Max Baucus

Mr. BAUCUS

Mr. BAUCUS. I will yield myself about 10 minutes. The Senator from Tennessee says this is going to hurt seniors. Let's ask the senior organizations what they think about that. Let's also look at this organization called 60 Plus. What does the AARP say in the letter to Senator Reid, dated December 2? It talks about this legislation: The legislation before the Senate properly focuses on provider reimbursement reforms. . . . I am sorry all my colleagues have fled the Senate. I would like for them to stay and listen to this. I would like to hear their response. But they have just fled the Senate after making sound bites.

Mr. BAUCUS. I will take my time. The AARP letter, dated December 2, states: The legislation before the Senate properly focuses on provider reimbursement reforms. . . . Most importantly, the legislation does not reduce any guaranteed Medicare benefits. That is AARP. All this is scare talk about ``grandma.'' With all due respect to my friend from Tennessee, he says that. He has been using that phrase a lot. But AARP says that grandma is fine. AARP says: Most importantly, the legislation does not reduce any guaranteed Medicare benefits. It doesn't reduce any benefits, according to AARP. Going on: AARP believes that savings can be found in Medicare. . . . The savings in Medicare will extend the solvency of Medicare. I am sure my friend from Tennessee knows the actuary said this legislation extends the solvency of Medicare, helps Medicare. The benefits go on longer than the status quo. Also, it does so, according to AARP, by eliminating waste and inefficiency and aggressively rooting out fraud and abuse. The last sentence is: We therefore urge you to oppose the McCain amendment to recommit. . . . The AARP says this hurts seniors, the McCain motion to commit. I think the job of the AARP is to figure out what is best for seniors. That is their conclusion. It is not just AARP's view. There is another letter. This is from the National Committee to Preserve Social Security and Medicare. They say basically this legislation doesn't cut Medicare benefits. Again, this is the National Committee to Preserve Social Security and Medicare. They say, rather, this legislation includes provisions to ensure that seniors receive high-quality care and the best value for their Medicare dollars. That is a very reputable senior organization. AARP is a very reputable senior organization. The National Committee to Preserve Social Security and Medicare is a very reputable organization. That is what they say. Who is this 60 Plus association I have heard referred to? Let me just tell my colleagues what 60 Plus really is. I will read this. This is from Wikipedia, and it may not be accurate. It says this about 60 Plus: The 60 Plus Association is an American conservative advocacy group based in Arlington, Virginia, that bills itself as the conservatives' alternative to the AARP. That makes good sense because over the years it has sought to privatize Social Security. 60 Plus, over the years, has sought to privatize Social Security. They want to end the Federal estate tax. They also want to strengthen gun rights, but that is not relevant. According to the AARP-- And this is a bit biased-- the 60 Plus Association employed the talents of conservative direct mail mogul Richard A. Viguerie to solicit new members. We all know who Viguerie is. 60 Plus is a very conservative organization. I don't think they are real interested in senior citizens. They have different fish to fry. Also, AARP criticized 60 Plus as being partisan because its issues and causes mirror those of only one of two major parties, the Republican Party. A final criticism leveled by the AARP [about 60 Plus] is that because it lists no dues-paying members and [get this] receives the majority of its contributions from the pharmaceutical industry, the group is simply a front organization for the pharmaceutical industry. I ask unanimous consent to have these letters in opposition to the McCain amendment, in support of the Bennet amendment, and the Wikipedia information printed in the Record.

Mr. BAUCUS. Mr. President, I think it is pretty clear that the main organizations that care about seniors support this bill. Another organization--60 Plus--I don't know what they think. I guess they oppose it because they want to privatize Social Security, and they get most of the money from the pharmaceutical industry. I don't think they care about senior citizens, frankly, and certainly not as much as these other organizations. I think it is also important to point out that this legislation is deficit neutral over not just the first 10 years but over the next 10 years. It is more than deficit neutral. This legislation generates a $130 billion surplus the first 10 years and, as we all know, reduces the budget by a quarter of GDP over the next 10 years. So this is not irresponsible; it is very fiscally responsible. It is strongly supported by the senior organizations that care for seniors. I might say, too, it is not raiding Medicare at all. It is strengthening the Medicare trust fund and it extends the solvency of the trust fund. Therefore, I think, clearly, as AARP says, we should oppose the McCain amendment, which hurts Social Security beneficiaries, does not help them. I yield such time as the Senator from Illinois needs.

