Medicare Under Attack

Floor Speech

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Mr. GARAMENDI. Thank you very much, Representative Tonko. Thank you for bringing this issue alive this evening and for giving us this time to discuss this.

Many, many thoughts went through my mind today as this vote and the debate went along. As it was debated by our Republican colleagues, I just couldn't understand where they were coming from. What would motivate them to want to destroy Medicare? And Medicaid? Why would they do that? The thoughts just reeled through my mind, and I'm going, I guess maybe they had had a different experience than I did.

I was a young boy in the 1950s, and there was no Medicare, and there was no Medicaid. My father was a rancher. We grew up in a ranching area up in the foothills of California, in the Mother Lode Gold Country. He took me one day to the county hospital. It was one of the most horrible moments I can remember as a child, because the wards, there was just a ward, maybe 20 or 30 very elderly men, and then on the other side elderly women, who were dying. Their medical care wasn't available to them.

Sometime later, maybe another month after that, we were out chasing cattle that had gotten loose--I was just a young man--and one of our neighbors, we came upon the neighbor and asked where the cattle might be, and he said they were down that way. He had this huge growth on his mouth, and my dad asked about that, and he said, it's cancer. He had no insurance. He had no care. He was probably 70, 75, 80 years old. He died shortly thereafter.

In 1965, this country did a remarkable, beautiful, wonderful thing. We gave to every senior in America medical care, doctor and hospital care, the opportunity to live longer, to have that cancer treated, to eliminate those wards in the county hospital where people simply were warehoused to die. And here today, for the third time since January of this year, the Republicans have put forth a proposal--and hopefully it will never become law--to terminate Medicare.

Have no doubt about it, Mr. Tonko, they would terminate Medicare. As you said, they would turn it over to the private insurance companies, with a voucher, insufficient to pay for medical care insurance from an insurance company today. The discrimination that exists in insurance for people with preexisting conditions, and the paramount preexisting condition in America is age. If you're 55, 60, 65, you have a preexisting condition. It's called age. What will come of those people?

What is this Nation all about? Who are we as Americans? Who are we as Americans that on this floor in a charade, in a falsehood, brought to America today, and twice previously, legislation that doesn't deal with the fundamental issues of the budget, the tax issues, the revenue side of it, real reform in the programs, whether it's Medicare or the military. Real reforms. No, no, no. Just cut, slash, burn, and take your seniors, toss them aside.

This is not the America that I want to live in. This is the America of the 1950s when there was no Medicare and when seniors were in wards left to die, or in no care at all. Every American 65 years of age is guaranteed a comprehensive health care benefit. It's called Medicare. Whatever else we stand for, that's where the Democrats stand. We will fight this fight. We will not lose this fight.

This is about the very heart and soul of this Nation.

Mr. Tonko, thank you for these moments.

Mr. TONKO. I think it's important for us to share with the American public what's happening on this floor in the House of Representatives. So many suggest that the history that drove Medicare to be developed, the dynamics that were so impacting on the senior community across this country coast-to-coast, could be revisited if their proposal to end Medicare--the Republican proposal to end Medicare--were to take hold. And I know Representative Courtney, Joe Courtney from Connecticut, understands that. He has shared those concerns over and over again, that we could go back and revisit history of 45 years ago, 46 years ago, when people literally were impacted by cherry-picking going on, where they couldn't afford policies even if they were offered to them, and many times they couldn't get policies written to cover them.

Representative Courtney, thank you for joining us this evening on what is an important bit of information exchange for America. They need to know that the seniors are at risk.

Mr. COURTNEY. Thank you, Mr. Tonko.

I want to thank Congressman Garamendi, who did great service as the insurance commissioner in the State of California. He understands these issues intimately.

I think this is really a generational gut check for our country in terms of whether or not this attempt to butcher Medicare, one of the most successful programs in American and world history, is going to succeed or not. John described very powerfully the public wards in the public hospitals and the third-tier status that seniors had prior to 1965. Kaiser Permanente actually did a study in terms of just reminding us of what this country faced when President Johnson signed that legislation on Harry Truman's porch step. At the time Medicare passed, only 50 percent of seniors over 65 in America had health insurance of any sort whatsoever. Part of it was class. Part of it was the underwriting rules. But part of it is, just as Mr. Garamendi said, age is a factor which carries risk. And there is no insurance company that evaluates risk within its own book of business that can really take all comers when you're talking about a population of 65 and up. Life expectancy was 70 in 1965.

