[Congressional Record Volume 143, Number 89 (Monday, June 23, 1997)]
[Senate]
[Pages S6058-S6072]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      BALANCED BUDGET ACT OF 1997

  The PRESIDING OFFICER. The Senate will now proceed to the 
consideration of S. 947, which the clerk will report.
  The legislative clerk read as follows:

       A bill (S. 947) to provide for reconciliation pursuant to 
     section 104(a) of the concurrent resolution on the budget for 
     the fiscal year 1998.

  The Senate proceeded to consider the bill.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SESSIONS. Mr. President, I suggest the absence of a quorum, and I 
ask that the time be equally divided.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DOMENICI. 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for the quorum call be rescinded.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. DOMENICI. Parliamentary inquiry, Mr. President. I understand we 
are on the reconciliation bill?
  The PRESIDING OFFICER. That is correct.
  Mr. DOMENICI. Time has been running?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. DOMENICI. How much time has run?
  The PRESIDING OFFICER. Thirty minutes.
  Mr. DOMENICI. I understand that the leadership has indicated there 
will be no votes today, which does not mean there will not be 
amendments offered. We hope that we will take a few amendments and 
debate them and then put them over in some stacked regime for tomorrow.
  I also understand there are 20 hours of debate equally divided on 
this bill. Is that correct?
  The PRESIDING OFFICER. That is correct.

[[Page S6059]]

  Mr. DOMENICI. And that there is also an agreement between the leaders 
that we will use 10 hours of that 20 today before we recess. So I think 
that sort of sets the stage for those who are interested in attempting 
to modify the bill before us.
  I have a couple of technical consents.
  Mr. President, I ask unanimous consent that the presence and use of 
small electronic computers be permitted on the floor during the debate 
and discussions on this measure.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                         Privilege Of The Floor

  Mr. DOMENICI. Mr. President, I ask unanimous consent that the 
following staff of the Budget Committee be permitted to remain on the 
Senate floor during consideration of S. 947 and the list be printed in 
the Record. This list contains both the majority and minority staff.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The list is as follows:

                             Majority Staff

       Victor Block, Scott Burnison, Amy Call, Jim Capretta, Lisa 
     Cieplak, Kay Davies, Kathleen M. Dorn, Beth Felder, Alice 
     Grant, Jim Hearn, Bill Hoagland, Carole McGuire, Anne Miller, 
     Mieko Nakabayashi, Cheri Reidy, Ricardo Rel, Karen Ricoy, 
     Brian Riley, Mike Ruffner, Andrea Shank, Amy Smith, Austin 
     Smythe, Bob Stevenson, Donald Marc (Javits) Sumerlin, Winslow 
     Wheeler.
                                  ____


                             Minority Staff

       Amy Peck Abraham, Matt Greenwald, Phil Karsting, Bruce 
     King, Jim Klumpner, Sander Lurie, Daniela Mays, Martin S. 
     Morris, Sue Nelson, Jon Rosenwasser, Barry Strumpf, Mitchell 
     S. Warren.

  Mr. DOMENICI. In addition, we have two others we want to have full 
access to the floor. I ask unanimous consent the privilege of the floor 
be granted to Austin Smythe and Anne Miller during the pendency of S. 
947 on the day of Monday, June 23.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, might I inquire, am I correct in 
assuming that Senator Roth and Senator Moynihan intend to come to the 
floor early this afternoon with a modification, an amendment?
  Mr. LAUTENBERG. We have heard that Senator Moynihan will be here, as 
will, I assume, Senator Roth, at about 1:30.
  Mr. DOMENICI. That might be the first matter we take up, I 
understand, since it is the chairman and ranking member.
  Mr. LAUTENBERG. That could be very well the case.
  Mr. DOMENICI. What I would like to do is make a few opening remarks, 
yield to my friend and colleague Senator Lautenberg, and see where it 
turns out.
  Today the Senate begins consideration of S. 947, the Balanced Budget 
Act of 1997. Some people wonder, when we had the debate and told the 
American people that we finally had reached an agreement, 5 years in 
duration, that would get us to a balanced budget, some people wanted us 
to tell them precisely what the agreement contemplated when, as a 
matter of fact, the agreement covered only a portion of what must be 
done by Congress. Then, in addition, a budget resolution was taken up 
on the Senate floor. During the discussion of that budget resolution, 
people would ask questions like, ``What changes are there going to be 
in Medicare to make it solvent for the 10 years that are being 
promised?'' They might ask the question, ``What is going to happen to 
Medicaid under this budget proposal and this agreement?''
  Frankly, for the most part, we told them what we knew and we told 
them that, in due course, a piece of legislation would be coming 
through that would change various laws of the land and would accomplish 
the goals, the savings required over the first 5 years and estimated 
over 10. And now, today, to put it into perspective and so the process 
is understood better, the committees that were charged under that 
budget resolution to do things--for the most part to decrease the cost 
of programs within their jurisdiction, within their authority; in a 
couple of instances they were asked to increase slightly, the 
expenditures--essentially those committees, eight in number, have done 
their work and now what we have is a law, what could be a law, that is 
a bill, not a budget resolution.
  The bill before us is a very special bill. It is called a 
reconciliation bill. That is significant in the U.S. Senate, more 
significant than in the House, because in the U.S. Senate this proposed 
bill, this reconciliation bill, is granted some very powerful immunity 
from the rules of the Senate. The biggest one is the bill cannot be 
filibustered. So you see right off, when I asked the question, is it 
not correct that there are 20 hours of debate on this bill?--and the 
Parliamentarian answered yes--that is by law. In other words, we came 
along and said these bills should not be delayed. They are part of 
getting you the budget changes you need, and they deserve a privilege 
of being immune from filibusters. So the law set down how much time 
would be used for debate.
  In addition, you will hear throughout the next 2 days some 
interesting verbiage. We will talk about amendments to the bill. Again, 
this bill is not an ordinary bill. Either by the statute that created 
the process or by subsequent enactment of the Congress, we have said 
that it is very difficult to amend this bill. So, essentially almost 
anything you try to do to this bill that changes matters of real 
substance that are in it are generally subject to a point of order and 
require 60 votes, if the point of order is made on a waiver, to make 
them germane and thus subject to being added to this bill.
  In the meantime, since that law, we adopted another rule for 
ourselves. The more we did these the more we found that Senators found 
ways to get around what was contemplated. So, what we did, with the 
cooperation and assistance of the distinguished Senator from West 
Virginia, Senator Byrd, we adopted a rule for ourself about this bill 
and we have now named it after the Senator. It is called the Byrd rule. 
Essentially what it says is that matters within this bill or matters 
attempted to be added to this bill that do not substantially decrease 
the deficit--that is, if you introduce them, for instance, to do away 
with a commission, but it really isn't there to save money--then the 
Parliamentarian will rule that it takes 60 votes to pass them.
  This is very different from an ordinary bill that comes before this 
body, which is the most generous parliamentary body in the world in 
terms of permitting Members to make amendments and argue what one might 
even call irrelevant matters to a bill pending. So, as an example, you 
can have a bill coming through here on education and somebody can get 
up and say, ``I would like to debate the troops in Bosnia.'' They would 
get up and they could introduce a resolution or a statute on that 
education bill that says we are going to be out of Bosnia in 6 months. 
Frankly, it is debatable for as long as the Senate wants to debate it 
and it cannot be stricken for germaneness or relevance because, under 
the Jeffersonian rules that we adopted and parliamentary 
interpretations, we are free to offer nongermane, extraneous amendments 
to the bill.

  In any event, Members now are familiar enough that they do go ask for 
some assistance before they up and offer an amendment to just change 
this reconciliation bill and do things their way. On the other hand, 
they may offer them even if they are not germane and subject to the 
Byrd rule, and everybody knows they are apt to be defeated because it 
requires 60 votes to concur in their adoption.
  So that is about where we are. Again, getting back to where we are, 
this legislation is the first reconciliation bill that was instructed 
by that budget resolution that we talked to the American people about, 
in terms of getting to balance. It was about 2 weeks ago we adopted 
that resolution. It told these eight committees of the U.S. Senate to 
do some work to change some laws. In a sense, this represents the first 
leg of a three-legged stool that must be constructed to implement the 
balanced budget, and the bipartisan budget agreement that attended it, 
that the Speaker of the House and the majority and minority leaders of 
the Senate agreed and concurred on on May 15.
  I characterize this as the first leg, because that historic 
agreement, to be fully implemented, requires changes both to 
entitlement spending, that is this first reconciliation bill; changes 
to our tax laws, that is the second reconciliation bill; and then, in 
due course, there will be 13 appropriations bills that are annual 
spending of

[[Page S6060]]

money that will have to be kept within the limits prescribed in this 
agreement and also will have to provide some priority items that were 
agreed to between the President and Congress for matters that pertain 
to crime, education, and about 13 different items. Some are small, some 
are large. We have to try to put those in their appropriate place in 
the appropriations bills. So, I characterize this as the first leg 
because the historic agreement, to be fully implemented, requires 
changes in both the entitlement spending and changes to our tax laws 
and, also, limits on the annual appropriations spending account.
  Obviously, it is complex. I do not know if we could get anywhere near 
where we are if we did not have these bills, which are privileged, as I 
indicated, for many of them would go on in debate for 3 or 4 weeks and 
many of them would be so burdened down with amendments that you would 
not recognize the bill when you finished. So, we are ready to take the 
cumbersome nature of it all and work as hard as we can so that by 
September 1 we have all three legs completed and perhaps the procedural 
changes that we must get to enforce it, which will come along here 
shortly, and thus be where we ought to be to reconfirm to the public we 
are on a path to a balanced budget.
  Last week these committees of the Congress completing this bill, this 
first leg, were quietly adopting spending limits established in the 
agreement for the upcoming fiscal year. Later in the debate on this 
reconciliation bill, I will offer an amendment, hopefully with my 
ranking member, Senator Lautenberg, to establish appropriation limits 
for the next 5 years as required by the agreement. I understand Senator 
Lautenberg is concerned about one aspect of that. We will try to work 
together on that.
  So, before the week is out, the Senate, in rapid succession, will 
have built the three legs of the stool necessary to carry out the 
bipartisan agreement which we negotiated over a period, generally now 
understood to be as long as 5 months of negotiating. Among those three 
legs, first the entitlement spending bill is before us today and, I 
repeat, immediately after it the second leg, the tax reduction bill, 
will follow, and then in due course the appropriations. When completed 
into law and signed by the President--and I am hopeful the two 
reconciliation bills will be, and I am hopeful that before September 1 
arrives we will have passed all the appropriations bills, thus enabling 
Government to operate for another year--what we will have is we will 
have set about to balance the Federal budget by 2002.
  If that works, and I have no reason to believe it will not, it will 
be the first such accomplishment since 1969. Reducing Federal spending 
compared to current Federal spending projections, spending will slow by 
nearly $290 billion over the next 5 years. And if the reform policies 
we adopt this week continue unchanged, we will have reduced Federal 
spending by nearly $1.1 trillion over the next 10 years, counting the 
debt service that we will not have to make because of reduced 
borrowing. Changing the scope of spending measured by the size of a 
growing economy resulting from this balanced budget plan, Federal 
spending will decline from 20.8 percent in 1996 to 18.9 percent in 
2002.
  Frankly, when I started, in 1974, as a member of the Budget 
Committee, I really was skeptical as to whether we would ever break 
this 20 or 21 percent of spending versus the gross domestic product. We 
will be down to 18.9 when this budget agreement is fully implemented. 
Again, that will be the lowest level since 1974, and, more important, 
52 percent of the 5-year savings will be derived from reduced 
entitlement growth, particularly through the reforms and changes made 
to Medicare and Medicaid Programs and, in particular, on Medicare, to 
avoid the bankruptcy of that program.

