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Health Care

Sen. Lamar Alexander

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Mr. President, Massachusetts voters yesterday sent a clear message that the Democratic majority in Congress is not in touch with the American people and that we ought to restart the health care debate.

Senator-elect Scott Brown's independent voice will provide a much needed check and balance to a Congress that has become dominated by more taxes, more spending, and more cash takeovers. Nothing demonstrates that need more than the so-called health care reform bill, a 2,700-page attempt to remodel 17 percent of the American economy that was concocted in secret, presented to the Senate over the weekend before Christmas during the worst snowstorm in years, voted on in the middle of the night, and passed 5 days later, on Christmas Eve, without one single Republican vote.

Now that the people have spoken in Massachusetts, we should abandon these arrogant notions of trying to turn our entire health care system upside down all at once and, instead, set a clear goal of reducing health care costs and then work together, step by step, to re-earn the trust of the American people--an approach Republican Senators urged exactly 173 different times on the floor of the Senate during last year.

If you will examine the Congressional Record, you will find that Republican Senators have been proposing a step-by-step approach to confronting our Nation's challenges 173 different times during 2009. On health care, we first suggested setting a clear goal: reducing costs. Then we proposed the first six steps toward achieving that goal: one, allowing small businesses to pool their resources to purchase health plans; two, reducing junk lawsuits against doctors; three, allowing the purchase of insurance across State lines; four, expanding health savings accounts; five, promoting wellness and prevention; and, six, taking steps to reduce waste, fraud, and abuse.

We offered these 6 proposals in complete legislative text totaling 182 pages. The Democratic majority rejected all six and ridiculed the approach, in part, because our approach was not comprehensive.

A good place to restart the health care debate would be to abandon plans to send a huge bill to States--that is, every State except Nebraska--to pay for Medicaid expansion. The 60 Senators who voted for this so-called health care reform legislation ought to be sentenced to go home and serve as Governor for two terms to try to pay for it because what these Senators would find is that States are broke, and there will either be higher State taxes or higher college tuition or both to pay for what the Democratic Governor of Tennessee has called ``the mother of all unfunded mandates.''

That mandate arrogantly expands Medicaid and, to help pay for it, would send a 3-year, $25 billion bill to Governors who, in turn, will send the bill to State taxpayers and then to college students. That is akin to your big-spending Uncle Sam hiring someone to paint your house and then sending the bill to you, even though you told Uncle Sam you already spent all your available money sending your kid to college. Of course, Uncle Sam does not have to balance its budget and you do.

I speak today not just as a Senator but as a former Governor worried about our States and as a former president of a great public university worried about our college students, many of whom are seeking an education to get a job.

Washington policies are turning our Federal constitutional system upside down. They are transforming autonomous State governments into bankrupt wards of the central government. In doing so, they are making it harder for States to support public higher education; therefore, damaging its quality and damaging the opportunity for Americans to afford it.

Governor Schwarzenegger of California said:

With a $19 billion deficit, the last thing we need is another $3 billion bill for Medicaid.

At the University of California, students are paying a 32-percent tuition increase. Why? Because, according to the New York Times, ``the University of California now receives only half as much support from the State per student as it did in 1990.''

Why is that? Because when Governors make up their budgets, it usually comes down to a choice between exploding Medicaid costs and higher education, and Medicaid, hopelessly entangled with expensive Washington policies and mandates, usually wins.

This is not a new problem. It was a problem when I was Governor 30 years ago. It became a bigger problem between 2000 and 2006, when Medicaid spending for State governments rose 63 percent, while spending for higher education went up only 17 percent.

The Association of American Universities and President Obama's Budget Director both have warned us that the drop in State support is hurting the quality of American public higher education, and the problem gets worse.

Some estimates predict the State share of Medicaid spending will go from $138 billion in 2007 to $181 billion in 2011. Yet instead of fixing the problem of exploding Medicaid costs and its impact on higher education, the health care bill would make it worse.

