H.R. 2425, MEDICARE PRESERVATION ACT OF 1995

MINORITY VIEWS--MEDICARE

America's senior citizens and disabled citizens have relied on Medicare for 30 years to maintain their health and security. Today, cynical politicians are attempting to frighten them into believing they must accept less than what they need and less than what has been promised and guaranteed them for nearly a third of a century. The Republican claim that `Medicare is in crisis' is, plain and simple, a lie. It is a ploy to secure by stealth what cannot be won in the light of honest discourse--a huge tax break for wealthy Americans. The `Medicare Preservation Act' should more accurately be titled the `Medicare Prevarication Act.'

Republican and Democratic Presidents and Congresses have dealt with the solvency of the Medicare Part A Trust Fund nine times, without fanfare or partisan propagandizing. This issue is not, therefore, either new and startling or--as our Republican colleagues allege so glibly--a `crisis.' Indeed, the current Medicare Trustees, publicly and in correspondence with the Congress, have expressed deep concern about the distortion of the facts in their most recent report, and the use of that report to further a cynical political agenda. Furthermore, both the trustees and every other authority on this matter have stated that cuts of the size proposed by the Republicans--$270 billion--are not needed to address trust fund solvency. The President's balanced budget plan includes $89 billion in savings, which are fully sufficient to extend the life of the Medicare Part A trust fund for 11 years (until the year 2006).

An analysis of Republican numbers reveals, in fact, that most of the Republican cuts from the Medicare program will not be dedicated to the so-called `trust fund crisis.' More than $137 billion comes from cuts in Medicare Part B and from increases in the premiums beneficiaries pay to cover doctors' bills and other non-hospital care. Not one penny of this goes into the Part A trust fund.

Further analysis reveals an even more subtle reality. In truth, this Republican proposal, highly touted to achieve savings through changes needed for more efficiency and more `choice,' actually achieves for the Part A Trust Fund the same amount of savings both proposed in the President's balanced budget plan and in Democratic alternatives proposed both in introduced legislation and in amendments offered in this Committee and the Committee on Ways and Means. When the figures are honestly examined, it is clear that the $130 billion the Republicans claim to `save' in Medicare Part A is wrong. This number must be reduced by a full $36.6 billion--the amount of savings which will be lost because the House Republicans repealed a change in Social Security tax that was put in place in OBRA 93! Thus, the real truth is that this Republican plan `saves' only $93 billion in Medicare Part A. This amount--virtually identical with amounts in both the President's plan and Democratic plans--extends the solvency of the part A trust fund to 2006. All Democratic alternatives--none of which include tax cuts for the wealthy paid for by senior citizens--extend the Part A trust fund solvency to exactly the same year.

The bill purports to `save' this excessive amount of money by offering beneficiaries a `choice' of managed-care plans, medical savings accounts, or traditional, fee-for-service Medicare. But this so-called `choice' is a carnivore in vegetarian's clothing. MedicarePlus will not guarantee beneficiaries--senior citizens and the disabled--anything more than a `defined contribution,' a fixed-size voucher with which to purchase their own health care plan. This defined contribution certainly will decline in value over time, since the Medicare growth rates allowed under the Republican plan bear no resemblance to actual or predicted growth in the cost of health care between now and 2002. (The Republican plan allows an average rate of growth of only 4.9 percent, compared with expert predictions that actual health care costs will grow at an average rate of 7.1 percent.)

The Republican-generated Medicare growth rates are not calculations based on health care cost or the needs of beneficiaries. They are arbitrary statements that satisfy budget goals designed to produce a tax break for the wealthy. This capricious cap on Medicare spending is what `saves' money in Medicare, not the illusory `choice' Republicans claim to offer beneficiaries.

The Republican plan also incorporates a `failsafe' mechanism requiring even more cuts if Medicare spending does not meet its statutory target. But his failsafe applies only to services provided under fee-for-service medicine. These undefined and undisclosed cuts will apply only to health care services for seniors who choose to keep their own fee-for-service doctors. These constraints apply only to traditional Medicare, and not to managed care plans. Doctors who choose to continue to serve their Medicare patients in a traditional, fee-for-service setting rather than in an HMO will see their fees cut far below what private patients pay--these doctors will have no choice but to leave fee-for-service Medicare.