So we passed Medicare, and what happened is we created a guaranteed benefit. The genius of Medicare is that we pooled the risk, and we actually made an affordable system financed through payroll taxes, premiums. The system has had its ups and downs financially over the past 45 years. The fact of the matter is we now have a life expectancy of 78 in this country. It has worked. We have also alleviated the crushing out-of-pocket costs that seniors faced in 1965, and we have elevated the status of people in that demographic in a way that the private insurance market just was totally incapable of doing it.

Last year, we passed the Affordable Care Act, which modified Medicare and made some important improvements and changes. We now have annual checkups covered. We now have cancer screenings. We now have extended prescription drug benefits. And one of the things that the Republicans claim, in trying to sell this measure with snake oil, frankly, is that somehow people who are 55 and above today will not be affected by the passage of the Ryan plan. In fact, we know that if you look at that plan, it cancels all of those new benefits in year one.

So seniors who now--hundreds of thousands--have gotten their annual checkups in the last 8 or 9 months since the new benefit kicked in, cancer screenings that kicked in, prescription drug assistance that's now providing health for seniors in the doughnut hole, all of that would be canceled today, and any prospective change that is proposed in this system, which again, starting for individuals 55 and under, now will be left in a private insurance market with a totally inadequate voucher, as Mr. Garamendi said. Again, that's where the real butchering of Medicare takes place. But there is no question for anyone who's listening tonight that if you are a senior citizen on Medicare, the false claim that you are somehow insulated from this measure because of the fact that you're already in the program, that is something that people have got to recognize and understand. That new benefits that are making this a smarter, more effective program are going to be canceled in year one if this measure, God forbid, ever is enacted.

Mr. TONKO. Very well said, Representative Courtney.

What I think upsets all three of us is the fact that, with the Affordable Care Act, where we found savings by reining in some of the profit margins of insurance companies that were used--those savings were used to fill the doughnut hole that you just talked about--they're now taking those savings and sharing them in a way that's not going to benefit seniors, and they're not going to fill that doughnut hole. So when seniors come to us and say, Look, what is this talk about Medicare? they're saying, You destroyed Medicare. No. We were working to make it stronger. We're working to fill the doughnut hole so that prescription costs that are impacting seniors--my gosh, with the passage of time, we have seen advancements in pharmaceutical research that provides more opportunity for wellness or for cure. That has stretched opportunities galore for our seniors. But they would raid those savings and pull them away again from our senior community and use those in other ways, which we find very offensive.

This ending of Medicare with this third vote tonight, how much more do we need to challenge the security of seniors out there? They're disturbed every time they hear of this effort to end Medicare. We want to make it stronger. We're talking about all sorts of efforts to bulk purchase pharmaceuticals for the Medicare program, which would make it stronger. They forecast $156 billion or $157 billion of savings to the Federal Government that would provide correspondingly some $27 billion in savings for individual seniors just by doing that.

So there's an all-out effort here to strengthen Medicare, not to end it. And it's sad that tonight we

witnessed the third vote cast here, with the majority's support so that it passed in the House, to move forward and include in that packaging the ending of Medicare.

Representative Garamendi, you have a chart up there.

Mr. GARAMENDI. I have this chart. We've used it before as we've discussed Medicare. It brings this whole thing right into focus. This is a tombstone. Medicare. 1966-2011. Created by LBJ. Destroyed by the GOP. It may be a little harsh, but this is really the reality of what is going on here. It's the end of Medicare as we know it. It's the end of the guaranteed benefit program, and it does turn everyone who is 55 years and younger over to the insurance industry.

I spoke to this briefly before--and Mr. Courtney, thank you for reminding me that I was the insurance commissioner in California for 8 years. I fought tooth and nail with the insurance industry over health care and automobile and homeowner and other kinds of insurance. In the health care sector, the private health insurance companies are about profit. That's their goal. They are profit-making organizations. And to enhance their profits, they do a variety of things. Deny coverage. You've got a policy? Oh, but that was a preexisting condition, and therefore we're not going to cover it. Or, gee, that kind of treatment is not covered.

