[Congressional Record Volume 143, Number 89 (Monday, June 23, 1997)]
[Senate]
[Pages S6084-S6093]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      BALANCED BUDGET ACT OF 1997

  The Senate continued with the consideration of the bill.
  Mr. LAUTENBERG. Mr. President, I yield to my colleague from New 
Mexico so much time as he needs to make his remarks.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, I thank the Senator from New Jersey for 
his courtesy, as always.
  Let me speak for a few moments on a motion, or amendment, that is 
going to be offered by the Senator from Illinois, Senator Durbin, the 
Senator from Rhode Island, Senator Reed, and myself. This is a motion 
to strike one provision that is in this reconciliation bill which would 
change the age at which senior citizens become eligible for Medicare. 
It raises that age from 65 to 67. Our amendment would propose to strike 
that provision from the reconciliation bill. In my view this is an 
unacceptable provision, it is very misguided, and one that we should 
not continue to keep in this legislation if we send this legislation on 
through the legislative process.

[[Page S6085]]

  Mr. President, there are no budgetary savings that would accrue as a 
result of this provision until the year 2003, after the target date for 
reaching the balanced budget. I am informed that this section would 
fall under the Byrd rule, and for that reason a vote of 60 Senators or 
more will be required to keep this provision in the bill, so I hope 
that a substantial majority of the Senate will agree with us that this 
provision should be stricken from the legislation.
  Raising the eligibility age for Medicare, first of all, is not 
necessary in order to balance the budget. The extra budget savings that 
this provision might generate are not necessary to meet any of the 
targets set by the budget negotiators in the earlier negotiation. While 
this change is described as being something that was done in order to 
bring Medicare into line with Social Security changes that were earlier 
made, there are obviously very real differences between Medicare and 
Social Security. Social Security allows an individual to receive early 
retirement benefits at age 62. Unlike Social Security, Medicare does 
not provide any other option for the retiree who wants to retire at age 
65. Either the person has insurance or they do not. To make this change 
in Medicare, I believe, would visit a real hardship on many seniors who 
have planned for their entire careers to be able to retire at age 65 
and to have Medicare available to them at that time. For us to make 
this kind of change, even though there is a long period for the phase-
in of the change, I think will be breaking faith with many of those 
Americans and many of the people in my State.
  Raising the eligibility age creates, also, the specter of a new group 
of uninsured Americans. We have spent much time in the previous 
Congress and in this Congress debating how we can cover more Americans 
with health care insurance. We have too many Americans today--in my 
State we have way too many Americans--who do not have health care 
coverage. We have talked about how to cover more children, how to cover 
more working families, how to cover more seniors before they are 
eligible for Medicare. This provision that we are going to propose to 
strike from the reconciliation bill adds to that pool of uninsured 
Americans who would be without health insurance at a very critical time 
in their careers. Essentially, it says to them that between the age of 
65, when they would normally expect to retire, and the age of 67, the 
responsibility for health care will be theirs.
  There are different groups of Americans and people have different 
circumstances. There is a large group that has no health care coverage 
in their employment. This would provide that there is an additional 2-
year period in which they continue to have no health care coverage as 
they approach their senior years. There is another group that has 
health care coverage but that health care coverage terminates at the 
time they quit their jobs. That group, of course, would have the 
financial responsibility. They would have the choice to either go out 
and buy private health care coverage, which would be very expensive, to 
cover that interim period of 2 years, or they would have the choice, of 
course, of trying to get through that period without health care 
coverage, either depending upon Medicaid or hoping against hope that 
they do not get sick and do not need medical attention.

  Of course there are others, I should point out, who have health care 
coverage and whose employers have agreed to maintain that health care 
coverage until they reach the eligible age for Medicare. Those 
individuals, of course, would continue to have health care coverage 
under their employer but the provision we are trying to strike here 
would visit a hardship on the employers in that case. The provision 
would have an immediate impact on employers right now, who provide 
health benefits to individuals until they reach the age for Medicare. 
Companies are required today, under Financial Accounting Standard 106, 
to estimate their liabilities for all future retiree health benefits. 
Companies determine the present value of their future liabilities for 
those health benefits and have to report that. These figures are 
reported as part of the financial statements the companies make. All of 
those liabilities would have to be rolled into those financial 
statements immediately upon the adoption of this provision, if this 
provision were to remain part of the reconciliation bill.
  So the change that we are proposing here not only would visit a 
hardship on the employees, the senior citizens who are ready to retire 
or who have retired, it also visits a financial hardship on employers 
and constitutes, in many ways, an unfunded mandate on the private 
sector. I am sure that issue will be discussed to a great extent by the 
other sponsors of this legislation. A higher Medicare eligibility age 
would actually create a disincentive for employers to hire or retain 
older workers, and it would also create an additional incentive, 
perhaps, for them to cut back on health care benefits at an earlier 
time.
  Mr. President, we are in the period where employers are cutting back 
on additional benefits that go with employment. That trend has 
continued, now, for some time. I do not think there is any doubt that 
it is a lower percentage. I have one figure here that the American 
Association for Retired Persons put out that in 1973, 71 percent of 
large employers covered early retirees with health care coverage. By 
last year, that proportion was no longer 71 percent, it was down to 63 
percent. Of course, that only applies to large employers. Most of the 
small employers in my State do not provide that coverage and most of 
the employees in my State, accordingly, do not have that benefit.
  Mr. President, I believe very strongly that we need to make necessary 
changes in the structure of Medicare in order to keep it solvent as we 
go forward. I support efforts to do that. I do not, though, believe it 
would be appropriate for us to try to improve the solvency of Medicare 
by reducing the number of individuals who are eligible to receive 
Medicare, reducing the pool of individuals who are eligible to receive 
those health benefits. This provision which we are trying to strike 
from the reconciliation bill has that exact effect. I hope very much 
the Senate will agree with us on this proposed amendment to strike this 
provision. I think this would substantially improve the legislation if 
we did strike this provision.
  I urge my colleagues to support the amendment when the vote is taken 
on the amendment. As I understand that will be tomorrow morning.
  Mr. President, I ask unanimous consent that five letters and a report 
on this subject be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                              National Association


                                             of Manufacturers,

                                    Washington, DC, June 16, 1997.
     Hon. William V. Roth, Jr.,
     U.S. Senate, Senate Hart Office Building, Washington, DC.
       Dear Senator Roth: The National Association of 
     Manufacturers has been a strong supporter of the May 
     bipartisan balanced budget agreement and the subsequent House 
     Ways and Means Committee markup of proposals to preserve 
     Medicare's solvency to 2007. The proposal being considered by 
     the Senate Finance Committee is nearly identical with at 
     least one major exception: conforming the eligibility age for 
     Medicare with that for Social Security, which is scheduled to 
     rise from 65 to 67 beginning in 2003. No budgetary savings 
     would accrue until that time, well after the target date for 
     achieving a balanced budget.
       Beyond the pending short-term fixes, Medicare's survival 
     depends on making long-term structural changes. Increasing 
     the eligibility age could well fall into that category and 
     should be studied along with other proposals by the Baby Boom 
     Generation Medicare Commission. Increasing the eligibility 
     age now would not contribute to a balanced budget, while it 
     would do harm to early retirees and employers who provide 
     retiree health coverage.
       Medicare currently has no option for early access to a 
     reduced benefit and, thus, a shift in the eligibility age 
     would create a major shifting of medical costs from Medicare 
     to retirees. Only about one-third of Medicare enrollees have 
     employer-sponsored retiree medical coverage, largely through 
     jobs in manufacturing, which typically pay higher wages. 
     Persons without such coverage, typically in lower-wage 
     industries, would be particularly affected and least able to 
     cope with this delay in Medicare coverage.
       On the employer side, companies now paying full medical 
     benefits prior to Medicare eligibility would have to continue 
     paying unreduced benefits for the duration of the age 
     increase. These companies would see an immediate increase in 
     their Financial Accounting Standards (FAS) 106 liability. 
     Thus, while any increase in the Medicare-eligibility age may 
     not begin to take effect for several years, the impact on 
     companies' book value would be immediate.

