Alexander: Health Plan Will Cut Grandma’s Medicare By Half A Trillion

  • Tuesday, December 1, 2009

Senator Lamar Alexander today made the following remarks on the floor of the U.S. Senate:

· “What Senator McCain is basically saying with his amendment is, don’t cut Grandma’s Medicare to pay for someone else’s insurance.”

· “If you find savings by cutting waste, fraud and abuse in Grandma’s Medicare, spend those savings on Grandma. Medicare’s trustees have said to us that there are $38 trillion in unfunded liabilities for the Medicare program, and that the program will start going bankrupt between 2015 and 2017. According to the Medicare trustees, ‘We need timely and effective action to address Medicare’s challenges.’ I don’t think the Medicare trustees were thinking that the timely and effective action we could take to keep Medicare from going broke was to take $465 billion out of it and spend it on some new program.”

· “Rather than take my word for it, let’s go to a Wall Street Journal headline: `Some Health Premiums to Rise.’ That means the cost of your insurance is going up. So my question is, why would we spend $2.5 trillion over ten years, cut Medicare, raise taxes and run up the debt to raise some Americans’ health care premiums? I thought the whole exercise was to lower the cost of health care premiums.”

· “This bill is historic in thinking we could take a system that affects almost all Americans and change it all at once. Why don’t we instead go step by step to re-earn the trust of the American people? Republicans will be making those proposals on the Senate floor this month and next month and as long as it takes to get real health care reform. Cutting Grandma’s Medicare by half a trillion dollars and spending it on a new program at a time when Medicare is going broke is not real health care reform.”

Full Alexander remarks:

Mr. KYL. Mr. President, I ask unanimous consent that during the 30 minutes controlled by the Republicans, we be allowed to engage in a colloquy.

The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.

Mr. KYL. Mr. President, I will begin by making some comments about the amendment Senator McCain, my colleague from Arizona, has filed. This is an amendment that, as the minority leader just said, will protect America's seniors. It will disallow the Medicare cuts this bill includes.

The economist Milton Friedman famously said, "There is no such thing as a free lunch," and that applies to health care as well. There is no such thing as free health care. Someone has to pay. Since this bill is a $2.5 trillion bill, the first question is, Who pays? The first answer to who pays is, it is America's seniors, because about half of the cost of the bill is allegedly paid for by cuts to Medicare.

Let me break down a little bit more specifically than the Republican leader did exactly what that means. This is about $500 billion in Medicare cuts as follows: $137.5 billion from hospitals who treat seniors; $120 billion from Medicare Advantage, which is the insurance program that provides benefits to seniors which will be cut more than in half as a result of this $120 billion reduction; $14.6 billion from nursing homes that treat seniors; $42.1 billion from home health care for seniors; and $7.7 billion from hospice care, one of the most cruel cuts of all. Obviously, with cut this dramatic there is no way to avoid jeopardizing the care seniors now enjoy, and seniors know this. That is why they have been writing our offices and attending townhall meetings to let us know they disapprove of this. I quoted from two letters constituents of mine from Arizona sent asking to please not cut their Medicare Advantage Program. This has been called the crown jewel of the Medicare system, and many of them rely on Medicare Advantage for dental care or vision care or hearing assistance they have come to rely on. They are not buying the claims that somehow or other we can make $1/2 trillion cuts in Medicare without somehow hurting their care. They know better than that, and they are right. The care they have been promised will be compromised to pay for this new government entitlement under the bill.

Finally, many are wondering what happened to the promise that they get to keep the care they have. We all heard the President say that many times: If you like the care you have, you get to keep it. That is simply not true. There are 337,000 Arizonans who are Medicare Advantage patients. They like what they have. Yet we know, according to the Congressional Budget Office, that the benefits they have under Medicare Advantage are going to be cut by more than half. They are saying: What happened to the policy I like? I am not going to be able to keep it if this bill passes.