Over the Christmas holidays in my State, the most talked about part of the health care bill was the so-called cornhusker kickback, which makes taxpayers and students all over America pay for Nebraska's Medicaid so Nebraskans will not have to raise their taxes and tuition.

I can guarantee you any Senator who is sentenced to go home and serve as Governor--except perhaps in Nebraska--would not vote for this health care bill.

The second recent big blow to States and to higher education has been the stimulus package, which was hailed as bailing States out but instead will soon push them over the financial cliff.

This is how the Democratic Lieutenant Governor of New York explained it in a Wall Street Journal article on January 8. He said:

On top of all this is the dramatic deterioration of the autonomous role of the States in our Federal system. Thanks, in part, to the stimulus, federally collected tax dollars have risen to 40 percent of State budgets. So instead of serving as autonomous laboratories of democracy in a Federal system, States are becoming little more than heavily regulated and increasingly insolvent administrative divisions of the central government in Washington.

Some are suggesting a new stimulus to bail out the States. Why should we even consider that when the last one is helping to push States off the financial cliff? Why should we pass a new health care bill that makes it worse for States; that is, every State except Nebraska.

Wouldn't it be better to restart the health care debate and take a series of steps to reduce health care costs without the Medicaid mandate?

Instead of expanding Medicaid and sending the States the bill, why not reform Medicaid, which has become an embarrassing administrative nightmare, where $30 billion a year goes to waste, fraud, and abuse, according to the Government Accountability Office.

Instead of dumping 15 million to 18 million more low-income Americans into a Medicaid Program, in which 50 percent of doctors--50 percent of doctors--will not take new patients, shouldn't we try a better idea?

Lieutenant Governor Ravitch suggests that one place to start is relieve States of the responsibility for those patients who draw services from both Medicare and Medicaid.

That would save States about $70 billion a year and would place all the responsibility on Washington for reforming the program so taxpayers could afford it.

Thirty years ago, when I was Governor, I met with President Reagan and proposed a grand swap: that the Federal Government would take over all of Medicaid in exchange for giving the States all the responsibility for elementary and secondary education. President Reagan liked the idea. I still think fixing the responsibility for both education and Medicaid in a single government would make it work better and force its reform.

The No. 1 topic on the minds of most Americans today is jobs. Running up the cost of health care, raising State taxes, damaging the quality of universities and community colleges, and restricting access to them is a good way to kill jobs, not create jobs.

There still is time to restart the health care debate, to work together on a step-by-step plan to reduce health care costs, while avoiding expensive mandates on States that increase State taxes and increase college tuitions. The surest way to cause this to happen is to tell those 60 Senators who voted for this health care bill that if it becomes law, they will be sentenced to go home and serve as Governor for two terms to try to pay for it.

Mr. President, I ask unanimous consent to have printed in the Record three newspaper articles.

There being no objection, the material was ordered to be printed in the Record, as follows:

