[Congressional Record Volume 142, Number 82 (Thursday, June 6, 1996)]
[Senate]
[Pages S5917-S5920]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                MEDICARE

  Mr. GREGG. Mr. President, I want to talk a little bit about Medicare, 
which I know has been discussed by other Members on the floor, and 
specifically about the Medicare trustees' report which I know has also 
received a fair

[[Page S5918]]

amount of attention, as well it should. This Medicare trustees' report, 
remember, is the second --there have been a number of reports--second 
in a series of reports that have raised a very large red flag, which 
red flag essentially had printed on it ``The Medicare Trust Fund is 
Going Bankrupt.''
  The Medicare trustees are independent in the sense that their job is 
to review what is happening with the Medicare system, do it in an 
analytical way, and issue a report. Even though three or four of the 
members are officially members of the administration, they have great 
credibility as to the integrity of this report.
  The first report that they initiated in this area that threw up the 
red flag in such a large way stated unequivocally--this was almost a 
year ago now--``We strongly recommend that the crisis presented by the 
financial position of Medicare trust fund be urgently addressed on a 
comprehensive basis, including a review of the program's financing 
method, benefit provisions, and delivery mechanisms.''
  Well, the U.S. Congress--specifically the Republican leadership in 
the U.S. Congress--did address the Medicare trust fund and that 
specific direction from the trustees. We put forward a proposal which 
was included in the balanced budget, which unfortunately the President 
vetoed, that addressed the underlying problem of the Medicare trust 
fund. It did it by giving seniors an opportunity to have more choices 
as to the type of health care that they receive. Unfortunately, that 
proposal was vetoed.

  So we now have another report coming out which has said that the 
original report of a year ago grossly underestimated the problem. This 
chart sort of reflects the situation. I call this the plane crash 
chart, the nose dive chart, or whatever you want to call it. This is 
the blue line that shows what is happening in the Medicare trust fund 
in the original report that we most refer to around here of a year ago. 
This red line is the new timeframe for insolvency. It has been moved 
from the year 2002 to the year 2001. But actually that only tells a 
little bit of the story when you use those 2 years because of the 
insolvency which is being projected by the trustees. In the year 2001 
they are talking about an insolvency or a deficit of $33 billion in the 
Medicare trust fund, part A. But in the year 2002, under this new 
report, they are talking about a deficit of over $100 billion--a 
massive deficit in the trust fund in the year 2002.
  What has the administration's response to this been? It has been to 
take their head and stick it as far down in the sand as they can and 
flap their wings in some demagogic manner about how the Republican 
proposals are going to slash Medicare when nothing could be less 
accurate or less truthful.
  The Republican proposal was that we should slow the rate of growth of 
Medicare from 10 percent annually down to 7 percent annually and that 
we should do that by, as I mentioned earlier, giving Medicare 
beneficiaries essentially the same type of choices that Members of 
Congress and the Federal employees have today. Today, unfortunately, a 
Medicare beneficiary has only one really viable choice. They have some 
experimental choice, and that is called ``fee for service.'' This is 
the type of health care delivery service we had in the 1950's and 
1960's in this country; the type of health care service seniors grew up 
with and, therefore, are most comfortable with. It happens to be the 
most expensive type of health care delivery service. People who work in 
the private sector today, who work in a business place today, who have 
health insurance, know that there are very few fee-for-service 
programs, that for the most part we have what is known as mixed cost 
programs where you buy a health care delivery service that takes care 
of all your activities when you are an employee.
  It might be an HMO; it might be something called a PPO; it might be a 
group of doctors practicing together. There are a group of variables 
about how this is done. But today we have basically fixed-cost delivery 
systems.
  What we as Republicans said to the seniors was, all right, if you 
like fee-for-service, you can stay with it. We are not going to tell 
you that you have to change, but we are going to encourage you to look 
at some other services, HMO's, PPO's, groups of doctors practicing 
together, other types of insurance programs, and to the extent you 
choose one of these other programs which has to deliver at the minimum 
the same benefits you are now getting under your health care system, 
under health care services, to the extent you choose one of those that 
costs less, because many of them can cost less, then we in the Federal 
Government are going to give you an incentive to choose that less 
expensive system.
  You may say, well, how can there be a less expensive system that is 
going to give the same type of care to seniors? It is called the 
marketplace. It just happens in the marketplace there are a lot of 
health care providers that are willing to give the same or even better 
services for less than what Medicare today pays to the average senior 
for fee-for-service.
  That is because we pay so much for the average care for seniors. We 
pay about $4,800 a year. That is a lot of money for seniors. There are 
a lot of systems out there that could probably supply that care, and 
maybe more care--maybe eyeglass care, maybe pharmaceutical care--and do 
it for less than $4,800 a year. To the extent it was less, we were 
going to give our seniors the option to choose the least costly service 
which may be a better service. And the incentive we were going to give 
them to do it was to keep the difference. If their plan they choose 
were to cost $4,500, that today costs us $4,800 to pay for their fee-
for-service, and the plan they choose was a fixed-cost system that cost 
$4,500, the senior would keep the $300 difference.
  That would create three events. No. 1, it would mean that seniors 
would have an incentive to go out and look for cost-effective health 
care. No. 2, it would mean the marketplace would respond with lots of 
different opportunities for quality health care. And No. 3, it would 
mean that the Federal Government would get a predictable rate of growth 
in health care. Instead of having a 10 percent rate of growth, we can 
conservatively estimate that the rate of growth would be about 7 
percent. Why? Because in the private sector, which has done exactly 
this, which has gone to a variety of different health care programs, 
the cost of the premiums has actually dropped by about 50 percent.
  What we are talking about is getting a 30-percent drop in the cost of 
premiums, so we know if we use this opportunity we would have the 
opportunity to control costs especially in the outyears and therefore 
give us a better chance at maintaining the solvency of the Medicare 
trust fund.
  What was the response of President Clinton and his minions when we 
put this plan forward? The response--and we still hear it from 
Congressman Gephardt and his group--was, we are slashing Medicare. We 
are slashing Medicare. Well, we said, Mr. President, tell us what you 
are going to do then to get the system under control. He did not have 
an idea, did not have a proposal. He said, you are just slashing 
Medicare. Let me go scare some seniors and tell them that you are 
slashing Medicare.
  It was the most demagogic position taken by a President in a long 
time because it was dealing with such an important issue and they did 
it in such a purely partisan and political way, so demagogic, in fact, 
that even the Washington Post, which is the spokesman for basically the 
liberal agenda in this country, if you are going to be honest about it, 
in its editorial policy, said that what the President was discussing 
was ``medagoguery,'' coined a phrase ``medagoguery,'' a very 
appropriate word to add to our lexicon.
  And so now with the trustees' report coming forward and telling us 
that the situation has even gotten significantly worse, that the system 
now instead of going broke in the year 2002 is going to go broke in the 
year 2001, now we hear rumblings in the administration, murmuring from 
the administration, well, we have a program to save this, to push it 
out a few years.
  Let us look at what the administration is proposing because what they 
are proposing is a terribly crass act of intergenerational transfer of 
burden. What they are proposing essentially is to take a major part of 
the cost of the present Medicare system which is borne by the hospital 
trust fund and to shift that cost on to all Americans who pay taxes.