The effect of the Republicans' arbitrary growth rate limits, combined with the `failsafe' mechanism, means not only less money available from the government for Medicare beneficiaries but a massive shift of health care costs to businesses in the private sector. Private sector employers will be compelled to pick up in the health insurance premiums they pay for their workers the added and inflated charges shifted to them to health care providers, whose reimbursements from the Government will have dropped dramatically under this bill.

Furthermore, when the artificially driven spending limits reduce Medicare reimbursement to health care providers--as they will--these providers will be allowed to send seniors bills for the `balance,' with no limits or control by the Medicare program. There will be no restrictions on these bills, as there are under current law. That is, the difference between what Medicare can pay doctors and the providers' actual charges can and will be billed directly to senior citizens and disabled people. There will be no way for these people to predict such costs in advance. They will find out what their health care costs only after the bill arrives in the mail. With more than 75 percent of the Nation's seniors having incomes less than $25,000 per year, many if not most of these bills will go unpaid--but the misery inflicted on these seniors' emotional health as a result will be incalculable.

So, how will these so-called `beneficiary choices' really work? First, the beneficiaries who choose to keep their own doctors may find themselves in new fee-for-service health plans where their only `choice' will be to pay more and more of their own bills and to spend more and more of their own money.

Second, to examine the true realities of choice, we need to ask which Medicare beneficiaries are likely to `select' a managed care plan rather than remain in fee-for-service medicine. Medicare beneficiaries will differ little in their choice from those in younger generations: healthier people tend to choose managed care plans; less healthy or disabled people want to stay in fee-for-service medicine. Why? People who need more, and more specialized, medical care want to keep their own doctor, who has cared for them for many years, and who understands their special needs. But as costs rise--as they surely will--beyond the Republicans' artificially low budget caps, the `failsafe' will kick in and require these health care providers (but not managed care plans) to accept lower and lower payments for their services. Providers will almost certainly then have to decide whether to serve Medicare beneficiaries only within HMO-type health plans, or be forced to charge seniors the increased costs. Fewer providers; providers forced, because of drastic cuts in fees, to economize on benefits; and compromised quality--this is the Republican definition of `choice.'

What of the highly touted Medical Savings Accounts (MSAs)? Even experts like Gail Wilensky, Chair of the Physician Payment Review Commission, Stuart Altman, Chair of the Prospective Payment Review Commission, and the Health Policy Economics Group of Price Waterhouse have expressed grave doubts about the use of MSAs in the Medicare system. The Republican plan would provide that an arbitrarily determined voucher value be used to purchase a high-deductible health insurance policy (up to a deductible of $10,000 per year). Any remainder would be deposited into a tax-favored savings account. Since only the healthiest and wealthiest seniors could afford to gamble with such a high-deductible policy, this proposal actually spends more on the healthy and wealthy, and leaves less to spend on the sick.

Because there is no reliable method to adjust MSA amounts for the different risks posed by each Medicare beneficiary, experts have testified MSAs could plunge the Medicare program into a `Death Spiral.' This is because only younger, healthier, and low-cost seniors will choose MSAs, leaving sicker, older, and more costly people in `traditional' forms of Medicare. This, combined with the spending caps and failsafe, will make it impossible for Medicare to provide for those less healthy people.

Furthermore, contrary to the alleged intent of this legislation--to save money in the Medicare program--the Congressional Budget Office has estimated, for purposes of a Senate bill identical with this House bill, that MSAs will cost the Medicare program more than $3 billion per year. (Other budget experts, both outside and inside the government, calculate that a cost of $3 billion is probably a conservative estimate; actual costs could run as high as $15 billion.) This is because today, in any given year, 15% of Medicare beneficiaries use no health care services and thus cost the Medicare program nothing. Giving them a voucher amount, which averages their costs with the costs of people who are less healthy, is a windfall for those who don't need the money and a disaster for those who do. In fact, over any 4-year period, a full 35 percent of Medicare beneficiaries use less than $1,000 in health care services. It is strange math indeed to argue that giving these people several thousand dollars a year saves money.

