Currently 295,727 American seniors enjoy Medicare health plans called “cost contracts.”

Under legislation I introduced in the Senate, seniors will be able to continue utilizing these valued health plans.Medicare cost contracts are managed care plans that are reimbursed on a cost basis for providing health services. Under current law, cost contracts are one option for Medicare beneficiaries. Cost contract premiums cover Medicare deductibles and additional benefits not covered by basic Medicare.

Further, for the costs of a normal Medicare fee-for-service copayment, seniors with cost contracts can use any Medicare provider regardless of whether they participate in the health plan’s network.Cost contracts are vital to seniors who have them.

From New York to California, America’s seniors are enrolled in cost contract plans. In Colorado, the state I represent, seniors are enrolled in cost contract plans in 46 of Colorado’s 64 counties. Cost contracts are especially important in rural Colorado. Of the 18,050 Coloradans with cost contract plans, 89 percent live in rural Colorado, where few Medicare and Medicare+Choice providers operate.

Unfortunately, under current law cost contracts soon will terminate. In 1997, in an effort to expand and refine Medicare+Choice, Congress passed the Balanced Budget Act. Among other provisions, the Balanced Budget Act terminated the Medicare cost contract program effective December 31, 2002.

To prevent the termination of this valuable service, in 1999 I introduced legislation to extend cost contracts. That year Congress passed the Balanced Budget and Refinement Act, which extended cost contracts for two years through 2004.I believe Congress should work to extend Medicare cost contracts further. My bill, the Medicare Cost Contract Extension Act of 2001, S. 1224, would accomplish this by extending by ten years the cost contract sunset date of December 31, 2004 to December 31, 2014.

Statement by 60 Plus Association President Jim Martin

Washington, D.C. — This is an exciting time not only for seniors but just as importantly for our children and grandchildren for they will benefit in the future from a new and improved Social Security system that will result from these options offered today by the bipartisan Commission to Strengthen Social Security.

President Bush tasked the Commission with the responsibility to see that current and near retirees’ benefits are preserved, while allowing young workers to take more control of their own financial destiny with personal retirement accounts (PRA’s).

And in the words of Commission Co-Chairman, former Democratic New York Senator Daniel Patrick Moynihan, the new system, once it’s in place, will allow for ‘wealth creation’ by lower income workers.

And to those nay sayers, the status quo seekers who take the head in the sand approach, we say shame on you. The system is going broke and they know it, and yet they offer no plan of their own to save it. We say no plan, no palaver. You ‘do nothing’ for seniors by this ‘do nothing’ approach.

While the current ‘pay as you go’ system worked well for more than 40 years, the shifting demographics have put it on a collision course with reality.

It started in 1935 with a 2% tax on $3000 income, a mere $60 per year, paid by some 40 workers to support each retiree. However, since seniors, as it has been indelicately described, ‘conveniently died’ at about 65, there was no real financial strain, thus no need, to increase the 2% tax.

But fast forward to today, and the tax is 12.4% on up to $80,400, extracting as much as a whopping $9,969.60 from each worker. But instead of 40 wage earners paying that amount an average of only three provide these revenues because of the dramatic drop in the birth rate. That amount would be enough if we seniors still ‘conveniently died’ at about age 65.

Seniors are now living well into their 70’s 80’s and 90’s and beyond. My favorite senior, my mom, is in her mid-80’s and my second favorite senior, my stepfather was born in the 19th century, lived through the 20th century and this September, celebrated his 102nd birthday in the 21st century. I call him a tri-centurion even though there is no such word.

In a nutshell, that causes today’s financial strain on the system, living longer but with fewer workers paying into the program.

20 years ago, Dr. Jose Pinera fathered the current program in Chile which allows fund managers to invest a portion of their taxes in the name of individual workers, a program which more than 90% have voluntarily joined.

More than a dozen countries in South America, Europe, and Asia have adopted, or are in the process of adopting, a Chilean-style plan. Even socialist Sweden is going that route and communist China, too.

60 Plus says it’s long past time for the U.S. to follow suit and move into the 21st century. Let’s stop scaring seniors for political gain. If seniors are assured that Social Security is there for them, they’ll be the first to say ‘let’s roll up our sleeves and fix the system for future retirees, our children and grandchildren!’

When I first came to Washington in 1962 as a young newspaper reporter, John F. Kennedy was in the White House (and I covered his tragic assassination, November 22, 1963), Neil Armstrong had yet to walk on the moon, Strom Thurmond was still a Democrat and only Barry Goldwater seemed to perceive the looming crisis facing Social Security.

The Arizona Senator was 30 years ahead of his time and now responsible members of Congress on both sides of the aisle are working to craft a plan to save Social Security for the future.

President George W. Bush is the very first White House occupant ever to have the courage to take this issue head-on.

He refused the ‘head in the sand, there’s no problem’ approach, and he’s fulfilling his campaign promise to work to save Social Security for future generations. Senior citizens applaud the President for having the courage of his convictions.

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This year, a consensus emerged in favor of significant tax reform. Congress passed and the president signed into law a comprehensive tax cut bill that eliminates the estate tax in 2010.

The only problem is the bill expires in 2011.

Permanent repeal of the estate tax is still needed to produce a fairer and flatter tax system. While it is important to focus on responding to the recent tragedies in our country, we should not lose sight of the need for policy reforms that will provide long-term stimulus for our economy and reflect America’s conviction that prosperity through hard work should be rewarded, not penalized.