  Funding priority programs will achieve balance in 2002, and the 
agreement does assume some directing of our limited Federal resources 
to priority programs, such as children's health, assistance to disabled 
citizens, education, environment, transportation, crimefighting, and 
international affairs.
  Reducing Federal taxes. When we complete the second reconciliation 
bill, the agreement will have been achieved to reduce taxes on American 
families and businesses to provide incentives, savings and investments 
and to provide relief for families with education expenses.
  Enforcing the agreement, when we finally complete work this week, 
will be extended and strengthened because we are going to add to the 
Budget Enforcement Act of 1990 and give the American people 
assurances--as sure as we can--that we will live by these decisions, 
because to break any of these caps over the next 5 years will require a 
waiver of this agreement and will require a supermajority of 60 votes.
  So, Mr. President, I say to fellow Senators, in short, this could 
turn out to be a very busy and, hopefully, a very successful week. It 
will be a week in which the fiscal policy decisions we make will 
resonate for many years to come. As it relates to the immediate bill 
before us, I thank the eight committees, their chairmen and ranking 
members, for acting as quickly as they did to report to the Budget 
Committee their legislative pieces which will carry out the agreement.
  The legislation before us is, in very large part, consistent with the 
agreement. However, in a few areas, the legislation does not comport 
with the agreement. An argument can be made that certain provisions are 
inconsistent with the agreement. Obviously, we will work on those over 
the next 2 days. Under the Budget Act, the Budget Committee could only 
bundle the eight committees and the language given to us for this 
report, and I quote from the statute, ``without any substantive 
revision.''
  It falls to the leadership and us in the full Senate to attempt, 
where necessary, and to the extent the rules of the Senate permit, to 
make changes that might result in it being made more consistent with 
the agreement and, I also want to mention, to the extent it is not 
totally inconsistent in some areas. There is one additional opportunity 
to fix it, and that will be when we go to conference with the House. 
They will be working on their bills simultaneous with this, and they 
will be off the mark in a few areas. When we go to conference, we will 
attempt to reconcile those differences and make them as consistent with 
the agreement as possible.
  I remind all Senators and their staffs, again, that this bill is on a 
special fast track, as I have alluded to. It is actually the paramount 
special fast-track legislation provided for in the laws and rules of 
the Senate. So amending can be tricky. I have already indicated that 
germaneness and not being extraneous are very important, and you can 
violate those standards only with 60 votes.
  So over the next 20 hours allowed on this legislation, I anticipate 
we will have four broad areas of amendments, and not all will be 
germane and probably many will be extraneous, but nonetheless, we will 
need to consider, first, as I mentioned earlier, the agreement calls 
for enforcement under the strict rules of the reconciliation budget 
process. Enforcement could not be considered in the committee. Any 
enforcement legislation similar to 1990 and 1993 will need to be 
considered on the floor. The joint Budget Committee staffs and the 
administration officials have been preparing such an amendment, and 
other Senators will probably also offer their amendments to enforce the 
agreement.
  Second, there will be a group of amendments that may need to be 
considered to bring legislative language into compliance. I will work 
with the leadership and the affected committee chairmen and ranking 
members to make sure that these amendments are necessary and consistent 
with the agreement.
  Third, the legislation before us falls short of the deficit reduction 
target assumed in the agreement. It may be necessary to consider some 
amendment that would bring the legislation before us into compliance, 
or modifications to the agreement will have to be considered.
  Finally, the legislation before us includes provisions on which the 
agreement was silent. Some of these in the Medicare area have been 
controversial, such as means testing of the Medicare deductible or 
gradually increasing the age when individuals will be eligible for 
Medicare. I am sure we will have

[[Page S6061]]

some hearty discussions about these provisions, and there will, 
obviously, be amendments to them.
  So now, Mr. President, the Senate business and work lies before us. 
It is important work for the country's fiscal future. After nearly 2 
years of debate with the administration on how to achieve a balanced 
budget, it is work that, once completed, I think, will become law and 
will balance the budget. It has been way too long in coming. I look 
forward to closing a chapter in the Senate at the end of this week, 
perhaps as late as Saturday, and immediately upon return from the 
Fourth of July recess, to reconcile with the House our differences and 
get this completed as early after the Fourth of July as possible.

  I thank the Chair, and I thank the Senators for listening. I yield 
the floor at this point.
  Mr. LAUTENBERG addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from New 
Jersey.
  Mr. LAUTENBERG. I thank the Chair. I want to say, Mr. President, this 
is my first year as ranking member on the Budget Committee to process 
the budget resolution, and it has been an interesting experience. It is 
a fairly complicated process. I had a lot of learning to do. I still 
feel that I am playing catchup in some areas, but it was largely 
through the good work of Senator Domenici that the process moved fairly 
expeditiously. We work well together. The relationship, on a personal 
basis, is excellent. We disagreed without being disagreeable, and we 
completed this arduous task. It has gone on for several months and I 
think probably will be a milestone mark in the way a budget is 
developed because of the target that it has, a balanced budget in the 
year 2002, 5 years hence. There will be enormous change as we go along.
  Mr. President, I have to point out that this comes at a time when 
things are pretty good. Since President Clinton has been in office, we 
have seen dramatic changes in our fiscal condition. For instance, the 
annual deficit came down from $290 billion, in round terms, in 1992, to 
an expected $70 billion level for the year 1997.
  So we have had dramatic declines in the deficits. Our unemployment is 
at a low point in decades. America is very competitive. We are sending 
out the kind of high-valued products that we like to see being shipped 
to other countries, in terms of international commerce. We have the 
lowest deficit to GDP among all countries of the world, running around 
1.5 percent, the envy of almost every nation on this globe. Our ratio 
of taxes to GDP is the lowest of any nation on the globe. We are 
talking about large societies, advanced societies.
  We just saw completion of the gathering of the heads of government in 
Denver, eight countries, including ours, in which I guess America 
boasted a little bit because we have been leading the way. Countries 
that were so envied for so many years, like Germany and Japan, are 
trying to figure out how we did it and with a tax base that enables 
people certainly to succeed, acquire, in some cases, incredible 
fortunes, fortunes far larger than we ever dreamed possible.
  There used to be a time in America when if someone was a billionaire, 
that was a stand-out person. It is not all inflation, but today they 
are counting billionaires and multibillionaires. There is success after 
success of people going into the corporate world, from whence I came, 
and work a few years with a company and walk out with $20 million, $50 
million, some people being paid $25 million a year on a regular 
routine.
  It is quite incredible and quite different, by the way, than the guy 
who works hard every day and tries to support his family and thinks 
about where he is, whether his kids are going to be able to get an 
education so they can move up the economic ladder. He worries about his 
old age, ``Will my pension be there when I am ready to retire?'' ``Will 
I be able to give a hand to my mother if she falls sick beyond the 
capacity of the system as it is presently designed to take care of 
her?'' ``Will I be able to continue to live on a little plot of land 
and maintain my home, our home?'' Or, ``Will my wife and I have to work 
shifts so that she can be home when I am not, and vice versa, to take 
care of our kids?"
  That is the picture we see in America today, with all the good 
results. People at the top are doing very, very well, and people at the 
bottom are doing slightly better but still very worried. The price of a 
college education, the opportunity for the kind of jobs that can 
sustain a family--it is quite different in the levels of income.
  So, Mr. President, when we look at a bill like this which we will be 
considering very soon, the tax consequences of our deliberation--and we 
will be running into some difficult discussions here, because I know a 
lot of my colleagues are worried about tax breaks for those who don't 
need them and tax opportunities for those who do.
  Today, we are talking about the first of the two reconciliation 
bills, this one called the spending reconciliation bill. Senator 
Domenici went through some explanatory statements to let people 
understand what it is about this arcane system of ours--frankly, it is 
a mystery to most and to many even inside this place--about the budget 
resolution, the reconciliation, enforcement, and all of the terminology 
that becomes routine when you are working with it every day, and 
talking about germaneness and relevance. Around here, relevance, to 
steal a phrase, when they talk about beauty in the eyes of the 
beholder, relevance here is in the eyes of the bellower. That is where 
often debate comes about--relevance. But we have a process by which we 
determine whether or not something is relevant. So that will be 
considered as we go along.

  So, Mr. President, I want to just say once again that I commend the 
chairman of the Budget Committee for his hard work and cooperative 
attitude over the past many months. We have spent long days in tight 
quarters working on this--by the way, no longer smoke-filled; that's 
out, as we see now with the tobacco legislation in front of us.
  Senator Domenici is one of the most competent, serious, hard-working 
Senators in this body. I enjoyed, as I said earlier, working with him 
over these past few months. The reconciliation bill before us includes 
provisions that have been, as the chairman noted, reviewed and 
developed by eight different authorizing committees. Our colleagues on 
those committees deserve real credit for moving fairly quickly to put 
these pieces together. I commend them for their hard work.
  When I look at the final product, there is much in this legislation 
to be pleased with. It makes some improvements in Medicare solvency and 
extending the trust fund. It restores some important benefits to legal 
immigrants. It includes $3 billion to move people from welfare to work. 
We want that to happen. And it softens the law that denies food stamps 
to those who try but are unable to find work.
  Despite these positive elements, Mr. President, I have serious 
concerns about this legislation in its current form. It is blatantly 
inconsistent in parts with the bipartisan budget agreement. Once again, 
I have to say that we labored long and hard and honestly, I believe, in 
trying to establish agreements. They did not always go down easy. Some 
of these were bitter pills to swallow. But we inched our way at first 
to get there, and finally it evolved into a consensus that we felt we 
could live with.
  The bipartisan budget agreement had some problematic provisions that 
now we are seeing--frankly, I would have to use the word ``attacked''--
in some ways. I want to touch on a few examples.
  First, I think this bill does challenge or violate the provision in 
the budget agreement that protects senior citizens with modest incomes 
from increases in Medicare premiums. The bipartisan negotiators set 
aside $1.5 billion specifically for this purpose. But the Finance 
Committee has refused to allocate this money. Now, this must be fixed. 
I understand they are considering it even as we speak.
  Second, the bill violates the provision in the budget agreement that 
protects those who have come into our country legally, paid taxes, 
played by the rules, who suffer at a future time from a disability, 
accident, sickness, or otherwise. The budget agreement clearly requires 
that these innocent

