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REMARKS BY: DONNA E. SHALALA, SECRETARY OF HEALTH AND HUMAN SERVICES PLACE: The National Press Club, Washington, D.C. DATE: May 25, 1999
I was thinking about that the other day, because when the subject is Medicare, we know we're not just talking about one more government program -- but one of America's longest-running success stories.
Let me share a few numbers with you.
Since Medicare was first enacted in 1965, the average life expectancy of senior citizens has grown by three years. Access to care has increased by one third . . . while poverty among the elderly has dropped by nearly two-thirds.
Before Medicare, more than half of all older Americans were uninsured at the very point in their lives when their need for health care was the greatest. Now 100 percent are protected.
But if you really want to understand Medicare's success -- and what that success means to America -- you can't just look at the numbers. You also have to listen to Americans like Anne Smilnak.
Now, Anne hasn't figured very prominently in the discussion about Medicare. But maybe she should. Not because she's a major player on Capitol Hill. She isn't. And not because she's written some new book on health care policy. She hasn't.
Anne is a 90 year-old widow living in Cleveland, Ohio. She was a homemaker who, together with her husband George, raised three children. But Anne lives alone now. In many ways, she's what Medicare is really all about.
You see, like most people her age, Anne has her share of health problems. Two of them are cataracts and glaucoma. In fact, over the last few years she's needed surgery for both. When asked where she'd be without her Medicare, Anne didn't need to think twice.
"When I saw the bill for my glaucoma surgery, I was frightened," Anne said, "but then my son told me that the Medicare would pay for most of it. If it wasn't for Medicare," she added, "I know I couldn't afford to pay the bills and keep living in my own home."
And she's not alone. There's Lorraine Melton, a 75 year-old from Bradenton, Florida. Two years ago, she was in a car accident. Three broken ribs, a broken kneecap, and a broken leg. She needed three operations - - and home health care during her convalescence. Thanks to Medicare, she was able to have it and today she's fully recovered.
And there's Jack Mertz, 74 years-old, from Valley Stream, New York. Medicare helps pay for the treatment he's receiving for prostate cancer -- and that's allowed him to continue to lead an active life.
And the list goes on. 39 million ordinary Americans living healthier, longer lives thanks to an extraordinary idea called Medicare.
It began as one of the most ambitious initiatives this government has ever attempted, but it worked because it was grounded in three simple principles.
The first was the principle that the health care needs of older Americans are best met through a system of insurance: a system that spreads risks fairly and protects the rights of patients to choose their own health care provider.
The second principle was that this insurance had to be affordable and available to every older American. In short, it had to be a system that left no one behind.
And the third principle was that it was the federal government's responsibility to make it work: to see to it that all of America's elderly -- regardless of their income or their health -- were able to become stakeholders in this new insurance system.
Three small principles, but they add up to one very important idea: the idea that every older American has earned the right to quality, affordable health care.
But today I'm here to tell you that, unless we act now, Anne Smilnak's generation may be the last to enjoy the security, protection -- the success -- of Medicare as we know it today. The reason? It's not that Medicare's principles have somehow grown obsolete. No. There's only one reason: it's our failure to respond to the fact that the number of Medicare beneficiaries is growing as never before.
I'm not talking about an increased flow of new beneficiaries into the system -- I'm talking about a tidal wave.
I'm talking about the fact that for every Anne Smilnak, and Lorraine Melton and Jack Mertz, who depend on Medicare today, there will be twice as many by the year 2035.
You can call it changing demographics or the graying of America, but the plain truth is that the generation that made its name at Woodstock is slowly making its way to Leisure World and Sun City.
One in eight Americans depends on Medicare today, but, in just three decades, that number will swell to one in five. When you include disabled Americans -- who also depend on Medicare -- it grows to one out of every four Americans.
Is the future of Medicare in question? I think it is: but not because America lacks the resources to keep up with these changes. No, the real threat is that in our zeal to prepare Medicare for the future, we may erode the principles that guided it in the past.
The threat is that some will try to define the issue simply as too many beneficiaries drawing too generous benefits, rather than understanding that the real problem is that our current financing scheme provides too few dollars to provide for them.
But, maybe the greatest threat of all is forgetting that measures to make Medicare healthier and stronger are of little consequence if they leave Americans sicker and weaker. That's what's at stake in the Medicare debate. And, as the President pointed out last January, the time to resolve this question is now.
