Bob Graham

Mr. GRAHAM

Mr. GRAHAM. Mr. President, the main points of this legislation are as follows. No. 1, it will exempt prison workers from the minimum wage provisions. No. 2, it will put an end to a cascade of lawsuits that our States have been faced with by prisoners demanding back wages. It enables the effective prison work and employment training programs that have been developed within many of our State corrections facilities to continue without the fear of these lawsuits. Mr. President, I am pleased to be able to cosponsor this legislation with my colleague, Senator Reid, who, during the last Congress and previously, has brought this issue so effectively to our attention. This legislation has engendered bipartisan support and today we are joined by Senators Mack, DeWine, Bryan and Dorgan in our efforts to correct the application of minimum wage to State prisons. This is an issue of national concern. Class action lawsuits by prisoners demanding backpay at minimum wage are entangling Federal courts in many sectors of the country. Florida alone has faced two such class action lawsuits in the last 24 months. In 1992, 18 States asked Congress for clarification of this issue. Today, 4 years later, we have yet to answer their call for help. It seems appropriate that we should address this issue in the very week that we have taken action to increase the minimum wage in the law. Many prisoners participate in job training and work programs which provide numerous benefits. This legislation restricts its applicability in terms of prohibition from the application of the minimum wage to those prison industry programs which are providing goods or services to either a local, State, or Federal governmental agency. We are not including where there might be the production of products or the delivery of services that would be beneficial and therefore in competition with commercial, private-sector activities. Not only are these activities beneficial in terms of providing services which range, in my State, from supplies such as furniture and printed materials, to the provision of services which are valuable to local, State, or Federal governments, but they also deal with one of the major issues that affects recidivism, the likelihood of a person upon release from prison returning to a life of crime. Consistently, one of the key factors in the likelihood of a prisoner either living a life of law and order and production or returning to their previous criminal behavior is whether they leave the prison prepared to hold a job. These programs provide that kind of on-the-job training and experience that make prisoners, upon release, more likely to be employable, more likely to have the cultural skills, the understanding of what it means to go to work every day in order to get and hold a job. I am very proud that in our State, the recidivism rate among those prisoners who have been through our prison industry program is one- fifth of the recidivism rate of the population as a whole. We want to protect these programs by eliminating the prospect that they might be subjected to the minimum wage. What would happen if the minimum wage were to be made applicable to these prison work programs? Again, using the State of Florida as an example, it has been estimated that if the State were to lose the class action suit that is before it, it would cost millions of dollars in backpay and an additional $24 million every year to continue the programs as they are currently in place. In a time of tight State budgets, there is very little likelihood that there would be this $24 million forthcoming, and, therefore, the prospect would be that this effective program that is serving so many important interests would be terminated. So, Mr. President, this legislation is beneficial to the States and the communities that are the direct beneficiaries of the products and services produced by these prison industries. There is even a greater benefit in terms of reducing the likelihood of prisoners, upon release, returning to a life of crime and, therefore, being a predator upon society. But it also gives us a chance, frankly, to eliminate a provision which makes us appear to be foolish to the American public. If you were to tell the average citizen in New Hampshire, did you know that there is an interpretation of the Federal minimum wage law that requires your State, if a prisoner is working while they are incarcerated, doing something productive, helping prepare themselves for their post- incarceration life, requiring the State to pay minimum wage to that person, in spite of the fact that the State is also providing them a place to live, to eat, their medical services, all of the requirements, and then to say they have to receive the minimum wage, which is now going to be raised over the next 2 years to $5.15 an hour, you would first encounter bemusement and then, I think, public anger at what they would see to be such a foolish idea. So, Mr. President, I hope that, albeit 4 years late, we would respond to the request of the States to clarify that we do not intend to apply the minimum wage to those persons engaged in prison industries and allow the States to continue with this thoroughly rational and important part of their corrections program. It is my honor to turn the remainder of the time to my colleague and cosponsor, Senator Reid. Mr. REID addressed the Chair.

Mr. GRAHAM. Mr. President, with my colleague, Senator Reid, we introduce today legislation which will clarify the Fair Labor Standards Act and the issue of minimum wage, as it applies to prisoners incarcerated in State and local institutions. I send the legislation to the desk.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, the main points of this legislation are as follows. No. 1, it will exempt prison workers from the minimum wage provisions. No. 2, it will put an end to a cascade of lawsuits that our States have been faced with by prisoners demanding back wages. It enables the effective prison work and employment training programs that have been developed within many of our State corrections facilities to continue without the fear of these lawsuits. Mr. President, I am pleased to be able to cosponsor this legislation with my colleague, Senator Reid, who, during the last Congress and previously, has brought this issue so effectively to our attention. This legislation has engendered bipartisan support and today we are joined by Senators Mack, DeWine, Bryan and Dorgan in our efforts to correct the application of minimum wage to State prisons. This is an issue of national concern. Class action lawsuits by prisoners demanding backpay at minimum wage are entangling Federal courts in many sectors of the country. Florida alone has faced two such class action lawsuits in the last 24 months. In 1992, 18 States asked Congress for clarification of this issue. Today, 4 years later, we have yet to answer their call for help. It seems appropriate that we should address this issue in the very week that we have taken action to increase the minimum wage in the law. Many prisoners participate in job training and work programs which provide numerous benefits. This legislation restricts its applicability in terms of prohibition from the application of the minimum wage to those prison industry programs which are providing goods or services to either a local, State, or Federal governmental agency. We are not including where there might be the production of products or the delivery of services that would be beneficial and therefore in competition with commercial, private-sector activities. Not only are these activities beneficial in terms of providing services which range, in my State, from supplies such as furniture and printed materials, to the provision of services which are valuable to local, State, or Federal governments, but they also deal with one of the major issues that affects recidivism, the likelihood of a person upon release from prison returning to a life of crime. Consistently, one of the key factors in the likelihood of a prisoner either living a life of law and order and production or returning to their previous criminal behavior is whether they leave the prison prepared to hold a job. These programs provide that kind of on-the-job training and experience that make prisoners, upon release, more likely to be employable, more likely to have the cultural skills, the understanding of what it means to go to work every day in order to get and hold a job. I am very proud that in our State, the recidivism rate among those prisoners who have been through our prison industry program is one- fifth of the recidivism rate of the population as a whole. We want to protect these programs by eliminating the prospect that they might be subjected to the minimum wage. What would happen if the minimum wage were to be made applicable to these prison work programs? Again, using the State of Florida as an example, it has been estimated that if the State were to lose the class action suit that is before it, it would cost millions of dollars in backpay and an additional $24 million every year to continue the programs as they are currently in place. In a time of tight State budgets, there is very little likelihood that there would be this $24 million forthcoming, and, therefore, the prospect would be that this effective program that is serving so many important interests would be terminated. So, Mr. President, this legislation is beneficial to the States and the communities that are the direct beneficiaries of the products and services produced by these prison industries. There is even a greater benefit in terms of reducing the likelihood of prisoners, upon release, returning to a life of crime and, therefore, being a predator upon society. But it also gives us a chance, frankly, to eliminate a provision which makes us appear to be foolish to the American public. If you were to tell the average citizen in New Hampshire, did you know that there is an interpretation of the Federal minimum wage law that requires your State, if a prisoner is working while they are incarcerated, doing something productive, helping prepare themselves for their post- incarceration life, requiring the State to pay minimum wage to that person, in spite of the fact that the State is also providing them a place to live, to eat, their medical services, all of the requirements, and then to say they have to receive the minimum wage, which is now going to be raised over the next 2 years to $5.15 an hour, you would first encounter bemusement and then, I think, public anger at what they would see to be such a foolish idea. So, Mr. President, I hope that, albeit 4 years late, we would respond to the request of the States to clarify that we do not intend to apply the minimum wage to those persons engaged in prison industries and allow the States to continue with this thoroughly rational and important part of their corrections program. It is my honor to turn the remainder of the time to my colleague and cosponsor, Senator Reid. Mr. REID addressed the Chair.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I wish to speak briefly on a provision which I hope will be included in this bill at the time we take our final vote. It is a provision which is of great importance to working parents and their children across America. For years, one of the major challenges to American families has been how to plan for their children's educational future. This challenge has been exacerbated in recent years due to the continued rising costs of college education. In response to this challenge, over the past 10 years States have formed innovative partnerships with families. These are typically known as prepaid college tuition plans. These plans, although not structurally identical, share a common purpose. These plans allow parents to pay in advance for a child's tuition at a participating college or university, thereby locking in today's tuition prices, guaranteeing the child's access to a future college education. The State then takes the funds which have been paid by the participant, typically the parent, and invests them in a way that keeps pace with the cost of college education. These programs are designed so that people of moderate means can help their children realize the dream of a college education. For instance, the typical Florida family participating in this program earns approximately $50,000 a year. These programs are also tailored to maximize flexibility. Families can either purchase a prepaid tuition contract with a lump sum or, if they choose, they can pay the child's education in monthly installments. These plans, therefore, are affordable. For instance, those families who opt to invest on a monthly basis in my State of Florida put aside an average of about $53 a month, roughly the price of cable television service. This affordability has made prepayment programs enormously successful in Florida and across the Nation. Most importantly, at a time when the next generation will struggle to provide for the financial security of its children, prepaid college programs provide a powerful incentive for families to save, to invest in their futures, to provide for some security when an unexpected tragedy occurs. Let me share with you an example of such an unexpected tragedy. Mr. and Mrs. Daniel Gilliland enrolled their sons, Sean and Patrick, in the Florida program in 1988, the first year of its existence. Four years later, Sean entered the University of Florida as a freshman in the fall of 1992. In 1994, the father, Daniel Gilliland, died unexpectedly, just as the younger son Patrick was about to go to the University of Florida for his freshman year. The death of Daniel Gilliland was devastating to the family, but because the Gillilands were able to participate in the Florida prepaid college program both children were able to go on with their lives and continue their education. I will quote from a letter from Mrs. Gilliland, which I ask unanimous consent be printed in the Record immediately after my remarks.

