Madam President, we have been engaged in a very important debate on our budget over the last few days, and this debate will continue over the next several weeks, indeed, for probably several months. It is not a new debate. Like past debates, at the heart of it are important programs to middle-income Americans, such as Medicare, Medicaid, and Social Security. In some quarters, they are under attack. This does not have to be the case.
In the 1990s, Democratic majorities in the House and the Senate, with a Democratic President, were able to deal with this issue of deficits while preserving these programs and strengthening, indeed, in many cases, these programs. We were able to also provide the kind of economic growth that generated job creation, not just increased GDP or increased profits on Wall Street, but jobs on Main Street.
Much of these efforts were, frankly, undone, beginning in 2000 with tax cuts that did not, as advertised, produce the kind of private employment growth that was necessary for our economy, that shifted the burden to middle-income taxpayers, while giving the wealthiest Americans extraordinary relief and unfunded entitlement programs, such as Medicare Part D and two major conflicts, none of which were paid for.
So now we, once again, face a situation where we have a significant deficit, and we need to address it. President Obama has begun that process with the same commitment to maintaining Medicare, Medicaid, and Social Security, not without reforms and strengthening, but making sure that middle-income Americans and all Americans can have access to these vital programs.
We have taken significant steps in the long run to reform our health care system with the Affordable Care Act.
We hope that act is implemented efficiently and effectively so we can begin to realize long-term savings to bend the proverbial cost curve of our health programs, not just our Federal health care programs but our health care costs across the board that are borne by private insurers as well as private programs.
In fact, ironically, it seems to me that one of the major accelerators of the Medicare Program is the fact that so many Americans--about 40 million--do not have access to consistent quality health care now. Yet, when they turn 65, by right they have access to a panoply of services. I have had discussions with doctors, and they will tell me that they say several times a day to their new Medicare patients: I wish I saw you 10 years ago because I would not have to apply the expensive diagnostic and treatment. I could have done something much easier, much less costly if you had coverage and access.
So that is one of the long-term efforts we have underway, but we have to do a lot more to go ahead and deal with the issues before us.
We have seen Republican budget proposals, but frankly I do not think they strengthen the middle class here in the United States, nor do they provide the kind of sensible investment that will lead to job creation and provide the opportunities that are necessary for succeeding generations in America. I think they are more dedicated to an ideological commitment to simply reduce taxes, and that is something that has to be tested and should be tested in the history of the last several years. That was the same argument that was made in 2001, that such tax cuts would generate huge growth in private employment, unleash huge economic forces here in the United States, and frankly, over the last 10 years, that has not been the case.
So I think we have to be sensible. I think we have to address the tax reforms and tax reductions to middle-income Americans, not continue to favor the richest Americans, when it comes to tax proposals. So much of what the Republican budget seems to do is continue what they started in 2001--huge relief for the wealthiest Americans. But it is increasingly putting the burden on Middle America. In fact, it has been estimated that under the Republican budget, individuals making over $1 million would receive an average tax cut of $125,000 a year. That is a huge cut relative to whatever a working, middle-income American might receive.
One of the other aspects of this budget is the impact it would have on Medicare. Medicare is central to every family in the country. In fact, look around at not just someone who is earning a wage hour by hour, but look at the small businessperson, a man or a woman. Their retirement plan rests on the assumption that they will have access to Medicare. The Republican's proposal, as I understand it, essentially ends that for individuals who are about 55 years old or younger. Well, in the next 10-plus years or so, they are going to have to come up with a lot of money to pay for the Medicare they assumed they would receive automatically when they retire at 65. That is not just the wage earner, the hourly worker who goes in there; that is the small businessperson whose postretirement plan rests fundamentally on Medicare and them being able to buy a supplemental health care plan to that.
So these are fundamental and, in fact, earth-shattering proposals, in my view.
Currently, seniors on traditional Medicare pay approximately $1,700 in annual premiums. They are charged a limited amount for every hospital stay, have a reasonable deductible for every major procedure and treatment, and pay copays for services and prescription drugs. They are even able to buy, as I alluded to, these Medigap plans so they can supplement what Medicare provides with additional resources, and these supplemental plans are very affordable. On average, Medicare then spends $11,762 on every senior, and that is just an average.
