Pete Stark

Mr. STARK

Mr. STARK. Yes.

Mr. STARK. I yield to the gentlewoman from Colorado.

Mr. STARK. Mr. Speaker, if I were this lady, I understand she makes $62,000 a year, she should drink a toast to the Speaker. That is a pretty nice salary for advising many of us who need help with our manners. I certainly could use some assistance in that, and the gentlewoman is correct.

Mr. STARK. Mr. Speaker, I want to thank the distinguished gentleman for yielding time to me. Mr. Speaker, it is rare that I have such an opportunity to thank my colleagues across the aisle, and particularly to congratulate the new leadership. Had I known what new vistas would open to us under this new leadership, I might have considered this much earlier. I received this morning, as did all of my colleagues, a nice communication from Mr. Livingood, our Sergeant at Arms. Mr. Livingood has informed me that he has taken a renewed interest in manners, or, excuse me, matters of protocol, and has announced that he has hired Pamela Gardner ``Muffy'' Ahearn as the director of protocol for the U.S. House of Representatives at, I would imagine, about $60,000 or $70,000 a year, for which we could hire a couple of policemen. She has extensive professional experience in dealing with foreign dignitaries. I do not know about us here, but with foreign dignitaries, embassies, and high-ranking government officials with all issues of protocol, she is going to help us. If Members have been worried about wearing white shoes after Labor Day, correct titles and forms of address and introductions, determining the order of precedence, for example, in California, illegal aliens are no longer eligible for medical care or education, but legal aliens may be, and a legal alien who served in the military might be. It is very important that Members know that, proper seating by rank, appropriate gifts and exchange thereon. The Speaker is going to let us vote on lobbyists giving us gifts. We will have a lot of gifts and we will need Ms. Ahearn to give us the protocol on what we do when we get these gifts from lobbyists; cultural traditions and taboos; dietary restrictions and preferences, I am sure the Speaker will be interested in that one; appropriate toasts following a meal; and language interpretation requirements. When Members are making protocol arrangements, for example, if the junior Senator from Oregon were worried about filling out his spousal identification card, he should make it out to the bearer, I would suppose, but Ms. Ahearn can in fact advise us on those matters. When we visit schools, the children who no longer get school lunches, should they sit at the same table with those Republican children who bring their lunch from the local caterer? This will be interesting to know, and very helpful for us, as we carry on our business. Mr. Speaker, I am glad that the Republicans are dealing with the serious matters of this House as they eliminate funding for school lunches, as they destroy Medicare. It will be interesting to know how we write those letters of condolence to the seniors who will no longer have Medicare available to them, and letters of congratulations to those rich seniors who will get the benefit of the $245 billion in tax cuts. We cannot write that, I am sure, looking too longingly at it. However, all of these things are matters which each of us here in the House should be concerned about.

Mr. STARK. I believe this letter was sent to all Members, and I am sure that in the most bipartisan spirit we all will have our manners and our protocol dressed up.

Mr. STARK. I would think under the Freedom of Information Act. parliamentary inquiry

Mr. STARK

Mr. STARK. Mr. Speaker, I am very disappointed that the China Policy Act contains no teeth, and I urge support of the resolution disapproving MFN for China. How long are we going to appease the murderous, nuclear proliferating, United States-citizen-arresting regime in Peking? Most of us have seen the movie, ``Schindler's List.'' What is going on in China is similar: factories churn out goods made with slave labor. By giving MFN to China, we give China a $37 billion trade surplus with us--and a lot of that is blood money. The world community failed to do the right thing 50 years ago. We are failing to do the right thing now. We should be ashamed. Yesterday, I nominated my constituent, Mr. Harry Wu, for the 1996 Nobel Peace Prize for his determined efforts on behalf of human rights. I am saddened and disappointed that the Congress will not act with the same courage as demonstrated by Mr. Wu.