[[Page S6086]]

       Current proposals to increase the Medicare-eligibility age 
     contribute nothing to budget savings until 2003. Therefore, 
     we urge that this proposal be studied by the Baby Boom 
     Generation Medicare Commission with a focus on its effect on 
     early retirees, employers and the Medicare program. Should 
     such a change be recommended, the implementation date should 
     allow companies and individuals sufficient time to plan 
     accordingly for this program change.
           Sincerely,
                                              Jerry J. Jasinowski,
     President.
                                  ____


Increase in Medicare Eligibility Age Should Be Deleted From the Budget 
                          Reconciliation Bill

       Issue: A provision to increase the Medicare eligibility age 
     from 65 to 67 was included in the budget reconciliation bill 
     approved by the Senate Finance Committee. The provision is 
     identical to one which the Senate rejected during its 
     consideration of the 1995 balanced budget act. Removing the 
     provision from the current budget bill would have no scoring 
     consequences because the phase-in to the increased 
     eligibility age would not begin until 2003. However, there 
     would be an immediate adverse impact for employers which 
     provide health benefits until an individual becomes eligible 
     for Medicare. Shifting these costs from Medicare to private 
     coverage is likely to result in a reduction in health 
     benefits for active workers, retirees or both.
       Discussion: The Senate bill provision would increase the 
     Medicare eligibility age over a 24 year period to conform it 
     to the revised Social Security age. The consequences of such 
     a long term change appropriately belong on the agenda of the 
     Bipartisan Commission on the Future of Medicare, a panel 
     which would be established by both the House and Senate 
     budget reconciliation bills to make recommendations to 
     Congress on the changes that need to be made to prepare 
     Medicare for the demographic impact of the Baby Boom 
     generation.
       The provision has no scoring consequences for the current 
     budget bill because the phase-in to the new eligibility age 
     would not begin until 2003, the year after the five-year 
     period of budget reconciliation bill. However, its effects on 
     private health coverage would be immediate. Employers must 
     comply with financial accounting standard (FAS) 106 which 
     requires companies to determine the present value of their 
     future liabilities for the health benefits provided to their 
     active workers and retirees. Increases in the Medicare 
     eligibility age would result in increased liabilities for 
     employer-sponsored coverage, including those firms which 
     agree to continue coverage for early retirees until they 
     become eligible for Medicare benefits. Because FAS 106 
     standards require that companies must account for their 
     increased financial exposure immediately--even though the 
     increase in the eligibility age would take place over many 
     years--the impact to employers' bottom line would occur long 
     before the full phase-in period.
       Shifts in health care costs from the federal government to 
     the private sector can have profound and unanticipated effect 
     and are very likely to result in lower coverage for active 
     workers, retirees or both. That is why any change in the 
     Medicare eligibility age must be carefully considered and 
     compared with other long term financial and structural 
     changes needed in Medicare to prepare the program for its 
     future beneficiaries.
       Congress and the President reached an historic bipartisan 
     agreement to balance the budget by 2002 and expressly decided 
     that long term Medicare changes would be addressed only after 
     an expert panel provides much needed guidance on the best set 
     of choices to secure Medicare's future. Clearly, increasing 
     Medicare's eligibility age should be given the further 
     consideration that such a fundamental change deserves.
                                  ____



                                                        NYNEX,

                                      New York, NY, June 18, 1997.
     Hon. Daniel Patrick Moynihan,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Senator Moynihan: NYNEX urges you to delete the 
     Medicare eligibility retirement age increase from the Senate 
     Finance Committee's bill. As you know, a provision in the 
     Chairman's mark would increase the Medicare eligibility age 
     from 65 to 67. Besides public policy concerns about insurance 
     coverage for senior citizens, this provision would also have 
     a significant and immediate adverse financial impact on 
     NYNEX.
       NYNEX provides health care coverage to its employees, 
     retirees and their dependents. Our retirees receive full 
     health care benefits at retirement and supplemental benefits 
     that are integrated with Medicare once they become eligible 
     for Medicare. Under the Finance Committee proposal, NYNEX 
     would ultimately be responsible for paying for the additional 
     two years of full benefits for its retirees.
       There is also a more immediate concern. Companies are 
     required under Financial Accounting Standard (FAS) 106 to 
     estimate their liabilities for all future retiree health 
     benefits and ``book'' (recognize on their financial 
     statements) the present value of these liabilities, net of 
     any assets dedicated to retiree health. This figure is 
     deducted from earnings. As a result, responsible companies 
     providing generous retiree health benefits will be penalized 
     and viewed as less profitable compared to their competitors 
     who do not provide retiree health benefits.
       The impact of this legislation will be to discourage 
     companies like NYNEX from offering comprehensive retiree 
     health benefits to their employees.
       Changes to the Medicare eligibility age should be 
     considered in the context of overall Medicare reform. It is 
     not necessary for the Finance Committee to adopt this 
     proposal to meet its budget reconciliation commitments, since 
     the proposal does not raise any revenue over the short-term.
       Again, NYNEX urges you to delete the Medicare eligibility 
     age provision from the Finance Committee bill. This issue 
     should be considered in the context of comprehensive reform 
     to ensure all aspects of the issue, including the concerns of 
     employers providing retiree health benefits, are addressed.
           Sincerely,

                                               Morgan Kennedy,

                                                   Vice President,
     Government Relations.
                                  ____



                                                Bell Atlantic,

                                    Charleston, WV, June 18, 1997.
     Hon. John D. Rockefeller IV,
     Hart Senate Office Building,
     Washington, DC.
       Senator Jay Rockefeller: Bell Atlantic urges you to delete 
     the Medicare eligibility retirement age increase from the 
     Senate Finance Committee's bill. As you know, a provision in 
     the Chairman's ``mark'' would increase the Medicare 
     eligibility age from 65 to 67. Besides public policy concerns 
     about insurance coverage for senior citizens, this provision 
     would also have a significant and immediate adverse financial 
     impact on Bell Atlantic.
       Bell Atlantic provides health care coverage to its 
     employees, retirees and their dependents. Our retirees 
     receive full health care benefits at retirement and 
     supplemental benefits that are integrated with Medicare once 
     they become eligible for Medicare. Under the Finance 
     Committee proposal, Bell Atlantic would ultimately be 
     responsible for paying for the additional two years of full 
     benefits for its retirees.
       There is also a more immediate concern. Companies are 
     required under Financial Accounting Standard (FAS) 106 to 
     estimate their liabilities for all future retiree health 
     benefits and ``book'' (recognize on their financial 
     statements) the present value of these liabilities, net of 
     any assets dedicated to retiree health. This figure is 
     deducted from earnings. As a result, responsible companies 
     providing generous retiree health benefits will be penalized 
     and viewed as less profitable compared in their competitors 
     who do not provide retiree health benefits.
       The impact of this legislation will be to discourage 
     companies like Bell Atlantic from offering comprehensive 
     retiree health benefits to their employees.
       Changes to Medicare eligibility age should be considered in 
     the context of overall Medicare reform. It is not necessary 
     for the Finance Committee to adopt this proposal to meet its 
     budget reconciliation commitments, since the proposal does 
     not raise any revenue over the short-term.
       Again, Bell Atlantic urges you to delete the Medicare 
     eligibility age provision from the Finance Committee bill. 
     This issue should be considered in the context of 
     comprehensive reform to ensure all aspects of the issue, 
     including the concerns of employers providing retiree health 
     benefits, are addressed.
           Sincerely,
                                                      Dennis Bone,
     President and CEO.
                                  ____

                                                  Corporate Health


                                               Care Coalition,

                                    Washington, DC, June 16, 1997.
     Hon. William V. Roth, Jr.,
     Chairman, Committee on Finance, U.S. Senate, Washington, DC.
       Dear Senator Roth: We would like to bring to your attention 
     the concerns of our companies about a provision we believe is 
     included in the Senate Finance Committee Proposal for Budget 
     Reconciliation. This provision--to raise the Medicare 
     Eligibility Age--could have a serious effect on our corporate 
     liabilities and book value.
       As you know, many companies today provide their retirees 
     with health benefits. In most plans, retirees receive full 
     benefits at any early retirement age and supplemental 
     benefits that are integrated with Medicare beginning at the 
     Medicare eligibility age. Under the Senate provision, 
     companies now paying full benefits prior to Medicare 
     eligibility would eventually have to continue paying the 
     unreduced benefits for two more years.
       Companies are currently obligated under Financial 
     Accounting Standard (FAS)106 to estimate their liabilities 
     for all future retiree health benefits that may be paid to 
     active and retired workers, and ``book'' the present value of 
     these liabilities, net of any assets dedicated to retiree 
     health. These net liabilities, which are estimated today to 
     exceed $300 billion, must reflect all current law 
     requirements and existing plan provisions, even though 
     companies may be planning to make changes in their plan.
       Even though the Senate's increase in the Medicare 
     Eligibility would not begin until 2003, and then would 
     proceed gradually over the next 24 years, the impact on 
     corporate book liabilities would be immediate. Under FAS106, 
     companies would have to re-estimate their future liabilities 
     and account for any addition to their liabilities as a result 
     of this change. The impact on FAS106 liabilities would vary 
     greatly depending on the type of plan and age of work force, 
     but would

