[Congressional Record Volume 142, Number 64 (Thursday, May 9, 1996)]
[House]
[Pages H4788-H4791]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 REPUBLICAN BUDGET FOR FISCAL YEAR 1997

  The SPEAKER pro tempore (Mr. Taylor of North Carolina). Under the 
Speaker's announced policy of May 12, 1995, the gentleman from New 
Jersey [Mr. Pallone] is recognized for one half of the time remaining 
before midnight as the designee of the minority leader.
  Mr. PALLONE. Mr. Speaker, I know that the hour is late, but I would 
like to address the Speaker and my colleagues tonight because today, in 
fact yesterday but we received more information today, the Republican 
leadership unveiled their budget, their budget for the next fiscal 
year. Very upsetting to me and I think particularly to senior citizens 
throughout this country, once again we see that the budget is very 
heavily dependent on cuts in Medicare and Medicaid, primarily once 
again to pay for tax breaks for the wealthiest Americans.
  I think that we know that in 1995, all of last year, we went through 
a series of efforts with the Republican leadership budget to try to 
oppose what Speaker Gingrich and the Republican leadership were trying 
to do to Medicare. They repeatedly came up with budget initiatives that 
would have cut Medicare and Medicaid severely, again primarily to pay 
for tax breaks, and again those tax breaks primarily to wealthy 
Americans.
  I had hoped because of the battle that ensued, that was largely taken 
up by Democrats against this proposal, that we would not see it raise 
its ugly head again. But in fact it has, and yesterday and today and I 
am sure over the next few weeks we are going to see again an effort to 
basically use the budget and use the cuts in Medicare and essentially 
pay for the Republican-proposed tax breaks on the backs of senior 
citizens.
  Now, I know I am going to hear over and over again from the 
Republican side that that is not really what is happening here, what we 
are really trying to do is somehow protect Medicare, or that somehow 
the level of cuts that are being proposed by the Republican leadership 
are not that different from some of the things that the President or 
some of the Democrats have proposed over the years.
  But I would point out that there are major changes in the Medicare 
and

[[Page H4789]]

Medicaid program that are being proposed by the Republican leadership, 
so that it is not just a question of dollars, it is also a question of 
what the Medicare and Medicaid programs are going to be like. I would 
venture to say that they are going to be radically different from what 
seniors expect and have seen in Medicare over the last 30 years. In 
fact, I would say that the every nature of these changes in Medicare 
basically destroys the Medicare program and makes it into something 
which is very different and very radical from what we have today.
  I am not surprised by that, because one of the points that I kept 
stressing throughout the Medicare debate last year was that the 
Republican leadership really does not like Medicare, really does not 
care whether Medicare is changed or negatively impacted because many of 
them never supported Medicare from the beginning.
  I would cite a quote that was made by the likely Republican candidate 
for President, who said, and I quote: ``I was there fighting the fight, 
voting against Medicare, one out of 12, because we knew it would not 
work,'' in 1965 when he was then a Congressman here in the House of 
Representatives. That statement was made by the Republican Presidential 
candidate just last October 24, 1995.
  Similarly, we have the Speaker, the Republican Speaker of the House 
of Representatives. He made another interesting comment which is very 
similar, if you will, back in October, on October 26, 1995. He said, 
``We do not get rid of it,'' referring to Medicare, ``in round one 
because we do not think that that is politically smart and we do not 
think that is the right way to go through a transition period. But we 
believe it is going to wither on the vine because we think people are 
voluntarily going to leave it.''

