[Congressional Record Volume 142, Number 84 (Monday, June 10, 1996)]
[House]
[Pages H6098-H6104]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
IMPACT OF REPUBLICAN CUTS ON MEDICARE AND MEDICAID
The SPEAKER pro tempore. Under the Speaker's announced policy on May
12, 1995, the gentleman from New Jersey [Mr. Pallone] is recognized for
60 minutes as the designee of the minority leader.
Mr. PALLONE. Mr. Speaker, on previous occasions during these special
orders I have talked about the impact of the Republican cuts in
Medicare and the fact that the Republican leadership proposals on
Medicare would cut the Medicare Program so much that most of the money,
or a good percentage of the money that would be cut, would be used for
tax breaks for wealthy Americans and also that the changes in the
Medicare Program that have been proposed by the Republican leadership
would negatively impact the Medicare Program by essentially depriving
many senior citizens of their choice of doctor, pushing them into
managed care programs; if they did not go into managed care of HMO
programs, they would actually experience rather large
[[Page H6099]]
increases in out-of-pocket expenses because the protections that exist
under current law whereby a doctor can charge only 15 percent more than
what Medicare pays would basically be repealed.
I have been very critical of the various components of the Medicare
Program that the Republicans have proposed. Well, tonight I wanted to
repeat some of that, but perhaps even more so, go into some of the
changes that are being proposed for the Medicaid Program because
tomorrow we are likely to take up on the House floor the Republican
budget bill, the conference bill that comes back from both the House
and the Senate, and that includes major provisions and incorporates the
changes, if you will, in the Medicare and the Medicare programs that
the Republican leadership has proposed.
In addition, starting tomorrow and after tomorrow, once that budget
is adopted, as I expect it will be by the Republicans or by the
Republican majority, we will start seeing individual committees take up
different components of that budget proposal, including the Medicare
and the Medicaid components, and actually come forward, the committees
will come forward, with legislation that provides a lot more details
about exactly how the Republicans and the leadership plan to make
changes in Medicare and Medicaid. Specifically, tomorrow my committee,
the Committee on Commerce, which has a Subcommittee on Health and the
Environment, will actually have a hearing on the Medicaid changes that
would likely be brought up and voted on in the committee some time
later this week.
The problem that I have with the Medicaid Program in some ways is
very similar to the problem that I have with the Republican Medicare
proposal. The cuts are too deep, they negatively impact the program
because the money is taken away from the program and used for other
purposes, primarily tax breaks for wealthy Americans, but in the case
of the Medicaid Program, unlike the Medicare program, the Medicaid
Program is essentially repealed outright because its entitlement
status, the guarantee that Medicaid recipients have now that they will
receive certain health care coverage or even health care coverage, is
basically taken away, and the program is what we call block-granted to
individual States. The States get a certain amount of money. They can
decide pretty much on their own how they decide to disburse that money.
If they decide that certain categories of people should no longer be
eligible for Medicaid, it is pretty much up to them to make that
decision, and even those who continue to be covered by Medicaid in many
cases will find that the scope of their coverage or services that are
rendered available to them are significantly less or significantly
poorer quality.
Now, many people think of the Medicaid Program as a program for poor
people, and that is essentially true, and the Medicare Program, of
course, is for all seniors regardless of their income status. Medicaid,
on the other hand, is for people of any age who fall below a certain
income. But in this country, in these United States, most of the
Medicaid Program money, most of the money that the Federal Government
and the State governments contribute to Medicaid, actually pays for
senior citizens who are staying in nursing homes. So Medicaid is,
although it is not exclusively for senior citizens by far, the majority
of the money goes to pay for senior citizens services, and it is just
as important to the seniors of this country, almost as important, I
should say, as Medicare itself.
I want to keep stressing that, that Medicaid is primarily a program,
or at least financially a program, that pays for seniors' health care,
primarily again in nursing homes.
Mr. Speaker, I wanted to talk about some of the reasons more
specifically why I oppose this Republican Medicaid Program and the
changes that are being proposed by the Republican leadership. The
budget that we will be voting on most likely tomorrow would reduce
Federal spending on Medicaid over the next 6 years by $72 billion. This
means that compared with what the Congressional Budget Office, or the
CBO, estimates is necessary to maintain the program's current level of
coverage, the Federal Government would be spending $72 billion less, a
cut in Federal Medicaid spending would be 16 percent below the amount
CBO estimates is necessary or needed to maintain the program at its
current level.
So once again you are going to be hearing from the other side of the
aisle, and they are going to be saying, well, we are actually
increasing the amount of money that we spend on Medicaid in the same
way that we are increasing the absolute amount of money that we are
spending on Medicare. But if you look at inflation and the actual cost
to take care of the people that are in the Medicaid Program now, just
as in Medicare, and project how many people would be in those programs
over the next 5 or 6 years, you realize very quickly that the amount of
money that is going to be made available will not cover the needs of
those Americans who would normally be eligible for Medicaid or
Medicare.
