Mr. Speaker, in 1965 the hot car on the American market was a Ford Mustang, which cost less than $2,000. The President of the United States was Lyndon Johnson. The entire Federal budget was less than $100 billion. The war that was on the…
Mr. Speaker, in 1965 the hot car on the American market was a Ford Mustang, which cost less than $2,000. The President of the United States was Lyndon Johnson. The entire Federal budget was less than $100 billion. The war that was on the front pages was the war in south Vietnam. The Super Bowl didn't exist. Cell phones didn't exist. If you wanted to use a computer, you typed out your program on data index cards and submitted them in a batch to a mainframe computer. I believe the dominant mainframe was an IBM 360. Gasoline cost approximately 25 cents a gallon, and a little-noticed program was put into effect to help our senior citizens with their health care costs called Medicare.
Forty-three years later, that Medicare program is going to expend over $400 billion to provide health care for over 45 million senior citizens in every State and territory of the United States. If something is not changed between now and the year 2018, in the year 2018, or 2019, the Medicare Trust Fund is going to be bankrupt.
If we look back in 1965 at how health care was provided and look at how it's provided in 2008, you would see numerous differences. We now focus, in Medicare, through the Medicare Advantage programs, which 20 percent of our seniors have chosen, on preventive care. A lot of Medicare spending today is through drug therapy, as opposed to surgery, things of this sort.
But the one thing that's constant has been the continuing escalation in cost. Medicare has averaged double digit increases in cost the last 10 years, and it's expected, by the year 2018, to be over $800 billion.
Medicare spending this year of over $400 billion is going to exceed by a factor of 4 the entire Federal budget back in 1965, the year that was created.
So because of the increase in the population, the increase in the complexity, the diversity of health care therapies, several years ago the Congress put into place what's called the Medicare trigger. The Medicare trigger says that in any year that Medicare spending or Medicare revenues come from 45 percent or more of the general revenue, i.e., the premiums that Medicare beneficiaries and the cost share that companies and Medicare payors pay into the system, when more than 45 percent of the funds going into Medicare come from the general U.S. Treasury, the Medicare trustees have to issue to the Congress a report. And if this happens 2 years in a row, the President of the United States has to submit a proposal to the Congress on how to bring spending back below the 45 percent trigger. That happened for the first time last year, in fiscal year 2006, and it's happened again this year, in the fiscal year that just ended, fiscal year 2007.
So several weeks ago the President and the Secretary of Health and Human Services presented to this Congress a report that did two things: Number 1, it did announce that the spending had exceeded 45 percent of the revenues of the general treasury, and Number 2, it put forward an outline of the proposal on how to bring that spending back below the 45 percent trigger.
The Congress does not have to act on the President's proposal. The Congress can initiate one of its own. In fact, if 70 Members of this House decide that they want a different proposal than the President of the United States, if 70 Members will sign a letter, I believe, to the Speaker of the House and also to the chairman of the Budget Committee, those 70 Members will present their proposal to the Budget Committee. If the Budget Committee holds hearings and certifies that the proposal that's been submitted by the 70 Members does, in fact, meet the requirements of the law, that proposal then is ordered reported to the House of Representatives for an up-or-down vote.
So sometime in the next several months, you are going to hopefully see a number of proposals submitted to the Budget Committee on how to deal with the pending crisis in Medicare. And I would encourage all Members of this body, since we all have Medicare recipients in our congressional districts, to be a part of some group that tries to address this problem.
Now, the President's proposal, again, it is not a definitive legislative language developed proposal. It's more of an outline of policy objectives, but the policy objectives are pretty straight forward: number one, Medicare beneficiaries that have higher incomes would pay slightly more in their premiums so you would begin to have a graduated means-tested premium increase based on your ability to pay the Medicare premium; number two would be a Medicare liability reform proposal that has been talked about for years. That, by itself, would probably save $180 billion over 5 years or so. There would be a requirement for more pricing transparency and more openness, so that Medicare beneficiaries could see what prices they're paying or are being paid on their behalf. And also there are some proposals, I believe, on quality indexing, quality of reporting so that, again, before the beneficiary decides where to have a particular procedure done or which doctor to use, he or she might have some data on the quality of the health care that's provided by various Medicare providers.
All in all, the President's proposal is very modest, but it's certainly one that needs to be seriously considered; and, again, the need for doing something on Medicare is something that we need to
begin to address as a Congress. The Medicare trustees have reported that if current policies are not changed within the next 11 years, the Medicare trust fund will go bankrupt. What that means is if you are 54 years old or younger, when you retire there will be no money in the Medicare trust fund to pay your Medicare benefits which you are, by law, entitled to at age 65.
So this is a problem that we can't put off for 20 years or 50 years. In my opinion, we can't put it off for any years. Again, we need to begin to address it immediately, we need to address it in this Congress, and we need to hopefully address it in a bipartisan fashion.
I now yield to the distinguished member of the Energy and Commerce Committee, the ranking member of the Veterans' Affairs Committee, the gentleman from Indiana (Mr. Buyer).
Mr. Speaker, I want to recapitulate why we are here this evening taking this Special Order. As I pointed out earlier, Medicare is a mandatory program for senior citizens over age 65. It was established in 1965, which is 43 years ago. I don't exactly remember in the first year how many citizens were covered and how much money was expended, but my recollection is that several million senior citizens were covered and expenses were in the order of a magnitude of 6 or $700 million. In the last year that we have numbers for, 45 million Americans were covered and the costs were over 400 billion.