  Well, that was a statement that was made by Speaker Gingrich again in 
October of last year. But what we are seeing here, and I think that it 
is really summed up by the Speaker's statement, is that the changes 
that are being proposed once again in this budget that we have received 
over the last couple days, the changes that are being proposed in 
Medicare by the Republican leadership will ultimately force seniors out 
of the traditional Medicare program that they are used to. In fact the 
program, the Medicare as we know it, essentially or eventually does 
wither on the vine and disappear as an effective and quality health 
care program for the average American.
  Mr. Speaker, I could go on and cite some of the other Republican 
leaders. Representative Dick Armey from Texas, who is the majority 
leader, made similar types of statements. But I think that I would 
rather get into the whole issue of what they plan to do it and how they 
intend to change Medicare and Medicaid so that they are negatively 
impacted.
  Before I do that, though, I just wanted to cite several reasons 
really why massive Medicare and Medicaid cuts are harmful, and it 
really goes back to the original purpose of the Medicare program.
  The reason why Medicare was started by President Johnson back in the 
early 1960's was because of the concern over the fact that many senior 
citizens simply did not have health care. They were living in poverty. 
They could not afford private insurance. They could not afford to pay 
out of pocket for the health care needs that they had.
  What we did back in the early 1960's was to essentially make sure 
that all senior citizens would be guaranteed health care, that 
everyone, when they got older and over 65, would know that they were 
guaranteed a certain level of health care. That is what Medicare is all 
about. But the massive Medicaid cuts, the massive Medicare and Medicaid 
cuts will basically increase old-age poverty and turn this all around.
  Half of all the senior citizens right now have incomes of less than 
$17,000 a year. Medicare and Medicaid cuts will increase out-of-pocket 
health care expenses for seniors, and the result is a massive increase 
in old-age poverty to the extent that seniors will spend the little 
money that they have to pay for health care. If it is not covered by 
Medicare or certain things are not covered by Medicare and they have to 
spend more out of their pocket, they go further and further into 
poverty.
  Mr. Speaker, it is also true that cuts in Medicare and Medicaid will 
reduce access to health care and result in an increase in sickness and 
misery. Particularly hard-hit will be Medicaid nursing homes where 
already minimal staff will be cut back to skeleton crews. I think a lot 
of us forget that the Medicaid programs, which is primarily a program 
for poor people, the majority of the money is spent for senior citizens 
in nursing homes. So if they cut back severely on the Medicaid program, 
they negatively impact nursing home care.
  Medicare cuts also mean less access to doctors because Medicare, 
Medicaid pay less for physician services than private insurance 
companies. Many doctors are simply refusing to accept more Medicare 
and Medicaid patients. In rural areas, poor areas and areas with large 
numbers of senior citizens, access to health care will be further 
restricted by too steep Medicare and Medicaid cuts.

  Massive Medicare cuts also mean increased cost shifting to younger 
people. The elderly use the same nurses, physicians and x-ray machines 
as everyone else. Right now Medicare is paying health care providers 
substantially less than the health plans covering the working 
population. The difference in public and private reimbursement rates 
has shifted from the elderly to younger patients.
  So lest any of the young people feel, ``Well, what does it matter to 
me if Medicare is negatively impacted or Medicaid,'' they need to know 
that what essentially happens is that the hospitals and the health care 
providers shift the cost to younger people, so they ultimately will 
suffer.
  Medicaid cuts particularly harm poor children. One out of every four 
children in America is in poverty. Medicaid is the primary health 
insurance system for America's poor children. Medicaid cuts mean that 
poor children will have even less access to health care.
  Medicare cuts also harm the disabled. More than 4.2 million seriously 
disabled Americans have their health care needs met by the Medicare 
system. Hundreds of thousands of very seriously disabled Americans are 
taken care of in Medicaid nursing homes. Cuts in Medicare and Medicaid 
will do serious harm to the primary health care systems of America's 
most disabled.
  I think, most important, the level of Medicare and Medicaid cuts that 
the Republican leadership has proposed will force many hospitals to 
close. We made this point during the debate last year in 1995. It is 
just as true now with the cuts that are being proposed by the 
Republican leadership now. Hospitals depend on Medicare and Medicaid 
for approximately 45 percent or more of total revenue. If Medicare and 
Medicaid are cut back, many hospitals will be forced to close and 
consolidate their patient base. The result will be less access to 
American medical care and fewer jobs in areas that may already have 
depressed economies.
  Mr. Speaker, I think lastly, and I would like to mention this because 
I think it goes against what the Republican leadership has said from 
the beginning, the Republican leadership in the beginning of 1995 
talked about and tried to implement their Contract With America. But 
what we were saying as Democrats throughout that debate is that the 
Congress cannot make a new Contract With America if it is not willing 
to make good on the old Contract With America, which is Medicare.
  The contract said that working Americans would be taxed their entire 
working lives in exchange for known and specified benefits in old age, 
and that contract was broken in 1995 by the Republican leadership. I 
believe it is broken once again today with the level of Medicare cuts 
and the changes in the programs that are being discussed or being 
proposed by Speaker Gingrich and the other Republican leaders.
  Now, let me get into a little analysis of exactly what we received 
yesterday and today as part of this new Republican budget for 1997. 
Again, a lot of this is just based on press conferences or press 
materials. But what was presented by the Republican leadership repeats 
many of the extreme policies that were proposed in the fiscal year 1996 
budget which was vetoed by President Clinton last December.
  It maintains the skewed priorities of the early Republican budget: 
large tax cuts paid for by excessive cuts in Medicare and Medicaid. 
Medicare is cut by

