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REMARKS BY:	U.S. SECRETARY OF HEALTH & HUMAN SERVICES, DONNA E. SHALALA
EVENT: 		Samuel Thier Lecture, Yale University Medical School , New Haven, Connecticut
DATE: 		October 7, 1999 

"To its academic missions of educating and training future leaders in medicine; pursuing new advances in basic sciences and clinical medicine; and providing excellence in patient care."

I'm also honored to give this year's Thier Lecture. Dr. Samuel Thier left an indelible mark on Yale Medicine-revitalizing and reinvigorating the Department of Internal Medicine.

While at Yale, and in the years that followed, he also continually gave expression to medicine's most enduring values-including the belief that health care's most important obligation is to further and enhance the public good.

This lecture reminds all of us of that obligation.

* * * Furthering and enhancing the public good was also the ultimate goal of Medicare-when it was signed into law by President Johnson thirty-five years ago. The difference that this one single program has made in the lives of our older Americans reminds me of a story about the famous writer, Somerset Maugham.

Maugham was asked to address a group on his 80th birthday. When the author was introduced, he slowly rose. He thanked his hosts. He took a few sips from his glass of water. He then began by saying, "Old age has many benefits." And he suddenly stopped.

Maugham looked around. He fidgeted. He sipped some more water. At last, he said dryly and slowly, "Old age has many benefits-I'm just trying to think of some."

Maugham, of course, was trying to be funny, but when he made that remark half a century ago, there was a sad ring of truth in his words. At the time, growing old meant poverty. Growing old meant disability. And growing old meant going without health insurance.

In 1965, only 56 percent of America's seniors had insurance for hospital care. But Medicare changed forever what it meant to grow old in America. Since 1965, access to health care has increased by one- third.and the poverty rate among senior citizens has dropped by nearly two-thirds since 1965.

But to really understand what Medicare has meant to America's seniors, we need to get beyond dry numbers and abstract statistics. We need to hear the stories of people like Lorraine Melton of Bradenton, Florida.

Two years ago, Lorraine-then age 73-was in a devastating car accident. She suffered three broken ribs.a broken kneecap.a broken leg.and her life seemed shattered along with her bones. But thanks to Medicare, she was able to have the three major surgeries she needed, and extensive home health care while she healed.

At its crux, Medicare promised the best health care in the world for older Americans -- and for the past thirty-five years our nation has recognized that we must keep this promise.

But ensuring that future generations also enjoy the promise of Medicare-its security and protection-isn't a job for government alone. It requires all of us-from the doctors who provide quality care for Medicare beneficiaries.to the health care administrators who help manage the program -- to act now to reform and strengthen the system.

After all, the baby boom is about to become the senior boom-with the number of elderly Americans doubling by the year 2030. No wonder that Medicare faces a demographic tidal wave.

One in eight Americans depends on Medicare, today. But in just three decades, that number will swell to one in five. When you include disabled Americans-who also depend on Medicare-it grows to one in every four Americans.

Given these numbers, it's obvious that any discussion about the future of Medicare is really a discussion about the future of health care.and that's why it's such a fitting subject for today's lecture.

Before we discuss Medicare's future, we need to take a moment to remember those principles that have guided the program since its inception. Medicare is one of the most ambitious health care initiatives we have ever undertaken as a nation. It has worked because it was grounded in three very simple principles.

First: The health care needs of older Americans are best met through an insurance system that spreads risks fairly, and that allows patients to choose their own health care provider.

Second: This insurance has to be affordable and available to every American. In essence, it must be universal.

And third: The federal government has an obligation to make this system work-to see to it that all of America's elderly-regardless of health or income-are able to be shareholders in this insurance system.

Three small principles-but, together, they form the grand promise of Medicare. If we want to keep this promise for generations to come, then a program designed for the 20th century must be modernized and strengthened to meet the challenges of the 21st century.