This is why the McCain amendment must pass. If our Democratic colleagues are not willing to protect Medicare, then I cannot imagine how the bill could otherwise be made acceptable since it starts with the commitments that Congress and the President have made to our senior citizens.

Perhaps one of the reasons why there are different numbers from one side of the aisle to the other is that sometimes we are not talking apples to apples. We are talking apples to oranges, and perhaps both numbers are correct in their context. The Senator from Tennessee used the number $2.5 trillion when the program is fully implemented. That is a very important statement. The other side will argue it is only $1 1/2 trillion for the first 10 years of the program. That is a correct statement. But it is $2.5 trillion for the first 10 years of total implementation of the program. What is the reason for the difference? For the first 4 years, money is being collected, but very few benefits are going out. The benefits start after year No. 4. So if we take the first 10 years of the program, we are collecting money to pay for it over the entire 10 years, but almost all of the benefits only occur during the last 6 years. Naturally, we have collected more money than we have paid out. But when we take the first 10 years of full implementation, it is as my colleague from Tennessee noted, a cost of $2.5 trillion. That is how sometimes we get somewhat different numbers.

As long as we are clear about what we are talking about, one thing is crystal clear: Whether it is $1 1/2 trillion or $2.5 trillion, we are talking real money. Somebody has to pay for it. If America's seniors are being asked to pay for half of it, that is not fair to America's seniors, given the commitment we have made to them. That is the point of the McCain amendment. Protect Medicare, protect America's seniors. We can do that with the simple amendment Senator McCain has which is send the bill back to committee -- it would only take 1 day -- and send it back here without those Medicare cuts in the bill.

Mr. ALEXANDER. I see the Senator from Idaho here. I wish to hear his observations on this. If there is any issue in this entire health care debate that symbolizes why we on the Republican side want to change the debate to a step-by-step approach to reducing the cost of premiums, it would be the Medicare issue. As the Senator from Arizona said, what we need to do about Medicare is make it solvent as quickly as we can, as effectively as we can. The Senator from Kansas said the other day that the proposal to take $465 billion from grandma's Medicare and spend on it some new program is like writing a check on an overdrawn account in a bank to buy a big, new car. There is a lot of truth to that.

The President said earlier this year something I agree with. He said this health care debate is not just about health care. It is about the role of the Federal Government in the everyday life of Americans. He is exactly right about that. This health care debate, which we are beginning this week, is not just about health care. It is about the stimulus package, about the takeover of General Motors. It is about the trillion dollar debt. It is about the Washington takeovers. It is about too much spending, too much taxes, too much debt. The Medicare provisions in this bill are a perfect symbol of that. That is why Senator McCain is right. What he is saying is, don't cut grandma's Medicare and spend it on some new program. If you can find some savings in the waste, fraud, and abuse of grandma's Medicare, spend on it grandma. Make sure those of us who are older and those of us who are younger and looking forward to Medicare can count on its solvency.

Later this week we will talk more about premiums going up. There was a lot of discussion yesterday because, according to the Wall Street Journal, some health premiums would rise. For people who get their insurance from large employers, this bill won't make much difference. And for small employers, if you get your insurance from a small employer, it won't make much difference. If you are going to the individual market to buy insurance yourself, your premiums will go up, except we are going to get some money from somewhere to help pay part of your premiums, at least for about half of Americans who are in the individual market. Where are we going to get that money? From grandma. We are going to get it from Medicare. So that is what is wrong with this bill. And what is right about the McCain amendment is, it says simply, don't cut Medicare. If we find savings, which we hope we can in Medicare, we should spend it on making Medicare solvent.

I wonder if the Senator from Idaho is hearing from seniors in his State about the proposed $465 billion cuts to Medicare and how they feel about taking that money and spending it to create a new program?