There was a lot of talk about death panels. I'll tell you where the death panel is--and I saw this as insurance commissioner. I saw insurance companies denying treatment that led to the death of numerous individuals over those 8 years. The real death panels have been the private insurance companies. In Medicare, I know of no case where that has happened. Maybe it did, but I'm unaware of it, and I had the biggest State--California. Also, there is this kind of discrimination that takes place.

Let me just put this additionally to it. The private health insurance company is grossly inefficient. It is inefficient. It has enormous additional costs that Medicare does not have. By comparison, Medicare is a very efficient operation. It takes about 2 percent to raise the money and another, maybe, 2 or 3 percent to pay the bills and, on the provider side, maybe another 10 percent to do the billing also. Maybe the total cost is somewhere at about 15 percent in administrative costs. The private insurance companies run somewhere near 30 percent in administrative costs when you consider profit, when you consider the advertising, sales commissions. And they have thousands of different policies covering this, but not covering that, this deductible, that deductible. And when it gets to the provider, the ultimate chaos. So the administrative cost in the private system is about twice what it is in Medicare. Medicare is a very efficient, very effective, universal program that raises the money in a very fair way.

All of us pay for it, and all of us should be getting that benefit when we get to be 65--but not so in the private sector. Our Republican colleagues want to take all of this money and hand it over to the private insurance market and say, "Okay. You guys take care of it.'' It's less efficient. It's certainly deadly in denying coverage and benefits. Just compared to Medicare, it's very inefficient.

Mr. TONKO. Representative Garamendi, earlier you had talked about the impact on the 55-year-old or 54-year-old. If you look at a 54-year-old today, that individual is advised to save some $182,000 to $190,000 so as to have that available cash to cover the deficiency that's going to come with this end to Medicare, where you shop with this voucher, and it's only going to cover 32 cents on the dollar. So that 54-year-old is already impacted, but there is more to the picture than that.

When you draw the line in the sand and say, ``look, we end Medicare, and so those under 55 today will have to fend for themselves,'' they'll shop out in the private sector market, but when you don't have the newly entering senior community as they turn 65 enter into the mix, there is a correlation of age with the drawdown of the health care system. As you take the younger senior population, they provide for that ebb and flow within the pooling that Representative Courtney talked about earlier. The beauty of the program is that you pool seniors from the very youngest of seniors to "senior'' seniors, and as that need for health care grows with age, the newly entering help provide that balance. So the stability of the program and the durability of that program is at risk, I believe, because we're changing the dynamics.

Representative Courtney, you have talked about the security of that program, of the stability that we can provide, and how we in this House, as Democrats, have been working to strengthen the Medicare program: to build the trust fund so that there is this underpinning of support that will enable the program to continue to meet the needs of the upcoming population of baby boomers.

Mr. COURTNEY. Right, and thank you.

Because there was so much, almost, fear language surrounding this debate in terms of whether Medicare is bankrupt, whether Medicare is going broke, whether Medicare is running out of money, it's important for people to go back and read the trustees' report, which was just issued a few weeks ago. It is a report that is issued on an annual basis. It has been since 1966 when Harry Truman was the first Medicare beneficiary to sign up for the program with his wife, Bess; but it has had its ups-and-downs over the years.

The report that just came out said that Medicare is fully solvent, can pay all of its bills through 2024 and that it can pay 90 percent of its bills through 2045.

Now, there is no question that, compared to last year's report, there was some deterioration in terms of that projection, but the trustees were careful to point out the fact that that slippage in terms of some of the years of lost solvency was due to the economy and due to payroll tax collection. It had nothing to do with overuse or certainly nothing to do with the Affordable Care Act. In fact, they said the opposite, which was that the Affordable Care Act actually extended the solvency of the Medicare program by a factor of 8 years. Thank God we had passed that legislation, because we really would almost be bumping up into a cliff at this point if we hadn't done it.

But again, I think it's important for people to remember that, going back in time to 1970, the Medicare solvency report that came out for the trustees projected 2 years of solvency as to when it was going to hit that tipping point. When Ronald Reagan was President in 1983 and came to the Congress, seeking an increase in the debt limit to avoid default, Medicare solvency was half of what it is today. So the fact is that it has had its challenges.

