[Congressional Record Volume 142, Number 82 (Thursday, June 6, 1996)]
[Senate]
[Pages S5911-S5915]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            TRUSTEES REPORT ON MEDICARE AND SOCIAL SECURITY

  Mr. DOMENICI. Mr. President and fellow Senators, the trustees' report 
on Medicare and Social Security has just been delivered. Everybody 
should know that is a report that is put together by a six-member 
commission, four of whom are either Cabinet Members of the President or 
hierarchy of the Social Security System itself.
  On page 10 of the summary of that report, the following statement is 
found:

       The trustees recommend the earliest possible enactment of 
     the legislation to further control the HI program costs and 
     thereby extend the life of the Hospital Insurance Trust Fund. 
     This is, however, only a first step in what must be a long-
     term process to achieve balance between HI costs and funding.

  Now, I repeat, these trustees I do not believe are Republicans. They 
are not Members of the Congress. Three of

[[Page S5912]]

them are members of the President's Cabinet. One of them is the 
administrator or the head person at Social Security. Then there are two 
outside citizens.
  Now, what they have said is this fund is going bankrupt 1 year 
earlier than we thought. I know no one wants to hear that. No one wants 
to really face up to the reality, but they have said we were wrong even 
last year; it is going to become insolvent even sooner, so they now say 
it will be insolvent in 5 years.
  That means it is already annually spending out more than it is taking 
in, and but for a surplus, there would not be enough money to pay the 
bills. Then they say that 5 years out there will not be any surplus at 
all and the money coming in will be tremendously deficient in terms of 
paying the bills.
  Now, I do not believe it is asking too much and I do not think senior 
citizens would think that it is asking too much for us to fix that. 
Should we wait another year and then we only have 4 years to fix it? 
Should we wait 4 years and wake up in the morning and say, seniors, it 
is right around the corner; there is not going to be enough money to 
pay the hospital bills? Or should we fix it now? Actually, these 
trustees recommend that we do this at the earliest possible time, and 
they recommend that we do this by further controlling costs.
  Mr. President, I want to update the Senate on the status of the 
Medicare trust funds. Yesterday, we received the annual reports from 
the Medicare trustees.
  The new report tells us that the hospital insurance (part A) trust 
fund will go bankrupt early in the year 2001. Last year's report 
predicted bankruptcy in 2002, so we've lost 1 year there. In addition, 
the President's veto of last year's Medicare reform plan means we have 
lost another year. We are now 2 years worse off than we were 1 year ago 
today.
  The report tells us that Medicare spending is 2.7 percent of the 
economy right now. If we don't do anything to slow the growth of 
Medicare spending, that will more than double, to almost 6 percent of 
the economy in the year 2020.
  The report confirms that the trust fund ran a small deficit for the 
first time last year. The report tells us that if we don't do anything, 
in the year 2005 the cash coming into the hospital insurance trust fund 
will be $130 billion less than the cash we need to pay hospital 
benefits.
  Let's talk about the plan we're proposing in Congress. Our plan would 
spend $1.48 trillion on Medicare over the next 6 years. Yes, it would 
slow the growth of Medicare spending, from about 10 percent per year, 
to 6.2 percent per year. That's still more than twice the rate of 
inflation, a goal the President endorsed 3 years ago.
  The President says that our short-term goal should be to keep the 
part A trust fund solvent for 10 years. Our plan does that; his does 
not. His keeps the trust fund solvent for only 1 year, and plays a 
shell game with $55 billion of home health spending.
  I can summarize the budgetary goals of our Medicare reform plan in 
two quick points, Mr. President. For Medicare part A, we will meet the 
goal of keeping the part A trust fund solvent for more than a decade 
without any shell games.
  And for Medicare part B, we will achieve the same level of savings as 
contained in the President's budget.
  Keeping the part A trust fund solvent requires making hard choices, 
Mr. President. Our plan saves money first by restructuring the system 
to provide seniors with more choices. Today we have a Medicare Program 
which is modeled after a state-of-the-art health insurance plan from 
the mid-1960's.
  It is time to bring Medicare into the 1990's, and to prepare it for 
the next century. Over the past 10 years, workers in the private sector 
have seen their health insurance coverage change. More of them are 
choosing to move into managed care, and more of that care is being 
delivered through networks of providers which can care for the entire 
patient.
  Many workers in the private sector and Government employees have 
health care choices, choices which many Medicare beneficiaries do not 
have today. I believe that by offering seniors a wide range of options, 
and by making private firms compete for the business of seniors, we can 
better meet the beneficiaries' needs, and we can save money as well.
  The trustees' report tells us that Medicare spending per beneficiary 
grew about 10 percent over the last year. We simply cannot sustain a 
program in which each year we spend 10 percent more for each person. We 
need to restructure the Medicare Program so that beneficiaries can make 
intelligent decisions about how they can best receive medical care.
  Our plan would also make some needed changes in the way we pay 
providers. Most hospitals are paid by the prospective payment system. A 
hospital is paid a specific amount for a certain medical condition. 
This fixed, up-front payment encourages the hospital to deliver care 
efficiently. While the prospective payment system has not done enough 
to control hospital spending, it was definitely a step in the right 
direction.