Stimulus Money Are Making it Harder for States To Cut Spending and

As one whose interest in public service stems largely from the conviction that government can make a positive difference in people's lives, I have found the past year a paradox. From the financial crisis to health-care reform, the federal government has taken on challenges that urgently need to be addressed. Yet despite these actions--and sometimes because of them--the states, which provide most of the services that touch citizens' lives, are in their deepest crisis since the Great Depression. The state crisis has become acute enough to belong on the federal agenda. New York State faces a budget deficit that could climb to $8 billion or $9 billion in fiscal year 2010-11 and the state could face another deficit in 2011-12 of about $14 billion to $15 billion. The causes of the larger deficits down the road include a drop off in federal stimulus funds, an increase in Medicaid costs, and the planned expiration of a state income tax surcharge, as well as the state's underlying structural deficit. New York is in a tough spot, but few other states are immune from large and growing deficits. According to the Center on Budget and Policy Priorities, the states have faced and will face combined budget shortfalls estimated at $350 billion in fiscal years 2010 and 2011. Past experience suggests that these deficits will continue even if a national economic recovery takes hold. Moreover, we do not know how robust the recovery will be or what shape it will take. We know only that it will not spare the states the necessity of making acutely painful fiscal choices. New York and other states face draconian cuts in public services, higher taxes, or, more likely, a combination of both. The federal stimulus has provided significant budget relief to the states, but this relief is temporary and makes it harder for states to cut expenditures. In major areas such as transportation, education, and health care, stimulus funds come with strings attached. These strings prevent states from substituting federal money for state funds, require states to spend minimum amounts of their own funds, and prevent states from tightening eligibility standards for benefits. Because of these requirements, states, instead of cutting spending in transportation, education, and health care, have been forced to keep most of their expenditures at previous levels and use federal funds only as supplements. The net result is this: The federal stimulus has led states to increase overall spending in these core areas, which in effect has only raised the height of the cliff from which state spending will fall if stimulus funds evaporate. Until recently, some people predicted that the stimulus funds would not evaporate--that instead the federal government would rescue the states once more with another stimulus bill. But the prospect of this kind of help looks doubtful as an increasing number of lawmakers in Washington worry about the federal deficit and seem intent on taking serious steps to rein it in. If those steps include neglecting the fiscal situation facing the states, the country could be headed for fiscal problems that are larger than the ones we face now. We are in a time of extraordinary economic change and Washington is struggling with the sometimes-conflicting demands of the federal deficit and the unemployment rate. But the states' growing deficits present their own urgent national problem that the federal government must place in the balance. Federal policy makers do not have the option of assuming that the state fiscal crisis is temporary or will cure itself without further involvement by Washington. This crisis reflects the growing long-term pressures on the states from the health-care needs of an aging population and the maintenance needs of an aging infrastructure. Moreover, the $3 trillion municipal bond markets have begun to notice the states' deficits: Moody's recently downgraded the bond ratings of Arizona and Illinois because of the deficits those states face. The rating agency says it is waiting to see whether New York will reduce its budget gaps and has warned the state against trying to do so solely through one-time actions. It seems almost inevitable now that the states' fiscal problems will have further effects on capital markets, possibly as soon as next spring and summer. If more cracks appear in the capital markets that handle municipal bonds, the U.S. Treasury and the Federal Reserve will be faced with an unattractive set of options: They can allow those markets to deteriorate or use federal tax dollars to shore them up and thereby increase the federal deficit. It is safe to say that one way or another events will force federal policy makers to spend money in response to state deficits. Federal officials shouldn't wait for an emergency to begin to address two questions: Which services should the federal government provide and which should the states provide? And how should the costs of these services be split among federal, state, and local tax bases? For example, Medicare, not Medicaid, is the primary payor of health-care costs for the elderly and disabled. About 17% of Medicare beneficiaries are low-income and, thus, also receive varying levels of state Medicaid benefits. These ``dual eligible'' beneficiaries account for some 40% of state Medicaid spending. For these beneficiaries, the current system is a nightmare: They disproportionately suffer from chronic diseases but must navigate two separate bureaucracies and sets of rules in order to receive care. For the states, this system is a costly burden. From the perspective of a rational health policy, the system is an anachronism. It developed when Medicare did not provide income-based aid and did not have income-based information about those it served. Medicare now provides such aid and has the information and capacity to provide these benefits more effectively, with more potential for cost containment, than the current system. A federal takeover of services to dual eligibles would cost about $70 billion per year. For many states, a share of this amount would be the difference between chronic fiscal crisis and a chance at structural budget balance. After the Troubled Asset Relief Program and health-care reform--with the cost of the latter estimated by the Congressional Budget Office at almost $900 billion from now through 2019 and $1.8 trillion in the 10 years from 2014 through 2023--the bill for such a takeover does not seem huge or disproportionate to the relief it would provide to state budgets. Those of us responsible for the states' budgets have the unpleasant duty of imposing greater burdens on our citizens before we can reach legitimate balance between revenues and expenditures. It is not unreasonable for us to hope that federal policy makers will treat our state deficit problems with the same seriousness with which they are now preparing to address the national deficit.

The Senator's time has expired.

The Senator from Arizona is recognized.

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