Service Members Home Ownership Tax Act Of 2009 - Resumed

Floor Speech

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Mr. GRASSLEY. Mr. President, as I said yesterday when I spoke on this very same bill, the excesses of the Reid bill appear willfully ignorant of what is going on in the rest of the economy outside of health care.

I believe the reason people have objected to the health care bill so quickly after the summer was that there was a rude awakening on a lot of other things the Congress has done to put this country further into debt, and then they heard us talking about $1.3 trillion and $1.6 trillion for health care, and they thought Congress had gone bananas. So everything seemed to focus on health care reform at that particular time. People were concerned about the economy as a whole. I think the health care issue in and of itself was what people came out for, but health care was kind of the straw that broke the camel's back and brought attention to everything else--the debt and things that weren't working. At the same time, they saw the auto industry going into bankruptcy and, of course, being bailed out or nationalized, as it is. They have seen banks go under. Then they wondered about health care being nationalized as well.

We have seen our Federal debt skyrocket by $1.4 trillion since this President took office. I say ``since this President took office'' because I acknowledge there was a trillion-dollar debt in last year's budget. Just with the addition, it comes out to $11,500 per household. So our Federal debt exceeds $12 trillion for the first time in history. Already, foreign holdings of U.S. Treasuries stand at nearly $3.5 trillion or 46 percent of the Federal debt held by the public. There doesn't appear to be light at the end of the tunnel. Don't just take my word for it. We have the nonpartisan CBO and the White House Office of Management and Budget which have intellectually honest people working there who aren't politically motivated who tell us really what is what. This is what they have to say. Both have stated that within 5 years, the Obama administration's policies will more than double the amount of debt held by the public. Both have stated that by 2019 these policies will more than triple the national debt.

In this context, you would expect Congress to be considering a bill that would create jobs and prevent the country from being burdened with a bigger and more unsustainable Federal budget. Instead of working to bring the Federal budget under control, we have in this Congress--the majority of it, by 60 being Democratic--putting forward a bill, this 2,074-page bill before us that will cost $2.5 trillion when fully implemented. Instead of addressing the budget crisis, this bill will bend the Federal spending curve the wrong way by over $160 billion over the next 10 years.

I remember during the summer that the Gang of 6, under the leadership of Senator Baucus--I was part of that bipartisan group--said there are two things we need to accomplish: We need to make sure that what we have comes out balanced, and we also need to make sure we do not have inflation of health care continuing to go up, that we would eventually bring it down. These bills don't do either. I know people say we do have the 10-year window balance. Yes, that is technically right. But when you have 10 years of income and 6 years of policy expenditure, it is easy to do almost anything you want to in that 10-year window. But you have to look beyond that 10-year window, and then you have questions about that.

So instead of addressing this budget crisis, this bill adds to the Federal burden with enormous costs from the biggest Medicaid expansion in history and unfunded liabilities from the new program. Instead of addressing this budget crisis, we are now considering this 2,074-page bill that cuts Medicare by $ 1/2 trillion and threatens seniors' access to care.

After the bailouts of Wall Street and Detroit, a stimulus bill that has led to the highest unemployment in 26 years, and the Federal Reserve System shoveling money out the door without any accountability--they even object to having the GAO check on them--the health care reform agenda the Democratic leadership put forward is, once again, kind of the straw that broke the camel's back.

We have the Senator from Arizona offering a motion to send this bill back to the Finance Committee with instructions to report a bill without the drastic, arbitrary Medicare cuts that are in this bill. I support the Senator's motion because it is an opportunity to fix the bill and then come back to the full Senate with a better bill. Anything that comes back to the Senate floor should not have the drastic and arbitrary Medicare cuts.

I am hearing this from seniors: I have paid into this Medicare for all these years. I am in retirement, and now Congress wants to take that money and establish a new entitlement program for somebody else other than seniors. So to a lot of seniors it just doesn't add up.

This bill, as written, now permanently cuts all annual Medicare provider payment updates in order to account for the supposed increases in productivity by health care providers. The productivity measure used to cut provider payments in this bill does not represent productivity for a specific type of provider, such as nursing homes.

You would think that if Medicare is going to reduce your payments to account for increases in productivity, it would at least measure your productivity, not an entire group of productivity or not somebody else's productivity but yours, and you would be rewarded according to that productivity or, if it wasn't productive, be harmed because of it because you are not doing the best job you can. 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 the productivity of the economy grows because computer chips and other products are made more efficiently, then health care providers see their payments go down. What is the relationship? These permanent cuts threaten beneficiary access to care.