Congress has levied estate taxes at various times throughout U.S. history, particularly during war. The current estate tax dates back to 1916, a time when many in Congress were looking for ways to redistribute some of the wealth held by a small number of super-rich families. This first permanent estate tax had a top rate of only 10 percent, and the threshold was high enough to ensure that the tax affected only a tiny fraction of the population. Like the rest of our tax code, it did not take long for this limited tax to evolve into a more substantial burden. In only the second year of the tax, the top rate was increased to 25 percent. By 1935 the top rate was 70 percent and in 1941 it reached an all time high of 77 percent.

The strongest argument that supporters of the estate tax make is that most American families will never have to pay an estate tax. While this is true, it does not justify retention of a tax that causes great harm to family businesses and farms, often constitutes double taxation, limits economic growth, consumes significant resources in unproductive tax compliance activities, and raises only a tiny portion of federal tax revenues. In other words, the estate tax is not worth all the trouble.

The estate tax can destroy a family business, farm or ranch. This is the most disturbing aspect of the tax. No American family should lose its business because of the estate tax. Current estimates are that more than 70 percent of family businesses do not survive the second generation, and 87 percent do not survive the third generation. While there are many reasons for these high numbers, the estate tax is certainly one of them.

More and more businesses are facing the prospect of closing their doors in order to pay the estate tax. One might expect that with all the economic dislocation associated with the estate tax that it raises a significant amount of revenue or accomplishes a redistributionist social policy. In fact, the revenue take is quite modest — less than 2 percent of federal revenue, or $27.7 billion in 1999.

A 1995 study published by the Rand Corporation found that for the very wealthiest Americans, only 7.5 percent of their wealth is attributable to inheritance – the other 92.5 percent is from earnings. America is a nation of tremendous economic opportunity. Success is determined principally through hard work and individual initiative.

Our tax policy should focus on encouraging greater initiative rather than on attempts to limit inherited wealth. The estate tax is a relic. It damages family businesses and farms, harms the economy, and constitutes double taxation. It is time for the estate tax to go.

America’s chronic dependence on foreign oil is not only an economic concern, but an important national security issue as well. It not only affects citizens and businesses nationwide, but also has a direct impact on our ability to fight and win wars.

As we engage in critical military operations in the war against terrorism, it is important to understand that our armed forces are highly dependent on foreign oil, much of which comes directly from the Middle East. Indeed, the fastest growing Middle East supplier of U.S. energy needs is none other than Iraq.

During the 1970s energy crisis, America was 36 percent dependent on foreign oil. Today we are 56 percent dependent and by 2010, we are headed for well over 60 percent. For the military, it now takes eight times as much oil to meet the needs of each U.S. soldier as it did during World War II. The Department of Defense today accounts for nearly 80 percent of all U.S. government energy use. Of that, nearly 75 percent is for jet fuel.

During the Persian Gulf War, our 582,000 soldiers consumed 450,000 barrels of petroleum products per day–four times the daily amount used by the 2 million Allied soldiers that liberated Europe from the Nazis in World War II. Legislation to seriously address energy policy is closer to approval now than it has been in many years. The President made it one of his top priorities for the year. In response, the House passed a comprehensive bipartisan energy bill in August.

There is simply no good reason for the Senate not to act. That is why I and others recently raised attention to this issue and urged the Senate leadership to commit to bringing an energy bill up for consideration this year. The President, the Secretary of Energy, and many others in both parties have also reiterated their strong support for prompt action on energy issues this year.Unfortunately, resistance is coming from those who oppose domestic energy production.

Opponents of oil exploration in Alaska’s Arctic National Wildlife Refuge (ANWR), including many radicalized political activists, have spread fear about possible adverse environmental impacts. But their concerns do not withstand scrutiny. New technology, advances in drilling procedures, and heightened sensitivity to the environment, permit confidence in our ability to engage in energy production consistent with the needs of environmental protection.

ANWR opponents claim that energy bill supporters are merely exploiting the recent acts of terrorism to advance their agenda. In reality, energy security was a critical issue before September 11, and its significance is now only more apparent to more people. In light of our long-term military needs, it simply makes no sense to perpetuate our dependence on foreign oil and the vulnerability it clearly entails.Now is the right moment.

The President is calling for energy legislation as necessary to both economic stimulus and national security. The House has responded. Now the Senate must act, as members of both parties are joined together in support of a meaningful and comprehensive energy bill. Those who oppose such action are merely using September 11 as a thinly-veiled excuse for delay. Surely, we can do better than that.

White House Ceremony, July 12, 2001

Washington, D.C.– James L. Martin, President of the 60 Plus Association, hailed President George W. Bush’s prescription drug benefit proposal “as fulfilling a campaign promise that senior citizens will receive a benefit which will help them meet the high costs of prescription drugs.”

George W. Bush promised during the campaign that he would provide a prescription drug benefit which would help senior citizens meet the escalating costs of medications. He has once again fulfilled a campaign promise. Senior citizens will greatly benefit from this assistance.
The prescription drug discount card President Bush proposes will enable seniors to gain immediate relief while the Bush Administration and Congress work on a long-term reform of the Medicare system.

President Bush has delivered for senior citizens. Our senior citizens owe him a debt of gratitude. No senior should have to make a choice between putting food on the table or being able to afford the prescription drugs they need. Seniors are pleased to learn of President Bush’s plan to ensure that their golden years are spent doing all those things that bring joy to their lives and their families.

I had the opportunity to submit testimony to the House Ways and Means Committee, the Senate Committee on Health, Education, Labor and Pensions and the House Commerce Committee last year urging a prescription drug coverage for seniors which would include important principles of coverage, flexibility, and resistance to excessive regulation. The President’s proposal and principles meet these needs. We now need Congress to work to reform the Medicare program.

The 60 Plus Association is a national, nonpartisan senior citizens advocacy organization of half a million members.

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