Opening Statement of The Honorable Pete Stark, a Representative in Congress from the State of California

February 13, 2007

This is the first hearing before our Subcommittee since our recent reorganization.   I look forward to working closely with Dave Camp as our Ranking Member.  And, I’d like to welcome the new members to our subcommittee:  Reps. Xavier Becerra, Earl Pomeroy, and Stephanie Tubbs-Jones are new to our Subcommittee, though not the Committee.   Rep. Kind joins us on the Subcommittee as a new Member of the Ways and Means Committee as well.   Of course, welcome back to all the seasoned veterans as well.  Now, to get to the subject before us.

Ms. Norwalk, thank you for appearing for our first hearing.  I know it won’t come as a surprise that I am disappointed by the President’s budget.  There is clearly a wide gulf between Congress and the Administration’s priorities for health care.

From 1984 -- 1995, Members of Congress and various Republican administrations would disagree on how to split reimbursements between rural and urban providers, or what percentage to take off of market basket updates.  But, we all worked toward the same goal: preserving and improving Medicare as a guaranteed benefit for America’s seniors and people with disabilities.

Instead of renewing this spirit, the President’s budget guts some $300 billion out of Medicare and Medicaid over the next decade while leaving some $50 billion in overpayments to private plans in place.  Even worse, this budget enhances provisions inserted into law as part of the Republican prescription drug program that hasten Medicare’s demise.

First, the President loads the so-called “45% trigger” with real ammunition.  Rather than recommending legislation to Congress, the President would be  empowered to make across-the-board automatic Medicare cuts to limit government spending.  This is a sure path to achieve the goal for Medicare to “wither on the vine.” 

Second, the President’s budget increases the number of people who will have to pay higher Part B premiums, and expands that income-relating to Part D drug premiums.  This is a tax increase on upper income beneficiaries who have already paid more for Medicare through payroll taxes.  It is designed to convert Medicare from a program that covers all seniors to one which covers only those without other options – another way to privatize Medicare.

In addition to the changes in Medicare, the President has proposed to undermine employer-based health benefits where 160 million Americans get their health insurance today.  Instead, employees will be given a voucher and left to find coverage in the broken, unfair, expensive individual health insurance marketplace.  The voucher will be worth as much as six times more for high wage earners than lower wage workers who will get only about $1100.  Then, as a kicker, because the proposal lowers annual income, it also would decrease low-wage workers’ Social Security benefits by as much as one-third when they retire.

Even the President’s own analysts predict that only 3 million of the 47 million uninsured would gain “insurance” under this proposal – less than 6%.  Millions would lose comprehensive coverage in exchange for high deductible plans that do little to help them meet their families’ health needs. If you have a history of illness, are older, or work in a line of business the insurance industry considers high risk, you won’t be able to buy insurance at any price.  This certainly could be defined as health “reform,” but it’s not an improvement.

Next, the President proposes cuts to Medicaid that weaken the health care safety net.  These cuts undermine the President’s plans to allow states to use Medicaid funds to expand coverage.  You can’t have it both ways. 

Meanwhile, the President spends $3.7 billion more for health savings account expansions – which benefit upper income families and only 100,000 have been sold -- while shortchanging the SCHIP program which covers more than 6 million children by at least $12 billion – and that’s just the bare minimum needed to maintain coverage for those low-income children who have it today.  If the President’s SCHIP plan were enacted, states would have to cut children off their insurance.  This is not the way to help the 8 million and increasing number of children without health insurance.

Secretary Leavitt said at a hearing before us last week that Medicare and Social Security have made the most significant contributions to society of any public program.  I agree.  That’s why I believe we should set aside the President’s budget and start from scratch.