Mr. GRAHAM. She states, ``By expecting the unexpected, we were able to give both sons an education at a fine university that would certainly otherwise have been difficult for me as a single parent.'' When Daniel died, I silently offered ``thanks that we had the foresight and chance to participate in this program.'' Today, Sean is a senior at the University of Florida, ready to graduate with a degree in business. Patrick maintains a 3.6 average, while working toward a degree in athletic training. Mr. President, it is because of success stories like the Gilliland's that the prepaid college programs are flourishing. Twelve States already have operating programs. Those States are those depicted in green on this map. Four States depicted in yellow will begin tuition programs this year, and a dozen more are moving towards enacting prepaid tuition legislation, those depicted in red. As an example, the Texas prepaid tuition program, which was set up this year, receives 4,000 inquiries a day and enrolled 40,000 participants within the first few weeks of implementing the program. In Florida, 376,000 families are currently participating in the program; 40,000 participants join each year. Why, in the face of this great success, are we considering Federal legislation to affect State prepaid tuition plans? The reason is because early this year the taxation of these plans was called into question by the Internal Revenue Service. The IRS contacted six States with operating programs and informed them that the IRS intended to do two things: First, the IRS stated that it would treat the State fund as a taxable corporation rather than a tax-exempt government entity. Obviously, this action would make it difficult for States to meet their obligation to families under the plan. Second, the IRS stated that families should have to pay tax annually on the interest income earned on amounts transferred to the fund. Mr. President, it just does not make sense to me that an individual who purchases a tuition contract should have to pay tax every year on the earnings on the funds. First, the contributor has surrendered control of his funds. He or she can only get money back if a student dies or should not qualify for college. And then, under most plans, the State refunds only the principal. Second, the contributor does not have access to the funds to pay the tax, since the money contributed to the tuition contract now belongs to the fund itself. Given the fact that most who contribute to the fund are of modest means, it is a tremendous disincentive to investing in education to make contributors pay tax on interest income for up to 18 years before the child goes to college. Because we felt so strongly about this issue, a bipartisan group of Senators, including Senators McConnell, Breaux, and Shelby, decided to do something about it. In discussions with the administration and the Department of Treasury we were able to get the IRS to revisit this issue. I am pleased to report that on June 11 of this year, the IRS issued new rules that will temporarily exempt State tuition plans from interest income taxation. This matter has not been settled. The Department of Treasury has asked for help from Congress, asking us to clarify the tax treatment of these plans. Until we act, the financial future of these plans, along with the education of over a half-million participants nationwide, remains in limbo. This bill will clarify that these State programs are not taxable and that the earnings on the fund will not be taxed until the child goes to college. Removing the specter of Federal taxation from these plans is particularly appropriate at this time, a time when Congress should be trying to foster innovative programs among the States and encouraging families' efforts to save and invest for their children's future. I would like to particularly thank Senator Roth and Senator Moynihan for their support and assistance in including this important provision in the legislation. With enactment of this legislation, parents and children will be able to rest easier, knowing that Congress has done the right thing in protecting their investment and protecting their-- and our--Nation's future. Exhibit 1 Mrs. Daniel D. Gilliland, Bradenton, FL. Karen S. Fenton, Editor, College Bound, Florida Prepaid College Program, Tallahassee, FL. Dear Ms. Fenton: I am writing to acknowledge your invitation to share ``success stories''. My husband Daniel and I enrolled our two sons Sean and Patrick in the College Program in 1988, I believe the first year this was offered. Sean entered the University of Florida (Honors Program) in the fall of 1992 a graduate of Manatee High School, Bradenton, Florida. Daniel died suddenly two years later at age 52, so with Sean then a sophomore, and Patrick about to enter his freshman year also at the University of Florida, I did silently offer thanks that we had the foresight and chance to participate in this program. By expecting the unexpected, we were able to give both son's an education at a fine university that would certainly otherwise have been difficult for me as a single parent. Today, Sean has reached his senior year pursuing a degree in business, with an area of specialization in Japanese studies. Patrick presently in his sophomore year maintains a 3.6 average while working towards a degree in Athletic Training. Thank you for allowing me to share this brief page from our lives with you and other participants of this college program. Sincerely, Sally A. Gilliland. Mr. MOYNIHAN addressed the Chair.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I first will extend my commendation to Senators Feingold and McCain and the others who have worked so hard to craft what is truly a bipartisan proposal to deal with one of the serious cancers in our American democratic system, and that is the way in which we manage and finance campaigns for the Congress. This bill is another example that, if we are going to do the public's will, it must be done in a bipartisan spirit. Mr. President, we have spent a lot of this year and last year talking about the creative energy of the States, the desire to return greater responsibility to the States for many of our most basic domestic programs. We have acknowledged that the States, given that responsibility, given their flexibility to respond to the specific circumstances that they face, would unleash a new wave of innovation to bring us creative solutions to some of our most vexatious problems. Mr. President, I say that we can take some encouragement as to the legitimacy of that position by looking at what States have done in the area of campaign finance reform. States were faced with basically the same problem that we are dealing with this morning--the problem of campaign money run amok and the need to change campaign financing mechanisms in order to restore public confidence. The experience of my State of Florida, I believe, is instructive in this regard. In 1991, the State legislature overhauled Florida's campaign finance system. It instituted a $500 cap on individual contributions. Prior to that it had been as much as $3,000. It provided for public financing of campaigns. It instituted overall caps on statewide races. It provided incentives to abide by the cap. What has happened in the relatively brief period that Florida has had these campaign finance reforms? In 1990, there was an incumbent Governor running for reelection. That incumbent Governor spent $10,670,000. Four years later, there was a different incumbent Governor running for reelection. In that campaign he spent $7,480,000. I note that the incumbent in 1990, who spent almost a third more, lost. The incumbent in 1994, under the new standards, was reelected. Common Cause of Florida attributes the decrease in campaign spending directly to Florida's enactment of campaign finance reforms. Mr. President, the States can control the terms and conditions of elections for State officials. It is our responsibility to do likewise for the Congress. I applaud the effort that is before us today. It is a genuine, thoughtful response to a serious national problem. I do not pretend that it is perfect. We have already heard on the floor several persons who, like myself, will vote to invoke cloture and support this bill, but who also are prepared to support modifications that we think would perfect it. For instance, I do not believe that political action committees are a poisonous political evil that should be banned. But, Mr. President, if accepting some restraints on political action committees is necessary to achieve the bipartisan consensus for the passage of this sorely needed legislation, I am prepared to vote to do so. Mr. President, there are many infirmities in our current system which have already been identified. Remedies have been prescribed. I wish to focus on one of those infirmities. That is, that the enormous amount of money in political campaigns has fundamentally changed the nature and purpose of congressional campaigns. What should be the purpose of a political campaign? In my opinion, it should include at least two dual relationships. First, there should be a duality of relationship in terms of education. Yes, the candidate is trying to educate the public as to who he or she is, what he or she stands