In addition, Medicaid, unlike Medicare, is 50 percent paid by the
States. So what the Federal Government does in how it relates to what
the States pay is also significant, and under the Republican budget,
which we will be voting on most likely tomorrow, the States would be
allowed to decrease their spending, and State Medicaid spending would
fall by $178 billion over the next 6 years, more than twice as much as
the Federal spending would be cut.
{time} 1845
So we could say that the total cut in Medicaid spending, both Federal
and State, would be $250 billion, or 18 percent.
There is no way, Mr. Speaker, this program can continue to cover this
same number of people and provide the same level of services with that
level of cut. It is unprecedented. Of course, it is not intended to
cover the same amount of people. The anticipation has to be that a lot
of people will simply not be eligible for Medicaid anymore.
As I said, the Republican bill would repeal the Medicaid Program and
replace it with a block grant to the States. More specifically, the
Republican bill repeals the individual Medicaid entitlement effective
October 1 of this year.
What does that mean when we talk about entitlements? Entitlements
historically have been if you are eligible because of income or other
criteria for a program, you are guaranteed that you would have that
health care coverage. Essentially what this Republican bill does is
take away the entitlement status of Medicaid, so no one is actually
guaranteed that they are going to have health insurance. Basically,
States would be entitled to fix the amounts of Federal dollars and
could vary the benefits they offer from person to person and area to
area.
I want to stress again, and I do not think I can stress enough, that
we are primarily here, in terms of dollars, talking about nursing home
coverage for senior citizens. The Republican bill puts the elderly,
especially the frail elderly in nursing homes, and their families at
risk of paying large amounts of out-of-pocket expenses for needed care
and of losing much of their current coverage altogether.
The Republican bill repeals the current entitlement that low-income
Americans have needed nursing home care, again effective October 1.
Again, if you were below a certain income now, you are guaranteed
nursing home coverage. You will not be under this bill. The bill
repeals the current requirement that nursing home services and other
benefits be sufficient in scope, allowing States to limit coverage to,
say, 14 days per month, or 2 months per year. Elderly nursing home
patients and their families would have to pay for the care received
during those periods the States chose to cover. Not only can the States
decide not to cover certain people for nursing home care, but they can
decide they will only cover them for 14 days, half a month, or a
certain number of months per year, and basically say you have to pay;
and since these people do not have the money to pay themselves, their
families, their children, their grandchildren, would have to pay those
expenses in the nursing home.
The Republican bill also repeals the current law requiring that
States pay nursing homes reasonable and adequate rates for the services
they provide to
[[Page H6100]]
Medicaid patients, and it prohibits nursing homes from suing States in
Federal court to enforce the reasonable and adequate payment standard.
Oftentimes what happens now is that States will decide that in order
to save money, they will reduce the reimbursement rate that goes from
Medicaid to the nursing homes. A lot of times in the past the nursing
homes could get together and say, look, that is not enough money to pay
for care. We would have to cut back on the amount of nurses that are
available. We would have tot cut back on various services. They sue in
the Federal court and they say, ``This is not enough to pay for the
proper services that we offer,'' and many times they win. Sometimes
that do not. They would not be able to bring suit anymore, and there
would not be a requirement anymore that the States set a rate at what
is reasonable to actually cover the costs of the nursing home care.
The Republican bill also repeals the current law prohibition against
the imposition of cost-sharing requirements on Medicaid nursing home
patients. So, as a result, I will give an example, States could require
each beneficiary to contribute $25 per day, say, toward the cost of
nursing home care. Since most of the beneficiary's income is already
applied towards the cost of care, because we are talking about low-
income people, the burden of this additional cost-sharing would, as a
practical matter, fall on the individual's family.
Mr. Speaker, what we are seeing here is a major shift historically.
When seniors were not able to afford nursing home care, the State and
the Federal Government contributed and paid for that care. What we are
going to see increasingly is that the burden will fall more and more on
the children and the grandchildren. I think some people say that is
fine, let the children or the grandchildren pay; but when we think
about the fact that those children may have the educational expenses
for their children or may have other costs that they incur in order to
pay for their children or their regular lives, it is very difficult for
many of them to now have to shell money out of pocket to pay for
nursing home care for their parents or their grandparents.
Mr. Speaker, I wanted to talk a little bit about what this Republican
Medicaid plan does for children. The bill basically strips over 18
million poor children of the health insurance coverage which they are
guaranteed under current law, children with disabilities or health
conditions that are expensive to treat, and their families are at a
particular risk of losing coverage.
The bill repeals the current entitlement to a basic benefit package
for every American child under 13 living in a family in poverty. This
repeal, which will essentially terminate health insurance coverage for
over 18 million children, would become effective October 1. The bill
also repeals the current requirement that States provide basic health
care coverage to children age 13 up to 18, living in poverty, and under
the Republican bill, coverage to these children would be at the option
of each State.
