Max Baucus

Mr. BAUCUS

Mr. BAUCUS. He does.

Mr. BAUCUS. May I ask the Senator another question?

Mr. BAUCUS. Then I have a question on the same subject.

Mr. BAUCUS. Might I respond to the Senator?

Mr. BAUCUS. Here is your opportunity; here is your chance.

Mr. BAUCUS. It is on both sides. We have even time.

Mr. BAUCUS. Yes. The basic question, obviously, is how to protect Medicare benefits. I think most of us would say how do we protect Medicare benefits and extend the solvency of the Medicare trust fund. I think we would all agree that excessive payments to providers would cause insolvency of the trust funds to come earlier rather than later. We all agree with that proposition. The next question is, What would excessive payments to providers be? Do providers get paid excessively? I think that is an honest question we should ask ourselves in a way to help extend the solvency of the Medicare trust fund. In fact, in 1995, many Senators, especially on the other side of the aisle, did say just that, that we have to cut Medicare in order to save benefits. That was made by many Senators. I have them right in front of me, if anybody wants to hear them. I am not going to go through all of that, but it is the truth. That is exactly what we are doing in this bill. We are trying to help extend the solvency of the Medicare trust fund by cutting down on excessive provider payments from the Medicare trust fund. How do we decide whether payments are excessive? That is the basic question here. All we can do is just give it our best shot, make our best judgment. I think it makes sense to look at the recommendations by outside independent groups, what they think. One is MedPAC, the Medicare Payment Advisory Commission. That is an outside group, as we all know, that advises Congress on Medicare payments. As Members of Congress, we are not totally competent to know exactly what dollars should go to which industry group. We have too many other obligations to think about. As Senators, we must be responsible to do the best we can. MedPAC has said these groups have been overpaid. And Wall Street analysts tend to agree. In fact, MedPAC said, with respect to Medicare Advantage, that they have been overpaid--I forget the exact amount but much less than the $118 billion reduction in this bill. In fact, I totaled up and looked at the projected growth rate of providers--hospitals, nursing homes, home health, hospice, PhRMA, you name it--and on average their growth rate over the next decade is going to be 6\1/2\ percent. That is the growth rate of providers. We decided to trim that a little bit by 1.5 percent. So it is 5 percent. It is a 5-percent growth rate in an attempt to try to find the right levels of reimbursement to providers, which will also help extend the solvency of the Medicare trust fund. When we talk to providers, they basically agree with those cuts. They basically agree. Why do they basically agree? They basically agree because they know that with much more coverage, with many more people having health insurance, they could spread out their business. They may lose a little on margin, but they can pick it up on volume. That is exactly what their business plan is under this bill. Wall Street analysts say--I quote them--these industries are doing great, they are doing well under this bill. They are not getting hurt. So we do achieve a win-win--I don't like that phrase, by the way, but I will use it here--where the solvency of the trust fund is being extended and where reimbursement rates to providers are fair--not being hurt; it is fair. And that is why they want this bill, by and large. Most groups tend to want this bill enacted because they know it is good for the country, it is good for the seniors, and it is good for them too.

Mr. BAUCUS. No, no, no, I did not. With all due respect, I did not say that.

Mr. BAUCUS. I talked about hospitals. I did not talk about doctors overpaid. If I may say to my friend from Tennessee, this legislation pays more to primary care doctors, a 10-percent increase in Medicare reimbursement for each of the next 5 years. I did not say ``doctors.''

Mr. BAUCUS. If the Senator will yield for another question, might I ask my friend if it isn't also true that in the June MedPAC report it states that Medicare Advantage overpayments cost taxpayers an extra $12 billion?

Mr. BAUCUS. Well, that is right, that is MedPAC. I think the point the Senator from Illinois is making needs to be underlined two or three or four times here--and the Senator from Connecticut has made it too-- and that is there is a huge distinction between Medicare and these private insurance plans.

Mr. BAUCUS. It is not. It is a private plan. What Medicare Advantage is overpaid--that is what these insurance companies are overpaid, and a lot of that goes back to the Part D drug bill and so forth--do those overpayments necessarily mean better benefits for persons who signed up for those plans?

Mr. BAUCUS. If that is true, why might that be the case, just so people understand?

Mr. BAUCUS. Does Medicare decide what the benefits will be for those folks?

Mr. BAUCUS. The private insurance carriers.

