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Public Statements

The Fiscal Cliff

Floor Speech

Location: Washington, DC

Mr. GRASSLEY. Mr. President, a week ago I visited with my colleagues about the necessity of taking a closer look at the problems of Medicare and taking advantage of the opportunity we have now with the fiscal cliff debate, to bring attention to it because I do not think it was getting enough attention.

There is no greater threat to America's growth and prosperity than our uncontrolled national debt. Currently, the country's debt exceeds $16 trillion. We face the so-called fiscal cliff that could send our economy into another recession. In these difficult times, we are challenged by the people we represent to find real solutions, not short-term bandaids.

As we move forward, it is clear that we must discuss spending. I emphasize that word, ``spending.'' I know President Obama is hyperfocused on increasing taxes as part of his deficit reduction proposal. I think the election shows he is legitimate in doing that, but he could have declared victory about 3 weeks ago. And in the 3 weeks since then he could have spent time talking about the expenditure side of the ledger because if we are going to be serious about reducing our debt, we must talk about spending--not sometime next year, not only after we talk about taxes, we must talk about spending and talk about it now.

We need to have a thoughtful conversation that focuses on where Federal spending most calls for control and containment. That is the purpose of my charts today. That is the purpose of my remarks. We must have a thoughtful conversation about where our Federal spending is taking us. It is past time for the

President to engage on health care entitlements with proposals that affect the long-term growth of health care costs. I am going to try to dissect this issue into 3 divisions and point out where the problems are.

The first division I will do, as shown in this chart, is the total government spending with everything except the interest on the national debt. By the way, this chart is from the Congressional Budget Office. It is not something I put together. It details, as I said, noninterest spending as a percentage of the gross domestic product.

We can see the percentages of GDP of health care, Social Security, and other noninterest spending. So we can see over the period of the next 25 years fairly level noninterest spending. We can see that Social Security, even though it has funding problems over the next 25 years, is going to be fairly constant as well. But when we get to health care costs, we can see a very dramatic rise. I suppose I should have had this on bigger charts so it would be more dramatic than it shows.

So this is the problem I want to address today. The driver of the cost is health care. And even though this chart only goes out 25 years, the board of trustees focuses 75 years ahead on Social Security and Medicare. So if this chart went out 75 years on Medicare, it would show about a $40 trillion deficit.

So it is a very dramatic increase compared to other parts of Federal Government spending. I want you to look closely at these longer term projections as I proceed with some other divisions of this problem and segmenting the issue of health care, Medicare and Medicaid.

It is pretty clear that we must address the growth of health care as well as entitlements. I do not think my colleagues on the other side of the aisle can walk away from the issue. We should start by looking at where we are spending the most money in our health care entitlements.

This next chart that we will put up divides this into three categories: Medicare-only health care costs, Medicaid-only health care costs, and then what we call the duals. The duals are people who qualify for both Medicaid and Medicare.

The middle group, as I said dual eligible, account for just over 10 percent of the entire Medicare-Medicaid population. But we can see by the chart that the amount of money that is spent on that 10 percent is much greater than either Medicare only or Medicaid only. When we talk about the need to find ways to control spending for these dual eligibles, it is for a good reason. They are poorer, they are sicker, and more often they are in need of more extensive, as well as expensive, coordinated care.

The inefficiency created in the misaligned incentives of Medicare and Medicaid is frequently cited as one of the areas in health care in the greatest need of improvement, not only for the quality of health care but also maybe a better caretaker of the taxpayers' money.

ObamaCare created an office in CMS charged with creating demonstration projects to allow for greater coordination of dual eligibles. Those demonstration projects have been moving forward at breakneck pace, with nearly half of the States looking to participate. Essentially, all demonstrations under ObamaCare seek to give States greater control of the acute care of the dual eligibles--in other words, of this group here. CMS has the incredibly broad legal authority under ObamaCare to take these demonstrations nationally if they are successful.