The time is now, because the only people worrying about the impact of Medicare on the next election are here in Washington. What really concerns Americans is whether Medicare's going to be there for the next generation. Whether, to paraphrase Irving Berlin, it's going to keep on being a success.
The time is now, before the number of Americans 65-and-over doubles. But, even more, the time for Medicare reform is now because, thanks to this President's leadership, we have just enough breathing room to do the job right. To take careful, prudent steps to:
Can we make this happen? We have to -- we may not have another chance.
Just two short months ago, I was able to join with the other Medicare trustees in reporting that, since 1997, we have actually extended the life of the Medicare Trust Fund by 14 years-- and cut Medicare's actuarial deficit by a full 66 percent.
How were we able to do it? For one, we balanced the budget for the first time in 30 years. We also began implementing the Medicare provisions of the Balanced Budget Act -- and, in the process, overhauled the way Medicare pays doctors, hospitals and other providers.
When it came to ideas like competitive bidding, we haven't just talked the talk . . . we've walked the walk. And, sometimes walking that walk has meant stepping on some very big toes.
We made a lot of hard choices, but, in the process, we've also made Medicare more efficient. But our initiatives didn't stop there. We launched the biggest crackdown on waste, fraud and abuse in Medicare's history. In fact, we restored over $1.2 billion dollars to the Medicare Trust Fund over these last two years alone.
But, we also decided that we didn't just want to run Medicare like a business -- we wanted to run it like a successful business. And we backed up our good intentions with good ideas. As a result of these initiatives and others, the Medicare Trust Fund is now solvent through the year 2015.
Is this a significant achievement? You bet it is. But it's not an achievement to rest on, but to build on. Because we have an awful lot more work to do to make sure Medicare is going to be there for the next generation. And that's what our Medicare reform initiative is all about.
What are the components of our action plan for Medicare's future? Well, I'm going to let the President announce that. But I can tell you that it is based on the elements I just described: One, improving Medicare's efficiency and competitiveness. Two, bolstering Medicare's financial strength. Three, maintaining -- and improving -- the quality of its benefits. And, again, that includes a new benefit for prescription medicines.
Now, I know there will always be some people who'll ask whether we can afford to provide a benefit for prescription medicines. The fact is we can't afford not to.
In recent years, we've expanded Medicare to cover flu shots, mammograms and prostate cancer screening. Why? Because we understood that investing in prevention makes sense. It saves dollars, but, more importantly, it saves lives. And the same is true of prescription medicines. Prescription drugs help people take care of themselves. Their safe use means fewer trips to the doctor -- fewer visits to the hospital -- and fewer admissions to nursing homes.
Now, back when Medicare was created, no one could have imagined the role prescription medicines play in improving health today. And for good reason: 30 years ago the science barely existed. Well, that was then. And this is now. In the last 20 years, consumer spending on prescription drugs has increased dramatically, providing great benefits, but also real costs.
How are Medicare beneficiaries paying for the medicines they need? Well, the fact is a lot of them can't. Over 14 million Medicare beneficiaries today have no prescription drug insurance coverage. Who are they? They're Americans like Lida Glover.
Lida lives in Detroit. She's an 84 year-old widow who receives $504 dollars from Social Security every month. But she has to spend about a quarter of that on medicine. She'll tell you she needs it to help control her blood pressure.
How is she able to do it? Well, she isn't always able to. She said: "It's very difficult. You get along with what yo u have, and trust the Lord for the rest."
Now, there may be some people who might say that as difficult as Lida's burden is, it would cost America too much to give her a helping hand. But, I submit the cost to America is higher because we don't.
Gerald Brenan once wrote that "Old age takes away from us what we've inherited, and it gives us what we've earned."
Well, we believe that Americans like Lida have earned better than an old age where they can afford to visit their doctor -- but not the medicine their doctor prescribes.
They've earned better than having to depend on an occasional free sample from their doctors because they can't afford to go to the drugstore. A prescription drug benefit is good health care. It's prudent policy. It's compassionate government. And the time for action is now!
The way to respond to the needs of beneficiaries like Lida isn't by undermining Medicare's core principles, it's by strengthening them.
