Deficit Reduction Omnibus Reconciliation Act of 2005

Floor Speech

Date: Oct. 31, 2005
Location: Washington, DC



Mr. GRASSLEY. Mr. President, I very much thank Senator Judd Gregg, chairman of the powerful Budget Committee, for his leadership and for doing what has not been done in this Senate, it is my understanding, since 1997: We have a budget reconciliation bill that will reduce the deficit by changing programs that are either appropriated or on automatic pilot that tend to never get reviewed as often as they should in order to watch the taxpayers' money wisely.

Senator Gregg's commitment to fiscal discipline has informed and defined this process, and I am grateful for his efforts.

As he just did, I congratulate the chairmen of seven other authorizing committees whose titles of this bill, along with the Finance title that I am going to talk about, comprise this giant legislation that we call reconciliation that Senator Gregg successfully reported last week.

I know that it was not easy for the chairmen of these eight committees to reach consensus and to move their titles forward. These chairmen and the members of their committees have every right to be proud of the work they have done achieving savings but also implementing policies that will help American workers.

Today, we have saved nearly $40 billion over 5 years--to be more accurate, $39.1 billion over 5 years--and that is $4.1 billion more than Congress even directed these committees to do back in April when the budget was adopted. Considering the 8 years since this has been done, this is a significant accomplishment and one of which we ought to be proud.

Many of the proposals in my committee's title, as well as the other titles of this bill, have bipartisan support. Some of them have been proposed by the administration in its budget which came out last February. While I am hopeful that during the debate this week, we will be able to persuade a number of Democrat Members to vote in favor of this bill, I recognize that the budget process is often a partisan exercise and that we will be able to count on few, if any, votes from the Democrat side of the aisle.

As the chairman of the Senate Budget Committee made very clear with his chart that was blank, we have not seen a Democrat proposal. Why? Because they do not want to bite the bullet and do what is hard to suggest from their point of view--how to reduce the deficit--unless it might be by raising taxes because often that is their solution, whereas I myself have never come to the conclusion that the American public is undertaxed. I never have my taxpayers telling me that they are undertaxed. The problem of the budget deficit is that Congress overspends.

In developing my part of this budget reconciliation proposal, I attempted to address a number of bipartisan priorities. These efforts were acknowledged by my colleagues during last week's Senate Finance Committee markup, and I want those members of the Finance Committee to know that I appreciate their kind words. Rather than having their kind words, I would rather have had those Democrats vote for this bill coming out of my committee rather than having it come out on an 11-to-9 partisan vote.

The Finance Committee portion represents nearly a year's worth of work on behalf of members of my committee and the staffs of the respective members, as well as committee staff.

The Senate Finance Committee title achieves a net of $10 billion in savings from Medicare and Medicaid by reducing wasteful spending and by closing loopholes. The Finance title also targets resources to preserving and improving Medicaid, the State Children's Health Insurance Program, and Medicare. In particular, the Medicaid provisions in the title will also produce additional resources for States in operating their Medicaid Programs. In so doing, this bill protects Medicaid benefits for the most vulnerable of our society.

The Senate Finance Committee title cracks down on Medicaid fraud and abuse by encouraging States to aggressively pursue Medicaid fraud by implementing in the respective States, beyond the 13 that have done it, State false claims acts, which in comparable legislation at the Federal level is the single most important tool that U.S. taxpayers have to recover the billions of dollars stolen through fraud every year. In addition, my Finance Committee title requires suppliers that do business with Medicaid to have a false claims act education program so that those with evidence of fraud against Medicaid know they may pursue these claims on behalf of the Government and help to recover stolen funds. In order to fight Medicaid fraud, the Senate Finance Committee title dramatically increases resources to fight fraud and abuse in Medicaid. This then will protect State and Federal budgets and generate substantial savings from this investment.

My committee's title also achieves savings by helping State Medicaid Programs obtain millions in payments owed by third-party payers each year. It also produces savings by ending drug manufacturers' gaming of the system by closing the authorized generic loophole so that appropriate rebates are paid to the States.

