let the states decide how and on whom the 
     money will be spent. This would pretty well eliminate the 
     federal guarantee that the needy young and elderly could 
     count on a certain level of care. The President rightly wants 
     to preserve the guarantee. He would meanwhile cut projected 
     costs by capping the annual increase per beneficiary--the 
     right way to do it.
       Much more is at stake in this than just a balanced federal 
     budget and the balance of power between the federal 
     government and the states. Medicaid is not just a major 
     federal cost and major source of aid to state and local 
     governments; it is the insuror of last resort in the health 
     care system. Especially if even costlier Medicare is to be to 
     shaken up and cut, Medicaid needs to be preserved to protect 
     the vulnerable. The alternative is even more people 
     uninsured; the poor, the states and the hospitals and other 
     institutions that serve the poor would all be stranded. This 
     fight is not just about the federal budget and the federal 
     role. It's about that.
                                                                    ____


             [From the Wall Street Journal, Dec. 11, 1995]

                    Release Us From Federal Nonsense

                          (By William F. Weld)

       Right now, America is well on the road to block-granting 
     welfare, Medicaid, and job training, and allowing the states 
     to shape these programs to fit their own ends. And most of 
     the nations' governors say a mighty hurrah.
       Washington Democrats, however, talk about this shift of 
     power from the federal government to the states as if it 
     represents a return to a more primitive time--to an America 
     without indoor plumbing or electric lights or a conscience.
       We governors find this highly ironic. Because from our 
     perspective in the state houses, it's Washington that has 
     been living in the Walker Evans photographs from the 
     thirties. We embraced the future some time ago.
       Most of us already have cleaned up our budgets to eliminate 
     deficits; we've cut taxes; and within the handcuffs the 
     federal government has put on us, we've improved our social 
     services while cutting the bloat.
       For example, it's been clear for years that the federal 
     welfare system is an abomination that lays families to waste; 
     Senator Daniel Patrick Moynihan's been saying this almost 
     since he was in short pants. But year after year welfare 
     bills have been passed without Congress doing anything about 
     the most glaring problems in the system, until finally the 
     states gave up on Washington, applied for waivers, and took 
     things into their own hands as far as the federal government 
     would permit.
       So when Washington Democrats characterize our enthusiasm 
     for block grants as naivete--or worse, a perverse desire to 
     begin some race to the basement--they've missed the point 
     entirely. If the federal government would just release us 
     from its bureaucracy and nonsense, we'd make these programs 
     better for those they serve, and we'd do it for less money.
       I think our experience in Massachusetts is instructive.
       By the time I was elected governor, Massachusetts had 
     achieved a high state of refinement. Our Department of 
     Corrections was under the wing of the Human Services Office--
     as if it were the taxpayers' obligation to help them have 
     more children they couldn't support. We had a new sales tax 
     on business services--as if that were the best way to 
     celebrate a thriving service economy.
       And our economy was falling to pieces; we were regularly 
     releasing violent criminals back to the streets to continue 
     their mayhem; and we managed to achieve the highest rate of 
     out-of-wedlock teen births in the country.
       We began getting Massachusetts' fiscal house in order by 
     taking on the ``budget-busters,'' and many of them were the 
     same ugly mugs the federal government is facing right now.
       In the four years before I was first elected governor 
     (1990), Medicaid costs in Massachusetts rose by 20% a year. 
     With Managed Care Medicaid, we brought that down to 3% a 
     year.
       We took on welfare, too--a state entitlement program known 
     as General Relief, and it was mighty general indeed. The 
     conditions that got you on the rolls were so loose that if 
     you were over 45 years old, overweight and without a stable 
     work history, you qualified. In other words, I qualified.
       We replaced General Relief with an emergency aid program 
     for the elderly, the disabled and children, and managed to 
     save $100 million out of a $14 billion budget, just by 
     targeting the help to those who really needed it.
       Advoctes predicted a ``bloodbath.'' They said we'd have 
     people starving in the streets. But nothing of the sort ever 