for, what would be the objective of service in public office, what they would try to accomplish. But there is an equally important side of the education duality, and that is that the citizens are influencing the candidate. A campaign should be a learning experience. The campaign should better prepare the candidate to serve in public office by the experiences, the exposure, that the campaign will provide. There is a second duality, and that is the development of a democratic contract. The citizens should have some reasonable expectation that if they vote for a particular candidate, the policies that candidate has advocated will, in fact, form the basis of the candidate's efforts once in office, and the public official should have the right to expect that in office he would have the support of the public, the mandate of the public to achieve those policies upon which his or her campaign was predicated. These dualities, a duality of education and a duality of the forming of a democratic contract, these are essential elements of our system of representative democracy. However, Mr. President, the excess of money in campaigns has changed the nature and the purpose of the campaign. It has, in fact, allowed candidates to hide from the voters rather than to use the campaign to learn from and more effectively communicate with the public. Candidates now move from the television studio to record 30-second sound bites, often of a highly negative character, to the telephone to solicit campaign contributions to pay for those 30-second sound bites. There is little time left to interact on a personal level with the voter. By providing for spending limits, this bill would direct voters from the television studio back to the street to look for ways other than money to appeal to voters, by interacting with them, discussing issues, debating of the candidates, so that voters can make an accurate assessment of who they wish to represent. I personally, Mr. President, would like to see a requirement that one who participates in the public assistance to a campaign, whether Presidential candidates participating for direct-cash infusion or congressional candidates who, under this legislation, would benefit by preference in perks like postal and broadcast rates, that they would commit themselves to participate in a stipulated number of public appearances with their opponents. I believe that is the truest way in which the public can form an opinion as to the qualities and capabilities of the persons who seek to represent others. Mr. President, providing for a voluntary system of spending limits, while simultaneously requiring candidates to raise at least 60 percent of campaign funds from their home State, are positive steps toward bringing candidates and voters together. Passage of this bill would be a positive step toward realizing the goal of our political process, allowing the voter to truly understand, truly assess the candidate's view, and thus to make an informed judgment, while simultaneously helping to prevent politicians from becoming insulated and mitigate voters' disaffection. Mr. President, by passing this bill today, we can restore a meaningful dialog between the voter and the candidate. By doing so, we can all share in giving this country a great victory, and restoring the public's faith in the political process. I urge this bill's passage.

Mr. GRAHAM. I yield the Senator 5 seconds.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I rise today to introduce timely legislation with Senators Baucus and Pryor that addresses the problem of Medicare fraud and abuse. The two bills, entitled the ``Medicare Anti-Fraud Act of 1996'' and the ``Medicare Restore Trust Act of 1996,'' would undertake serious and strong anti-fraud efforts by the Federal Government based in large part on the success of the administration's recent Medicare and antifraud effort called Operation Restore Trust and ensure that savings achieved from such efforts are returned to the Medicare trust fund. Mr. President, we have heard in the last few days some very troubling reports about the impending insolvency of the Medicare trust fund. This legislation would have two direct contributions to reversing that move toward insolvency. First, it would suture a hemorrhage of funds out of the Medicare trust fund which today are going for fraudulent bills, and not for service to American citizens; and, second, it would assure that any funds that were recovered as a result of these more effective investigations and prosecutions would go directly back into the Medicare trust fund in order to restore its financial base. Mr. President, unfortunately the phrase ``fraud, waste and abuse'' has become discredited. It has been used so often as an excuse for not dealing with the more difficult and fundamental problems. Unfortunately, the area of Medicare waste, fraud, and abuse is a part of the fundamental problem. It has been estimated that of the $180 billion spent last year on Medicare and on approximately 36 million Americans' health care--$180 billion--10 percent, or $18 billion, was wasted in fraudulent activities. You might ask why is there such a high level of fraud in this program of Medicare? Some of the reasons include: The amount of money that is being expended is huge--$180 billion and growing; that it is being spent largely on populations which have groups within it that are vulnerable to these fraudulent schemes; that those people who wish to perpetrate those schemes are sophisticated shysters and there has been lax enforcement. First and foremost, the General Accounting Office estimates that the Medicare waste, fraud and abuse rip-off rate is about 10 percent. With fraud pilfering the health systems' resources, losses to Medicare and the federal share of Medicaid could be $30 billion annually. Using the most conservative of estimates, we could cover an additional 2 million seniors a year with funds lost just to Medicare waste, fraud, and abuse. Two million additional Americans could be covered if those funds could be properly directed. Although it is increasingly unlikely that a Medicare reform package will pass this year in Congress, it would be unconscionable to not pass a Medicare waste, fraud and abuse this year. Rather than putting Medicare beneficiaries at risk of losing coverage or access with the cuts envisioned in some legislative proposals during this Congress, we should act instead to combat Medicare fraud to protect the health care of beneficiaries and the Medicare trust fund. As the Citizens Against Government Waste wrote in their August 23, 1995, report entitled ``Medicare Fraud: Tales From the Gypped,'' ``Preserving, protecting, and strengthening Medicare must be the number one priority for Congress and the administration.'' The organization details 89 examples in its report and advises that waste, fraud, and abuse is the first area of needed attack. How did this get to be such a problem? According to the General Accounting Office in its February 1995 report entitled ``Medicare Claims,'' ``Physicians, supply companies, or diagnostic laboratories have about 3 chances out of 1,000 of having Medicare audit their billing practices in any given year. Moreover, Medicare pays more claims with less scrutiny today than at any other time over the past 5 years.'' The GAO continues, ``In fiscal year 1993, Medicare processed almost 700 million claims, about 250 million more than it processed 5 years earlier. Despite the rising volume of claims, per-claim funding for antifraud and antiabuse activities declined between 1989 and 1993 by over 20 percent.'' As a result, FBI Director Louis Freeh says cocaine distributors in south Florida and southern California are switching from drug dealing to health care fraud. The reason: more money with less risk. Drug dealers committing health care fraud know that law enforcement is not yet equipped with the laws needed to effectively attack the problem. With a program estimated by the Congressional Budget Office to be spending over $1.6 billion during the next 6 years and with lax laws to combat abuse, con artists, thieves, and opportunists know Medicare is where the easy money is. As Republican Congressmen Steven Schiff and Chris Shays write, ``currently there is no Federal crime of health care fraud. It is difficult to prosecute health care-related offenses because law enforcement must rely on wire and mail fraud statutes for their investigations and prosecutions.'' Attacking fraud is crucial to the overall Medicare debate for the following reasons: Fraud ought to be the first place we look when considering reductions in Medicare expenditures. Fraud undermines public confidence in Medicare. We cannot ``fix'' Medicare while letting fraud erode the system. One dollar spent against fraud and abuse can reduce Medicare Program costs by as much as 11 dollars, according to the Health Care Financing Administration [HCFA] and demonstrated by the administration's effort in Operation Restore Trust. Solutions are available. What can be done to solve this problem? To engage in a comprehensive assault on fraud, particularly within the Medicare Program, multiple agencies within the Federal Government will need additional resources. The Inspector General testified at a hearing before the Senate Finance