[[Page H4790]]

$168 billion over 6 years. The numbers have changed slightly, but the 
impact on people and hospitals is the same as last year's budget. The 
implications for health care delivery, seniors will have less choice, 
Many of the hospitals will close, and doctors and hospitals will be 
able to do balanced billing. That is where they simply charge Medicare 
recipients more than what Medicare pays.
  The Republicans claim that their cuts of $123 billion--of this $168, 
$123 billion is in part A, which primarily pays for hospitals and 
health care institutions--the Republicans say that these cuts are 
necessary to preserve the solvency of the Medicare Trust Fund through 
the year 2006. In fact, the President's budget proposal, which he 
unveiled earlier this year, extends the life of the trust fund through 
2006 without such deep reductions.

                              {time}  2245

  Republicans are clearly using funds cut from Medicare to pay for part 
of their tax breaks, just as they did in 1995. Now when you go to 
Medicaid as opposed to Medicare, Medicare being primarily a program for 
seniors regardless of income, Medicaid primarily for poor people 
regardless of age, Medicaid spending in this new Republican budget is 
cut by $72 billion over 6 years. They block grant Medicaid. It is this 
idea of sending the money back to the States in a block grant, cutting 
the amount of money that the States get, because Medicaid, the States 
have to match what the Federal Government puts up. So if you block 
grant the money and send the Federal dollars back to the States, you 
reduce the amount that the States are going to get and you basically 
say look, you do what you what with it, without any strings attached.
  What that means is that Medicaid, as we know it, which entitles 
certain people, certain poor people, to health care benefits, children, 
pregnant women, certain people were just automatically eligible because 
of Federal guidelines, well, with this block grant approach, where the 
States basically get less money but are free to spend the money as they 
please, essentially you are eliminating the guarantee of coverage to a 
lot of low income children, to a lot of nursing home residents, because 
what the States will do is they will say okay, we are getting less 
money, we cannot afford to pay as much State money as we used to, and, 
therefore, we will just say that certain categories of people are not 
eligible for Medicaid, or even if they are we will not provide certain 
services.
  So the whole block grant approach to Medicaid essentially means a lot 
of people will not have coverage who have it now, and if they do have 
coverage, the types and amounts of services will be severely impacted.
  In Medicaid, the proposed cuts of the Republican leadership are $18.5 
billion deeper than the reductions proposed by President Clinton. But 
more important, Republicans appear to be proposing a change in the 
State match rate which could ultimately produce cuts in total Medicaid 
funding of more than $250 billion through the year 2002.
  I will get into that a little more, in a little more detail later, 
but essentially right now, the Medicaid program is whatever Federal 
dollars are put up, the States have to match them essentially 50-50 to 
achieve a dollar that is spent on Medicaid patients. What the 
Republicans are proposing to do is to say we will give you more Federal 
dollars and you do not have to match as much in State dollars. But the 
point is that the overall amount of money that would be available for 
Medicaid patients is less, and hence you get the interest in the States 
in actually spending less or disqualifying certain people who are now 
eligible for Medicaid.
  Now, I wanted to get into a little on Medicare again, what changes 
are really being made and how radical the Republican changes are to the 
Medicare program for senior citizens. There are basically three aspects 
of the current Medicare program for seniors that have existed since it 
began under President Johnson that are now threatened by the Republican 
proposal that has been unveiled.
  Right now, Medicare offers beneficiaries, seniors, unlimited choice 
of doctors and hospitals. They can go to any hospital or doctor they 
want. It offers protections against balanced billing, in other words, 
limitations on what doctors can charge you beyond what Medicare pays, 
and, third, guarantees coverage of all Medicare benefits for the 
premium established by law.
  So if you are eligible for Medicare under current law, you are 
entitled to certain benefits. Well, all these protections are at risk 
under the budget and under the proposals the Republicans are putting 
forward.
  First of all, let us talk about this unlimited choice of doctors and 
hospitals. What they are going to do, what the Republicans are 
proposing to do, is push more and more and eventually most senior 
citizens into HMO's or managed care systems, where you do not have a 
choice of doctors or hospitals. The way they do that is through very 
tight budget caps. They basically put a cap on the overall amount of 
money that is available in the current fee for service system, where 
you choose your own doctor. So they say if you go into an HMO or 
managed care, more money is going to be available for reimbursement to 
hospitals or to physicians than if you stay in this current system 
