SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 1157 words

COMMITTEE: HOUSE ENERGY AND COMMERCE

SUBCOMMITTEE: HEALTH

HEADLINE: MEDICARE MODERNIZATION

TESTIMONY-BY: MR. DAN SCHULDER, LEGISLATIVE DIRECTOR

AFFILIATION: ALLIANCE FOR RETIRED AMERICANS

BODY:
June 14, 2001

Statement of

Mr. Dan Schulder Legislative Director Alliance for Retired Americans

Subcommittee on Health

On behalf of the Alliance for Retired Americans, its officers and members, I thank you Mr. Chairman for the opportunity to present testimony today on Medicare reform and modernization issues including the merging of Medicare Parts A and B.

The Alliance, which was established on January 1 of this year, now has 2.6 million members across the nation. Retirees from affiliates of the AFL-CIO, community-based organizations and individual seniors have joined the Alliance to fight for social and economic justice and civil rights for all Americans. We believe that all older and retired persons have responsibility to strive to create a society which incorporates these goals and rights.

As you know, Mr. Chairman, Medicare is one of this society's great accomplishments. It has opened access to quality health services to both older persons and persons with severe disabilities from every income level. Its pioneering role in restraining health care costs is one of its many unheralded successes. It has demonstrated that overhead costs can be kept low despite enormous volume and growing complexity. And, because of prudent management, the spending restraints of the Balanced Budget Act and revenues buoyed by the economy of the last decade, there is no financial crisis facing the system for years to come. At the same time, the Alliance and its members recognize systemic shortcomings including a lack of dental and vision care, routine preventive care such as check-ups, limited nursing and home- health care and mounting out-of-pocket costs. Seniors now spend one in five dollars of their income for health care and the older and the poorer you get, the higher that proportion grows. Medigap policies with drug coverage are becoming unaffordable and employer-provided retiree health benefits are declining rapidly. Over the past decades, Medicare coverage compared to what most workers have under company plans - has declined. And, in the coming decades, the millions of baby boomers will line up for their entitlement to quality health care. The Alliance is dedicated to making sure that Medicare will be there for them and for all of our children and grandchildren.

In the light of these needs and strengths, the Alliance stands with those who want to assure that Medicare will be modernized, expanded, receive adequate revenues and resources and will have the management capacity to continue to deliver quality care to our citizens. There is no more important claim on the nation's resources and energies over the coming years.

The Alliance's prime legislative objective this year is the enactment of a universal and comprehensive Medicare prescription drug benefit standing alone or as part of any changes to the Medicare program. Of all improvements to Medicare, this benefit is first on the list of Medicare improvements in surveys of our members.

You have asked us, in particular, to discuss the implications of merging Parts A and B of Medicare. There is no specific description in legislative proposals of exactly what such a merger might entail. What we understand is that the long history of separate trust funds, revenue streams, deductibles, cost- sharing differences, billing and contracting practices and solvency definitions all suggest no easy definitions of the desirability of such a merger. However, from the standpoint of beneficiaries, a number of questions should be addressed:

- Will such restructuring enhance or retard work on enacting a universal, comprehensive and defined pharmaceutical benefit?

- What are the goals of restructuring?

- If there are savings to restructuring, who benefits, who loses?

- Will such restructuring help to establish a overall cap on out- of-pocket costs to beneficiaries?

- Will the process enhance services to rural communities; will the states be inspired to enroll more QMB and SLMB eligibles; will preventive services be provided without deductibles and copayments?

The Alliance believes that the central goal of all modernization and restructuring activities must be the enhancement and expansion of quality services to beneficiaries and the overall strengthening of the Medicare system working in their behalf. If the goals, however, include covert attempts to cap annual expenditures, end the entitlement status of Medicare, create voucher systems and construct a multi-tiered system of health services, the Alliance will oppose them. It all depends on both mechanics and motives.

It is also a question of priorities, Mr. Chairman. The need for a prescription drug benefit presents a crisis for millions of Americans. The escalating price of drugs has created Medigap policies with premiums reaching $9,000 in annual costs for 75- year-old women in some states. Mr. Chairman, more than a million beneficiaries have lost Medicare HMO coverage and there are more to come. Medicare pays for a declining portion of health care costs and there is no limit on liability.

The Alliance does believe that there are aspects of Medicare administration that should be addressed. HCFA should examine better ways of contracting for services, create bundled payments for some services and use competition to select intermediaries and carriers. It should assess the benefits of creating a primary care case management system to better guide treatment in fee-for- service programs and look again at offering disease management services to enrollees which could improve care while reducing costs. We support such modernization directions because they can be good for both beneficiaries and the system.

Mr. Chairman, there is no question that the Medicare program will need greater resources even if every acceptable efficiency and cost saving change is incorporated. A drug benefit will be expensive as would an overall stop-loss cap. Millions of persons will become eligible in a few years. That is why the Alliance supports the use of on-budget surplus funds to strengthen Medicare and extend solvency. We hope that the 2001 tax changes will not prevent such an allocation and if so, we would expect the Congress to revisit its action on taxes and reassess national priorities. We also foresee a review of the adequacy of current payroll taxes to support expanded benefits and increased numbers of beneficiaries.

The Alliance does support your efforts, Mr. Chairman, to explore ways to assure a more efficient and effective Medicare program. And we trust that you agree with us and with millions of seniors, their families, and the health care workers treating them, that the focus of Medicare improvements, in the short and long term, must be the guarantee of first-class care for all Medicare beneficiaries. On that basis, you can count on us and our members to work with you and with this Committee.

Thank you.



LOAD-DATE: June 19, 2001