[Congressional Record Volume 142, Number 96 (Wednesday, June 26, 1996)]
[Extensions of Remarks]
[Pages E1178-E1179]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                MEDICARE

                                 ______
                                 

                          HON. LEE H. HAMILTON

                               of Indiana

                    in the house of representatives

                        Wednesday, June 26, 1996

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, June 26, 1996, into the Congressional Record.

                Medicare: Providing Security for Seniors

       Medicare is a fundamental security net for older Americans 
     that has contributed enormously to the well-being and quality 
     of life for seniors. It is the major source of health care 
     for 38 million older Americans, covering the vast majority of 
     their physician and hospital services. Medicare has its 
     faults, but it has dramatically improved the health care and 
     the longevity of older people in this country. As one older 
     person said to me, ``I cannot live without Medicare.'' There 
     is no question that it must be preserved and protected.
       The Medicare system faces financing problems, but it is not 
     in jeopardy of extinction. Medicare will continue to be 
     available for seniors and future retirees despite some of the 
     frightening rhetoric we have heard of late. The issue of 
     Medicare's financing is complex and confusing for many 
     Americans. Seniors already in the system and those planning 
     for retirement are understandably wary.
       Medicare is facing short-term financing problems because 
     people are living longer (the number of people over 65 today 
     is some 65% greater than it was in 1970), medical technology 
     continues to explode, and the cost of medical care continues 
     to rise. These cause financing problems that need to be dealt 
     with in order to shore up the system for the near-term. The 
     more difficult issue is the longer-term financing problem 
     caused by the impending baby boomer retirements. As more and 
     more people retire, fewer are left in the workplace to help 
     finance Medicare. There is no easy solution, but there are 
     ways to fix this problem. In the past, Congress has acted to 
     extend the program's solvency, and we will do so again. We 
     must work to find solutions which ensure Medicare's solvency 
     and maintain quality health care for seniors.


                          medicare's financing

       There are two basic parts of the Medicare system which help 
     seniors meet their health care costs: the Hospital Insurance 
     (HI) trust fund and the Supplementary Medical Insurance (SMI) 
     trust fund. HI, which covers hospitalization costs, is 
     financed through a payroll tax of 2.9% on wages, half paid by 
     employers and half by employees. SMI, which covers physician 
     and outpatient services, is financed by general tax revenues 
     and monthly premiums paid by beneficiaries. Beneficiary 
     premiums make up about 25% of SMI's costs.
       The Medicare trustees recently issued their annual report 
     on the financial status of the HI and SMI trust funds. Even 
     though the trustees have issued ominous projections almost 
     every year since 1970, the latest HI projections were 
     particularly troubling. According to the trustees, the HI 
     trust fund is projected to be insolvent in 2001, a year 
     earlier than expected. The problem is that the payroll tax, 
     which finances the fund, is not sufficient to cover the ever-
     increasing cost of health care and the increasing number of 
     Medicare recipients--factors which will only continue to 
     strain the system unless changes are made. Unlike HI, SMI is 
     not in danger of bankruptcy, but inflation and an aging 
     society have led to rapidly rising costs. Costs will continue 
     to rise as health care costs in general continue to escalate.


                               solutions

       Over the past several years Congress and the President have 
     taken action to extend Medicare's financing in the short-term 
     and prevent bankruptcy of the fund. That has happened nine 
     times in the past and we will certainly do so again. Neither 
     Congress nor the President will allow Medicare to go 
     bankrupt. Medicare is too big, too successful, and too 
     popular for it to fail. Proposals to save Medicare have 
     included curbs on increases in fees to providers, higher 
     premiums and co-payments for better-off beneficiaries, an 
     increase in the eligibility age, new taxes, a range of new 
     options for obtaining health care, and containing costs 
through market forces. Each of these options, or some combination of 
them, will have to be considered in the future. The long-term solvency 
of Medicare will not be easy to resolve, but it must be done.

       I have several thoughts about Medicare reform. First, we 
     must preserve doctor choice. I do not want to force older 
     people into managed care. If they want to choose their own 
     doctor, they should have the right to do so. Second, whatever 
     changes are made, we must assure that Medicare delivers good 
     care. I do not want to reduce the quality of health care for 
     older Americans. Third, we should not cut Medicare to provide 
     for a big tax cut. We should separate the Medicare debate 
     from the highly politicized and partisan budget process. We 
     should reform Medicare on its own, and not use Medicare as a 
     piggy bank for making tax cuts. Fourth, a wholesale 
     restructuring of Medicare should be approached with caution. 
     Such a major change would likely be ineffective unless 
     coupled with a restructuring of the entire health care system 
     to hold down escalating costs. It is better to make 
     incremental changes in Medicare aimed at health promotion and 
     disease prevention, increasing efficiency, and reducing fraud 
     and abuse. But we do need to begin making adjustments. The 
     sooner we start the gentler it will be.
       A major accomplishment of the 104th Congress has been 
     blocking the plan put forward by Speaker Newt Gingrich to cut 
     back Medicare by $270 billion. The problem with this plan was 
     not that it squeezed too hard. Savings of that magnitude were 
     estimated to be twice as much as needed to keep the program 
     solvent. Excessive cutbacks could threaten the quality of 
     care. While some cutbacks and some restructuring of Medicare 
     will be necessary, $270 billion in cut-backs was necessary 
     not to help Medicare, but to help finance huge tax cuts 
     targeted toward well-to-do Americans.

[[Page E1179]]

                               conclusion

       The Medicare program has served our seniors well. It has 
     provided them with quality health care, and, equally 
     important, a sense of security that their basic health care 
     needs will be met. It does not cover all the services and 
     treatments seniors need, but it is a primary safety net for 
     them.
       Americans contribute throughout their working lives to 
     finance the Medicare system. They deserve the assurance of 
     access to medical care during their older years. Congress 
     must focus on maintaining those assurances. Medicare is not a 
     faceless government program to be slashed at blindly; it is a 
     fundamental source of security for seniors. They have earned 
     the benefits, and I will continue to work to ensure they 
     receive what is justly theirs.

                          ____________________