Service Members Home Ownership Tax Act Of 2009 - Resumed

Floor Speech

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Mr. GRASSLEY. Mr. President, I had a chance to hear a great deal of what the Senator from Alabama said. I think I would highlight that what he said is what he is hearing from the grassroots of his State, which is very much what I hear from the grassroots of my State: people are very concerned about this piece of legislation leading to the nationalization of health care, similar to what they have seen this administration previously do this year with the nationalization of General Motors, partial nationalization of the financial system--a big deficit. And then they see the money being spent on this bill--$2.5 trillion after it gets fully implemented. And where are you going to get money? And what is that going to do to the economy? And, more importantly, what sort of a legacy is that leaving to our children and grandchildren?

He also correctly stated that I do visit every county every year. The number of counties the Senator had was just a little bit high. We only have 99 counties. But for the 29 years I have been in the U.S. Senate, I have held a town meeting in each one of our counties every year. So I do have the benefit of 2,871 town meetings as a basis for suggesting what people tell me face to face, besides the large number of phone calls we get.

You cannot believe the number of phone calls that are coming in now, the number of e-mails we are getting--historically high. I have never had that before on any issue. I assume it is the same for the State of Alabama, contacting their two Senators as well.

Mr. President, I rise to bring up an issue that is a relatively new issue in this debate, as in the secrecy of the negotiations that are going on around Capitol Hill on the issue of health care reform. These secret negotiations actually started about October 2 when Senator Reid, the leader, had to merge the bill out of the Senate Finance Committee and the bill out of the Senate HELP Committee into one bill. It took a long period of time to do that.

We are in the second week of debate. I hope people realize that 99 Senators ought to have the same privilege that 1 Senator had of getting a grasp of this huge 2,074-page bill. There are still negotiations going on because the leader still does not have locked down the 60 votes that it is going to take to get to finality.

So some of these discussions are: what can we do to get a few votes if we do not have a so-called public option? And the latest of that is: Well, allow people to buy into Medicare. So I want to speak about that issue because it sounds pretty simple. It may get 4 more votes and may get 60 votes, but it is bad. It may be good politically, but it is bad for Medicare and particularly for Medicare in rural areas where we have a difficult time keeping hospitals open, and we have a difficult time recruiting doctors in rural America.

So I would talk about the recent news reports of a proposal being concocted behind closed doors to allow 55- to 64-year-olds to buy into the Medicare Program. Supposedly, this idea has been put on the table to get the votes for supporters of having a brandnew government-run health plan and the people who do not like that.

Back in the spring, such a proposal came up during the early stages of our Finance Committee's health care reform efforts. The idea was originally proposed by President Clinton even going back to 1998. I opposed such a proposal back then, and I oppose such a proposal now. I oppose the proposal because of its negative effect on the Medicare Program and our senior citizens who use Medicare.

The best way to describe the effect of this proposal on the Medicare Program and its beneficiaries is to quote former Senator Phil Gramm of Texas when he was asked about President Clinton's proposal when President Clinton put that proposal on the table back in 1998. Senator Gramm said this about President Clinton's proposal, which would be applicable today as our colleagues are studying it:

If your mother is on the Titanic, and the Titanic is sinking, the last thing on Earth you want to be preoccupied with is getting more passengers on the Titanic.

Since its inception in 1965, the Medicare Program has helped ensure senior
access to health care. But, as the Senator from Alabama and I were just discussing, the problems with health care and Medicare are such that Medicare is already under extreme financial pressure. So why would you load more people into a system that Senator Gramm of Texas was referring to as the Titanic? You would not load more people on it as it was going to sink.

This is not to say that this entitlement program, Medicare, is not in need of improvement, but having the 36 million Americans who are age 55 to 64 buy into the program is not an improvement. Even groups supporting the Reid bill, such as the AARP, are pointing out the severe shortcomings of such an approach.

Last summer, the AARP Public Policy Institute published an analysis of the Medicare buy-in concept. In their report, the AARP points out the potential for increased Federal entitlement spending. AARP said:

Expanding the program to more people could raise federal spending even further if their care is made affordable through subsidies that would be funded by the existing Medicare trust funds.

And do not forget the effects of adverse selection from a Medicare buy-in program. Here AARP has studied it, and this is what they say about that:

..... the premium may be too uncompetitive for those who don't use much health care and unaffordable for those with modest incomes. This may limit buy-in enrollment and drive up cost further.

So this means that this buy-in proposal is likely unsustainable. And we all know what happens when the government creates an unsustainable new program. What happens? The taxpayers end up on the hook for bailing it out down the road sometime.

