[Congressional Record (Bound Edition), Volume 145 (1999), Part 20]
[Senate]
[Pages 29116-29118]
[From the U.S. Government Publishing Office, www.gpo.gov]



                            MEDICARE REFORM

  Mr. BREAUX. Mr. President, I take this time with my distinguished 
colleague, Senator Frist from Tennessee, and our distinguished 
colleague, Senator Bob Kerrey, who served with me on the National 
Bipartisan Commission on the Future of Medicare, to offer what I think 
is the first ever comprehensive Medicare reform bill to be introduced 
since the advent of Medicare back in 1965.
  We introduced a bill today. It is available for consideration by our 
colleagues. I hope this legislative effort becomes the marker for 
future discussions and debate on the question of what we do with 
Medicare. We introduced the bill today because we think it is 
absolutely essential that the Congress in this session take up the 
question of how to reform the Medicare Program that is currently 
serving 40 million Americans.
  We did it essentially for two reasons. First of all, the program that 
the seniors now benefit from is not nearly as good as it should be nor 
nearly as good as it can be. Medicare today is noted more for what it 
does not cover than for what it actually covers. As an example, it does 
not cover prescription drugs; it does not cover eyeglasses; it does not 
cover hearing aids--three examples of things our seniors need and need 
very desperately.
  So in addition to not covering these items, it does not cover a 
number of other expenses, including about 47 percent of the expenses 
for seniors who are

[[Page 29117]]

