Math is Such An Anathema

Floor Speech

BREAK IN TRANSCRIPT

Mr. SCHWEIKERT. Mr. Speaker, give me a moment here to get set up. Sometimes, we are just scrambling because we had a whole speech lined up. We were going to do something just simple and pleasant for everyone. We were going to walk through Medicare financing for a while, and they wouldn't give me 3 hours or 4 hours to do it, so you are stuck with me for a half an hour.

Then, earlier today, CBO actually did their update. Okay. Let's see if I can make this make sense.

When I come behind these microphones, I am trying to explain sort of a unified theory that, so often, the political class behind these microphones say: We can do this.

Okay. That may be wonderful, but you have to understand that it all works together: our demographics, our tax system, the fact of the matter is this incentive for this to grow, this incentive here, and the adoption of technology. I need people to start thinking about the interaction that there is not a simple solution to a country that, right now, is functionally borrowing about $74,000 every second so far this fiscal year.

Sorry. Let me rephrase. Over the last 12 months. If you do just fiscal year, it is higher.

A few hours ago, the CBO put out a report. Look, the report is actually like this. I just cheated. I just grabbed the executive summary because I didn't need the whole binder out here.

It is going to take me 3 days or 4 days to read through everything, but I have some of the highlights for you--this is important--and then it is going to tie into what we are spending.

Your country is an insurance company with an army. That is both funny and it happens to be mathematically true. In about 33 months, over half of the Federal spending will go to those who are 65 and up. Actually, in 33 months, I will be one of them.

It is demographics. We have gone about 30 years or 40 years with dramatically fewer children than we expected. I have done a series of presentations here on the floor where I have shown that we actually have the same number of 18-year-olds as we had 20 years ago, but double the number of those who are 65 and up.

Is that Republican or Democrat? Look, there is policies that have been engaged in by Democrats that helped to create this, but the fact of the matter is that these are people. It is our reality. We have our obligations on Medicare, on Social Security, and some that will be dual eligible because they are poor and retired, and we have some things that are terrifying.

In 6\1/2\ years, the Medicare trust fund is empty. Your hospital will take an 11 percent cut. Medicare Advantage programs will actually take something much larger. It is just the way the Medicare part A trust fund works.

In 6\1/2\ years, the Social Security trust fund is empty. No one stole your money. We just don't have enough workers. It was a Pay-As- You-Go system. It is math. The fact of the matter is that, yes, the money has been loaned to the Treasury. Treasury actually pays interest on that money, so that twice a year, there is actually a fairly large dividend given to the trust fund. It is demographics. We had the baby boomers.

In 6\1/2\ years, if we followed the law, there is a 24 percent cut coming to Social Security recipients, which will double the poverty of seniors in America. Our math is that it will double the number of baby boomers who are homeless. It is absolutely immoral, but we are not allowed to talk about it except for idiots like me who get up and say week after week: Please, my brothers and sisters here, there are things that we can do.

The Democrats say that we will just tax rich people. Then you show that the math is nothing like that. It doesn't work.

Here is the CBO report. In here, it makes it absolutely clear, and I have been telling you for 1 year, but the scorekeepers have finally caught up with my Joint Economic Committee economists. Remember, I chair the Joint Economic Committee. I chair Oversight Subcommittee in the Ways and Means Committee, so I am blessed. I have a freaky smart staff.

In 2032, the trust funds are empty. In 2033, the first year where they are completely empty, if you said that we are just going to pay for everything out of the general fund, okay, we can do that.

My estimates come in at about $638 billion in 2033 just to make up the shortfall of the Social Security trust fund being gone and the Medicare trust fund being gone. That is, what, 60 percent of today's defense budget.

Why is math such an anathema to this place?

Let's walk through a couple of other things here. I have only had time to produce a couple of boards from the new CBO report, and then we will try to tie these into what else is going on.

This year, we are basically going to spend 3.3 percent of the entire economy on interest--interest. Once again, this interest number is just the interest to publicly sold debt.

Remember how I was just talking about the debt? That we borrow the Social Security money, and then the trust fund gets IOUs from the Treasury, and we pay it interest? Then when the Social Security needs money--which they do every month--because the tax receipts come in from your FICA taxes and there is a shortfall, so they cash that in every month?

If you add up all of the money and interest paid from the trust funds, I think this year is going to look more like $1.2 trillion in interest. Why that is important: What is the number one spend in America? The number one spend of your Federal Government is Social Security. It is going to come in at about $1.6 trillion this year.

Interest is your number two. It is going to come in at about $1.2 trillion.

Medicare is going to come in at about $1.1 trillion this year, maybe a little more.

Medicaid and ACA, ObamaCare subsidies, are going to come in at $900 billion.

Those are your top four.

Number five is the defense. The thing that is actually in the United States Constitution is actually number five in hierarchy of spending.

One of the things that CBO was trying to point out is that their estimate is for 9 budget years--so 9 budget years is 2036 from now-- that we will go from $1 trillion of interest to $2.1 trillion of interest. In 2036, so 9 budget years from now, the annual deficit will be about $3.1 trillion. Structural deficit is $1 trillion, and $2.1 trillion will just be interest. The majority of future deficits are actually interest.