MSAs are a new concept. They have never been tested in any large population, much less a population of senior citizens and disabled people. Like managed care for the elderly and disabled, MSAs turn Medicare beneficiaries into health care guinea pigs--all to provide a piggyback from which Republicans can extract a tax break for the wealthy.

Finally, Republicans tout their plan as a way to reduce fraud and abuse in the Medicare system. But testimony of the key experts on health care fraud and abuse show this to be one of the emptiest promises of all in this legislation. Testimony reinforcing this point has been presented by Health and Human Services Inspector General June Gibbs Brown; Gerald M. Stern, Special Counsel for Health Care Fraud at the Department of Justice; and Judith Berek, Senior Advisor to the Administrator for Program Integrity, Health Care Financing Administration. Unanimously, they agreed that the Republican proposal does just the opposite of what its authors claim. This legislation not only fails to improve the chance of reducing fraud and abuse in the Medicare program, it actually `undermines the authority of law enforcement agencies and thus interferes with [their] ability to combat fraud and abuse' (Judith Berek).

Specifically, HHS Inspector General Brown states that the Republican proposal would:

Contrary to statements made by Republican members at the Committee mark-up, the Administration in July of this year sent a lengthy letter to the Chairman of the Oversight and Investigations Subcommittee, commenting on the Republican proposals and providing specific suggestions for improving fraud and abuse detection and enforcement. This letter was obviously ignored and its suggestions not taken into account in this proposal. Thus, in short, the Republican proposal increases opportunities for fraud and abuse in the system; diminishes the ability of the government to find, prosecute, and recover penalties for such fraud; and seriously undermines the already very active government efforts to combat health care fraud.

Democrats have been accused of not offering alternative `solutions' to problems facing the Medicare program. But at the Committee mark-up, Democrats offered no fewer than 22 amendments, all designed to make improvements and eliminate egregious, harmful components of the Republican bill. All of theses proposals were rejected, on party-line votes. Democrats offered two complete substitutes, both of which would have achieved savings of $90 billion--completely sufficient to extend the solvency of the Part A trust fund to the year 2006. We were not permitted to debate and vote on these alternatives because of procedural objections from the Republican side.

Do we want to improve Medicare? Yes. Should we continue to look for efficiencies in this program? By all means. But not at the expense of unnecessary increased costs, fewer benefits, loss of choices, and lower quality medical care for our senior citizens and for disabled people to whom we made the promise of Medicare 30 years ago. Harry Kranz, a 71-year-old Bethesda, Maryland, resident, perhaps stated most clearly and succinctly our beliefs and views on this legislation when he said: `We spent 30 years building Medicare. Let's not tear it apart in 30 days.'

John D. Dingell.
Henry A. Waxman.
Edward J. Markey.
Cardiss Collins.
Ron Wyden.
Bill Richardson.
John Bryant.
Rick Boucher.
Thomas J. Manton.
Gerry E. Studds.
Frank Pallone, Jr.
Sherrod Brown.
Bart Gordon.
Elizabeth Furse.
Peter Deutsch.
Bobby L. Rush.
Anna G. Eshoo.
Ron Klink.
Bart Stupak.

ADDITIONAL VIEWS OF HON. CARDISS COLLINS

During markup on H.R. 2425, the Republican Medicare Bill, I offered two amendments designed to restore current protections for seniors who have diagnostic tests performed in a doctor's office and to ensure that our elderly continue to have access to durable medical equipment such as wheelchairs, electrical beds, walkers and oxygen. Unfortunately, both amendments were defeated. As an unwavering supporter of a sound and secure Medicare program and champion of the needs of our elderly, I plan to pursue these amendments on the House floor when this measure is considered.

The Clinical Laboratory Improvement Act Amendment (CLIA) I offered to the Bliley Substitute would have restored current law protections for patients who have testing done in physician office laboratories. Had it been adopted, it would have stricken the provision in the bill that eliminated the requirements of the CLIA for labs in doctor's offices.