[[Page S6087]]

     range from a 5 to a 25 percent increase in FAS106 
     liabilities.
       This would create a serious financial and accounting 
     problem for companies currently operating retiree health 
     plans, and could cause many to move to limit or eliminate 
     their commitment to retirees. While there is some logic to 
     coordinating Medicare and Social Security retiree ages, we 
     ask that we take up this task after Budget Reconciliation is 
     completed and we have time to consider provisions to avoid 
     the FAS106 liability effects.
       Since we do not believe this provision contributes to 
     meeting the Budget Reconciliation instructions to the 
     Committee, we urge you to drop this provision altogether.
           Sincerely,
                                                  Ellen Goldstein,
     Chairman.
                                  ____

         International Union, United Automobile, Aerospace & 
           Agricultural Implement Workers of America--UAW,
                                    Washington, DC, June 23, 1997.
       Dear Senator: Today the Senate is scheduled to take up the 
     budget reconciliation legislation dealing with spending 
     reductions. The UAW strongly opposes this bill because it 
     incorporates a number of anti-worker, anti-senior provisions. 
     We urge you to support amendments to delete the objectionable 
     provisions; If they are not eliminated, we urge you to vote 
     against the bill on final passage.
       This budget reconciliation legislation contains a massive 
     attack on the Medicare program that would be extremely 
     harmful for the elderly and for working men and women. In 
     particular, the UAW strongly opposes the provisions that 
     would; Increase the Medicare eligibility age to 67; this 
     provision would greatly increase the number of Americans 
     without health insurance coverage; it would also impose huge 
     new costs on those employers who currently provide pre-
     Medicare retirees with health insurance coverage, and impose 
     additional pressure on these employers to drop this coverage; 
     means test the Medicare program by imposing drastic increases 
     in the Part B deductible for beneficiaries with higher 
     incomes; this provision would be extremely difficult to 
     administer, while raising relatively little revenue; in 
     addition, it unfairly penalizes seniors who are ill, and 
     would generate increased pressure to totally abandon the 
     social insurance nature of the Medicare program; impose a $5 
     per visit copay for home health care visits; this provision 
     would impose enormous costs on seniors who depend on home 
     health care; and establish a dangerous pilot program for 
     100,000 Medical Savings Accounts, which would allow insurance 
     companies to engage in skimming practices that would threaten 
     to fragment the Medicare program.
       Taken together, these provisions would undermine the social 
     insurance nature of the Medicare program, and would represent 
     the first step towards converting it into a welfare program 
     that would lack broad based political support. In addition, 
     these provisions would impose significant and unacceptable 
     new costs on many senior citizens. At the same time, the 
     budget legislation fails to provide adequate assistance to 
     low income seniors in paying their Part B premiums. It is 
     also important to note that the provisions increasing the 
     Medicare eligibility age and means testing the Part B premium 
     were approved without adequate public hearings and debate, 
     and are outside the scope of the budget agreement. For all of 
     these reasons, the UAW urges you to support amendments to 
     strike all of these objectionable Medicare provisions from 
     this reconciliation legislation.
       The UAW also opposes the provision in this reconciliation 
     legislation that would overturn the federal court decision in 
     the Pennington case. This decision prohibited the states from 
     using accounting devices to make certain groups of workers, 
     especially part time employees, ineligible for unemployment 
     benefits. By overturning this decision, the reconciliation 
     legislation would reduce coverage under state unemployment 
     compensation programs by about six percent. We urge you to 
     support efforts to strike this provision from the budget 
     legislation so that laid off workers are not denied this 
     essential assistance.
       The UAW also opposes the provisions in the reconciliation 
     legislation that would: allow Texas to privatize the 
     administration of its Medicaid and food stamp programs; this 
     represents a dangerous precedent that would allow private 
     companies to make decisions regarding the eligibility of 
     individuals for government benefits; establish an open-ended 
     block grant program to encourage the states to provide 
     expanded health insurance coverage to children; the funds 
     provided for this effort are inadequate; in addition, we 
     believe that the most cost effective way to provide health 
     insurance coverage to uninsured children would be by 
     expanding the Medicaid program; deny SSI coverage in the 
     future to elderly and disabled legal immigrants; this would 
     unfairly penalize extremely vulnerable populations who 
     genuinely need public assistance; and allow HHS to administer 
     the Welfare to Work program, while failing to emphasize the 
     importance of job training; we believe that this program can 
     be better administered by the Department of Labor; in 
     addition, the funds available under this program should be 
     made available for job training, which is critically 
     important to moving individuals off to welfare and into the 
     work force.
       Lastly, the UAW strongly urges you to oppose any amendment 
     that would exempt individuals in workfare programs from 
     coverage under the minimum wage and other provisions of the 
     Fair Labor Standards Act. As a matter of basic social 
     justice, we believe that all workers should be entitled to 
     these fundamental protections. We are also concerned that 
     this type of exception would undermine these protections for 
     other workers.
       Accordingly, the UAW urges you to support amendments that 
     would eliminate the objectionable provisions discussed above, 
     and to oppose any amendments that would further undermine 
     protections for seniors and working men and women. Unless the 
     objectionable provisions are stricken from the legislation, 
     the UAW urges you to vote against this budget reconciliation 
     legislation on final passage.
       Thank you for considering our views on this vital 
     legislation.
           Sincerely,
                                                     Alan Reuther,
     Legislative Director.
                                  ____


 [From the Association of Private Pension and Welfare Plans, June 20, 
                                 1997]

Increase in Medicare Eligibility Age Should Be Deleted From the Budget 
                          Reconciliation Bill

       A provision to increase the Medicare eligibility age from 
     65 to 67 has been included in the budget reconciliation bill 
     approved by the Senate Finance Committee. The provision is 
     identical to one which the Senate rejected during its 
     consideration of the 1995 Balanced Budget Act. While removing 
     the provision from the current budget bill would have no 
     scoring consequences because the phase-in to the increased 
     eligibility age would not begin until 2003, if the provision 
     remains, there would be an immediate adverse impact on 
     employers who provide health benefits until an individual is 
     eligible for coverage under Medicare. Shifting these costs 
     from Medicare to private coverage is likely to result in a 
     reduction in health benefits for active workers, retirees or 
     both.
       Any changes in the Medicare eligibility age must be 
     carefully considered and compared with other long term 
     financial and structural changes needed in Medicare to 
     prepare the program for its future beneficiaries and we 
     oppose including an eligibility age increase in the budget 
     package for the following reasons:
       A Long-Term Agenda Issue. The Senate bill provision would 
     increase the Medicare eligibility age over a 24 year period. 
     The consequences of such a long term change more 
     appropriately belong on the agenda of the Bipartisan 
     Commission on the Future of Medicare, a panel which would be 
     established by both the House and Senate budget 
     reconciliation bills to make recommendations to Congress on 
     the changes that need to be made to prepare Medicare for the 
     demographic impact of the Baby Boom generation.
       Immediate, Negative Effects on Employees. Because the 
     phase-in to the new eligibility age would not begin until 
     2003, the provision has no scoring consequences for the 
     current five-year budget reconciliation bill. However, 
     private health coverage would be affected immediately. 
     Employers must comply with financial accounting standards 
     (FAS) 106 which requires companies to determine the present 
     value of their future liabilities for the health benefits 
     provided to their active workers and retirees. Increases in 
     the Medicare eligibility age would result in increased 
     liabilities for employer-sponsored coverage, including those 
     firms which agree to continue coverage for early retirees 
     until they become eligible for Medicare benefits. Because FAS 
     106 standards require that companies must account for their 
     increased financial exposure immediately--even though the 
     increase in the eligibility age would take place over many 
     years--the impact to employers' bottom line would occur long 
     before the full phase-in period.
       The Costly Effects of Cost Shifting. Shifts in health care 
     costs from the federal government to the private sector can 
     have profound and unanticipated effects and are very likely 
     to result in lower coverage for active workers, retirees or 
     both. In addition, the provision would leave many individuals 
     with a costly gap in health coverage until they turn 67 which 
     would further discourage companies from providing health 
     benefits to retirees.
       Congress and the President reached an historic bipartisan 
     agreement to balance the budget by 2002 and expressly decided 
     that long term Medicare changes would be addressed only after 
     an expert panel provides much needed guidance on the best set 
     of choices to secure Medicare's future. Clearly, increasing 
     Medicare's eligibility age should be given the further 
     consideration that such a fundamental change deserves.