Mr. BAUCUS. Mr. President, I think it is appropriate to remind people of some of the provisions that are in this bill. To repeat, because some people have listened to some of this debate and some have not and some might be tuning in right now, the fact is, without reform, without this legislation, Medicare is expected to go broke in the next 8 years. That is according to the Medicare trustees report. With this legislation, that is extended for at least 5 more years. That protects seniors. This legislation protects seniors. Without reform, that is, without this bill, costs will rise and seniors will be forced to bear more and more of the burden out of their own pockets. This legislation adds benefits for seniors. It does not take it away, as the other side implies. Without reform, seniors will struggle to afford prescriptions in the doughnut hole. I remind my colleagues that this legislation will cut the cost of brand-name prescription drugs in half for seniors during that gap, the so-called doughnut hole. It will also help provide more benefits in terms of annual wellness visits. When seniors go to the doctor for a colonoscopy, mammography, or other preventive screenings, they will not have copays, as is currently the case today. That is an added benefit this legislation provides for seniors. Also, this legislation helps seniors who are eligible for both Medicare and Medicaid with access to home, community-based alternatives. A lot of our seniors would like that additional benefit. That is all in this legislation. This legislation provides more benefits for seniors, not fewer. This legislation protects seniors; it does not harm them. This legislation extends the solvency of the trust fund rather than not. I might also say--and I think the Senator from Illinois made a very good point--currently, seniors who are paying a Part B premium are really paying a $90 tax per year for those persons who are in Medicare Advantage. We know Medicare Advantage is overpaid. The Senator from Oklahoma, Mr. Coburn, agreed with me when I asked him just yesterday if Medicare Advantage was overpaid. He said, yes, it is overpaid by a very large margin. This legislation can adjust that overpayment. I might also say, too, that the groups I mentioned support this legislation. But the main point I want to make is this: There are so many fundamental provisions in this legislation that really have not come out much in debate, a little esoteric but under the heading of ``delivery system reform.'' We must begin to change the way we reimburse doctors and hospitals so we are focusing much more on quality of care rather than quantity of care. Some of that is already happening in America without legislation. Basically, it is the nature of integrated systems. We all talked about them. I know Senators on the other side of the aisle also agree with this new trend where hospitals, doctors, nursing homes, and other groups get together and they coordinate their care. Their care is much more patient focused. We have to move much more in that direction. This will go a long way once it starts kicking in--it is going to take maybe 3 or 4 years to finally have an effect--toward eliminating the waste in our current system. Estimates are we have between $200 billion to $300 billion to $800 billion annually in waste in the American health care system. That is the reason health care costs are so high for family, businesses, governments, whatnot. We have to begin to get that under control, and this legislation does that. If we do not pass this legislation, we will be postponing the day when we have to begin to get some of these excessive costs under control, and then the problem will be much more difficult. An ounce of prevention is worth a pound of cure in medicine. It is also true in legislation. Clearly, now is the time to exercise a little ounce of prevention by starting to curb excessive costs, and this bill does that.

Mr. BAUCUS. Reserving the right to object, under current law, if less is spent for Medicare providers, the benefits inure to the Medicare trust fund beneficiaries. Although I have the greatest respect for the Senator from Iowa, this is a stunt, and I object.

Mr. BAUCUS. How much time remains?

Mr. BAUCUS. The Senator from Arizona has yielded back his time. We might as well yield back our time, and we can vote.

Mr. BAUCUS. Mr. President, I ask my colleague if he wishes to go first? Whatever he wants to do. It is his motion.

Mr. BAUCUS. Mr. President, the McCain motion is next. Unless we act today and pass health care reform, the Medicare trust fund runs out of money in 2017. There are two ways to keep Medicare solvent: find efficiencies so Medicare spends less or increase revenues going into the trust fund--two ideas. Our bill would make Medicare Advantage more efficient. We would introduce competitive bidding----

Mr. BAUCUS. I thank the Senator from West Virginia. We extend the trust fund for 5 more years. That is in this bill. Yes, Medicare Advantage plans would not be overpaid as much, but those plans could pay for greater efficiency by cutting their profits or cutting their executives' pay. They could do that. Nothing says they have to go after beneficiaries. Our bill does nothing to reduce the guaranteed Medicare benefits. To the contrary, our bill would improve Medicare benefits. It would help seniors on the prescription drug doughnut hole and add new preventive benefits such as annual wellness visits. The bill would help ensure doctors would be available to treat Medicare patients. We would prevent the 21-percent cut in doctor payments under current law. For all those reasons, the American Association of Retired Persons supports reform and opposes the McCain motion. I urge my colleagues to support reform and oppose the motion to commit.