  Our Medicare reform plan would reform how Medicare pays for home 
health services, and for services delivered in skilled nursing 
facilities. These are the fastest growing components of Medicare 
spending today, and we need to restructure the way we pay these 
facilities to help control costs.
  Our Medicare reform plan would also reduce the rate of growth in 
payments to providers. This is nothing new, Mr. President, and if we 
are to control costs in the short run, we must do it. But to those who 
claim that we are going to actually cut payments to providers below 
today's level, I say you are absolutely wrong. Even after reform, 
payments to hospitals and physicians will go up.
  The providers, Mr. President, should be among the strongest 
supporters of our reform plan, because they will ultimately benefit 
from a system that delivers and allocates health care more efficiently. 
As more Medicare beneficiaries participate in privately offered 
Medicare plus plans, we can get the Government out of the relationship 
between a patient and his or her doctor. We can allow doctors to 
practice the best kind of medicine they know, and we can allow a 
patient and a doctor to cooperate in making smart and economical 
decisions about the amount and type of care that a beneficiary needs.
  Our Medicare reform plan would enact real reforms to control Medicare 
program costs so that we can keep the Medicare trust fund solvent for 
10 years. Once we have done that, we can then begin to address the 
longer-term financial problems that will result from the retirement of 
the baby boom generation.
  That is in direct contrast to how the President's budget proposes to 
deal with Medicare. The President's budget contains a Medicare shell 
game which just moves money around from one pot to another. The 
President's Medicare shell game would mislead Medicare beneficiaries, 
hard-working families paying taxes, and the Congress about the health 
of the part A trust fund.
  And the President's Medicare shell game would place $55 billion more 
pressure on income taxes. It makes you wonder if this is really just a 
back-door way to increase taxes, Mr. President.
  The President's plan would take $55 billion of home health spending, 
which is currently paid out of Medicare part A, and would say that it 
is no longer going to be paid from the Medicare part A trust fund. He 
would transfer responsibility for that spending from Medicare part A to 
Medicare part B.
  Why would you do that? For one simple reason: it makes the part A 
trust fund look better. Since you're no longer spending that $55 
billion from the part A trust fund, that trust fund goes bankrupt more 
slowly, and it appears healthier. But you haven't really done anything 
to address the problem, because the spending still exists in medicare 
part B.
  By playing this shell game with home health spending, the President 
claims to keep the trust fund solvent, when really all he has done is 
shift the problem from one part of Medicare to the other. That would be 
bad enough, if that's all there were. But unfortunately there is more.
  Medicare part B is paid for from two sources. Premiums paid by 
beneficiaries cover 25 percent of the costs, and income taxes from 
hard-working

[[Page S5913]]