  Mr. BINGAMAN. I yield the floor and I suggest the absence of a 
quorum. I request the time be charged equally to both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. KERREY. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page S6088]]

  The PRESIDING OFFICER. Who yields time?
  Mr. LAUTENBERG. I yield the Senator from Nebraska as much time as he 
needs.
  Mr. KERREY. I thank the Senator from New Jersey.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, first, I would like to praise the chairman 
of the Finance Committee, Senator Roth, and the ranking Democrat on the 
Finance Committee, Senator Moynihan, as well as the chairman and 
ranking member on the Budget Committee, Senator Domenici and Senator 
Lautenberg.
  The bill we are debating right now makes a substantial contribution 
to deficit reduction. The goal of all this deliberation is to balance 
the budget by the year 2002, the purpose of which is to enable us to 
continue with an economy that is growing and continue creating jobs and 
continue the prosperity that we are currently enjoying in the United 
States.
  I am saying all this because we will be debating all kinds of reasons 
why this bill is bad, and I think it is very important for us to begin 
by saying there is a purpose here.
  We know Medicare is a very substantial program in terms of cost, and 
any attempt to balance the budget has to look at this program. Chairman 
Roth has done, I think, an exceptional job of producing a proposal that 
not only contributes to deficit reduction, but does a number of other 
things which I believe are very important.
  First of all, one of the things this bill does, in addition to 
contributing to deficit reduction, is there are a number of provisions 
that Chairman Roth and Senator Moynihan put in this bill that directly 
affect our capacity in rural America to get good health care. That has 
been a bit of a problem. There are a number of issues we have 
identified over the years, and Chairman Roth has made some changes in 
law in this bill that will benefit those of us who represent rural 
States. I would like to list some of those provisions.
  First, rural hospitals and physicians will be able to form their own 
networks, independent of larger managed care companies, and contract 
directly with Medicare on a capitated basis. These provider-responsive 
organizations would not only provide competition, but they will enable 
us to increase coverage and increase health care delivery in the rural 
areas.
  Second, the proposal is one that will increase managed care payments 
in rural areas. The increase in payments will be detailed during the 
course of this debate, but it is critical, if we are going to get 
managed care in rural areas, that the payments be increased, and 
Chairman Roth has made certain in this bill that happens.
  Third, it creates a single designation for small rural limited 
service hospitals that would be paid on a reasonable-cost basis. This 
new authority will include the current--called EACH/RPCH--demonstration 
hospitals. Once again, we have been asked by rural hospitals and rural 
providers for this provision. Chairman Roth and Senator Moynihan have 
included it in their bill, and for those of us who represent rural 
States, we are going to be able to say, correctly so, that this law is 
going to make it more likely that we are going to get good care in the 
rural community.
  Next, it allows sole community hospitals to opt for a fourth payment 
option based upon the costs from fiscal year 1994 or fiscal year 1995. 
It is a detail that I will not go into at length here today, but again 
on the ground at the community level this will make a tremendous 
difference in most States where rural health care shortages are a 
problem.
  Next, it reinstates the Medicare dependent hospital program through 
2002. This means that hospitals with less than 100 beds and where 60 
percent or more of the discharge is paid for by Medicare will be paid 
on the same basis as sole community hospitals. It is a very important 
provision. There are lots of hospitals in Nebraska sort of hanging on 
the edge with fewer than 100 beds. This will give them a fighting 
chance to survive.
  Last, it allows rural referral centers greater flexibility to receive 
payments based on rates for the nearest germane area.
  Mr. President, I just say again that this provision is one last thing 
in the bill that will enable us to say that in addition to eliminating 
this deficit that has plagued us for so many years, this proposal will 
increase the likelihood that managed care and good health care will 
reach the rural area. I thank Chairman Roth and I thank Senator 
Moynihan and Senator Domenici and Senator Lautenberg. It is a terribly 
important provision for those of us who represent rural States.
  Second, and I will not go at length in describing this, this bill 
grants authority to the Secretary of Health and Human Services to bring 
more competition into this system. Competition in my judgment will not 
solve all of the problems, but it is a tremendously useful tool to 
bring costs out of the system. It is more likely to get it done in an 
efficacious fashion. Again, Senator Roth and Senator Moynihan have 
included this in the mark. And I believe it represents substantial 
reform and important reform in the Medicare system.
  Third, this committee, the Finance Committee, again under Senator 
Roths's and Senator Moynihan's leadership, has paid attention to the 
unique problems that low-income Medicare beneficiaries face. And it can 
be a tremendously difficult problem.
  It is relatively easy for us to get caught up in all the numbers and 
presume that all we are doing is trying to find numbers savings. But 
for an individual out there at the community level, Medicare really can 
be a lifesaver.
  I have a woman in Omaha, NE, that I pulled from our file, we are 
working with at the moment, that faces some problems, a very common 
situation. A widow on Medicare, she has $610 a month in Social 
Security. She has $182 in rent subsidized through section 8. Her 
utilities and phone are $55 a month. Her Medicare part B is $43 a 
month. She has a Medigap cost on top of that. By the time she is done, 
she has $4,000 left over for everything, for food, clothing, and other 
expenses. It does not take much in the way of prescription drugs and 
additional costs for health care for her to find herself with almost no 
money left over.
  So this mark, for those of us concerned about low-income people, 
continues the dual eligibility system for Medicare and Medicaid. It 
continues both the SLMB and the QMB Programs that enables lower-income 
people to get payment. And I believe the managers' amendment will make 
it more likely that the SLMB Program will enable low-income people to 
find themselves able to accommodate the increases in premiums that will 
occur as a consequence of the shift of some home-based coverage from 
part A to part B.
  Though I would argue there is still some room for improvement, this 
bill represents a good-faith effort to acknowledge that there are low-
income beneficiaries out there who are faced with different problems 
than higher-income beneficiaries.
  There is still one out of seven Americans over the age of 65 who live 
in poverty. Medicare and Social Security reduces the rate of poverty 
from 50 percent to about 12 percent in the country. But still, for 
those 12 percent, life can be quite difficult. And I assure you, 
Chairman Roth and Senator Moynihan have paid attention to that problem 
and, I think, have enabled us to say that we have at least tried to 
make certain that low-income beneficiaries are given full 
consideration.
  The next thing that I would like to spend most of my time talking 
about is, this mark, this piece of legislation does acknowledge, as 
well, that we have long-term problems, that we cannot stick our heads 
in the sand and ignore that the Medicare Program not only promises to 
make payments for the next 5 and for the next 10 years but it promises 
to make payments for the long-term as well, promises to make payments 
especially for that baby-boom generation that will begin to retire in 
2010, 2011, depending upon when you mark the generation. It is either 
1945 to 1965 or 1946 to 1965. In that 20-year period, about 2010 to 
2030, under current forecasts, even as we have adjusted the program--I 
note there will be some that try to knock out the increase in the 
eligibility age. There will be some that try to knock out the income-
related test on part B, the copayment on home health, the $5 fee on

[[Page S6089]]

home health, and make compelling arguments. But you can only make those 
arguments persuasive if you ignore where this program is going.

