[Congressional Record Volume 159, Number 9 (Thursday, January 24, 2013)]
[Pages S238-S240]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                      MEDICARE AND MEDICAID REFORM

  Mr. HATCH. Mr. President, I rise to speak on a matter that is of the 
greatest importance. Our Nation is on an unsustainable fiscal path. The 
national debt stands at a current whopping $16.4 trillion with annual 
trillion-dollar deficits having become the norm with the current 
administration. Put simply, unless we change our course, our debt 
threatens to cripple our economy and saddle future generations with 
bills they will not be able to pay.
  Federal spending has been growing and will continue to grow at a rate 
that outpaces government revenues by leaps and bounds. Despite some 
claims to the contrary, the difference simply cannot be made up by 
increasing taxes. We do not face a problem with not taxing enough in 
this country; we have a spending problem.
  Moreover, in the runup to the fiscal cliff, we had a national 
discussion on increasing taxes. Taxes were increased and the revenue 
discussion is done. It is time to turn our attention to our country's 
runaway spending problem and our unsustainable entitlement programs. 
The only way we can make meaningful progress toward reducing our 
deficits and eliminating our massive debt is to focus on the main 
drivers of these problems. The main drivers of our debts and deficits 
is not a lack of revenue; it is our entitlement programs.
  Let's take a look at our two main health care entitlements, Medicare 
and Medicaid. In just the next 10 years, the Federal Government will 
spend more than $12 trillion on Medicare and Medicaid. Let's put that 
in perspective. That is $12 trillion on just two programs. That is more 
than the entire economies of Germany, France, the UK, Italy, and Spain 
combined. If we do not act to slow the rate of growth in these two 
programs, they will consume roughly 10 percent of our entire economy by 
the year 2035.

  Medicare, by itself, spent nearly $480 billion last year. Over the 
next 10 years, it will spend more than $7 trillion. In fact, by the end 
of that same 10 years, we will be spending more on Medicare than on our 
entire national defense. The prospects for Medicare solvency only get 
worse as time goes on. Over the long term, Medicare has nearly $39 
trillion in unfunded liability. That is $328,404 for every American

[[Page S239]]

household in this country. Fixing Medicare will not just be a matter of 
trimming off some fat and waste. The problems with the program are 
  Let's talk about Medicaid for a moment. Things are not much better 
with that program. The Federal Government spent $261 billion on 
Medicaid in 2012 and the States themselves spent about $196 billion, 
bringing the total cost of the program to $457 billion in a single 
year. In the next 10 years, Federal Medicaid spending as a share of the 
U.S. economy is set to grow by 37 percent. The Federal Government will 
spend more than $4.4 trillion on the program over that time.
  According to the National Governors Association, Medicaid represents 
the single largest portion of total State spending, which accounted for 
an estimated 23.6 percent of State budgets last year. Between Medicare 
and Medicaid, we have two programs that threaten to swallow not only 
the Federal Government but State governments as well. We simply cannot 
afford to keep these programs running on autopilot, nor can we afford 
to tinker around the edges when we talk about reform. If we are serious 
about addressing our Nation's debt, Medicare and Medicaid need 
structural reforms.
  Today, I wish to lay out five specific reform proposals that could 
help to rein in entitlement spending and put our Nation on a better 
fiscal course. These are reasonable, rational ideas that have all 
enjoyed bipartisan support over the years. I believe they should be 
included in any deficit reduction package.
  No. 1: We need to adjust the Medicare eligibility age from 65 to 67. 
Raising the retirement age is simply common sense. It would reflect 
increases in life expectancy and align Medicare eligibility with that 
of Social Security. This idea was supported by the Simpson-Bowles 
Commission, and it was included in the bipartisan deficit negotiations 
in 2011.
  In addition, prominent Democrats, including former Senate Budget 
Committee chairman Kent Conrad and House Budget Committee ranking 
member Chris Van Hollen, have expressed support for raising the 
retirement age as part of the discussion on retirement reform. Raising 
the retirement age is not just a Republican idea. Members of both 
parties have supported it.
  No. 2: We need to modernize the Medigap Program by limiting 
supplemental Medicare insurance plans from covering initial out-of-
pocket expenses for Medicare beneficiaries. In 2010, on average, 
Medicare made $9,765 per beneficiary. The average out-of-pocket expense 
coming from copayments, coinsurance, and deductibles for beneficiaries 
was $1,679. Almost 90 percent of Medicare recipients use some kind of 
supplemental insurance to offset some of their out-of-pocket costs. 
Almost 30 percent of beneficiaries have so-called Medigap policies that 
provide first-dollar coverage.
  Multiple studies have found that this 30 percent--the ones with 
Medigap insurance policies--use about 25 percent more services than 
those without similar coverage. This overutilization of services leads 
directly to higher costs for all seniors on Medicare. Limiting first-
dollar coverage will encourage seniors to make better health care 
choices and ensure the highest quality outcome while lowering costs for 
the entire Medicare Program.
  This policy was supported by the Simpson-Bowles Commission, and it 
was part of the Biden-Cantor deficit reduction negotiations in 2011. In 
addition, the Democratic members of the House Ways and Means Committee 
included this idea as part of a set of cost-sharing reforms in their 
2011 deficit reduction proposal. The President's own 2011 deficit 
reduction package included a similar proposal to reduce costs 
associated with Medigap insurance plans.
  Once again, this is a policy that both Democrats and Republicans 
should be willing to get behind.
  No. 3: We need to simplify Medicare beneficiary cost sharing while 
protecting seniors from catastrophic health costs. Currently, Medicare 
cost sharing--copays, deductibles, et cetera--varies significantly 
depending on the type of service being provided. Beneficiaries now have 
separate deductibles for inpatient care under Part A and physician and 
outpatient services under Part B. This overly complex benefit structure 
is difficult for beneficiaries to navigate, and it promotes 
overutilization. By streamlining the cost sharing and creating a single 
combined deductible for both Part A and Part B, we can make it easier 
for seniors to use Medicare more efficiently and reduce costs 
associated with overutilization.
  At the same time, we should institute an annual catastrophic cap to 
protect seniors who face serious health events which will provide 
seniors with much needed financial security. This was another policy 
supported by the Simpson-Bowles Commission. It was also a part of the 
Coburn-Lieberman Medicare proposal introduced in the last Congress. It 
is, in every sense, a bipartisan proposal.
  No. 4: We need to increase quality and lower costs on Medicare by 
introducing competitive bidding into the program. By allowing private 
health plans to compete with traditional fee-for-service Medicare, we 
can provide seniors with their guaranteed Medicare benefit while at the 
same time reducing costs and improving the quality of care.
  Entitlement reforms should draw upon market-oriented solutions. 
Increased competition will allow seniors to choose for themselves based 
on transparent cost and quality information--if they want to use the 
traditional Medicare program or a private health plan. This is the type 
of structure seniors enjoy under the Medicare Part D which has 
controlled costs and is very popular among beneficiaries.

