[Congressional Record Volume 146, Number 83 (Tuesday, June 27, 2000)]
[Senate]
[Pages S5879-S5880]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          MEDICARE'S BIRTHDAY

 Mr. GRAMS. Mr. President, I come to the floor to recognize the 
birthday of one of the most important programs known to the American 
people today: Medicare. Thirty-five years ago this week, the Medicare 
program was established in order to provide timely, quality health care 
coverage for America's retirees and the disabled. Today, the Medicare 
system still serves this country well, and I believe issues relating to 
its modernization, long-term solvency, and improvement should be among 
our top priorities in this legislative session.
  The Balanced Budget Act of 1997 had a tremendously detrimental effect 
on provider payments under Medicare and on the organizations that 
deliver daily care to our seniors. The provisions in the Balanced 
Budget Act (BBA) relating to Medicare were designed to gradually help 
control costs to the program. Instead, the result has been an affront 
to organizations fighting for their existence. As a Member of the 
Senate, I meet with people daily from Minnesota who come to detail 
their concerns, their frustrations, and the impact the BBA continues to 
have on their institutions. These are institutions serving all segments 
of the healthcare industry, including inpatient and outpatient hospital 
care, skilled nursing facilities, home health care and emergency 
medical services.
  Prior to the BBA, my state of Minnesota already experienced one of 
the lowest capitation, or reimbursement rates, in the country, so the 
BBA and additional reductions in Medicare payment strategies have taken 
an enormous toll in my state. In fact, the situation has become so dire 
for so many institutions, providers and patients that the Minnesota 
Attorney General and the Minnesota Senior Federation have filed a 
lawsuit against the Department of Health and Human Services in an 
effort to restructure payment schedules and capitation rates under 
Medicare Part C, or Medicare +Choice.
  As I was working on my statement for today, I glanced across my desk 
and came across an advertisement that I think is relevant. The 
advertisement reads: ``Where Will Our Patients Go?'' It cites a new 
study conducted by Ernst & Young showing that between 1998 and 2000, 
hospital operating margins in the United States declined from 5.5 
percent to 2.6 percent, a reduction of more than 50 percent in 2000. 
During that same period, hospitals' operating margins on services to 
Medicare patients declined from 2.5 percent in 1998 to negative 0.5 
percent in 2000. Negative 0.5 percent. Translation: every Medicare 
patient that walks through the door of our hospitals and clinics cannot 
continue down this path of payment reduction while continuing to 
provide timely, quality health care services to our seniors and the 
disabled.
  I raise these issues to emphasize the measurable consequences of 
legislative efforts to date, and to outline the challenges we face when 
attempting to add a prescription drug benefit onto an already ailing 
Medicare system. That is why during the budget process, I, along with 
Senator Abraham and several of our colleagues, sent a letter to the 
budget resolution conferees requesting that language be included in the 
final report ensuring that any Medicare reforms, including the addition 
of a prescription drug benefit, would not be implemented at the expense 
of the provider payment rates that are in drastic need of restoration.

  The simple fact is that Medicare does require reform. What form that 
will ultimately take is really the question. Clearly, Congress has 
taken steps to reinvigorate Medicare since passage of BBA including: 
the Balanced Budget Refinement Act, which in a broad sense returned 
funds to hospitals for outpatient services; the Hatch bill, which 
reduced the arbitrary caps on complicated cases in skilled nursing 
facilities; and the American Hospital Preservation Act, which currently 
addresses the other half of the hospital equation inpatient services. 
But these are only band-aids applied to a system that needs 
comprehensive reform or modernization, including a prescription drug 
benefit.
  As you know, the Bipartisan Commission to Reform Medicare, under the 
direction of Congressman Bill Thomas, and Senators Breaux and Frist, 
advocated dramatic reform in order to better position Medicare in the 
future and enhance the benefits offered under the program. Their plan 
relied heavily on