  Mr. President, the current cost of Medicare represents about 10 
percent of this budget. And from 2010 to 2030, Medicare costs will go 
from about 10 percent to 35 percent of the budget. That is the kind of 
growth that we see out in the future. It is a demographic problem. And 
when you move the eligibility age from 65 to 67, in order to bring it 
into line with where Social Security is going, we are making and 
recommending an adjustment that takes into account where this program 
is going, what the future looks like out there.
  I acknowledge that there are problems when you move the eligibility 
age for people who are between the ages of 60 and 66 or 67. There is a 
problem. This legislation has in it not only a commission, but in law 
we recommend that the commission consider doing what Kerrey-Danforth 
recommended, which is to allow seniors between the ages of 62 and 
eligibility age to be able to buy into the Medicare Program. I think it 
is the sort of thing that we are going to have to consider whether we 
adjust the eligibility age or not.
  But I will give this evening--I suspect I am going to have plenty of 
opportunity to argue this when the amendment is offered to strike it on 
the eligibility age--I give this evening one set of facts. Between the 
years 2010 and 2030, the number of people in the work force will grow 
by 5 million, a 5-million-person increase between 2010 and 2030. But 
the number of people who are retiring who will be eligible for payments 
will increase by 22 million. That is a problem, Mr. President, that we 
face with our program. And we can either ignore it and say we do not 
want to make change or we can acknowledge, in order to preserve and 
protect Medicare for the long term, these kinds of changes will be 
necessary.
  The change does not impact anyone over the age of 58 today and does 
not fully impact anyone over the age of 36. I say that because I have 
already seen interviews given to current Medicare beneficiaries, people 
who are 65, people who are 70, receiving Medicare that are 
beneficiaries today, and the question is put to them, ``What do you 
think about moving the eligibility age?'' as if it is going to affect 
them. And very often again they will find themselves concerned about 
losing their Medicare, about whether or not they are going to be paying 
more for their Medicare. And there is a presumption made that this 
change is going to have an impact on them.
  Mr. President, this movement of the eligibility age is one of the 
easiest. Right along with that, a change that I believe should be made 
is to bring a new accounting to the cost of living index. We debated it 
earlier on in the year. We were not able to get it. Some objected to 
the so-called ``politicization'' of the CPI. The CPI was imposed in 
1973 for political reasons.
  I want a good formula, a good calculation. Unfortunately, we were not 
able to get that because we ended up being opposed both on the left and 
on the right. But these are the kinds of changes that are necessary to 
accommodate demographics.
  There was a piece in the New York Times Sunday magazine yesterday. I 
think it was Ben Wattenberg that made a couple of suggestions. And if 
Members want to bring that kind of suggestion to the floor, why it will 
be an interesting debate. He suggested that we change our tax and our 
spending laws to encourage Americans to have more babies or we open our 
borders and accept more people in the United States as immigrants, 
trying to increase the number of workers per retiree.
  Or one can walk to the floor if they choose to and propose a tax 
increase. Many people who have honestly evaluated this program have 
suggested that all we need to do is increase the payroll tax just a 
little bit and that will solve the problem.
  Mr. President, I intend in this debate to repeatedly point out to 
colleagues that the tax-cut provisions in this bill addresses the 
income tax. It does not address what is for many Americans the largest 
tax of all, and that is the payroll tax.
  And I have been in Nebraska many times in townhall meetings and 
talked about this movement of the eligibility age and the income-
related test on part B, which is also in the chairman's mark. And very 
often it provokes a big debate. And some do not like it.
  I say, let me just ask the audience, How many of you would support 
increasing the payroll tax? And it is rare where you will find more 
than one or two people holding up their hand, Mr. President. And the 
reason is, that for a family of four in Nebraska, earning $34,000 a 
year, husband, wife, two children, they will pay $2,719 in Federal 
income tax; they will pay $5,358 in payroll taxes, $4,300 of which is 
FICA and $1,000 of which is the Medicare tax. Mr. President, that is 
almost twice as much in payroll taxes.
  One of the reasons that we find people say to us that this system has 
to be fixed with these kinds of changes is that they acknowledge that 
this payroll tax is taking a substantial bite out of the income of the 
working families of America.
  So the bill has a change in the eligibility age. I defend it 
strongly. I intend to come down when the amendment is offered to strike 
and explain at greater length why those who are arguing to strike it 
will not help strengthen this program. I intend to argue as well, by 
the way, that I, having studied this a long time, believe long term it 
is going to be difficult for us to maintain Medicare and Medicaid, the 
VA, and the income-tax deductions as intact programs.

  I think it is going to be difficult for us to not, at some time, 
relatively soon, begin to examine once more whether or not we should 
change the law and change the way people become eligible.
  It is very revealing when you talk about moving the eligibility age, 
Mr. President. The law says if you have reached the age of 65 in 
America you are eligible for Medicare. If you can prove you are poor, 
under the law, the law says you are eligible for Medicaid. If you get 
blown up in a war, as I did, the law says you are entitled to the VA 
system. If you work for the right employer, the law says you can get a 
subsidy through the income tax system. If you work for the Government 
very often, the law says you also have a right to health care.
  Mr. President, I believe, though it may seem counterintuitive for 
those of us who have been worried about the growing cost of the 
mandatory programs and entitlements and that interest, that we need to 
consider rewriting the social contract for Federal health care and 
establishing a simplified eligibility. If you are an American or legal 
resident, you pay according to your capacity to pay. Everybody has to 
pay the true cost of health care.
  We ought to allow competition to control the cost. And we ought to 
allow consumers to get far more information about what the health care 
system is both doing for them and sometimes doing to them.
  I think it is very difficult for me to stand here and say that we can 
preserve Medicare as an intact program unless some demographic change 
occurs between now and 2010.
  I believe it is inescapable you look at these kinds of choices, 
otherwise you are basically going to prolong the due date and at some 
point we are going to be facing choices that are far more difficult 
than the choices that are being presented by the committee in this 
budget.
  Mr. President, another change that we have in this proposal is a 
change that says that we are going to make the Medicare part B more 
progressive than it currently is by asking Americans who have higher 
incomes to pay more, to be subsidized less, in short, by Americans with 
lower income for that part B premium.
  Initially, Senator Gramm of Texas and I, who worked on this proposal, 
had an offering that we would use the deductible as a basis for change, 
in short, that we were going to try to affect utilization. It got a bit 
confusing. And as a result of that confusion, both he and I have agreed 
to change it so that it will be an adjustment in the part B premium for 
Americans under $50,000 a year. They will not be affected at all. 
Roughly 94 percent of beneficiaries are somewhere in that range. It 
does not fully affect any individual under $100,000. We phase the 
subsidy out over $100,000 for an individual and $125,000 for a couple.

[[Page S6090]]