where you choose your own doctor or hospital. So essentially seniors 
get pushed, if you will, into the HMO's, into the managed care systems, 
because that is where the money is.
  The second thing that I mentioned is this existing protections 
against balanced billing. Under current law, seniors are protected from 
balanced billing, in other words, where the doctors want to charge more 
than what Medicare provides, and the same with hospitals. Hospitals 
under current law may not charge seniors one penny more than their 
allowed fee. Doctors may not charge beneficiaries more than 50 percent 
above the fee that Medicare pays.
  But what they are essentially doing under the Republican plan that is 
proposed is that doctors and hospitals could charge seniors any amount 
they want for Medicare services if the senior stays in the traditional 
fee for service system. So if you want a choice of doctor and 
hospitals, and you stay in the traditional system, then they can charge 
you whatever they want over and above Medicare. If you move into the 
managed care and the HMO, that would not be the case, but again, one 
more incentive to move to managed care, to HMO, where you do not have 
your choice of hospital or physician.
  The last thing, as I said, under current Medicare law there is 
guaranteed coverage of all Medicare benefits for the premiums, and so 
if you know you are in Medicare you get certain benefits under the law. 
But all of a sudden the Republicans have come up with a new idea called 
medical savings accounts, and what this does is, this is an untested 
idea, MSA's, essentially what we are doing here is using senior 
citizens as guinea pigs for this untried new proposal. Under the 
Medicare savings accounts proposals, the voucher----
  Mr. KINGSTON. Will the gentleman yield?
  Mr. PALLONE. My time is limited. I have to go with the time I have. I 
am sorry, I cannot yield.
  Under the medical savings accounts proposal, basically you are going 
to get a Medicaid voucher that could be used to buy a catastrophic 
health insurance policy with a high deductible, it might be as high as 
$10,000. Any difference between the cost of that policy and the voucher 
amount would be placed in a tax-favored medical savings account. So if 
you just want to use your Medicare money, if you will, or a voucher, to 
have a high deductible account, you can do that. But then if you get 
sick, of course, you have to pay that out of pocket.
  But the problem is that only the healthiest and the wealthiest 
seniors could afford to gamble with this kind of high deductible 
policy. Those individuals who buy the MSA's, the healthier and 
wealthier people, will be outside the traditional pool, so we believe 
the average cots eventually of those remaining in Medicare would 
increase. Again, these are significant changes, I believe, and I think 
it is self-evident, in the Medicare program as we know it.

  So that is what we are hearing from the Republicans. Again, they were 
talking about these proposals last year, and they are coming up again 
now in the context of the budget.
  Let me talk about the changes in the Medicaid program, the program 
that is

[[Page H4791]]

primarily for low income individuals. Right now 36 million Americans 
receive Medicaid Benefits. Twenty-six million of them are poor children 
and adults. But, again, when you talk about Medicaid, the majority of 
the money is spent on nursing home coverage for senior citizens.
  So I want seniors to understand that even though Medicaid is for low 
income seniors, most of the money goes to pay for nursing home care for 
seniors, many of whom have spent the amount of money they saved for 
nursing home coverage and then have to go on to what we call Medicaid 
coverage to pay for the nursing home care.
  What we are concerned about here is when you block grant Medicaid 
under the Republican proposal, and you basically leave it up to the 
States to decide what to do, large groups of seniors citizens may no 
longer be eligible for nursing home care, or, if they are eligible for 
nursing home care, the level of services that is going to be provided 
to them under Medicaid will be significantly reduced.
  Basically states could opt to drop the number of patients they cover, 
which would cause the number of uninsured Americans to swell, and, if 
that happens, the Urban Institute predicts that 4 to 9 million 
Americans will lose health insurance coverage, and every American could 
feel the effect of these cuts as states are forced to raise other taxes 
or as insurance companies raise premiums to make up for the increased 
costs.
  So essentially what we are saying is even though you might say to 
yourself, what does it matter to me if low income people are no longer 
eligible for Medicaid, it does not have any impact on me, but it could 
easily have impact if states decide to continue coverage for those 
individuals because they feel an obligation to, and, therefore, you 
state taxes or other taxes could rise as a result of the fact that 
there is a shortfall in the Federal dollars.
  I just wanted to read a quote, if I could, because I thought it was 
such a good one, from the Washington Post back in December, December 12 
of last year, when this whole battle over Medicaid was on the floor of 
the House and was being considered for the last time in a significant 
way.