Mr. STARK

Mr. STARK. Mr. Speaker, I would like to share with you a recent article which appeared in the magazine The Economist which illustrates the dangers of China's weapons proliferation. Since China's nuclear missile promotion threatens every country, it is imperative that the United States adopt policies which promote peace and not appeasement. Following is a text of the article: China's Broken Promises: The World Needs to Make It Keep Them When it comes to establishing a workable order out of the post-cold-war chaos, there are few more frustrating--or more important tasks than to bind China into the international game. Proud, prickly and, of late, worryingly pugnacious, China has always seen itself as an outsider. In the days when two superpowers, the United States and the Soviet Union, competed to be the top dog, China could bend or break the rules with impunity, playing one off against the other. But now, whether it is smothering regional conflicts, or controlling the spread of missiles and weapons of mass destruction, cooperation, more than competition, is the name of the big-power game. Meanwhile, China is emerging as a more muscular power, in Asia and beyond. For both reasons, China needs to be encouraged to drop its finger-in-your-eye habit. For a while, it seemed as though China might be preparing to do just that. Three years ago, it did a U-turn and signed the Nuclear Non-Proliferation Treaty (NPT). It has since committed itself, along with the other four undeclared nuclear powers, to reach a comprehensive test ban in 1996. And last year it promised America that it would henceforth observe the guidelines of the Missile-Technology Control Regime (MTCR), which seeks to prevent the spread of those missiles (along with the technology and equipment to build them) whose range and payload make them capable of carrying a nuclear warhead. But look at what China does, not what it says: after seeming to accept these rules, it has bent, or broken, all of them. In an effort to bolster the authority of the NPT, and to put pressure on the handful of countries that remain outside it, the other main nuclear suppliers now refuse to sell parts and materials to countries that do not accept full international checks on their nuclear industry. As a consequence, India, one of the NPT hold-outs suspected of having the bomb, had been finding it hard to get the enriched uranium it needed to refuel one of its nuclear reactors-- until China sold it the stuff. The Indian deal may be a one- off, but China has long kept band nuclear company; it has worked closely with Pakistan, another NPT refusenik that has the bomb, helped fend off action by the U.N. Security Council against North Korea, which is thought to have cheated on its NPT promises in order to get one, and is expanding cooperation with Iran, which wants one. In a similar vein, when the NPT was extended indefinitely this year, and the nuclear powers, including China, promised the ``utmost restraint'' in nuclear testing, China waited barely four days before setting off its next underground blast. China is by no means the only nuclear power equivocating over its test-ban promise, but its peculiar determination to have the right to conduct ``peaceful nuclear explosions'' (indistinguishable from nonpeaceful ones) could yet sink the proposed treaty. Not all of this behavior has contravened the letter of the international rule book, though at times China seems to have willfully undermined its spirit. However, when it comes to the promise to abide by the restrictions of the MTCR, there is gathering evidence that China has systematically and deliberately broken its promises. China is not yet a member of the MTCR, but it agreed last year in a joint statement with America that it would not, in the future, contravene the MTCR's guidelines. This promise of correct behavior enabled America to lift some commercial sanctions on China's space industry. These had been imposed because, despite public denials, China had sold the parts for MTCR-busting missiles to Pakistan, and possibly others. Now evidence is accumulating that more Chinese missile parts are going to Pakistan; missile-guidance systems and clever machine-tools for making sophisticated missiles are also thought to be going to Iran. As always, it will be hard to come up with cast-iron proof that the agreed rules have been broken. But the evidence gathered so far is strong enough--and worrying enough--for China to be asked by America to explain itself. Once the proof is in, American law dictates that sanctions be applied forthwith. The missile issue could not have reappeared at a more awkward moment. Relations between China and America are badly strained over President Clinton's decision earlier this year to allow the president of Taiwan--which China regards as a rebellious province only temporarily out of its control--to pay a private visit to the United States. Indeed, the two issues may yet become more dangerously entangled: at times in the past China has shown its displeasure when America has tilted towards Taiwan by deliberately stepping up military sales to the world's outlaw states, and may do so again. Yet, however damaging the missile issue may seem, the greater harm would come from trying to duck it. The world has too much to lose by turning a blind eye to missile proliferation promoted by any country, let alone one the size of China. And this kind of proliferation, like the nuclear kind, is a threat to all. It should be dealt with by as many countries as possible, not just America. When America first imposed sanctions on China for its missile sales, European companies were among those competing to pick up the business that American companies were being asked to forgo. If, once again, it comes to sanctions on Chinese industries, Europe and Japan should lean just as hard on their companies as America does on its, to ensure that everyone toes the line against proliferation.

Mr. STARK

Mr. STARK. Mr. Speaker, by detaining Harry Wu and charging him with crimes punishable by death, China shows that its government can be arbitrary and cruel as Mr. Wu's research indicates. For those who are considering trade with China, they should be fully conscious of the human rights violations by their potential trading partner. If you are planning to trade with the People's Republic of China, you should see or read about the so-called, state-secrets Mr. Wu is accused of stealing from them. These state secrets are actually horrendous human rights violations. Mr. Wu has exposed the true conditions and purposes of the Chinese prison system. Mr. Wu spent nearly two decades in the Chinese gulag. He has traveled back to China at great personal risk and has collected photos and anecdotes revealing the brutal treatment the prisoners receive and the illegal human organ trade which proliferates in the camps. The BBC, CBS, and NBC television have all aired documentaries based on Mr. Wu's research. All America was moved by the movie, ``Schindler's List.'' Mr. Wu's work is a reminder that ``Schindler's List'' is not some dusty old historical tale. We today face the same moral challenge. We know that there are Chinese concentration camps. We know that the camps produce goods for sale. Like most German businessmen during Hitler's reign, we can go along and profit from what is happening. Or we can take a stand and say that we won't wallow in this sea of blood for the sake of profits.

