[Congressional Record (Bound Edition), Volume 149 (2003), Part 20]
[Senate]
[Pages 27929-27930]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            MORNING BUSINESS

  The PRESIDENT pro tempore. Under the previous order, there will be a 
period for the transaction of morning business with the first 30 
minutes under the control of the Democratic leader or his designee and 
the second 30 minutes under the control of the Senator from Texas or 
her designee.
  Who yields time?

                          MEDICARE CONFERENCE

  Mr. REED. Mr. President, I would like to take a moment to express 
concern about the current discussion on Medicare, particularly the 
prescription drug bill. The first point I would make is that the 
process has been, I think, subverted because all the conferees are not 
invited to participate in conference meetings. Many of my colleagues in 
the Democratic caucus who have voted for the bill and are named as 
conferees have not been given access to all of the deliberations and 
discussions.
  I know Senator Baucus and Senator Breaux have been there and are 
doing an admirable job representing the viewpoints of the Democratic 
caucus, but this is not the way procedurally to conduct deliberations 
on such important measures as Medicare reform and prescription drug 
benefit for seniors. But those are procedural issues.
  The substance also troubles me, particularly the discussion of cost 
containment, premium support, income relating--all of these are 
euphemisms but have extremely important consequences in the lives of 
seniors and, indeed, in the lives of everybody throughout the country.
  The conference is examining these proposals and exploring ideas that 
are not just about prescription drug benefits for seniors. In fact, the 
conference discussions have taken on a rather controversial cast 
because we are talking seriously now about Medicare reform. But we are 
not just talking about Medicare reform; I would argue we are talking 
about proposals that would perhaps lead to the end of the Medicare 
program, eventually, as we know it.
  Back in 1995, Newt Gingrich said that his approach to Medicare was to 
let it ``wither on the vine,'' to undercut it, undermine it, underfund 
it, so that eventually it would become a remnant, not a vital part of 
the American fabric. That, I fear, might be taking place right now in 
its first steps.
  Of course, as we deliberate these issues with respect to Medicare 
drug benefits, one major issue that concerns me is that we have 
allocated $400 billion. That seems like a great deal of money but, 
frankly, it is not. When we consider, over the 10-year period we are 
talking about, that seniors will spend $1.8 trillion on 
pharmaceuticals, $400 billion is not a lot of money. Indeed, compared 
to what we are spending on some efforts overseas--Iraq being the most 
prominent at the moment--that $400 billion over 10 years is not an 
astounding total.
  In fact, I would argue it is insufficient to give the benefits that 
most seniors expect to receive and believe we are discussing at the 
moment.
  One of the particular issues that I am disturbed about is first this 
notion of cost containment. My impression of cost containment is that 
we would somehow be able to contain the cost of prescription drugs we 
are buying and seniors are buying, but that is not the view of the 
conferees about cost containment.
  Cost containment is really Medicare expenditure containment. I think 
that is a fallacy. If we can't control the cost of pharmaceuticals 
through market forces, then we will never catch up with the explosion 
of costs. But then to arbitrarily say we are going to cap what we will 
put into Medicare, to me, is a fundamentally erroneous approach to this 
very difficult problem. In fact, the cost containment issue the 
conference is discussing is not directed precisely at the 
pharmaceutical program. It is going to be applied across the board to 
all Medicare expenditures.

[[Page 27930]]