  What the Post said, on Tuesday, December 12, about the Medicaid block 
grant, they said:

       The Republicans 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. 
     Medicaid is not just a major Federal cost and major source of 
     aid to state and local governments. It is an insurer of last 
     resort in the health care system. Medicaid needs to be 
     preserved to protect the vulnerable. The alternative is even 
     more people uninsured. The poor, the States and 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 is about that.

  I need to stress that, Mr. Speaker. We are not just talking about the 
budget here. I bristle every time I hear that Medicare and Medicaid 
have become the subject of the battle over the Federal budget, because 
the bottom line is that this whole Republican proposal to cut Medicare 
and Medicaid is strictly budget-driven. They are not out to preserve 
and protect Medicare and Medicaid, they are trying to save money, and 
they are trying to save money primarily to pay for these tax breaks for 
wealthy Americans.
  I believe very strongly that the whole Medicare and Medicaid debate 
and any changes to it, any changes to those programs, should be 
considered outside of the whole budget debate and should be considered 
separately, but they are not. The Republican leadership constantly 
brings it up in the context of the budget debate.
  I see that my colleague from Ohio, is here and I would certainly like 
to yield to him.
  Mr. KINGSTON. Did the gentleman find some time now to yield, now that 
we are yielding?
  Mr. PALLONE. You have your time on the Republican side of the aisle, 
after I am done.
  Mr. KINGSTON. I will be happy to yield back to you.
  Mr. PALLONE. I yield to the gentleman from Ohio.
  Mr. BROWN of Ohio. Mr. Speaker, I appreciate the leadership the 
gentleman has shown in this issue, not just this year but last year. 
This is sort of ``There you go again with the Gingrich budget,'' or 
``The same old song,'' or whatever that we saw in 1995, last year, we 
saw the same kind of budget, Medicare cuts, Medicaid cuts, student loan 
cuts, cuts in environmental protection and environmental laws, all in 
order to pay for tax breaks for the richest people in the country.
  Clearly with this budget, it is simply not much different this year 
than last year. Last year the American people rose up and said no to 
Medicare tax cuts for the wealthy, no to Medicaid cuts and student loan 
cuts of $5 billion in order to give tax breaks to the wealthy, and this 
year the Gingrich crowd, Gingrich extremists, are basically doing the 
same thing, trying to sneak in the back door while some of these other 
issues are going on, trying to sneak in the back door in making these 
cuts so they can give major tax breaks to the wealthiest people in the 
country.
  The real key I think is what you said, Mr. Pallone, that they talk 
out of both sides of their mouth. Speaker Gingrich himself said that we 
are trying to save Medicare, yet a year ago, some 6 or 8 months ago, 
speaking to a group of insurance executives, who stand to make a whole 
lot of money under the Gingrich Medicare plan, he said, ``We do not get 
rid of Medicare in round 1 because we do not think that is politically 
smart.''
  Then he goes on to say, ``We believe under our plan Medicare is going 
to wither on the vine.'' That is clearly what he thinks about it.
  Then the Speaker says, ``We are going to save Medicare. This plan is 
to save Medicare.'' Obviously it is not. This plan is to weaken 
Medicare, because he did not believe in it in the first place. As you 
said, the same with the Senator Dole, that he saw the same thing, that 
he was against Medicare 30 years ago as a young House Member, and now 
that he voted against it then, he led the fight then, he does not want 
to see that kind of thing happen today.

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