Mr. CRAPO. I thank the Senator from Tennessee. Very definitely we are hearing from seniors in Idaho who see through this. It is very clear to the folks in Idaho that what we are seeing is a proposed massive growth of the Federal Government by over $2.5 trillion, when fully implemented, that is to be funded on the backs of American taxpayers and senior citizens through cuts in Medicare. In fact, in addition to those who have contacted me who are seeing their health benefits lost, I have also been contacted by a number of the providers. We are talking about those who are in home health care or hospice health care, skilled nursing facilities or hospitals and the like.

They make a very interesting point. Their point is that not only will senior citizens -- in Medicare Advantage in particular -- literally be losing their benefits dramatically, but that other senior citizens who are in traditional Medicare will also be losing access and quality of care. How is that the case? We know from the details of this bill that we are going to see major cuts in hospice care, home health care, skilled nursing facilities, and hospitals.

The points made to me by those providers are that they have already gone through a series of very deep cuts, cuts to the point that in Idaho for home health care, we lost something like 30 percent of our facilities already. The way one of them explained to it me was that if you reduce the compensation we are receiving, then we have to reduce something in our budget. He said: We can't just start taking bricks off of our buildings. What we will end up having to do is to reduce personnel. That would be the nurses and the doctors and the other care providers who are there to provide support for these individuals. We will have to reduce the number of rooms we operate or the facilities we provide. In the end, there will be a reduction of services and access available to senior citizens, including a reduction in the quality of the care they are able to be provided.

Mr. ALEXANDER. In discussing the Medicare cuts, another provision of the bill which we will be talking about this month and next month as we go through the health care debate is what about the problem of paying doctors and hospitals who see Medicare patients. They get paid about 83 percent of the rate they would be paid if they were seeing a private care patient. Every year Congress has to make an adjustment in something we did a few years ago which automatically cuts the amount of money that we pay doctors who are seeing Medicare patients.

That is a big problem for Medicare patients. Because if the doctors can't be paid, they won't see the patients, and Medicare patients may find themselves increasingly in the condition that Medicaid patients do, low-income Americans who are covered through the State program -- that is our largest government-run program -- where they are paid about 60 percent of what doctors who see private patients are paid and about half of Medicaid doctors won't see new patients. I ask the Senator, does he see anywhere in this bill a provision for the $1/4 trillion that will be needed to pay doctors 10 years from now what they are making today? If it is not in the bill, where is that $1/4 trillion going to come from? Is it going to come from Medicare cuts, or will it come from adding to the deficit?

Mr. CRAPO. Obviously, it will come from cuts in Medicare or increased taxes or simply more debt on the Federal level.
The Senator raises a very interesting point. This question of fixing the compensation rates for physicians in Medicare is a huge question, one which we have been fighting for for a number of years to try to find a solution to, as each year we delay the expected cuts that will happen. I have talked about this factor in the context of being a budget gimmick in this bill. What do I mean by that? Those who say this bill reduces the deficit are able to say so only because it has about $500 billion of new taxes, about $500 billion of Medicare cuts, and a number of budget gimmicks that delay the implementation of the spending side of the bill or, in this case, don't even include at all one of the major expenses that needs to be accommodated, and that is the fix for physician compensation. If any of those things were not in this bill, this bill would drive up the deficit tremendously.
What we are going to see, in addition to these fiscal impacts on the Federal Treasury in terms of huge increases in the debt or huge increases in more taxes, even more than we are talking about with this bill, is we are going to see the very real potential that access to medical care for seniors will be again reduced because of this factor.

Let me give a couple of statistics. In their June 2008 report, the Medicare Payment Advisory Commission, or MedPAC, said that 29 percent of Medicare beneficiaries who were surveyed were looking for a primary care physician and had trouble finding one to treat them. In other words, about 30 percent of Medicare beneficiaries today are having trouble finding a physician who will take a Medicare patient. That is before the $465 billion of cuts and before simply not including physicians at all in this legislation.