No one argues that the way Medicare and Medicaid coordinate the dual eligibles works very well. The coordination today is akin to asking me and somebody else to compose a letter with the other person writing the consonants and my writing the vowels. Giving the States greater control over duals may be a good answer. Some States might do a good job.

But when we consider the fiscal challenges faced by the States, this should be a decision considered by Congress examining all possible alternatives and in consultation with States rather than something occurring through this regulatory action that we are seeing under ObamaCare and what CMS is doing with those demonstration projects.

Furthermore, moving more responsibility to the States may miss a real opportunity to address an even larger cost problem. While some dual eligibles are expensive and need extensive long-term support and services, there are dual eligibles who, in fact, are relatively low cost. More importantly, though, is that not all the expensive Medicare beneficiaries are dually eligible.

Take a look at this chart. In this chart we see the most expensive individuals in the Medicare Program.

These are beneficiaries who have multiple, chronic conditions and functional impairments. Fifty-seven percent of them are eligible for Medicare only, and 43 percent of them are dually eligible for Medicare and Medicaid.

We have numerous studies showing that the care for high-cost, Medicare-only beneficiaries is just as complex, and the quality of care calls for as much attention as that of the dual-eligibles.

So, then, legitimately ask the question of, Why are we splitting these two groups? These are two groups of similarly situated individuals. They all have need for improved care. They all have multiple conditions that are very expensive. Why do we tell some people: You get Medicare solely because you have income--income that doesn't qualify for Medicaid--and then we tell some people: You should get Medicaid solely because you don't have enough income. Why is it a good idea to give States control of poor beneficiaries? Why should low-income beneficiaries get one of 50 different models to coordinate their care and people with higher incomes get Medicare only? Why is CMS pushing States to take a greater role with a complex, expensive population when they are also being asked to find the resources to cover poor individuals in Medicaid and develop exchanges to cover people in the private market?

Congress should consider what States should do in health care and what are reasonable expectations in those States. Congress should involve States in this conversation. If Congress wants States to administer benefits for the aged, the blind, the disabled, and low-income individuals, along with managing the exchanges for individuals with incomes over or up to 400 percent of poverty, Congress can do so.

If health care is the primary responsibility of States, it is because of decisions made by this Congress. States are being asked to do so much in health care while also overseeing education, public safety, roads, bridges, and meet, in most cases, a balanced budget requirement.

So I think Congress needs to step back and ask where the States are best able to focus on health care. We should ask States.

When we look at the long-term spending growth of our health care entitlement, we should use this as an opportunity to reconsider the role of the States in providing health care coverage. What we ask of the States should be thoughtfully considered in any discussion.

I know there are people telling us we shouldn't talk about health care entitlements now. President Obama hasn't come to the table yet on this issue. We don't have a choice. All you have to do is look at the numbers I have given you. Look at the spending. We only make the problem worse by putting it off.

We can save Federal dollars by extracting more from beneficiaries, providers, and States, but that is not going to do the same thing we need to do when we talk about health care changes. It is the very same thing we went through when Obamacare was being considered by a bipartisan group.

We need to do things to change the long-term growth curve of Medicare and Medicaid costs generally. That needs to be done right now. We need to talk about solutions to actually lower the growth curve and do it sooner than later.

We are $16 trillion in debt. One of every $4 we will spend in this next decade will be on Medicare and Medicaid. When you get further down the road than 10 years, it is going to grow even more dramatically. We will see health care entitlements double as a percentage of GDP in the next 25 years. I said the trustees look ahead 75 years, and it is even a bigger problem 75 years out.

If we want Medicare and Medicaid to not only survive--and I do--but also to thrive for the next generation, we need to be willing to ask fundamental questions and seek solutions that can affect the growth curve. I sincerely hope we are able to look for solutions that can make a real difference.

I yield the floor, and I suggest the absence of a quorum.


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