That's exactly what this Administration has sought to do. When the President and Vice-President took office almost seven years ago, it was projected that Medicare would actually go bankrupt in 1999. But working with Congress-and bolstered by a strong economy-we supported administrative and legislative changes that completely changed this gloomy scenario.and still kept Medicare's historic promise.

We've now extended the life of the Trust Fund by 16 years. We launched the biggest crackdown on fraud, waste and abuse in Medicare's history.and in just the last two years we were able to restore over one billion dollars to the Medicare Trust Fund.

We modernized our payment systems to doctors, hospitals, nursing homes and home health care agencies. We've begun to improve Medicare through market-oriented reforms like competitive bidding. And we've added new preventive benefits such as annual mammograms and prostate cancer and bone density screenings.because investing in prevention makes sense. It saves lives-and it also saves dollars.

These are significant accomplishments. Accomplishments to be proud of. But they are steps to build on- not to rest on. We have a lot of work to do to ensure that we keep Medicare intact for future generations.

That's what our Medicare reform plan is all about. The plan builds on the hard work of the "Bipartisan Commission on the Future of Medicare," which certainly promoted the debate on the program's future.

Unfortunately, the Commission did not advance a lasting solution, because it failed to address the paramount issue of demographic growth. Instead of speaking to the fact that we'll soon have twice as many beneficiaries who will need just as much-if not more care, the Commission proposed that we scale back the health care that we already provide.

That's hardly the answer.

Because as Judith Feder of Georgetown University and Marilyn Moon of the Urban Institute note, limiting the government's liabilities for health care won't make those liabilities go away.

Medicare's problem is not per-capita costs-as the Bipartisan Commission concluded-but the number of capitas. Over the next 30 years, the number of people Medicare serves will grow from 40 million to 50 million. And that's why the way to address the problem isn't by restricting access-it's by increasing reforms and expanding revenues.

That's what our reform plan aims to do.and just like the original promise of Medicare, the plan is based on three simple components -- three components that are also challenges that we must meet.

Our first challenge is to modernize Medicare's benefit package.

Above all, that means we must include the one benefit that has become an essential element of high-quality medicine: a voluntary prescription drug benefit. When Medicare was created, no one could have imagined the role that prescription drugs would eventually play in modern medicine.

As doctors, medical students and researchers, I certainly don't have to tell you that, today, medications are just as important as hospital care was when Medicare was inaugurated. The prudent use of prescription medication can help older and disabled Americans not only avoid visits to the doctor-but even avoid lengthy hospital and nursing home stays.

But despite the proven value of keeping people healthy-of preventing, treating and curing illness-many older or disabled Americans simply cannot afford prescription drugs.

They're individuals like Lida Glover. Chances are no one here knows Lida. She's a widow in her 80s who lives in Detroit. Each month, she receives 504 dollars from Social Security-and she has to spend at least a quarter of that on medication. How does she do it? Unfortunately, she isn't always able to. Lida notes, "It's very difficult. You get along with what you have, and you trust the Lord for the rest."

Interestingly, in 1965, many argued that Medicare was not necessary because a majority of seniors already had basic hospital and doctor coverage. Today, many are making the same argument against an affordable drug benefit.

In fact, 13 million Medicare beneficiaries-like Lida-have no prescription drug coverage. Additionally, nearly half of all rural beneficiaries are without prescription coverage. And millions more could lose their coverage as private insurance becomes more expensive and less accessible.

In the wealthiest nation on earth, too many of our citizens are being forced to choose between putting food on the table or filling their prescriptions. Some would say that as difficult as the burden is for Lida and so many other senior citizens, it would cost America too much to give her a helping hand.

But I believe that the cost to America is higher because we don't. I'm reminded that Gerald Brenan once wrote, "Old age takes away from us what we've inherited. And it gives to us what we've earned."

I believe that Americans like Lida have earned better than an old age where they can afford to visit their doctor-but can't afford the medicines their doctor prescribes. A prescription drug benefit is good health care. It's prudent policy. It's compassionate government.