A 2008 survey by the Texas Medical Association found that only 58 percent of the State's doctors took new Medicare patients, and only 38 percent of the primary care doctors accepted new patients. Again, it is an example from MedPAC and from one State that indicates what we know is happening around the country; namely, that doctors in increasing numbers are no longer taking new Medicare patients, just as they have been doing with Medicaid patients for years. Yet we see these massive cuts to Medicare being proposed that will have the same impact on hospice care and home health service and skilled nursing facilities and hospitals, and we see that doctors are not even included at all, meaning they are projected now to receive major reductions. I think it is over 20 percent reduction in their compensation for taking Medicare patients.

The solution here to establishing a massive new Federal entitlement program is not to cut Medicare. I want to repeat something both the Senators from Arizona and Tennessee have already said that is critical. Reducing the Medicare budget by $464 billion, by any number, is something that has been encouraged in terms of trimming the growth path for Medicare. That is something this Congress has looked at in the past. But never was it intended by those who made these projections about needing to control the spiraling cost of Medicare that we address the fiscal circumstances in Medicare with the intended purpose of creating another new, massive Federal entitlement program that will grow the Federal Government by over $2 trillion -- we talked about the numbers; the full 10-year period is $2.5 trillion -- and leave Medicare with these dramatic cuts, this loss of service and loss of benefits to the recipients, while they see this new government growth with a new government program. That was not in the mind of anybody who was asking us to deal with the solvency issues on Medicare, and it don't think it was in the mind of anybody who asked that we have some kind of health care reform to deal with the rising cost of premiums.

Mr. ALEXANDER. Mr. President, how much time remains on the Republican side?

The ACTING PRESIDENT pro tempore. The Senator has 8 1/2 minutes.

Mr. ALEXANDER. Would the Chair let me know when 4 minutes remain.

The Senator from Idaho will conclude our remarks at that time.

The Senator from Idaho has made an important point, anticipating our Democratic friends will have the next 30 minutes and some other things they may be saying the rest of the day. There was a lot of talk yesterday about the CBO report about the effect of this $2.5 trillion proposal on premiums. Rather than take my word for it, let's go to the news section of the Wall Street Journal of today which has the headline: "Some Health Premiums to Rise."

That means going up. That means the cost of your insurance is going up for some Americans.

So my question is, why would we spend $2.5 trillion over 10 years, cut Medicare, raise taxes, and run up the debt to raise some health premiums? I thought the whole exercise was to lower the cost of health care premiums.

The article says: The analysis released Monday by the nonpartisan Congressional Budget Office and the Joint Committee on Taxation --We are supposed to pay some attention to these outfits as nonpartisan -- painted a more complicated and uncertain picture. It said people who pay for their own insurance would see a higher bill, albeit for more generous benefits -- That is the government-approved insurance you are going to be forced to buy. Unless they are lower earners who qualify for a new government tax credit.

Where is the money going to come from for those subsidies? It is going to come from grandma. It is going to come from Medicare. It is going to come from taxes. And it is going to come from increasing the debt.

Those are facts.

Employees of small firms -- Says the Wall Street Journal -- would effectively see their insurance premiums unchanged -- So for small firms, we are going to spend $2.5 trillion over 10 years, cut Medicare, cut taxes, and run up premiums for millions of Americans, so your insurance will continue to go up at about the rate it already was. Why should we be doing that?
while workers at large firms would see something between unchanged and slightly lower premiums under the bill -- Compared to what would already happen -- according to the analysis.

We need to change the debate. We need to start over. Instead of this comprehensive 2,000-page bill that is full of taxes, mandates and, as a general effect, raises premiums and taxes and cuts Medicare, we should set a clear goal, reducing costs, and begin to go step by step toward that goal -- reducing junk lawsuits against doctors, allowing health care to be purchased across State lines to increase competition, allowing small businesses to combine in health plans so they can offer more insurance to employees at a lower cost.