Now, it is a good thing that we have 45 million senior citizens in this country. Those are our grandparents and great grandparents and great aunts and uncles. They are certainly the generation that has been pointed out that fought the great wars of World War II and Korea and Vietnam. They have ushered in an amazing American economy unsurpassed in the history of the world in terms of its ability to generate wealth and economic prosperity. And they are well deserving of the benefits that we are paying out for Medicare.
So the problem is not that our senior citizens don't deserve the best health care in the world, and it is not that we are living healthier and longer. The problem is, quite simply, how do we pay for it. Average expenditures for Medicare are on the order of magnitude of about $7,000 per person per year. And to put that in perspective, that is more than most families pay per person for their food or for their housing.
If nothing is done on the current Medicare program in terms of its policies and the way it's structured in 11 years, in 2019, the Medicare trust fund is going to be bankrupt. As I pointed out earlier, if you are 54 years young or younger, when you retire, there will be no Medicare. Now I'm 58. So if I were to retire at age 65, in 7 years I would have 3 years of Medicare benefits before the program went bankrupt. My wife, Terry, who's younger than me, when she retires, she would have no benefits. None of my children would have benefits. None of my grandchildren would have benefits.
So this is not a program that we can just let go on automatic pilot. We need to begin to fundamentally and in a focused way look at the Medicare program as it exists today, not cut people off the program, not change it so that there are fewer benefits. We need to look at Medicare and try to bring our technology to bear, bring our management processes to bear, all of the innovations that have happened in the last 40 years.
As I pointed out earlier, if we were still making the 1964 Mustang, that was a great car in 1964, 1965. But it's hardly the car that people want to buy today. We didn't have cell phones in 1965. Today, everybody in America has a cell phone. In fact, there are more cell phones than there are hard line phones. If you look at computers, the computer in 1965 was a mainframe computer that you had to go to a central location to use. I would guess that almost every American citizen has some access to a personal computer today.
So a lot has changed in many fields since 1965. But in Medicare, we have the same basic program funded the same basic way.
So we need to look at ways to change that program and to bring it into the 21st century. I think some of those ideas are going to be in the form of preventive medicine, like we have in those seniors, about 20 percent of those 9 million that have chosen a Medicare Advantage plan. There may be some ways in terms of sharing costs; as the President has suggested, Medicare beneficiaries that are more well-to- do could pay a higher share of their premium.
We have the whole issue of health information technology, or health IT. It's suspected and predicted that if we would bring health information technology to bear on Medicare, you could save tens of billions, perhaps more, each year just by using that technology that's currently in the private sector.
So, there are a number of great ideas, but because of this Medicare trigger, this year, a certain percent of Members, I believe it is 70 Members, but a
number on that order of magnitude, if they have a plan to restructure Medicare, to reform it, to bring the spending in total below 45 percent of general revenue, they can submit their plan to the chairman of the Budget Committee. The chairman of the Budget Committee will hold hearings to certify that the plan does, in fact, meet the Medicare trigger recommendations. And if it does, my understanding of the law is that those plans have to be brought to the floor; they have to be voted on by the House of Representatives. Now, I'm not clear exactly the procedure for the rules for bringing these proposals to the floor, whether every proposal is given a vote on the floor or whether there are only certain proposals that are certified by the Rules Committee, but my understanding is that all proposals that meet the budgetary cutoff do get an up or down vote on the House floor.
So, if you're a member of the majority, of the Democrat Party, and you've got an idea and you can get 70 Members to support it, your plan can be voted on. If a bipartisan group of Members bring a proposal, that plan can be voted on. If the Republican leadership, whom I'm doing this Special Order for, has a plan, it can be voted on. If the President can get 70 Members to sign under his plan, it can be voted on. I personally don't see any problem with having different plans on the floor. The bottom line is to vote on some plan that begins to restructure and reform Medicare. Again, not trying to cut people off the program, not trying to tell our senior citizens we're going to do away with Medicare; what we should be telling our senior citizens is that we want Medicare to be there not just for another 11 years, but we want it to be there for another 50 years, another 60 years, not for people that are just now over 60 and over 70, but for our children and our grandchildren.
This is a program that, again, in 1965, my recollection is it cost less than $1 billion a year. This past year it cost over $400 billion. And by 2018, it's going to cost over $800 billion. And by 2036, it's going to cost more than the entire Federal budget today, which is over $2 trillion.
So this is not something that we can just put on the back shelf and not do anything about. It is something that we need to take action on. And again, because of the Medicare trigger, we have the ability, under expedited rules, to put these proposals to the Budget Committee, the Budget Committee certifies its proposal will meet the cost savings requirement, those plans will come to the floor and be voted on sometime this year before we go home in October for the elections in November.
So, Mr. Speaker, I want to bring to the attention of the House the Medicare trigger language and that it does require the President to submit a proposal. He has done so. It does require the Budget Committee to meet on that proposal and any other proposals that 70 Members of the body can put before the Budget Committee. And it does require that the House vote on the bill, or the bills, later this year.
We need to address it. The Medicare trustees have pointed out that for 2 years in a row the spending has exceeded 45 percent of the general revenues going into the program, and so it is time for us to begin to address it.
Mr. Speaker, I see no other Members present. So with that, I would humbly suggest that everybody begin to think about what to do to protect and reform Medicare.