[[Page S6062]]

victims be protected. However, the Finance Committee has refused to 
include that in their agreement and included only a temporary 
restoration of benefits. This, too, must be fixed.
  Third, the bill fails to provide Medicaid coverage for the 30,000 
children who are losing SSI benefits under last year's welfare bill. 
This runs counter to the goal of ensuring that America's children have 
health care coverage. It is another blatant violation of the bipartisan 
budget agreement.
  Mr. President, it is up to the congressional leadership, not the 
leadership of the committees, to correct these problems and to bring 
the reconciliation bill back into compliance with the budget agreement. 
Senators Lott and Daschle have agreed in writing to do this through 
bipartisan leadership amendments. I am confident that this commitment 
is going to be fulfilled. But as I mentioned earlier, Mr. President, I 
am concerned about other provisions as well in this reconciliation bill 
that go beyond the bipartisan budget agreement. I want to outline some 
of these.
  First, the bill changes the age for eligibility in Medicare from 65 
to 67. Mr. President, that may be a worthwhile subject, but not here, 
not in this bill. There is no legislation to protect the seniors who 
will be aged 65 and 66 as they wait for eligibility going from one 
place to another. For many companies, for many situations, the 
retirement period is age 65. It is common. I do not think it is right 
to be in here. The issue was never discussed during the negotiations on 
the budget agreement. So while there may be an argument for considering 
related proposals as part of a broad review of health care and 
entitlements, this is not something that we ought to be doing now on a 
fast-track reconciliation bill. Our senior citizens deserve more than 
that, or one day to be senior citizens.
  Nor, Mr. President, should we be considering a fundamental change in 
the universal nature of the Medicare Program as part of a fast-track 
bill? This legislation would introduce means testing to Medicare. 
Again, I realize that there are Senators here who support this 
proposal. But the long-term implications for this move are enormous. 
They deserve much more thorough debate than is possible in this 
legislation.
  Mr. President, the bill before us also includes several other 
provisions that go beyond the bipartisan budget agreement that are of 
concern.
  The bill would increase the financial burdens on some of our most 
vulnerable senior citizens, poor people, people impoverished by 
establishing a new copayment for home health visits.
  It would authorize medical savings accounts, a new approach to 
Medicare that could, in my view, harm its long-term viability, harm the 
viability of the whole Medicare Program, because it would give people 
choices outside the system and perhaps would pull out those who are in 
good health and leave the rest to those who are not quite up to snuff. 
It would make excessive burdens for them. It cuts the Medicaid 
payments. The hospitals also would be curtailed, and they serve a 
disproportionate share of poor and uninsured patients.
  So, Mr. President, these and other problematic provisions should not 
be in a reconciliation bill--again, I remind you, fast track; this will 
be done sometime tomorrow--that is designed to implement a bipartisan 
budget agreement. I hope that many of these things can be eliminated 
before the Senate has to vote on final passage of the legislation.
  I want, Mr. President, to caution my colleagues that they are to get 
here with their amendments because the time continues to pass. As 
Senator Domenici has said, at some point the 20 hours that is allocated 
for the debate will be consumed by just wasting time. If that is the 
case, those who have amendments that they care about will be here in 
the final moments of the time that we have allocated to this debate and 
they will not be able to bring them up. They may be able to introduce 
them and get a vote on them, but they are not going to be able to 
discuss them, they are not going to be able to argue the merits. I 
think that is something that people ought to pay a lot of attention to 
if they are serious about the amendments that they are proposing.
  So, I plead with our colleagues, get over here, get your amendments 
in. The fact that there will be no votes today does not have anything 
to do with the time schedule. If these issues are going to be voted 
upon, these amendments, that can be done tomorrow, but the debate will 
have to be held before we run out of time.
  So I conclude, Mr. President, by saying this to my friend and 
colleague, the chairman of the Budget Committee, that despite the 
various controversies that have pitted our two parties against each 
other, we have managed to maintain a spirit of bipartisanship in our 
efforts to balance the budget in the proper way. I believe that we will 
maintain that cooperative approach. But if we are going to do it, many 
of these problems will have to be addressed before this legislation is 
sent to President Clinton. I look forward to working with Senator 
Domenici and with the leadership on both sides of the aisle to make it 
happen.
  Let us get a bill that we can live with, a consensus bill, much in 
the manner that we shook hands on; maybe with a grimace or two across 
the table, but we did it. We arrived at a consensus. I need not go to 
such elementary teachings to say a consensus really reflects a give-up 
by all parties to a discussion. A consensus is not I win, you lose; it 
is we both win a little and we both lose a little. That is what we did 
to get to where we are. Therefore, I express some disappointment in the 
changes that have been made in the process of reconciliation and hope 
that we will be able to change the changes and get on with this 
bipartisan budget agreement that we concluded here on the floor not too 
long ago.
  I yield the floor.
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from New 
Mexico.
  Mr. DOMENICI. I just want to thank Senator Lautenberg for his 
observations and his comments. Whatever words he had to say about me, I 
appreciate.
  I say, I have just an evaluation that is mildly different. I think, 
considering the great bulk of things the committees had to do--and, you 
know, we had an agreement for the first time that told them they had to 
do certain things; before it was a very vague instruction--I think they 
did fairly well. I mean, I think we can count on the fingers of our 
hands--probably even if we did not have all five fingers, we could even 
on less than five--the areas that they did not comply with. I think 
they are going to work with us to try to get those done.
  Obviously, there is one that is difficult that has to do with the 
radio and television spectrum. That is a little more difficult. The 
administration told us we could get a lot of money and, if we did not 
go that far, it would not last. It turns out it is very hard to do 
that. But we are working on that, in a bipartisan fashion also.
  I say to Senator Wellstone, you have been here for a while. Senator 
Judd Gregg has indicated that it was all right with you if he 
proceeded.
  Mr. WELLSTONE. That is correct.
  I just want to ask the managers--it is fine with me if Senator Gregg 
proceeds. It is my understanding that Senator Moynihan will be coming 
to the floor seeking a modification.
  Is that correct?
  Mr. DOMENICI. Yes. He and Senator Roth or somebody.
  Mr. WELLSTONE. When do we expect them to come to the floor?
  Mr. DOMENICI. I thought it was 1:30 to 2 o'clock. I think we will 
have some time for statements before that if you want to make a 
statement before that.
  Mr. WELLSTONE. I say to both my colleagues, I potentially am ready to 
do an amendment or two. But I would rather wait until after some 
discussions with other Senators. Also, Senator Moynihan and Senator 
Roth will be here.
  I thank the Senator for his courtesy.
  Mr. DOMENICI. I say to Senator Gregg, how much time would you like?
  Mr. GREGG. Fifteen minutes.
  Mr. DOMENICI. I will yield the Senator 20 minutes.
  I wonder if you could do me a favor. I am going to sneak out and get 
something to eat. Would you manage the floor for about 15 minutes?
  Mr. GREGG. Certainly.
  Mr. DOMENICI. I thank the Senator.
  I yield the floor.

[[Page S6063]]

  The PRESIDING OFFICER. The Chair recognizes the Senator from New 
Hampshire for 20 minutes.
  Mr. GREGG. First, I rise to congratulate the Senator from New Mexico 
and the Senator from New Jersey, the chairman and ranking member of the 
Budget Committee, for getting us to this point where we are in the 
process of voting on and hopefully reaching a conclusion on two very 
important reconciliation bills which deal with the critical elements of 
how we manage entitlement spending and how we manage tax policy here at 
the Federal level, and which lead, hopefully, to a conclusion that we 
can say with certainty that the balanced budget agreement which was 
reached has been met and that we will therefore have a balanced budget 
which our children can look to as a benefit and which we can look to as 
a success.
  I want to speak specifically about two elements of the reconciliation 
bill which I consider to be important, two different bills, the one 
that deals with the spending, the entitlement bill, and the one that 
deals with tax policy, and talk about the Medicare Choice Program, 
reform program, and the pension language within these two bills, 
because I think these bills have made giant strides in both these areas 
toward addressing some fundamental public policy needs.
  I commend Senator Roth and the Finance Committee for including these 
important provisions on both Medicare and on pension reform.
  Earlier this year I introduced S. 246, the Choice care bill. It was 
essentially similar to legislation that I had introduced in the last 
Congress, which was included in the Balanced Budget Act that year, 
which unfortunately was vetoed by the President. The Medicare savings 
achieved in this reconciliation bill represent only a tentative start, 
however, toward placing the Medicare system on a path toward long-term 
solvency. But they are an important start. There are still trillions of 
dollars of unfunded Medicare liability awaiting us, and this 
legislation does not address it all, but it does get us off on the 
right foot.

  I am pleased we have taken this opportunity to enact some of the 
structural reforms that are key to real substantive Medicare reform and 
the stabilization of the Medicare trust funds. In my Choice care bill 
and in the provisions contained in this legislation, seniors will be 
able to choose from a large variety of health care purchasing options. 
They can remain in their traditional Medicare plan, they could instead 
buy an HMO, or they could buy from a competing medical plan provided 
that it meets the benefit standards of the present Medicare system. So 
seniors will have a wide variety of new and exciting choices.
  When we offer seniors this great array of choices, we benefit not 
only the seniors but the system as a whole by bringing it into the 
marketplace. Traditional Medicare must then effectively compete for the 
right for seniors' health care spending in the marketplace and the 
people in the marketplace who are willing to give other options to 
seniors. Suppose, for example, there are plans that can deliver 
services more effectively and more efficiently than Medicare in a 
particular region of this Nation. If they can do that, then they can 
offer a more substantial package of benefits for the same costs, and, 
therefore, seniors will have an incentive to buy from these plans.
  Take, for example, if a plan was able to offer the seniors not only 
the basic Medicare benefit but also maybe an eyeglass benefit or a 
prescription drug benefit. That option is now going to be available to 
the seniors. This benefits the health of the system because, at the 
same time, this legislation gains control over the rate of growth of 
the per capita spending in the Medicare Program. So whenever seniors 
move into these plans that can offer them a better benefits package, 
the entire system will save money because the Medicare system will be 
spending less money per capita on these seniors than it would under the 
traditional Medicare system.
  If they are getting a stronger package, you might say, how can that 
be? It is called the marketplace, it is called capitalism, it is called 
what is happening in the private sector today, in the health care 
system generally. But, unfortunately, it is not helping Medicare, which 
was designed for a 1960's health care delivery system, which simply is 
not operable in the 1990's or as we go into the year 2000.
  This legislation begins to flatten the wide disparity in 
reimbursement levels that exist between geographic regions in this 
country by gradually blending over time local and national 
reimbursement rates. If we do this, then we make spending patterns in 
Medicare more fair and reward those regions of the country that have 
already done well in holding down costs. The disparity between regions 
is really excessive. For example, in some parts of this country, like 
New Hampshire and Oregon, and I suspect in Wyoming, where the Presiding 
Officer is from, the costs of Medicare benefits are significantly lower 
than in areas like Staten Island. In fact, it is lower by almost $500 a 
month.
  It is imperative we include such reform as a component of the 
Medicare Choice Program because only by doing so can we be sure that 
seniors in low-cost areas will ultimately have access to a wide array 
of benefit packages. As long as reimbursement rates in some parts of 
the country are unfairly low, it will be difficult to entice plans into 
those regions to compete for seniors' dollars even though the health 
care benefits in those areas today are being maintained at a high 
level.
  I believe we should have increased the incentives available to 
seniors to become cost conscious by offering them opportunities to save 
money in the manner in which they buy Medicare. That is the incentive 
that truly moves shoppers, and I believe that Medicare Choice would be 
a greatly strengthened reform if we had included a cash-rebate 
incentive. Under my original bill, S. 246, every time a senior bought 
from a less expensive plan, even though the benefit package in that 
plan had to meet the same benefit package or exceed the benefit package 
of the present Medicare system, if the plan costs less because of 
competition and efficiencies within that plan, then 75 percent of the 
savings would have gone to the individual, and the remaining 25 percent 
would have been deposited in the trust fund. Thus, the trust fund would 
never lose money due to such rebates.
  On the contrary, the trust fund would receive money every time a 
senior sees this incentive to make a cost-conscious decision. 
Unfortunately, this language was left out of this bill, and, in fact, 
there is some language in this bill which undermines the ability to 
create incentives in the Medicare system under the Medicare Choice 
plan. I expect I will be offering an amendment to correct this, an 
amendment to strike that section which limits the ability to offer 
incentives, because lacking that important incentive we cannot, in my 
opinion, create the huge marketplace forces which we need in order to 
significantly control the costs of health care and to create 
marketplace forces within the health care systems.
  Even considering that, this package still offers the incentive to 
seniors that where their plan can be more efficient, they will be 
offered an enhanced package of benefits. That is a significant 
incentive. While perhaps not as powerful a purchasing incentive as an 
actual cash rebate, for example, it is my hope that the prospect of 
strengthened benefits will prove a powerful enticement that allows 
seniors to move more comfortably into buying Medicare Choice plans.
  I am reminded of the old saying that you begin a trip, a long 
journey, with one small step. Well, this package that has been brought 
forth by the Finance Committee is a series of small steps. It has 
gotten us well into the journey. It has not gotten us to the end, but 
it has gotten us down the road by giving seniors more choices and more 
opportunities in the way they purchase their health care.
  At the same time that the Finance Committee has made significant 
strides in the area of Medicare by making Choice care available to them 
in the Choice care plan which I introduced, it is also contained in the 
tax resolution which will be coming forward later in the week, a 
significant incentive to increase retirement savings. I congratulate, 
again, and thank Senator Roth, the chairman of the Finance Committee, 
for including so many of the ideas and initiatives which