  I appreciate the sacred nature of Medicare, but nowhere do I find it 
persuasive that we ought to ask people with lower incomes to subsidize 
people of higher incomes. Very often the people of lower incomes do not 
even have health insurance. They are struggling to pay the cost of 
health care themselves out of pocket, and part of their taxes--again, 
the larger share of their taxes coming from payroll taxes being 
delivered to pay the health care of individuals with a capacity to be 
able to take care of themselves.
  I do not believe this challenges the Medicare system. I do not 
believe it is a slippery slope to destroying Medicare. I believe it is 
consistent with what Medicare attempts to do, which is to say that the 
market will not provide insurance for all of our citizens, that we have 
to, on a progressive basis, write a law that enables us to do that. 
This change will make the system more progressive, not less. I 
emphasize that.
  For all those who will come to the floor and argue that this package 
is not sufficiently progressive, they will find themselves, in my 
judgment, turning their arguments inside out in proposing this test of 
income on part B. How can you defend a change, a simple change at a 
relatively high income, Mr. President, $100,000 for an individual and 
$125,000 for a couple? Mr. President, this is a substantial first-step 
change, once again, to acknowledge that we have a long-term problem 
with Medicare, and we are going to have to begin to make more difficult 
choices if we want to arrive out there in the future and say we have 
solved future problems as well.
  Very importantly, under this change, we did not do it for budgetary 
reasons. Neither the move of the eligibility age nor the change in part 
B premiums has been done in order to generate budget savings. Indeed, 
the revenue that we get from the part B premium will go into the health 
insurance trust fund, strengthening the health insurance trust fund. We 
have not had it scored. We are not using it to pay for other things. We 
are using it to strengthen the Medicare Program and, as I say, to make 
the program more progressive.
  Mr. President, finally, as we go through this debate, I intend to 
repeatedly come to the floor and call to my colleagues' attention 
another terrifying fact. People come and they will argue, well, in 1965 
when we passed Medicare, we intended the following--and whatever it is 
that the colleague wants to offer in opposition to either moving the 
eligible age or in opposition to putting an income test on part B, will 
suggest there was something in 1965 that caused us to say we would do 
something and never come back and change it. There have been lots of 
changes that have occurred since 1965.
  I will in the midst of the debate have plenty of opportunity to go 
through many of those changes that I think dictate that we change the 
program again. The one that is the most impressive of all is that in 
1965, 30 percent of the Federal budget went to mandatory programs. That 
is entitlement programs plus net interest, and 70 percent of our budget 
went to discretionary spending. Mr. President, in the year 2002, when 
this budget agreement ends, we will have exactly the opposite--70 
percent will be mandatory spending and 30 percent will go to 
discretionary. It does not stop there. It will continue to grow until 
100 percent of the budget is mandatory, until we have converted the 
Federal Government into an ATM machine, collecting taxes and merely 
transferring back out.
  Mr. President, for all those who care about investing in our future, 
who want to invest more in education, who are concerned about 
productivity, we have all kinds of other things we believe this Nation 
needs to be addressing, unless we come to grips with the growing cost 
of mandatory programs, it will be impossible for us to do all the 
things that most of us would like to do in order not only to make our 
country fair but also to make our country more prosperous and 
productive.
  I believe the legislation that Chairman Roth and Senator Moynihan 
have presented to the chairman of the Budget Committee, Senator 
Domenici, and Senator Lautenberg, the ranking member, is a fair 
proposal. It will enable us to say we will balance the budget by the 
year 2002. It is more progressive than the current law, taking greater 
account both of low-income Americans as well as upper-income Americans' 
capacity to pay. It is a terrific package that will enable us in rural 
America to increase the quality of care that we see our citizens 
getting. It moves more toward a competitive model, not only giving 
Health and Human Services more power, but giving consumers more power 
by giving them the data and the information that they need to make 
choices. There is substantial reform not just for budgetary reasons but 
for the purpose of improving the quality of this program that has been 
so enormously beneficial for our country.
  I appreciate the opportunity to work with the chairman and the 
ranking member, Senator Moynihan, and I look forward to the opportunity 
of returning to the floor to debate some of the specific amendments 
that are offered.
  I yield the floor.
  Mr. LAUTENBERG. Mr. President, I yield 20 minutes to the Senator from 
Illinois.
  Mr. DURBIN. I thank my colleague from New Jersey for yielding.


                         Privilege of the Floor

  Mr. DURBIN. Mr. President, I ask unanimous consent that Ann Marie 
Murphy of my staff be accorded privileges of the floor during debate on 
S. 947.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. Mr. President, let me say at the outset I want to 
acknowledge the leadership role that has been played by my colleague, 
the Senator from Nebraska, who preceded me on the floor. He is calling 
on us as Members of the Senate and the House to face the reality that 
entitlement programs need reform. Senator Kerrey has oftentimes been a 
lonely voice in that effort. It is not altogether a popular position to 
take and yet it is necessary. I admire him for his leadership and his 
candor, and I think that we in the Senate should heed his advice that 
we must resolve ourselves into the business of addressing the needs of 
these entitlement programs--Social Security and Medicare in 
particular--on a long-term basis.
  What I am about to speak to today in no way should reflect on Senator 
Kerrey's effort or the effort of others for meaningful reform with 
Medicare. But the issue which I address is one included in this 
reconciliation bill which I feel is fundamentally wrong and 
fundamentally unfair. It is a provision which is included in this bill 
which would over a period of time raise the eligible age for Medicare.
  By way of background, many years ago we raised the eligibility age 
for Social Security. The reason the people still think in terms of 
Social Security eligibility at age 65 is that this change to age 67 
will be implemented during a transition period from the years 2003 to 
2027. It is a gradual change adding, over 24 years, 24 months before a 
person can be eligible for Social Security. During the course of its 
deliberations, the Senate Finance Committee entertained a motion by my 
colleague from Texas, Senator Gramm, to add an amendment which would 
increase the eligible age for Medicare from 65 to 67. It is said in the 
report of the Finance Committee--and I am sure this reflects the nature 
of the debate--that an attempt was being made to find some symmetry 
between the increase in eligibility age for Social Security and the 
increase in eligible for Medicare. If there is any parallel or any 
symmetry between these two programs it is only that they both serve 
elderly Americans, and there it ends. I think we should view this 
suggestion of raising the eligible age for Medicare from 65 to 67 in 
the context of the people who are affected.
  This package that raises that age to 67 for Medicare literally 
reneges on our promise to provide Medicare to seniors at the age of 65. 
There is no budgetary impact in this provision. There is no money to be 
saved, because whatever is going to be saved, if it is ever 
implemented, will not occur until the next century, far beyond the 5 
years when we measure the impact of this bill.
  This change does not parallel the Social Security change which I 
described. Individuals have the ability now to begin their Social 
Security benefits at age 62. Of course, those benefits are diminished, 
but should a person reach that point in life and say, ``I'm ready to 
retire. I do not want to wait until 65. I have talked it over with my 
spouse.

[[Page S6091]]

 I'm going to retire at age 62.'' It is perfectly legal. They can do 
it. The Social Security benefits start flowing to their family based on 
what they have paid in.
  There is no corresponding option for Medicare. Medicare begins at 65. 
Unless you are disabled and thereby qualify for Medicare, you cannot 
touch this program until you are age 65.
  Currently, 1.6 trillion individuals in America between the ages of 55 
and 65 are uninsured. How do people find themselves in this 
predicament? Well, I bet you everyone listening, those viewing, can 
probably think of someone in their family or a friend who reached that 
situation. I have a situation in my own family, a person who had worked 
for years and years for a major company and decided he would retire at 
age 60 and the company said, ``Well, here is your watch. Here is your 
package of benefits. Good luck in your retirement.'' Within 12 months 
they notified him there had been a change in the program, and no longer 
would they offer health insurance to him as a retiree. His recourse? 
None, zero, no place to turn. Age 60, retired, out of work, no health 
insurance. Then the trouble began for him personally, heart problems, 
leading to serious heart surgery. He literally put his life savings 
into his medical care and counted the days until he reached the age of 
65. He had been critical of a lot of ``big government'' and big 
government programs, but now a big government program was coming to his 
rescue and his family's rescue. He finally made it and reached age 65 
and reached eligibility.
  Is this an isolated case of one person who did not have good luck 
when he retired? I am afraid not. A 1997 Commonwealth Fund study 
indicates in 1994 only 30 percent of retirees had health insurance from 
a previous employer, compared with 44 percent in 1988. The trend, 
unfortunately, is in the direction of uninsured people at the age of 60 
and beyond. Even coverage by larger employers has declined. In 1993, 71 
percent of large employers provided coverage. But then again by 1996, 
this figure had dropped to 63 percent. Many retirees, incidentally, do 
not retire voluntarily and may not have much chance of future 
employment. Private insurance for this group of seniors is very 
expensive.

