Medicare Conference

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.

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.