Transcript: Super Committee Rep. Fred Upton’s Q&A on previous debt proposals

Joint Select Committee on Deficit Reduction Hearing: Overview of Previous Debt Proposals on Nov. 1, 2011

Transcript of Rep. Fred Upton (R-MI) Question and Answer Session:

Rep. Fred Upton (R-MI), member of the Joint Select Committee on Deficit Reduction. IMAGE SOURCE:

Rep. Fred Upton (R-MI):

“Thank you, Mr. Chairman.

“I certainly want to agree with each of you that these deficits are unsustainable. I appreciate your candor, your service, your hard work. Believe me, we know a little bit about your work because we together have spent hundreds of hours as well over the last number of weeks. You underscore my respect for each of you as truly great Americans.

“As you may know, my home state of Michigan – Dave Camp’s as well – we’ve had 34 consecutive months of double-digit unemployment. As I talk to people back home, as I was again this last weekend, people know that we’re in a rut. Sen. Simpson, they know exactly what you’re talking about. They, in fact, are relying on us to try and get our car out of the ditch and back in first gear.

“I’ve put a chart. I can’t see it very well up here, but I think you have a chart in front of you that scores the president’s health care plan from 2014 to 2023. That 10-year outlay plan shows that spending [and] the effects on the federal deficit will be almost $2 trillion in additional spending over the next 10 years.


Each of you noted in your various proposals that the federal budget is on this unsustainable path, and you identified health care as one of the most important items that this committee and the nation should be focusing on. So as you can see from this chart, the exchange subsidies are certainly the primary driver of this dramatic expansion of Medicaid. CMS actually certified that because of the president’s proposal, nearly 25 million more Americans will be on Medicaid after 2014 because of that expansion, which means that more than one in four Americans will be, in fact, a Medicaid beneficiary. So based on that and the statements that you made about the budget crisis, do you believe that we should revisit the expansion of the Medicaid program and the president’s proposal? Erskine? Sorry that you start on that end…”


Erskine Bowles:

“No, no. I’m very happy to answer any question that you ask. You won’t smell any fear on us out here. We had great questions that if the Affordable Health Care Plan could actually slow the rate of growth of health care to GDP plus 1.

Because we had those questions, we did believe that it would solve the problem of providing more people with health care, but we didn’t think it solved the problem of how to control the cost of health care. Therefore, we made the $500 billion worth of additional cuts to both Medicare and Medicaid and certain other federal health care programs in hoping that that would slow the rate of growth. If it didn’t slow the rate of growth, then what we said there’s got to be an overall cap on all of these areas of spending – of federal health care spending – and you’re going to have to look at some options – like a premium support plan, like the robust public option, like a single-payer plan.”


Rep. Fred Upton:

“Alice? I’m sorry, Alan?”


Former Sen. Alan Simpson (R-WY):

“We just knew that whatever you call it – whatever you want to use: call it Obamacare or any kind of care you want – it won’t work. It can’t work because all you have to do is use common sense. You have this imploding of people. You have diabetes. You have one person in America weighs more than the other two. You got guys who choose to do tobacco, who choose to do booze, who choose to do designer drugs, and all of them will be taken care of. You’ve got preexisting conditions in three-year-olds – what happens through their 60 years or 50 years of life? All you have to do is forget the charts, and know that if you torture statistics long enough, they will eventually confess. Know that this country cannot exist on any kind of situation where a guy who could buy this building gets $150,000 heart operation and doesn’t even get a bill. Now that’s nuts. That’s where we are in America. There’s no affluence testing. You got to raise co-pays. You got to knock down providers. You got to deal with physicians. You got to have hospitals keep one set of books instead of two. That would be a start.”


Rep. Fred Upton:

“Alan, what did you do about Medicaid? Because originally you all had – as I understand it – you were going to convert it into a block grant for the states. It’s my understanding that you dropped that proposal.”