But this would all change, and it would inject a huge amount of uncertainty if the budget that is proposed by Republicans, that is still being debated by the Republicans, that is still being supported in many cases by Republicans is in any way enacted.
In the year 2022, under the proposal, if the Republican budget were enacted, every senior who becomes eligible for what we now call Medicare would be given $8,000 to address all their health care needs and then sent to the marketplace to buy health care private insurance.
Now, I guess I have reached a point in my life where I can reflect and remember that as a youngster in the 1950s, there was, in practically every one of my friends' homes, a grandparent who was there because they didn't have access to Medicare or Medicaid.
They were in a hospital bed in the living room or in some other room. They were being cared for by typically the mother, who was also trying to care for youngsters such as myself and my contemporaries. The reason was, regardless of how much money you have, at some point, insurance companies will not sell you insurance. You are old. You had health experiences prior to that. You are a bad risk, and they are not in the business of insuring bad risks. That was, as much as anything, the genesis of Medicare--the recognition that the private health care market would not, regardless of the ability to pay, provide adequate coverage. And I think we have forgotten that.
When the Congressional Budget Office, a nonpartisan organization, looked at the proposal, they essentially concluded that with this $8,000 transfer to a senior in lieu of traditional Medicare, the senior would be on the hook for an additional $12,500 in health care costs. In fact, it would likely result in some seniors not even getting health care insurance at all, not being able to afford it or at some point, particularly as they aged, getting to the point where no one would write them health care insurance because of the obvious health risks they were.
So this is a plan that I don't think comports with the reality of Americans who have already planned to have access to Medicare and also the reality that what is proposed--an $8,000 transfer payment to an insurance company--would be inadequate to provide the kind of minimum coverage we should be providing to our seniors.
We have had examples before where particular Republicans would propose that they had a new, novel way to provide private health care insurance in lieu of traditional Medicare. When Medicare Advantage was established in 2003, seniors had the option of enrolling in private health insurance plans that were argued by their advocates as being cost-effective, as putting pressure on the public health care plan known as Medicaid. Madam President, 60,000 seniors in my State of Rhode Island enrolled. Private Medicare Advantage plans sell consumers on additional benefits and smaller copays. They went out--very selectively, I suspect--recruiting seniors in a way that they hoped attracted the healthiest seniors, not the sickest seniors, to lower their costs. However, in reality, most of these plans tended to cost more than traditional Medicare as the smaller copays were largely offset by higher monthly premiums.
So there are those who are still seriously proposing this Republican approach to Medicare. I think it will be a mistake. I think it would reduce access to health care coverage for seniors. I do not think the private market will jump up with $8,000. I do not think you will see that Congresses in the future will escalate the cost of these vouchers or transfers to private insurance companies in any way that would be commensurate to the real cost seniors would face.
As a result, I think this proposal will do serious harm to health care and particularly to the middle-income American who, regardless of whether they are running a small business or working for an hourly wage, will now face the prospect of the great uncertainty, the great unknown of no adequate health care coverage when they reach 65. We will go back in time to the period of my youth where, quite frankly, seniors did not have the kind of health care coverage they have today and I believe the kind of health care coverage they deserve.
With respect to Medicaid, there are also proposals here and the thought that Medicaid is just a program for children and poor Americans. But, frankly, if you look at the statistics, there are 26,000 seniors in my State who are on Medicaid, principally because of nursing home care. And we have to ask ourselves, if these plans to provide block grants to States are enacted under the Republican proposal, whether those seniors still can maintain themselves in these nursing facilities, whether the costs will be so great on the States that they will be unable to keep up the level of effort, the level of support they are today.
What seems to be inherent in all of those proposals is not savings but shifting costs, not reforming the system to be more efficient and more effective but simply shifting the cost onto seniors, shifting the cost onto particularly middle-income Americans.
So, I am pleased that we did not accept these Republican budget proposals, which are the wrong way to address our budget issues.