The Chief Actuary at the U.S. Department of Health and Human Services recently identified this threat to beneficiary access to care. He confirmed this in an October 21 memorandum analyzing the House of Representatives' bill and again in a November 13 memorandum. Both the House bill and the Senate bill propose the same type of permanent Medicare productivity cuts.

We have a chart here. Here is what Medicare's own Chief Actuary had to say about these productivity cuts. Referring to these cuts, he wrote:

The estimated savings ..... may be unrealistic.

In their analysis of these provisions, Medicare's own Chief Actuary said:

It is doubtful that many could improve their own productivity to the degree achieved by the economy at large.

The Actuary goes 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.

So you have a $14 trillion economy today. You have $2.3 trillion of that, or one-sixth, related to health care, and you are going to try to do something to the health care aspect, productivity measure, harm or benefit, based upon what happens to the entire $14 trillion economy? That doesn't make sense.

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 cost of caring for the beneficiaries.

Going back to my chart again, ultimately here is the Chief Actuary's conclusion--that providers who rely on Medicare might end their participation in Medicare, ``possibly jeopardizing access to care for beneficiaries.''

This bill also cuts $120 billion from the Medicare Advantage Program, which provides health coverage to 11 million seniors, including the 64,000 seniors in my State of Iowa. These drastic Medicare cuts would reduce Medicare payments for those 11 million beneficiaries by close to 50 percent.

Just like a lot of people, seniors are struggling financially right now, and these Medicare Advantage cuts will only make it harder for them to afford vision care, chronic-care management, dental care, and other benefits they have come to rely on, of their own choosing, because they decided to go to Medicare Advantage instead of staying in traditional Medicare. And what they are going to lose if they don't want to stay in Medicare Advantage and they are not going to get the benefits they got out of it, they go over to traditional Medicare, are these sorts of benefits which will not be included in traditional Medicare.

During the campaign, the President said that if you like what you have, you can keep it. Well, that won't be true for Medicare Advantage people. They will either pay more, which is contrary to what the President said in his September speech to the joint session of Congress, they are going to pay more or lose benefits.

Another problem is that this bill creates a new body of unelected officials with broad authority to make even further cuts in Medicare. Ironically, this body has been renamed the ``Independent Medicare Advisory Board,'' but it is not really advisory. I would hardly describe this group that way when its so-called recommendations can automatically go into effect, even absent congressional action--absent Congress going after it.

I want to go to the chart again. The Wall Street Journal has a more appropriate name for this group. They call it the ``rationing commission.'' They described it as ``the unelected body that will dictate future medical decisions.''

These additional cuts in Medicare will be driven by arbitrary spending targets and automatic Medicare cuts written into law by this bill.

This bill, unwisely, makes this board permanent. This bill requires this board to continue making even more cuts to Medicare and to do that forever. If you want to stop it, it will take another act of Congress to do it. Of course, this kind of sounds like the sustainable growth rate, or SGR, that impacts doctors every year. We always have to correct the mistakes that were made by passing the sustainable growth rate, SGR, first set in place probably 20 years ago, because this SGR formula set arbitrary spending targets. These targets turned out to be unrealistic. Now that flawed formula will cause an automatic 21-percent cut in Medicare physician payments on January 1 if Congress doesn't intervene by the end of the year.

We all know the challenges Congress faces every year in trying to prevent these Medicare physician cuts that are supposed to take place because spending targets have been exceeded, so automatic payment cuts are then to automatically kick in.

We have all heard from physicians in our States about the challenges in providing care to Medicare beneficiaries while these payment cuts loom above. This permanent board would cause the same problem for the entire Medicare Program, not just as SGR does for physician payments. This is a far bigger threat to the Medicare Program. It will jeopardize access to health care for our Nation's seniors on a much bigger scale.

If this bill is enacted with this permanent board, we will be hearing from other providers, in addition to doctors, about how they cannot afford to treat Medicare patients.

What is more alarming is that special back-room deals were cut to exempt some providers. This forces then, because of these special exemptions that were made, even greater cuts to fall directly on the remaining providers.

Also, the Congressional Budget Office has confirmed that the board structure requires it to take focus on its Budget Act on premiums that seniors pay for Part D prescription drug coverage and for Medicare Advantage.

