Unemployment Compensation Extension Act Of 2009
Floor Speech
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Mr. GRASSLEY. Mr. President, over the past few days, this Senator and several other Senators have been coming to the floor, talking about various aspects of the health care reform bills the majority has brought forward so far. Today I want to review the impact of these bills on Medicare beneficiaries.
First, this is the Senate Finance Committee bill. It would cut Medicare by about $470 billion over 10 years. The House version takes an even bigger bite out of Medicare. In that bill, Medicare is cut by about $540 billion. That is more, obviously, than $ 1/2 trillion. Cuts of this magnitude are sure to hurt Medicare providers and threaten beneficiaries' access to care.
Take a look at the cuts in these reform bills. It shows why there is genuine concern that health care for Medicare beneficiaries will suffer greatly because of health care reform. The proposed legislation permanently cuts all annual Medicare provider updates. Permanently, or another way to say it, cuts them forever.
In addition, some providers, such as hospitals, home health agencies, and hospices, would face additional cuts over the next 10 years. These permanent cuts are supposed to reduce Medicare payments to account for increases in productivity by health care providers.
Supporters of those productivity adjustments believe Medicare generally overpays providers. I wish they would ask providers in my State of Iowa. And they say this would happen because today's Medicare payments do not take into account productivity increases that might reduce the cost of providing care to beneficiaries.
However, this proposal for productivity adjustments is an extremely blunt instrument that will threaten beneficiary access to care. It is flawed in at least two ways. First, the productivity measure used to cut provider payments in the bill does not represent productivity for specific types of providers, such as nursing homes. I mean, you would think that if Medicare is going to reduce your payments to account for increases in productivity, it would at least measure your specific productivity, but that is not the case. Instead, these reform bills would make the payment cuts based on measures of productivity for the entire economy. So if productivity in the economy grows because let's say computer chips or any other products are made more efficiently, then health care providers see their payments go down. Where is the connection?
But there is a second major problem. This other problem is that the productivity adjustment actually punishes providers for increases in productivity. This policy says that when a provider is more productive, Medicare is going to take it all--100 percent of the productivity increase. The provider does not even get to keep half of the financial benefit for that increase in productivity. Where is the reward? Confiscating the entire productivity increase removes all of the incentives for providers to improve their productivity in the first place. This is a typical government policy. If you do better, the government wants its share. But here, the government not only takes its share, it takes all of it.
These cuts are sure to impact health care for seniors. But I don't want you to take my word for it, so I am going to go to one of those nonpartisan people in government. There are a lot of nonpartisan, very professional people in government. But now I refer to the Chief Actuary of the U.S. Department of Health and Human Services. He recently identified this threat to beneficiary access to care. He confirmed this in an October 21 memorandum analyzing the House bill. The House bill and the Senate Finance bill both propose the same types of permanent Medicare productivity cuts.
Here we have a chart referring to the Chief Actuary. Here is what Medicare's own Chief Actuary had to say about these productivity cuts. In reference to those cuts, he wrote that:
The estimated savings ..... may be unrealistic.
In their own analysis of the House bill, Medicare's own Chief Actuary says:
It is doubtful that many could improve their own productivity to the degree achieved by the economy at large.
They go on to say:
We are not aware of any empirical evidence demonstrating the medical community's ability to achieve productivity improvements equal to those of the overall economy.
In fact, the Chief Actuary's conclusion is that it would be difficult for providers to even remain profitable over time as Medicare payments fail to keep up with the costs of caring for beneficiaries.
So let's go back to this chart again. Ultimately, here is their conclusion: Providers that rely on Medicare might end their participation in Medicare, ``possibly jeopardizing access to care for beneficiaries.''
Medicare's Chief Actuary confirms what I have been hearing from providers back in my State of Iowa about these permanent productivity payment cuts.
Those providers are doing everything they can to be efficient and to be innovative. They are doing everything they can to get the biggest bang out of every Medicare dollar they can. But assuming the level of productivity assumed in these bills would be like getting blood out of a stone.
These health reform bills will make it even harder for them to keep their doors open. Look at providers such as nursing homes and hospices. They provide labor-intensive services. There are few gadgets or processes in these settings that will increase productivity. Nothing in these settings replaces staff being at their bedside and providing care.
So it is very incorrect to assume these providers will achieve levels of productivity like the rest of the economy, justifying those cuts that these bills anticipate.
Let's look at other providers affected by these productivity adjustments, like ambulances. The Finance Committee bill would permanently cut payments for ambulance services beginning in 2011. It would do this in spite of the fact that Congress enacts payment increases to ambulances year after year. In fact, the Senate Finance bill extends the existing add-on payments for ambulance services for another 2 years, until 2012, and then you know what, it turns right around and cuts them.
I have no quarrel with providing additional payments for ambulance services because without them many ambulance providers would not survive. Well, what about this slight of hand? What is the impact? The bill proposes that we cut ambulance payments while we vote to increase them. It is kind of like, I voted to cut before I voted to increase.
There is another proposal in the Senate bill that cuts Medicare, and now I am talking about the Medicare Commission.
The pending insolvency of Medicare is a very serious problem, and Congress needs to stop kicking the can down the road when it comes to shoring up Medicare. We are nearing the end of that road.
This Medicare Commission is fatally flawed, and the risk of unintended consequences that will hurt seniors outweighs any benefits it might have. Not only will it be harder to find a doctor or hospital that will see Medicare patients, you can also forget President Obama's promise about keeping what you have.