Earlier this year, the work of Senator Breaux, Congressman Thomas and the Bipartisan Commission on the Future of Medicare made an important contribution to understanding the problems facing Medicare as it readies itself for the future.
The Breaux-Thomas plan, quite rightly, emphasized the need for Congress to give Medicare the tools to benefit from the competitive management practices of the private sector. And, I should point out, the Breaux - Thomas proposal also recognized the need to expand coverage for prescription drugs. But while the Breaux - Thomas proposal advanced the debate, I don't think it advanced a lasting solution.
By failing to address that pivotal issue of demographic growth, its advocates missed a crucial opportunity to strengthen Medicare for the future. As I mentioned a moment ago, over the next 30 years the number of Medicare beneficiaries is going to double.
Yet, rather than speak to the fact that we'll soon have twice as many beneficiaries who will need just as much care -- if not more care -- than those we have today, the Breaux-Thomas plan would instead scale back the health care we already provide.
It would diminish the availability of care first by raising the Medicare eligibility age from 65 to 67. I should point out that this proposal to raise the eligibility age includes no workable policy to prevent an increase in the number of uninsured among these vulnerable Americans. The plan would also undermine care by placing new cost burdens on beneficiaries -- including unlimited home health co-pays.
In addition to this, the independent Medicare actuary suggested that traditional program premiums would rise 18 to 30 percent under the proposal released in February.
But even with all these measures, the staff of the Bipartisan Commission found that the Breaux -Thomas plan would still fall far short of ensuring Medicare's solvency for more than a few additional years.
Now, I know there's been a lot of discussion about the role this plan would give to managed care. Let me be clear: this Administration is no enemy of managed care. In fact, we're convinced it's part of the solution. That's why we're working to make our Medicare+Choice program more flexible to better meet the needs of providers and beneficiaries alike.
We are absolutely committed to modernizing Medicare, continuing our tough management reforms, and giving beneficiaries more choices than ever as part of our new Medicare proposal. That means seeing to it that Medicare uses the same effective practices private health insurers have been using to constrain costs. And that includes selective contracting with lower cost, higher quality providers. It also means competitive bidding for services like medical supplies.
Now, I think most Americans would agree that competition -- and getting the most for our dollar -- isn't just good business sense, it's common sense. But there are some who see the issue a little differently: they're the providers and suppliers who can't say enough about competition -- so long as it's some other company that has to do the competing.
Well, today I'd like to send them a message. It's that Medicare's choices aren't going to be guided by who can make the most noise, but by who can provide the highest quality product at the best cost to the system. That's what America's taxpa yers have a right to expect and that's what Medicare is going to provide.
As Judith Feder of Georgetown University and Marilyn Moon of the Urban Institute point out, simply limiting government's liabilities for health care won't make those liabilities go away. That's why, in the final analysis, Medicare's problem is not per-capita costs -- it's the number of capitas. And the way to address that isn't by restricting access; it's by expanding revenues and reforms. That's what the President wants to do, and the bottom line is we don't have to raise taxes to do it.
As the President pointed out last January, by dedicating 15 percent of the budget surplus to Medicare for the next 15 years, we can extend the HI Trust Fund for about another decade.
Now, I know some have suggested that maybe we ought to take that money and give it back to America's wage earners. I think if they looked a little closer, they'd realize that's exactly what we're proposing. The difference is that instead of offering a few dollars today, our plan will provide Americans with something much more valuable: dependable, quality health care when they grow older.
I'm convinced that's what Americans want. I know that, to stay strong in the future, that's what Medicare needs. And that's what this President -- and this Administration -- is working to achieve.
A Medicare system for the next generation. A system that can continue to provide the kind of care people need when they're faced with heart disease or cancer or stroke. The kind of care each of us would want if, someday, our doctor tells us we need to have surgery for cataracts the way Anne Smilnak did. Or, God forbid, have a car accident like Lorraine Melton's.
When President Johnson signed the law establishing Medicare, many believed it would become a Democratic legacy. But I believe it's really much more than that. It's a compact between the generations. The living embodiment of our values. It's America's children telling our parents and grandparents that just as you worked hard and stood up for us, there will come a time when you'll be able to depend on us to stand up for you.
Well, our elders kept up their end of the bargain. Now it's time to hold up ours --and see to it that this incredible success story called Medicare keeps on being a success.