Committee that ``now is the time to implement new legal remedies and reverse the downward trend of funding for efforts to combat health care fraud and abuse.'' The legislation that I am introducing today will achieve both of these goals. Operation Restore Trust is an effort currently underway in five States which brings together the HHS Office of Inspector General, Health Care Financing Administration, the Department of Justice, State Medicaid agencies, and State Medicaid fraud control units to combat fraud and abuse. This legislation would institutionalize these efforts in all 50 States. The Department of Health and Human Services recently released results from the first year of Operation Restore Trust. The program had $4.09 million to work with and has added $43.2 million to the Medicare trust fund and U.S. Treasury: an 11-to-1 return. This program has been a great success, but I agree with June Gibbs Brown that this is the ``tip of the iceberg.'' To provide adequate resources to go after the fraud and abuse, we establish a Medicare anti-fraud account for the Inspector General (IG) and an anti-fraud control account for other government agency's use. Funds for the Medicare account would be provided by and returned to the Medicare trust fund. For every $1 spent on prevention, the IG uncovers at least $7 in fraud. By using trust fund dollars to augment IG operations, the legislation assures that the IG will continue to have the resources necessary to combat fraud and abuse without worrying about discretionary spending cuts. This legislation enacts a broad-based Federal statute aimed at suppressing Medicare fraud. This enhances the protection of fraud victims and prescribe stiff penalties against those convicted of fraud. It institutes a policy, ``one strike and you are out,'' one instance of Medicare fraud and you are out of the program for at least 5 years. The second bill would establish a point of order against any piece of legislation that would divert savings from anti-fraud, waste and abuse enforcement activities for any other purpose--such as new Federal spending or tax breaks--other than saving the Medicare trust fund. This legislation would also ensure that any savings from anti-fraud, waste and abuse activities reimburse the up-front investment on enforcement and further strengthen the Medicare trust fund. We have all promised to protect Medicare. We can do so by passing comprehensive Medicare waste, fraud, and abuse legislation and do it in 1996, thus ensuring savings achieved are used to protect Medicare and improve its solvency. The two bills we are introducing today--the Medicare Anti-Fraud Act of 1996 and the Medicare Restore Trust Act-- would accomplish these goals. Mr. President, I suggest these two pieces of legislation should get the immediate attention of this Senate. I am pleased to see that we have with us today the chairman of the Senate Finance Committee, which I assume will be the primary committee of reference for consideration of this legislation. Every day that passes allows for further waste of Federal taxpayers money and further eroding of the solvency of the Medicare trust fund, further erosion of the confidence of the American people. We must take action now. At the signing of the Medicare bill in Missouri 30 years ago, President Johnson said Medicare had been planted with ``the seed of compassion and duty which have today flowered into care for the sick and serenity for the fearful.'' Medicare has lived up to the promise of President Johnson and President Truman. But fraud is rotting away at the Medicare system. We have the prescriptions to combat fraud. Now is the time to employ them if we want to save the integrity of Medicare for future generations. Mr. President, I ask unanimous consent that the text of the bills be printed in the Record.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I rise today to introduce timely legislation with Senators Baucus and Pryor that addresses the problem of Medicare fraud and abuse. The two bills, entitled the ``Medicare Anti-Fraud Act of 1996'' and the ``Medicare Restore Trust Act of 1996,'' would undertake serious and strong anti-fraud efforts by the Federal Government based in large part on the success of the administration's recent Medicare and antifraud effort called Operation Restore Trust and ensure that savings achieved from such efforts are returned to the Medicare trust fund. Mr. President, we have heard in the last few days some very troubling reports about the impending insolvency of the Medicare trust fund. This legislation would have two direct contributions to reversing that move toward insolvency. First, it would suture a hemorrhage of funds out of the Medicare trust fund which today are going for fraudulent bills, and not for service to American citizens; and, second, it would assure that any funds that were recovered as a result of these more effective investigations and prosecutions would go directly back into the Medicare trust fund in order to restore its financial base. Mr. President, unfortunately the phrase ``fraud, waste and abuse'' has become discredited. It has been used so often as an excuse for not dealing with the more difficult and fundamental problems. Unfortunately, the area of Medicare waste, fraud, and abuse is a part of the fundamental problem. It has been estimated that of the $180 billion spent last year on Medicare and on approximately 36 million Americans' health care--$180 billion--10 percent, or $18 billion, was wasted in fraudulent activities. You might ask why is there such a high level of fraud in this program of Medicare? Some of the reasons include: The amount of money that is being expended is huge--$180 billion and growing; that it is being spent largely on populations which have groups within it that are vulnerable to these fraudulent schemes; that those people who wish to perpetrate those schemes are sophisticated shysters and there has been lax enforcement. First and foremost, the General Accounting Office estimates that the Medicare waste, fraud and abuse rip-off rate is about 10 percent. With fraud pilfering the health systems' resources, losses to Medicare and the federal share of Medicaid could be $30 billion annually. Using the most conservative of estimates, we could cover an additional 2 million seniors a year with funds lost just to Medicare waste, fraud, and abuse. Two million additional Americans could be covered if those funds could be properly directed. Although it is increasingly unlikely that a Medicare reform package will pass this year in Congress, it would be unconscionable to not pass a Medicare waste, fraud and abuse this year. Rather than putting Medicare beneficiaries at risk of losing coverage or access with the cuts envisioned in some legislative proposals during this Congress, we should act instead to combat Medicare fraud to protect the health care of beneficiaries and the Medicare trust fund. As the Citizens Against Government Waste wrote in their August 23, 1995, report entitled ``Medicare Fraud: Tales From the Gypped,'' ``Preserving, protecting, and strengthening Medicare must be the number one priority for Congress and the administration.'' The organization details 89 examples in its report and advises that waste, fraud, and abuse is the first area of needed attack. How did this get to be such a problem? According to the General Accounting Office in its February 1995 report entitled ``Medicare Claims,'' ``Physicians, supply companies, or diagnostic laboratories have about 3 chances out of 1,000 of having Medicare audit their billing practices in any given year. Moreover, Medicare pays more claims with less scrutiny today than at any other time over the past 5 years.'' The GAO continues, ``In fiscal year 1993, Medicare processed almost 700 million claims, about 250 million more than it processed 5 years earlier. Despite the rising volume of claims, per-claim funding for antifraud and antiabuse activities declined between 1989 and 1993 by over 20 percent.'' As a result, FBI Director Louis Freeh says cocaine distributors in south Florida and southern California are switching from drug dealing to health care fraud. The reason: more money with less risk. Drug dealers committing health care fraud know that law enforcement is not yet equipped with the laws needed to effectively attack the problem. With a program estimated by the Congressional Budget Office to be spending over $1.6 billion during the next 6 years and with lax laws to combat abuse, con artists, thieves, and opportunists know Medicare is where the easy money is. As Republican Congressmen Steven Schiff and Chris Shays write, ``currently there is no Federal crime of health care fraud. It is difficult to prosecute health care-related offenses because law enforcement must rely on wire and mail fraud statutes for their investigations and prosecutions.'' Attacking fraud is crucial to the overall Medicare debate for the following reasons: Fraud ought to be the first place we look when considering reductions in Medicare expenditures. Fraud undermines public confidence in Medicare. We cannot ``fix'' Medicare while letting fraud erode the system. One dollar spent against fraud and abuse can reduce Medicare Program costs by as much as 11 dollars, according to the Health