Addressing the Fiscal Cliff

Floor Speech

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Mr. COURTNEY. Thank you, Congressman Garamendi. And I realize there's congressional districts in California that are probably bigger than Rhode Island and Connecticut combined, so I won't hold it against you too hard.

Thank you for taking time on the floor today to spend some time talking about Social Security, Medicare, and Medicaid. This really is the moment of truth right now.

Yesterday, the Republican leadership came out with their package in terms of trying to deal with the so-called fiscal cliff, and even though, for months, they have not really fleshed out with great detail where they wanted to see savings, yesterday they did. They came out with a proposal which talked about raising the eligibility age for Medicare from 65 to 67.

They talked about recalculating the cost-of-living-adjustment for seniors who are on Social Security. It's the so-called chained CPI, which would lower the year-in and year-out increase for people on Social Security in terms of keeping up with the cost of living.

These proposals really need a full, vigorous debate before the American people before we move in that direction, which I would argue, and certainly you and others here this afternoon, would be the wrong direction for middle class and working family Americans.

You know, in terms of Medicare, I think it's really important, historically, to review how Medicare came into existence.

In 1965, when it was signed into law by President Lyndon Johnson on the porch of Harry Truman's house in Independence, Missouri, only half of America's seniors had any insurance whatsoever. Because of age, because of preexisting condition, because the insurance company, frankly, just viewed them as too high a risk, and because of cost, only half of America's seniors had any insurance whatsoever. Life expectancy in America in 1965 was 70 years old.

With that stroke of a pen by Lyndon Johnson, the genius of Medicare was created, which created a pool for people above the age of 65 and people on disability, a pool which could spread risk out and make the challenge of covering people at that age much more manageable. And for the following 47, 48 years, we have had a system which now has brought life expectancy for Americans up to age 78. In other words, having people in a situation where they can access needed medical care, in fact, lengthened people's lives and, in some instances, actually added to the economy because some people even continued to work, to a degree, who are on Medicare.

It has really accomplished its mission which was visualized the day that President Johnson signed it into law. It does face challenges. There's no question that demographics, with the baby boom coming on the horizon, is going to increase the number of people in the program, but the way you solve that problem is just make it smarter and more efficient.

When President Obama signed the Affordable Care Act in March of 2010, last year there were some really solid, smart changes that were made to the Medicare system to make sure that the cost per patient would be moderated, but not that it would cut benefits or kick people off the program, which is what the Republicans are proposing to do, saying people who are 65 and 66 would no longer be eligible under their proposal.

This chart which I brought along with me this afternoon is based on Standard & Poor's Dow Jones Index, which tracks the Medicare program every single month in terms of per capita spending, and it shows, again, back as recently as 2005, 2006, per capita expenditure for Medicare was actually quite high. It was over 7 percent per patient, and that, obviously, is an unsustainable level under almost really any circumstance, but over time it moderated.

And then this red line shows the day that President Obama signed the Affordable Care Act, which put a number of really intelligent changes into Medicare, promoting preventive care services, prescription drug coverage, making sure people will get their colonoscopies and their cancer screenings, and also saying to hospitals, hey, if people show up at your emergency room 30 days after you just treated them, we're going to penalize you. You've got to do a better job of monitoring care in the community. And that change, by itself, is already promoting a lot more collaboration on a much more cost-effective, better way for people.

Who wants to be in an emergency room? You want to be home with your care being provided, not sitting, again, in a hospital room waiting for life-or-death treatment.

So since that date, when President Obama signed it into law, the per capita growth rate under Medicare is now down to its lowest level in the history of program--2 percent per capita growth. And the fact of the matter is we can do more. We can actually build on that success of the Affordable Care Act.

Anybody watch ``60 Minutes'' on Sunday? They had a story about a hospital system which basically was threatening to fire doctors if they didn't admit patients according to certain quotas because they're, again, chasing that fee-for-service incentive that is in old Medicare. I mean, those are the kinds of, in that case, fraud, but in other instances, you know, changing that fee-for-service incentive can actually bring this number down even much more dramatically, and we don't have to touch a hair on the head of any Medicare-eligible senior in America for decades to come if we make those smart changes.

So the fact of the matter is we're seeing great progress just, again, in the last 2 years, 2 1/2 years. And the fact is that there are very good ideas about ways of making the system much more efficient.