That's why our Medicare reform plan provides all Medicare beneficiaries with access to affordable, comprehensive coverage for prescription drugs.

Like all Medicare benefits, our drug benefit is universal. But participation is also completely voluntary. If individuals have better prescription drug coverage they can stay with it.

But our plan doesn't stop there. To further modernize the benefit package, it would eliminate co-payments and deductibles for all covered preventive services. Our plan will also help make medical care more accessible to those who need it by including an affordable Medicare buy-in proposal for vulnerable Americans ages 55 to 65.

Taken together, these measures will greatly modernize Medicare's benefits for the 21st century. But if we're to fully prepare Medicare for a new century, it just isn't enough to modernize the benefits.

Our second challenge is to make the program more competitive and efficient.

Our reform plan ensures that the traditional fee-for-service program will be more competitive by adopting the best management, payment, purchasing and clinical practices used by the private sector.

That includes selective contracting with lower cost, higher quality providers. And it also means competitive bidding for services like medical supplies. Under our Medicare reform plan, managed care plans would compete by offering lower costs and higher quality -- and payments to HMOs and other private plans in the Medicare+Choice program would be determined by competition, rather than the current system of government administered prices.

Finally, our plan would establish a fund so that adjustments could be made if we determined that certain curbs on payments to providers-curbs that were part of the 1997 Balanced Budget Act-are hurting patient access to care.

And that brings me to our third and final challenge: To strengthen Medicare's financing so that our seniors always have access to the best possible health care.

As I'm sure you're aware, as part of our reform plan, President Clinton is proposing to use one in six dollars of the budget surplus for Medicare for the next 15 years. This will ensure that Medicare remains solvent until 2027-when the majority of the baby boom generation will have already joined the program.

And it will allow us time to work out an even longer-term solution.

Let me say: That's why the President vetoed the Republican tax bill. That bill was too big. Too risky. And would have made it nearly impossible to find a long-term solution for Medicare or Social Security.

So, as the President likes to say - first things first. And that is what the debate we're having in Washington is all about, . . .making sure we do the hard work of preparing our health care system for the 21st century.

In other words, this debate is about the future - which means it's about you. You have an enormous stake in the outcome of what is taking place in our nation's capital. Bigger, perhaps, than you can even imagine.

Because if we can't keep our health care system solvent, . . .if we can't provide quality care at a reasonable price, . . . if we can't keep our research and technology second to none, . . . if we can't keep the promises we've made to older Americans while modernizing our health care system for younger Americans, . . . then all your years of hard work - not to mention the hard work and prayers of your parents - will be shortchanged.

Let me put it another way: The current debate over Medicare and health care will effect how you practice. And it will effect the patients on whom you practice.

We know, for example, that people who have health insurance are more likely to seek lower-cost primary care. They're more like to get their children fully vaccinated. And they're more likely to purchase and use their prescription medicine.

We also know from a Census Bureau report that just came out this week showing that over 44 million Americans have no health insurance; that many of these Americans hold jobs; and that the problem is much worse among women than men.

So we have a lot of work ahead of us. And government can't do it alone. You are tomorrow's practitioners. We need your help. We need you to be part of the solution.

Let me leave you with this thought. While the debate over Medicare and a voluntary and affordable prescription drug benefit is critically important - and not yet settled - there is more is at stake than just health care. Our values are at stake.

Medicare is a compact between the generations. That means it is a statement of who we are and who we want to be. Are we going to preserve the lifelines we built for older and disabled Americans-Americans like Lorraine and Lida-or are we going to cut them adrift?

I believe - and I know the President believes - that we must ensure that the promise of Medicare-is never broken. We must ensure that elderly and disabled Americans continue to enjoy the very best health care in the world.

We must ensure that all publicly financed health care meets the financial and demographic challenges of the 21st century. We must ensure that we keep our promises for this generation - and every generation to come.

Thank you.

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