Mr. STARK

Mr. STARK. Mr. Chairman, reserving the right to object, will the gentleman be willing to amend that to 12 minutes?

Mr. STARK. Enough energy to blow those corks right out on New Year's Eve.

Mr. STARK. This is bubbles in a bottle, shining a little light on the bubbles for California champagne is certainly worth $1 million of the taxpayers' money.

Mr. STARK. It is right in the center, reclaiming my time, Mr. Chairman, of the finest champagne country in the world. What this will do is irradiate that champagne that comes from California, much to the disadvantage of New York, where they do not make such very good champagne. I understand that the gentleman, and Texas has a problem with it, too. The gentleman from Wisconsin supports this amendment because the bubbles in beer will be irradiated and that will put the gentleman from Missouri at a disadvantage. So that I want to say that if you want to waste $1 million trying to make California champagne better, which you cannot do, then we welcome this money. But if you really think that there is a place for $1 million and fewer bubbles or better beer, we could spend that money elsewhere.

Mr. STARK. I yield to the gentleman from California.

Mr. STARK. Mr. Chairman, I would like to engage my distinguished colleague from California, the chairman of the Subcommittee on Energy and Environment. This is a wonderful project. The gentleman knows it will go to Livermore, CA, and shooting light on these bubbles will cause a lot of wonderful things. Do you know what else they make in Livermore, CA?

Mr. STARK

Mr. STARK. Mr. Speaker, my constituent, Dr. Harry Wu of Milpitas, CA, a Chinese-born American citizen, has campaigned to publicize conditions in the Chinese labor camps. He has recently been arrested and charged with espionage by the Chinese government, and he could face execution if convicted. Dr. Harry Wu's only crime is exposing the true conditions and purposes of these Chinese labor camps. Our message, Mr. Speaker, to the Chinese Government and to the world must be crystal clear. No American citizen shall be arrested and mistreated anywhere in the world without all Americans being threatened and all Americans responding. The Congress will soon be considering most-favored-nation trade status with China. The Chinese are currently running a $36 billion a year trade surplus with us. Without MFN, Mr. Speaker, most of its exports will cease. Let us make Dr. Wu the $36 billion man and withhold MFN from these barbaric goons.

Mr. STARK

Mr. STARK. Mr. Speaker, the evening of July 10, I missed four votes because of the need to be with my wife in child-birth classes. I hope everyone who has been through this process will be understanding of my absence. If I had been present, I would have voted: No, on rollcall 474, moving the previous question; No, on rollcall 475, the motion to table the motion to reconsider; No on rollcall 476, the committee assignment resolution; and No on rollcall 477, permission for committee to sit for remainder of week while the House is meeting.

Mr. STARK

Mr. STARK. Mr. Speaker, I thank the distinguished gentleman for yielding time to me. Mr. Speaker, I rise in hopeless opposition to a rule that was crafted in the dead of night, and I rise to warn the American public. The gentleman from Michigan [Mr. Dingell], who spoke a few minutes ago, was absolutely correct. This is terribly flawed legislation. This bill destroys a fairly good idea. This bill has been introduced and written by former operatives of the health insurance industry. It deregulates supplemental insurance, and provides an opportunity for the worst shylocks in the health insurance industry to steal from the Medicare system and from our seniors. Sitting right over there is a man who, within the past year, has received hundreds of thousands of dollars from the health insurance industry. He is a Republican Committee on Ways and Means staff person who drafted this bill for the health insurance industry. Mr. Speaker, they are entitled to get payback for the huge contributions they made to the Speaker's campaign funds. That is OK. We know that goes on. However, I am telling the Members, Mr. Speaker, that what has happened here presages doom. If this kind of sloppily drafted legislation is how the Republicans think they are going to find a way to cut $270 billion out of Medicare, they would save everybody a lot of time by just moving to eliminate Medicare, because they will do it through stupidity, lack of experience, urgency to provide help to the people who have feathered their campaign nests, and with complete disregard for the seniors. Mr. Speaker, the seniors who sign up for this in States where it is not regulated, and it is regulated in those States, it is regulated by no one except the good conscience of the insurance companies. Companies like Prudential, who have stolen billions of dollars from seniors, companies that are under indictment or have pled guilty and paid $300 million, $400 million in fines are the same companies who are going to take care of our parents, and indeed ourselves, under this plan. Do not buy into that. Mr. Speaker, this is just a precursor of the Republican plan to destroy Medicare. We will hear about it after the recess. We will hear about taking $270 billion out of the most popular program, the most efficient insurance program in the country. It is being done at the behest of the health insurance companies by the Republicans. Members should vote against this rule in protest, and Members should vote against the bill.

Mr. STARK. Mr. Speaker, I yield 3 minutes to the gentleman from Maryland [Mr. Cardin].