And I will tell you, and I know my Members that are here on the floor will agree with this. When you go and visit a hospital or when you go and visit medical groups, the changes in electronic records, the changes in terms of incentivizing preventive care have been embraced by the medical community. They actually understand how wasteful the high volume fee-for-service system is in terms of just not only taxpayers, but also the resources that are precious and should be really allocated to all Americans, not just those who have good insurance that can reimburse for those procedures.

So the fact of the matter is we can do far better than kicking 65- and 66-year-olds out of the system as a way of protecting Medicare solvency, and that should be the direction that we go with these discussions over the financial future of the public finances of this government.

Again, I want to thank Mr. Garamendi for organizing this discussion here today because it's important to get these facts out.

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Mr. COURTNEY. Again, I think it's important--and you touched on this, JOHN--when the Affordable Care Act was passed in March of 2010, the Congressional Budget Office was projecting out some savings because of the ACA. But they were figuring about 4 percent per capita growth. Again, as you pointed out, this chart now shows we're down to 2 percent. So they have actually been revising their estimates over the last 2 years. And the net savings, the recalculation just in the last 2 years has been hundreds of billions of dollars of lower expenditure than they had first thought was going to be the case.

When you compare that magnitude of savings with, for example, raising the eligibility age to 67, they're dwarfed. It is really just a small portion of what efficiencies in the system are capable of producing. And the fact of the matter is that raising the eligibility age, there's no free lunch. The fact is that even though these are people that will be challenged in the private insurance market, 65 and 66 are still the healthiest population within the Medicare pool. So the ones who remain in Medicare, their part B premiums are going to go up. And that's not just me saying it. It's the Kaiser Family Foundation, which analyzed the impact of raising the age to 67. You're going to raise premiums. You're going to, obviously, leave people in a horrible situation in terms of trying to find any insurance. In the private market, which you regulated, you know that is the roughest area of older working-age individuals. And the net effect in terms of overall health care costs in terms of the system is zero. In fact, there's some that would argue that it would actually add cost to the system.

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Mr. COURTNEY. You're mentioning the fact that there may be some young folks out there who might be of the belief that this is really not a big deal to bump that age up 2 years. The fact of the matter is that some of the folks who, again, analyze the impact of raising the eligibility age say that it would spill over to young Americans, and here's how:

There are a lot of private employers that have health insurance plans that when people hit retirement age, 65--or their hoped-for retirement age--they are able to, again, move into Medicare. They come off their employment-based plan, maybe get some supplemental coverage as part of their retirement package. But the fact of the matter is that helps move people out of the workforce at an appropriate age of 65 and opens up jobs for younger Americans. To the extent that you now are going to say that Medicare won't be there until age 67, it, frankly, is going to force a lot more people to stay in the workforce longer than I think really most people believe would be the case today. So, in fact, it would create that job lock that would prevent, again, the workforce to continue to refresh itself with young Americans.

So the fact is that having a solid retirement health insurance plan like Medicare helps young Americans because it, again, allows the workforce to continue to circulate people, older Americans out and younger Americans in. That's why, again, the folks who had the genius to have the strength to pass Medicare in 1965, they solved a lot of problems in the U.S. economy, in the U.S. society that really extended far beyond just the patients who that program covers.

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Mr. COURTNEY. Well, again, what's remarkable--and I know both of you are well aware of this--is that Social Security, over the last 3 or 4 years, 2 out of those last 4 years there was no COLA; there was zero percent increase for seniors on Social Security. Again, as we all know, that's a formula that's tied to the Labor Department basket of goods that they spill out every year since the 1970s when COLA was first enacted, and where the economy at that point produced that result.

Now, the last 2 years there have been moderate increases through the COLA formula; but, again, Republicans want to go deeper. They want to come out with a new cost-of-living adjustment formula called the ``chained CPI,'' which would depress the existing COLA formula that already ended up with a zero percent 2 out of the last 4 years and make that even lower for seniors.

As I think many of you know, you go to a senior center and you talk about, how come we didn't get a COLA this year or how come the COLA is so small, and you explain to them how the formula works. Well, the fact of the matter is that Labor Department formula that we use today uses a lot of goods and services that seniors don't buy. They don't buy flat screen TVs, they don't buy laptop computers, where prices have come down because of competition in those areas. They concentrate their spending on food and fuel and prescription drugs, which, if you look at just that basket of goods, the COLA would be higher than the existing formula, certainly not lower.

So for the Republicans to come out with a proposal that says we should depress the COLA formula that we have today that, again, really doesn't match up with the profile of what a senior goes out to the supermarket and buys one week to the next, and is really going backwards in terms of really the economic security of people over age 65.

I know the gentleman from Michigan would like to share his thoughts.

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