Mr. BAUCUS. Mr. President, I move to reconsider the vote.

Mr. BAUCUS. Madam President, I think it would be instructive to stop all this rhetorical talking past each other on Medicare Advantage and explain a little bit about how we got to where we are in this legislation. I don't know the exact year, but I think it was back in the 1980s sometime, up to a certain point Medicare was basically paid fees for services. That is the basic Medicare model. The service was provided and there are certain set rates for that service. Then, in the 1980s, private companies thought maybe they could be more efficient, private insurance companies. So they came to Congress and said: We can do a better job in compensating Medicare based on fee for service, so let's set up something called Medicare Advantage, private entities. So Congress said: OK, competition is a good thing. So we did that. Congress did that. We basically set the rates to be paid to Medicare Advantage plans at 95 percent of fee for service. After all, the plan said they could do it more cheaply and they could compete. So we said: OK, that sounds like a good idea. We will pay you 95 percent of what otherwise would be paid under fee for service. That continued for a while. In 1997, the plan said: Gee, we need a little more money. So Congress said: All right. And we gave a little more money to Medicare Advantage and basically said, OK, that will pay the 95 percent. But if you are not doing so well and making money at 95, we will set kind of a higher floor, according to certain areas of the country, and you could choose whatever enables you to have the greatest compensation. The big change occurred in 2003, in the Medicare Modernization Act, otherwise known as the drug bill. It was the legislation that created drug benefits for seniors. As we all know, frankly, when Medicare was created, it didn't have an outpatient drug benefit because drugs weren't comparatively as important then as they are today. Today there are miracle drugs that help in a lot of ways. We created the drug benefit in 2003. The Congress did something else then. Many Members of Congress were concerned that Medicare Advantage might not offer the plans in rural parts of America, that there wouldn't be enough incentive for Medicare Advantage to go to rural America to offer the drug benefits--not only the drug benefits but other benefits they provided. Congress, frankly, gave a lot of money to Medicare Advantage plans so there could be at least two plans operating in all parts of the country. Give them enough money and they will go; that was the theory. Guess what happened. We gave them a lot of money and they went. We have reached the point now where Medicare Advantage is, by everybody's estimate, quite dramatically overpaid, as the Senator from Oklahoma, Mr. Coburn, said when I asked him yesterday whether Medicare Advantage plans are overpaid. He said, ``Yes, they are definitely overpaid.'' MedPAC, which advises us on Medicare reimbursement, said to us that we are way overpaying Medicare Advantage plans. I hear figures of from 14 to 18 percent overpayment. It depends on what part of the country you are in. Let's be conservative and say it is 14 percent in fee for service, that they are overpaid. MedPAC is an independent advisory group that helps us figure out what in the world we pay hospitals, nursing homes, home health agencies, etc. We are not the experts. We need help. MedPAC said to the Congress that we are overpaying them big time. We decided let's figure out a way to reform the system. How about a little competition? Right now, Medicare Advantage plans are paid what is called a benchmark, depending upon the fee for service in their certain area. We all know fee for service is much less in rural America, and I am sure in the home State of the occupant of the chair. Fee for service is much higher in other more urban States and so forth. As it turned out, under the benchmarks for fee for service, they were way overpaying in States where fee for service is so high, and not quite as much overpaid where fee for service is so low. That is a nutty system in the current law today. What we are doing in this legislation is, basically, we are saying: Look, let's introduce a little competition. We are saying: Let's get rid of the benchmark-type fee for service. It is out of whack in different parts of the country. What are we going to do? We say: OK, we will divide the country into geographic areas. In your area, wherever you might be, Uncle Sam--or Medicare--will pay the average competitive bid for that area. The average cost you bid for that area is what we are going to pay, which eliminates this big disparity between States and makes it much more fair so that reimbursement is based much more on what it actually costs in a certain area, but it is competitively bid. That is what we are trying to do. Is that a good thing to do? I think most of us think so. Is it perfect? I don't know for sure, but we are trying our best to make this a better system, a better program than we currently have. As a consequence, we are going to save some money, and there will be competition. Most of us think competition is often a pretty good thing. That is what this is, I remind my colleagues. As a consequence, we are not going to be overpaying Medicare Advantage plans anymore. The amount we reduced the payment to is in line with what MedPAC says we should pay, the Medicare Payment Advisory Commission. We are trying to be responsible and reasonable with taxpayer money, seniors who pay into Medicare. The point is often made that, gee, this will hurt Medicare Advantage, hospitals, and so forth. I think it is worth reminding all of us that a meeting occurred at the White House, I think, 4 to 6 months ago, when all of the so-called providers--the hospitals, insurance companies, including Medicare Advantage plans--all got together with the President and said: Mr. President, we agree this country needs health care reform. They all agreed. Let's move back in history a little bit. When President Clinton attempted health care reform, all those groups were opposed to health care reform. This time, they are pretty much in favor of it because they know if we don't fix it, it is going to collapse. Back to that meeting. What did they say? They said: Mr. President, we have all gotten together and we think we can contribute. We can cut collectively $2 trillion in payments that go to us over the next 10 years. That is what they said. That is pretty interesting. Thank you very much. So we are working together to get health care reform. Why do you think they would agree to $2 trillion? They got their calculators out and got their financial officers together and said: Gee, if everybody has health care--remember, 46 million Americans don't have health insurance--if everybody had health insurance, hospitals, Medicare Advantage plans said: Hey, we can make some money because everybody has health insurance. So that was the deal. They will have a little lower margins, but they will make it up on volume. That is why they said to the President: We can cut $2 trillion that otherwise would be reimbursements to us. In this legislation, did we reduce the rate of increase over 10 years by $2 trillion? No. Did we decrease the rate of increase in expenditures by half of that or $1 trillion? No. Do we reduce the rate of increase of health care expenditures down to, say, $450 billion, close to $500 billion? Yes, that is what we did. About one-quarter of the industry said they could voluntarily contribute. Are they squawking today? No. Why? Because they got a pretty good deal. They know they can continue to provide services and the hospitals are going to do well and home health care agencies will do well. I will add that the profit margin for home health agencies is about 17 percent. That is pretty good. So we are cutting them a little bit. The profit margin for nursing homes--Medicare payments to nursing homes--is about 15 percent. We are cutting that a little bit. But they are still making money and still will do well. In fact, their average rate of growth over the next 10 years is going to be in excess of 5 percent a year. Wall Street analysts say these outfits are doing pretty well. You don't see their stocks going down. We are trying to do what is right and to reform Medicare Advantage, as I just outlined it. It is a pretty fair attempt at reform. Also, we will reduce payments to hospitals and other providers in an amount that they can live with--not be happy with but an amount they are OK with, and where they know they can still make money. That extends the solvency of the Medicare trust fund another 5 years because those providers are not being paid as much as they would otherwise be paid. I hear Senators crying crocodile tears about how seniors are going to be cut, and so forth. Frankly, with the changes we made, I think it is very fair, and it will extend the solvency of the trust fund. There is not one dime of guaranteed Medicare benefits that will be cut--not one thin dime--in this legislation. It is true that because Medicare Advantage--the rate of growth of increase in Medicare Advantage plans is trimmed back a little, perhaps there will not be as many extra benefits--not the guaranteed benefits but extras, fringe benefits, like gym memberships and things like that. Don't forget, that is not because that is a decision made by Medicare or by Congress; that is a decision made by the executive offices of these private companies. I am not saying they should do this. They could trim salaries, overhead, and they could have a little less return to stockholders, and they could cut down administrative costs. There are various things they could do, which doesn't have to be passed on to reductions in fringes. Let's keep things in perspective as to what is actually going on.

