Senate Finance Committee Holds Hearing on Medicare
Feb. 27, 2003
Senate Finance Committee Holds Hearing on Medicare
GRASSLEY:
Good morning, everybody, and welcome, Secretary Thompson, and all my colleagues who are here. I may have to step out to make a quorum down the hall at judiciary but otherwise that would be the only reason for my absence, and that would be for a short period of time.
Today, we're pleased to be here on a very important issue, and obviously it's demonstrated by the big, big turnout we have from the public, generally. So we welcome Secretary Thompson to discuss the administration's policies and priorities on Medicare and Medicaid. I'm glad that the secretary has agreed to come to us about the administration's plans to strengthen and improve Medicare and to make the Medicaid program more flexible.
So far this year, we've had an opportunity to hear many presentations and maybe sometimes leaks about what the administration has planned in regard to prescription drugs. It's brought some mixed messages. We've heard one time about a plan, and then we've heard more recently about principles. Some ideas found their way into the press before members of the committee were briefed. And the Medicaid proposal, while more detailed, is still very new and needs to be examined, and I was given some briefing on that by the secretary by telephone, and I appreciate that very much.
So I think that this is a very appropriate meeting we're having at this time to give us all an opportunity to have it all laid out on the table just exactly the way the president and the secretary sees it. We need that.
We need it most often and particularly right now because we don't have a lot of time to waste, at least I see measure not a lot of time to waste because what we don't get done early this year may get mixed up with the presidential campaign, and a lot of times controversial and sweeping issues don't get done. So that's kind of why Senator Baucus and I have been speeding things along within this committee. We need obviously to get to work on Medicare so that this committee can produce a bipartisan consensus prescription drug and Medicare improvement bill this spring.
I want to compliment the president of the United States and all of his advisors, and I assume in that I'm including Secretary Thompson, because the administration has come a long, long ways by putting $400 billion on the table for what we would call Medicare, of which the biggest portion of it would obviously be the prescription drug program, because we didn't have that sort of sweeping changes quantified by the administration in the previous two years.
I think Congress talking about $400 billion over the last year or two, figures below maybe $200 billion all the way up to $800 billion, that $400 billion would be in the ballpark for a lot of members of the Congress. So the president is helping that process along very much. Now, that by itself, of course, is a tremendous improvement over last year, and you, Secretary Thompson, and President Bush deserve credit for their commitment to this very important issue.
And while I want to hear more from you and the president about how specifically you would spend the $400 billion, I'm not going to let that $400 billion sit around all year while we wait for the White House to sign off on details. Plan or more plan, this committee must move ahead. After today's hearing, I will continue to share ideas on prescription drugs and Medicare improvement with members from both sides of this committee, from our seniors and from our providers who serve them. I want to listen to any and all ideas from my colleagues who share the goal of bringing Medicare into the 21st century.
Over the next four months, there will be meetings, many meetings. There will be hearings, and my hope is that there will be an honest to goodness markup that will result in a bipartisan consensus bill that can get 60 votes. Because, as we all know, for anything to get done in the Senate, it will need to be bipartisan, and that just about always dictates 60 votes.
Getting there will mean that we have to make hard choices, we have to compromise, and none of us will get everything that we want. For my part, I would like to see a prescription drug program that's universal, voluntary and affordable. I would like to see improvements to the program that focus on preventive care and disease management in addition to prescription drug coverage. I would like to see overall a program that's more rational, more affordable and more like today's insurance coverage, particularly the kind of insurance that federal employees across the country in all states, both urban as well as rural, enjoy today.
Finally, and most important, I will insist that any new benefit that we add to the Medicare program be accompanied by meaningful improvements to the current geographic inequities that hurt low-cost states like Iowa. Iowa doctors and hospitals provide some of the highest quality, most efficient care in the country, but the age-old formulas that determine Medicare reimbursement do not account for that.
So I will include provisions in whatever bill we mark up that corrects these outdated formula flaws and that incentivizes the Medicare program to begin recognizing high quality, cost-efficient care.
The Majority Leader has assured me, and he's here, and so I want to thank him for doing his leadership on this, working hard to bring high visibility to this bill. Senator Frist has assured me that he will bring the work of this committee to the Senate floor in the time frame of July 4. We've got an awful lot of work to do be done here to get there, so we must get started.
