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Mr. DeFAZIO. I thank the gentleman. Certainly his extraordinary and extensive experience as an insurance commissioner ably qualifies him to comment on what's going to happen when the Republicans kill Medicare and instead force future seniors into private insurance plans presumably sold through some sort of exchange.
Now, of course the Republicans just spent the last year reviling ObamaCare, which creates exchanges for people who are uninsured. They said people who are uninsured should not be forced to go to exchanges and buy good standard policies. Well, now what they want to do is force future seniors to give up Medicare and force them to go to exchanges and buy private policies with some premium support.
Now, there are a few problems with this issue. Among the things they repeal are the reforms of the insurance industry. And one of the most critical reforms, as far as seniors or older workers or older Americans go, or Americans who've ever been ill or ever had an ill kid, is removing the condition that an insurance company can have a preexisting condition exclusion. That is, you were sick once, they won't sell you a policy. Maybe they'll sell you a policy, but they will exclude that condition and other conditions they think you might have, and they're going to charge you 4, 5, 6, 10 times as much for your policy because you're a risky person. They only want the gravy.
It also repeals another little trick of the industry. This has already stopped now. This is one of the most horrific things the insurance industry has done to people in America. Pay your premium every week. Your employer pays your premium every week.
You get sick. This happened to a woman in Texas, actually Joe Barton's district. She had breast cancer. Needed serious treatment. The insurance industry, the insurance company she had, put a team on her case. Isn't that great. They want to help her out. No. They want to find out a way to throw her off the plan. And they found that once she had gone to a dermatologist and didn't tell them about it. And that might have been related to her breast cancer, so they threw her out of the plan.
Now, the dermatologist wrote a letter to the insurance company and said, well, no, actually, no, this woman just kind of had a skin condition that has nothing to do with cancer, and you can't do this. And they did.
And finally, to give them credit, Joe Barton intervened, called the president of the company and said, you're getting one big black eye here. Give this woman back her health insurance. And she got it back. But quite a bit later, her cancer had advanced, and it hurt her chances for a full recovery. That's called recision.
Under the Republican proposal, recisions are back. You get sick? Your company gets to comb through your life and find out a way not to pay your policy. And oh, by the way, if you're sick now and your policy lapses at the end of the year, they won't have to renew it because they're doing away with that reform, too.
So we will take away those horrible reforms that the Democrats put on the anticompetitive insurance industry--and oh, by the way, the insurance industry is exempt from the antitrust law. So the insurance industry can and does and has discriminated in these ways. It can and does fix prices. Can and does share or divide markets to drive up their profits. All of those things are back under the Ryan proposal. Isn't that great?
Now, how is this going to serve seniors? So now, here they are. They're going to get a little premium support--that is, the Federal Government will not let them have the money; they don't even get a voucher so they could just say well, I'm going to go do something on my own. They have to buy one of the health care plans that the Republicans would dictate they can buy--presumably through an exchange--and they'll get a little premium support. The government will give the money directly to the insurance company.
Now, the insurance company can charge them whatever premium they want. So this is problematic.
Now, around here, the Republicans are a little schizophrenic. Some days they love the Congressional Budget Office--when it gives them results they like. And other days they hate the Congressional Budget Office--when it gives them answers they don't like.
So in this case the Congressional Budget Office looked at it and said well, actually, under the Ryan plan, seniors who today pay 25 percent of their health care costs in the aggregate under the Ryan plan of the future, they will pay 68 percent of their health care costs. Guess what that means? That means we are back to 1964.
Now, there's not many people around here old enough to remember '64. I certainly wasn't serving here but I know what happened then. Congress passed, Lyndon Baines Johnson signed, Medicare. Now one of the principal drivers of that was we had a poverty rate for seniors--that is, our parents and grandparents--they were at twice the poverty rate that they are today because of medical costs.
Nobody can save enough money to provide for their medical care. And if you can't buy insurance--which most seniors can't and couldn't--and you get sick, you're bankrupt. You lose everything. And the principal thing that drove seniors into poverty and bankruptcy in those days was medical costs. So Medicare was established.
And now the greatest legacy proposed here by Mr. Ryan, the chair of the Budget Committee, is to end Medicare. And he's doing this under the guise of the path to prosperity. The question is whose prosperity? Not the seniors. Perhaps it's the insurance industry.
Mr. GARAMENDI. Thank you very much, Mr. DeFazio.
I heard you toss out two numbers. One number was the amount of medical, the percentage of the costs of medical care that seniors now pay. Did you say 28 percent?
Mr. DeFAZIO. It's about 25 percent on average of all of their medical costs, the ones for seniors who are eligible for Medicare.
Mr. GARAMENDI. If the Republican proposal goes forward, seniors will wind up paying how much?
Mr. DeFAZIO. Sixty-eight percent of their health care costs.
Mr. GARAMENDI. I see. So we are shifting the costs to the seniors; right?
Mr. DeFAZIO. Right.
If the gentleman would yield.
Mr. GARAMENDI. Of course.
Mr. DeFAZIO. We are not going to do anything about the costs of medical care or the premiums charged or the egregious practices of the insurance industry. We are just going to shift the costs onto future seniors. Many of these people, if they are 55 today, they have been paying into Social Security and Medicare for 35, 37 years, and now, suddenly, oh, sorry, can't have it.
Mr. GARAMENDI. Game's over. You can put that RIP back up.
Mr. DeFAZIO. If I could, just one other point.
Mr. GARAMENDI. Please.
Mr. DeFAZIO. The one other thing, since the Republicans seem to want to roll back the clock, are they are going to bring back the doughnut hole. Now, the doughnut hole is this bizarre construct of the Republican prescription drug benefit. Remember, instead of designing a low-cost prescription drug benefit that was uniform and available to all seniors on Medicare--we could have done that at a very, very low cost--the Republicans said let's subsidize the pharmaceutical and insurance industries and create a confusing mix of plans, and that's what we'll do for seniors. $750 billion over 10 years to subsidize the pharmaceutical and insurance industries and give seniors the doughnut hole.
Now, last year we began to close the doughnut hole, and this year the pharmaceutical industry has to give discounted prices to seniors in the doughnut hole. Mr. Ryan would undo that. No more discounted prices for seniors in the doughnut hole. That's eating into the obscene profits of the pharmaceutical companies. So they've got a little provision in this bill. The doughnut hole is back. Make the world safe for doughnut holes. That's the Ryan path to prosperity.
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