[Congressional Record Volume 142, Number 141 (Thursday, October 3, 1996)]
[Senate]
[Pages S12265-S12266]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            MEDICARE PROGRAM

  Mr. CHAFEE. Mr. President, I want to take a few minutes this 
afternoon to discuss the Medicare Program. Restoring solvency to the 
U.S. Medicare Program is the greatest domestic challenge that the 
Congress will face when we reconvene in January 1997.
  The Medicare Program is in deep trouble. The latest report is 
entitled, ``Status of Social Security and Medicare Programs, a Summary 
of the 1996 Annual Reports.'' This is submitted by the trustees of the 
Medicare Program and the Social Security Program. I will restrict my 
remarks to the Medicare Program.
  According to this report, the hospital insurance trust fund--that is 
the program that pays for the hospital bills for individuals on 
Medicare--will run out of money by the year 2001.
  How far away is 2001? That is 4 years from this coming January. The 
trust fund is currently spending more money than it receives in 
revenues. Even now, more money is going out than is coming in.
  According to a recent report, this shortfall is increasing at a rapid 
rate. The trust fund lost more than $3 billion--I would like to repeat 
that, Mr. President--the trust fund lost more than $3 billion in the 
month of August, according to the Treasury Department. That was a loss 
twice as high as the deficit occurred in August, 1995.
  The Medicare part B program--what I have been discussing up to now is 
the part A program, the hospitalization. The part B program, which pays 
doctor's bills for our senior citizens, faces equally dismal fiscal 
problems. Unlike the hospitals' insurance program, this part of 
Medicare is voluntary. Retirees choose to participate. They then pay 
premiums into the system. And the premiums then go toward paying their 
doctor's bills.
  However, the premiums paid by the participants in the part B program 
fall far short of paying for the cost of the program. When the program 
was set up it was never designed that the premiums that the retirees 
pay would cover the cost of the part B program, namely the doctor's 
bills. It started out that the individual's premiums would pay 50 
percent of the cost of the program and the other 50 percent of the cost 
of the program would come from the general fund of the United States, 
from ordinary tax and other revenues that go into the general fund. 
That was 50-50.
  Currently, by law, only a fourth of the program's costs are covered 
by the premiums. Twenty-five percent now is covered by the premiums 
that are paid by the beneficiaries. The remaining 75 percent is paid 
for from general tax revenues. In other words, Mr. President, we have 
the strange situation as follows. Income taxes paid by factory workers, 
or the secretary in some office, or the janitors sweeping the floors 
and waxing the floors, their income taxes pay 75 percent of the 
doctor's bills for our seniors. And this is true regardless of whether 
the senior is somebody living on a very modest income or a 
multimillionaire. So multimillionaires who are retired, on Medicare, 
have three-fourths of their doctor's bills paid by ordinary citizens, 
scrimping away, paying dutifully their income taxes.
  The part B expenditures have been increasing at a rapid rate for many 
years, and are projected to nearly triple as a share of the Nation's 
economy by the year 2020. In other words, these costs are escalating as 
part of the total expenditures in our country. They are going up and up 
and up. And they will triple some 25 years from now.
  Because the general fund pays 75 percent of these costs, as just 
outlined, the Medicare Program will drain an ever increasing amount of 
resources away from other important Federal programs. The more that 
goes out into this program for doctor's bills paid by the general fund, 
the less there is in the general fund to pay for education, and health 
care, Head Start programs, crime prevention, FBI, whatever it might be.
  Early next century, starting in 2000, just some 4 years from now, the 
baby-boom generation will begin to reach retirement age and, as a 
consequence, start to demand benefits from the Medicare Program. They 
will reach 65. They will want what others have. The current Medicare 
Program, however, will be unable to meet those demands. It is essential 
that we begin to reform Medicare next year. We cannot wait any longer. 
So the changes we put in place can be instituted over a relatively long 
period. The longer we wait, the harder it is to institute the reforms 
that are necessary under Medicare.

  If we make these changes starting next year, it will have two 
important benefits. It will allow future retirees to plan for the new 
system, in other words, if there are going to be changes then those 
about to retire can make some plans; and, second, as I mentioned 
before, it will provide some lead time so that the savings needed to 
restore solvency can be achieved.
  It is also imperative that any reform of the Medicare Program be done 
on a bipartisan basis. The political stakes are simply too high for 
this program to be left at one party or the other's doorsteps. We have 
to be in this together. All of us, Democratic and Republican Senators, 
are going to have to take difficult votes on Medicare if the program is 
going to survive. Both parties, away from the campaign trail, do now 
recognize the need to reduce the Medicare spending.
  For example, the President's last balanced budget proposal included 
reforms to Medicare that would have yielded $124 billion of savings 
over 6 years. That was the President's program, $124 billion of savings 
over 6 years. The final Republican plan proposed savings of $168 
billion. The President's savings, $124 billion; the Republican final 
plan, $168 billion. Obviously, there is a figure somewhere in the 
middle of this range on which Republicans and Democrats can agree.
  There already has been put together a bipartisan plan. That was the 
centrist coalition balanced budget plan which Senator Breaux and I and 
others offered earlier this year. Some 20 of our colleagues joined with 
us to submit this program with important programmatic reforms to the 
Medicare system.

  What did it do? It opened avenues for savings by allowing seniors to 
choose private managed care plans. And it created a new payment system 
to encourage the growth in the availability and accessibility of such 
plans. It called for slower growth in payments to hospitals, 
physicians, and other service providers. It called on higher income 
seniors to pay a greater share of the costs of the part B program. No 
longer, it seems to me, can a multimillionaire have the taxpayers pay 
for his or her doctor's bills just because he or she is on Medicare.
  Finally, it increased the Medicare eligibility age to conform with 
the increase in the Social Security eligibility age which will begin in 
the year 2003. Starting in 2003, the age for retirement under Social 
Security will go up gradually. And we increase the eligibility age for 
Medicare to conform with that.
  Together these reforms would reduce Medicare expenditures by $154 
billion over the next 7 years. This was a fair

[[Page S12266]]

and a balanced plan. I am pleased it received bipartisan support. And 
46 Members of this body, 46 out of the 100 Senators, voted for that 
plan: 22 Republicans, 24 Democrats.
  Mr. President, I am delighted that it appears that we can once again 
next year convene our centrist coalition with the able leadership of 
Senator Breaux on the Democratic side, while I will be pleased to rally 
the Republican Members. I am convinced we can once again come forward 
with constructive solutions to the Medicare challenges.
  Mr. President, in closing I would stress this. Members of this body 
are now scattering to 50 different States. All of them are going to be 
involved in the campaigns either as candidates themselves, or as 
helping those from their parties in their own States.
  It is my earnest hope, Mr. President, that the Senators seeking 
reelection and, indeed, all Senators will not lock themselves into such 
positions that would prevent them from taking the necessary votes that 
are going to be required if we are going to reform the Medicare Program 
next year.
  If we do not reform this program, if no one wants to touch it because 
it is too much of a hot potato, if it is regarded as the third rail 
which nobody can touch, leave it alone, then absolute disaster will 
face Medicare--the Medicare Program in the future.
  So I again urge all my colleagues, those seeking reelection, those 
who are not even Senators yet but are challengers, not to get 
themselves into such a position that they are prevented from taking the 
tough votes that are required to reform the Medicare Program so that it 
will be there for future beneficiaries.
  Mr. President, I see that no one else is desiring to speak at this 
time and, therefore, 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. BREAUX. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Faircloth). Without objection, it is so 
ordered.
  Mr. BREAUX. I ask unanimous consent to that I be recognized for 10 
minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________