[Congressional Record (Bound Edition), Volume 159 (2013), Part 7]
[Senate]
[Pages 9304-9305]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                MEDICARE

  Mr. FRANKEN. Mr. President, I rise to talk about Medicare solvency. I 
know that to many people the words ``Medicare solvency,'' which is the 
ability of the Medicare program to meet its financial obligations, 
sounds like an invitation to a nice nap.
  You and I pay into Medicare every month, and we need to know that the 
benefits we paid for will be there when we need them, and not just 
that. I need to know Medicare will be around to cover my daughter and 
my new grandson when they become eligible. That is what Medicare 
solvency is about.
  A couple of weeks ago we got some good news. According to the annual 
report released by the Medicare board of trustees, Medicare will stay 
solvent for 2 years longer than previously estimated.
  There are a lot of things that are contributing to Medicare solvency, 
but one big thing is health reform. In fact, Medicare will be solvent 
for a total of 9 years longer than before we passed health reform. Let 
me say that again. The life of Medicare is 9 years longer today than it 
was before we passed health reform.
  HHS Secretary Sebelius said:

       The Affordable Care Act has helped put Medicare on more 
     stable ground without eliminating a single benefit.

  The point is that health reform is not just about making our health 
coverage more comprehensive, it is not just making sure when we get 
sick we can get the care we need, it is also making Medicare more 
efficient. It is extending the life of Medicare so that Medicare can 
keep supporting our parents and will be able to support our kids.
  How exactly has health reform helped extend the solvency of Medicare? 
Well, to start with, it stopped Medicare from overpaying private 
insurers. As you might know, seniors can choose to get their Medicare 
benefits directly from the Medicare Program or get them through a 
private insurance program that gets paid by Medicare, which is called 
Medicare Advantage. Before we passed health reform, we were overpaying 
these private insurers by about 14 percent. So we reduced what Medicare 
pays these private insurance companies. In fact, over the next 10 years 
we are going to reduce these insurance payments by about 14 percent, 
which CBO scored in 2010 as saving Medicare $136 billion over 10 years.
  I will note that we were told by some of our colleagues that if we 
did this, insurance companies were going to leave the market, that we 
weren't going to have Medicare Advantage anymore. Well, so far, 
enrollment in Medicare Advantage has gone up by 10 percent, and I am 
glad about that because Medicare Advantage serves an important purpose 
for millions of seniors across our country.
  We are also adjusting reimbursements to hospitals downward. Why and 
how does that work for hospitals? When you insure 31 million people who 
previously didn't have insurance, hospitals are no longer on the line 
for uncompensated care when those 31 million people go into the 
emergency room. The hospitals aren't left holding the bag for all of 
those costs.
  And we didn't just extend the life of Medicare by 9 years; while we 
were at it, we expanded benefits for Medicare beneficiaries. I go to a 
lot of senior centers and nursing homes in my home State of Minnesota, 
and I have to tell you, seniors are very happy about their new 
benefits. They are very happy about the new free preventive care they 
get--the wellness checkups and the colonoscopies and the mammograms. 
They know and we know that an ounce of prevention is worth a pound of 
cure.
  Do you know what else we are doing with that money? We are closing 
the prescription drug doughnut hole--the gap in coverage under Medicare 
where seniors have to pay the full costs of their prescription drugs in 
that gap. Seniors are very happy about that. For more than one-third of 
seniors, Social Security provides more than 90 percent of their income, 
and for one-quarter of elderly beneficiaries, Social Security is the 
sole source of their retirement income. So when Medicare stops covering 
the cost of their prescription drugs in the doughnut hole, that is 
serious, and sometimes these seniors have to decide between food and 
heat and medicine. Well, because we have been closing this doughnut 
hole, many don't have to make that impossible choice anymore.
  When I was running for the Senate back in 2008, a nurse in Cambridge, 
MN, told me about a senior being hospitalized. She was being treated by 
the doctors and nurses so that she would be well enough to leave the 
hospital, and when she left the hospital, they would make sure to give 
her the prescriptions she needed.
  After a few days, this nurse would call the pharmacy and ask: Has 
Mrs. Johnson come in and filled those prescriptions?
  The pharmacist would say: No, she hasn't.
  Why was that? Because she was in the doughnut hole. And guess what. 
In 10 days or in 2 weeks or whatever, Mrs. Johnson would end up back in 
the hospital because she couldn't afford her medicine. These 
readmissions cost our health care system a lot of money. But now, 
because we are closing the doughnut hole as part of the health care 
law, these seniors are able to get their medicine. This is improving 
their health, and it is saving us money.
  So we have increased benefits and extended the life of Medicare, and 
that was done as part of health care reform.
  Many of the provisions of the health care reform law will make our 
health care system more efficient and will lower costs in the long run. 
I wish to touch briefly on one I authored that is already keeping costs 
down for families in Minnesota and across our country. The provision of 
the health care reform law that I authored is based on a Minnesota law 
in a way. In 1993 Minnesota wrote a law that insurance companies had to 
report their medical loss ratio, and that is the piece I wrote into the 
law.
  What is the medical loss ratio? Medical loss ratio is the percentage 
of premiums a health insurer receives that goes to actual health care--
to actual health care, not to administrative costs, not to marketing 
costs, not to profits, not to CEO salaries, but actual health care.
  Starting in 1993 Minnesota health insurers had to submit to the 
commissioner of commerce--the Minnesota