  This is not a Republican fantasy or a conservative plan to gut 
Medicare, as some may claim. Democrats have supported this approach 
over the years as well. President Clinton proposed a major set of 
Medicare reforms in 1999 that included a version of a premium support 
system. Alice Rivlin, OMB Director under President Clinton, recently 
worked with Senator Pete Domenici on a Medicare reform bill that 
included a defined premium support plan. In addition, Democratic 
Senator Ron Wyden worked with the House Budget Committee Chairman Paul 
Ryan to develop a similar proposal in the 112th Congress. So while 
there may be some resistance to this particular idea, it has enjoyed 
bipartisan support.
  Finally, No. 5: We need to strengthen Medicaid for patients and 
States through realistic reforms. Setting per capita limits on Federal 
Medicaid spending would put the Medicaid Program on a sustainable 
budget and, when combined with increased flexibility for patient-
centered reforms at the State level, would reduce costs and improve 
patient care across the board. As with other ideas I have mentioned, 
this is a bipartisan proposal.
  In 1995, President Clinton introduced a Medicaid reform plan that 
included a per capita cap on Federal Medicaid spending. At that time, 
all 46 Democratic Senators, including several who are still serving 
today, signed a letter to President Clinton expressing support for this 
proposal. In addition, in October of last year, former Democratic 
Senate majority leader Tom Daschle publicly expressed support for per 
capita caps on Medicaid spending as a way of ``guaranteeing the 
benefits of the Medicaid program.''
  So there we have it--a concrete, bipartisan approach to reforming our 
health care entitlement programs and restoring fiscal sanity here in 
  I know it is popular to talk in abstractions around here when it 
comes to reforming our entitlement system, but these are specific ideas 
that have enjoyed the support of both Republicans and Democrats over 
the years. This is precisely what has been missing from the current 
debate over deficit reduction.
  Entitlement reform is not a matter of choice; it is a necessity. That 
being the case, it is not a Republican or Democratic issue; it is a 
challenge facing our entire country. My proposals, which have all 
enjoyed bipartisan support, will help ensure future generations have a 
viable and sustainable safety net in place. Far from being offered out 
of any sense of ``suspicion'' about government safety net programs, as 
a cynic might suggest, my proposals are designed to help sustain these 
important programs.

[[Page S240]]

  I believe these types of proposals are a good starting point for a 
serious discussion about entitlement reform. I hope my colleagues on 
both sides of the aisle will want to be part of this conversation.
  Mr. President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Rhode Island.
  Mr. WHITEHOUSE. Mr. President, I will yield the floor for my 
distinguished friend from Florida, Senator Nelson, with the 
understanding that I will be recognized at the conclusion of his 
  The ACTING PRESIDENT pro tempore. The Senator from Florida.