These three bills I mentioned have been offered and rejected so far by the Democratic majority. We should have more flexibility in health savings accounts, efforts at waste, fraud, and abuse, which are, in effect, Medicaid -- the largest government program -- and Medicare -- the second largest -- and more aggressive steps to encourage wellness and prevention.
One approach, the comprehensive 2,000-page bill, Washington-takeover approach, Americans are very leery of. In my respectful opinion, this bill is historic in its arrogance for thinking we could take a system that affects almost all 300 million Americans, 16 percent of the economy, and change it all at once.

Instead, why don't we go step by step to re-earn the trust of the American people? Republicans will be making those proposals on the floor this month and next month and as long as it takes to try to see that we get real health care reform. Cutting grandma’s Medicare by $1/2 trillion and spending it on a new program at a time when Medicare is going broke is not real health care reform.

Mr. CRAPO. Mr. President, how much time remains?

The ACTING PRESIDENT pro tempore. There is 4 1/2 minutes remaining, Senator.

The Senator from Idaho.

Mr. CRAPO. Thank you, Mr. President. I wish to conclude with our time this morning by focusing on the larger picture a little bit, as my colleague from Tennessee has done in his concluding remarks.

When you ask Americans whether they want health care reform, the vast majority would say yes. When you ask them what they mean by that, the vast majority in the polls and in my personal experience are saying: We want to see the spiraling costs of health care and our health insurance brought under control and reduced, and we want to see increased access to quality health care for those who do not have access today and for those who have limited access today.

This bill fails on those two central points. What this legislation does, instead, is increase the size of government by $2.5 trillion of new Federal spending, establishing massive new Federal controls over the economy, and even creating a Federal Government insurance company. It increases taxes by about $500 billion, and not just on the so-called wealthy. The vast majority of these taxes are going to squarely hit those who President Obama said would not be hit: those who make less than $200,000 a year and, frankly, all the way down the income chain.

It cuts Medicare by $464 billion. It puts a major new unfunded mandate on our States, which are already struggling in their fiscal budgets. As my colleague indicated, it causes the price of insurance premiums to go up for the individual market, to go up in the small group insurance market, and to be basically unchanged in the large insurance market, according to the CBO study.

By the way, one of the things that is not pointed out in that CBO study very much is in that large market, which it says will be the only part of the market that does not see insurance rates go up, one of the reasons is because their health care will go down. In other words, there is a tax on these larger, high-cost insurance premiums that is going to be either passed through and cause their insurance to go up or will be avoided by reducing the cost of their insurance and reducing coverage of the benefits in these policies. So one way or the other, all Americans are going to see their health care premiums go up or, in the large groups, see their health care premiums be held the same by reducing the quality of the insurance they have.

If you go back to those two reasons Americans wanted health care reform, did we see premiums go down? No. Did we see increased quality or increased access to care? Well, there are some who are going to get a subsidy in this program for this new massive Federal program. But at what price? Mr. President, $2.5 trillion, $464 billion of cuts in Medicare, the establishment of a major new government program that would essentially be funded on the backs of massive new tax increases, massive Federal tax increases, and Medicare cuts, and in the end we will still be in a system in which we are seeing spiraling increases in health care costs. To me, that is not the kind of reform we need. My colleague from Tennessee indicated there are a number of reforms on which we can find common ground that will reduce health care costs. There are a number of reforms on which we can find common ground that will help us to increase access to quality care. That is where our focus should be. That is why I stand here today in support of my colleague John McCain's amendment, which is a motion to commit this legislation to the Finance Committee. As was indicated, it could be done in 1 day, to simply remove the Medicare cuts that are contained within it. Let's fix that part of this bill, and then let's work forward.

I see my time has expired. I encourage this Senate to focus closely on the legislation and to let us work together in a bipartisan fashion rather than speeding ahead and trying to pass legislation that has not had the opportunity for this kind of bipartisan effort to develop a good work product for the American people.

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