Finally, the Republican bill repeals the current law requirement that
physician, hospital, and other so-called guaranteed benefits be
sufficient in scope for children. As a result, States would be allowed
to limit children to, say, one physician visit per month or 5 hospital
days per year. Just as with the seniors in the nursing homes, the
children, the coverage for children, could be limited by just taking
out whole categories of children who would not have health insurance,
and would then be among the ranks of the uninsured, or basically by
limiting the kinds of services that the children would receive under
the program.
I see that my colleague, the gentleman from New York [Mr. Hinchey],
is here. I yield to him to talk about Medicaid or Medicare, which I
know is very important to him and his district.
Mr. HINCHEY. Mr. Speaker, I thank the gentleman for blocking out this
time and giving me an opportunity to join him in this discussion.
I know that the gentleman is very concerned, as I am and I think many
of the people in this House are, about the future of both Medicare and
Medicaid. Last week we saw once again the trustees, the
Medicare trustees, issue their annual report. It is a report, of
course, that they issue every year. When they issued their report last
year, the Medicare trustees reported that legislation that would reduce
costs by only $89 billion over a 7-year period would be sufficient to
maintain Medicare's financial security. So it is not an awfully
difficult job to do. A relatively small amount of money over that 7-
year period will ensure the future stability of Medicare for at least
another decade beyond that.
Most of this legislation, which would extend Medicare's viability
another decade, required only the continuation of existing Medicare
laws that were scheduled to expire. So, simply by taking laws that are
about to expire and extending them into the future, that alone will
provide us with most of the funds that we need to ensure the strength
and viability of Medicare for at least another 10 years. Many of us,
including you and I, cosponsored legislation that would continue those
laws and would meet that $89 billion goal.
Relatively small shifts in reimbursement levels and technical changes
can produce substantial savings without requiring any dramatic overhaul
of the Medicare Program. Our colleagues on the other side of the aisle
here, whose real intention is to destroy Medicare, are proposing to cut
much greater funds out of the program. Their proposal last year, of
course, was for $270 billion out of Medicare. They have dropped that
back a little bit this year. It is something in the neighborhood of
$220 to $240 billion that they would cut out of Medicare this year in
their budget proposal over a 7-year period.
We know that there have been many times in the past, and Medicare has
been around now for 30 years, there have been many times when the
trustees have reported that Medicare would run out of funds, in some
cases in as short a time as only 2 years. There were a couple of
periods back in the decade of the 1980s, for example, when the trustees
came in with their report and said unless the Congress takes some
action of some kind to strengthen the fund, the fund will be exhausted
in 2 years. Of course, Congress took that action, and the fund was
extended for years into the future.
Now the trustees, in their most recent report, have said that the
fund is secure for another 5 years. There is nothing that has to be
done for another 5 years and it will be secure, but sometime within
that 5-year period the Congress will have to act.
That has always been the case. Medicare was created on a pay-as-you-
go basis back in 1965. It was not as though Lyndon Johnson, who was
President then, found a big pot of money someplace and said, well, this
is going to be the Medicare trust fund. We have just discovered this
fund and we are going to turn it into the Medicare trust fund. Nothing
like that, of course, happened. What they did was set up the Medicare
program and established its funding on a pay-as-you-go basis, year
after year after year, assuming that the program would be effective,
that the American people would support it, and so therefore the
Congress would continue to support it with the necessary funds.
Now the majority party here has come and has reacted to this recent
revelation, this recent report from the trustees that stipulates that
Medicare is fine for 5 years, and they are trying to instill panic in
the general population, particularly those people who are receiving
Medicare, elderly people. They are vulnerable to this. They are worried
about their health care. So when someone in the House of
Representatives stands up here on the floor and stamps their feet and
makes a big to-do, pretending that Medicare is about to go bankrupt,
when in fact it is stronger today than it has been many times in the
past, senior citizens become concerned, because it is the health
insurance that they need to get the health care they need to sustain
their health and to sustain their lives. Their children become
concerned, too, because without Medicare they know that they would have
to sustain substantial costs which in many cases for working people
would be far beyond their ability to sustain.
Mr. Speaker, it is really, I think, scandalous the way some people
here have tried to turn this routine report from the Medicare trustees
that comes out every year, how they have tried to turn it into a
political football, and they are trying to exploit this report
[[Page H6101]]
by pretending it is something that it is not. It is not a call for
alarm, certainly not panic. It is simply the requirement, annual
requirement that the law stipulates that the trustees must do, and that
is to report to Congress and to the United States every year on the
condition of the fund. The fund, with 5 years, is obviously a lot
stronger than it was back in the 1980s, when a number of times, at
least twice, there were only 2 years left in the fund.
Congress has responded throughout this 3-year period. In the last 13
years, for example, Congress has adjusted the Medicare fund nine times
to respond to recommendations that were contained in the annual report
of the Medicare trustees. So this report this year is nothing
extraordinary, it is nothing new. It is the routine, annual reporting
of the trustees to the Congress, and it is our responsibility to
respond to that either this year or next year.
