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REMARKS BY: DONNA E. SHALALA, SECRETARY OF HEALTH AND HUMAN SERVICES SERVICES PLACE: American Association of Health Plans DATE: September 16, 1996
Thank you, Karen, for that gracious introduction and for your continuing leadership of this remarkable industry. When President Clinton talks about building a bridge to our future, it is leaders like Karen Ignagni who will take us into the 21st century.
It is a pleasure to be with you today to offer a few remarks about the future of Medicare and Medicaid. These two extraordinary programs have literally changed the lives of millions and millions of women, men, and children. In thirty years they have lifted our parents and grandparents out of poverty. They have extended both the length and the quality of the lives of every generation of Americans. And they have combined to transform our health care delivery system so that it, too, is ready for the new century.
And two other things that Medicare and Medicaid have helped to accomplish: They have helped create a society where our senior citizens have a lower rate of poverty than those under 65. And they have helped to create a society where Americans over the age of 65 have a longer life expectancy than senior citizens in any other country in the world. These are accomplishments of which we all should be very proud.
It has been about a year since I last met with you to talk about the progress we are making together in providing the Americans people with high-quality, affordable, health care.
A year ago I told you that the state of the nation's health care system was improving and that our efforts to modernize the delivery of care were showing signs of success. I am pleased to tell you that a year later that progress is even more pronounced.
Since we last met, more than one million Medicare beneficiaries have been added to the membership of managed care plans in this country. Since we last met, the percentage of Medicare beneficiaries in managed care plans increased by 26 percent. Since we last met, the number of senior citizens and people with disabilities enrolled in managed care plans has been increasing at a rate of 80,000 per month. In fact, during the course of this conference, an estimated 8,000 Medicare beneficiaries will enroll in managed care plans across this country. This is real progress.
Today, 325 managed care organizations are participating in Medicare, and three-quarters of them are participating on a risk basis. We have applications from another 70 plans and 30 other plans are looking to expand their areas of service.
Our record in Medicaid is even more impressive. More than 11.6 million Medicaid beneficiaries are now enrolled in managed care arrangements nationwide -- that's one third of all beneficiaries. Forty-nine states are operating some form of Medicaid managed care program including many through waivers approved by my Department.
These changes represent the new dynamic of HCFA. A dynamic forged by that agency's leader -- Bruce Vladeck -- and his talented team.
So, I believe that Medicare and Medicaid are ready to cross that bridge into the 21st century and continue to provide the American people with the care they need and the care they deserve.
That's not to say that there are no problems on the horizon. But there are no problems facing us that we cannot solve. And we will solve them together for the good of our nation.
I very much appreciate Karen's comments on the President's new Advisory Commission on Consumer Protection and Quality. I know that some of you -- perhaps even many of you -- have concerns about the work of this panel. Let me reassure you. This is not an attack on managed care. Frankly, if it was, I would have no part in it.
I am a big believer in managed care. In fact, I was a member of an HMO 25 years ago before most of us had even heard the term. As the President said, when it works right managed care gives consumers more choices, allows them to make decisions that are right for them, keeps costs down, and maintains high-quality care.
Your industry has been a leader on the measurement and maintenance of quality and I thank you for that. What we need to do now is to make sure that all Americans have the kind of peace of mind they deserve when it comes to the quality of their health care.
It shouldn't matter what kind of plan a family chooses to join. Whether it's a fee-for-service plan, an HMO, a PPO, or any other model, consumers should be able to rely on that plan for high-quality care. And for the majority of Americans, that kind of security is there every day. But as we have increased the number of choices available we have a responsibility to increase the amount of information that consumers have about those plans and their rights.
This will be a very focused effort. We're going to look at three areas: (1) consumer protection; (2) quality; and (3) availability of treatment and services in a rapidly changing health care system. We will submit a preliminary report by September 30 of next year and a final report 18 months from the date of our first meeting.
This is an effort to build on your successes and to gain a better understanding of how the changing health care system is affecting America's families. I am certain that the work of this commission will make your jobs easier.
As our health care system transitions from a medical model to a health model, many of you are taking the brunt of the uncertainty that many consumers feel. Virtually everywhere I travel I get questions from consumers about the movement toward managed care. When we are able to have a calm and rational discussion, each of us walks away with a greater feeling of security. What we need to do now is take that conversation to the national level.