not covered by Medicare insurance. They have to go out and buy 
supplemental insurance. So the program is not nearly as good as it 
should be, nor as good as we could make it.
  The second reason we have introduced it is because, as bad as the 
program is, it is going broke. By the year 2020, one-half of all the 
revenues to fund the Medicare program are going to have to come out of 
general revenues. It was never intended to come out of general 
revenues. It was supposed to be paid from the payroll tax. But, by 
2020, over half the costs of the program are going to have to come from 
general revenues. In addition, by the year 2015, the program is going 
to be insolvent. It is going to be broke. There is not going to be 
enough money to pay for the benefits the seniors currently get.
  For those two reasons, we have built on what the Medicare Commission 
recommended, expanded on it, and improved upon it, to present to our 
colleagues the first ever comprehensive Medicare reform bill.
  Basically, building on the Federal Employees Health Benefits Plan, we 
are saying about the plan that I, as a Senator, have, and what all of 
our colleagues and all the House Members and the other 10 million 
Federal employees have, is if it is good enough for them, it should 
also be good enough for our Nation's seniors.
  What we have suggested is we pattern a new Medicare program based on 
the Federal employees plan. We would create a Medicare board, which 
would be appointed by the President, confirmed by the Senate, for 7-
year terms. They would guarantee all the plans being submitted to serve 
our seniors would ensure quality standards. They would negotiate the 
premiums. They would approve the benefits package. They would make sure 
there are safeguards against adverse selection of only healthy seniors. 
They would provide information to our seniors.
  This Medicare board would call upon the existing health care 
financing authority and all private groups such as insurance 
companies--whether it is an Aetna or a Blue Cross--all of these who 
want the privilege of serving the Medicare beneficiaries would have to 
compete for the right to do so. They do not do that today.
  We would say to all these people who want to serve Medicare 
beneficiaries, they have to offer at least as much as what Medicare 
pays for today, at least as much but hopefully a lot more. We would 
require every group that wants to sell health insurance to Medicare 
beneficiaries to have to compete for the right to do so, compete on the 
price they request seniors to pay, and compete on the quality of 
service they make available to seniors.
  In addition, every one of these plans would have to offer a high 
option plan which would contain a prescription drug plan. Prescription 
drugs today are as important as a hospital bed was in 1965, and maybe 
even more so because prescription drugs keep people out of hospitals. 
They keep people out of nursing homes. They make their lives better and 
the quality of their lives better than it would be, were they not 
getting prescription drugs.
  So every one of these single plans would have to offer a high option 
plan and they would have to make that a prescription drug plan with an 
actuarial value of at least $800 per year, which would be indexed to 
the increase of costs of prescription drugs annually.
  They would also have a stop-loss guarantee which simply means no 
senior would ever have to pay more than $2,000 out of their pocket.
  We think, in essence, what this plan would do is bring about 
substantive, real reform to a 1965 model program which simply is not 
working as we move to the 21st century. We cannot continue to tinker 
around the edges. We need complete, total reform of the Medicare 
program. If we do that, then we can start talking about adding other 
benefits such as prescription drugs, which I think are very important 
and I strongly support. But you cannot add prescription drugs to a 
broken program. You have to fundamentally restructure it and reform it; 
bring about real competition where all these plans will compete for the 
right to serve.
  That is what I have as a Senator. That is what 9 million other 
Federal employees have. I think we would see substantial savings 
brought about by companies having to compete for who can offer the best 
package at the best price. If they want to stay in a current fee-for-
service plan offered by Medicare, they can stay right where they are. 
They don't have to make a change. But if they see one of these other 
plans offer them a better deal, they should take that better deal.
  We hope our colleagues take a look at what we have offered. We think 
it is where we are ultimately going to end up. My colleagues, Senators 
Kerrey and Frist, have done a terrific job. We think this is where we 
should go as a nation.
  The PRESIDING OFFICER. The Senator from Tennessee is recognized for 
up to 5 minutes.
  Mr. FRIST. Mr. President, I have joined Senators Breaux and Kerrey 
here this evening to introduce a bill to comprehensively reform 
Medicare. The obvious question is, why is it necessary to reform 
Medicare? The very simple answer is that our seniors need and deserve 
better health care than what the current Medicare program can provide. 
The problem facing Medicare today is that, although we are in 1999, we 
are still relying on an antiquated system based on a 1965 model of 
health care. Medicare today is an inflexible system, it is an 
incomplete system, and it is a system that is going bankrupt. The 
rigidity of Medicare today limits access to new treatments and medical 
technologies, whether it is transplantation or treatment for 
hypertension.
  The benefit package, in particular, is severely outdated, as 
evidenced by a lack of outpatient prescription drug coverage. I can 
tell you as a physician, that in order to deliver quality health care 
to our seniors, prescription drug coverage is imperative.
  Most seniors today do not realize the Federal Government only pays 53 
percent, or about half, of their overall health care costs. Our 
nation's seniors deserve better.
  Right now, Medicare is micromanaged by Congress through 130,000 pages 
of regulations, 4 times the number of pages for the IRS code. Right now 
there are over 10,000 different prices in 3,000 different counties 
which are managed by the Health Care Financing Administration and 
Congress.
  With 77 million baby boomers entering the Medicare program in 2010, 
we can expect a doubling of our eligible Medicare beneficiaries over 
the next 30 years. Medicare, in it's current form, is not prepared for 
and cannot endure these immense demographic changes. The program is 
already due to be insolvent by the year 2015.
  This bill incorporates three main concepts. The first is health care 
security for our seniors. The second is choice, to meet beneficiaries' 
individual health care needs, as Senator Breaux just outlined. The 
third is the establishment of a comprehensive, health care system that 
offers an integrated set of benefits.
  We model this proposal on the Federal Employees Health Benefits 
Program. As the Senator from Louisiana just said, that is the way we in 
Congress get our health care. In addition, 9 million others get their 
health care through the FEHBP model. We have a long history, almost 40 
years of experience with this model. All federal employees, including 
myself and my family, receive a description of benefits and choices, 
which outlines all the plans available in a geographic area, including 
the cost and quality of each plan. It is all right here in this 
booklet. This is what we as Members of Congress have today and it is 
what our seniors deserve.
  This bill guarantees all current Medicare benefits, which is critical 
in maintaining health care security. Regardless of what plan a 
beneficiary chooses, HCFA-sponsored or private, all benefits in 
Medicare are guaranteed in a system based on choice and competition.
  For the first time in Medicare, not only are outpatient prescription 
drugs offered to all beneficiaries, but all Medicare beneficiaries 
receive a discount for drug benefits. Full coverage

[[Page 29118]]