[[Page S5919]]

  The program that they are proposing is to take the home health care 
portion of the hospital trust fund, which represents about $55 billion, 
and transfer that out of the hospital trust fund, part A, into 
theoretically part B. But they do not put it in part B really. What 
they are doing is they are putting it on the backs of all the taxpayers 
in America. Today, of course, this item, $55 billion in home health 
care, is paid for out of the hospital trust fund.
  What does that mean? It means it is paid for by the taxes which go 
into the trust fund which are to accumulate for the purposes of buying 
insurance for seniors when you meet the age eligibility requirements. 
And so these costs of home health care are supported by the taxes paid 
to the trust fund. But what they are proposing is to take it out of 
that trust fund, and they put it in the part B trust fund and they have 
it paid for by the general taxpayers.
  In fact, they go so far in this exercise of political gamesmanship as 
to not only take it out of the hospital part A trust fund, but when 
they put it into the part B trust fund they do not even require that 
seniors pay what is the traditional percentage of the part B trust 
fund, which is 25 percent.
  Let me explain that because that is fairly complicated. Basically, 
the part B trust fund, as many people know, pays for things other than 
hospitalization, other than acute care. Under our system today, a 
senior citizen pays 25 percent of the costs of their nonacute care, 
nonhospitalization costs, and the general taxpayers, John and Mary 
Smith who are working down at the local restaurant or at the gas 
station or on an assembly line, they pay 75 percent of the senior 
citizens' costs for their nonhospitalization. That is the part B trust 
fund.
  Well, when they took the $55 billion out of the part A trust fund and 
put it into the part B, the administration at the same time said, no, 
seniors are not going to have to pay even the 25 percent. So the full 
$55 billion falls on Mary Smith and John Smith who are working at the 
local restaurant, the local gas station, or the local assembly line. 
And it is a clear transfer from one generation to the next generation 
of the costs of $55 billion.
  Does it do anything at all to address the underlying problem of the 
Medicare system, which is that it is growing at an annual rate of 10 
percent? No, nothing. Absolutely nothing. It does not address the 
primary problem of the Medicare trust fund one iota. All it does is 
create a political benefit for this administration of being able to say 
to seniors, well, by taking $55 billion out of your obligation and 
putting it on your children's back, we have been able to extend the 
life of the trust fund by a couple of years.
  That is truly a crass and, I think, cynical approach to addressing 
what is a very core and significant problem. Because as I mentioned 
when I began the talk, the size of the Medicare problem in the part A 
trust fund is now estimated to be a $100 billion deficit in the year 
2002. So through this little bit of gamesmanship, they may buy a year 
or two, but they do not do anything at all to address the underlying 
problem--nothing. All they did is create the ability to go into this 
election and say to seniors, listen, we corrected this problem.
  Of course, there is not going to be any asterisks by that which says 
to the seniors' kids, to the children and their grandchildren, oh, I am 
sorry; we just raised your taxes $55 billion--because that is all this 
is. This is a tax increase on the children of our seniors and their 
grandchildren who are working of $55 billion.
  Now, it is not unusual for this administration to resolve problems by 
raising taxes. They gave us the largest tax increase in the history of 
the country which was, under a 5-year budget, $265 billion or $285 
billion, but actually now that we are funding under a 7-year budget it 
turns out it was a $550 billion tax. Now, on top of that tax increase 
of $550 billion, they want to hit working Americans with another $55 
billion tax increase, while at the same time, and most amazingly with a 
straight face --and this is what I find rather ironic, they do this 
with a straight face--at the same time they say to our seniors, oh, we 
have taken care of the Medicare problem.
  They have not done a thing about the Medicare problem. There is no 
effort at all in the administration proposal to address the factors 
which are driving a 10-percent annual rate of growth in the trust fund. 
In fact, if anything they have aggravated it because they have taken 