Turning now to Medicaid reform, Mr. Secretary, as you know, states are struggling with some of the worst budget shortfalls in recent history, yet they have consistently seen their medical costs rising. The National Governor's Association reports that states are facing the worst fiscal scenario since World War II, albeit 40 percent of that in one state of California. The Medicaid costs are rising and the program has expanded in complicated ways.
States are trying in a number of ways to address the needs of the uninsured through the Medicaid program. States have been asking Congress for two types of relief: fiscal relief and flexibility to design a benefits package for certain enrollees. I think it is appropriate for the Congress to consider a means by which we can get some fiscal relief to states, and I am open to a discussion.
Additionally, states have sought flexibility on how they design their program through waivers. Mr. Secretary, in the 2004 Budget submitted to Congress, this administration has outlined principles that address both fiscal and regulatory relief for states.
I appreciate your willingness, Mr. Secretary, to open up a debate on the issue of Medicaid reform. I appreciate your willingness to work with members of Congress and our nation's governors. I would urge us all to keep an open mind when we work through a number of your recommendations as well as other things that members might want to put on the table about Medicaid.
I understand that the administration has left a number of important details unresolved so that you, Mr. Secretary, could get input from the states and from the Congress. I think this is a sound approach. I look forward to working with you to address these issue in a timely, thoughtful and responsible manner.
And now I'd like to turn to Senator Baucus.
Thank you very much. We'll have five-minute rounds, and the order will be Grassley, Baucus, Frist, Conrad, Breaux, Smith, Lincoln, Bunning, and Mr. Lott's here and Ms. Snowe is here. I'll get a new list by the time we get around to you guys.
Mr. Secretary...
UNKNOWN:
Glad you're getting around to them.
(LAUGHTER)
GRASSLEY:
Bunning, Lott and Snowe.
The first question, Mr. Secretary, is in regard to the 28 percent, or about that percentage, of seniors that already have drug coverage from a former employer. To get an idea how the administration would see that, how you could preserve the good prescription drug coverage that many seniors have through those former employers while we add a prescription drug program to Medicare and particularly if employers are already providing this coverage, how can we assure that we aren't replacing private dollars with public dollars?
Let me explain what I would consider a political problem as we deal with this 28 percent moving towards one of two things. We would hopefully not have that dumped on the government program, save public dollars, but more importantly, I would see that group of people with good health care and maybe even better health worried that it would be lost if they thought it was going to be lost.
You might have about the same group of people that were irate about catastrophic coverage 15 years ago when we adopted it, the group of people that were paying higher premiums for people maybe not getting benefits for people that were going to get benefits, and that revolution really caused Congress to repeal that. That same group of people, maybe middle class, older people, would be the ones that maybe could say, "Well, if I'm going to lose what I have now, why should I have lesser coverage if we're going to have a government program?"
THOMPSON:
Well, Mr. Chairman, you know that there's none of us that wants the private sector to be pushed out or supplanted by federal decisions on federal programs, and I can assure you that that will not be the case with the president's and the administration's proposal.
The final details, as you know, Mr. Chairman, have not been completely worked out, and so that particularly detail will have to be left until the final details are able to be announced by the president and be able to be given to you and all members of this committee.
GRASSLEY:
But the administration is at least considering that as a...
THOMPSON:
Absolutely.
GRASSLEY:
... major issue to be dealt with.
THOMPSON:
Absolutely, Senator.
GRASSLEY:
And I think you're saying that it's not the administration's intention that those programs would be heard or discouraged because of a government program.
THOMPSON:
Absolutely not. They would be encouraged rather than discouraged.
GRASSLEY:
OK. Now, I'd like to go to a Medicaid issue. About 90 percent of Medicaid beneficiaries in nursing homes are optional beneficiaries. These optional beneficiaries include those who are not categorically eligible for Medicaid but who are impoverished by the cost of nursing home care. As you know, about a third of nursing homes residents are not Medicaid beneficiaries at all but are private pay.
Under the Medicaid reform proposal, would the Nursing Home Reform Act no longer apply to these residents? In other words, would their care be exempted from the federal quality standards, annual inspections and enforcements that are spelled out in existing law?
THOMPSON:
All of those protections will be continued and will remain in the statute and will not be in any way changed whatsoever, Mr. Chairman. The mandatory populations, the mandatory options, the mandatory guarantees, as you have just outlined, continue in the law and are not affected one bit.