  Ostensibly, what the conferees are talking about now is capping the 
general fund contribution to Medicare. There are two sources of 
financing for the Medicare program. First is the Medicare trust fund, 
then second is general revenues. The conference position today, I am 
told, is if our general expenditures exceed 45 percent in any two 
consecutive years, we arbitrarily stop funding Medicare--not just the 
pharmaceutical portion, but the whole program. To me, that is the wrong 
approach--setting arbitrary limits not based upon the health conditions 
of our seniors but based upon our fiscal situation here in Washington.
  Indeed, we all understand that Medicare is an extremely popular 
program. A Kaiser Family Foundation/Harvard School of Public Health 
survey found that 80 percent of seniors have a favorable impression of 
Medicare, and 62 percent believe the program is well run. Seventy-two 
percent of people age 65 and over thought seniors should be able to 
continue to get their health insurance coverage through Medicare over 
private plans.
  It is an extremely popular program. It is efficiently run with very 
low overhead. And it is in danger of being scuttled because we are 
attempting to apply arbitrary limits to our contributions to Medicare.
  There is another aspect that concerns me very much in this whole 
debate; that is, this notion of premium support. These euphemisms sound 
innocuous but the consequences could be quite severe to the long-term 
health and viability of Medicare.
  Premium support is the notion that we are going to entice private 
health insurers to go in and take the place of the Medicare Program. If 
the market would allow for that, that is great. We want competition and 
choice. It provides for more efficient allocation of resources. But 
what the conferees are proposing is a $12 billion slush fund that will 
favor private companies over the government-run system. I think the 
only reason we have to do that is, in reality when you look at the 
Medicare system today, it is in many cases more efficient than private 
health insurers.
  The way these private health insurers are going to be making their 
money is not to serve every senior, but to be very careful and very 
selective--to cherry-pick the senior population--and get the healthiest 
seniors into their plans; and in addition to that, get subsidies from 
the Federal Government to their bottom line by simply saying we can't 
make enough money to participate in this market--not that we can't 
serve enough seniors.
  I think that is wrong. That will severely and significantly undercut 
the Medicare Program.
  It has been estimated that a result of premium support will be that 
rates for seniors across the country will no longer be uniform. They 
will be variable based upon the region and based upon how many private 
plans are participating. They could vary from one area to another. 
Rhode Island and New England is a small area. We could have one rate in 
East Providence, RI, and 10 minutes away in Massachusetts the rates 
could be entirely different.
  Today, seniors count on predictability, reliability and the certainty 
that the rates are stable and uniform. We could lose that. That is a 
major concern of mine.
  There is another concern also; that is, the fact that we are on the 
verge of accepting this notion of means testing. The euphemism of the 
moment is income relating Medicare Part B premiums. They have laid out 
a situation where seniors who are making over $80,000 a year would 
gradually see their Federal subsidy reduced from a current level of 75 
percent. Certainly at that level of income there is an argument to be 
made that seniors can afford to pay more than the majority of seniors 
whose incomes are much less than $80,000, and are probably closer to 
$15,000 to $20,000 a year.
  We are fracturing the program by means-testing premiums. We are 
giving incentives for wealthy seniors to ask, Why should I participate 
at all? This is not a program that helps me. I can get my health 
insurance coverage in the private market, and I will do that.
  The fragmentation--both in terms of geography because of premium 
support, and in terms of income because of this notion of means 
testing--will begin that slow, I am afraid, and irreversible process of 
withering Medicare. It makes no sense.
  One of the reasons we enacted the Medicare Program in 1965 was 
because private health insurance companies would only insure the 
wealthiest and healthiest seniors, leaving the vast majority of seniors 
with nothing. The burden of those seniors was the burden of every 
family in this country.
  As I grew up in the 1950s and the 1960s, it was not uncommon to have 
a grandmother or a grandfather living in your home because they simply 
could not support their health care needs. They could not support 
themselves. Medicare changed that more than any other program in this 
country.
  It is widely popular, and based on the simple notion that, first, we 
are going to provide the benefit equally to all of our seniors. We are 
not going to fragment it by region or by income. We will provide a 
system of care. We essentially are going to do what insurance should 
do--take the broadest possible risk pool of all seniors--healthy 
seniors, unhealthy seniors, the frail and elderly seniors, and the 
young and vigorous seniors. They are all going to participate. That is 
the efficient, fair, and sensible way to do it.
  We are on the verge, I fear, of ruining that system--not just for the 
moment but for all time.
  I hope in the next several days we can resolve these issues 
favorably. But I am concerned if we proceed on this course we will not 
really be doing anything for seniors, the prescription drug benefit 
might be illusory, and the long-term effect will be severe and perhaps 
cause fatal damage to Medicare.
  I yield the floor.
  The PRESIDENT pro tempore. The Senator from Massachusetts.

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