For consumers, knowledge is power. I have always believed that we need a consumer bill of rights that enunciates what consumers have the right to know and how they can enforce those rights. But a bill of rights can't be written by a group of government officials -- no matter how intelligent or well- meaning.
The information a consumer needs about one type of plan isn't necessarily helpful to them in another type of plan. We know that one size doesn't necessarily fit all. That's why we need your input, your expertise, and your commitment to make this work.
Secretary Reich and I look forward to working with you in the months ahead so that our end product is one that we can all be very proud of.
Let me turn now to the topic of today's discussion -- the future of Medicare.
As one of Medicare's trustees, I take very seriously my responsibility to protect the future of the Medicare program. Earlier this year, the trustees reported that the Hospital Insurance trust fund will exhaust its reserves in five years. Our recommendation was to enact a series of short-term savings to extend the solvency of the trust fund through the next decade while a nonpartisan panel studies the changes needed to create long-term solvency for the Baby Boom generation and beyond.
This is not the first time we have made these recommendations. We did it in 1993. We did it in 1994. We did it in 1995. And we did it again in 1996.
In 1993, President Clinton met that challenge by proposing changes in Medicare that added three years of solvency to the trust fund. In 1994, the President proposed further changes that would have added another six years of solvency to the trust fund. In 1995 and again in 1996, we are proposing savings that would result in a decade of solvency for the trust fund.
For the last two years we have been engaged in a very rigorous debate about the future of Medicare with very real differences in approach. As you know, the President vetoed the Republican plan to cut $270 billion dollars from Medicare by 2002. That bill would have undermined the future of Medicare and endangered the benefits of today's senior citizens and people living with disabilities. It would have doubled and even quadrupled premiums for beneficiaries no matter their health status. It would have capped funding for a program that is designed to meet all of the needs of our parents and grandparents. And it would have warped our system of choice by introducing dangerous, untested models of coverage.
The President was right to veto that bill and he'll do it again if the Congress sees fit to send him another version.
As part of his balanced budget, the President has on the table a reasonable and rational plan to preserve Medicare and improve it for the future. The President's plan provides beneficiaries with more choice and more power to utilize that choice. It protects the elderly from unwarranted increases in out-of-pocket costs. And it guarantees real choice -- a choice where consumers can go into a new plan and leave that plan if they're not happy without paying a penalty.
The President's proposals could be enacted today but, frankly, it seems unlikely that this Congress will take that action. That means we will have to go right back to the table next year to enact a set of changes that protect the trust fund for a decade and begin the process of long-term reform.
The President is also committed to the preservation of Medicaid. The President believes that the traditional federal- state partnership in Medicaid must and will continue. He has vetoed one Republican bill to block grant Medicaid and he will veto any others the Congress sends him. The Medicaid safety net cannot and will not be broken.
As we look to the future we cannot limit our vision to public programs like Medicare and Medicaid. That's why it was so important that the President signed the Kennedy-Kassebaum law.
This new law gives millions of working Americans a true guarantee that if they work hard and play by the rules their health insurance can't be yanked out from under them. It allows people to move from job to job without losing coverage. And it allows people with pre-existing medical conditions to change insurers without losing their coverage.
Kennedy-Kassebaum also provides important assistance to people who are self-employed and buy their own insurance. Combined, the provisions of Kennedy-Kassebaum will help more than 25 million Americans -- one in ten people in this country -- get and keep health insurance for themselves and their families. That's an important step forward. But it's only one step. We need to take more steps -- and we will.
As part of his balanced budget, the President has proposed a program that will help people who are between jobs and unable to afford their health insurance premiums buy coverage for up to six months. We also want to do more to encourage the creation of voluntary purchasing cooperatives to help small employers come together and exert greater leverage on the health insurance market.
I think we all agree that small businesses should have the same clout that their larger competitors have when it comes to buying coverage for their workers and their families. We can do this and still balance the budget.
As our nation prepares to walk across the bridge into the new century, we will need a strong and vibrant health care system to care for us, to nurture us, and to help us grow for the future. I am confident that with the men and women in this room leading us, we will be a much healthier nation for the new millennium.
Thank you.