[[Page S6064]]

I was able to participate in pulling together as chairman of the 
Retirement Task Force. I also want to particularly thank Senator Bob 
Graham and other members of the bipartisan working group for their 
aggressiveness in promoting pension reform which will promote savings.
  Some months ago, I was asked by Majority Leader Trent Lott to chair 
the Republican task force on retirement security, and in that capacity 
I worked with Senator Roth and the rest of the task force to develop a 
package of proposals introduced a week ago as Senate bill S. 883.
  I will not use this time here to describe again the dire 
circumstances of this Nation with respect to retirement savings. When 
we introduced S. 883, we detailed the vast gap between our Nation's 
retirement income and the inadequate amount of funding we are currently 
putting aside to meet those retirement needs. Approximately $7 trillion 
of unfunded liability sits in our different retirement accounts. I am 
very pleased to note that no fewer than 13 of the provisions, 13 of the 
provisions of S. 883 have been included in some form in this budget 
reconciliation package. While many of them are small or technical 
corrections without significant revenue impacts, enacting these reforms 
will do much to improve the prospects for expanding pension coverage 
and retirement savings.
  Because time is limited, let me list only a few of the reforms that 
have come to be included in this package which I think are positive for 
encouraging people to save for their retirement.
  This budget reconciliation package includes the first title of the 
WISE bill, S. 260. This part of the WISE bill--the WISE bill being a 
bill directed at giving more equity to women in the area of being able 
to save for their retirement--strengthens the homemaker IRA. I, 
personally, have placed a higher priority on this provision than on any 
other of our task force savings initiatives, so I am particularly 
pleased to see it was included. This provision received the active 
support of a bipartisan group of Senators, including, most notably, 
Senator Carol Moseley-Braun from the other side of the aisle.
  This provision, Mr. President, will sever the link between the 
homemaker's ability to make a fully tax deductible contribution to IRA 
and allow her to make that contribution whether or not her husband or 
her spouse who is in the workplace has a pension plan. This is an 
important provision not only because it will stimulate additional 
savings but because it will enable homemakers, especially women, to 
generate additional savings in their own name. It is about time we do 
that. I especially want to congratulate, of course, Senator Roth, the 
chairman of the Finance Committee, who has been a tireless advocate for 
this idea.
  This reconciliation bill also will gradually raise the income limits 
on the tax deductible contributions to IRA's. Our Republican task force 
endorsed the Roth-Breaux legislation that would have completely phased 
out the income limits so that every American will be eligible to fully 
deduct their IRA contributions. I believe that Finance Committee 
Chairman Roth exerted every effort to achieve as much as he could in 
this area, and I am pleased he included at least a version of the 
language from the task force bill, gradually phasing up the income 
limits, doubling them by the year 2004. This will do a tremendous 
amount to spur savings in our marketplace and as people head toward 
retirement.
  This budget reconciliation package also includes the backloaded IRA, 
an important new option in retirement savings in which the 
contributions are not tax deductible and the tax advantages come up 
upon withdrawal. This expands the capacity of individuals to take 
advantage of retirement incentives in a way that works best for them. 
It also limits the revenue loss in the short term from IRA expansion, 
because the contributions today will be taxed when they are made. I 
know many individuals will wish to use this alternative backloaded-IRA 
structure, and thus this will be an important incentive for additional 
long-term savings.

  Mr. President, one thing we must do as a nation is simply make it 
easier and more convenient for people to save. The fact is that if we 
do not do this, we as a nation are going to face bankruptcy as a result 
of the costs of our pension systems as the postwar baby-boom generation 
fully retires in the year 2010 and beyond. One reason why the thrift 
savings plan worked so well for Federal employees is that it has the 
feature of automatic deduction from one's payroll, automatic 
investment, automatic savings. I am pleased that the Finance Committee 
has also included the provision to allow for automatic payroll 
deductions into IRA accounts. This will also stimulate additional 
retirement savings simply by making IRA investment easier.
  I am also pleased this reconciliation package recognizes we must 
continue to do more to stimulate retirement savings not only through 
individual savings but also through employer-provided pensions. I have 
long been troubled by the limitations that have been placed on employer 
funding of future pension liabilities. Employers must fund these 
liabilities sooner or later, and it is good policy to put more of the 
funding upfront to allow that funding to be invested and to use the 
compounding interest to increase the investment and to assure an 
adequate amount of funds when people retire.
  The reconciliation package picks up most of the provisions authored 
by the task force to raise the limits on full funding by 5 percent 
every 2 years. I believe that our Nation's workers will be more secure 
by their pension benefits being funded more fully. This is a critical 
point because so many of our pension benefits are underfunded. The 
capacity of the employer to be able to fully fund the pension benefits 
at an earlier time in the cycle is critical to assure people will have 
a pension when they retire.
  Some of the technical changes made by this bill are very significant. 
This reconciliation bill would exempt State and local government plans 
from the cumbersome nondiscrimination rules. This was a prime example 
of how many of our pension laws and regulations have been unduly 
complicated. Nondiscrimination rules were not created to apply to 
Government plans, where it is difficult to find exactly who the 
employer is and thus to compare employer and employee benefits. This 
type of commonsense change will make it easier for States and local 
governments to plan for functions around the country.
  Another task force-endorsed reform picked up by the reconciliation 
bill will do much to help small business. Until now, the matching 
contributions made by the self-employed were treated differently under 
tax law than the matching contributions made by employers. By 
straightening out the discrepancy, we will remove another obstacle from 
among the many that deter small business owners from providing pension 
coverage. As we all know, small business is where we most need to 
increase participation in pension plans.
  There is not time, Mr. President, to discuss every reform that was 
inserted into this reconciliation bill in the pension area. But I am 
pleased that this bill draws from reform initiatives in a variety of 
areas. In the area of portability--I am talking now about the tax bill 
coming to us after we complete the bill on spending--this bill will add 
extra protection to defined benefit plans that accept rollovers, 
protecting them from disqualification if they do facilitate that kind 
of portability. Moreover, the bill includes a few provisions that will 
streamline the paperwork process. The bill will facilitate the use of 
new technologies to replace old paperwork filing, and also eliminate 
some paperwork requirements that should no longer be required. Finally, 
various technical inconsistencies within the law will be eliminated if 
we retain those provisions in conference.
  Let me close by thanking Chairman Roth for his extraordinary effort 
and for his willingness to include so many provisions to promote 
pension reform and Medicare Choice in both reconciliation bills, as 
well as several other Finance Committee Senators, including Senators 
Bob Graham, Chuck Grassley, Orrin Hatch, Jim Jeffords, and others. 
Although I am not on the Finance Committee, I was certainly pleased to 
be able to work with this group to advance efforts to increase 
retirement savings. Savings incentives are an effective and important 
use of tax relief--one of the very best things that we can do with our 
opportunity

[[Page S6065]]

this year to relieve the tax burden on American taxpayers. I do hope 
and expect that we can retain these critical provisions in these two 
bills.
  Now let me express one area that I have concern about, and that is 
the area of how we handle the Medicaid expansion, or the new program 
for the purposes of assisting child health. I have read the bill. I 
understand that States have the right to choose between a capped grants 
program and the expansion of the Medicaid Program. It is not, however, 
clear to me what the requirements are relative to coverage, and how 
demanding the Federal Government is going to be on each State as to how 
and what must be covered on each child. I would have serious 
reservations if we have created a new entitlement program. This would 
be a mistake, at a time when we are trying to control the rate of 
growth of the Federal Government and growth of the most explosive side 
of the Federal Government, the entitlement accounts of this Government; 
it would be a serious error for us to embark on a new entitlement 
program.
  It is not clear to me, after having read this, whether or not we have 
done that. It is clear to me that there was an intention not to do 
that. At least, in the language of the bill, and in the explanation of 
the bill, statements were made that it was not the intention of the 
committee to move down the road of a new entitlement program. Whether 
or not the operable language in fact creates such an event, demanding 
that certain action be taken, that certain expenditures be made and not 
funding those, or creating a situation where people can come in and 
demand those expenditures in a way that creates an entitlement or a 
mandatory program is not absolutely clear. As we go forward with this 
debate, I hope we will get clarification on this point. Should it turn 
out that this is a new entitlement program, I hope we will change that, 
either here on the floor or in conference, so that the intent of the 
language is clear, which is to create a grant program to benefit 
children and their health needs.
  Mr. President, I yield the floor.
  I 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. GREGG. 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. GREGG. Mr. President, is the time being controlled?
  The PRESIDING OFFICER. Yes. The Senator would need time yielded to 
him to speak, but could offer an amendment that would then be debated 
for 2 hours equally divided.
  Mr. DOMENICI. How much time would the Senator need?
  Mr. GREGG. I would need about 15 minutes.
  Mr. DOMENICI. Would the Senator be agreeable at a later date, in the 
stacking process, to rearrange the order of his amendment if the 
Committee on Finance wants to have an amendment before it?
  Mr. GREGG. Absolutely. I would agree to a unanimous consent to place 
my amendment behind whatever amendments are offered by the chairman and 
ranking members of the committee.
  Mr. DOMENICI. Would the Senator also agree that it can be sequenced 
in a manner that helps the manager work this bill through? It won't 
take a long time. But it may be second or third.
  Mr. GREGG. As long as it is not eliminated.
  Mr. DOMENICI. Right.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. Mr. President, it is my intention to shortly offer an 
amendment which is technical in nature but goes to one of the 
philosophies of the Choice care issue. The Choice care, as presented in 
this bill which is an excellent step forward in trying to make the 
Medicare system more viable, efficient, and most importantly more 
effective for our senior citizens, is a concept where seniors are going 
to be given an opportunity to go out in the marketplace and choose 
between the variety of different care providers.
  Today under the Medicare system, basically seniors are limited to the 
traditional Medicare and to a very limited HMO option. The traditional 
Medicare, of course, is a 1960's program designed to meet a 1950's 
medical system structure. It is not current or effective for today. It 
is a cost-plus system, for all intents and purposes. It is 
extraordinarily inefficient, and it does not allow very much 
flexibility in the marketplace.
  The pre-Medicare system, as is structured today for the delivery of 
its different options to seniors, is like driving a 1961 Chevrolet down 
a highway in 1997 with the understanding that you are going to have to 
go into the year 2000 still driving a 1961 car. Everything on the car 
has been replaced. Very little of it works. It is blowing out a lot of 
smoke. It is chugging along at 45 miles an hour top speed. It simply 
isn't working correctly.
  So, in order to try to redress that, the committee has put in place a 
very creative initiative in the area of Choice care, which essentially 
says that seniors are now going to have the ability to go out in the 
marketplace and choose between a variety of different health care 
providers. That variety of health care providers could involve an HMO. 
It could involve a PPO where a group of physicians get together. It can 
be called a PSO, again, a group of physicians getting together. Or it 
could involve some new way, I suspect, where hospital and doctors and 
somebody else designs a new way of delivering services. But the 
services they deliver must equal the benefits package which is 
presently under the Medicare system.
  So seniors lose nothing in the definition of the size or nature of 
their benefits package. And it must equal the benefits package in the 
area of quality so that seniors lose nothing in the area of quality of 
their health care.
  What they get is a marketplace which will come forward and compete 
for the seniors' health care. What does that do? Well, as we have seen 
in the private sector, that will give the seniors a whole new variety 
of choices, a whole new panoply of choices, from which to choose the 
health care provider group that they want to give them Medicare.
  They may get options coming at them which say, ``Here, we are going 
to give you the basic Medicare package, but we are going to also throw 
in eyeglass care. We are also going to throw in pharmaceutical care. It 
is not going to cost you any more, but we will put that in to try to 
attract you to our supplier of health care, to our HMO, to our PPO.''
  So seniors are going to get more choices. Under this benefits 
structure, as put forward in the reconciliation bill, new benefits can 
be added on top of the benefits that are supplied by the basic Medicare 
plan. That is a given. That is an incentive that can be put in. But 
what is not allowed under this package, or what is specifically 
disallowed, is the concept that a senior could pay less for the same 
benefit package.
  You have to remember here that what you are dealing with is the 
market system. So it is more than likely--in fact, it is expected--that 
a variety of health care providers, as a result of being efficient, as 
a result of cost-saving structures which they put in place, are going 
to be able to supply the health care basic benefits structure of the 
Medicare system to a senior citizen for less than what it costs today.
  For example, we pay out $4,800 a year for health care benefit. 
Insurance pays about $4,800 a year for insurance for seniors. That is a 
very high price, by the way. It is very likely that you are going to 
see provider groups come forward at $4,300 a year. There is going to be 
a $500 saving in that provider group.
  Under this bill, the way the provider group adjusts for that is they 
must put more benefits into the package. That is the only option they 
have. They have to put in eyeglasses. They have to put in drug 
benefits. That is a reasonable approach. Yes; to give the senior more 
options at the same price for more health care types of health care. 
But another option, of course, would be let's sell it to the senior for 
less. That is probably going to happen, too. You are going to probably 
see some health care providers give the same package of options but be 
able to give it at less than $4,800. Under this bill as it is presently 
structured, if that were to occur, the health care provider would get 
all the savings. There would not be any incentive for the health care 
provider to turn some of that savings back to the