Mr. BAUCUS. You already said it, but I think it is worth repeating-- --

Mr. BAUCUS. Most seniors, as they pay Part B premiums under fee for service, don't get any benefit whatsoever?

Mr. BAUCUS. That is right. Higher premiums.

Mr. BAUCUS. The figure I saw--I guess it is $90 a year they pay extra and get no benefit from it.

Mr. BAUCUS

Mr. BAUCUS. Will the Senator yield for a question?

Mr. BAUCUS. I would like to hear you talk about the CLASS Act. I am no fan of the CLASS Act myself so why don't you proceed.

Mr. BAUCUS. Mr. President, it has been a very interesting discussion, listening to the Senator from New Hampshire. Several points. One, the underlying bill is clearly not a net increase in government spending on health care. The numbers are bandied about by those on the other side-- $1 trillion, $2.5 trillion, et cetera. I do acknowledge and thank the Senator from New Hampshire for saying, yes, it is all paid for. He did say that. He did agree this is all paid for. So I just hope when other Senators on that side of the aisle start talking about this big cost, $1 trillion, $2 trillion, whatever, that they do admit it is paid for. The ranking member of the Senate Budget Committee flatly said: Yes, it is all paid for. I would hope other Members on that side of the aisle heed the statement of the Senator from New Hampshire, ranking member of the Senate Budget Committee, for saying it is all paid for. But don't take my word for it or his word. It is what the CBO says. In fact, let me quote from a letter to Senator Reid not too long ago: The CBO expects that during the decade following the 10- year budget window, the increases and decreases in Federal budgetary commitment to health care stemming from this legislation would roughly balance out so that there would be no significant change in that commitment. That is, a commitment to health care, to government health care spending, no change basically. It is flat. Although it is a little better than flat because the subsequent CBO letter has said the underlying bill achieves about $130 billion in deficit reduction over 10 years and one-quarter of a percent of GDP reduction in the next 10 years. The Senator from New Hampshire talks about large deficits this country is facing. That is true. Frankly, all of us in the Senate have a responsibility to try to reduce that budget deficit as best and as reasonably as we possibly can. Bear in mind, this underlying health care bill helps reduce the budget deficit. Sometimes people on the other side like to suggest that $1 trillion over 10 years will add to the budget deficit. Again, we have definitely established it does not add to the budget deficit at all, not one thin dime. In addition, we actually reduce the budget deficit through health care reform, through this underlying legislation. We all know the Medicare trust fund is in jeopardy, in part, because baby boomers are retiring more but also because health care costs are going up at such a rapid rate. That is health care costs for everybody. It is health care costs for me, for every Senator, for every senior, for businesses. Let's not forget, we spend in America about 60 percent more per person on health care than the next most expensive country, about 50 to 60 percent more per person. The trend is going in the wrong direction. We are going to spend about $33 trillion in America on health care over the next 10 years. That is going to be somewhat evenly divided between public expenditures and private. Every other country in the world has figured out ways to limit the rate of growth of increase in health care spending. We haven't. We are the only industrialized country--in fact, developing country--that hasn't figured out how to get some handle on the rate of growth of increase in health care spending. One could say: Gee, let's forget about it. Just let the present trend continue. We all bandy about different figures. One I am fond of at least remembering is the average health care insurance policy in America today costs about $13,000. If we do nothing over 8 years, it will be $30,000. That is a much higher rate of increase than income for Americans. It means the disparity between wages of the average American and what they are paying on health care will widen all the more if we do nothing. We have to do something. This legislation is a good-faith effort to begin to get a handle on the rate of growth of spending in this country. The Senator from New Hampshire was being honest, frankly. Some on the other side are being not quite so honest. He is basically saying: Yes, it is true we are not cutting beneficiary cuts, although he talks about Medicare Advantage. Let me point out that there is nothing in this legislation that requires any reductions in any beneficiary cuts. In fact, guaranteed benefits under Medicare are expressly not to be cut under the express language of this bill. The portion we are talking about is Medicare Advantage. The fact is, there is nothing in this bill that requires any cuts at all in Medicare Advantage payments. Those Medicare Advantage payments are in addition to the guaranteed Medicare payments, such as gym memberships, things such as that which are not part of traditional Medicare. Why do I say there is nothing in there that requires cuts for those extras? That is because the decision on what benefits or what extras Medicare Advantage plans have to give the guaranteed benefits, that is by law. But the decision as to what extras should go to their members is a decision based not upon us in the government, in Congress, not