  In my home State of Illinois, I checked in the city of Chicago, and 
the average cost of health insurance for a healthy male age 60 to 64 is 
$6,520--healthy male. What if they had a preexisting condition, a 
serious medical condition? The cost goes up over $10,000 a year. You 
are retired, you are going fishing, you are taking it easy, all of a 
sudden, no health insurance. Where do you turn? You just had a 
diagnosis that says you have a medical problem--$10,000 a year and you 
wait, counting the days until you are eligible for Medicare.
  This bill does not help seniors. This bill does not help retirees. 
This bill does not help working families, and this provision is totally 
unfair. If we lived in a country where everyone had health insurance, 
universal health coverage and you did not have to worry about whether 
you lost it through changing a job or retirement, that is one thing, 
but we do not live in that nation. We live in a country where any one 
of us with the loss of a job could be vulnerable to no health insurance 
coverage, and the suggestion of the majority that we raise the 
eligibility age for Medicare leaves more people vulnerable--vulnerable, 
of course, to the cost of health insurance if they can buy it.
  That is why I oppose this provision and why I will make a point of 
order when I have concluded these remarks. I yield for debate only to 
my colleague, Senator Reed.
  Mr. REED. I thank the Senator from Illinois for yielding. I join him 
in my opposition to this provision in the bill. I also have great 
respect and regard for Senator Kerrey, the primary sponsor of this 
provision. He has courageously identified many issues with respect to 
Medicare and has provided great insight, but in this particular 
situation I believe that to raise the eligible age for Medicare is 
going in exactly the wrong direction. It forgets why we created 
Medicare in the first place in the mid-1960s.
  The overwhelming reality was that seniors at that age could not get 
health care. That is why the Government stepped in. Private insurance 
companies were unwilling to sell insurance to those people at any 
reasonable price. Many things have changed since the mid-1960s--the 
demographics of our population, the efficacy of a health care program, 
the longevity of our citizens--but one thing has not changed, and that 
is the unwillingness of private insurance to step in and provide 
affordable and accessible health insurance to seniors.
  Today, 13 percent of the 21 million people aged 55 to 64 lack health 
insurance, and by adopting this provision we will simply add to that 
number because, now, from age 65 to 66, they will not have access to 
the Medicare system. Therefore, we have to, I think, maintain a 
situation where the Medicare system begins at age 65.
  Indeed, I hope that we will endeavor to try to develop programs that 
would broaden the base of health care insurance for all Americans. It 
is quite disturbing to listen to the statistics cited by my colleague 
from Illinois, and to point out that many, many companies are now no 
longer insuring, as a matter of routine, their employees and, 
consequently, the percentage of insured Americans, particularly in the 
later years of their work life, is declining. We would add to that 
precipitous decline by adopting this particular amendment.
  Indeed, also, we have to understand that the majority of Medicare 
beneficiaries between the ages of 65 and 67, who would be affected by 
this amendment, have incomes below $30,000. They certainly would not be 
in a position to pay a $10,000 a year private insurance premium, as is 
evident in some States, like Illinois. Often they are single, poor, 
unemployed. They would have no recourse. And this is not the way to fix 
the Medicare system--by denying health care insurance to people, by 
essentially pushing them out of the system of health care with the idea 
that we will somehow stabilize and increase the longevity of our health 
care system.
  There is another aspect of this that should be studied much more 
deeply before we embark on such a change; that is, many employers have 
provided health care benefits to their employees until they reach the 
Medicare age of eligibility. As a result, if we were to push back the 
eligibility table, we would require corporations throughout this 
country to immediately recognize, because of accounting rules, an 
increase in their liability, a significant increase in their liability. 
This could force them to rethink their overall health care strategy to 
accelerate the decline of health care not only for seniors but for 
working Americans, as companies simply say, ``we can't afford to 
shoulder this burden any longer.'' As a result, we also, I think, have 
to recognize the significant impact this would have on the application 
of health care insurance throughout our society. As one employer wrote 
to me, ``The impact of this legislation will be to discourage companies 
from offering comprehensive retiree health benefits to their 
employees.''
  I think we have to be very careful and thoughtful about how we reform 
Medicare. We all want to stabilize the system, to ensure solvency. We 
can do that without adopting this amendment. To move away from a 
guarantee of health care for seniors, beginning at 65, is a retreat 
that I don't think we should make and I don't think we have to make. 
Therefore, I join my colleague from Illinois in objecting to this 
provision of the bill before us today. I thank the Senator and yield 
back my time.
  Mr. DURBIN. I thank my colleague, the Senator from Rhode Island, for 
his remarks. I want to really follow up on one of his last points. I 
say to Senator Reed, I have in my hand a letter signed by some 80 
businesses and business organizations objecting to the increase in the 
Medicare eligibility age from 65 to 67. These are not just a few odds 
and ends when it comes to the business profile of America. We not only 
have a letter signed by the U.S. Chamber of Commerce, but also the 
National Association of Manufacturers, companies like ARCO and Bell 
Atlantic, Chrysler Corp., Ford, General Motors, and the list goes on 
and on. Making the point my colleague from Rhode Island made, they have 
already made a commitment to their employees and it is this: We will 
protect you with health insurance as a member of our family, our 
corporate family, after retirement until

[[Page S6092]]

you are eligible for Medicare. Now, if we raise the Medicare 
eligibility 2 years, these companies having made that commitment have a 
new liability that they had not anticipated. It is not only a cost but 
a disincentive to these and other companies to make that kind of 
promise. That is the real world. For people to see the simple symmetry 
between Social Security and Medicare--oh, it is going to 67 by the year 
2027 on Social Security, and let's go to 67 for eligibility on 
Medicare--is to overlook the real world that people live in. The 
employees who are faced with troubling medical conditions late in their 
lives who may not have health insurance coverage, who cannot afford to 
buy it at that point in their lives, where are they? Who speaks for 
them in this Chamber? Who will stand up and say that these people 
deserve protection and coverage? Well, we have it today--at least 
beginning at age 65.
  I hope that, in the name of balancing the budget and having some 
budget impact in the next century, we will not throw away a basic 
commitment to those in our country who have worked so long and so hard. 
I will be making a point of order at this point in the debate, unless 
others would like to speak.
  Mr. REED. If the Senator will yield one more time. The fact is that 
this will create a significant system impact. For example, private 
companies may change their insurance packages, et cetera. There is 
another impact, also. In this country, sick people--and I hope in this 
country they will still get care someplace. As a result, without the 
Medicare Program, they will be thrust upon the hospitals for 
uncompensated care and thrust upon--if they are low-income citizens--
Medicaid programs or special programs at the State level. So as we hope 
to save at the Federal level, we very well may generate other costs, 
and perhaps larger costs, at local-State levels and in other insurance 
programs. So, essentially, our commitment to Medicare, I feel, should 
be maintained. I, again, concur with the Senator and thank him for 
yielding me this time to further comment.

  Mr. DURBIN. I thank my colleague. Senator Barbara Boxer of California 
and Senator Tom Harkin of Iowa could not be here for this debate, but 
they wanted to have their names joined in support of our effort.
  In conclusion, I will say that my colleague from Rhode Island brings 
home the conclusion to this debate; that is, if we shirk our 
responsibilities to these working families, if we walk away from a 
Medicare promise of over three decades, we will end up with people in 
unfortunate circumstances, many of them sick, presenting themselves for 
care without any health insurance, without Medicare. Of course, most 
hospitals and most health care providers in this country will do their 
best to treat them anyway. Then the cost of that care will be borne by 
everyone, borne by those who pay into insurance and those Government 
programs that insure, as well. Unfortunately, people wait until they 
are in acute and critical conditions before they come to a hospital 
under those circumstances. Then the care is more costly, and many times 
they sacrifice their health and their lives. In the name of balancing 
the budget, let us not include a provision raising the eligibility for 
Medicare that creates such a disadvantage and such pain and suffering 
for so many working families across America. This is not an idea whose 
time has come. This is an idea that should be shelved until our 
commission working on the future of Medicare can come up with sensible 
suggestions that really reflect the reality of the world that many 
seniors face today.
  Mr. President, at this point, I understand that before I make my 
point of order I must ask that all pending amendments be laid aside. I 
make that request.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                             Point of Order