[[Page S6066]]

Government or back to the senior citizen.
  In the original Choice care plan that I drafted--I do not say this to 
try to be too expansive about my own efforts--I believe was essentially 
one of the cores from which this plan was put together, which is in the 
reconciliation bill. In my original health care plan, I had language 
which said, if a senior is able to purchase their health care--the same 
package, the same benefit structure--from a health care provider, that 
health care provider cannot use that for selection. They cannot try to 
pick and choose seniors. It must take all comers. If a senior is able 
to find a health care provider who is willing to charge less--and the 
quality must be maintained under the standards we have here--then the 
senior, rather than having only the option of getting more benefits, 
would also have the option of getting a return on the lower cost 
premium.
  So, if you paid $4,800 for seniors' health care but you could 
purchase health care at say $4,300, there would be a $500 savings 
annually. We would take that $500 savings. And the health care provider 
could as an option, rather than buying eyeglass care for the senior or 
buying health prescription drugs for a senior, could say to the senior, 
``We are going to turn that $500 back to you.'' If the health care 
provider decided to do that, then the senior, under my original bill, 
would get to keep 75 percent of that and 25 percent goes back to the 
Federal Treasury.
  That was the plan of the original bill.
  This language of this bill says a Medicare Choice organization is not 
authorized to provide cash or other monetary repayments as an 
inducement for enrollment. That makes it impossible for an incentive 
system to be put in place. Markets work on incentives, not only benefit 
incentives but money incentives.
  Thus, I believe that subject to the limitations of what HCFA will put 
on the provider, subject to the limitations that it has to be a quality 
system, subject to the limitations that it has to be a system which 
meets a health care insurance plan that meets the basic Medicare 
requirements of what must be covered, subject to the fact there cannot 
be adverse selection, there is no disincentive, no downside to creating 
a marketplace in force beyond added benefits of added cash, of the 
potential of refunding cash.
  So, basically, I think this language is counterproductive to the 
basic goal of Choice care, which is to create market forces not only on 
behalf of the provider groups but within the senior community to go out 
and be cost-conscious purchasers. The whole idea of Choice care is to 
give seniors more options to choose from and create a more efficient 
marketplace, which will in turn create a lower cost of health care for 
the basic benefits package of Medicare, or at least slow the rate of 
growth of the cost of that health care package.
  That is the whole concept of Choice care. But if you take out of 
Choice care any financial incentive to save, if you say to seniors: 
Your only incentive to purchase another plan may be additional 
benefits, which they may not need, then you have reduced dramatically 
the marketplace forces. If you take out of the system any incentive for 
the provider group to rebate those savings, then you have created an 
atmosphere where provider groups may generate savings, but they will 
keep them themselves. In that way, I think you skew the marketplace 
because in an open market when somebody is able to sell a product for 
less, they pass the benefit of that lower cost on to the consumer, and 
that is what we are trying to do in the language of the original bill--
pass the benefit of the lower cost of health care on to the consumer.
  So in order to address that, without putting in place the incentive 
system that I design in my bill--we are not suggesting that that 
incentive system should go in as I designed it. We are just suggesting 
there should be the opportunity for HCFA and for the regulatory 
agencies to be able to look at incentive systems and not be barred from 
looking at incentive systems, cash incentive systems, monetary 
incentive systems. In order to allow that to occur, we need to remove 
this language. In order to make this Choice care more effective, a 
potentially more dynamic force to create more of a marketplace event 
where seniors are actually out there thinking, hey, I intend to look 
around and see how much I can buy insurance for, and one of the reasons 
I am looking around is while I might get better benefits, the second 
reason I am looking around is I may get it at less cost--in order to 
create that type of market dynamic, which is absolutely critical if you 
are going to have Choice care work effectively, you cannot have 
language which says under no circumstances, even if HCFA were to find 
that it would work, can you in any way create an incentive system that 
involves monetary consideration.
  So this language, I believe, is counterproductive to the basic goal 
of Choice care. I think it should be noted as an aside here also that 
the concept of Choice care is to make seniors more cost-conscious 
purchasers, but in doing that you have to remember that, yes, those 
seniors who are on the system today probably are not going to change. 
They probably are not going to change their health care system. They 
have been there. They have been in the system. They came out of the 
1950's and 1960's when they had a sole care provider. They are used to 
less health care. That is the way they are brought up, most of the 
seniors on the system today. So we are not really targeting the Choice 
care concept at that group. What we are targeting the Choice care 
concept at is the next generation of seniors coming into the system, 
that generation which has already been through the health care 
explosion of the late 1980's and early 1990's. A variety of health care 
providers were made available to them, where HMO's became commonplace 
in the private sector and in the marketplace. These folks are going to 
be familiar with the concept of a PPO, PSO, or HMO as a provider group, 
so they are going to be comfortable with going out and shopping around.
  If we create a disincentive for them to do that by saying, well, if 
you shop around, you do not get any of the benefits of shopping around 
other than some higher benefit package which you may not want to begin 
with, then we will be undermining a culture which already exists. We 
will be saying to people who are coming out of the private sector, 
having been used to shopping around--maybe they were in a cafeteria 
program where they actually got a refund of some of the costs of the 
lower cost health insurance since they purchased it. We are going to be 
saying to those people, when you get into the public system, it is 
basically a cost-plus system and you are not going to be able to get 
any of benefits of the thoughtful purchase of lower priced health care 
in relationship to your needs or in relationship to a one-size-fits-all 
package.
  So I do believe that to leave this language in not only undermines 
one of the options that might make Choice care much more effective, but 
it undermines the natural, inherent attitude that is going to be coming 
with this new generation of people who receive funds from Choice care, 
who participate in Medicare, and who have been brought up in a 
marketplace where Choice care is the typical type of health care 
approach.


                           Amendment No. 426

  So, in light of that explanation, Mr. President, which I know the 
Presiding Officer was closely following, which I very much appreciate, 
I would send the amendment to the desk.
  The PRESIDING OFFICER (Mr. Coats). The clerk will report the 
amendment.
  The legislative clerk read as follows:

       The Senator from New Hampshire [Mr. Gregg] proposes an 
     amendment numbered 426.

  Mr. GREGG. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 213 strike all of (d) and insert the following:
       ``(d) Terms and Conditions of Imposing Premiums.--Each 
     Medicare Choice organization shall permit the payment of net 
     monthly premiums on a monthly basis and may terminate 
     election of individuals for a Medicare Choice plan for 
     failure to make premium payments only in accordance with 
     section 1851(g)(3)(B)(i).''

  Mr. GREGG. Mr. President, I make a point of order that a quorum is 
not present.
  The PRESIDING OFFICER. The clerk will call the roll.

[[Page S6067]]

  The legislative clerk proceeded to call the roll.
  Mr. GREGG. 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. GREGG. Mr. President, I ask unanimous consent that no second 
degree amendments be in order relative to the amendment which I just 
offered.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. GREGG. I yield the floor and make a point of order that a quorum 
is not present.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DOMENICI. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                     Amendment No. 426, as Modified

  Mr. DOMENICI. Mr. President, I understand that the unanimous consent 
request Senator Gregg proposed with reference to his amendment is 
technically insufficient to accomplish the purposes that we intended 
when we concurred, and so in lieu thereof I ask unanimous consent that 
with respect to amendment 426 no amendments be in order to the 
amendment or the language proposed to be stricken and the amendment be 
modified to reflect a straight strike of all after (i) through line 16.
  The PRESIDING OFFICER. Is there objection?
  Mr. GREGG. Reserving the right to object.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. I would like to ask for the yeas and nays on the 
amendment.
  The PRESIDING OFFICER. First the Chair would ask, is there objection 
to the unanimous consent request of the Senator from New Mexico to 
modify the amendment?
  Without objection, it is so ordered.
  The amendment, as modified, is as follows:

       On page 213, line 13, strike beginning with ``A Medicare'' 
     through the period on line 16.