I have already spoken about Medicare Advantage but just think: One of the things we hear about this time of the year all the time from seniors is prescription drug costs are going up, premiums on Part D are going up. Then you want to give this advisory commission--that is not advisory--authority to increase premiums that seniors pay for Part D prescription drug coverage? That means higher premiums for some of our most vulnerable populations.

Another issue that cannot be ignored is the pending insolvency of the Medicare Program. The Medicare hospital insurance fund started going broke last year. That means more money is going out than is coming in from the payroll tax. The Medicare trustees--you remember, they report yearly and they look ahead 75 years--the Medicare trustees have been warning all of us for years that this trust fund is in terrible trouble and, by a certain date, 2017, we bust it. But rather than work to bridge Medicare's $37 trillion in unfunded liabilities--and that $37 trillion is that 75-year figure the trustees give us once a year, each spring, as they update it--so instead of working to bridge that $37 trillion of unfunded liabilities, this bill does what? It cuts $ 1/2 trillion from the Medicare Program to fund yet another unsustainable health care entitlement program.

Medicare has a major problem with physician payments that could cost more than $250 billion to fix, but this bill ignores the problem. Instead, the proposed legislation assumes the government would implement the 23-percent Medicare cut scheduled to go against doctors in January 2011, as well as additional cuts that are scheduled for future years under that SGR.

By pretending the physician payment issue does not exist, this bill would leave future Congresses virtually no way to restructure Medicare that would fix this problem. Instead, this bill diverts Medicare resources elsewhere and ignores major problems such as that one.

Besides ignoring major problems, such as the physician payment issue, this bill also ignores the predictions of experts that Medicare cuts, such as are in this bill, will jeopardize access to care of Medicare beneficiaries.

There are no fail-safes in this bill that would automatically kick in if these drastic cuts caused limited provider access or worsened quality of care. Instead, Congress would have to step in. Congress can always step in, but will it step in. We know how impossible it is to undo this kind of damage. By making this board a permanent program and requiring permanent productivity cuts, they become part of the baseline in the next decade. They go on cutting, cutting, cutting forever. If Congress ever wants to shut off those cuts, then this is the problem Congress faces: We have to come up with offsets to do it. The administration can cut and cut and cut or add and add and add. They do not have to do that. But the budget laws require us to have these offsets or to do the famously impossible thing to do--get a 60-vote margin to overcome it.

The Congressional Budget Office has projected that these Medicare cuts keep increasing by 10 to 15 percent each year over the next decade. You heard me right. Medicare cuts keep growing 10 to 15 percent each year beyond the year 2019. Those are some pretty substantial cuts in a program that 43 million seniors and people with disabilities rely on for their health coverage.

Provisions, such as the productivity adjustments and the Medicare independent advisory board, would drive the increased cuts to the program. This gives us an idea of the damage these bills will do to health care. This is an example of the challenge Congress will face in the next decade if this bill--this 2,074-page bill--becomes law.

The few years of extended life this bill would give to the Medicare hospital insurance trust fund is a pyrrhic victory because the drastic and permanent Medicare cuts in this bill will worsen health care quality and access.

This bill is the wrong way to address a big and unsustainable budget. You
simply cannot slash Medicare payments, spend those funds to start up another new unsustainable government entitlement program, and then turn a blind eye toward the effect on access and quality. That is why I will support the motion of the Senator from Arizona to commit this bill and develop a bill without these Medicare cuts. I urge my colleagues to do the same.

The reason I urge my colleagues to do the same is because we have an opportunity to step back just a little ways, go back to the drawing board on bipartisanship and maybe come up with something that fits in with the health care issues affecting the lives of 306 million Americans and, secondly, restructuring one-sixth of our economy. That is something I have heard people on both sides of the aisle say ought to be done on more of a consensus basis than the partisan road this is going down. It was a road that, for the first 6 months of this year, looked very doable, but it never turned out that way.

I get back to this bottom line: If you are having a coffee club meeting in some restaurant Saturday morning in Delaware, Illinois or Iowa, and they are talking about health care reform and I go in to explain that what we are discussing right now on the floor of the Senate is going to raise taxes, it is going to raise premiums, it is going to not do anything about the inflation of health care costs, and we are going to take almost $ 1/2 trillion out of the Medicare fund to fund a new entitlement program, I would say that unanimously people would say: This is not health care reform. There has to be something else. But we throw away the word ``reform'' when we are not accomplishing the kind of goals we set out to accomplish the first 6 months of this year.

I yield the floor.

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