This was a simple, straightforward amendment intended to retain requirements for quality and accuracy of lab tests done in physician offices. CLIA was first enacted because of problems with proper training of laboratory personnel. These problems were causing harm to patients and occurring in doctors' offices. At the time the House passed CLIA, the late Representative Edward Madigan, who was at the time ranking Republican member of the Health and Environment Subcommittee, states `One benefit of this legislation will be to unify the regulation of clinical labs by implementing a uniform standard. It also provides for the regulation of physical office laboratories which are currently exempt from federal regulation.' When Congress passed CLIA in 1988, it had overwhelming bipartisan support. Good quality lab testing should not be subjected to partisan politics, because that is bad for patients.

What is the rationale for exempting office labs? What is the rationale for exempting one specific test--Pap smears from such labs? If it is critically important for doctors' offices to meet quality standards for Pap smears--why shouldn't those same quality standards be met when it comes to cholesterol tests, colon and prostate cancer screening, needle biopsies to detect precancerous conditions and glucose monitoring?

Where I come from, a lab test is a test no matter where it is performed. Seniors and the elderly, indeed anyone should be able to expect the same level of accuracy from a lab test done by their own doctor as they do from a test done by a large commercial lab or big hospital lab. Hopefully, my Republican colleagues will put partisan politics aside and vote for this amendment on the House floor.

My second amendment would have removed the seven-year freeze on payments for Durable Medical Equipment (DME). Under current law, payments for durable medical equipment, prosthetics and supplies, like wheelchairs, electrical beds, walkers and oxygen and paid on the basis of fee schedules. The payment amounts are increased annually by the consumer Price Index-Update (CPI-U).

The Bliley substitute `payment freeze' will cause severe disruptions for beneficiaries who need their oxygen to breathe, electrical beds, wheelchairs and walkers to move about. Without these needed and essential items, seniors and the disabled could be forced into potentially life-threatening situations. Again, it is my intention to offer this amendment to the Republican Medicare bill on the House floor.

CARDISS COLLINS.

ADDITIONAL VIEWS OF REPRESENTATIVE ELIZABETH FURSE

While there are a number of reasons that I am extremely disappointed in the majority's decision not to hold hearings on this bill, I am particularly concerned that we had no opportunity to discuss the impact of H.R. 2425 on the millions of people in our country with diabetes.

I know first-hand the problems that people and families face when someone is diagnosed with diabetes. My own beloved daughter has diabetes, and her experience has taught me about the problems that thousands of people who have diabetes face every day. She is a truly remarkable woman.

Obviously, diabetes remains one of the most serious health problems in our nation. It costs America over $100 billion annually, and affects 14 million Americans. In my home state of Oregon, for example, diabetes affects over 140,000 people. Moreover, diabetes is unique because it is the only major disease that can and must be managed on a daily basis by the patient.

I would like to direct my colleagues' attention a statement made by Speaker Gingrich on July 27, 1994, on `Good Morning America':

We don't today pay for training for you, as a diabetic, how to take care of yourself. We will pay to put you in the hospital and to amputate your leg when you fail to take care of yourself. But literally, the government bias today is not to pay for the preventive and educational experience that will lower your costs.

Earlier this year I introduced H.R. 1073 and H.R. 1074 to help people with diabetes manage their disease. Support for both bills has increased steadily since the beginning of the year, with over 100 bipartisan cosponsors presently. The American Diabetes Association, the National Association of Diabetes Educators, and the American Dietetic Association have all come to Congress and testified in favor of this legislation.

During consideration of H.R. 2425 in the Commerce Committee, I was prepared to offer an amendment to incorporate the texts of H.R. 1073 and H.R. 1074 into the Medicare reform bill. My amendment would have ended the government bias that Speaker Gingrich told America about last July. Contrary to what most people believe, insulin is not a cure for diabetes. It is one part of the supplies necessary to managing the disease. We know that if people with diabetes have the necessary tools to take care of themselves, we will save billions of dollars because it will reduce the incidence of the costly complications which result from diabetes--stroke, amputations, heart disease, and others.