  Mr. GREGG. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. The yeas and nays have been requested. Is 
there a sufficient second? There is a sufficient second.
  The yeas and nays were ordered.
  Mr. MOYNIHAN. Mr. President, 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. ROTH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from Delaware is recognized.
  Mr. ROTH. Mr. President, I am pleased by the work and cooperation 
that was exhibited last week in the Senate Finance Committee. It was an 
encouraging display of bipartisanship--both sides of the aisle working 
together to craft a proposal that meets the guidelines of the budget 
agreement and achieves needed reforms in spending programs while 
protecting America's vulnerable.
  Out of this tremendous effort that went into the Finance Committee 
markup of the budget came two distinct themes that we would do well to 
keep in mind as we take this issue up to the floor. First, that the 
time has come, as President Clinton expressed in an earlier State of 
the Union Address, to end big Government as we know it. This is no 
longer an objective held by one side of the aisle over the other. It is 
a necessity.
  We are blessed with the greatest Nation on Earth. We have the most 
productive citizens, the finest resources and materials, and we have 
the ingenuity and spirit of enterprise. We realize, however, that our 
resources are finite and Government's role is limited. Yet, we are 
willing, on both sides of the aisle, to make certain that Government 
efficiently and effectively provides for those with whom Government has 
a contractual or moral obligation to provide. Medicare is contractual. 
Medicaid, when it serves the most vulnerable, particularly America's 
children, is moral. And these feelings are shared mutually by 
Republicans on the committee as well as Democrats. This became 
obviously clear last week.
  Second, we demonstrated the power of bipartisanship. I can safely say 
that no one, but no one, on the Finance Committee got everything he or 
she wanted. No one was completely satisfied with everything, as it is a 
compromise between differing political philosophies and between deeply 
held views. So while what we have passed and addressed on the floor 
today is not the budget package that any of us would have drafted, it 
represents a major step forward, a step forward that, through balancing 
the budget, can help assure continued growth, jobs and opportunity.
  As we worked on the committee to report out this budget, I was led by 
two primary goals. First, to implement the budget agreement in such a 
manner that we not only balance the budget but that we do so in a 
manner that preserves and strengthens the programs impacted. As I said 
during the committee markup, ``It is not enough to reduce the cost of 
such critical programs as Medicare and Medicaid, but it must be done in 
a way that provides better service to beneficiaries of these 
programs.''
  My second objective was to implement the budget agreement in a manner 
that assured bipartisan support for the program. I believe we have 
accomplished both of these. What we offer today is a workable balance, 
a critical balance that protects our most vulnerable populations while 
addressing necessary reforms in important entitlement programs.
  Let me give some specifics. The largest program we concerned 
ourselves with was, of course, Medicare. Much has been written and said 
about the future of this program and the need to strengthen it for the 
long term. We did this. We took a critical first step towards 
addressing the long-term solvency of the Medicare Program while at the 
same time making certain that the program meets the needs and 
expectations of its current beneficiaries. The changes we made in 
Medicare actually allow us to expand Medicare coverage for certain 
important preventive services including mammography, colorectal 
screening, bone mass measurement and diabetes self-management. We are 
able to offer this expanded coverage and protect and preserve Medicare 
by incorporating choice and competition into the current program, and 
by slowing Medicare's rate of spending growth. Our measures will save 
Medicare from bankruptcy for another 10 years, while still increasing 
Medicare spending per beneficiary from $5,450 this year to $6,950 in 
the year 2002.

  In expanding choice in the Medicare Program, we have used the highly 
successful Federal Employees Health Benefit Program as a model. Under 
our new Medicare Choice Program, seniors will have the opportunity to 
choose from a variety of private health plan options and select the 
health care plan that best suits their needs and preferences. These 
choices will include the whole range of health plan options available 
to the under-65 population--fee-for-service, varieties of managed care, 
and medical savings accounts. Through these options, seniors will be 
able to obtain important benefits, like prescription drugs, that are 
not covered by traditional Medicare.
  It is clear to see how these commonsense and, again, I want to say, 
these bipartisan solutions will preserve and strengthen the program. We 
were not content to stop there. The Finance Committee proposal calls 
for a National Bipartisan Commission on the Future of Medicare. This 
will be a 15-member commission, established for 1 year, charged with 
making recommendations to Congress on actions necessary to ensure the 
long-term fiscal health of the Medicare Program, something of great 
concern to the ranking member, Pat Moynihan, and myself.
  The Finance Committee report also creates a demonstration project 
within the Medicare Program for medical savings accounts. This 
demonstration project will allow up to 100,000 Medicare beneficiaries 
to opt into an MSA program, a program that will allow them to choose a 
high-deductible Medicare Choice plan.
  These changes to Medicare will result in a net savings of $115 
billion, savings

[[Page S6068]]

that will not only help us meet the budget compromise but savings and 
reforms that will preserve the Medicare Program while ensuring that it 
continues to serve those who depend on it now. Again, these important 
reforms were made possible only through sincere bipartisan efforts, and 
it is my hope that such bipartisanship will continue as we address 
these reforms on the floor.
  Such bipartisanship also marks our treatment of Medicaid. Working 
together, we passed reforms that will control the growth of the 
program, resulting in a net savings of over $13 billion. For more than 
a decade, there has been a constant tug of war between the Federal 
Government and the States over Medicaid, as each side has asserted its 
will over the other. From the mid-1980's through the early 1990's, the 
Federal Government imposed mandates on the States and, in turn, the 
States shifted costs to the Federal Government. The result was 
devastating to all of our budgets as Medicaid routinely grew at a 
double-digit pace, reaching as high as a 29-percent increase in 1992. 
This Finance Committee proposal signals an important change in the 
program.
  Having said this, let me be clear. We are not cutting Medicaid. Under 
this proposal, Medicaid spending will continue to grow. The Federal 
commitment to Medicaid will grow from $99 billion in fiscal year 1997 
to $140 billion in 2002. The President originally proposed $22 billion 
in savings in the Medicaid Program. We achieved approximately $14 
billion in savings.
  The first part of our Medicaid reform is to give the Governors the 
tools they need to control this program. This will be able to move more 
individuals into managed care without waiting years for waivers from 
the Federal Government. They will be able to contract with selected 
providers for service. The States will be able to ask families to take 
some responsibility for the decisions they make when seeking health 
care services.
  In short, our plan gives the States many of the same tools that the 
private sector has in stretching health care dollars. The fact is, 
health care as a whole has changed, and the Medicaid Program needs to 
catch up. Our proposal gives the States the tools necessary to act as 
many large employers do, to get the greatest value for Medicaid 
dollars. So we are taking the important next step to move both the 
States and the Federal Government out of the waiver process.
  But we also want to ensure that as the old program requirements are 
replaced, quality is still assured. As I have said, in addressing the 
Medicaid Program, we also provided many of the reforms requested by the 
bipartisan National Governors' Association. These include repealing the 
Boren amendment provision. The history of the Boren amendment is a 
classic example of unintended consequences as it has been used to 
increase the costs of the program, rather than control costs.
  The Governors and the administration agree on the repeal of this 
provision. It will take the providers and the States out of the Federal 
courts and put them back at the contract negotiating table.
  As we repeal the Boren amendment, we must be very careful that we do 
not simply create a new round of lawsuits over what Congress means in 
terms of Medicaid payments to facilities.
  Another major provision of our plan to control the growth of Medicaid 
is the reduction in spending on the Disproportionate Share Hospital 
Program. This DSH Program provides funding for indigent individuals who 
are not enrolled in Medicaid. Under current law, DSH spending is 
projected to increase from $10.3 billion in fiscal year 1998, to $13.6 
billion in 2002. In 1990, Federal and State DSH spending combined 
totaled less than $1 billion, and in 1995, Federal and State DSH 
payments totaled nearly $19 billion.
  Without reform, Federal DSH payments alone will total nearly $60 
billion over the next 5 years, and we need to exert some discipline in 
this program.
  This bill reforms the DSH Program through a combination of controls.
  First, a State which spends less than 3 percent of its Medicaid 
Program on DSH will be frozen at its 1995 level. For these States, 
there will be no reduction, but also no growth.
  Second, beginning in 1999, high-DSH States and low-DSH States will be 
reduced from their 1995 actual spending levels. A high-DSH State or a 
State that spends more than 12 percent of its Medicaid dollars on 
indigent hospital costs will be reduced from its 1995 spending levels 
for inpatient hospitals only. It will not be allowed to count spending 
on institutes for mental diseases. These high-DSH States will be 
reduced from 1995 spending by 14 percent in 1999 and by 20 percent in 
the years thereafter.
  Low-DSH States are those that spend less than 12 percent, but more 
than 3 percent of the Medicaid dollars will be reduced from their 1995 
spending by 2 percent in 1999. In the year 2000, they will be reduced 5 
percent from the 1995 level. In 2001, the reduction will be 10 percent, 
and in 2002, it will be 15 percent.
  As I mentioned, our proposal places restrictions on the States' 
ability to fund their State mental health facilities with Federal 
funds. Over the past few years, the States have shifted the cost of 
these facilities to the Federal Government. As you check with your 
State, many will find huge increases in Federal costs associated with 
these facilities. It is time to close this loophole.
  Let me say that the President proposed $22 billion in savings from 
the Medicaid Program. Two-thirds of these savings were to be realized 
out of the DSH Program and one-third from per capita caps. The savings 
target has been reduced, but the potential reforms for achieving these 
savings are also limited.
  I believe there is general agreement that through the DSH Program, 
the use of DSH payments had been expanded well beyond the original 
intent. The DSH formula has been developed with consultation and in 
bipartisan cooperation. The formula has been carefully designed, based 
on past problems in this program and with input from Members.
  Concerning the steps which we take in this package to address 
children's health, let me begin by saying that we all share the same 
goal of increasing access to health care for as many children as we 
can. And it is clear that Members on both sides of the aisle are 
committed to finding an answer to the problem of uninsured children in 
this country.
  Of the 71 million children in the United States, more than 86 percent 
are covered by some type of health insurance; two-thirds are covered by 
insurance through the private sector; 23 percent of all children in the 
United States under age 18 are covered by Medicaid, and another 3 
percent are covered by other public insurance programs.
  Of the 9.8 million children who are not insured, 2.9 million children 
live in families with incomes above 200 percent of the Federal poverty 
level. Half of these children live in families with incomes of about 
300 percent of the Federal poverty level. Mr. President, 300 percent of 
the poverty level is over $48,000 for a family of four. This tells us 
that insurance coverage is more than an issue of family income. It is, 
in fact, a complex issue which does not yield easy to Washington-knows-
best solutions.

  The proposal we offer today provides the States with a choice 
concerning how they will expand coverage to more children. They can 
expand their Medicaid coverage, or they can offer a package of benefits 
which is actuarially equivalent to the Federal Employees Health 
Benefits Program.
  Our intention is to build on the successes the States have been 
realizing. This year, the States will be increasing coverage to more 
than 800,000 children through initiatives proposed by the Governors.
  We should learn from these initiatives and encourage the States to 
develop them. This proposal will allow the States to choose how best to 
extend coverage to children.
  Expanding Medicaid is certainly a choice States have made. Thirty-
nine States have expanded Medicaid eligibility for pregnant women and 
children beyond the Federal requirement, but States are also developing 
other strategies for increasing coverage of children as well. There are 
already public-private partnerships in more than half the States.
  There are successful programs, such as New York's Child Health Plus 
and

[[Page S6069]]

Florida's Healthy Kids. These innovative programs, and programs like 
them, can grow with additional resources.
  The Children's Health Initiative that we include in our committee 
proposal is a bold new approach to support the States in the drive to 
provide coverage for more of our Nation's children. As I have said, the 
States will be given a choice to expand coverage through the existing 
Medicaid Program or through a new initiative in which they can 
subsidize private programs for children or provide a new benefit 
package which is actuarially equivalent to what Federal employees 
receive.
  Under either choice, the Federal Government will provide the same 
matching rates to the States. A State would pay the same rate as it 
does currently in the Medicaid Program. We recognize this may not be 
enough to encourage States to participate. Therefore, under this 
proposal, the Federal Government would send to the States an additional 
incentive bonus for each child who is covered in this new initiative. 
We call this an enhanced match. The State will receive a 10-percent 
bonus for each new child they cover and 5 percent for a child who is 
already covered under a State health program for children. These 
bonuses will be provided for children who are receiving health care 
coverage from the State that is beyond Federal Government requirements 
for Medicaid.
  A critical component of this agreement is what type of health 
insurance coverage is provided. Let me stress that this truly is 
insurance. A State would be required to provide either its current 
Medicaid benefits package or one which is equal to what the children of 
Federal employees receive. The Secretary of Health and Human Services 
will review these plans to ensure that they meet this test.
  The welfare of our children was a critical component in the 
bipartisan plan we achieved in the Finance Committee. The result of our 
work will be to cover more children and to provide them with real 
health insurance. Again, this children's health care initiative will 
build upon the leadership in the States. It passed the Senate Finance 
Committee with strong bipartisan support, and I thank all the Members 
who made a contribution to this special effort.
  As you see, Mr. President, each of these reforms is necessary. 
Together they meet the requirements and responsibilities that were 
given to us. During the next 5 years, we reduce deficit spending by 
$100 billion, including Medicare reductions of $115 billion, and net 
Medicaid reductions by $13.6 billion.
  At the same time, we increase spending for children's health care in 
this bill by $16 billion, SSI support for elderly and disabled 
immigrants by $10.4 billion and welfare to work by $3 billion. We 
extend the solvency of the part A trust fund for Medicare for at least 
10 years, while introducing structural reform to give beneficiaries 
more choice among competing health plans.