The Senate Finance Committee title helps preserve services to beneficiaries by ending overpayments to pharmacies, by reforming the broken system used to reimburse pharmacists for prescription drugs, which is based on the flawed average wholesale price formula, costing taxpayers lots more money than it should. There have been 13 reports in the last 5 years dealing with an average wholesale price formula done by the Congressional Budget Office, the Inspector General's Office, and from the Government Accountability Office, all calling for reforming the Medicaid pharmacy payment formula and ending overpayment for prescription drugs. These overpayments have been costing the States, as well as our Federal Government, billions of dollars needlessly.

The bill also includes provisions to protect rural pharmacies and encourage greater use of cost-saving generic drugs. In addition, my portion of this reconciliation bill balances the savings derived from pharmacy payment reforms with an increase in the rebate paid to State Medicaid Programs by drug manufacturers from 15.2 percent to 17 percent.

On the Medicare side, the Finance title calls for the phaseout of the budget neutral modification to the MedicareAdvantage risk adjuster. This provision will help ensure that the health status risk adjuster required by the Balanced Budget Act of 1997 meets its objective of providing accurate payment to plans based on their enrollees' health. The title also repeals the MedicareAdvantage regional stabilization fund.

There are concerns about these provisions, and some people have argued that we should not touch the MedicareAdvantage Program. In response, I point out that the phaseout of the risk adjuster was announced three times: first in February in the President's budget; second, with the 2006 rates; and again in the September CMS factsheet. So plans submitted their bids knowing full well that the phaseout was going to happen.

When we worked on the Medicare Modernization Act--and that was in 2003--the idea was that if the funds were not needed, then the dollars were to be returned to the U.S. Treasury. We have strong regional preferred provider organization participation. Regional preferred provider organizations are in 21 out of the 26 regions into which the country has been divided. Regional preferred provider organizations have several other safeguards to make sure they are available.

The base MedicareAdvantage rates have been fixed. There are risk corridors, network adequacy requirements, the essential hospital fund, and a moratorium on local PPOs. The title does not affect any of these safeguards, so we feel this money going back to the Federal Treasury under this bill is the right thing to do.

The Finance Committee title of this bill also preserves access to health care for seniors in Medicare by providing a 1-percent payment update to all providers paid under the Medicare physician fee schedule. This replaces a 4.4-percent payment cut that physicians are scheduled to receive in 2006 under the existing formula. So we change that formula to make sure that the 4.4-percent cut does not go through. On top of that, there is a small increase for our physicians.

The Part B premium is affected due to changes included in the title that affect Part B spending. While some provisions lower Part B spending, other provisions increase the spending. However, there is no effect on the Part B premium paid by our seniors until the year 2007. It is also important to keep in mind that the Part B premium increase does not affect low-income beneficiaries. In fact, I worked hard to extend the QI Program so that Part B premiums would continue to be covered for these individuals.

Avoiding the physician payment cut has strong support in the Senate. In July of this year, 89 Senators from both sides of the aisle sent a letter to the White House Office of Management and Budget calling for the removal of Part B drugs from the physician payment formula. This change, which the administration has the authority to make, would permit Congress to address the longstanding programs with the Medicare formula for reimbursing physicians.

Certainly, we are all concerned about any impact on Part B premiums, but this Senate is almost unanimous in its support of addressing this, as evidenced by the 89 signatures calling for changes in the formula that were sent to the administration. To be clear about this, the changes in the physician fee called for in that letter would also increase Part B premiums to our senior citizens. It is important that we take steps to maintain access to physician services in the Medicare Program. The benefits in Medicare are not worth much if beneficiaries cannot find a doctor when they need one.

Another important area addressed by the Senate Finance Committee is long-term care costs. Recognizing that long-term care costs account for significant spending in the Medicaid Program, this bill makes key provisions in long-term care for seniors and the disabled. Consistent with a proposal put forth by President Bush, this bill includes a ``money follows the person'' rebalancing demonstration program. This program would direct grants to States to increase use of home- and community-based services rather than institutional care, and it would eliminate barriers that prevent or restrict the flexible use of Medicaid funds so that individuals may receive support for long-term services in a setting of their choice. This is empowering people.

The title also provides new options for private coverage of long-term care through the long-term care partnerships and promotes the availability of programs of all-inclusive care for the elderly in rural areas.

The Finance Committee title also addresses a number of Medicare priorities while also achieving savings in other areas of Medicare. To begin, being mindful of the unique needs of rural residents and the facilities that serve them, the title protects access to Medicare services for rural beneficiaries.