The proper response is, as I indicated when I first started speaking
a few moments ago, the proper response is to look at the existing law,
take some of those things that are about to expire, extend them on into
the future so that they will produce the needed revenues, and the mere
$89 billion over 7 years, a far cry from the $270 billion that our
friends on the other side of the aisle are trying to chop out of the
program, simply by extending provisions in the existing law you can
obtain the $89 billion over 7 years and ensure the strength and
solvency of the fund for at least another decade, which is the kind of
thing that the Congress has done over and over and over again
throughout the 30-year history of Medicare.
But it comes as no surprise to you nor to me that these folks are
trying to exploit this report, to turn it into a source of panic and
concern, when really there is no need for concern, let alone panic. It
comes as no surprise to us because we know that the majority leader of
the Senate, who is now about to retire, was bragging here on an October
day last year when he was addressing a very conservative group of
people here, when he was trying to appeal to them as a candidate for
the Republican nomination for President, he was trying to appeal to
them by saying to this very right-wing group, ``If you want someone who
is really conservative, then I think I am the guy you want, because I
have been against Medicare from the very beginning.'' He bragged about
being one of only 12 people to vote against Medicare when it was first
proposed on the floor of this House. he was a Member of the House in
those days, in 1965.
He bragged about being only one of 12 people to oppose the Medicare
legislation, and he seemingly makes no bones about it, frankly. He was
proud of the fact that he was against it then. He said he has been
against it ever since, and he is against it today. Why, he explained?
Because, and this is the real kind of silly part of his argument, he
said, ``Because I knew it would not work then and I know it does not
work now.''
The fact of the matter is that millions of American seniors have
benefited from the Medicare program. It has provided them with
excellent health care; not that it is perfect by any means. There are
things we have to do and will do to improve the program. But the fact
of the matter is that Medicare has served the senior citizens, 65-year-
or-older population in this country, very well now for more than 30
years. And of course we know that the Speaker of our own House,
coincidentally that same week in October of last year, speaking to a
group of insurance executives at the time, said this to them.
He said, ``We are not going to attack Medicare directly. No, no. We
are not going to do that. That would be politically unwise,'' he said.
``What we are going to do is attack it circuitously, by going around
the back, withdrawing the funds from the program''; hence their
proposal for a $270 billion reduction, ``withdraw the funds from the
program and let Medicare wither on the vine.''
{time} 1900
That was his approach to these insurance executives, who of course
many of them would like to see Medicare be destroyed, because that
would give them some opportunity to perhaps sell some health care
insurance to some people who do not need it now because of the fact
that they have Medicare.
So it comes as no surprise to us, it ought to come as no surprise to
the American people that there are certain people in this House as well
as in the other body that are trying to exploit this routine report
from the Medicare trustees, turn it into something it is not, pretend
that it is cause for concern and try to exploit it for political
reasons, which I think is frankly unconscionable. Nevertheless, that is
what they are trying to do, when in fact this is a routine report.
It is simply the trustees fulfilling their obligations to report to
the Congress and to the American people, and this Congress or the next
one, which will be elected in November, will do exactly what Congresses
have done in each and every case in the past. They will do the
responsible thing. They will extend these programs out. They will take
the appropriate action to ensure that this Medicare program, which has
served the country and particularly our elderly population so well now
for so long, will continue to do precisely that.
So I wanted to come over and join you in this discussion because I
think that these are matters that are important and ought to be said.
In fact, I think that they ought to be said as often as possible.
Mr. PALLONE. I appreciate the gentleman coming down and saying the
things that he said. It is so true. I think it is really an ideological
phenomenon that basically the Republican leadership does not favor
Medicare or Medicaid, and that is essentially because I think that they
believe that whether it is for seniors or it is for low-income people,
there really should not be a government-funded or run health care
program.
The bottom line is that these programs were established because we
knew that the majority of seniors were not able to get health
insurance. When Medicare was established in 1965, the majority of
seniors did not have health insurance coverage. Certainly people who
are eligible now for Medicaid who are very low income, there is no way
for them to get health insurance coverage unless the Government
provides a program like Medicaid.
But what the gentleman was saying about how the Republican leadership
is trying to use this Medicare trustees' report as a way to justify
their radical changes, if you will, that they are suggesting for
Medicare, is so true.
I just have some statistics here that show that right now the
Medicare trust fund actually has a $125 billion balance and there is no
danger that claims will not be paid. I have people coming up to me
because they hear what the Republicans say, and they say, ``Is my
Medicare going to be paid this year?''
As the gentleman points out, even though the trustees' report
indicated that it would only be solvent for another 5 years, that is
actually better than many previous trustees' reports which were only
for 2 years. Also, when the gentleman was talking about the actions by
the House, the Democrats in 1995 and 1996 actually proposed on the
floor amendments to the budgets that would have corrected the problem.
We had a vote on a proposal of the gentleman from Florida [Mr.
Gibbons], the ranking member on the Committee on Ways and Means, the
Democratic ranking member, last year during the budget debate to cut,
I guess, $90 billion out of Medicare. That is exactly what the
trustees' report said was necessary in order to keep the program
solvent for the next decade. The President's budget was offered on the
floor this year that would have achieved the same goal, and the
Republicans voted against it.