the $55 billion and put it on the back of the average taxpayer in this 
country, John and Mary Jones, working someplace on Main Street. That 
means that we created a whole new burden on them, which is an 
entitlement, which they will have to pay taxes on and then expand the 
program as a result of lack of accountability, which is the way 
programs expand around here. They get created as entitlements and put 
in the general fund and then there is no way to control them at all. 
That is essentially what they are doing here.
  If you are going to address the Medicare issue, you have to look at 
the fundamental question, what is driving the rate of growth of 
inflation in Medicare costs? I have heard some pundits saying, ``It is 
demographics, it is people. It is all the new people coming in the 
system.''
  That is not true at all, not during the timeframe we are talking 
about. Yes, it is true when the postwar baby boom people hit the 
system. When Bill Clinton's generation and mine hit the system it is. 
But between now and 2010 it is not a demographic issue, it is a 
generational issue. It is not a demographic issue. It is a function of 
the fact that the rate of inflation in health care costs in Medicare 
are dramatically exceeding the rate of inflation of health care costs 
in the private sector and in the costs of health care for people who 
are under the age of 60.
  Last year, the rate of growth in the premium costs of people under 
the age of 60 was flat, essentially no inflation. The rate of growth of 
Medicare was 10 percent. You can see that is what is driving the 
problem with the Medicare trust fund. So, until you address that rate 
of growth of costs of the health care in Medicare you are not going to 
be able to make the system solvent.
  So, when the Republicans came forward last year and put down a 
proposal which was aimed specifically at bringing market forces into 
play in the Medicare system, taking it out of the system which is a 
1960's system designed for the health care delivery system of the 
1950's, and moving it into the 1990's by bringing market forces into 
it--when we did that we put forward a proposal which was fundamentally 
sound and which was directed at the core problem, which was the fact 
that the rate of growth of health care costs was too great. Through the 
use of market forces we tried to control that.
  What we have here essentially, in the Medicare system, is a 1959 
Chevrolet driving down a 1990's highway. It has not been repaired. The 
hubcaps have fallen off, it is running on three pistons, the exhaust 
system is spewing out pollution, and it cannot keep up to speed. What 
we suggested, as Republicans, is that we should put a new car on the 
1990 highway, something that can keep up with the times and something 
that would actually give the seniors a better choice of options for 
health care delivery.
  What the White House suggested, what the administration suggested, 
was that we simply get more oil and more gas and pour it into the car, 
the 1959 Chevrolet, and we get that oil and gas from John and Mary 
Jones, who are working on Main Street. It was a cynical act, to say the 
least. Exceeded, of course, by their statements that our proposals were 
slashing and cutting Medicare. That was the most cynical act by this 
White House, but in the tradition of that, equally or competitively 
similar, to suggest we should make this type of a transfer.

  If we are going to resolve the Medicare problem, we are going to have 
to have a White House which thinks about something other than 
reelection; that thinks about substantive policy, that thinks about how 
you govern, not how you get reelected to govern.
  I have not seen any sense that that is the character of this White 
House, but there is still time. Republicans still have on the table a 
proposal which would substantively improve the Medicare system, and do 
it in a way that would lead to a real direction of solvency for the 
trust fund, rather than to a shell game of transferring burden from one 
generation to the next. I hope, if nothing else, the American public 
will see through the games that

[[Page S5920]]

the White House has been playing on this and would put some pressure on 
the administration to begin to act responsibly in this area.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DeWINE. 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. DeWINE. Mr. President, I ask unanimous consent to proceed as in 
morning business for 15 minutes.
  The PRESIDING OFFICER. The Chair advises the Senator we are in 
morning business and is recognized for 10 minutes.

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