upon the HHS Secretary; it is based on the corporate officers of these companies. They are overpaid, Medicare Advantage plans, right now. Everybody knows they are overpaid. Even they, privately, will tell you they are overpaid. They are overpaid based upon legislation that Congress passed in 2003, the Medicare Part D, by setting these high benchmarks. They are overpaid. The MedPAC commission also said they are overpaid to the tune of about between 14 and 18 percent. So the reductions that are provided for in this bill, in Medicare Advantage plans, the effect of those reductions is up to the officers of those plans. They could cut premiums people otherwise pay. They could cut benefits to help themselves, help their salaries. They could cut stockholders. They could cut administrative costs. They can decide what they want to do. That is solely a decision of the executives of Medicare Advantage plans. Private insurance plans is what they are. They are private insurance plans, so there is nothing here that says the fringes, the extras, have to be cut at all. Those executives could keep those fringes and maybe have a little less return to their stockholders or maybe make some savings in their administrative costs, maybe not increase their salaries. There is nothing here that requires those fringes, those extras, to be cut, nothing whatsoever. The Senator from New Hampshire says: Oh, it is about $400 billion to $500 billion of reduced payments to providers in this legislation. That is true. Well, let's look and see what the consequences of that are. First of all, that means the Medicare trust fund's solvency is extended. It is more flush with cash. I would think all Senators here would like to extend the life of the Medicare trust fund. A good way to do that is by what we are doing in this bill, saving about $450 billion over 10 years that otherwise would be paid to Medicare providers is not being paid, and those benefits inure to the trust fund. There is no dispute--none whatsoever--that this legislation extends the life of the Medicare trust fund by another 5 years. That is because of those changes in the structure and also because there are no cuts in benefits. There are no cuts in benefits, I say to Senators. Although sometimes Senators on that side of the aisle like to either say or strongly imply there are cuts in benefits, there are no cuts in benefits. There are no cuts in the guaranteed benefits with the basic benefits, and there are no required cuts for the fringes or the extras because the officers can make that decision not to cut, if they want to. That is their choice, as I have explained a few minutes ago. Let's look to see what the other side proposed not too many years ago back in 1997. They proposed cutting the Medicare benefit structure, cutting payments to providers, big time--big time. They proposed a 12.4-percent cut to providers back in 1997, when they were in charge. They did that in part to save the Medicare trust fund, to extend the life of the Medicare trust fund. I have a hard time understanding why back then it was a good thing to do, which was about three times more of a cut--let's see, twice as heavy a cut to Medicare providers back then, in 1997, than it is today. Nobody over there has explained why it was the right thing to do back then but not the right thing to do today, when the goal is the same. The goal is the same; that is, to extend the solvency of the trust fund. One could say--I think the Senator from New Hampshire did say--well, let's take those savings, which do extend the solvency of the trust fund, but not--he said--provide another program. I think he wants to use that to cut the deficit. That is what I think he wants to do. That is a very basic, fundamental, values question I think this country should face; that is, do we want to set up a system where virtually all Americans have health insurance? We are the only industrialized country in the world that does not have a system where its citizens have health insurance--the only industrialized country in the world. It is a very basic question. I think we should ask ourselves as Americans: In every other industrialized country, health insurance, health care is a right. That is the starting point. In every other country that has a health care system, health care is a right-- that everybody should have health care. Of course, it is true, people are different. Some are tall, some are short. Some are very athletically endowed, some are not. Some are smart, some are not so smart. But health care does not care--that is a way to put it--whether you are dumb, smart, tall, skinny. It affects everybody; that is, diseases affect everybody, and everybody needs health care regardless of your station in life, regardless of your income, regardless of whether you are an egghead, you are brilliant, or an athlete. It makes no difference whatsoever. We are Americans. I frankly believe other countries on that point have it right; that is, that they treat all their citizens basically equally because disease is indiscriminate--who is going to get disease--accidents are indiscriminate--who is going to get in an accident--and so forth. So we could take this $400 billion, $500 billion and reduce the deficit with it and forget any health insurance coverage. That would be an option. That is a legitimate question we could ask ourselves. I frankly think the better choice is to take that $400 billion, $500 billion, which does extend the solvency of the trust fund, and help set up a way, help set up a system so all Americans