[Congressional Record Volume 142, Number 18 (Friday, February 9, 1996)]
[Senate]
[Pages S1174-S1175]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MEDICARE SHORTFALL
Mr. LOTT. Mr. President, the headline in Monday's New York Times,
February 5, was even more chilling than Washington's weather. It read,
``Shortfall Posted by Medicare Fund Two Years Early. A Surplus Was
Expected.''
The chief actuary of the Health Care Finance Administration observed,
``Things turned out a little worse than we expected.'' I will say they
did. The administration had projected a $4.5 billion increase in the
Medicare fund balance for fiscal year 1995. Instead, the balance fell
by $35.7 million. The reason for the shortfall was twofold. First,
income from payroll taxes was less than expected. Second, and more
important, outlays were higher because of more hospital admissions than
were expected.
Whatever the reasons, the day of reckoning is coming sooner than
anyone had expected. Throughout last year, the Republicans in the House
and the Senate have urged a solution for Medicare's fiscal ills. We
have hammered home the estimates by the Medicare trustees that the
program would slip into the red ink by 1997, and would go bankrupt by
2002.
Now it turns out even that dire forecast was on the optimistic side.
Medicare has already started paying out more than it takes in. I cannot
help but wonder how the White House will respond to this news. The
administration spin experts must be wracking their brains on this one.
In the face of all the facts, they have to come up with some way to
portray President Clinton as the champion and savior of Medicare.
The fact is that instead of cooperating with the Congress, who wanted
to preserve and protect Medicare last year, President Clinton launched
his Medicare campaign and played Medicare politics ruthlessly, and I
regret to say, somewhat successfully. He convinced or he scared many
Americans into believing that our proposal to strengthen Medicare was
instead a cut in its funding when, in fact, it would allow over the
next 7 years for over a 60-percent increase. Only in Washington is a
60-percent increase in the level of spending over 7 years considered a
cut.
They were somewhat successful in scaring the people into believing
that. When he vetoed that proposal last December, he posed as the
defender of Medicare against extremists in the Congress.
Now, the fiscal chickens are coming home to roost and they are headed
for the roof of the west wing of the White House. Mr. President,
Clinton's game plan for Medicare--to stonewall about the problem's
financial peril in hope of getting safely reelected in another term
after this year have been overtaken by the events that have occurred
recently. He is trapped in a maze of his own mapping.
Here is the dilemma: To make it through this year, I guess he will
have to come up with a Medicare salvage package of his own, but in
order to do that he will have to call for a massive job crippling and
probably recessionary hike in payroll taxes, or he will have to adopt
most of the Republican plan to preserve Medicare. That would be the
same plan he vetoed just last year with such gusto, and with Lyndon
Johnson's pen, no less.
Of course, he will want to do neither. So, he will look for another
way out for an escape, make an evasion. My guess is he will call for a
national commission or a similar proposal to postpone the decisions
that have to be made now. I hope I am wrong. I hope the President will
take another look at the legislation of congressional Republicans, the
work we have drafted, the year we spent developing this plan to save
and protect and preserve Medicare for the future. I hope he will
reconsider his bias against health care choices for seniors. That is a
major part of what we tried to do.
I hope he will renounce his animus against the medical savings
accounts. When I suggest to my senior citizens and even my mother about
the idea of a medical savings account of your own, where you have it to
use, or you do not have to use it, a novel idea, it is yours. It would
help cut out some of the unnecessary use of the system. It is the
American way. Let you choose, let you use your own money, let you save
and get a little interest.
I do not know why the President was so opposed. Maybe he will
reconsider. That could be the final catalyst that brings together a
real budget agreement--not a deal, an agreement--that is good for
America.
Well, maybe I should prepare for the worst, which would be yet
another abdication of sensibly dealing with the problems of Medicare.
We demonstrated that last year that we really could not, as a
government, face up to it. This is not an issue we can walk away from.
It is there. It is not good. It is going to get worse soon. There is
too much at stake for 35 million Americans, the elderly, and the
disabled, for whom Medicare is, quite literally, a lifeline.
It is time we put partisanship and politics aside and address the
real problems for the future of Medicare, for our parents, and for our
children.
I ask unanimous consent the New York Times article by Robert Pear be
printed in the Record, entitled ``Shortfall Posted by Medicare Fund Two
Years Early.''
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the New York Times, Feb. 5, 1996]
Shortfall Posted by Medicare Fund Two Years Early
(By Robert Pear)
Washington, Feb. 4.--New Government data show that
Medicare's Hospital Insurance Trust Fund lost money last year
for the first time since 1972, suggesting that the financial
condition of the Medicare program was worse than assumed by
either Congress or the Clinton Administration.
In a report to Congress in April, the Administration
estimated that the amount of money in the trust fund would
increase by $4.7 billion in the 1995 fiscal year, which ended
on Sept. 30. In fact, officials said in interviews, the
balance in the trust fund fell by $35.7 million, to $129.5
billion.
``Things turned out a little worse than we expected,'' said
Richard S. Foster, chief actuary of the Federal Health Care
Financing Administration, which runs Medicare for 37 million
people who are elderly or disabled. ``We had projected that
1997 would be the first fiscal year with a deficit.''
Income to the trust fund, primarily from payroll taxes, was
slightly less than expected, Mr. Foster said, and outlays
were somewhat higher. There were more hospital admissions
than anticipated, patients were
[[Page S1175]]
somewhat sicker and hospitals filed claims faster than expected, he
said.