Basically what they are trying to do is, they are trying to increase
the cuts significantly more, as the gentleman said, than what is
necessary to keep the program solvent. I have maintained that is
primarily in order to pay for these tax breaks that go primarily to
very wealthy Americans.
So I think it is only fair, as the gentleman is doing, to point out
where this debate really is. What we are seeing are efforts on the part
of Speaker Gingrich and the Republican leadership to make real changes
in the Medicare program and also in Medicaid, as I was talking earlier
that are essentially going to have a negative impact on these programs
and ultimately force
[[Page H6102]]
them to disappear or, as I guess the Speaker said, wither on this vine.
I think that was his quote, that Medicare should wither on the vine.
Mr. HINCHEY. It is clear that that is his intention. I think you are
right for pointing out that there are certain ideological differences.
There are things relating to public policy that separate the Democratic
Party from the Republican Party, not every member of the Republican
Party, because there are people in the Republican Party who very much
appreciate Medicare, who like it, regard it as something very positive
and want to support and sustain it.
It happens, however, that the leadership in this House feels quite
differently and the leadership in the Senate feels quite differently.
They are very strongly opposed to it. They have said so themselves.
They make no bones about it. They are not reticent about their
opposition to it. They have been quite clear in the things that they
have said. They are opposed to the continuation of Medicare, as they
are opposed to the continuation of Medicaid, and they are trying to
destroy these programs by taking the lifeblood from them, the funding
that is necessary to keep them going.
Something else that the gentleman said really stuck me, also. I was
at a housing unit over in Binghamton, which is a city in my district,
over the weekend. It is a very lovely place. It is well run, it is well
kept. It is 16 years old, was funded by the Federal Government. It was
built 16 years ago but it is maintained so well that one would think it
was only 4 or 5 years old. it is in very good condition.
This is a building that houses senior citizens and people with
multiple disabilities. If it were not for buildings like this, these
people frankly in many cases would have no place to go. So here they
have an opportunity to live independently and live in a secure
environment and one that is quite pleasant. In fact, in the back yard
there was a lovely landscaping operation and a garden where people had
planted some vegetables, tomatoes, and things like that, to harvest in
the summer harvest.
They were deeply concerned when I talked to them about Medicare. They
had heard some of the things that were reported here. They had heard
about the Medicare trustees' report, they had heard about the kind of
twists on that report that had been placed upon it by certain Members
of this House on the other side of the aisle, and they were deeply
concerned.
They were wondering if they were going to continue to have their
health insurance, if it was going to continue to be viable. I had to
assure them that, yes, of course it was, that this report was not
anything unusual, it was simply the routine report put out by the
trustees.
But there are people here in Washington who do not like Medicare.
They have never like it, as Bob Dole has said quite clearly. He was
against it from the very beginning back in 1965. He did not like it
then, he does not like it now. That is his right, of course, not to
like it. He is certainly entitled to his opinion.
We think he is wrong. We believe earnestly that he is wrong. We
recognize that Medicare has served this country very well, particularly
our elderly population and the families of older people as well. But
they do not like it and they are opposed to it. They would like to see
it ended, and they are trying to destroy it by these continuing efforts
to cut the funds out of the program so that, in the words of Speaker
Gingrich, it would just wither on the vine.
Mr. PALLONE. I am somewhat familiar with the gentleman's district,
not so much with Binghamton but with Endicott, which is also in your
district, I believe.
Mr. HINCHEY. Yes, it is.
Mr. PALLONE. Because my father-in-law and mother-in-law both grew up,
until they went off to college, lived in Endicott, and I have been up
there a few times. It in many ways very similar to a lot of areas in my
district where there is an aging population in many ways. You have a
lot of the senior citizens, maybe a little out of proportion to some
other areas of the State or other States.
The problem that I see with all this, not only with Medicare and
Medicaid, with the Republican proposals, is that if you cut people off
the rolls or if you cut back the services that are covered by Medicare
and Medicaid you cause, which is what they are doing basically, a lot
more out-of-pocket expenses. What I see is the burden shifting
increasingly to the children and the grandchildren of these senior
citizens. Because many of them are not going to be able to afford the
additional costs out of pocket.
Some people have said to me, ``Oh, that's okay, let the children and
the grandchildren pay for it.'' First of all, you have the phenomenon
that some will not. But beyond that, how far can they go? A lot of
younger people have their own children to raise and they are not
expecting that they are going to have to shell out large amounts of
money to pay for nursing home care for their parents or their
grandparents or these other doctor and physician services.
What we are talking about here is not just something that relates to
senior citizens but relates to the population as a whole because of the
cost shifts that would occur. I do not know that we have been able to
get that out a lot, but I think that it is a phenomenon that we need to
speak out about.
Mr. HINCHEY. The gentleman is absolutely right, of course. It is
critically important. I know the families in my district, and I know
that my district is not unusual, this is true of families across the
country, are struggling today because of the fact that incomes have
been stagnating, in some cases even declining. From 1989 to 1992,
average incomes in this country for working people actually went down.