  Mr. DURBIN. Mr. President, I raise a point of order that section 5611 
of the bill, S. 947, contains provision that produces no change in 
outlays or revenues during the required period of time and therefore 
violates section 313 (b)(1)(A) of the Congressional Budget Act of 1974.
  Mr. ROTH. Mr. President, pursuant to section 904 (c) of the 
Congressional Budget Act of 1974, I move to waive the point of order, 
and ask that debate on the waiver be postponed until tomorrow following 
any votes ordered for tomorrow morning.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. DURBIN. Mr. President, I ask for the yeas and nays on the 
Senator's motion to waive.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. ROTH. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. LAUTENBERG. 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. KENNEDY. Mr. President, the reconciliation bill before us today 
seeks to raise the age of eligibility for Medicare from 65 to 67. If we 
allow this increase to remain in the bill, we will be breaking a 
compact made with millions of future beneficiaries. For 32 years, we 
have said to working Americans ``pay into this program and we will 
provide you with health security at age 65.'' During the drafting of 
this bill, however, this promise was callously and capriciously cast 
aside.
  Proponents will claim that they are merely conforming the eligibility 
age for Medicare to that of its sister program, Social Security. Yet, 
the manner in which we are approaching this change and the final 
outcome differ dramatically and dangerously.
  First, it is important to note that the change in the age of 
eligibility for Social Security, which begins to rise in 2003, was 
enacted in 1983. Therefore, individuals affected by the Social Security 
change will have had a minimum of 20 years to adjust their retirement 
planning. By changing Medicare at this late date, we are giving future 
beneficiaries only 6 years notice to absorb in their retirement 
planning a change that could eat up a significant portion of their 
retirement income, should they actually be able to purchase insurance. 
It could also bankrupt them, if they are forced to go without insurance 
and suffer a devastating illness.
  Second, under Social Security, individuals will still be able to 
receive reduced benefits at age 62, the age of early retirement, if 
they choose to retire before they are eligible for full benefits. Under 
this proposal, however, senior citizens will be unable to receive any 
Medicare benefits until they reach the new age of eligibility.
  A delay in eligibility for Medicare could throw millions of senior 
citizens into the ranks of the uninsured. Unless we are willing to 
enact simultaneous insurance reforms to guarantee access to affordable 
and comprehensive coverage for this group, these senior citizens will 
be forced to forgo health security in their retirement.
  In 1992, employer-related retiree health plans paid for only 6 
percent of health expenditures for persons over age 65. There is no 
reason to expect this number to increase. In fact, many employers are 
now reducing or canceling retiree health coverage for both early 
retirees and Medicare-eligible retirees. According to one study, in 
1988, 62 percent of firms offered retiree coverage to those under age 
65, and 55 percent offered benefits to those eligible for Medicare. In 
just 4 years, by 1992, the numbers of firms offering retiree health 
coverage had dropped nearly 10 percent in both categories--to 52 and 46 
percent, respectively.
  Members of the Corporate Health Care Coalition have ominously issued 
a warning that this provision could hasten the loss of employer-
sponsored coverage. In a letter of June 16, 1997, they state that 
raising the eligibility age ``. . . could cause many [companies] to 
move to limit or eliminate their commitment to retirees.''
  It is difficult to know why the Finance Committee proposed this step, 
since it does not contribute a single penny toward their reconciliation 
instructions. A change of this magnitude deserves careful study and 
planning. The age of eligibility is precisely the type of issue that 
ought to be considered by the National Bipartisan Commission on the 
Future of Medicare, which this bill will create. To change the age of 
eligibility suddenly, on the

[[Page S6093]]

spur of the moment, on this reconciliation bill, is an unwise, 
unfortunate, and unnecessary attack on all senior citizens.
  The provision also violates the Byrd rule because it does not affect 
spending within the budget window. We eliminated this proposal 2 years 
ago, and Senator Durbin's point of order should strike it from the bill 
again.
  Mr. LAUTENBERG. Mr. President, I rise to support removing the 
provision on the increase in Medicare eligibility. I would like to see 
that removed. This provision, as we all know, calls for increasing the 
eligibility age for Medicare from 65 to 67.
  Throughout our negotiations on the bipartisan budget agreement, there 
was no serious discussion--none--of increasing the eligibility age for 
Medicare. And, if there was, even the most casual discussion didn't 
wind up in the bill. So it wasn't believed in the contentious review 
that it would be appropriate. Nor has this issue been the subject of 
hearings or serious debate in the 105th Congress. There is nothing in 
the budget resolution that calls for dealing with the issue, as I said.
  Nevertheless, the bill before us would increase the eligibility age 
for Medicare and would do so without protecting the seniors aged 65 and 
66 to make sure that they will have access to affordable health 
insurance as they age. Typically corporations now have men aged 65 to 
offer retirement in many cases, and that is the vulnerable age. If 
there is an illness that befalls someone or they run into economic 
differences during that period of time, that is a very harmful 
experience. I think it would be a serious mistake to do that without 
making certain that the those aged 65 and 66 are protected.
  Before going further, I want to acknowledge that the Senators who are 
responsible for this proposal are trying in good faith to confront the 
long-term problems facing the Medicare Program. They deserve real 
credit for that. I, too, would like to have a comprehensive review on 
Medicare.
  I think we have made a good first step back when we finally had the 
policy behind the development. That was to add years of solvency to the 
Medicare Program while we engaged in a comprehensive review. So this is 
not the time, frankly, nor the place on our agenda to do that. So I 
disagree with their approach.
  My concern is that if we simply exclude 65- and 66-year-olds from 
Medicare, what do these folks do? At that age private health insurance 
can be prohibitively expensive, if it is available at all. Without 
Medicare, these people may have nowhere else to turn.
  Mr. President, I point out that more and more businesses are dropping 
health insurance coverage for their retirees. The trend has been 
accelerating in recent years, and it may well continue into the future.
  I know lots of people who face retirement who want to engage in a 
business or continue to work productively. But in almost no case can 
they be assured that they are going to get private health insurance to 
take them over if they wanted to go beyond Medicare protection. So 
private insurance doesn't look like it is a real course for those in 
that 65-66 category.
  It is a frightening prospect. I have never heard so many 
conversations from people about their concerns about health insurance. 
It is a continuing subject. Notice that in job opportunities very often 
the health insurance discussion is no longer one that is available. 
Lots of small companies can't afford to provide it, and they don't.
  So people are worried about the prospect of bankruptcies as a result 
of a catastrophic illness, about being put out on a limb and not 
getting the coverage that they need. We know that hospital services in 
this area are expensive. We also know that there has been a major 
change in the psychology of our society; that is, people in their 
sixties no longer expect to be put out to pasture. They can do lots of 
good things. Take it from an expert here, they can do lots of good 
things. And they want to know that their health is protected.
  So it is a scenario that could face millions of Americans if we are 
not careful.
  If the Congress decides, Mr. President, that the Medicare eligibility 
age should be changed, there are ways to protect senior citizens in the 
process. Some have suggested allowing uncovered seniors to pay a 
reasonable premium in return for Medicare coverage. Others have 
suggested subsidizing private insurance or other options.
  I am not advocating any single program at this point. My focus is 
that we should not pull the rug out from millions of Americans without 
ensuring that they have at least a basic safety net.
  I also believe that a fast-track reconciliation bill is the wrong 
vehicle to be considering a fundamental change like this. For those who 
are not familiar with our terminology, ``fast track'' means get it 
done, try to zip it through the place--not undercover but to try to get 
it done. The reconciliation bill is one that kind of commands an 
enforcement mechanism for achieving the objectives that we set out for 
ourselves--in this case the balanced budget by the year 2002, to try to 
extend the solvency of Medicare, take care of legal immigrants who 
are here, to provide insurance coverage for children that are not 
ensured.

  Those are the missions that we encompass in this bill. They were 
negotiated over a long period of time--several months. They were very 
difficult negotiations--difficult not because we were at each other's 
throat but because we tried to deal with reason and thought and arrived 
at a consensus that would take care of most of the needs that we 
provide for our citizens, including a massive infusion into our 
education programs to provide young people with opportunities for the 
future, and again to protect senior citizens who are perhaps 
impoverished and can't afford increased premiums. Suddenly this is a 
new factor introduced from the Finance Committee which is an amendment 
to the basic bill.
  In addition to the limit on amendments to the reconciliation, it 
would be very difficult even for Senators to consider fully various 
options.
  The proponents of rating the eligibility age in this bill argue that 
we must act now to give Americans adequate notice about a change that 
is coming in the future. However, I would note that this bill includes 
a commission to look at the long-term issues involving the Medicare 
Program. The commission is required to report within 1 year of this 
bill's enactment. If the commission determines that a delay in the 
eligibility age is required, Americans will have plenty of notice about 
that possibility to be able to respond with their community and with 
their organizations. They will be able to send in considered opinions. 
I think we must do that.
  So I hope that my colleagues will support the effort to remove this 
provision from the reconciliation bill. It would be wrong to leave 
older Americans without health care coverage. We certainly shouldn't do 
so on something that is going to move as rapidly as this is without an 
opportunity for having adequate public input and a full debate.
  So, Mr. President, again I salute the effort of those who are 
offering the change because they think that it is essential for the 
solvency and for the long-term survival of Medicare. But, on the other 
hand, if it is that important and that crucial, then we ought to make 
sure that we allow enough time and allow enough review to make certain 
that the step we are going to choose is the correct one.
  Mr. President, I see nothing is going on at this moment. I therefore, 
note the absence of a quorum, and I ask that it be charged to both 
sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The bill 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.

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