Care Financing Administration [HCFA] and demonstrated by the administration's effort in Operation Restore Trust. Solutions are available. What can be done to solve this problem? To engage in a comprehensive assault on fraud, particularly within the Medicare Program, multiple agencies within the Federal Government will need additional resources. The Inspector General testified at a hearing before the Senate Finance Committee that ``now is the time to implement new legal remedies and reverse the downward trend of funding for efforts to combat health care fraud and abuse.'' The legislation that I am introducing today will achieve both of these goals. Operation Restore Trust is an effort currently underway in five States which brings together the HHS Office of Inspector General, Health Care Financing Administration, the Department of Justice, State Medicaid agencies, and State Medicaid fraud control units to combat fraud and abuse. This legislation would institutionalize these efforts in all 50 States. The Department of Health and Human Services recently released results from the first year of Operation Restore Trust. The program had $4.09 million to work with and has added $43.2 million to the Medicare trust fund and U.S. Treasury: an 11-to-1 return. This program has been a great success, but I agree with June Gibbs Brown that this is the ``tip of the iceberg.'' To provide adequate resources to go after the fraud and abuse, we establish a Medicare anti-fraud account for the Inspector General (IG) and an anti-fraud control account for other government agency's use. Funds for the Medicare account would be provided by and returned to the Medicare trust fund. For every $1 spent on prevention, the IG uncovers at least $7 in fraud. By using trust fund dollars to augment IG operations, the legislation assures that the IG will continue to have the resources necessary to combat fraud and abuse without worrying about discretionary spending cuts. This legislation enacts a broad-based Federal statute aimed at suppressing Medicare fraud. This enhances the protection of fraud victims and prescribe stiff penalties against those convicted of fraud. It institutes a policy, ``one strike and you are out,'' one instance of Medicare fraud and you are out of the program for at least 5 years. The second bill would establish a point of order against any piece of legislation that would divert savings from anti-fraud, waste and abuse enforcement activities for any other purpose--such as new Federal spending or tax breaks--other than saving the Medicare trust fund. This legislation would also ensure that any savings from anti-fraud, waste and abuse activities reimburse the up-front investment on enforcement and further strengthen the Medicare trust fund. We have all promised to protect Medicare. We can do so by passing comprehensive Medicare waste, fraud, and abuse legislation and do it in 1996, thus ensuring savings achieved are used to protect Medicare and improve its solvency. The two bills we are introducing today--the Medicare Anti-Fraud Act of 1996 and the Medicare Restore Trust Act-- would accomplish these goals. Mr. President, I suggest these two pieces of legislation should get the immediate attention of this Senate. I am pleased to see that we have with us today the chairman of the Senate Finance Committee, which I assume will be the primary committee of reference for consideration of this legislation. Every day that passes allows for further waste of Federal taxpayers money and further eroding of the solvency of the Medicare trust fund, further erosion of the confidence of the American people. We must take action now. At the signing of the Medicare bill in Missouri 30 years ago, President Johnson said Medicare had been planted with ``the seed of compassion and duty which have today flowered into care for the sick and serenity for the fearful.'' Medicare has lived up to the promise of President Johnson and President Truman. But fraud is rotting away at the Medicare system. We have the prescriptions to combat fraud. Now is the time to employ them if we want to save the integrity of Medicare for future generations. Mr. President, I ask unanimous consent that the text of the bills be printed in the Record.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, thank you. (The remarks of Mr. Graham pertaining to the introduction of S. 1859 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'') Mr. ROTH addressed the Chair.

Mr. GRAHAM. Mr. President, I ask unanimous consent to speak for 10 minutes for purposes of introducing two bills.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I appreciate this opportunity to conclude the debate on today of a balanced budget amendment. As the Presiding Officer said in his remarks, and as my friend from Montana reiterated in his, it has been a long day, filled with active debate and some emotion, on this important subject. I do not intend to keep the Senate long with my remarks, but I would like to make a few statements relative to the decision that we will make tomorrow. As I have in the past, I shall vote for the constitutional amendment to insert into the U.S. Constitution a provision requiring a balanced budget as a fundamental principle of our Nation's public policy. It is unfortunate that we have to vote on a constitutional amendment to force us to do something that we ought to do and that most Congresses throughout the history of this proud Republic have done. However, we have reached the point at which I have concluded that a constitutional amendment will be necessary in order to provide to this Congress and to future Congresses the necessary constitutional backbone in order to maintain a policy of a balanced budget. What does the passage of a balanced budget amendment to the U.S. Constitution accomplish? The passage of this amendment will not, as the Presiding Officer has stated, place this into the U.S. Constitution. It refers this matter now to the States, and it will be the responsibility of three-quarters of the States through their appropriate legislative process to make a determination as to whether this shall be added to the Constitution. Certainly the passage of this amendment will not result in a balanced budget or the diminishment by even a penny of the U.S. deficit. Rather, this is a statement of an objective and the provision of constitutional methods by which to give some assurance that that objective will be reached. This is not a substitute for the long road of difficult decisions that will in fact be required in order to reach a balanced budget. This amendment may make us feel patriotic. It may make us feel good. But it is not a cure-all for our budget woes. The budget deficit will not suddenly disappear because of the passage of this amendment. I reflect on a decision which this Senate made a few days prior to Memorial Day. I was part of a group which has worked over the past several months to develop a balanced budget plan, a plan which, within 6 or 7 years, would bring our deficit into balance and would make those structural changes that would give us some confidence that once in balance, the budget would stay in balance past that 6- or 7-year period. This effort, which has been referred to as the centrist coalition or as the Chafee-Breaux coalition, was a serious effort to develop a proposal which would actually achieve the objective of a balanced budget. I think in the development of this proposal and in its disposition by the Senate that there are some important lessons. The first of those lessons is that this effort by the centrist coalition was bipartisan. It happened that the final proposal was developed by 22 Members of this Senate, 11 Republicans and 11 Democrats. It was not intended that it be so equally balanced, but that was how it finally evolved. I believe that there is an important lesson here, and that is that almost any serious effort in this Government which is intended to have a sustaining life must be based on a broad foundation of bipartisanship. There is an arrogance and an ignorance which is associated with efforts which assume that one individual or one party can carry a major reform. It has been said, and I believe correctly so, that the U.S. Constitution was the first time that the basic structure of a government was written with one of its fundamental objectives being that that government should not function efficiently. Our Government was designed to be difficult. Our Government was intended to be such that no government, by its alacrity and by its effective organization, would be able to trample on the rights of minorities or individual citizens. The very fact that it is difficult to accomplish anything with our form of government underscores the importance of starting the process of change with a bipartisan spirit. So, while there have been many speeches given in the last few hours about the heroic efforts to try to balance the budget which then foundered because of the Presidential veto, I suggest they had no chance of getting to the destination in the first place and were not serious efforts at getting to that destination because they failed the fundamental, initial test of an effort at serious bipartisanship. Our effort, the centrist coalition, was a serious bipartisan effort. What happened to