  Our goal is to give the Medicare beneficiary the same choices that 
Federal employees have within our Federal health program, including the 
traditional fee-for-service, and this is an excellent beginning.
  We were able to produce such a strong bipartisan package because of 
the spirit of cooperation shared by members of the Finance Committee. 
Views were solicited actively, from all members of the Finance 
Committee. They were asked to submit in writing the recommendations as 
to how the budget agreement should be implemented, and their ideas were 
incorporated in the initial chairman's mark. Informal meetings were 
then held to seek the further advice and recommendations from Members. 
These, in turn, were incorporated into the proposal we address today.
  As chairman of the Finance Committee, I say with certainty that this 
proposal has substantial support on both sides of the political aisle 
and it is, again, my sincere hope that the spirit of bipartisanship 
that existed within our committee will prevail as we move forward. I 
hope the objectives that guided us will remain those that carry us 
through the next few days as we consider this budget. I particularly 
express my sincere appreciation to Senator Moynihan for his leadership 
in this monumental effort, as well as my appreciation to all the 
members of the committee who reported this proposal out of the Finance 
Committee unanimously. Senator Gramm provided invaluable leadership on 
the Medicare Subcommittee, and I thank all the committee staff members 
who worked around the clock day after day to ensure that the objectives 
we were given to meet would be met in the most efficient and effective 
way possible.
  Mr. President, I yield the floor.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I would like first to thank our revered 
chairman for his concise and comprehensive account of this epic 
legislation. It comes to the floor from a unanimous Finance Committee.
  These are the first substantive changes made in Medicare and Medicaid 
since these measures were enacted a generation ago. I was present in 
1965. I am here in 1997. I so state, our problem --and it is a curious 
problem in social policy, is that I am not sure we will be heard 
because we are not making enough noise. And we are not making enough 
noise, Mr. President, for the simple reason that we are in agreement. 
We have changed our minds about certain basic things. We have 
recognized the events of the past generation that require us to do so.
  We came into these programs little expecting how much they would come 
to take over in the Federal fisc at a time when medicine was just on 
the verge of a great shift in its capacity, its ability to cure, to 
treat, to heal. Fee for service was the only form of medicine available 
to most persons, not otherwise known, and Medicaid was thought to be a 
very minor aside.
  We reached a point where health care, partly because we have so much 
better health care, became hugely expensive. The chairman noted that in 
1992, Medicaid grew by 29 percent.
  Mr. President, that means it doubles every 3 years, or more 
accurately, doubles every 30 months. You cannot sustain that. We are 
therefore profoundly reforming the system, not so much returning it to 
an earlier good state, as bringing it forward to deal with the present 
realities and possibilities offered by managed care and the general 
change in medicine of recent years.
  I say again, before there was agreement in these matters, we could 
have had a markup in our committee that went on for 3 months, we could 
have had rallies, speeches, petitions, filibusters, heavens knows what, 
because there was not in fact agreement. When agreement is arrived at, 
when there is consensus, the most extraordinary changes can take place 
in a seemingly everyday manner, without a voice raised or a single 
dissent. This is also particularly owed to the work of the Senator from 
Texas, who chairs the Subcommittee on Health, as the chairman observed, 
and whom I am happy to note is here on the floor. He found that 
agreement and he put it in place.
  There are other things in the legislation. I do want to note that we 
have added $8 billion for child health care in the form of insurance, 
for a total in the two reconciliation bills of $24 billion. I can 
recall the days when Wilbur Cohen assured us the whole program would 
cost $24 billion a year, and indeed for a while there it did. I think 
it should be clear that this was the work of Senator Hatch, who cares 
so very much about this matter. Equally, Senator Rockefeller was able 
to bring about an increase in the moneys that will be available to low-
income families as part of the child tax credit in combination with the 
earned-income tax credit.
  Senator Bob Kerrey, who does not intend that things should always be 
done the way they always have been done--save perhaps in the U.S. 
Navy--proposed, and we agreed, that the time had come to begin to ask 
higher income persons to pay a higher premium to get this insurance, 
which they do not have to take. It is optional, but which if they can 
afford to pay something more like the original anticipated 
contribution, well then, they ought to. That is just good sense. I 
think this will be understood by the Senate and in time by our 
colleagues in the House. We also move the Medicare eligibility age from 
age 65 to 67, bringing it into conformity with Social Security.
  Finally, Mr. President, I think it has to be said--and I know the 
chairman

[[Page S6070]]

will agree with me--that we did miss an opportunity of lasting 
consequence for Federal finance this year by failing to take action on 
how we measure the cost of living.
  Our chairman has been an outspoken advocate of developing an accurate 
cost-of-living index, which we do not now have. We have cost-of-living 
indexes all over the place. You find them in the Department of Labor, 
the Department of Commerce, and the Health Care Financing 
Administration.
  But we had agreement, from an initiative taken in the Finance 
Committee, to produce an adjustment to the Consumer Price Index--which 
is not cost of living--by 1.1 percentage points. It would have produced 
$1 trillion in 12 years, and it would have put the Social Security 
trust funds in actuarial balance until the year 2052. This was in our 
hands, and it was let slip at the last moment. We blinked, and the 
opportunity is now history.

  But part of that history is also that the chairman of the Finance 
Committee and the members of the Finance Committee--I do not speak for 
all of them; I certainly speak for myself--realized this should be 
done. It is a correction that should be made. The sooner we do, the 
more we will be able to address other problems that remain because, as 
the chairman said, we have a series of measures here that ensure the 
viability of Medicare for 10 years. But we mean to be around more than 
10 years, and we will have to address this subject also.
  Finally, there are exceptional measures in this bill to make 
provision for teaching hospitals and medical schools. One of the 
unanticipated consequences, to use the chairman's phrase, the phrase of 
Robert K. Merton in 1935, I think, that the economic rationalization of 
health care has been that the teaching hospitals and medical schools, 
which necessarily must charge more for the care they provide because 
they are teaching and training and do research, find themselves in an 
exposed situation which we can take care of from the gains we acquire 
in the course of rationalization. But if we do not, we shall find that 
one of the unanticipated consequences is that we spoiled our medical 
schools at this moment in the great age of medical science. This bill 
precisely addresses the matter in ways I think are constructive. And we 
will look into the issue further in the commission which the chairman 
proposes.
  It remains for me, sir, simply once again to congratulate our revered 
chairman. If you would so measure the quality of his achievement, 
observe the silent awe which is now observed in the Nation.
  Mr. President, I yield the floor.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER (Ms. Collins). The Senator from Texas.
  Mr. GRAMM. Mr. President, I want to join our distinguished colleague 
from New York in commending the chairman of the Finance Committee.
  The PRESIDING OFFICER. If the Senator would suspend.
  The Chair would like to know who yields time to the Senator.
  Mr. ROTH. I yield to the distinguished Senator 10 minutes.
  The PRESIDING OFFICER. The Senator is recognized for 10 minutes.
  Mr. GRAMM. Mr. President, I want to join our colleague from New York 
in commending our chairman of the Finance Committee for his excellent 
work and leadership. I think it is a great testament to his leadership 
that we have before us a bill that will spend less money on Medicare 
than another bill we debated 2 years ago which was deemed to be a 
partisan effort which ruptured the bipartisan nature of our work on 
health care.
  Today we have before us a bill that is superior in virtually every 
way to that bill. And this bill that is now before us passed the 
Finance Committee on a unanimous vote and was strongly supported and 
praised by every member of the Finance Committee.
  I think it is a testament to the leadership and fairness of the 
chairman that we have achieved this goal. I can say, as a person who 
has watched now many chairmen work, both in the House and the Senate, I 
have never seen anybody be fairer to every single member of the 
committee from the most senior member to the most junior member than 
Senator Roth was.
  I think it is a lesson to all of us. That is, when you have heavy 
lifting to do, if you give people an opportunity to speak their mind, 
to have a fair hearing for their ideas, in the end they are a lot more 
willing to be part of that effort than if they feel you are trying to 
ram it down their throat or treat them unfairly. We have all heard, 
from our teenage years, if you want me with you on the landing, you 
need to have me there on the takeoff. But we often forget it in real 
life. And I think our chairman has reminded us of it again here.
  We have before us a very thick bill which is the composite of all of 
the so-called reconciliation bills that are supposed to save money. I 
want to note that there is only one bill in here that saves any real 
money, and that is the bill that we are talking about today, the bill 
that came out of the Finance Committee.
  Now, lest someone jump up and say the Commerce Committee saved money, 
what the Commerce Committee did was to sell spectrum, the right to 
broadcast. We had the Agriculture Committee that was actually ordered 
to spend $1.5 billion, and remarkably they had no trouble doing it. But 
the Finance Committee portion of the bill that is before us saves $100 
billion with a ``b'' dollars. And it does it in some of the most 
sensitive programs of the Federal Government. I want to talk very 
briefly about some of these changes because they are important.
  We are going to have a lot of debate here in the Senate tomorrow when 
we start shooting real bullets and start having amendments offered 
about Medicare. We are going to have questions about the need for long-
term reform. I am proud to say that the bill before us is the most 
dramatic reform of Medicare in the history of the program, and, in 
fact, if you combine all of the other reforms in Medicare that we have 
adopted in the last 32 years into one package, it is relatively 
insignificant as compared to this bill.
  I know there will be those who question the need for this dramatic 
reform, but I just want to remind my colleagues that over the next 10 
years Medicare will be a $1.6 trillion drain on the Federal Treasury. 
If you take all the money we collect in payroll taxes and you compare 
that to how much money we are going to spend on Medicare over the next 
10 years, we are going to fail to pay for the program by a cumulative 
total of $1.6 trillion.
  We have an unfunded liability in Medicare under the best of 
circumstances. With all the right reforms, if they could be made and 
done immediately, we still have an unfunded liability bigger than the 
current inflation adjusted costs of winning World War II. We have 
promised Medicare to two succeeding generations and we have set no 
money aside to pay for those benefits. As the baby-boomer generation--
79 million people strong--begins to go into retirement 11 years from 
now, we are going to go from 5.9 workers to 3.9 workers to 2.2 workers 
per retiree, and the impact of it is going to be cataclysmic on the 
Federal budget.
  That is why this bill is so important because it takes the first step 
toward saving Medicare. I believe if we can save these reforms not just 
in the Senate but through the House and to the President with his 
signature, that every Member of the Congress will be able to say of 
this bill that they truly did something worthy of being remembered.
  Now, let me outline some of the major components of the bill that I 
think are important. First of all, this bill gives our seniors who 
qualify for Medicare a broad range of choices. Today they have two 
choices. They can stay in the old fee-for-service Medicare policy or 
they can go into a massive all-encompassing HMO. What we do is fill in 
all the areas in between by giving our seniors the same kind of 
competitive choices that are available in private medicine today. I 
think this is a dramatic reform. I think it is a reform that is going 
to enhance the quality of health care. It is certainly going to expand 
freedom. Since we know competition has an impact on health care costs 
because the competition of the last 8 years in the private sector has 
driven the medical price index that measures inflation in medicine 
below the Consumer Price Index which measures the costs of all goods 
and services in the economy, we are confident that