GRASSLEY:
There are a number of challenges associated with providing health care in rural areas. As I understand it, your plan would allow states to provide a different level of coverage in urban and rural areas within a state. How would you address the concerns that unless states are directed to pay attention to rural areas that those interests may not get attention that they need? And how would you ensure that Medicaid recipients in both areas would receive fair and equitable treatment?
THOMPSON:
Senator, under the current law, Medicaid requires everything to be uniform anytime you adopt an optional choice, an optional benefit or an optional population. So under the current financial stress of governors and legislators and states, the governors only have one or two choices: Maintain the program as is or drop it. We're going to give them a third option. We're going to give them if they volunteer to go into the program be able to maintain the program or be able to modify it and be able to allow for different benefits if they need be.
For instance, sometimes there may be an HMO in a particular area. You may want to be able to provide for an HMO coverage in a particular area of your state. You cannot do that under the current law. Under the new flexibility, you would be able to do that.
And you know that I come from a rural area like you do. I would not allow for anything that would be able to discriminate against rural areas in a proposal that I'm advancing, Senator. And I can assure you that that would be the case. It would give the states and the legislature one more tool in their arsenal to be able to provide the coverage. Because what's happening right now states are dropping these optional populations because they can't afford it. We want to be able to maintain it, and that's what this proposal gives them the flexibility to do.
GRASSLEY:
OK. Thank you. I'm going to put a statement in the record for Senator Thomas who could not be here.
Senator Baucus?
GRASSLEY:
I'd like to ask Senator Frist, Senator Conrad and Senator Breaux if they would give permission to Senator Smith who has to get a plane at 11 to go ahead of them. If any of you object, obviously we won't jump over you. Any objection?
Senator Smith go ahead. And then if Senator Lincoln comes, I'm going to interrupt so we can vote our miscellaneous tariff bill out that we didn't get out last week. And thanks to Senator Baucus for the suggestion.
Senator Smith?
SMITH:
Thank you, Mr. Chairman. I guess the last will be first in this case. I thank my colleagues for their indulgence.
GRASSLEY:
It doesn't happen very often.
SMITH:
No, it doesn't. I'll take it when I can get it.
Secretary Thompson, thank you for being here and thank you for the tremendous progress you're making on health care issues. I know my state of Oregon for a long time has tried to be very innovative in health care and trying to get to full coverage for Oregonians, but there's still 14 percent uninsured, and that number is climbing given the recession. And yet the flexibility that you are offering I think is very welcome and would have helped Oregon a lot in earlier years had it been available. So I salute you for that.
But I do want to point out the tremendous support that there has been in the Senate for a bill that Senator Baucus and I, Senator Rockefeller, Senator Collins, Senator Ben Nelson have put forward in earlier Congresses and have reintroduced this time that would increase not just flexibility but dollars above what the administration is proposing to help. You just met with all of our governors and having been one yourself you know how much extremist their budges they're in. My state has already cut several billion dollars from their budget, and they've got some more to go.
GRASSLEY:
Mr. Smith?
SMITH:
Yes, sir.
GRASSLEY:
Can I interrupt you without taking time away from your five minutes?
SMITH:
Of course.
GRASSLEY:
We have a quorum 11 here.
BAUCUS:
The plane's going to leave.
SMITH:
That's OK.
GRASSLEY:
So I'd like a minute to request that we go into executive session, complete work from yesterday on the markup of the Miscellaneous Tariff Technical Corrections Act 2003. During the consideration, we adopted one amendment sense of the Senate by Senator Conrad. Beyond that, the bill is virtually identical to the legislation drafted by our staff last year. So at this time, if there's no objection, is there any objection to taking it up?
GRASSLEY:
Thank you.
So I'd like to ask for a voice vote. Those who are in favor of allowing the bill out of committee say aye. Those opposed say no.
So the ayes obviously have it. The bill is favorably reported, and I will leave the record open for anyone to vote accordingly for the rest of the day if they want to cast their vote. And I ask for unanimous consent the staff be allowed to make technical corrections to the bill. Thank you all.
UNKNOWN:
The bill with some technical corrections.
GRASSLEY:
Well, we're making technicalyou know, the English language. I think I'm better off if I just drop it.
(LAUGHTER)
Senator Smith to continue on his five minutes.