Mr. STARK. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, this conference report legislation seeks to extend and expand the capricious demonstration program which will endanger the Medicare program and its beneficiaries. Basically it is a license for the insurance companies to steal. Medicare is the finest health care program in the county. There is no insurance plan in the country that offers more beneficiary choice. It is valued because we in Congress have worked long and hard to make it so. Today by forcing a premature expansion of this demonstration program, the Republicans in Congress are turning their backs on this great tradition. Republicans are putting the interests of private insurance companies ahead of the Medicare program, not only in this bill, but in their budget bill which seeks to cut $270 billion out of the Medicare program, and they are ignoring the beneficiaries who rely upon it for their health care security. This bill, as I have said before, is written by a Republican Ways and Means staff member who, within the past year, was receiving hundreds of thousands of dollars from the health insurance industry. Talk about big time sellout to private interests, this bill takes the cake. Medicare select will be presented as a program without problems, just another choice for the seniors to elect. The facts are quite different. At the time of the committee action on this bill, only a very preliminary evaluation of the Medicare Select Program had been concluded. That preliminary analysis found as follows: There is little coordination or management of care by organizations offering Medicare Select. The network formed by insurance companies were initially organized to increase Medicare market share at network hospitals rather than to minimize utilization. Since the time of the committee action, a more complete evaluation of Medicare select has been conducted, and before my Republican friends dismiss the report as some partisan document, I would like to remind them that this report was commissioned by a Republican administration, and the researchers who conducted the study were selected by that Republican administration. The study has been ongoing for well over 2 years. I will enter the study in the Record, and it is important to note here that in the study it talks about costs and utilization findings to date. The study says: We were surprised to find Medicare Select is significantly associated with Medicare cost increases in 8 of the 12 select States: Alabama, Arizona, Florida, Indiana, Kentucky, Minnesota, Texas, and Wisconsin. For the eight States indicating positive impacts on Medicare program costs, the average impact is 17.5 percent. The estimates vary from 7\1/ 2\ percent in Minnesota to a 57-percent cost increase in Indiana. However, only the Indiana estimate is much more than 20 percent. The results indicate that the cost increases substantially reflect increases in inpatient hospital utilization. These estimates are unusually robust. That is the understatement of the day, 17.5 percent increase on the Medicare trust fund, in addition to cutting $270 billion out. As I have said before, you would save the taxpayers a lot of money if you just introduced a resolution to eliminate Medicare tomorrow, let the Republicans vote for it. That is basically what they intend to do. Let the public see their true colors. Given the findings and the fact that the Congressional Budget Office found that this study raises serious questions about the operation of the Medicare Select Program, why are the Republicans rushing forward to extend and expand this demonstration project, particularly when they are trying to reduce Medicare expenditures? Are they that cavalier about the report's conclusion? For months congressional Democrats and the administration have called for a limited extension of the program in order that the assessment of the demonstration could be completed and necessary adjustments made based upon its findings. Republicans have only marched forward faster. Why? Whose interests are the Republicans responding to in this intemperate bill? Why are we trying to reduce costs under Medicare, and this program at the same time is moving in exactly the wrong direction? Halting the expansion of this demonstration program is the only prudent action for us to take. Proponents of this bill have made the claim if we do not extend it beneficiaries will be harmed. That is wrong. It is absolutely not the truth. Everyone should understand there is no current participant in the Medicare select plan who will lose coverage if we do not extend the program today. Certainly, additional beneficiaries will be prohibited from enrolling after today, but current enrollees would be allowed to continue in the plans. By voting ``no'' today, the program evaluation will be allowed to be completed without corrupting Medicare. And, third, voting ``no'' today will confirm our responsibility for the fiscal integrity of Medicare by blocking a premature expansion of this program. How can any of us explain to our constituents a vote to expand a program from 15 to 50 States that has just been found to raise costs to the Federal Government by tens of millions of dollars? That is fiscal irresponsibility at its highest. For those who ignore the evidence and vote to expand this program today, before adjustments can be made to it, you are in effect voting to increase Medicare's costs by $800 for each beneficiary who ends up in one of these plans. That is not fair to the seniors. Finally, what does the Medicare beneficiary get who is in the Medicare select plan? Access to a very limited network of doctors and hospitals. You prevent them from getting the ability to switch out of the Medicare select plan and back into a reasonable MediGap program. You deny them their choice of medical independence. In my home State of California, the Medigap plan will cost them an extra $3,360 in premiums. For the fiscal integrity of the Medicare trust fund and the protection of beneficiaries, you must vote ``no'' on the conference report to H.R. 483. Mr. Speaker, I reserve the balance of my time.

Mr. STARK. Mr. Speaker, I yield 2 minutes to the distinguished gentleman from Montana [Mr. Williams].

Mr. STARK. Mr. Speaker, I yield 1 minute to the distinguished gentleman from Washington [Mr. McDermott]. (Mr. McDERMOTT asked and was given permission to revise and extend his remarks.)