After all the promises about not cutting Medicare benefits, Congressional Democrats and the White House are using the Medicare Commission to take aim at the popular Medicare prescription drug benefits and the Medicare Advantage Program. Under the Finance Committee bill, this new Medicare Commission would be given explicit authority to cut Federal subsidies for Medicare prescription drug premiums. Think about that. Today, that Federal subsidy pays for about 75 percent of the premium for Medicare prescription drug coverage for seniors, but the Finance bill says: Cut that subsidy. It says: Raise Part D premiums for our seniors. That is right.
But again, do not take my word for it. On October 13, during the Finance Committee health reform markup, the Director of the Congressional Budget Office, CBO, was asked whether reducing the Part D subsidy would raise premiums. So chart 2 here is what Dr. Elmendorf, the Director of CBO, said: ``Yes ..... [reduced subsidies] would raise the costs to beneficiaries.'' So this was clear confirmation that if the Medicare Commission cuts payments to Medicare drug benefits, it will cause Part D premiums for seniors and the disabled to go up.
At a time when the country is facing record unemployment and Americans are struggling to keep up with increasing prescription drug costs, these provisions will make these lifesaving prescription drugs more expensive for beneficiaries. These are the kinds of things that get buried in a 2,000-page bill. When the other side does not understand why the American people are concerned about these huge bills, those are some of the reasons.
These health reform bills also propose to cut up to $170 billion from Medicare Advantage. In my home State of Iowa, these cuts will cause about a 25-percent cut in the amount of money going to extra benefits for 63,000 seniors who are enrolled in Medicare Advantage. That means fewer low-income Iowans will be getting the eyeglasses, hearing aids, and chronic care management they have come to rely upon.
Some health care providers, such as hospitals, got a special deal. They are exempted from the Medicare Commission's payment cuts. That means other providers and programs, such as drug benefits for seniors and Medicare Advantage, will be bearing the brunt of payment cuts.
The Medicare Commission would also become a permanent program that Congress would, for practical purposes, be unable to undo. By making the Commission a permanent program, it becomes part of the baseline in the budget over the next decade, so it just goes on forever, sort of like the Energizer bunny--it will just keep cutting and cutting and cutting. If Congress ever wants to shut off those cuts, then it will have to offset the cost when of terminating this commission. That will make it effectively impossible, and the damage will have been done.
These Medicare cuts will also only make things worse for beneficiaries in rural areas. Seniors in rural areas already face health care access problems. Medicare generally pays rural providers less than those in urban areas. Cuts of this magnitude will make it much harder for rural Medicare providers to care for beneficiaries.
But believe it or not, it only gets worse. My colleagues on the other side of the aisle intend to create a government-run health plan. If this government plan pays providers based on already low Medicare rates, it is only going to make this whole situation with access and keeping hospitals open much worse.
These Medicare cuts are achieved at the expense of health care access and quality. These Medicare cuts turn a blind eye to threats to health care quality and access. There are no fail-safes in these bills that kick in automatically if these drastic cuts cause limited provider access or worse quality of care. Instead, Congress will have to step in.
The Congressional Budget Office has already projected that these Medicare cuts keep increasing by--can you believe it?--the cuts will keep increasing 10 to 15 percent each year over the next decade, so 15 percent even beyond the year 2019. And provisions such as these productivity adjustments and the Medicare Commission would drive the increased cuts to the program.
So this will give you an idea of the damage these bills will do to health care, particularly for seniors. This is an example of the challenge Congress will face in the next decade if these bills become law. And this is just what we know about these bills we see. Who knows what is being cooked up behind closed doors right now.
Once again, it is time to back up this process. It is headed in the wrong direction. A bill of this magnitude should be done on a bipartisan basis with broad support. We can get it done right, if we work together. These bills have massive Medicare cuts. They will do permanent damage to our health care system--higher prescription drug premiums for seniors, increased costs, jeopardized access for beneficiaries. These bills are taking us in the wrong direction.
I yield the floor.
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Mr. GRASSLEY. Mr. President, I would like to take a moment to express my concern about a provision included in the unemployment compensation bill before the Senate.
The provision I am concerned about deals with a reversal of a sound international tax policy reform. Back in 2004, Congress passed and President Bush signed a major bipartisan business tax reform bill. The centerpiece proposal in the international tax reform area was a restoration of the Finance Committee position from the 1986 Tax Reform Act on the treatment of interest for the purposes of the foreign tax credit.
This reform, known as World Wide Interest Apportionment, was due to take effect at the beginning of 2009, but its implementation was delayed for 2 years in order to pay for housing legislation enacted in July of 2008. I expressed my concerns at the time about delaying sound international tax policy in order to fund new spending priorities. However, my view lost out and the delay of this provision was used as an offset.
Now, here we are again, in need of revenue offset in order to fund other priorities. The proposal in the bill before us delays this important reform an additional 7 years, until December 31, 2017. I support the main provisions of the bill intended to provide relief to those struggling to find work by extending unemployment benefits and to provide a lift to the economy by extending the homebuyer tax credit and the expanded net operating loss carryback period for small businesses.
My opposition to this revenue offset rests in the bad tax policy this proposal represents. The interest allocation reform would, if allowed to take effect, lower the chance of double tax that arises under current law from the artificial overallocation of interest expense to foreign income, even when the debt is incurred to fund domestic investment. The current rules actually penalize domestic manufacturers that compete in global markets by making it more likely they will be double-taxed on their foreign income.
Several companies have spoken to my staff about the negative ramifications this delay will have on them. Some of these companies are just starting to grow their businesses beyond the U.S. borders. The delay of this important international reform will make it more costly for these companies to expand into these markets. If these companies cannot grow beyond the domestic economy, they will be unable to compete in the global marketplace.
Mr. President, I ask unanimous consent that a letter I received from John Deere explaining their concern about delaying the implementation of this provision be printed in the RECORD.
There being no objection, the material was ordered to be printed in the Record
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