American families pay the other 75 percent. Every $1 paid by a medicare 
beneficiary for doctor's services through Medicare part B is subsidized 
by $3 from working taxpayers.
  We know that the President's Medicare shell game transfers $55 
billion of home health spending from Medicare part A to Medicare part 
B. So it would make sense that, if you did that, beneficiary premiums 
would go up to pay for 25 percent of those costs.
  But they do not. The President's shell game transfers the $55 billion 
of spending from part A to part B and makes the part A trust fund look 
healthier, but he exempts the transferred spending from the calculation 
of the premium.
  So who do you think pays for it? Where does the $55 billion come from 
to pay for the transferred home health spending? Under current law and 
under our reform plan, it comes from the payroll taxes that pay for 
part A benefits, and are needed to keep the part A trust fund solvent.
  But if the $55 billion is now paid from part B, but the premiums paid 
by beneficiaries are not going to pay for any of it, then the entire 
$55 billion cost will be borne by hard-working, taxpaying American 
families. Rather than subsidize three-fourths of this spending, as they 
do for all other part B services, the President would make working 
taxpayers subsidize the whole thing.
  Let me summarize the shell game, Mr. President:
  First, transfer $55 billion of home health spending from part A to 
part B;
  Second, this makes the part A trust fund look healthier, when 
actually nothing has changed;
  Third, exempt the $55 billion from the calculation of the part B 
premium;
  Fourth, and therefore make working taxpayers pick up the entire $55 
billion cost.
  I wonder if there are plans to extend this shell game in the future, 
Mr. President. If he wanted to, each year the President could propose 
to transfer some more spending from Medicare part A to Medicare part B. 
He could exempt it from the premiums, and each year he could claim to 
save Medicare. But in reality all he would be doing is misleading the 
American people and Medicare beneficiaries, allowing Medicare to go 
bankrupt, and raising taxes on hard working American families. I 
sincerely hope that this is not the President's goal.
  Now, Mr. President, I am going to insert a statement in the Record 
because of the lack of time that explains in detail the proposal that 
the Republicans have submitted this year. This proposal, which is 
working its way through the Congress, would save the trust fund for 10 
years.
  I want to spend a little bit of time talking about what the President 
of the United States does not do. It has been very difficult. It seems 
like nobody wants to write about what the President is proposing, but I 
believe we ought to tell the public what he is proposing and let them 
pass judgment upon whether he has a bona fide, legitimate 10-year fix 
of Medicare. The proposal that our committees will work on, everybody 
agrees, will make the trust fund solvent for 10 years. But now let me 
suggest how the President goes about solving this problem. I wish I was 
a better wordsmith because what he has done just cries out for some 
simple few words to explain it that everybody would understand. But I 
am not very good at that. The closest I can come to it is a flimflam, a 
hoax, a charade. So let me try to tell you what I mean.

  The trust fund has money coming into it from all the workers of 
America. All the hard-working people getting paychecks, they will see a 
little piece of it taken out, and it goes in this trust fund to pay for 
hospital and home health care for senior citizens. It is a lot of 
money. The problem is the costs in that fund have grown 10 percent a 
year and the taxes going in are not growing at 10 percent a year.
  Some say we can cover seniors and modernize this system, and instead 
of growing at 10 percent a year, maybe we can cover it at a growth of 7 
percent a year. Some say the providers that are charging for this care 
have to charge in a different way and we have to prevent fraud and we 
have to make sure that we are not being overcharged as we attempt to 
take care of seniors for their hospital care.
  The most interesting thing about this is that out of that fund 
currently, we also pay for home health care for seniors. It does not 
matter to the Senator from New Mexico how one explains how that 
happened to come about. The truth of the matter is, when these trustees 
were referring to reducing the costs, they were referring to reducing 
the costs of what we are paying for out of that trust fund.
  One of the big-ticket items that we have committed to pay for out of 
this trust fund for our seniors is home health care. It just happens 
that home health care is growing rapidly. As a matter of fact, if you 
looked in that trust fund and zeroed in and said, ``What are we paying 
for,'' and you asked, ``What is it costing,'' the fastest growing one 
is home health care for seniors. It is growing at 19 percent a year.
  The trustees recommended that we try to reduce the costs of this 
program. Listen carefully. Here is how the President did it. He said, 
let us not pay for home health care from the trust fund. Let us take 
the spending out of the trust fund. It is a small item, $55 billion 
over the next 6 years. Let us just take it out of there and not pay for 
it out of the trust fund anymore.
  That is marvelous. If you can do that with immunity and if you can do 
that without charging somebody for the $55 billion, you have a 
marvelous budget. We just got rid of $55 billion worth of debt that 
that trust fund is obligated to pay for our seniors, and we say we are 
not going to pay it anymore.
  Obviously, if you do that you have already made the trust fund 
solvent for a little bit longer. You took away $55 billion of its 
obligation. And what does the President do with it? He says we are 
going to pay for that from general revenues, paid by the working 
taxpayers of America.
  How do you like that? All of a sudden, whack, just like that, we 
transferred $55 billion from the trust fund to all the hard-working 
people of the country. Mr. President, $55 billion of their taxes are 
going to go to pay that. And all of a sudden, the trust fund got a 
little more solvent.
  The trust fund may be getting solvent, but the taxpayer is going 
broke. The youngsters in America, with children, trying to raise a 
family, they could not have even dreamt of such a marvelous gift from 
the President. Suppose they woke up one morning and he said, ``I have 
taken $55 billion out of that trust fund, and you pay for it. But I 
have made the trust fund solvent because I just got rid of $55 billion 
worth of things it has been paying for.''
  Frankly, if that is how you want to fix the trust fund, why do we not 
go over and ask those who are taking care of the trust fund and paying 
the bills, why do we not say, ``Why do you not give us another whole 
bunch of bills we are paying for seniors out of the trust fund? Why do 
you not find another $50 billion and let us not pay them anymore out of 
the trust fund. Let us take those responsibilities out and say we are 
going to pay for them, we are just not going to pay for them out of the 
trust fund?''
  Then who is going to pay for them? Certainly we are not saying nobody 
is going to pay for them. Certainly we are not saying we are going to 
take them away from the seniors. We are just saying the taxpayer will 
pay. We are just saying let those hard-working people pay. They do not 
know it, but we just put another tax on them.

