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Public Statements

Statement on Medicare/Social Security for Wyoming PBS roundtable

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Location: Unknown

Hello, I'm U.S. Senator Mike Enzi. I want to thank Wyoming PBS, the panelists, and those watching, for taking part in a much needed conversation about Medicare and Social Security.
I want these safety nets to be available for you and me -- and my kids ---- and my grandkids. We are not on a path to have that happen.

In 1999, President Clinton realized the bleak future for Social Security if no changes were made. We talked about how the program could be saved for everyone over 55. That was 13 years ago and we are still saying the same, "safe for those over 55". Thirteen years from now that could be a myth.

When Social Security began, no one could retire until age 65 -- and the life expectancy was less than that. In other words, for most people, they would never see a dime of what they paid in. Now people live longer than the age at which they can retire. We are also welcoming 50 million baby boomers who will be receiving Social Security -- which means 50 million people who will no longer be paying in.

Did you know that the money from our paychecks that is for Social Security is sent in and then paid out right away to those retired? There used to be more paid in than had to be paid out in a single month. That money was accounted for as though it was in a trust fund and as though it was growing with a minimal interest payment for the rest of government using it, leaving bonds in the Social Security drawer.

Last year part of your Social Security money was not collected from employees or employers. The hope was that it would stimulate the economy. That was money that should have gone to Social Security - a fund already going broke.

Let's talk for a moment about federal trust funds. When politicians can touch them they are NOT trust funds. I mentioned that all the Social Security trust fund is just bonds, not money or investments. There is also a pension trust fund paid into by private companies who offer pensions to their employees. The purpose of that fund is to guarantee employees of businesses that go out of business that they will receive at least 60 percent of what they were promised. The tax was even increased last year, but the increased money, supposedly promised for the trust fund, was diverted to highways maintenance and construction for each of the next 10 years!

I first learned about how the trust funds worked trying to get some money out of the Abandoned Mine Land Trust Fund. Every ton of coal mined in Wyoming has a tax on it. Half of the tax is designated for Wyoming and put into a "trust fund". The other half goes to Eastern states to reclaim their abandoned mines. When I got to Washington I tried to get some of Wyoming's money released. I was told I had to put money in, to get money out. What kind of a trust fund is that? I did special legislation so all coal mining states would be able to get money out. But this year, a middle of the night amendment we didn't get to vote on, stole most of Wyoming's money. Does that give you confidence in federal trust funds?

The biggest problem with fixing Social Security and Medicare is that senior organizations will go after the person or group who offers any solution. Mr. Novelli, who headed AARP, wrote a book. He did a splendid job of explaining the problem. I challenged him and his organization to specify the changes needed. For example, suggesting raising the retirement age for young people. The exact age change needs to be specified. The same with raising the tax -- a solution needs to be specific.

We aren't the only country who has this problem. I suggest that we take a look at what the Australians did 20 years ago. Their plan was put into place by a liberal government. They made their old system strictly a safety net. Then they raised the tax by three percent for the employee and three percent for the employer. But the money went into an investment account for that individual. The investing is done just like the federal employee personal investment accounts with professional managers. The money is then off limits to politicians. And if a person dies before collecting any, his or her heirs inherit the balance in the personal account. How has it done? The total in those accounts is greater than the Gross National Product (GNP). GNP is the total value of everything produced in a given year in all of Australia! Investments are made in Australian businesses. And that investment is keeping Australia growing rather than in a recession.

And now for Medicare. More is paid out each year for Medicare than is paid in by all those still working and the match from the employer. No money is being put away for those who are paying in and who someday will turn 65 and be eligible for Medicare. Medicare is an annual liability, not to mention, the biggest-growing future liability. Even though it is coming up short every year and adding to the deficit, the Health Care Reform bill took $716 billion from Medicare and put it into new programs. At the same time, the law put into place a new board that can dictate to Congress where to make cuts to make up for any shortfall. If Congress can't find cuts elsewhere, the cuts proposed by the new board will go into effect automatically. There isn't anywhere else to find that money than to cut payments to doctors and providers, hospitals, nursing homes, and home health. Already, I run into seniors all the time who know of someone or themselves wanted to see a doctor, but were told that doctor is no longer seeing Medicare patients. And the doctors have to do that to be able to make enough money to be able to keep their doors open because Medicare keeps cutting the amount paid to doctors and other providers. If you are selling at a loss, quantity makes the loss bigger.

The most important thing that Washington needs to understand is that there is no single solution for every family or every patient. A "one size fits all" approach to health care will never work. Unfortunately, when we mandate funds for a specific purpose like health insurance, many people are confronted with the reality of fewer choices and higher costs. What we've seen over the past couple of years is an effort to expand health care coverage, but unfortunately nothing to significantly address rising costs. More than 50 million people will soon be covered by Medicare, yet the funding for the program was diverted for new entitlement programs. We have to get these costs under control.

Medicare's broken fee-for-service structure is one of the biggest problems in our health care system. This method of payment encourages providers to see as many patients and prescribe as many treatments as possible. The program does nothing to reward providers who keep patients healthy. We must rescue the system from its current path towards cost-driven and ineffective patient care. Reforms can significantly improve health care quality and lower health care costs in the long run--but only if we reform both the way we deliver and pay for medical care.

The misaligned incentives created by a fee-for-service system drive up costs and hurt patient care. Value-based insurance would help realign the incentive structures for delivering health care services by reducing copays for high-value services and increasing copays for low-value or excessive services. Shifting the health care delivery system from one that pays and delivers services based on volume to one that pays and delivers services based on value is an idea that unites both Republicans and Democrats.

Our nation has made great strides in improving the quality of life for all Americans, and every major legislative initiative that has helped transform our country was forged in the spirit of bipartisanship and cooperation. These qualities are essential to the success and longevity of crucial programs such as Medicare and Social Security.

I thank you again for this opportunity to address these issues and I look forward to hearing the points made by other panelists.


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