our effort? Our effort failed. It failed by a vote of 46 yeas and 53 nays. It had 22 Republican votes and 24 Democratic votes, so its essential bipartisanship from the beginning carried through to the final vote. It was good news that the vote was as close as it was. Frankly, I was surprised that there were 46 Members of the Senate who would be prepared to put their names behind the very tough choices that were contained in that centrist coalition. The bad news was that in fact it did lose. That failure indicated that, for another year, we were not going to have a plan for a balanced budget. It also indicated the gap, the chasm, between the rhetoric and the actions of people who will stand and, with such flourish, indicate their commitment to a balanced budget but, when there is an actual opportunity to vote for a bipartisan bill, do not. This was a bipartisan bill which a significant number of Members of both parties were prepared to support and with some expectation that, if it were actually passed by the Congress, that the President would sign it into law. That it failed is an indication of the gap between rhetoric and the actual tough choices that we have to make. There have been a number of analogies on the floor in the past few hours. One of those analogies, which I think the Presiding Officer used, was of a hockey stick, to describe that we had an essentially balanced budget for most of our Nation's history and then in the last few years we have gone off the chart, in terms of deficits. If I could use that hockey analogy, and hockey is not a sport that is particularly well known to me, I would say that those who give speeches in favor of a balanced budget are like a hockey player at practice, where the net is empty and all you have to do is take the puck and, with your hockey stick, knock it into the net. If you are sufficiently skilled, that is not a particularly difficult thing to do. What happens when the actual game starts, when the full teams of both sides are on the ice? Then you might have somebody in the net with the skill of John Vanbeesbrook, who is the goaltender for the Florida Panthers. The challenge comes to be able to score when you have a difficult target to hit. That is the nature of the challenge we are going to face and which the passage of this constitutional amendment is not going to allow us to avoid. At some point, whether we pass this amendment or whether we do not pass this amendment, collectively, and in a bipartisan spirit, we are going to have to make some very tough choices. There has been lots of discussion about why we are doing this. We are doing it in order to help the people of America be able to buy a home, get a job, pay off their student loans. We are doing it because it is our generation's responsibility. A frequently stated reason is we are doing it out of a sense of responsibility to our children or grandchildren. I want to join that chorus. Mr. President, this happens to be a picture taken of my wife and myself and our eight grandchildren. These three, who are triplets, were born approximately 14 months ago. I am pleased to report that one of those triplets, whose name is Adele Gibson, took her first steps yesterday, and I was there to observe her taking three of those first steps. She is ready to start her life of increased mobility and independence. It is for Adele and her cousins and the millions of other grandchildren of America for whom we take this action. This amendment will force us to make some of the tough decisions that we have become too accustomed to avoid. The passage of this amendment is not a time to exalt. Passing this amendment is not a victory. We may have, by passage of this amendment--should we be able to get the constitutional number to do so tomorrow--performed the equivalent of the hockey exercise of getting the puck into an empty, unguarded net. The challenge is going to be when we can do the tough work of scoring against the difficult opponent of inertia, the difficult opponent of special interest, the difficult opponent of people who have developed a set of expectations that are necessarily going to have to be challenged if we are to move in a different course. These choices will be difficult, and many of them will not be politically prudent. However, they must be made. So, Mr. President, I state again that it is my intention tomorrow to vote for the constitutional amendment which will establish as a fundamental policy of the Government of the United States of America that we will balance our budget. But I do not wish anyone who observes this process, and certainly none of us who will participate directly in it at noon tomorrow, to be under any delusions that we have done some heroic act by voting for this constitutional amendment. We have just stated that we are unable to make the tough choices without the threat of a constitutional crisis in failing to do so and, thus, are prepared to impose the shackles of that crisis upon ourselves and those who will serve here in the future. We have stated that while we have been unwilling to make the tough choices to date, that with those shackles we will be forced to do so. So this is a time of sober reflection on our failure rather than exaltation at a temporary success. I hope that my colleagues will provide the necessary constitutional margin to pass this amendment tomorrow, because without it, I do not see any evidence in our actions and actions as recently as the past 2 weeks that give me cause to believe we will, in fact, make those tough decisions to balance the budget of the U.S. Government, achieve the benefits that will come from that and be faithful to Adele Gibson and the other grandchildren of America. Thank you, Mr. President. Mr. President, I suggest the absence of a quorum.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I am introducing legislation today that will order Customs to take the necessary steps to correct an inequity suffered by a Florida company, Juice Farms, Inc., resulting from a Customs administrative error arising from a dumping case. From 1987 to 1990, several anti-dumping orders were issued covering Brazilian frozen concentrated orange juice. Juice Farms imported juice from Brazil and deposited duties with Customs. As required by law, liquidation of the import entries by Customs was suspended by Commerce pending the outcome of administrative dumping reviews to be conducted by Commerce. In 1991, after three successive reviews, the Department of Commerce found no sales at less than fair value. Commerce instructed Customs to return Juice Farms' anti-dumping duty deposits plus interest. Juice Farms learned, however, that Customs had mistakenly liquidated a number of entries. Such liquidations were in clear violation of the suspension order. Juice Farms pursued court challenges but received an unfavorable decision because the court found that the company filed its protest of the premature liquidations too late. Accordingly, even though the duties were required by law to be returned to Juice Farms, to date the deposits have not been received. The legislation I propose today simply will correct that error and require Customs to refund the funds properly owed Juice Farms.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, this amendment deals with two important issues. One is preserving the integrity of the Medicare trust fund, and, second, an effective assault against Medicare fraud. It provides that any funds that are derived by suppression of Medicare fraud will go back into the trust fund from which that fraud caused adverse effect. It would not be available for any other spending purposes. Mr. President, I urge adoption of this amendment, which I think is both a statement of our commitment to suppressing Medicare fraud, protecting the Medicare trust fund, and balancing the Federal budget.

Mr. GRAHAM. Mr. President, anticipating this point of order, I would like to point out to my colleagues that on page 53 of the budget resolution before us, beginning at line 12, is almost in the same verbatim form, a point of order, except that point of order does not go to the reconciliation bill, which amendment 4007 does, but rather goes to the appropriations bills. If my amendment is considered to be nongermane, clearly, this provision is nongermane. I also point out that in the last budget resolution for fiscal year 1996 there were two provisions, which contained point of order enforcement of provisions within the budget reconciliation. So, Mr. President, we await the Chair's ruling, which I hope will be a finding that this is not a valid point of order on the Budget Act.