Mr. BAUCUS. Most people did.

Mr. BAUCUS. That is correct. To be totally fair, the other side likes to trot out this Medicare pamphlet that includes Medicare Advantage. I think that is misleading and not accurate. As the Senator says, these are private plans.

Mr. BAUCUS. Absolutely. That was the rationale.

Mr. BAUCUS. That is correct. It depends on the part of the country.

Mr. BAUCUS. That is correct.

Mr. BAUCUS. Exactly.

Mr. BAUCUS. With great considerable administrative costs and profits that otherwise could go to seniors.

Mr. BAUCUS. Congress did. Congress set the benchmarks.

Mr. BAUCUS. That is correct.

Mr. BAUCUS. That is correct. Under this legislation, we say--frankly, under the earlier Medicare Advantage plans, HMOs had some coordinated care, but the other half, the private fee for service, preferred provider organizations did not have coordinated care. We are saying in the legislation that if you are in the Medicare Advantage plan, which includes a whole list, and you provide coordinated care, we are going to give you a bonus.

Mr. BAUCUS. That is a very interesting question. When I was told about the handbook, that is what I thought I was going to do, is call up Medicare and say that is misleading and it is inaccurate because it is misleading and it is inaccurate.

Mr. BAUCUS. These are private companies.

Mr. BAUCUS. It has officers, a board of directors.