First, the title would extend the hold-harmless provisions for the small rural hospitals and sole community hospitals from implementation of the hospital outpatient prospective payment system.

Second, it would expand coverage of additional preventive benefits under the Federal qualified health centers.

Third, it would extend the Medicare Dependent Hospital Program, which provides financial protections to rural hospitals with less than 100 beds that have greater than 60 percent of their patients coming from Medicare.

Another issue I suspect we will hear a good deal about during this debate over the next few days is the impact that Hurricane Katrina had when it devastated hundreds of thousands of our fellow Americans.

The title would provide for a much needed downpayment to those States that have suffered as a result of Hurricane Katrina. I am committed to ensuring that the families who have suffered so greatly as a result of this national tragedy receive the services they need to rebuild their lives, and the States which have been affected are made whole.

The Finance Committee title of this bill also provides funding to strengthen and improve the Medicaid and State Children's Health Insurance Program. As my colleagues know, as many as 23 States are projected to experience shortfalls in the Children's Health Insurance Program over the next 2 years. The national total of these State Children's Health Insurance Program shortfalls is near $1 billion. The Senate Finance Committee title includes temporary provisions that will stem these State shortfalls and ensure that States are not forced to curtail or end their Children's Health Insurance Program coverage for vulnerable low-income children.

In order to continue to improve the Medicaid and Children's Health Insurance Programs, the Senate Finance Committee title in this reconciliation bill also includes outreach and enrollment efforts so that children eligible for public health assistance receive that assistance.

This legislation also addresses a fundamental flaw in our current Medicare payment system. Right now, Medicare payment policies do not encourage high-quality care. In other words, doctors get the same reimbursement and hospitals get the same reimbursement whether they are doing the highest quality of care or whether they do not care, and people are always going back into the hospital because the job is not done right the first time. So we have come to the conclusion that we need to reward quality and we need to provide incentives to invest more in health care information technology and other efforts that will improve health care quality.

This reconciliation bill does just that. This bill implements recommendations from the Institute of Medicine and also from the Medicare Payment Advisory Commission. These provisions are based on the bipartisan Medicare Value Purchasing Act, which is S. 1356, introduced by me and my Democratic colleague, the leader on the other side of the aisle of the committee, Senator Baucus of Montana. The legislation creates quality payments under Medicare for physicians and other providers, including hospitals, health plans, skilled nursing facilities, home health organizations, and end stage renal disease facilities.

Finally, the Senate Finance Committee title includes the Family Opportunity Act. The Family Opportunity Act was motivated by the circumstances of individual families--the Melissa Arnold family of Iowa and the Dylan Lee James family. You could say they are representative of hundreds of thousands of families. Both are families we use as an example of those who relied on Medicaid health services for their children with disabilities, and both families ended up risking eligibility for Medicaid as a result of financial eligibility rules that continue to create disincentives for parents to work and stay working and even improve their employment opportunities.

Acute need persists for the Family Opportunity Act. It is just as important today as it was over the past several years that I have been fighting to get the Family Opportunity Act law. I have heard from a number of families in Iowa and across the country, speaking of the imperative to enact the Family Opportunity Act. They tell me about their son or daughter or grandchild, and how much they love their child or grandchild and how important it is to tell their story. They tell about the illness or disability that their families have been struggling with for years.

Then they describe how dad and mom could comfortably support their family but must remain poor, even unemployed, in order that their child receive the health care coverage they need. These parents want to work and provide for their families but must put the health care of their child first.

If we are able to successfully pass the legislation--we have been able to pass this legislation in the Senate, but it did not get through the House of Representatives. If we are successful again, we will achieve important savings that help put our fiscal house in order as well as preserve benefits and ultimately expand access through the Family Opportunity Act for families in Iowa and across the Nation.

The Finance Committee title of this bill achieves significant savings in Medicare and Medicaid by reducing wasteful spending and closing loopholes. It then directs much of these savings to make improvements in these programs that expand access to health care services, protect health care coverage for kids, and protect access to Medicare beneficiaries.

But the bottom line is more than $10 billion in savings in existing programs or additional money being recouped from fraud or money coming in from fees. The bottom line to the Federal deficit is $10 billion.

I have two summaries of the Finance Committee title. I ask unanimous consent that they be printed in the RECORD.

There being no objection, the material was ordered to be printed in the RECORD, as follows: