[Congressional Record Volume 142, Number 16 (Tuesday, February 6, 1996)]
[Senate]
[Page S895]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      MEDICARE: A CALL FOR REFORM

  Mr. FRIST. Mr. President, I rise today because I cannot in good 
conscience remain silent. As we all know, for many years, the Medicare 
board of trustees has warned of the impending bankruptcy of the 
Medicare trust funds. Many in Congress and in the administration 
dismiss these annual warnings, preferring to spend blindly, counting on 
a wish and a prayer for our children and grandchildren. They say they 
do not believe that Medicare will really go bankrupt. They continue to 
say this, despite all evidence to the contrary. They have accused those 
of us who want to save Medicare of destroying one of the most popular 
programs in American history. But this time, Mr. President, history and 
the hard data, prove them wrong.
  The front page of yesterday's New York Times proclaimed: ``Shortfall 
Posted by Medicare Fund Two Years Early''. What that means is that--for 
the first time in its history--Medicare spent more money than it took 
in through payroll taxes. Mr. President, those of us who have been 
telling the truth about Medicare knew the situation was serious. But, 
this article tells us that it is even worse than we knew. Experts had 
predicted in good faith that the Medicare trust fund would grow, but 
despite their best efforts, they were off by nearly $5 billion. And we 
know for certain that once the trust fund begins to lose money, it is 
on a rapid path to depletion. Richard Foster, the Health Care Financing 
Administration's chief actuary, is quoted as saying, ``Obviously, you 
can't continue very long with a situation in which the expenditures of 
the program are significantly greater than the income. * * * Once the 
assets of the trust fund are depleted, there is no way to pay all the 
benefits that are due.'' Within less than six years, Mr. President, 
there will be no money to pay for any hospital services, for any senior 
citizen in this country. This is not expected to occur in the distant 
future. Again, this will happen within the next 6 years, perhaps even 
before the end of my Senate term.
  There are no signs of improvement in the near future. Mr. Foster, 
points out the causes of the shortfall: First, income to the trust fund 
through dedicated payroll taxes was less than expected; second, 
hospital admissions increased; third, patients were sicker; and fourth, 
hospitals filed claims more quickly. Projections are never going to be 
perfect, but the important thing is that most of the prediction error 
was that Medicare spending grew faster than was projected. Without 
fundamental restructuring of the Medicare Program, bankruptcy is 
certain, and increasingly swift.
  The reaction of the Health Care Financing Administration in the past 
has been to analyze and attempt to figure out the problem. Once again, 
that has been HCFA's response to the latest reports. Historically, the 
Federal Government is far slower than the private sector to respond 
with action to such problems. We must learn from the private sector 
about the value of prudent and decisive action. The 1996 trustees 
report is due out in less than 2 months. We cannot wait around for 
another report that promises bankruptcy, meanwhile wringing our hands. 
Medicare must be restructured to build on the experience of the private 
sector. Proposals to reform the Medicare Program have been proposed in 
Congress for more than a decade. The key fundamental change was to 
allow Medicare beneficiaries a limited choice of private health plans--
restricted to federally qualified health maintenance organizations 
[HMOs]--thus by definition, omitting the many plans available today. 
Yet, where available, these plans are delivering more health care 
benefits and greater out of pocket protection to seniors and the 
disabled than are available from the current Medicare Program.
  I urge my colleagues and the American public to call for bipartisan 
action to preserve, protect and strengthen Medicare. Saving Medicare in 
the short term--the next 10 years--should be the easy part. We must 
revisit the issue as we prepare for the future and the enrollment of 
the baby boomer generation. Changes must be made now to protect our 
seniors and the disabled. If we fail to act now, a much higher price 
will eventually be paid by our children and grandchildren.
  The irresponsible approach is to think of Medicare as a non-evolving 
program. It must keep pace with the times. It must be cost-effective 
and deliver quality care to our seniors and our disabled. Only 
fundamental restructuring of the Medicare Program offers stability for 
the future. We must not fall back on the traditional approach of 
raising payroll taxes and ratcheting down provider fees. We must 
reintroduce the private sector principles into this public program. 
Restructuring does not result in a fundamental dismantling of the 
program. Rather, it offers beneficiaries the same choice of high 
quality health care available to younger Americans. It offers greater 
out-of-pocket protection, more choice of benefits and services and 
greater continuity of care. It brings Medicare from a pretty good 
program based on the 1965 health care market to a great program ready 
to meet the needs of the next century.

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