is offered for beneficiaries below 135 percent of poverty. For 
beneficiaries between 135 percent and 150 percent of poverty there will 
be a discount based on a sliding scale, ranging from 50 percent to 25 
percent. For all other beneficiaries who are above 150 percent of 
poverty, a 25-percent discount is offered.
  This bill protects beneficiaries against high out-of-pocket costs. 
Most seniors do not realize today that if they get sick, there is no 
limit on what they will pay for care. We, for the first time, through 
enrollment in a high-option plan, limit out-of-pocket expenditures to 
$2,000 for core Medicare benefits.
  This bill also offers low-income and rural protections. In our 
legislation, we specifically address the lack of private plans in 
certain areas, such as rural areas. In these underserved or rural 
areas, we make sure that affordable health care is available for 
seniors. We guarantee both the current Medicare benefits and 
prescription drug benefits.
  We include beneficiary outreach and education efforts coordinated at 
the federal, state and local levels, to ensure timely, accurate, and 
understandable information, outlining affordable health care options, 
is available for all Medicare beneficiaries.
  In summary, the bill we have introduced today promotes high-quality, 
comprehensive, integrated health care for our seniors that meets their 
individual needs. It assists all beneficiaries, especially those with 
low incomes, in obtaining comprehensive benefits, including 
prescription drug coverage. It increases the flexibility of the 
Medicare program to capture innovations in medicine. Whether it is new 
technologies, new breakthroughs in medicines, or new drugs, it is 
important seniors have access to these services, something they don't 
have today. This bill also ends congressional micromanagement. We have 
been struggling all week with fixes to a Balanced Budget Act from 2 
years ago, trying to figure out how to correct the problems we created 
by micromanaging Medicare on the Senate floor. This just does not make 
sense. As I said, there are over 130,000 pages of regulations that we 
are trying to oversee here in Congress. Finally, we adopt a stable, 
competitive system based on the proven FEHBP model. This bill is based 
on competition, choice, health care security, and the need for 
comprehensive and integrated benefits, including prescription drugs.
  I urge all of our colleagues to support this legislation as it is a 
critical focal point and sets the stage for future discussions as we 
address Medicare reform and modernization.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, I join the distinguished Senator from 
Tennessee and the distinguished Senator from Louisiana in introducing 
this legislation. I want to emphasize something both Senators 
emphasized in an earlier press conference, and that is, the goal of 
this legislation has three parts: No. 1 is security, securing Medicare 
for beneficiaries today and beneficiaries in the future. It is a 
terribly important program, and the roughly 40 million Americans who 
currently benefit from this program need to know the law guarantees 
their benefits. This proposal actually secures their benefits even more 
than existing law.
  Some people will attack this proposal, but we have been very careful 
in drafting this legislation to accommodate the beneficiaries' concerns 
that their benefits under a competitive model might be lower. This 
legislation says their benefits cannot be less than what is currently 
available under existing law, and there is, I say to those who are 
concerned about rural communities, as I know the distinguished occupant 
of the Chair is, there is a provision in here that says if competition 
does not bring alternative plans, plans other than the fee-for-service 
offering of the Health Care Finance Administration, that the cost to 
the beneficiaries cannot exceed 12 percent of the national weighted 
average. That would make it very likely that in rural areas there will 
be no penalty; indeed, it is likely to be they will be paying less than 
they do under the current law.
  The second is that it is comprehensive and it offers comprehensive 
choice. There is a very important part of this legislation that, almost 
all by itself, is going to increase the satisfaction of citizens as 
they examine Medicare. That is, we establish a public board that has 
significant power not just over HCFA but over the plans that are 
offered in the marketplace.
  Right now, HCFA writes the rules for competing plans; obviously, a 
conflict of interest. We do not want to decrease the ability of HCFA to 
offer plans. We have written this so HCFA can offer its fee-for-service 
plan and be competitive, but we want this board to set the rules and 
conditions under which competitive plans come into the marketplace, 
although we have written in the legislation guarantees, as I indicated 
earlier, to make certain the program is secure.
  A public board is much more likely to give the public satisfaction 
than the current environment. All of us understand it is exceptionally 
difficult both to evaluate what is right and what is wrong when we are 
faced with a request from a provider or from a beneficiary, and it is 
even more difficult to get HCFA to change its rules mostly on account 
of HCFA knowing that if it changes a rule, for example, in Nebraska, it 
is going to be changing rules for all other 49 States as well and could 
add significant costs to the program. So HCFA ends up being very 
inflexible, I argue not through any fault of its own but through the 
fault of the way the law is written.
  The second objective of this legislation is that we provide 
comprehensive choice in a new legal environment, where the citizens 
will have more opportunity to make their case to a public board and the 
public board will have much greater expertise in making decisions about 
how to create a competitive environment that will enable HCFA to 
compete as well as private sector companies to come on line and offer 
more choice at lower cost to beneficiaries.
  The third thing is we say that a prescription benefit should and must 
be considered in a comprehensive solution with Medicare reform. We 
cannot separate it. You cannot take a prescription benefit for a 
Medicare beneficiary and separate it and create an entirely new program 
without considering the need for comprehensive change in the program. 
It is much more likely that we will satisfy concerns of taxpayers that 
we not end up with a program that has an open-ended cost to it and much 
more likely, especially with the structural change of the board, that 
the rules will be written so the marketplace cannot only develop 
affordable products, but develop creative products that we are apt to 
see increasingly being asked for by our health care delivery system.
  I am very pleased to be a cosponsor of this legislation. I hope we 
are able to get a markup in the Senate Finance Committee next year. I 
hope this becomes the basis for bipartisan reform. All too often this 
is a subject matter that lends itself to demagoging on both sides. 
Mediscare has become a verb and a form of political art. Hopefully, as 
a consequence of it beginning in a bipartisan fashion, it will end up 
in a bipartisan fashion, and the rhetoric will be much more tame and 
much more honest as well.

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