  Frankly, if I sound a bit let down, if I sound a bit frustrated, I am 
both. I am really let down.
  I ask for an additional 5 minutes, Mr. President.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. If I appear a little let down, I am. If I appear a 
little bit kind of chagrined, I am. Because we set about to do 
precisely what the trustees said. We tried to reduce the costs to the 
trust fund of providing this care. We wanted to make the system modern, 
give seniors options instead of the 30-year-old program, one program 
for all seniors. We thought we could save them money if we gave them 
options. We thought they might get more coverage if we gave them 
options. We worked very hard on how can we change the way we keep the 
system from getting defrauded. We worked very hard at how we pay and 
make sure we are getting our money's worth for all these hospital 
bills.

[[Page S5914]]

  Isn't it something, after you have worked like that, you have gone 
across the country and told the people you are doing it, along comes 
the President and, overnight, in the budget, says, ``I just found a way 
to save $55 billion. Just take it out of there and let somebody else 
pay for it.''
  I do not understand why people are not asking the administration, and 
those who represent the administration: How can you do this? Who is 
going to pay the $55 billion that you just relieved the trust fund of? 
Who is going to pay it? Is it manna from heaven, going to fall down 
somewhere and nobody is going to have to pay it, or are we going to 
find a way not to provide it to seniors?
  So I thought it was very important to explain this, one day after the 
issuance of the latest report--and, senior citizens, with each year the 
report is getting worse. It is not going to get better. We have to try 
to fix this program. I do not believe anybody really thinks that fixing 
it means letting us transfer the costs of it to working men and women 
who already are paying too much taxes. We do not exempt them. We did 
not find a way to exempt the way their tax is. They are going to pay 
for it.
  I venture to say, in closing, if somebody were to offer a bill to the 
U.S. Senate that said, ``Let us put a $55 billion tax on Americans' 
general income tax and let us transfer that to the trust fund to pay 
for hospital care for seniors,'' I venture a guess that it would not 
get 15 votes. For everyone knows you cannot take every trust fund that 
is around, and when it is not quite able to do its job, just go out and 
say put an income tax on the public to pay for it. This was a trust 
fund. We told the working people you will pay a fixed amount, put it in 
there, and it will take care of this. And we have not yet even 
attempted a reasonable effort to reduce the costs and supply seniors 
with adequate hospitalization.
  We are just coming to grips with the problem, and along comes an 
opportunity to do it together and do it right with the President and 
the Congress working together, and the President finds a way to get rid 
of the problem, about half the problem, by deciding to move $55 billion 
worth of costs out of the trust fund and saying, ``We'll pay for it 
another way.''
  I do not like to just always paint the side of the picture the 
Senator from New Mexico sees. There will be some who will say it is 
pretty logical that we should take out home health care. Maybe it 
should not be in there. But the truth of the matter is, when you do it 
this way, you have perpetrated on the public a vicious 
misrepresentation, for you are telling them you made it $55 billion 
more solvent, and you are not telling them how it is going to be paid 
for, on whose shoulders is the cost going to fall as this $55 billion 
has to come out of the general coffers of America.
  I am quite sure that the President might say, ``I don't intend it 
that way,'' but I ask, how do we intend to pay for it otherwise? It 
could be that since we are moving that down into another provision of 
health care for seniors, maybe the President is going to propose that 
we raise the costs of that program to seniors. They pay 25 percent of 
that. The taxpayers pay 75 percent of that. That is for the insurance 
policies for everything but hospitalization. Perhaps the President will 
come along here and say, ``We've got to make sure the seniors bear a 
portion of that cost.''
  I do not find that anywhere in the budget. So I am assuming it comes 
out of the general tax coffers of the country to pay for making the 
trust fund solvent.
  Again, in summary, if it is the intention of the Congress and the 
President to make the trust fund solvent, not by reducing costs but by 
paying for a big portion of it out of general taxes, maybe we ought to 