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, I thank my friend from Louisiana. It is a pleasure to have worked with the centrist coalition in the last several months in an attempt to develop a balanced budget based on a realistic set of principles. In my limited time, I would like to make two points. First, if this Congress is serious about achieving what is stated to be its No. 1 priority, which is to develop a multiyear balanced budget plan that would reduce the Federal deficit to zero at the earliest practical date and then to keep that deficit at zero for the foreseeable future, I suggest that the vote that we are about to take on this centrist coalition will be the ultimate test of our fidelity to that principle. There is no other opportunity to pass a balanced budget in 1996 other than that which is presently before the Senate. The reality is a balanced budget will not be passed which is totally written by Democrats. We established that fact in the early 1990's. A balanced budget proposition will not be passed which is written and supported totally by Republicans. We validated that truth in 1995. We now have an opportunity to vote on a plan which represents a moderate centrist perspective with support from significant numbers of Senators from a variety of philosophical and regional and economic backgrounds which does have a meaningful chance to be adopted. That is the fundamental question: Are we going to reject the good because it falls somewhat short of our own personal view of the perfect, or are we to say that this good is so much better than the alternative, which is to continue to have these enormous Federal deficits and all of the damage that they do to our Nation and to our individual lives? Are we going to miss the opportunity to get the benefits of a balanced budget, including the very substantial benefits of a lower interest rate over the next decade than that which we will have if we do not exercise this act of discipline? I believe, Mr. President, that the course of action which commends itself to this Senate is to adopt the centrist budget. I would like to speak to one element of the budget which has received some comment which I think is illustrative of the principles that underlie the centrist approach. And that is that it is pragmatic, it is compassionate and it builds in structural changes that will help keep a budget once brought to balance in balance for the foreseeable future. Our Medicare Program is in two parts. One part relates to hospitals and is financed through a trust fund supported by payroll taxes. The other part relates to physician's payments, and it is supported by a premium paid by the beneficiaries voluntarily. If they do not wish to receive those physicians' services, they can elect not to do so and not to pay the premium. The balance is paid by the general tax revenue of the Federal Government. That premium has been set for most of the 1990's to be 31.5 percent of the cost of providing the physicians' services. Today it has dropped back to its pre-1990's level of 25 percent of the cost. That 31 percent, or today's 25 percent, is applied to all of the some 35 million-plus Medicare beneficiaries, the most affluent to the most indigent. Our plan is based on, first, that we should raise from the part B premium, the premium for physicians' payments, the equivalent of 31.5 percent if that amount were applied to all of the 35 million beneficiaries. But we should not distribute the premium across all beneficiaries equally. Rather, it should be affluence tested. We propose to have those Social Security beneficiaries who are under 200 percent of poverty, which represents approximately 70 percent of the beneficiaries, pay the current----

Mr. GRAHAM. Pay the current 25 percent. Those who are between 200 percent of poverty and $50,000 for an individual or $75,000 for a couple will pay the 31.5 percent, which had been the premium level for the first half of this decade. Those above the $50,000 or $75,000 per couple, will pay a higher premium based on their income. Mr. President, I believe that is fair, equitable, and compassionate and makes an important structural change in the Medicare system which will help to preserve the long-term solvency of our Medicare system. I cite this one example as illustrative of the approach that has been taken throughout the centrist coalition budget. But the fundamental thing that recommends it is its bipartisan nature, the fact that it is reality, both economically and politically. This has a chance to actually pass, become law and make a difference in the lives of Americans. I urge its adoption.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, on Friday I filed amendment No. 4007, reserving the time to discuss that amendment until today. I wish to use at least 5 minutes to review this very terse but important amendment. This amendment, Mr. President, provides that any funds which were derived by the more aggressive attack on Medicare fraud would be returned to the Medicare trust fund. We are facing two interrelated challenges. One is combating the rampant level of fraud which exists within our Medicare program and second is ensuring the solvency of the Medicare trust fund. It has been estimated by the General Accounting Office that the rate of Medicare waste, fraud and abuse is approximately 10 percent and in some areas of the country is estimated to be twice that amount. If we could use even the more conservative estimate, an additional 2 million seniors could be served each year through Medicare just by reducing the level of Medicare fraud. Medicare fraud ought to be the first place we look when we are considering reductions in the Medicare Program. Fraud undermines public confidence in Medicare. It is a very cost-efficient expenditure. One dollar spent on suppressing Medicare fraud on average will return in excess of $10 in reduced costs. There are a number of solutions, many of which have been contained in legislation adopted by this Senate, which will allow for a comprehensive assault on Medicare fraud. We have prescriptions such as using the Medicare Federal hospital insurance trust fund as part of the source of financing, more effective investigations and prosecutions of Medicare fraud. It is the intent that those savings derived by that more effective effort be returned to the trust fund both to reimburse for the expenses that have come out of the trust fund for the investigations and prosecutions and also the return to the trust fund some of the money which was pilfered from it by the fraud itself. Unfortunately, Mr. President, these efforts to assure that the savings derived by effective programs against Medicare fraud end up benefiting the trust fund for Medicare have been under assault. There are proposals, for instance, to divert these funds into new Federal spending efforts, efforts that are outside of the Medicare trust fund. There are also proposals to use it to finance new tax breaks. As worthy as those other spending efforts or additional tax reductions might be, it is not appropriate to use funds derived from the Medicare trust fund through the efforts to suppress fraud which it finances for any purpose other than assuring the solvency of the Medicare trust fund. So the amendment I have filed, which is amendment No. 4007, essentially establishes, as do other provisions within this budget recollection bill, a point of order which states, ``It shall not be in order for the Senate to consider any reconciliation bill, conference report or otherwise which would use savings achieved through Medicare waste, fraud and abuse enforcement activities as offsets for purposes other than improving the solvency of the Medicare Federal Hospital Insurance Trust Fund.'' So that is the essence of the amendment. It is to provide procedural protections to assure this Senate, to assure the American people, and especially to assure the over 35 million Americans who depend upon the Medicare trust fund for their hospital payments, that any funds which are pilfered from that trust fund, any funds which are used from that trust fund for purposes of effective enforcement will be for the benefit of the trust fund. I urge adoption of this amendment. I thank the Chair. I thank my colleague.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, in deference to time and to my colleague from Ohio, who has generously allowed me to offer this amendment prior to his remarks on our esteemed friend, Admiral Boorda, I offer this amendment with the intention of just briefly referencing it at this point and then asking unanimous consent that it be set aside. This amendment, Mr. President, has as its objective to assure that any savings that are achieved by the new effort that we are going to make on waste and fraud within the Medicare Program ends up benefiting the Medicare Program and, specifically, the Medicare trust fund. We are all aware of the concern that we have had that the Medicare trust fund was becoming financially vulnerable. In fact, that concern has been exacerbated by some recent information that the trust fund is weaker than we had thought a year ago. This would assist in strengthening the trust fund by assuring that any proceeds derived from our assault against Medicare fraud and abuse, which have the result of depleting the trust fund without providing meaningful medical services to older Americans, then any funds that are recovered as a result of this war on Medicare fraud will go back into the trust fund and, therefore, strengthen it for this and future generations of older Americans. Mr. President, I look forward to discussing this matter in greater detail at another time. At this time, I ask unanimous consent that this amendment be temporarily laid aside.

Mr. GRAHAM. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. GRAHAM. I thank my colleague from Ohio and commend him for his thoughtfulness on his upcoming remarks regarding Admiral Boorda.