Erskine Bowles:

“No, we were never going to convert it into a block grant for the states. One of the things that we thought that was too big of a shift now, too an unproven of a theory. What we did advocate is testing it in 10 states. It’s on the theory that one size doesn’t fit all. Governors can cover more people with less costs if they have control of the funds. So we said let’s test it in 10 states. If it does prove to be something that does lower the cost of health care and still provides coverage to people who need it, then we could support it. But you ought to test it first. I think that’s what you would do in the business world. I think that’s what you would do in most places. It’s now being tested in Rhode Island; it is working very well. I understand Washington state is actually asking if they can test it. So I do think it’s one of the things that will prove out over time.”


Rep. Fred Upton:

“So beyond those tests, did you ask for any other reforms on the Medicaid side?”


Erksine Bowles:

“Yes, we did. As an example, having run the public hospital in North Carolina over the last five years, you know you can see the gaming that goes on in the Medicaid program by the payments. Since it’s a shared cost program, it’s approximately 50-50 between the states and the federal government. You know, the docs would up the amount that they would charge in order to cover the higher fee charged by the state. They would both come out even but the taxpayers would end up with about a $50 billion bill for that. So we cut out that kind of gaming in the state Medicaid programs.”


Rep. Fred Upton:

“Alice, one of the proposals that you all recognized on the Medicaid side was this program called the per-capita cap, which – for those in the audience – each state would receive an allotment determined by the number of folks in the specific categories for Medicaid based on the state population number for those numbers and then that would be increased each year by GDP plus 1 beginning in 2014 or 2015. Are you a part of that proposal? Are you still supporting that idea?”


Dr. Alice Rivlin:

“We looked at a number of ways to reduce the rate of growth in cost of Medicaid. One was splitting the responsibility between the federal government and the states. Medicaid is really two programs. It’s acute care, which is largely for children and their mothers; and it’s long-term care. One of the things we looked at was split the responsibility for those two between the federal government and the states. We thought that would help make it clearer who’s responsible for what and not have the matching program that results in a certain amount of gaming. We also wanted to get rid of the kind of gaming that goes on in Medicaid, as Mr. Bowles has suggested. One thing we were very clear about was the dual eligibles – those who were eligible for both Medicaid and Medicare. There are some impediments to their getting into managed care and management of their usually multiple diseases, and we wanted to fix that.”


Rep. Fred Upton:
“What did you do in terms of added state flexibility to allow the states to be able to have greater control over what services are eligible?”


Dr. Alice Rivlin:

“That’s certainly a possibility. We did not, frankly, come down very clearly. We offered a menu of options on what to do about Medicaid. I think it’s the hardest problem. Much harder than Medicare. We thought we had a good plan for Medicare. We offered a menu for Medicaid.”


Rep. Fred Upton:

“On Medicare, both Ways and Means and Energy and Commerce have jurisdiction over this issue. I know as many of us have looked at this, we have felt that it’s the toughest entitlement to try and curb the cost curve downwards. We’ve heard a little about A and B and putting them together, the deductibles, the co-pays. It’s my understanding that both of your groups also increased the age, is that right? For eligibility?”


Dr. Alice Rivlin:

“No, we did not. We didn’t even do it for Social Security, but we certainly did not for Medicare.”


Erskine Bowles:
“We have it as one of the options in the 10-year window…”


Rep. Fred Upon:

“When you looked at all the options that you considered, what was the priority order that you came up with in terms of where you thought what we ought to do to reform Medicare?”


Erskine Bowles:

“We did not prioritize outside of the 10-year window. We said that drastic steps are going to have to be taken. Those drastic steps must include looking into things… like premium support plans. It has to look at a robust public option. It has to look at things like block granting Medicaid to the states. It has to look at things like a single-payer plan. It’s got to look at things like raising the eligibility age for Medicare. Those are the options we saw that would have to be considered if, in fact, you can’t slow the rate of growth to GDP plus 1.”



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