tell everybody that. Maybe we ought to say that is how we are going to 
provide for this hospitalization. I do not believe anybody thinks that. 
I do not believe anybody thinks you are going to make that fund solvent 
by taking 4, 5, 6 percent of the general taxes that Americans are 
paying and put it in there. Pretty soon there will be no tax dollars 
for anything else.
  So I thought it was very important that we get the message out. I had 
hoped I could have gotten it out yesterday. It would have been more in 
rhythm and in sequence with the issuance of the report, but we had 
other important things to speak of, so I came today to do it.
  Mr. CRAIG. Will the Senator from New Mexico yield?
  Mr. DOMENICI. I will be glad to yield.
  Mr. CRAIG. I want to thank the Senator from New Mexico for his 
statement, and it is timely. It is important the record show that.
  Yesterday, we heard from the trustees, the actuarial study of the 
state of the trust fund of Medicare. This Senator happens to be holding 
town meetings across Idaho on Medicare. I can tell the Senator from New 
Mexico, there is one question always asked. In your package, and I am 
using the comparative between what you did, what Senator Roth worked in 
producing, what the Senate finally voted on to reform Medicare a year 
ago, and I compare it with what the President had offered, and they say 
to me, ``Well, now, home health care, that's a very important part of 
keeping costs down. Why is the President doing what he's doing?''
  I try to explain it to them. They say, ``Well, then doesn't that mean 
it just gets funded out of the general fund?''
  I say, ``With no other form of taxation or revenue source''--as the 
Senator from New Mexico just pointed out--``you are absolutely right.''
  They say, ``Well, that takes it out of the character of the kind of 
health care this country needs.''
  We ought to be moving people toward home care. It is the least 
expensive way, or it is a less expensive way, certainly, and it clearly 
offers that senior who needs this kind of health care the sanctuary of 
the home. We ought to be driving toward that.
  The Senator from New Mexico, I think, has made a very important 
statement in that area. Let me thank him for doing so. I do not want to 
have to deal with this issue again this year, but if we do, I do not 
want the President sitting down there saying, ``We're slashing it,'' 
when there is less than a half a percentage point difference in what we 
are doing.
  I think the thing that is most interesting for those attending my 
town meetings--we use the charts and the graphs; we show the 
President's plan and our plan--they say, ``Where's the difference?''
  I say, ``We offer more options, and those options help bring costs 
down.''
  They say, ``We see that, Senator, but we thought you were destroying 
the program.''
  I say, ``Well, when the facts are on the table, no one--no one--in 
this Senate will ever do that. But we are on the board of directors, if 
you will, of Medicare and we have to make the necessary corrections to 
get it done.''
  I think your points today are valuable, very important to the whole 
of the message, and I thank you for bringing it to the floor of the 
Senate.
  Mr. DOMENICI. I thank the Senator. Mr. President, I yield myself 1 
additional minute.
  The PRESIDING OFFICER (Mr. Coverdell). The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, there is another aspect which I have not 
spoken about, and I will take a minute to discuss it. It is entirely 
possible that when you take expenditures out of the trust fund that 
were obligated to be paid by that trust fund, that you might be 
diminishing the quality of what you are giving seniors, for if the 
obligation is in the trust fund, it is a pure trust responsibility to 
pay for those kinds of things for seniors. If you take it out and say 
it is going to be paid for out of the general fund, it may be that down 
the line, we will turn it into welfare or we will pay less for it 
because we will be saying, ``It's not in the trust fund; it's something 
we can control by just turning the money off or on.''
  I have not said that other than today, but I do believe it is subject 
to a serious question: Do you diminish the expectation rights of 
seniors to home health care if you take it out of the trust fund and 
put it in another place under another fund which may not be quite as 
secure in terms of the commitment?
  I yield the floor.
  The PRESIDING OFFICER. Who seeks recognition?

[[Page S5915]]

  Mr. DOMENICI. 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. SIMON. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SIMON. Mr. President, I want to speak just briefly on two 
subjects.

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