[Congressional Record Volume 143, Number 84 (Tuesday, June 17, 1997)]
[House]
[Pages H3807-H3808]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  REPUBLICANS IGNORE BUDGET AGREEMENT AND FAVOR THE WEALTHY OVER LOW-
                             INCOME SENIORS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 21, 1997, the gentleman from New Jersey [Mr. Pallone] is 
recognized during morning hour debates for 5 minutes.
  Mr. PALLONE. Mr. Speaker, last week the Committee on Commerce voted 
on Medicare and Medicaid legislation that included the controversial 
medical savings accounts, or MSA's, which, according to the nonpartisan 
Congressional Budget Office, will cost the Medicare program over $2 
billion over 5 years.
  At the same time, Republicans did not include the $1.5 billion for 
specified low-income beneficiaries, also known as SLMB's, which 
basically is a fund that assists low-income Medicare beneficiaries in 
paying their part B premiums.

                              {time}  1245

  The Republicans have again, in my opinion, Mr. Speaker, shown their 
true colors by helping the wealthy at the expense of low-income 
seniors.
  As a result of maintaining the part B premium for senior citizens at 
25 percent of program costs and shifting home health to part B, 
Medicare premiums will rise by as much as $23 per month from 1997 to 
2002 over the life of the budget agreement. The budget agreement 
reached by the President and Republican leaders included moneys to help 
low-income seniors who would likely see their monthly premiums rise 
from $43.80 to $66.67 per month. Unfortunately, the Republicans on the 
Committee on Commerce did not honor that agreement. Instead, the 
Republicans opted to spend an additional $2.2 million on MSA's which 
would benefit only wealthy and healthy seniors.
  When the Democrats learned of the Republican legislation, Mr. 
Speaker, we offered an amendment, it was actually offered by the 
gentleman from California [Mr. Waxman] in the subcommittee, and again 
in the full committee, that would have eliminated the costly MSA 
provision and used those moneys for SLMB's. But both times, Republicans 
voted along party lines against low-income seniors.
  It is not enough that the Republicans have broken the budget 
agreement with this and voted against low-income seniors, but that they 
would try to include the costly MSA's in Medicare reform, again.
  I just wanted to point out, Mr. Speaker, why I think Medicare MSA's 
make no sense. They would only appeal to healthier and wealthier 
seniors while further eroding the financial integrity of the Medicare 
Program, to the detriment of older and sicker seniors. Even worse, the 
Republican proposal would allow senior citizens to spend Medicare 
dollars, that is, tax dollars intended for health care purposes, for 
other purposes, basically having it become income to them that they 
could use to buy a boat or go on a vacation instead of for health care.
  Last year, as a result of the passage of the Kennedy-Kassebaum 
legislation, a pilot program was created to examine the effect of MSA's 
on the general population. We are not going to know the results of this 
demonstration program for another 4 years, but it seems to me it would 
make sense to wait for these results before experimenting with MSA's on 
the senior citizen population.
  Many do not understand that most Medicare beneficiaries only cost the 
program about $1,400 per year, but that the sickest Medicare 
beneficiaries cost Medicare over $36,000 per year. If the healthier 
seniors leave the traditional Medicare program for MSA's, then the 
Medicare program will increasingly become a health care program for 
just the older and sicker seniors, which will only exacerbate its 
solvency problems.
  Every senior will eventually get older and sicker, and they thus will 
have to rely on the Medicare program that will no longer be able to 
pull money from the healthier seniors. What I think we are going to see 
with the MSAs ultimately, Mr. Speaker, is a death spiral for Medicare.
  In the last Congress, when the Republicans advocated inclusion of 
MSA's in the Medicare Program, they received strong support from 
insurance companies, particularly the Golden Rule Insurance Co. It is a 
well known fact that Golden Rule would receive a financial windfall 
with the expansion of MSA's into Medicare.
  It is also well known that Republicans have been reaping financial 
benefits from Golden Rule. After all, Golden Rule has contributed as 
much as $1.6 million to Republicans in the 1992 and 1994 election 
cycles, and contributed nearly $400,000 to Republicans during 1996.
  Many Republicans have been staunch advocates of MSA's and have 
suggested that MSA's will provide seniors with another health care 
option. I would argue that MSA's only create options for healthier and 
wealthier seniors.
  Just to give an example, Mr. Speaker, in a letter to an MSA applicant 
dated the 29th of May this year from Golden Rule, this was the response 
to this individual named Alan from Virginia. It says, ``Thank you for 
your interest in our company. We do currently

[[Page H3808]]

market health insurance, including the Medical Savings Account, in your 
State. However, your medical condition of'', and then you could fill in 
the blank, in this case they said diabetes, ``would not be one that 
falls within our underwriting guidelines. Therefore, we would be unable 
to consider you for coverage.''
  What this means, Mr. Speaker, is that Golden Rule's rule is only 
interested in the bottom line, while this individual, Alan, will remain 
in the traditional health insurance that will see increasing health 
care costs because of the further division in the health care pool. 
MSA's are not going to provide choice, they are just going to break the 
insurance pool.
  The average elderly woman has an income of less than $12,000 a year. 
MSA's will not benefit her, but part B premium increases will make it 
more difficult for her to balance her health care needs.

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