Mr. STARK. Mr. Speaker, the reason to vote no on this bill is to give the Congress time to perfect the necessary structures and regulations for Medicare Select to work. Indeed, it does work in California. The trouble is, there is only one insurance company, Blue Cross, who has been importuning Members to support it, because the insurance commissioner will not allow it. The corporation commissioner does, giving Blue Cross a monopoly. That is not fair in California, either. If it is good in California, let us let other insurance companies sell it. Somebody brought up the good name of the Consumers Union. They did in fact mention some of these policies. However, let me summarize Consumers Union's recommendations to the Subcommittee on Health of the Committee on Ways and Means in February of this year. Consumers Union stated that: Congress should study the impact of further negotiated discounts . . . before rushing to extend the Medicare Select program. . . . Research done to date indicates that the Medicare Select . . . has not achieved its goals. It has resulted in a marketplace in which premium pricing games distort the true cost of the policy. It has not achieved cost savings, but merely shifts costs to other consumers. Few insurers and few consumers have participated. In many States, regulation of this product has fallen between the cracks of different regulatory agencies--is it insurance or managed care?--leaving consumers without the protections they need. Congress should not expand the program and make it permanent, but should take steps now to fix what is broken, and what is broken is the pricing structure, the need for open enrollment, and await further study results before locking the program into place. With respect to Medicare Select, Consumers Union would urge you to proceed with caution. I would join with the distinguished gentleman from Michigan [Mr. Dingell] and others, and urge Members to vote ``no'' to protect the consumers, to protect the Medicare trust fund which the Republicans are going to dismantle and destroy, $1 billion here, $1 billion there, $84 billion to rich seniors, $270 billion to pay the tax cuts to the very richest in this country. Do not let them destroy Medicare any further. Vote ``no.'' Summary of Consumers Union Testimony on Medicare Select, February 10, 1995 Medicare Select is a cross between traditional Medicare supplement policies (``medigap'') and HMO's. We urge caution when it comes to expanding Medicare Select or making it permanent because of the following major problems: Pricing games: Medicare Select policies often offer cheaper premiums to begin with. But because of a system of so-called ``attained age'' pricing that many policies use, premiums will rise steeply as the policyholder gets older. Congress should not lock-in or expand a program which perpetuates this deceptive pricing practice. Illusory Cost Savings: Medicare Select premiums are often low, but at a cost to other Americans. Insurance companies that write Medicare Select policies typically don't pay the deductible to the hospital that other medigap policies are designed to pay. But the hospital still has to cover its costs. The result: it shifts the cost to other patients--and their insurers. The Medigap Maze: The whole idea behind the OBRA medigap reforms was to allow consumers to make kitchen table comparisons among plans. But the Medicare Select program doesn't forward that goal. Medicare Select adds a layer of confusion by forcing consumers to balance initially lower premiums against restricted freedom of choice of doctor or hospital. We believe that it is premature to expand or make permanent the Medicare Select program. Preliminary analysis of the program indicates that so far it has not been successful in reducing costs or even attracting substantial interest from insurers or consumers. We recommend that Congress: Require ALL states to do what several states have already done: community rate their medigap market to eliminate the hazardous pricing structure used by many Medicare Select plans (and level the playing field among all insurers). Alternatively, condition a state's ability to participate in Medicare Select to a statewide requirement of community rating for the medigap market. Require a six month open enrollment period for all consumers who were previously enrolled in Medicare Select. (Currently, in many cases, they are not eligible if their Medicare Select insurer does not offer a traditional policy.) Limit the extension of Medicare Select to a two-year time period that would allow for analysis of cost savings and quality control. Such a study is currently underway at HCFA. Postpone expansion of the program to additional states until the studies are complete and regulatory adjustments can be put in place. Consumers Union\1\ appreciates the opportunity to present our views on the issue of Medicare Select. We have spent several years monitoring the medigap market and working to improve protections for seniors who buy medigap policies. We worked in support of this Subcommittee's efforts to fix the problems in this marketplace, efforts that culminated in the historic enactment of OBRA-90 medigap reforms. These reforms made it much easier for consumers to comparison-shop among so-called medigap policies, which are designed to fill in the gaps in coverage left by Medicare. We continue to believe that these reforms serve as a valuable model for future legislation in areas such as long-term care insurance and regulation of a supplemental market in future health reform. Footnotes at end of article. --------------------------------------------------------------------------- This testimony addresses one aspect of the Medicare supplement insurance market--Medicare Select. Medicare Select is a cross between traditional Medicare supplement (or medigap) policies and HMO's. In return for initially cheaper premiums, consumers agree to obtain care within a designated network of doctors--in order to be reimbursed for the costs covered by the policy. (Medicare still provides coverage, regardless of whether the provider is in the Select network.) We believe that there are several problems