Interest and healthcare are the primary drivers of U.S. sovereign debt. Will the bond market continue to finance this?

What happens when one of your greatest solutions is: Can we actually have honest conversations about healthcare costs? Are we willing to legalize the very technologies and the methodologies of helping our brothers and sisters stay healthier and, therefore, use dramatically less healthcare?

I have been coming behind this mike for over a decade with presentation after presentation of technologies, new pharmaceuticals, and new methodologies to crash the price of healthcare. I get the crap kicked out of me because armies of lobbyists don't like it when we talk about changing their business model.

Remember, several months ago, I came here to the floor and showed that we came up with a math experiment of, in America, how many duplicative MRI scans, ultrasounds, X-rays, and CTs are there? The top end was looking like $36 billion in a single year.

Why wouldn't you do something crazy? You get an MRI, attach it to this crazy supercomputer that you put in your pocket, and then when you go to your next doctor, you put it up, and it is up on their screens, and you don't get another one.

Now it turns out that you get some folks who make money on the duplicative scans. They get very angry, but $35 billion over 10 years, $350 billion, and that is just one of dozens of things. Why is it so hard? Are we that afraid of the lobbyists? Are we that afraid of trying to explain to the folks at home that we don't have a choice?

In 6\1/2\ years--let's say it again--the Medicare trust fund is empty. If you want to extend the life of the trust fund, let's have a revolution on the actual cost of delivering healthcare.

There are a couple of other things that are highlights in the CBO report. They estimate that in 10 years, we will have 5.3 million fewer people in America. That is mostly from reduction in immigration and the fact that our fertility rates continue to fall, but think of this.

That missing 5.3 million people is $500 billion over that timeframe in lost tax receipts. When I use the term ``demographics'' on our debt, it is a function. Our debt is a function of the fact that our society has gotten older. We have substantially fewer children. We are going to have fewer workers, and there are actually whole charts I have here that actually talk about it.

Look, they are hard charts. This one is absolutely inappropriately designed to use on the floor, but it is trying to explain what happens in a society when we have substantially fewer young workers in our society and substantially more of those who are now 65 and older.

It is just life, but we have to be prepared for what it means when the majority of Federal spending will be going to those 65 and up in just a couple of years.

Are we prepared for this? Of course, we are not. So many folks still have a mind frame that is decades out of date with what we are demographically. This is happening over the entire industrialized world, but in our society here, if I can raise wages and productivity of those who are in the workforce, I have resources to cover the promised benefits, because we made a deal. We have a societal deal that we are going to cover Medicare and Social Security.

Something I want to touch on--and I didn't bring the chart on this. There are a lot of folks who think that Medicare itself is paid for by your payroll tax. It is actually about 38 percent of that. As a medical enrollee, you pay--the total cost, depending if you are in Medicare Advantage, which is--what?--55 percent of the population. The others are maybe in part A, part A and part B.

Fifteen percent is sort of paid by the enrollee. Thirty-eight-some percent is paid by the FICA tax, so today's workers paying for today's retirees. The rest is borrowed out of the general fund.

You have to understand that a huge portion of our debt is actually paying for the healthcare.

Sorry. My 3-year-old is trying to call me. Yes, I have a 3-year-old and a 10-year-old, so you know I am optimistic.

When we talk about Medicare financing, most folks don't understand it is one of the key drivers of our debt.

Let's actually walk through something. Several months ago, we gathered all the MedPAC reports, all the other reports on Medicare Advantage. It is Medicare part C. I love a capitated model. A properly designed capitated model, which is Medicare Advantage, is designed so you have sort of a gatekeeper. That may be the insurance company or that may be the group of doctors. Their mission needs to be helping you be healthier.

We do this in my State's Medicaid system. We call it AHCCCS in Arizona. I actually, at one point, did the budgets for that.

The concept behind this is to align the incentives. The incentives aren't to keep trying to find the highest reimbursement to charge things to the healthcare system. It is the incentive that we are going to help our brothers and sisters be healthier.

If you are the insurer, you make a profit because you lower utilization because you had your enrollees, your patients, your members, get healthier. That is not what has been happening in Medicare Advantage if you read the actual auditing reports.

We actually did a piece of legislation several months ago that said instead of having this world where there is the risk scoring and--if you see, there are actually now criminal investigations going on at the Department of Justice because of people being scored as being much sicker, needing much more, and they are actually not sick. There are multiple criminal investigations going on at the Department of Justice.

I keep approaching the Medicare Advantage companies, saying to work with us. Could we get rid of the way we do risk scoring, the way we do these star ratings, where you use those things to pump up your compensation, and actually do it from enrolling? Let's get the actual models right. We will build a shock absorber if someone gets really sick. We will share the risk.

Then, the incentive is to help the population get healthier and healthier because we have technology. We have wearables. We have GLP-1. We have other things you can do to help our brothers and sisters get healthier.

We have lots of data right now, when we are starting to see math showing, in 2025, almost $84 billion of new risk model implementation basically saying this is excess spending. If you look at the MedPAC report, it is almost coming in at a couple of hundred billion dollars a year.