That is an extraordinary fact. So working people are having a difficult
time as it is just trying to maintain their standard of living. In many
cases it is slipping a bit. They are trying to put some money aside for
the education of their children, perhaps for their retirement, in the
case of young people trying to put some money aside for the purchase of
a first home or perhaps to start a business, something of that
nature. and if they had to suddenly be forced to bear the additional
costs of tending for the health care needs of their parents and
grandparents absent Medicare and Medicaid, I think for many people that
I know, certainly in my family and many of my friends and the people
that I know and the people that I represent across my district, it
would be an absolute impossibility. They just could not do it.
This is a situation that although it affects our elderly population,
our senior citizens, most directly because it is their health care,
after all, but by extension it affects in a very direct and very solid
way everybody in the country. Everyone in this country would be
affected if we were to lose the Medicare Program. I think that that is
why this program is supported so overwhelmingly. Every indication,
polls and other samplings of public opinion indicate that the American
people support Medicare, they understand its value, how it has helped
their parents and grandparents, what it means to them and their
economic circumstances, and they support its continuation. They want it
improved as you and I want it improved. There are problems with
Medicare in the area of fraud and abuse that need to be improved and I
am happy that the administration has taken some very solid steps
recently updating the computer operation so that cross-checking of
bills can be done much more quickly and much more accurately. There
have been instances of double billing in Medicare from some doctors.
Most doctors, of course, would not do that. But in any population of
any group of people, you are going to find some who will try to exploit
the system. And so we have had examples of double billing from some
physicians in Medicare, and these changes in the administration of
Medicare that are being brought on line by the Clinton administration,
updating the computers, making them more powerful, giving them the
ability to cross-check and cross-reference bills, will sharply reduce
the incidence of fraud and abuse in the Medicare system, and we need to
continue to do that.
It is estimated that as much as $1 billion a year is found in fraud
and abuse in Medicare. I think if we continue to work on that, we can
get that down to a very small number. I do not think that we are ever
going to eliminate it completely, but I think we can get it
[[Page H6103]]
down to a very small number and that will be additional funds, of
course, which will be available to improve the quality of the program
and the quality of health care that is available to the people who
depend upon it.
Mr. PALLONE. One of the things that I was going to get to tonight,
and obviously there is so much to be said about Medicare and Medicaid
that we could talk forever, but one of the things that Democrats have
been critical of in the Republican changes to the Medicaid program is a
provision that actually repeals statutory safeguards that have
protected against some fraud and abuse. I think people have the notion
that the reform proposals that have come forward on the floor here over
the last year would somehow curb fraud and abuse, but in many cases
they repeal existing statutory protections against fraud and abuse.
For example, in the Medicaid program over the past 10 years the
largest single abuse of Federal Medicaid funds has been the use by some
States of what is called illusory financing schemes. This is where they
have these fictitious payments to disproportionate share hospitals and
then the State substitutes Federal for State dollars effectively
reducing the State's share of program costs.
In 1991 and again in 1993 Congress enacted legislation designed to
curb these abuses where they set up these fictitious funds and the
Republican bill expressly repeals these statutory safeguards
essentially reopening the door to abuse of the Federal Treasury by
States if they want to lower their own Medicaid spending without
reducing the amount of Federal Medicaid funds that they would fall down
on.
{time} 1915
So again, one would think when we are getting a reform proposal that
we would be cutting back on the fraud and abuse, but in effect what
this does, in block granting the money, it actually takes away some of
the safeguards that have been used by the Federal Government to prevent
the States from basically coming up with these illusory finance
schemes.
We might say what State would do that, but, of course, States do that
because they are trying to save money and cut back on the amount of
State dollars and use the Federal funds in ways they are not supposed
to.
Mr. HINCHEY. Absolutely. I served in the State legislature, and I
know State legislatures and governors are not embarrassed about trying
to use Federal funds in creative ways to solve their own budgetary
problems.
In New York, for example, where the State still does not have a
budget in place, it is months overdue, if they had the opportunity to
manipulate Federal funds in a way that would allow them to produce a
budget easily, without them having to do some difficult things within
the context of their own responsibility, I believe they would do it and
they would not care about the loss of the Federal program. They would
just sort of gloss over that.
So there is a lot of irony here, unquestionably. Not only do our
friends on the other side of the aisle over here want to cut Medicare
by $270 billion so they can pay for a $245 billion tax cut, most of the
proceeds of which would go to upper-income people, but, as the
gentleman pointed out, they are slashing away, and the bill is still
before the House, the one that calls for a $270 billion cut, they are
slashing away at the existing provisions which attack fraud and abuse.
What they would do in that bill is this: They would raise the
standards of proof so it would be more difficult for investigators and
law enforcement people to prove fraud in the system. So if there were
people out there ripping the system off, under their proposal it would
be tougher to catch them. So the white collar crooks ripping off the
Medicare system would get away with murder based on their proposal
because they would make it much more difficult for the authorities to
catch up with them.