with Medicare Select. In the big picture, Medicare Select represents a diversion from the tough issue of reining in Medicare costs-- through managed care or other steps. Pressing questions that this Subcommittee must address include: to what extent do HMO's--which limit seniors freedom of choice of doctor--truly save costs (or merely select the healthy risks)? Is there adequate quality assurance in Medicare risk contracts? Is there sufficient ability for consumers who do not feel well- served by Medicare HMO's to pick up traditional Medicare/ medigap coverage? Is it possible--and fair to seniors--to ratchet down the Medicare budget without achieving cost control in the private insurance sector (in the context of overall health care reform)? There are several major problems with the Medicare Select market and we urge caution when it comes to making Medicare Select a permanent program: Pricing games: Medicare Select policies often offer cheaper premiums to begin with. But because of a system of so-called ``attained age'' pricing that many policies use, premiums will rise steeply as the policyholder gets older. Congress should not lock-in or expand a program which perpetuates this deceptive pricing practice. Illusory Cost Savings: Medicare Select premiums are often low, but at a cost to other Americans. Insurance companies that write Medicare Select policies typically don't pay the deductible to the hospital that other medigap policies are designed to pay. But the hospital still has to cover its costs. The result: it shifts the cost to other patients--and their insurers. The Medigap Maze: The whole idea behind the OBRA-90 medigap reforms was to allow consumers to make kitchen table comparisons among plans. But the Medicare Select program doesn't forward that goal. Medicare Select adds a layer of confusion by forcing consumers to balance initially lower premiums against restricted freedom of choice of doctor or hospital. Summary of Recommendations We believe that it is premature to expand or make permanent the Medicare Select program because of these problems and others described below. Preliminary analysis of the program indicates that so far it has not been successful in reducing costs or even attracting substantial interest from insurers or consumers. We recommend that Congress: Require ALL states to do what several states have already done: community rate their medigap market to eliminate the hazardous pricing structure used by many Medicare Select plans (and level the playing field among all insurers). Alternatively, condition a state's ability to participate in Medicare Select to a state-wide requirement of community rating for the medigap market. Require a six-month open enrollment period for all consumers who were previously enrolled in Medicare Select. Limit the extension of Medicare Select to a two-year time period that would allow for study and analysis (that is currently under way by HCFA) of cost savings (vs. cost shifting) and quality control. Postpone expansion of the program to additional states until the studies are complete and regulatory adjustments can be put in place. We elaborate on our concerns and recommendations below. Analysis of the Medicare Select Market pricing games Medicare Select policies often use an ``attained age'' pricing structure, which Consumer Reports says is ``hazardous to policyholders.'' Various letters and comments regarding Medicare Select have noted that Consumer Reports found that eight of the top 15 Medigap products were Medicare Select. But this tells only part of the story. Five of the eight policies mentioned use an attained-age pricing structure. Consumer Reports stated that: Attained-age policies are hazardous to policyholders. By age 75, 80, or 85, a policyholder may find that coverage has become unaffordable--just when the onset of poor health could make it impossible to buy a new, less expensive policy. Take, for example, an attained-age Plan F offered by New York Life and an issue-age Plan F offered by United American. For someone age 65, the New York Life policy is about $114 a year cheaper. But by age 80, the buyer of the New York Life policy would have spent a total of $5,000 more than the buyer of the United American policy.\2\ The attained-age pricing structure allows companies to bait consumers with low premiums in early years, and then trap them with high increases in later years. Standardization of the medigap market resulted in price conscious consumers, with the effect of facilitating a trend away from community-rated policies and toward attained-age rated policies. The percent of Blue Cross-Blue Shield affiliates, for example, that sell attained-age policies grew from 31 percent in 1990 to 55 percent in 1993. Ten states have recognized this market dynamic and have taken steps to protect consumer either by requiring community rating for this market or by banning attained-age rating. These are Arkansas, Connecticut, Florida, Georgia, Idaho, Maine, Massachusetts, Minnesota, New York, and Washington. Four of these states--Florida, Massachusetts, Minnesota and Washington--are part of the Medicare Select demonstration program.\3\ Recommendation: Require ALL states to do what several states have already done: community rate their medigap market to eliminate the hazardous pricing structure used by many Medicare Select plans (and level the playing field among all insurers). Alternatively, condition a state's ability to participate in Medicare Select to a state-wide requirement of community rating for the medigap market. illusory cost savings The purpose of Medicare Select was to cut health care costs through coordinated care networks that increase the use of utilization review and management controls, often through PPO's. It was expected that enrollees would be restricted to a subset of providers. But the experience shows that often there is no restriction of providers. There is little coordination or management of care in Select plans.