As you point out, there are good ideas about using bulk purchasing, and there are good ideas about revisiting the subsidized insurance program in terms of the size of the insurance company subsidies. We can deal with that 10 percent shortfall between 2024 and 2045 without butchering the program. That really is, in my opinion, the wolf in sheep's clothing surrounding this debate in that somehow people are using solvency reports as an excuse to basically eliminate the guaranteed benefit.

Again, it is our duty as Members of Congress to make sure that we protect for the next generation the benefit that our parents enjoyed and that pushed out solvency from age 70 in 1965 to age 78 today. That is a Medicare success, and we cannot go backwards as a Nation.

Mr. GARAMENDI. Mr. Courtney, thank you for pointing out that very, very important fact that seems to have been totally overlooked in today's debate, at least by our Republican colleagues.

There is another factor here, and that is that Medicare, like all medical services across the United States, whether you are in Kaiser or in Blue Cross, Anthem or Medicare--all of these programs are carried along on the inflationary wave in health care, which actually runs two or three times the general inflation of our economy. So health care is growing very, very rapidly overall. It turns out that the inflation rate in Medicare is about one half the inflation rate in the general health care system. Now, if Medicare is part of the health care system and takes care of the most expensive part of the population, how is it that Medicare is not inflating--the costs are not going up--as fast as the costs are in the private health insurance sector?

The reason is, as I discussed before, Medicare is very efficient. It is a very, very efficient program: a universal benefit across the Nation, uniform; clear deductibles, clear co-pays; and in Medicare part B, cost sharing. All of that is there and it's understood. The private insurance has 1,000 different policies--chaos throughout the marketplace.

Now, we've talked about this a little bit. We really need to have Americans understand that the

Affordable Health Care Act had a whole series of very, very important legislative activities that will reduce the overall cost of health care.

An example is electronic medical records, not written records by a doctor or a nurse--either legible or illegible, stacked in a great big stack of papers--and all of us have seen those. Electronic medical records. It's a very, very important way to reduce problems, to reduce misunderstandings, a back-and-forth with drugs and the like.

Another very important factor is hospital infection rates. Hospitals have a very high infection rate, and don't get paid a second time for retreating the original illness when that person comes in. It has a very, very important impact on reducing the cost of medical services. There were many other things you talked about--the drug benefit.

By the way, how is it that during the Bush period when the Medicare part D, the drug benefit, went into place that the pharmaceutical industry was so powerful that they denied American taxpayers the opportunity for the government to negotiate for the price of drugs?

Mr. Tonko, you raised that point. To this day, we've not had our Republican colleagues come along and say, "Oh, yeah. There's a good way to save money. We'll just negotiate for the drugs.'' It turns out, as to the military and the health care services provided by it, they can negotiate for drugs, but Medicare cannot.

So it costs us, you said, $150 billion over 10 years. Is that the number you came up with?

Mr. TONKO. I believe it's $157 billion, right. It's a benefit that ought to be shared on behalf of our Nation's seniors.

To the points made earlier in this discussion as to the efforts for prevention, for screenings, that do not require co-payments or deductibles--the annual checkups--these are all elements that were introduced and imbedded into our reform package to contain costs, to bend that cost curve.

The real concern that so many have raised from the Democratic membership in this House is that we're not providing the sorts of savings for our seniors, that we're not bending that cost curve. When you send them out to shop and don't even give them adequate coverage--32 cents--and then the indexing into the future is not keeping pace with the projected inflation of health care costs, we're putting them at risk. We're targeting them for defeat. They're saying, Well, you're going to have 13 or 15 plans from which to choose as you shop in the open market.--That isn't bending the cost curve.

So the economic consequences here are, first and foremost, the hardship that seniors will have to embrace, that they'll have to endure. Then also, when we look back at 1966 and 1965, the available cash--the economic vitality of a senior household--was drained. It went south because medical costs were usurping their retirement funds.

Think of it. Those dollars not only help provide stability and security for our Nation's seniors, but that's available cash that they can use to perhaps have a meal out at a restaurant in their local community. There are dollars that are made available that get spun into the regional economy that allow for the comeback. So this is very interesting.

The programs, the cuts that they're suggesting, are all in areas that can help create jobs and improve economic viability.

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