[Congressional Record Volume 146, Number 97 (Monday, July 24, 2000)]
[Extensions of Remarks]
[Pages E1304-E1305]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      INTRODUCTION OF THE MEDICARE EARLY ACCESS AND TAX CREDIT ACT

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                         Monday, July 24, 2000

  Mr. STARK. Mr. Speaker, more and more people in this country are 
losing access to health insurance. A new study by the Urban Institutes 
that the percentage of people under 65 without health insurance in 1998 
grew to a stunning 18.4 percent. And, as the study's authors highlight, 
the strong national economy is masking what would otherwise be an even 
greater problem.
  There are many approaches to solutions for decreasing the number of 
uninsured. As most of my colleagues are aware, I support the creation 
of a universal health care system in which each and every American 
would have health insurance coverage. That is the most fair, 
affordable, and sustainable solution to our national health care needs.
  However, that won't be accomplished overnight. In the meantime, there 
are steps that Congress can and should be taking to develop immediate, 
if smaller, solutions to providing people affordable health insurance 
coverage options.
  One such is to pass legislation that would provide certain groups of 
individuals the option of buying into Medicare. For two sessions of 
Congress, we have sponsored a bill endorsed by the President called the 
Medicare Early Access Act. The goal of this legislation is to expand 
access to Medicare's purchasing power to certain individuals below age 
65.
  The Medicare Early Access Act is self-financed, through enrollees' 
premiums; it is not a publicly financed program. It simply would enable 
eligible individuals to harness Medicare's clout in the marketplace to 
get much more affordable health coverage than they are able to purchase 
in the private sector market that currently exists.
  The bill would provide a very vulnerable population (age 55-64) with 
three new options to obtain health insurance:
  Individuals 62-65 years old with no access to health insurance could 
buy into Medicare by paying a base premium (about $326 a month) during 
those pre-Medicare eligibility years and a deferred premium during 
their post-65 Medicare enrollment (about $4 per month in 2005 for an 
individual who participated in the full 3 years of the new program). 
The deferred premium is designed to reimburse Medicare for the extra 
costs due to the fact that sicker than average people are likely to 
enroll in the program. The deferred premium would be payable out of the 
enrollee's Social Security check between the ages of 65-85.
  Individuals 55-62 years old who have been laid off and have no access 
to health insurance, as well as their spouse, could buy into Medicare 
by paying a monthly premium (about $460 a month). There would be no 
deferred premium. Certain eligibility requirements would apply.
  Retirees aged 55 or older whose employer-sponsored coverage is 
terminated could buy into their employee's health insurance for active 
workers at 125 percent of the group rate. This would be a COBRA 
expansion, with no relationship to Medicare.
  Today, we are here to introduce a new, improved version of this 
legislation. As we are all aware, there are new projections of vast 
budget surpluses in our Nation's future. We want to take a small 
portion of those monies and finance a new component of the Medicare 
Early Access Act. Our new bill, the Medicare Early Access and Tax 
Credit Act of 2000 supplements our previous proposal by incorporating a 
new 25 percent tax credit that would be attached to each of the three 
programs. Thus, the actual cost to taxpayers would be 25 percent less 
than the cost under the proposals in the existing bill. I join today 
with more than 50 of my colleagues to reintroduce this new version of 
the legislation.
  Affordability is a key component of expanding health insurance 
coverage. Adding a tax credit to the programs increases their 
affordability so that more people age 55 and older can take advantage 
of the program. The latest analysis from the Congressional Budget 
Office and the Joint Committee on Taxation, indicate that more than 
500,000 currently uninsured people would gain health insurance coverage 
by enactment of the Medicare Early Access and Tax Credit Act.
  The Medicare Early Access and Tax Credit Act isn't the total solution 
for people age 55-64 who lack access to health insurance coverage. 
However, if passed, it would make available health insurance options 
for these individuals at much less than the cost of what is available 
today. This is a meaningful step forward in expanding health insurance 
coverage to a segment of our population that is quickly losing coverage 
in the private sector. The Medicare Early Access and Tax Credit Act is 
legislation that we should be able to agree upon and to enact so that 
people aged 55-64 have a new, viable option for health insurance 
coverage.
  I submit a more detailed summary of the Medicare Early Access and Tax 
Credit Act as follows:


[[Page E1305]]



                Medicare Early Access and Tax Credit Act

                 Title I: Help For People Aged 62 to 65


   62-65 year olds without health insurance may buy into medicare by 
   paying monthly premiums and repaying any extra costs to medicare 
            through deferred premiums between ages 65 to 85