have health insurance. We do it in a way that reduces the budget deficit. We do it in a way that reduces the budget deficit in the first 10 years and also in the next 10 years. I again repeat, if trimming the rate of growth of provider payments was OK back in 1997--that was twice as much as today back then to extend the solvency of the Medicare trust fund--why isn't it OK today to do half as much to extend the life of the trust fund, in this case for 5 more years, and at the same time help provide health insurance benefits for people who deserve it? Let's not forget, hospitals want us to do this. They want everyone to have health insurance. Doctors want us to have a system where everybody has health insurance, whether it is Medicaid or it is private health insurance. All the providers want it. The pharmaceutical industry does, the home health industry does, the hospice industry does. The durable medical equipment manufacturers want it. They all want it because they know it is the right thing to do. They also know they are not going to get hurt. I heard some reference here that some HHS actuary, commenting on the House bill, said, oh, gee, it might scare providers and whatnot, but we actually got subsequent information which showed that letter--that actuary admitted it is extremely variable, what he came up with. There are lots of factors he did not take into consideration. I also have statements from hospital administrators saying no way are they going to be allowed. In fact, let's remind ourselves of this: It was not too many weeks ago, a couple months ago--remember that meeting--when all the health care providers and the insurance industry went to the White House? They were all over there. What did they pledge to President Obama to help get health care reform passed? That they would cut their reimbursements by $2 trillion over 10 years. They would cut. They agreed to cut their payments that Uncle Sam makes to them in the health care system by $2 trillion over 10 years. It was widely reported in the papers. What did we do in this bill? We reduced the rate of increase in payments to providers, not by $2 trillion, not by $1 trillion, less than $\1/2\ trillion over that same 10-year period. So if they could commit back then to $2 trillion, you would think, my gosh, this is a quarter of that. That is not too bad and not going to hurt anybody, and providers are not going to be leaving. I might add too, I have a letter from AARP to the majority leader dated today. It has been handed to me. In part it says: The legislation before the Senate properly focuses on provider reimbursement reforms. . . . Most importantly, the legislation does not reduce any guaranteed Medicare benefits. This is a letter today from the American Association of Retired People. I will re-read that portion. It is addressed to Senator Reid: The legislation before the Senate properly focuses on provider reimbursement reforms. . . . And, man, we need about a week or so to talk about all the reforms in this bill that are so important so we have a better health care system focusing more on quality than we currently do in the United States system. Again: Most importantly, the legislation does not reduce any guaranteed Medicare benefits. In the letter they also say: AARP believes that savings can be found in Medicare through smart, targeted changes aimed at improving health care delivery, eliminating waste and inefficiency, and aggressively weeding out fraud and abuse. That is important. It is very important. I might add, too, that every person today who pays a Part B premium--every American today--every senior today who pays that quarter, that 25 percent of Part B today, pays also for the waste that is in the system today, especially under Part B. So if we get the waste out, we also will be able to reduce that Part B premium payment that seniors have to pay too. I think that is a good thing. So the more you dig into this bill, the more you see the good features. I do not think all the good features have been pointed out in this bill. One of our jobs here is to point out what they are, so when this legislation passes--mark my words, this legislation is going to be enacted. It is going to be enacted, I will not say exactly when, but certainly, if not this month, it will be signed by the President either this month or next month--then Americans are going to start to see: Oh, gee, there is a lot in there that is good. I didn't know about that. That is good. I like that. It may not be perfect, but they started in the right direction. That is pretty good. They are going to like it. I hear all these references to polls around here, and that is because of all the confusion, in part. But once it is passed and people look to see what is in it--they will look to see what is in it because that is the law. They are forced to look to see what is in it because that is the law. I know some of my colleagues on the other side of the aisle may say: Yes, when they look to see what is in it, they will see how bad it is. I disagree. That is not my view. My view is, the more this legislation is subjected to the light of day, the disinfectant of sunshine, which shows what is in this bill, the more people are going to say: Hey, that was a good thing they did back then in December or January. I yield the floor.

Mr. BAUCUS. As soon as I get the page number, I guess I would like to ask the Senator from Oklahoma a question.

Mr. BAUCUS. What page?

Mr. BAUCUS. I don't have it with me right now, but there are no required reductions in fringes or extras--