The deficit, while relatively small, is significant because
once the trust fund starts to lose money, the losses are
expected to grow from year to year. No tax increases are
scheduled under current law, and Federal officials do not
expect a reduction in the rate of growth in Medicare spending
unless there is a budget deal between President Clinton and
Congress.
No such deal is in sight. The two sides have not held
serious negotiations in three weeks, and they evidently
intend to fight out their philosophical differences in the
November elections.
Moreover, neither party's proposals go far enough to
guarantee the solvency of Medicare for the baby boom
generation, whose members start to reach the age of 65 in
2011.
In general, health policy experts say, the changes needed
to shore up Medicare can be relatively small and gradual if
they are made in the near future, but they will have to be
larger and more abrupt if they are deferred.
Bruce C. Vladeck, administrator of the Health Care
Financing Administration, said: ``We are still analyzing the
Medicare data to see what last year's experience might say
about changing patterns of care or need among the elderly.
In-patient hospital volume went up a bit more than we had
projected. We are trying to figure out why.''
Officials at the American Hospital Association said the
increase was puzzling because it followed more than a decade
of decline in Medicare hospital admissions.
Donna E. Shalala, the Secretary of Health and Human
Services, and three other Administration officials serve as
trustees of Medicare. In the report in April, they said the
hospital trust fund would run out of money late in the year
2002.
Republicans seized on that prediction to justify their
proposals for vast changes in the structure of Medicare. They
said they were cutting the growth of Medicare not to balance
the budget, but to ``preserve, protect and strengthen'' the
program. Mr. Clinton vetoed the proposals, saying they would
hurt beneficiaries and ``dismantle Medicare as we know it.''
In view of the financial shortfall in 1995, the Hospital
Insurance Trust Fund could go bankrupt earlier than
anticipated, perhaps a year sooner, but that is not certain.
``It's hard to say what the implications are for future
estimates,'' Mr. Foster said. ``It's possible this could
advance the depletion date, or the trust fund might be
depleted earlier in the same year, 2002. In any event, it
doesn't help. That's a safe conclusion.''
The trustees and the actuary will make new forecasts in
their next annual report, which under Federal law is to be
submitted to Congress by April 1. The report may be a month
late because of time lost while the Government was shut down
in November and again in December.
The actuary and his staff write much of the trustees'
report. Medicare actuaries have a tradition of independence
and a history of providing objective information to Federal
officials and Congress. This year's report will be closely
scrutinized since it comes in an election year, when Medicare
is an important campaign issue. Under Federal law, the chief
actuary must certify whether the Administration's conclusions
are based on reasonable assumptions and cost estimates.
Private employers have slowed the growth of health costs in
recent years by prodding employees to join health maintenance
organizations and other forms of managed care. While the
number of Medicare beneficiaries in H.M.O.'s is growing
rapidly, only about four million people, representing 11
percent of the beneficiaries, are in H.M.O's.
Medicare's Hospital Insurance Trust Fund pays for hospital
care, skilled nursing homes, home health agencies and
hospices. The trustees' report in April predicted that
outlays would grow an average of 8 percent a year from 1995
to 2002, while income to the trust fund would grow 4 percent
a year.
Referring to the disparity between income and outlays, Mr.
Foster said: ``This gap, which barely showed up in 1995, will
grow in future years. In the absence of legislation, it will
keep getting worse. Obviously, you can't continue very long
with a situation in which the expenditures of the program are
significantly greater than the income. We have enough assets
to cover the shortfall in each of the next few years. But
once the assets of the trust fund are depleted, there is no
way to pay all the benefits that are due.''
While Congress and the Administration recognize that
Medicare is unsustainable in its current form, they disagree
on the urgency of the problem. In 1993, President Clinton
described a health care crisis, demanding transformation of
the entire health care system. But last year, when the debate
focused on Medicare, he expressed less alarm and resisted
many Republican proposals, saying they would have ``Draconian
consequence for the elderly.''
Doctor and laboratory bills are paid by a separate Medicare
trust fund under Part B of the program. It is much smaller
than the hospital trust fund and is financed in a different
way, with beneficiary premiums and general revenues.
This separate Medical Insurance Trust Fund ended the fiscal
year 1995 with a balanced of $13.9 billion,which was $1.7
billion more than predicted it is virtually impossible for
this trust fund to run out of money because it has a sizable
cushion and the premiums and matching Government
contributions are adjusted each year to cover the expected
costs.
Medicare outlays for doctors' services are rising faster
than those for hospital care, in part because complex
services once performed in hospitals are now often done in
out-patient clinics and doctors' offices.
Mr. Clinton and the Republicans agree on many proposals to
curb Medicare payments to hospitals, doctors and other
health-care providers. But it appears unlikely that such
cutbacks will be approved this in the absence of a general
agreement on how to balance the Federal budget.
``No deal is preferable to a bad deal,'' said Mr.
Vladeck,the head of the health care financing agency, who
expresses the Administration's views. ``Everybody agrees on
many things that could be done to save money and to make the
Medicare program better. But we can't do them because members
of the Congressional majority are unwilling to separate those
items from their ideological agenda.''
Repblicans, by contrast, say Mr. Clinton has thwarted their
efforts to save the program from bankruptcy. Under their
proposal, elderly people would have a range of health
insurance options like those available to people under 65,
and the Republicans assume that many would choose H.M.O.'s,
which try to control costs by providing comprehensive care in
return for flat monthly premiums.
Mr. LOTT. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. KYL. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Lott). Without objection, it is so
ordered.
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