This year, the American Diabetes Association has gathered petitions from over 75,000 people asking Congress to include coverage of education and supplies in Medicare reform. My amendment was designed to do two things. First, it would have ensured that Medicare beneficiaries receive coverage of outpatient self-management training. Currently, the only training that Medicare covers is when a person is diagnosed with diabetes in the hospital, even though people with diabetes need self-management training throughout their life. Secondly, it would have covered blood testing strips for all people with diabetes, regardless of whether they have Type 1 or Type 2. People with Type 2 Diabetes still need to test their blood glucose level--although less consistently than people with Type 1--and currently have no coverage under Medicare. These people often end up in the emergency room because they have not been able to properly manage their disease.

Let me direct my colleagues' attention to a second quote:

I had a doctor approach me a year ago who's a specialist in diabetes who believes we can save $10 billion in diabetes alone by just having more preventive care so people take care of themselves, so they don't go blind, they don't have their legs amputated, they don't end up on disability. That is not a cut. That is a genuine improvement.

Speaker Gingrich said this on May 28, 1995, in a speech before the Seniors Coalition, and he's absolutely correct. According to conversations with the Congressional Budget Office, a much broader version of my amendment would have cost an average of $70 million a year over the 7 year life of this bill, or about $5 per person with diabetes. CBO did not, however, take into account many of the savings that private sector studies have conclusively reported regarding the use of blood testing strips and self-management training. The New England Journal of Medicine reported a study where self-management training reduced hospitalizations by 73 percent. The Endocrine Society notes that a minimum standard of diabetes coverage would save over $10 billion. I have numerous studies from the Journal of Insurance Medicine, Department of the Army, and many non-governmental sources which indicate that covering self-management training and blood testing strips will save billions of dollars.

Remember, if we can reduce complications of diabetes by a small amount--10 percent--we will save $10 billion in health care costs. It is my belief that the private sector studies are correct, and my amendment would have actually saved billions of dollars in health care costs. While my amendment would have been paid for through the bill's `fail-safe' provision, it was a consensus opinion on the Committee that a specified budgetary offset would have been a more suitable financing mechanism. As such, I did not offer my amendment and will work with the appropriate people before this bill reaches the floor to locate the necessary resources and make these dramatic changes for the 14 million Americans with diabetes. I hope that my colleagues will join me in this endeavor.

In addition, I must point out my concern with an existing provisions in this bill which--far from helping people with disbetes--could actually jeopardize their health insurance. This bill contains a section that pushes from 18 to 24 months Medicare's role as a secondary payer for end-stage renal disease patients (ESRD). End-stage renal disease patients are on dialysis, one third of whom are people with diabetes. This provision increases the length of time that employers or insurers are exposed to the high health costs of end-stage renal disease patients, which might lead insurers and employers to drop coverage for these people. So even though Speaker Gingrich constantly tells people with diabetes how much he wants to help them, this section of the bill certainly only hurts their chances for insurance coverage. I urge my colleagues to drop this section of the bill, and will work to change this important change in H.R. 2425.

I will close with one last quote of interest:

Two doctors recently told me that we could save several billion dollars a year in the treatment of diabetes by shifting to a more educational, prevention-oriented system. Today Medicare will pay for one educational visit to train the diabetic in self-diagnosis but then requires the patient to wait until he or she needs a leg amputated or confronts some other emergency before thee can be more government-paid counseling. By minimizing prevention we maximize illness, cost, and suffering.

This quote is from Speaker Gingrich's book, `To Renew America,' which was released during his national tour in August of this year. I could not have said it better myself. I hope that every American whose life is affected by diabetes holds the Republican leadership accountable for their words. Empowering people with self-management training and blood testing strips is the key to improving the quality of life for all Americans with diabetes, and ultimately saving billions of dollars. I will continue fighting to make these important changes a reality.

ELIZABETH FURSE.

ADDITIONAL VIEWS OF MR. STUPAK

On October 11th, I introduced H.R. 2456 `The Common Sense Medicare Reform Act.' I introduced this legislation as an amendment to the Chairman's Mark, however, the Chairman incorrectly ruled it out of order. The new majority in Congress claims that it is necessary to cut $270 billion in order to save the Medicare program. This is a ludicrous and illogical explanation. In fact, the majority is attempting to steal $270 billion from the Medicare Trust Fund in order to keep its campaign promise by giving a $245 billion tax cut to the wealthiest one percent of Americans.