And, in addition to that, they go further. When and if they were ever
caught under their proposal, they reduce the penalties. So anyone
caught abusing the system through fraud or other ways, not only would
it be tougher to catch them under their proposal but if they were ever
caught the penalties for stealing from the system would be
substantially reduced.
It is an incredible irony and I think it indicates quite clearly how
dedicated they are to the destruction of the Medicare Program. They
want to take the money out of it and use if for unnecessary tax cuts.
And, for the most part, people are sensible enough not to want them
because they understand that that money ought to be used to keep this
program strong, and if there is any extra money lying around here in
Washington it ought to be used to balance the budget.
Not only do they want to do that, but out of one side of their mouth
they talk about the budget deficit and out of the other side they talk
about big tax cuts. It is quite extraordinary, frankly.
Mr. PALLONE. I agree. And the other thing that has really been, I
think, not exposed enough is this whole way in which they go about
adding more out-of-pocket expenses under Medicare. Last year when we
had the Medicare proposal, they were actually increasing the costs of
the part B premium, the amount that seniors pay under Medicare for
their physician's care. Those premiums were skyrocketing over the next
5 or 6 years, and we managed to basically scuttle that because the
President said he would not sign it. I guess he actually vetoed the
bill.
But now what they are trying to do in this bill that is going to come
to the floor tomorrow is essentially say that if an individual refuses
to join an HMO or a managed care system, and they want to stay in the
traditional Medicare Program where they choose their own doctor or
their own health provider, then they no longer have the guarantee that
the doctor or provider cannot charge them 15 percent beyond what
Medicare pays. There is actually no limit.
So when I hear my colleagues on the other side say, well, you are
given all the choice you want here; you can stay in traditional
Medicare or go to an HMO, or you can have all the choices you want,
what kind of choice do you have if you stay in the traditional Medicare
program and then the doctor can charge you an unlimited amount of
copayment? You are not going to be able to stay with this very long
unless you have unlimited resources, which obviously most seniors do
not.
I have been trying to explain that as much as possible to my own
constituents because I think they cannot imagine a situation where the
doctors can charge an unlimited amount beyond what Medicare bills. But
that is only forbidden now because of the statutory restrictions on it.
Mr. HINCHEY. Right. There are statutory restrictions which were put
into place not too long ago, as a matter of fact, were they not? I
think a decade or so ago.
Mr. PALLONE. That is right.
Mr. HINCHEY. They were put into place because it had become clear
that overbilling had become rampant in the system, and this was
something that was done to ensure fairness and to prevent overbilling.
I think the point that the gentleman has just raised is important,
and it reminded me of something that I have here. The Physician's
Payment Review Commission, which is a nonpartisan panel of experts that
advises Congress on Medicare policy, had the following to say. They
said, and I quote, this change that our friends, the Republicans want
to make here, which would allow unscrupulous physicians to overbill
Medicare patients by large amounts, they say, and I quote, ``could
leave beneficiaries exposed to substantial out-of-pocket liability in
the range of 40 percent of the bill.''
So the effect of their proposal, which will be, I think, here before
us tomorrow or later this week, is it tomorrow?
Mr. PALLONE. Probably tomorrow, but I guess we do not know for sure.
Mr. HINCHEY. Yes. Could be tomorrow or could be Wednesday. In any
case, what they want to do is take the limit off the billing ceilings
for health care, and that would expose Medicare beneficiaries, the
people who are reliant upon Medicare, to pay out of their pockets an
additional 40 percent.
Now, again, what they are trying to do here is transparent. It is so
easy to see through their motivation. They are trying to destroy
confidence in the program. They think that if somehow they could get
this bill passed, I do not know how they think they could get it
[[Page H6104]]
passed, I mean the President would obviously veto if it ever gets to
him, the Senate probably has more sense than to ever take it up, but
what they want to do is to establish a new law which would require
Medicare beneficiaries to pay, on tap of their copayments and on top of
other insurance that they might have now, under their proposal, an
additional 40 percent out-of-pocket for routine health care procedures.
Now, that is guaranteed to undermine the public's confidence in the
Medicare system and it is precisely what they want to do. It is clearly
their motivation. It is so transparent that anyone, no matter how
myopic they might be, can see through it.
So over and over again they want to destroy this Medicare program in
one way or another by cutting the funding out of it, by pretending the
Medicare trustees report is something it is not, trying to elicit fear
on the part of people who are depending upon Medicare, and now by
attempting to pass a bill which would provide that doctors can charge
almost as much as they want and elderly people would have to pay 40
percent out-of-pocket.
It is really, I think, scandalous.
Mr. PALLONE. I am glad you mentioned this. I was actually assuming,
which I see from the document I have, which is similar to yours from
this Physician's Payment Review Commission, I was assuming that that 40
percent included the copayment, but that is actually beyond the
copayment.
Mr. HINCHEY. Yes.