       Starting July, 2001, the full range of Medicare benefits 
     (Part A & B and Medicare+Choice plans) may be bought by an 
     individual between 62-65 who has earned enough quarters of 
     coverage to be eligible for Medicare at age 65 and who has no 
     health insurance under a public plan or a group plan. (The 
     individual does not need to have exhausted any employer COBRA 
     eligibility).
       A person may continue to buy-into Medicare even if they 
     subsequently become eligible for an employer group health 
     plan or public plan. Individuals move into regular Medicare 
     at age 65.
       Financing: Enrollees must pay premiums. Premiums are 
     divided into two parts:
       (1) Base Premiums of about $326 a month payable during 
     months of enrollment between 62 to 65, which will be adjusted 
     for inflation and will vary a little by differences in the 
     cost of health care in various geographic regions, and
       (2) Deferred Premiums which will be payable between age 65-
     85, and which are estimated to be about $4 per month in 2005 
     for someone that participated for the full three years. The 
     Deferred Premium will be paid like the current Part B 
     premium, i.e., out of one's Social Security check.
       Note, the Base Premium will be adjusted from year to year 
     to reflect changing costs (and individuals will be told that 
     number each year before they choose to enroll), but the 20 
     year Deferred Premium will not change from the dollar figure 
     that the beneficiary is told when they first enroll between 
     62-65--they will be able to count on a specific dollar 
     deferred payment figure.
       The Base Premium equals the premium that would be necessary 
     to cover all costs if all 62-65 year olds enrolled in the 
     program. The Deferred Premium repays Medicare for the fact 
     that not all will enroll, but that many sicker than average 
     people are likely to voluntarily enroll. The Deferred 
     Premiums ensure that the program is eventually fully financed 
     over roughly 20 years. Savings from the anti-fraud proposals 
     (introduced separately as HR 2229) finance the start-up of 
     the program and protect the existing Medicare program against 
     any loss (see Title IV).

       Title II: Help For 55 to 62 Year Olds Who Lose Their Jobs


55-62 YEAR OLDS WHO ARE ELIGIBLE FOR UNEMPLOYMENT INSURANCE (AND THEIR 
       UNINSURED SPOUSES) MAY BUY INTO MEDICARE THROUGH A PREMIUM

       The full range of Medicare benefits may be bought by an 
     individual between 55-62 who:
       (1) has earned enough quarters of coverage to be eligible 
     for Medicare at age 65,
       (2) is eligible for unemployment insurance,
       (3) before lay-off had a year-plus of employment-based 
     health insurance, and
       (4) because of the unemployment no longer has such coverage 
     or eligibility for COBRA coverage.
       A worker's spouse who meets the above conditions (except 
     for UI eligibility) and is younger than 62 may also buy-in 
     (even if younger than 55).
       The worker and spouse must terminate buy-in if they become 
     eligible for other types of insurance, but if the conditions 
     listed above reoccur, they are eligible to buy-in again. At 
     age 62 they must terminate and can convert to the Title I 
     program. Non-payment of premiums is also cause for 
     termination.
       There is a single monthly premium roughly equal to $460 
     that will be adjusted for inflation. It must be paid during 
     the time of buy-in; there is no Deferred Premium. This 
     premium is set to recover base costs plus some of the costs 
     created by the likely enrollment of sicker than average 
     people. The rest of the costs to Medicare are repaid by the 
     anti-fraud provisions (see Title IV).

 Title III: Help for Workers 55+ Whose Retiree Benefits are Terminated


  WORKERS AGE 55+ WHOSE RETIREMENT HEALTH INSURANCE IS TERMINATED BY 
   THEIR EMPLOYER MAY BUY INTO THEIR EMPLOYER'S HEALTH INSURANCE FOR 
ACTIVE WORKERS AT 125% OF THE GROUP RATE (THIS IS AN EXTENSION OF COBRA 
         HEALTH CONTINUATION COVERAGE--NOT A MEDICARE PROGRAM)

       This Title is an expansion of the COBRA health continuation 
     benefits program. If a worker and dependents have relied on a 
     company retiree health benefit plan, and that protection is 
     terminated or substantially slashed during his or her 
     retirement, but the company continues a health plan for its 
     active workers, then the retiree may buy-into the company's 
     group health plan at 125% of cost. They can remain in that 
     plan, paying 125% of the premium, until they are eligible for 
     Medicare at age 65.

                          Title IV: Financing

       Titles I & II of the Early Access to Medicare Act are 
     totally financed. Title III is not a Medicare or public 
     program.
       The existing Medicare program is protected by placing these 
     programs in their own trust fund. The Medicare Trustees will 
     monitor the program to ensure that it is self-financing and 
     does not in any way burden the existing Medicare program.
       Most of the cost is paid by the enrollees' premiums.
       Payment of start up costs: While the Deferred Premiums are 
     being collected and for any costs not covered by premiums, a 
     package of Medicare anti-fraud, waste, and abuse provisions 
     has been introduced as a separate bill, the Medicare Fraud 
     and Overpayment Act of 1999. This bill provides for a number 
     of reforms, including:
       (1) improvements in the Medicare Secondary Payment 
     provisions,
       (2) a reduction in Medicare's reimbursement for the drug 
     EPO used with kidney dialysis so that Medicare is not paying 
     much more than the dialysis centers are buying the drug for;
       (3) Medicare payment for pharmaceuticals, biologicals, or 
     parenteral nutrients on the basis of actual acquisition cost 
     rather than the average wholesale price which is often far 
     above the price at which the drug can really be purchased,
       (4) setting quality standards for the partial 
     hospitalization mental health benefit, so as to weed out 
     unqualified, abusive providers, and
       (5) allowing Medicare to get a volume discount by 
     contracting with Centers of Excellence for high volumes of 
     complex operations at hospitals which have better than 
     average outcomes.

                          Title V: Tax Credits

       Creates a new, federal tax credit equal to 25% of the 
     amount paid by an individual for any of the three new 
     programs described above.

     

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