Statement by Dr. Shirley Charter,
Commissioner of Social Security,

October 5, 1995

Alternative Medicare Hearing

Mr. Chairman and Members of the Committee:

I want to commend you for calling this hearing to discuss the proposal pending in Congress to make $2 70 billion in cuts in the Medicare program over the next seven years. It is essential that the public have the facts to understand the ramifications of these cuts and to determine if, in reality, reductions of this magnitude are necessary at all.

There are two issues I wish to discuss in my testimony. As a member of the Board of Trustees for the Medicare Trust Funds, and as a signatory to the 1995 annual report issued by that Board this past April, I would like to discuss the rationale being used to justify a $270 billion Medicare cut. I believe it is necessary to point out how the April 1995 trustees report is being distorted and misused to justify an unnecessary and destructive action.

It is important to remember, though, the recent history of how Medicare solvency issues have been handled by the White House and Congress. Nine times in the past, the Medicare trustees have warned that the trust fund would be insolvent within seven years. Each of those times, the President and Members of Congress responded in a statesmanlike manner, taking the necessary actions to strengthen the fund.

But this statesmanlike approach is not seen at this time, not when some members of Congress are unfairly distorting the 1995 Trustees Report to suggest that Medicare is facing such an extraordinary financial crisis that it can only be saved by cutting the program by $270 billion. Not only is such a claim unwarranted. It is also untrue.

The Medicare trustees have reported that it would take $89 billion, not $270 billion, to keep the Hospital Insurance (Part A) trust fund solvent for another 10 years through 2006. There is simply no reason, no logical reason, to take such an extreme action.

Mr. Chairman, clearly we can better protect low-income elderly citizens-- the people who will truly suffer without an effective Medicare program -- by taking this kind of comprehensive approach, which has been proposed by the President.

I thank you for the opportunity to testify on this very important issue. And I look forward to continuing to work with this Congress, both as Commissioner of Social Security and as a Trustee of the Social Security and Medicare Trust Funds.