Mr. GRAHAM. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. GRAHAM

Mr. GRAHAM. I thank my colleague from California. Mr. President, this debate should commence with one fundamental truth: The Medicaid Program for the last 30 years has been a great American success. The Medicaid Program has been a great American success. Let me give you a few examples of that success. In the early 1980's, in many parts of this country--I can speak specifically for the American South--the rate of infant mortality was a disgrace, rates of infant mortality that were close to those that would be found in some of the less-developed nations of the world. In that period, leaders in the South decided that they wanted to have a different legacy for the future. So under the leadership of Governors such as Lamar Alexander of Tennessee, Bill Clinton of Arkansas, Governor Dick Riley of South Carolina, who was designated to be the chair of a task force in the South on the children of the South, Governor Riley made a series of recommendations which were adopted by most of the Southern States. But the keystone recommendation was that the South should take steps to reduce its infant mortality by substantial increases in its commitment to appropriate prenatal care, care for pregnant women, care for infants, and care for children in those critical early days of life. The effect of that program 10 years later has been a dramatic reduction in infant mortality in the South, and because of that, a significant reduction in infant mortality in the United States, approximately a 20-percent reduction in the number of children who were born without life or with a life that was less than it might have been. Mr. President, Medicaid was an absolutely critical component of that effort to reduce infant mortality in our Nation, and because of it, there are literally hundreds of thousands of boys and girls who are alive today, living lives that have great promise and opportunity. Medicare is an American success story. Medicaid has also allowed older Americans to live a life of dignity and respect when otherwise they would have been consigned to the same condition of their parents and grandparents. To get old in America and to be poor in America was to be without dignity and respect. You say, ``Why is this true of Medicaid? I thought it was Medicare that provided services for older Americans.'' The fact is the two programs work in a very compatible manner. Medicaid, for those elderly who are unable to pay their premiums for Medicare, pays those premiums. It allows the indigent elderly to continue to have access to Medicare physician services. For those indigent elderly who cannot pay their prescription medication, Medicaid pays for their prescriptions so that they can have access to the modern miracles that make life possible and make a quality of life possible. For many Americans, it is Medicaid which provides access to long-term care, whether that be in a community setting or in an institutional setting such as a nursing home. As the Senator from California has pointed out, most Americans who are in nursing homes today--over two out of three--receive their nursing home monthly payments through the Medicaid Program. Medicaid is an American success story for older Americans. Medicaid is an American success story because it has served as the fundamental safety net under millions of poor children who without Medicaid would be without any financing for their health care. In 1980, of all Americans who were employed, approximately 65 to 70 percent were employed in a workplace which provided health care coverage for themselves and for their families. That was part of what we thought was the American dream, that if you worked hard and you supported your family, you would have access to and the capacity to afford to acquire health care. We in Congress promoted that by providing very favorable tax treatment for employer-provided health care benefits. But since 1980, there has been a precipitous decline in the percentage of Americans who are covered at this point of employment with health care. Today that number is below 60 percent, and the estimate is that in the foreseeable future it will drop below 50 percent. Less than half of the Americans who are working will be securing their health care through their place of employment. The result of this has been literally millions of low-income, not only the employees themselves but even more the dependents of those employees, their spouses and their children, without health care coverage. What has happened is that as these people fell into medical indigency, it was Medicaid which came to their rescue, and it has provided them with access to health care coverage. If it had not been for Medicaid, we would not be a nation today with some almost 40 million Americans without access to health care financing; we would be a nation with 45 to 50 million Americans without access because persons who had lost their coverage are able, and particularly their dependents are able, to get it through the Medicaid Program. So the Medicaid Program has been an American success story. Because of that we should not be talking, as is suggested in the Republican proposal of 1996, as it was in the Republican proposal of 1995, about an amputation of Medicaid. Rather, we should be talking about thoughtful reforms that will preserve the fundamental values of the system while making it stronger and better and more adapted to some of the current changes in health care delivery. What are some of the fundamental issues in that reform of Medicaid? One is, should we maintain the basic national partnership between the Federal Government and the State governments in the financing and delivery of Medicaid services? There are those who would suggest that that partnership is an anachronism, that it has had its day, but now we should amputate it, cut it off. Let us look for some new mutation to take its place, and that new mutation is going to be some form of block grants where the Federal Government's role is essentially consigned to that of being a check writer that on the October 1 will write 50 checks, send them off to the State capitals of America and with very little involvement wash its hands of the Medicaid Program. The irony of this proposal, Mr. President, is that the very people who make it with such ardor frequently on other issues look, as one of their political North Stars, to former President Ronald Reagan and suggest that he is in many ways the father of modern conservative political thought. Would Ronald Reagan have supported a program of block grants to the States for Medicaid? As my colleague from California, who no doubt had an opportunity to observe former Governor and then President Reagan over a number of years, will certainly know, the answer is no, because what President Reagan proposed was that rather than Balkanize Medicaid, Medicaid should be federalized. He had a couple of compelling reasons why he thought that should be the case. The first was that as a Californian he recognized the fact that if you had differentials in standards, there was a tendency for a mobile population of poor people to seek out those communities that had the most generous standards. In the 1960's and 1970's California had among the most generous standards in the country and therefore served as a magnet for persons to come in the State in order to access those standards. So one rationale of President Reagan was that we needed to have greater uniformity in order to avoid this inducement to move. A second rationale which I think is extremely relevant today is that President Reagan recognized that Medicaid, which had started as being primarily a program for poor children and their families, was increasingly becoming a program for the frail elderly. In my State today about 60 to 70 percent of the Medicaid funding is spent on people over 65, a very high percentage spent on people over 85. So President Reagan felt that we needed to relook at both Medicare, the health care financing program for the elderly, and Medicaid, the program for the indigent, and attempt to rationalize, harmonize, knit those two programs more effectively together, and that that knitting together would occur with more likelihood if Medicaid was a Federal program than if it were distributed to the States. Mr. President, I think those two reasons of President Reagan were compelling in the 1980's and, if anything, they are even more compelling today. So it is somewhat of a shock now to see that the descendents of the philosophy of Ronald Reagan want to go exactly in the opposite direction from his advice, and that is to remove the Federal Government as a continuing partner in this national program of Medicaid.

Mr. GRAHAM. Also, there will continue, unfortunately, to be a decline in the number of children covered by the health insurance of their parents at a point of employment. The population will continue to age. More people will be in the advanced ages, which is the greatest source of additional cost to the Medicaid Program. We are making some policy decisions such as those embedded in our recent vote on the immigration bill that are going to result in greater demands on the Medicaid system. So there is no basis for the proposition that we can meet all of these challenges to the Nation's health care system and sustain a $250 billion cut in the Medicaid Program, most of it being a cut at the State level, not at the Federal level. Finally, in the Medicaid system, one area of reform that cries out is to treat all States fairly. Today we have extreme disparities in terms of the funding that is provided for the poor child, the poor frail elderly, and the disabled from one State to the next. Those disparities are a function of history, the fact that we have built up a practice of inducing States to come into expanded Medicaid services by the Federal Government, matching or more than matching those State commitments. Those States that had a sufficient level of affluence to afford a more luxurious system have developed that, and, therefore, that has led to substantially higher amounts of Federal support for their Medicaid programs than for the less affluent States. We also have the situation in which certain States severely abused a program that had a good purpose: to recognize the special cost of hospitals that served large numbers of indigent Americans. Those hospitals were to be recognized by getting a disproportionate share of Medicaid funds in order to pick up some of that cost that was otherwise uncompensated. Unfortunately, that program was severely abused by a handful of States and resulted in extreme distortions in where Federal Medicaid money went, State to State. The proposal we have before us would largely freeze those past inequities into place and would make us live with them for the foreseeable future. The amendment offered by the Senator from California represents a clarion voice for reform and fair treatment in that all Americans should be assured that they will be treated equally by their National Government in terms of their access to quality health care. Those are some of the fundamental issues we are dealing with. Are we going to maintain the Federal-State partnership which has served us so well in reducing infant mortality, providing dignity for older Americans, providing a safety net under an increasingly frayed system of employer-based health insurance? Are we going to maintain an adequate funding basis at both the Federal and the State level to meet increasing demands on our Medicaid Program? And are we going to treat all Americans, wherever they live, fairly? The amendment that is offered by the Senator from California meets those tests of fundamental fairness and vision for the future of America. The underlying proposal fails on all of those tests. I urge the adoption of the amendment of the Senator from California. Mrs. Boxer addressed the Chair.

Mr. GRAHAM. The Senator from Florida is close to being through, and at the conclusion of my remarks, I will be pleased to yield. The second point is that the Medicaid Program requires a base of financing in order to meet its current needs and to be able to assume the new responsibilities which clearly lie just over the horizon. As the Senator from Massachusetts pointed out, the proposal of the Republicans will reduce the total funds available for Medicaid over the next 7 years not just by the some $70 to $80 billion that will be eliminated at the Federal level but by a figure of close to $250 billion because the amount that will be asked of the States in their contribution to participate in the Medicaid Program will be so reduced. Mr. President, I do not believe any serious analysis of the challenges facing Medicaid could come to the conclusion that we can meet the health care needs of Americans with a $250 billion reduction in funds available in the fundamental safety net program of our national health care system, Medicaid. In fact, there are a number of factors that are going to put Medicaid under greater pressure. One of those factors is the fact that we have a growing number of children and adolescents in our population. To give just one statistic, last year America graduated approximately 2.5 million students from its high schools. Within less than 9 years, we will be graduating over 3 million children from our high schools, as an indication of this surge of youth that is coming through our society, who in addition to having education needs will also have health care needs which Medicaid would be the principal instrument for meeting. I ask the Senator from California if she could yield an additional 5 minutes.