Mr. PALLONE. So you could have a 20 percent copayment and then have
this 40 percent out-of-pocket beyond the traditional copayment, which
is incredible when you think about it. Who is going to be able to
afford that? I mean, very, very few.
Mr. HINCHEY. Oh, yes. That is exactly right. On top of everything
else it is as much as an additional 40 percent. So if their bill ever
became law, what we would have in the case of a senior citizen who
required some surgery of some kind, say for example, that in an
addition to the payments that would be made through Medicare and
whatever additional insurance they might have, they would then be faced
with the need to pay thousands of additional dollars out of their own
pocket. And that is just absurd.
Mr. PALLONE. The other thing that I was thinking about when the
gentleman was talking about this extra out-of-pocket expense is the
fact that the majority of seniors now are covered by medigap. So they
are already buying a supplemental insurance policy, in many cases
called medigap, that covers services and out-of-pocket expenses in some
cases as well.
I know that I saw an article in the New York Times just a few weeks
ago that talked about how costs for Medigap supplemental insurance were
going up in our States, the New York metropolitan area, New York, New
Jersey, and Connecticut, something like 14 percent over the next year.
So when one thinks about all these extra out-of-pocket costs for the
seniors that would result, I would assume also that those Medigap
premiums would soar as well, because as fewer services were covered, we
would see even a higher cost for Medigap.
How far can these people go? How far can the seniors go?
Mr. HINCHEY. Well, there seems to be no limit on the temerity of some
of the majority party in this House and their ability to attack
Medicare and Medicaid.
I know you have talked about Medicaid earlier. In my State, and I
assume it is probably similar in New Jersey, 80 percent of the funding
in the Medicaid program in New York goes to pay for the expenses of
senior citizens and people with multiple disabilities in nursing homes
or similar settings.
Mr. PALLONE. Exactly.
Mr. HINCHEY. Obviously, what would happen to the families of those
people if Medicare were changed in the way that they are proposing to
change it, to block grant it, reduce the amounts of money that is
available, send what is left in the form of block grants to the States,
the States then would have to add on administrative costs or take out
of that administrative costs because now they will have to run the
program and be responsible for parts of it. They would have to hire
people to do that. They would have to have office space and most of the
things that would be associated with making additional costs, which
would take money out of the Medicaid program.
As the gentleman mentioned earlier, there is always the temptation
for State governments, when they have access to Federal funds, to use
them in what might be called creative ways and to spend that money out
of the Medicaid system to help balance a budget or to do something else
for some other kind of expenditure in some way.
The result of all of that would be far less money available for
Medicaid recipients, elderly people in nursing homes, people with
multiple disabilities in nursing homes. I ask myself, what would the
families of those people do? How would they cope with that? How would
they manage under those circumstances?
I can tell the gentleman in the case of many of the people I know,
the families of people who have elderly parents in nursing homes or who
have someone in their family who is severely handicapped with a severe
physical disability as a result of an automobile accident, perhaps, or
as a result of a condition at birth in some instances, they simply
would not be able to deal with it. They do not have the financial
resources.
So people would end up being taken and put into closets somewhere. We
have all heard the horror stories that existed prior to the
establishment of Medicare and Medicaid; how people, left to their own
devices, without the resources to handle these situations in competent
ways, what they had to resort to. And I know that we would be in many
instances put back into those same circumstances. We have to prevent
that and the way we can prevent it is by keeping these programs alive
and preventing the opponents of Medicare and Medicaid from having their
way, preventing them from destroying these programs, which is precisely
what they want to do.
Mr. PALLONE. I appreciate what the gentleman is saying, and I think
that over the next few weeks we will be pointing out more and more
about how Medicare and Medicaid are negatively impacted by these
Republican proposals.
{time} 1930
In many ways, even though we have not talked as much, we have talked
about it, but there has not been as much discussion on the floor about
Medicaid. In many cases the changes proposed on Medicaid are even more
drastic, but I think fewer people will be covered. The impact on senior
citizens is just as great, as the gentleman said, because so many
senior citizens in nursing homes or other institutions will no longer
be covered or will not have adequate coverage and will see increasing
out-of-pocket expenses.
The same things we talked about for Medicare in terms of the
overcharges, that is also in the Medicaid legislation that the
Republicans have proposed. Those overcharges will not be paid by the
seniors but will be paid by the family in many cases.
I thank the gentleman for coming down and joining me in discussing
this. I know that over the next few weeks we are going to be talking
about it more and more, and even though the budget comes before the
House tomorrow, a lot of the details will be worked out in the various
committees leading up to reconciliation, as we call it, later this
year. So we are going to have to continue to fight this battle to
preserve Medicare and Medicaid.
Mr. HINCHEY. I thank the gentleman. This is one of the most critical
subjects we have before this Congress, and the more light we can shed
on those proposals, the better off the American people will be. They
will be able to make competent decisions based on factual information
rather than pretend on hysterical statements that we have seen coming
out of some of the people in the House over the last couple of days.
Mr. PALLONE. I thank the gentleman.
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