We all know the Medicare Program has $37 trillion in unfunded obligations. We all know about the pending insolvency of the Medicare Program. The trustees say so every spring.

The Medicare hospital insurance trust fund started going broke last year. In 2008, the Medicare Program began spending more out of this trust fund than was coming in through the payroll tax. The Medicare trustees have been warning all of us for years that this trust fund is going broke. They now predict that it will go broke right around the corner in 2017. Well, as the AARP has pointed out, adding millions to the Medicare Program would almost certainly make things much, much worse for the fiscal health of a program that is not in very good financial shape. This proposal would also make things worse for the 45 million Medicare beneficiaries who paid into the program over the years and are receiving benefits under the program.

Since we started debate on this 2,074-page bill, Members on this side of the aisle have questioned the wisdom of slashing Medicare by $ 1/2 trillion and then using the savings to start a new Federal entitlement program. We on this side have stressed that provider cuts of this magnitude will make it financially harder for providers to care for beneficiaries. We have pointed out that this will worsen beneficiary access to health care, as providers stop treating Medicare patients.

Adding millions more Americans to Medicare on top of the $ 1/2 trillion in Medicare cuts in this Reid bill would make beneficiaries' access to care much worse. But do not take my word for it. Even national hospital associations such as the American Hospital Association and the Federation of American Hospitals are opposing this proposal. They are mobilizing their ranks against this proposal even as I speak. Yes, the same groups that agreed already--and this was back in June--to $155 billion in Medicare cuts--and they did that in an agreement with the White House and got sweetheart deals in this bill--do not want the Senate to go the route of expanding Medicare for people under 65 years of age. The American Medical Association has also opposed this proposal. These groups recognize the potential for financial disaster by boosting the number of patients with coverage that pays well below cost.

This Medicare buy-in proposal would also jeopardize retiree benefits. Going back to the same AARP analysis that I have quoted, they concluded that a Medicare buy-in program could further reduce employer-sponsored health benefits.

According to the AARP:

..... a buy-in program might displace retiree coverage now available through [their] employers.

Still quoting AARP, they said:

As health care costs tend to rise with age, employers might have the incentive to find ways to avoid offering private coverage for early retirees. .....

So with fewer patients with higher paying private coverage, there is less opportunity for providers to cost-shift to make up for low Medicare payments, because everybody recognizes the Federal Government does not pay 100 percent of costs. This would make it even harder for providers to treat Medicare beneficiaries, and as a result, beneficiaries would have an even harder time finding a provider to treat them.

I come from a rural State where Medicare reimbursement is already lower than almost every other State in the Nation, so I have serious concerns about the ability of the Iowa providers to keep their doors open if more and more of their reimbursement is coming from Medicare. I know this is a concern that is shared by rural State Members of this body from both sides of the aisle. But losing providers to serve Medicare beneficiaries would only be the beginning of access problems caused by a Medicare buy-in program. Because if you think it would be tough to keep existing Medicare providers, think how hard it would be then to recruit new ones.

Provider recruitment is already a major problem in rural States, particularly my State of Iowa. This issue comes up during my meetings with constituents in Washington or during the townhall meetings I hold in each of Iowa's 99 counties every year. It is already a challenge under the current Medicare Program for Iowa to compete for providers with urban areas where Medicare reimbursement is higher.

I hear countless stories from constituents where they make great efforts to recruit doctors only to lose them to areas where Medicare reimbursement is higher. The Medicare buy-in will only make this situation worse in my State of Iowa, because more and more reimbursement would come from Medicare. So the current and future Medicare beneficiaries would be assured of limited access to providers because of this buy-in.

AARP pointed out another flaw in this buy-in proposal. In their analysis, AARP warned that there are large cost-sharing requirements in Medicare, so buy-in enrollees would still be exposed to significant cost sharing. Maybe these buy-in enrollees would have the resources to purchase supplemental Medicare policies to defray these cost-sharing requirements. Perhaps AARP is thinking of making even more money by selling supplemental policies to these retirees.

I share the goal of getting more Americans covered, but expanding the Medicare Program to early retirees is not the answer. Medicare beneficiaries have paid in to this program all these years and rightfully have the expectation to receive the benefits to which they are entitled under the program. The Medicare buy-in proposal would jeopardize these benefits. It would jeopardize existing retiree benefits. It would leave retirees exposed to significant cost sharing. It would be unsustainable and taxpayers would end up footing the bill.

I yield the floor.

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