[[Page 9305]]

Department of Commerce--their medical loss ratio. They had to compute 
it and submit it. I took that and I put a little wrinkle into it. I 
wrote something called the 80-20 rule, which says that insurance 
companies have to spend at least 80 percent of their premiums on actual 
health care for small group policies and individual policies and 85 
percent for large group policies, and if they do not meet that, the 
health insurer has to rebate the difference. Well, thanks to this 
provision of the law, last year more than 12 million Americans 
benefited from $1.1 billion in rebates from insurers that did not meet 
the 80-20 rule, including 123,000 consumers in Minnesota.
  In a new report, the Kaiser Family Foundation estimates that premiums 
in the individual market would have been $1.9 billion higher last year 
if it weren't for the medical loss ratio rule and they would have been 
$856 million higher in 2011. That is more than $2.75 billion in savings 
over the last 2 years alone. Those savings are in addition to the 
rebates consumers received. They estimated that insurers would have 
raised their rates that much more--$2.75 billion more--if they hadn't 
had to meet the 80-20 rule. This is another important way the health 
reform law is keeping health care costs down. So the rule I wrote into 
the law has already saved Americans nearly $4 billion in health care 
costs.
  In fact, after going up at three times the rate of inflation for a 
decade, over each of the last 2 years health care costs have gone up 
less than 4 percent for the first time in 50 years. That is according 
to data released by the Department of Health and Human Services.
  Now, I am not saying we are done, not by any stretch of the 
imagination. We have more work to do. In fact, one big thing we could 
do would be to allow Medicare to negotiate directly with pharmaceutical 
manufacturers on the price of their drugs. The VA does this, and they 
pay nearly 50 percent less for the top 10 drugs than Medicare does. I 
have a bill to allow Medicare to negotiate directly with pharmaceutical 
manufacturers, and I hope to work with my colleagues to bring this 
proposal to the floor.
  At the end of the day, my job is about strengthening what works in 
our country and fixing what doesn't. Medicare works. It works for 
seniors across the Nation, it works for grandparents from Pipestone to 
Grand Marais, and I hope to work with my colleagues to protect Medicare 
benefits for our parents and grandparents, while strengthening the 
program for our children and grandchildren.
  I thank the Chair, and I yield the floor.
  The PRESIDING OFFICER (Mr. Schatz). The assistant majority leader.

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