     happened, and the doomsday scenarios faded away. In fact, a 
     quarter of our General Relief customers didn't even bother to 
     reapply.
       All along the way, we stepped on special interests who used 
     the same scare tactics we're seeing today in Washington. But 
     these tactics are far less effective when they are used in 
     one's own district, because voters can more easily see how 
     their money is being spent and, often, misused--another 
     argument for letting states take care of their own.
       When we cut taxes, we heard that we were reverse Robin 
     Hoods. What the protectors neglected to mention was that our 
     frugality not only allowed us to phase out the long-term 
     capital gains tax, it also allowed us to lift the tax burden 
     on low-income working people.
       When we made changes to Medicaid, we heard that we were 
     abusing the poor. But before we put Managed Care Medicaid in 
     place, most poor children had no primary care physician, and 
     many weren't getting their shots. Now a little girl with an 
     earache doesn't have to report to an emergency room to get 
     medical attention; she has her own doctor who knows her by 
     name. And we've got advocates praising our Medicaid program 
     in public.
       Before we privatized mental health services, patients were 
     warehoused in state institutions; now we save $60 million a 
     year, and the patients live in less intrusive community 
     settings that almost everyone agrees are much more humane. In 
     case after case, not only did we not hurt the poor, the 
     elderly and the vulnerable, we managed to do a lot better by 
     them than previous administrations.
       Our experience is not unique. All across the country, 
     creative governors are aggressively dealing with problems 
     Washington is just beginning to wake up to. So if the 
     question is whether state governments are responsible enough 
     to dispense welfare and Medicaid funds in our own way--we're 
     more than ready.
       Not only can we handle that responsibility, it's rightfully 
     ours. The 10th Amendment of the Constitution says quite 
     plainly that the powers not expressly given to the federal 
     government are reserved to the states and to the people. And 
     common sense dictates the same thing.
       Government ought to be as local as possible, as close to 
     the people as it can be, because generalities rarely get the 
     story straight. So in my operation, we're doing some 
     devolving ourselves, putting all the regulatory functions of 
     government under a single office and sunsetting the entire 
     25,000 pages of the Code of Massachusetts Regulations, so 
     our cities no longer have to apply to a half-dozen state 
     agencies every time they want to put up a stop sign or a 
     curb cut.
       When it comes to social programs, the states shouldn't have 
     to beg Washington for the right to put up a stop sign. The 
     welfare reform law my state passed this year is full of badly 
     needed stop signs. It includes a family cap that will allow 
     us to cease subsidizing illegitimacy. It requires those with 
     school-aged children to go to work within 60 days. It 
     requires teenage mothers to live at home and finish high 
     school, so they'll have a shot at something better than 
     welfare. It puts a two-year limit on benefits, so welfare 
     will be what it should be--a temporary leg up, not a 
     permanent lifestyle. And it allows our Commissioner of 
     Transitional Assistance to make exceptions for hardship 
     cases.
       For every change we wanted to make, we had to ask 
     Washington's permission for a waiver of federal law and then 
     put up with half a year of paper pushing and haggling. 
     Ultimately, the Clinton Administration refused to grant us 
     one of the cornerstones of our plan, the two-year limit.
       The irony here is that our law passed with the overwhelming 
     support of a Democratic Legislature. It's sheer arrogance for 
     Washington to think it knows better than Massachusetts what 
     Massachusetts needs, but the current waiver system encourages 
     that arrogance. If President Clinton really wants to end 
     welfare as we know it, he should sign the bill ending welfare 
     as we endure it.
       Washington has long tried to direct our life here at sea 
     level from the summit of Mount Everest. In the process, it 
     has turned entire communities into public sector hells. It 
     has made fatherlessness the norm for two generations of 
     inner-city kids and given birth to a frightening culture of 
     drugs and violence.
     
[[Page S18695]]

       We know these communities. Washington doesn't.
       It's time for President Clinton to allow the states to give 
     it our best shot. We couldn't do worse than Washington. I 
     know we'll do much, much better.

                          ____________________