[[Page S6071]]

expanded choice, expanded competition, and the efficiency that it will 
ultimately bring will benefit every Medicare beneficiary and will 
benefit the 110 million people that are paying Medicare taxes.
  This is a very important reform. It is a reform that now, I think, we 
can be proud to say, is virtually noncontroversial.
  One thing we have done in the bill which I say that had it been left 
up to me I would not have done is we have transferred home health care 
out of the trust fund into general revenue. Those who have wanted to be 
unkind have said it is a phony reform; not only are they unkind, they 
are correct. In fact, when we initially debated this so-called reform I 
said that you can buy 10 years of solvency in Medicare by taking the 
fastest growing item in Medicare out of the trust fund and putting it 
in general revenue and not counting it as part of Medicare anymore as 
part of the part A trust fund. If that is real reform, I can save 
Medicare for 100 years by simply taking hospital care out of the trust 
fund and putting it into general revenue and not counting it as part A 
Medicare, but would anybody believe that I had done anything when I did 
it?
  So, one part of this bill which was dictated by the budget agreement 
is the transfer of home health care. But there are two things that we 
have done as part of this transfer which really represents an 
accounting gimmick, but two things we have done are real. No. 1, we are 
going to build over time 25 percent of the cost of home health care 
into the Medicare premium that people pay for part B services or 
physician services after retirement; and also for the first time in 
this bill we have a $5 copayment for home health care. Now I know that 
there will be an amendment offered and that people will scream and 
holler that this $5 copayment represents the end of the world. But I 
want to remind my colleagues that home health care now spends more 
money than the National Institutes of Health. It now spends more money 
than the space program. This is a massive uncontrolled program.
  Some of you probably saw the big article in the Wall Street Journal 
about how people have gotten out of the garbage collection business and 
gone into home health care and become instant millionaires, how 
fraudulent much of this program is in terms of people who were 
providing services and overbilling and how the whole system is 
completely out of control. We are trying to begin to tighten up on that 
but there is nothing that will be better for tightening up on it than 
asking for a small nominal payment so that people will look at the 
cost, so that people will make rational choices. So it is a small 
copayment. But if we know anything about the world we live in, it is 
that small costs affect behavior on a substantial basis.

  We have very important long-term reform in this bill. The reform has 
already been denounced by most of the major special interest groups in 
the country that tend to speak out on these issues, and I want to talk 
about the two long-term reforms. The first reform has to do with 
retirement age. I remind my colleagues that we changed the retirement 
age in 1983 for Social Security. I remind you of the circumstances. We 
were on the verge of having Social Security go bankrupt. We were down 
to the point where we could not have sent out the July checks. We had a 
commission that had not reached any kind of conclusion, and under the 
leadership of Ronald Reagan we were ultimately able to get a 
recommendation to make some changes. The only real substantive change 
that the commission made and Congress adopted was changing the 
retirement age. They set out to change the retirement age over a 35-
year period where, as we recognize that people are living longer, as we 
are healthier, as we are working longer, that ultimately Social 
Security had to change.
  People forget that when Social Security went into effect in 1935 the 
average American worker did not have a life expectancy that was high 
enough that they would ever receive any benefits from Social Security. 
It was the exceptional person who lived longer than normal who ever got 
a penny out of Social Security. Our lifetimes, thank God, have grown 
tremendously since 1935 due to improvements in public health, due to 
improvements in medical care, due to improvements in nutrition, and due 
to the improvements that would come as income has risen with our strong 
free-enterprise economy and we have all been able to do a better job 
taking care of ourself and our children.
  But we raised the retirement age to 67 for Social Security--that will 
become effective in the year 2027--but we did not raise the eligibility 
date for Medicare. In this bill we make the conforming changes so that 
Social Security and Medicare will again be brought together. What it 
means is for people who were born in 1960 and who are, therefore, 37 
years old today, they will know, with 30 years to plan for it, that 
they are not going to qualify for Social Security and for Medicare 
until they are 67. So they have 30 years to plan for that change. In my 
case, I was born in 1942. So I know that if this bill is adopted, along 
with the changes that have already been made in Social Security, that I 
will not be eligible to retire until I am 65 years and 10 months old. 
So I have 11 years to adjust to the fact that under this bill I am 
going to be required and can expect to work 10 months longer.
  Now, we have a lot of people who are saying that this is 
unreasonable, outrageous, that the end of the world is going to come as 
a result of it, but this is the reality of the world we live in. We are 
healthier, we are working longer, and we are living longer. So if this 
program that we all depend on is going to be there to serve us, this is 
a change that needs to be made. I intend to defend it vigorously.
  The second change that was made had to do with asking very high-
income retirees to pay the full cost of the voluntary part of this 
program. Some people will recall that the part A of the trust fund, the 
hospital part, you pay for during your working life by paying 2.9 
percent of your wages into a trust fund, and that pay is for part A. 
Actually it is a long way from paying for it but that is the system. 
The part A section of Medicare which pays for hospital care, you do not 
pay for while you are working, you pay 25 percent of the costs of the 
part B premium. When the program was started in 1965 it was going to be 
50 percent of the costs.
  What we do under this bill is ask our high-income seniors, who as 
individuals, make between $50,000 and $100,000 a year and as couples 
from $75,000 to $125,000, to phase up that part B premium from that 25 
percent of the cost which is $526 a year to approximately $2,100 a year 
of costs, which is the full cost of that voluntary program.

  Now, again, some people will say this is an outrage, but the plain 
truth is this is a voluntary program. It is still a better buy than 
anybody can get in the marketplace. Nobody paid for this program during 
their working life. It makes no sense for my son in the labor market 
and 21 years old to be paying taxes to subsidize voluntary insurance 
for a senior who is making $125,000 a year. It is just not right. This 
is a good Government program. I note that the savings from this higher 
part B premium for very high-income seniors and from the retirement age 
change, that the savings from those two programs we do not even count 
them in this bill. They are not counted for budget purposes. We are not 
using them to balance the budget. We are not using them to fund tax 
cuts. We are simply doing them and dedicating all the savings to the 
Medicare trust fund to keep the system solvent. No one has ever done 
anything like this before in the name of trying to save Medicare.
  Finally, we did have a provision that would have used the higher 
costs for very high-income seniors as a deductible instead of as a 
payment. We have had so many questions raised about it that I have 
decided, along with others, to go ahead and simply charge the premium 
and then do a study and a test of using the deductible instead of the 
premium. I will submit for the Record two letters, one from the 
American Enterprise Institute and one from the Heritage Foundation, 
explaining why doing it where we would raise the deductible instead of 
the premium would be better and would save more money and would improve 
the efficiency of the system. The logic which seems to escape many 
people is that if I am a high-income retiree and I pay $1,577 more for 
an insurance policy, once I paid that, then the cost of medical care 
that I would then buy with that policy is totally unchanged.

[[Page S6072]]

  So all the Government did that helped Medicare was it got $1,577 out 
of my pocket and put it into the trust fund to help keep the program 
alive--good work, important work, but by doing it as a deductible, 
which I hope some day we can do when people understand it, you are 
going to get high income seniors who will be more cost conscious 
because they will be paying the first $2,100 as a deductible, and so 
they will actually be consuming medical care more efficiently, getting 
out their bills and reading them, and reporting when somebody over 
charges them. They will actually be shopping around for the best buy. 
That is what we want people to do. But this whole idea is so important, 
I don't want a new idea to threaten it.
  So I will submit these two letters for the Record. I ask unanimous 
consent that they be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                      The Heritage Foundation,

                                                    June 20, 1997.
     Hon. Phil Gramm,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Gramm: I was delighted to hear that your 
     amendment concerning the Medicare Part B deductible was added 
     to the Finance Committee bill.
       We have long argued, as you have, that raising the Part B 
     deductible for upper-income Americans is wise policy. 
     Moreover, given the choice between raising the deductible and 
     raising premiums, increasing the deductible makes far more 
     sense. While raising the premium for upper-income retirees, 
     like raising the deductible, would reduce the taxpayer-
     financed subsidy now going to people who do not need it, 
     raising the deductible would have the added advantage of also 
     significantly changing patient incentives. That would lay the 
     groundwork for long term structural reform of Medicare.
       I should add that the criticisms leveled at your amendment 
     are quite remarkable. At a time when Medicare is increasingly 
     incapable of promising continued service to lower-income 
     retirees, it seems incredible that some liberal members and 
     organizations are defending a huge subsidy to the rich. And 
     it is almost amusing to hear the claim that the amendment is 
     unworkable. We have been means-testing programs for the poor 
     for many years, but now we are told that designing an income-
     adjusted Medicare deductible for the rich is beyond the 
     capability of the human mind.
       Keep up the good work, Senator!
           Sincerely,

                                         Stuart Butler, Ph.D.,

                                       Vice President, Director of
     Domestic and Economic Policy Studies.
                                  ____

                                     American Enterprise Institute


                                   for Public Policy Research,

                                    Washington, DC, June 20, 1997.
     Hon. Phil Gramm,
     U.S. Senate,
     Washington, DC.
       Dear Senator Gramm: I would like to congratulate the Senate 
     Finance Committee on its recent action to introduce income-
     related deductibles into the Medicare program. In my personal 
     view, this proposed change is long overdue for the following 
     reasons:
       The original Part B deductible was $50. After over 30 
     years, it has only been allowed to increase to $100. If it 
     had been indexed to per capita health care costs, it would 
     today be about $1,200.
       75 percent of Part B is now financed from general revenues. 
     This means that each Medicare recipient receives a subsidy 
     from other taxpayers of about $1,700 per year. It is highly 
     appropriate that higher income Medicare recipients pay a 
     higher portion of the cost of their insurance coverage.
       The long-term reform of Medicare is not just a matter of 
     raising more revenue from payroll taxes or premiums. It will 
     require reforms that give recipients incentives to seek more 
     cost-effective providers when they need care and to avoid 
     using medical care unless it is actually needed. Higher 
     deductibles are a useful first step on the long road to 
     reform since they will give those with the greatest ability 
     to pay an incentive to use medical care more carefully. You 
     will not get these behavioral effects from higher premiums.
       Since Medigap policies impose extra costs of approximately 
     $1,000 per beneficiary on the Medicare program and reduce the 
     behavioral effects of deductibles and co-payments, I urge the 
     Congress to investigate and eventually pass reforms affecting 
     the Medigap insurance market.
       The views expressed here are my own and do not necessarily 
     reflect the views of the American Enterprise Institute or any 
     of my colleagues.
           Sincerely yours,

                                              Robert B. Helms,

                                                 Resident Scholar,
                                Director of Health Policy Studies.

  Mr. GRAMM. Madam President, I yield the floor.
  Mr. ASHCROFT addressed the Chair.
  The PRESIDING OFFICER. The Senator from Missouri is recognized.
  Mr. ASHCROFT. Madam President, I ask unanimous consent that I be 
allowed to yield 20 minutes from the majority time for purposes of 
making remarks.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.

                          ____________________