We run around here saying waste and fraud, but this technically might not be fraud because it is the design of the system.

When ObamaCare was passed 18 years ago, it actually had a series of things in there that created many of these incentives to game the system.

Now, the administration is talking about saying we are just going to do a cap. I want to try to sell this concept, saying why don't we align the incentives, both the government incentives as the payer and the patient incentives to the doctor, so we are all doing the same thing. We are lowering the expense by creating a healthier population.

The fact of the matter is, if you look at the MedPAC reports--and I know they get mocked, but no one else seems to produce the actual data--it is almost $2 trillion a year. Remember, the MedPAC report comes in and says, Medicare Advantage, when you do the risk adjustment, it comes in at 120 percent of fee-for-service. That is a 25 percent gap. In the original design, in 2005, the Medicare part C was supposed to come in at 95 percent.

I know it is geeky, but this is a stunning amount of money. We will spend hours here arguing about millions of dollars. These are billions and billions, and over 10 years, it is in the trillions.

Why is it so hard for this place to want to take on the things that actually would affect the crushing debt that CBO just told you is coming screaming at you?

Remember, the CBO report here basically says in this 9-year budget window, 10-year budget window, your country goes over 120 percent debt to GDP, surpassing World War II.

Are we going to fix it by little incremental things, or are we going to do it by a major reconciliation bill that actually takes on big issues, complex issues, real math? Or will we just continue to pander and not tell the truth about the scale of what is coming at us?

Medicare Advantage overpayments, we believe, this last year, just the overpayment portion, was $84 billion. You start to see a chart like this. Add it up, I actually have a trillion dollars here for you. Align the incentives, and I can get you another few hundred billion dollars of alignment incentives by changing utilization, by helping our brothers and sisters be healthier. Turns out that is real money.

I have lots of charts here, but I want to actually go--I am going to skip around a little bit--to contributions to the proposed Medicare Advantage payment update. If there happens to be a lobbyist out there representing Medicare Advantage, come talk to me. This is what I think CMS is actually proposing to you, saying we are going to change the compensation. We are going to change your risk scoring. You are basically getting zero movement.

This is what you get by not working with us in aligning the incentives, where you can make a profit by fixing the incentives within the system or you can basically get a cramdown. Which one do you want to do? Do you want to prove that you are a free market manager, that a free market system actually can deliver healthcare and do it better, faster, more efficiently, and more morally because you give a darn about your patients?

Or we can basically say we are just going to pay you less, and then you figure out how you are going to put that through the system. This is the proposal coming at you. You didn't want to talk to me about trying to fix the incentives in Medicare Advantage, so now you are going to get this.

I will argue, come talk to us about our piece of legislation. It has been out there for several months. You have had chances. We have had multiple Ph.D. economists score it. We have a preliminary score from CBO, saying it is probably about $1.84 trillion in savings over 10 years, making it the single largest savings bill in U.S. history.

I am in a 50/50 district, and I am doing bills like this because I can do math.

Mr. Speaker, instead of me walking through all this, did you see the job growth numbers today? They are actually pretty good. Did you see the punch line in the job growth numbers?

The U.S. economy added approximately 140,000 jobs; the market added 181,000. It is absolutely terrific. A dominance of the new jobs that were created are in healthcare. The majority of spending in healthcare comes through government. Does anyone see the circular problem of what we are talking about? If my growth in the employment base is healthcare, and over here those jobs are financed through government spending, and that government spending is substantially borrowed, that is not a virtuous cycle.

We have a structural problem. Remember, today your government is going to borrow 6 to $7 billion. This was supposed to be a year with the tariff receipts and with everything else we were supposed to really start to pay down the deficit. The problem is interest, healthcare costs have exceeded our models. We are still probably heading to a 1.9, $2 trillion borrow.

It turns out now CBO is catching up with the numbers I have been bringing behind this microphone for the last year. If we do not start to take this seriously, Mr. Speaker, we will have made the decision that the bond market, not as in Congress, not the White House, will run this country.

Remember, we have to bring about 10 to $11 trillion of debt to market this year for refinancing, and we are going to issue probably $2 trillion of new debt.

When the United States sells a 10-year bond and Greece sells a 10- year bond today, Greece has a lower interest rate than the United States. When the debt markets think Greece is more creditworthy than the United States--I don't know how to make it more simple. Why is it so hard to tell the truth about the math?

Mr. Speaker, there is a way to stabilize this. We are not going to pay it off. The demographic headwinds make that almost impossible, but you can stabilize the debt. You just have to do complex big boy things to do it.

One of the reasons I am leaving Congress is I am tired of smashing my head over and over here on blunt objects as people just stare back at you and say, David, I would have to try to explain that. David, you are not allowed to use the words ``Social Security'' and ``Medicare.'' It will upset people. What will upset people is when these trust funds run out and they are seeing their benefits cut because we were too intellectually vacuous to step up and tell the truth even though we have known this for decades.

Mr. Speaker, I am actually going to drink more coffee and do more reading.

I yield back the balance of my time.

BREAK IN TRANSCRIPT

Source