Actually, the Medicare Trustees say that the federal government must devote $89 billion--not $270 billion--to avoid insolvency of the program in the year 2002. I believe that changes and adjustments must be made to the program, but I think it's irresponsible to gut a program which 37 million elderly Americans depend on for health care coverage. My proposal is simple. My legislation takes the best ideas from the Republican proposal and the Democratic plan, and it's designed to improve the Medicare program in a bipartisan manner.

Most importantly, I believe we must aggressively fight waste, fraud and abuse in the Medicare program. As much as ten cents of every dollar spent on Medicare is consumed by fraud and waste. Some health care providers charge the Medicare program for goods, such as durable medical equipment, many times what an individual could purchase those goods for on the open market, and Americans taxpayers foot the bill. For example, the Medicare system pays $280 for oxygen concentrate, which is used by patients who need assistance in breathing, while the Department of Veterans Affairs pays only $123 for oxygen concentrate. The Republican bill claims that it will cut the price of oxygen concentrate by $56. But this is still $101 more than what the VA pays.

If we can save money that is stolen from the system or misused by Medicare providers, we can use that money to better serve Medicare beneficiaries. In 1994, federal law enforcement recovered $8 billion from waste and fraud by Medicare providers and is expected to recover $10 billion in 1995. I think we can do better. We can save $93.5 billion over the next seven years by actively detecting and prosecuting waste, fraud and abuse, and this amount is more than enough to sustain the Medicare program according to the Trustees' report.

The Republican Medicare bill legalizes fraud committed by health care providers by raising the legal standard required to prove fraud. Conversely, my bill gives law enforcement more tools to fight Medicare fraud--a crime which harms Medicare recipients and American taxpayers. My bill increases the powers available to law enforcement to fight fraud in the Medicare program through civil penalties for kickbacks, grand jury disclosure and increased subpoena authority. Both the FBI and the Justice Department endorse the fraud-fighting tools that are contained in my bill.

Current law provides that any money saved from the Medicare program will be returned to the U.S. Treasury to be used for any purpose. My legislation requires that any funds recovered through cuts or savings from waste, fraud and abuse be automatically returned to the Medicare Trust Fund so that Medicare is protected and will remain solvent. In order to preserve the Medicare system for current and future beneficiaries, it is imperative that funds go directly back into the program--not into the U.S. Treasury for tax cuts for the wealthiest Americans and large corporations.

Medicare is the second largest program administered by the federal government. I believe that before we gut some health care programs and organizations and implement other radical and untried programs, we should test the feasibility of these new programs on a voluntary basis. I propose that we look at managed care programs and health care service networks on a five year trial basis. Through such pilot programs, I believe we can recapture costs and prolong the life of the Medicare program while giving seniors greater health care benefits and choices. Programs such as Provider Sponsor Organizations (PSOs) and Provider Sponsor Networks (PSNs) are particularly useful and effective in rural areas. Not only do these programs deliver care more cost-effectively, but they provide seniors with wider choice of medical services. In Northern Michigan, we are on the cutting edge of providing maximum benefit for our health dollar through cooperative efforts.

My legislation also directs that a `Baby Boomer Commission' be appointed to study alternatives for the best way to address the large influx of recipients who will be eligible for Medicare beginning in the year 2010. The Commission will work with Medicare Trustees and others in the medical field to ensure there will be funds available to provide health care coverage for the baby boomer population. In addition, the Commission will actively seek community input from all across the country to study long-term solutions for and improve the quality of the Medicare system. The Commission must have open hearings in our region of the country, not just Washington, D.C.

Lastly, I advocate the use of a single claim form to increase administrative efficiency. Through the use of a single standard administrative system, we can simplify the Medicare system for beneficiaries and providers, while saving money from increased productivity.

I don't believe people should have to pay more to receive less and lose their choice of doctors. I also don't believe the Republican majority should raid the Trust Fund to give tax cuts to their wealthiest friends and campaign donors. Instead of stealing money from the Medicare system, we need to put money back into the system to keep it solvent for current and future beneficiaries. Let's not gamble with the health of our senior citizens.

BART STUPAK.

104th Congress: Democratic Perspectives
103rd-107th Congress Committee Activity