\4\ Medicare Select premiums may be low for the wrong reasons-- because these policies shift costs to others by not covering all the costs that traditional medigap policies must cover. Medicare Select companies often negotiate with providers to eliminate the payment of Part A deductibles. Insurers have indicated that the discounts of the Part A deductible by participating hospitals is the most significant source of premium savings available in Medicare supplements.\5\ This means that hospitals get less reimbursement from Medicare Select carriers. It does not mean that the hospital's costs are lower, so cost shifting to other patients (and their insurers) is inevitable. Before extending Medicare Select to additional states (or for a substantial time period), we urge you to study further why Medicare Select premiums are often low. Are they cutting premiums for their policyholders merely by shifting costs to other payers? Another issue of concern to us is whether the Medicare Select markets in each state are truly competitive. We understand that in California, for example, there is only one key Medicare Select carrier (Blue Cross).\6\ A study prepared for HCFA found that three-fourths of Medicare Select enrollees have policies from affiliates of three Blue Cross and Blue Shield plans (in Alabama, California and Minnesota), hardly an indication of a truly competitive marketplace.\7\ We urge you to study the level of competition in this marketplace, recognizing of course that traditional medigap policies do compete with medicare Select policies. Recommendation: Limit the extension of Medicare Select to a two-year time period that would allow for study and analysis (that is currently underway by HCFA) of cost savings (vs. cost shifting) and quality control. Postpone expansion of the program to additional states until the studies are complete and regulatory adjustments can be put in place. medigap maze A key goal of the medigap reform legislation that was included in OBRA-`90 was to provide true consumer choice of medigap policy by standardizing policies, thereby simplifying the choice. In light of the minimal role the Medicare Select products have made in this marketplace, we question whether the expanded complexity offers consumers significant benefits. Consumers (in Medicare Select states) must decide between Medicare only, Medicare risk plans, Medicare cost plans, health care prepayment plans, medicare Select plans, and traditional Medicare supplement policies. They can't even consider which of 10 standard packages to consider until they have made this choice. Furthermore, insurers have indicated that the 10 standard medigap plans are appropriate for fee-for-service (traditional) medigap policies, but not for network Medicare Select products.\8\ If Medicare Select necessitates an additional one or more standard policies, then simplicity is further undercut. need to await study results Medicare Select was included in OBRA-90 medigap reform legislation as a demonstration program. Medicare Select was established with the hope of achieving goals such as reducing health care costs (both for the Medicare program and consumers) and reducing the paperwork burden on consumers (since Medicare Select plans relieve consumers of the paperwork burden inherent in filing claims). It should not be made permanent until studies of its effectiveness have been completed. The preliminary report (February 1994) paints a picture of Medicare Select that is hardly complimentary. A tiny percent of people eligible have enrolled; a small fraction of insurers participate; cost savings appear to be superficial only and may be cost-shifting in disguise; the market is highly concentrated; Medicare Select regulation often falls between the cracks in state regulatory departments. Some specific findings that should set off alarms to put on the brakes--not rush ahead with a permanent expansion-- include: Some states (e.g., Arizona) have found that market response has been poor and that beneficiaries tend to migrate back to traditional plans.\9\ Several states that were selected for the program could not get it off the ground and dropped out.\10\ Others have had no applications for select plans.\11\ When studied by RTI, only 2.5 percent of eligible Medicare enrollees selected Medicare Select policies, and most of these ``rolled over'' from prestandardization products. It appears that consumers are not, in general, attracted to Medicare Select policies.\12\ Nor are insurers attracted to the Medicare Select product: only ten percent of HMOs and medigap insurers in Select sates offer Medicare Select policies, with even interest in some states.\13\ Recommendation: Congress should delay expanding and making permanent the Medicare Select program until further study results are available. It should not be made permanent without fixing the elements that are broken. Regulatory Gaps Medicare Select is fraught with questions about regulatory authority. It is not unusual for a state's insurance department to regulate fee-for-service medigap coverage, but another state department (e.g, Department of Public Health or Department of Corporations) to regulate Select products. It is very possible that Medicare Select policies get lost in the regulatory cracks where authority for traditional insurance and HMO's is split. This confusion has even led to approval of plans (as Select) that deviate from the OBRA '90 standard plan designs.\14\ Medicare Select consumers need regulatory protection. For example, consumers switching out of Medicare Select need protection. Consumers who choose a Medicare Select option must use providers in the designated network in order to get medigap coverage. The NAIC model regulation provided protection to consumers who elect Medicare Select but then wish to change to traditional medigap policy. Companies were required to offer such consumers a policy with similar benefits, without underwriting. But this provision has a loophole--consumers have no assurance of such an offer if the Medicare Select company does not offer a traditional (``fee- for-service'') medigap policy. In the event that Congress decides to end the Medicare Select program, either now or in the future, then consumers who have Select policies when the program is ended will need protection. Without new entrants in their pool, their premiums (in closed blocks of business) would spiral upwards. They will need the protection from such an open enrollment period. Recommendation: Congress should require that all policyholders who wish to switch out of Medicare Select be eligible for an open enrollment period (regardless of which company they select) in order to protect them against being locked into a Medicare Select plan that they do not like.