[[Page S5880]]

the injection of private-sector competition in managing benefits. My 
sense is, whatever additional reforms we pursue in Congress need to 
incorporate this kind of private-sector approach. By allowing the 
private sector to compete for the business of Medicare beneficiaries, 
both the Medicare system and the beneficiaries under it would stand to 
benefit from greater choice and greater flexibility when it comes to 
meeting their health care needs.
  In fact, Senators Breaux and Senator Frist have recently drafted a 
new proposal: Breaux-Frist 2000, the Incremental Bipartisan Medicare 
Reform and Prescription Drug Proposal. The proposal calls for a new 
Medicare agency outside of the Health Care Financing Administration and 
the Department of Health and Human Services, which would administer the 
competitive relationship between traditional Medicare Fee for Service 
plans and private plans, and would include a prescription drug benefit.
  Is this ultimately the approach we should take? I do not know. 
However, I am committed to exploring efforts like these that place a 
premium on reform or modernization, while attempting to improve benefit 
levels for beneficiaries through private-sector competition.
  One of the important improvements that has received a lot of 
attention lately is the provision of a prescription drug benefit. I 
think most of us would agree that were Medicare to be developed today, 
it would include a benefit of this type. Now, I am not a 
pharmacologist, nor am I a medical doctor, so when I first introduced 
my own prescription drug plan for Medicare over a year ago, I was 
amazed at the discoveries that have taken place in this area. The most 
remarkable thing to me is that not only do many of these new, 
innovative products slow the rates of disease progression, but they 
often create measurable differences in the number of emergency room 
visits, expensive and invasive procedures, and even deaths. 
Prescription drugs today have an enormous financial impact in terms of 
reducing overall health care costs over the long term and should be 
incorporated into the Medicare system.
  To that end, I introduced the Medicare Ensuring Prescription Drugs 
for Seniors Act, or MEDS. My bill was an early attempt to heighten the 
debate surrounding prescription drugs, and at the same time provide a 
plan that would address the needs of the nearly one third of senior 
citizens in this country who currently lack any form of prescription 
coverage. We have all heard the frightening stories of the choices that 
many seniors are forced to make when it comes to paying for 
prescription drugs. Unfortunately, many of these stories have been used 
to stir the political cauldron over the past several months. But the 
reality is that making choices between food, shelter, and medicine is 
all too common among our neediest seniors. MEDS was introduced to help 
these people.

  My plan would add a prescription benefit under the already existing 
Part B of Medicare, without creating or adding any new overly 
bureaucratic component to the Medicare program. It works like this: The 
Part B beneficiary would have the opportunity to access the benefit as 
long as they were Medicare eligible. Those with incomes below 135 
percent of the nation's poverty level would be provided the benefit 
without a deductible and would only be responsible for a 25 percent co-
payment for all approved medications. I think the neediest American 
seniors who are Medicare eligible should be able to access the benefits 
of medical technology like everyone else, and while they will be 
responsible for 25 percent of the costs, I believe the benefit will 
reduce the necessity for tough decisions between food and medicine. 
Most important, MEDS has no benefit cap. This allows seniors to access 
the care they need when they need it, for as long as they need it.
  My bill also provides relief for seniors above the 135 percent 
threshold who may be facing overwhelming prescription drug costs 
because of the number of medications they take, or the relative expense 
of them, by paying for 75 percent of the costs after a $150 monthly 
deductible is met. A provision of this type, in addition to the fact 
that there is no cap on the benefit, is necessary for those who 
confront high monthly prescription costs.
  An important part of my plan is that it is not universal and will not 
displace anyone from the private insurance coverage that they currently 
have and probably prefer. Rather, it is offered to provide prescription 
coverage to those who really need it.
  Is MEDS perfect? Will it appeal to everyone? Maybe not. But it 
includes principles that I believe must be included in order for any 
prescription drug bill to hit its mark.
  In closing, Mr. President, let me say that the challenge before us 
today is to enable Medicare to shape and adapt itself to reflect the 
realities of an ever-changing health care system. After 35 years of 
endless tinkering, we have a real opportunity to make it more 
responsive, more helpful, and more attuned to the needs of current and 
future retirees and disabled persons in this country. I can think of no 
better birthday gift for a program that has served so many--and for the 
aging, baby-boom generation--than a reinvigorating shot in the arm to 
Medicare that will deliver it into the twenty-first century and keep it 
healthy for years to come. This is something to which I am wholly 
committed.

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