\15\ This protection would actually help to promote the Medicare Select option because consumers would have a safety valve if they are dissatisfied. If Congress chooses to end the Medicare Select program, insurers should be required to extend an open enrollment period to Medicare Select policyholders. We urge the Congress to study carefully the regulatory experience and analyze where regulatory authority for Medicare Select is best housed. does medicare select compromise quality? Medicare Select policies keep premiums low by negotiating lower reimbursement schedules with providers (mostly hospital), providing discounts to policyholders. On average Medicare pays doctors and hospitals about 59 percent of what private insurers pay for the same services. If (in the future) Medicare Select coverage is negotiated downward (e.g., providing Select policies with Part B discounts also), providers will get even less. At some point, the cumulative impact of lower reimbursement has got to have an impact on quality of care that patients receive. This could occur when providers withdraw from providing services to consumers, or when they cut corners (such as patient time) due to the lower reimbursement levels. Recommendation: Congress should study the impact of further negotiated discounts for providers before rushing to extend the Medicare Select program. In conclusion, research done to date indicates that the Medicare Select demonstration program has not achieved its goals. It has resulted in a marketplace in which premium pricing games distort the true cost of the policy. It has not achieved cost savings, but merely shifts costs to other consumers. Few insurers and few consumers have participated. In many states, regulation of this product has fallen between the cracks of different regulatory agencies (is it insurance or managed care?), leaving consumers without the protections they need. Congress should not expand the program and make it permanent, but should take steps now to fix what is broken (the pricing structure, the need for open enrollment) and await further study results before locking the program into place. With respect to Medicare Select, we urge you to proceed with caution. Thank you for considering our views. footnotes \1\Consumers Union is a nonprofit membership organization chartered in 1936 under the laws of the State of New York to provide consumers with information, education and counsel about goods, services, health, and personal finance; and to initiate and cooperate with individual and group efforts to maintain and enhance the quality of life for consumers. Consumers Union's income is solely derived from the sale of Consumer Reports, its other publications and from noncommercial contributions, grants and fees. In addition to reports on Consumers' Union's own product testing, Consumer Reports with approximately 5 million paid circulation, regularly, carries articles on health, product safety, marketplace economics and legislative, judicial and regulatory actions which affect consumer welfare. Consumers Union's publications carry no advertising and receive no commercial support. \2\``Filling the Gaps in Medicare,'' Consumer Reports, August 1994, p. 526. \3\It is premature to evaluate the impact of the combination of Medicare select and community rating, since two states (Massachusetts and Washington) are new to Medicare select and since community rating requirements are fairly recent. \4\``Evaluation of the Medicare SELECT Amendments--Case Study Report, RTI Project No. 32U-5531, prepared for Office of Demonstrations and Evaluations, Health Care Financing Administration, U.S. Department of Health and Human Services, February 10, 1994, RTI, p. XX-3. \5\RTI, p. xi. \6\Three other plans: Foundation Health Plans; National Med; and Omni Health Plan have been approved but had minimal enrollment, that totals less than 500. [RTI, p. IV-17] \7\p. ix. \8\RTI, p. xiii. \9\RTI, p. III-6. \10\E.g., Oregon and Michigan. RTI, p. XV-1. \11\E.g., Illinois. RTI, p. XV-3. \12\RTI, p. ix. \13\RTI, p. ix. \14\See, for example, RTI, p. IV-9, IV-10. \15\In Florida, Select insurers are required to offer at least a basic Plan A in a non-Select form, providing partial protection for people who wish to switch out of Select plans. One side-effect: this provision makes it infeasible for HMO's to offer SELECT plans.

Mr. STARK. Mr. Speaker, I yield myself the balance of my time.

Mr. STARK

Mr. STARK. Mr. Speaker, I rise today to recognize the achievements of Ms. Helen Garrett Alder who is retiring after 31 years of dedicated service to the schoolchildren of California's 13th Congressional District. Ms. Alder was born in Evansville, IN, and completed her undergraduate studies at Tuskegee Institute University in 1949. She earned her master's degree in education from Texas Southern University in Houston, TX. After coming to California, Ms. Alder began teaching in the Oakland Unified School District while continuing her education at Stanford University and the University of California at Berkeley. She began teaching physical education at Bret Harte Junior High and later moved to Skyline High School where she taught American Government, economics, and social studies. She also coached the girls' basketball and softball teams, was director of the cheerleaders and pesters and served as the department chair of student activities. Ms. Alder also taught driver's education and training and was an instructor at Edward Shands Adult School in Oakland. Mr. Speaker, I am proud to recognize Ms. Helen Garrett Alder for her commitment to the children of the Oakland Unified School District and am certain that she will be sorely missed. I hope that you and my colleagues will join me in wishing Ms. Alder much happiness and success in her future endeavors.