[Senate Hearing 110-82]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 110-82

    PRESERVING SENIORCARE: AFFORDABLE DRUG COVERAGE THAT WORKS FOR 
                               WISCONSIN

=======================================================================

                                HEARING

                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                             MARCH 28, 2007

                               __________

                            Serial No. 110-4

         Printed for the use of the Special Committee on Aging



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html







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                       SPECIAL COMMITTEE ON AGING

                     HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon                    GORDON SMITH, Oregon
BLANCHE L. LINCOLN, Arkansas         RICHARD SHELBY, Alabama
EVAN BAYH, Indiana                   SUSAN COLLINS, Maine
THOMAS R. CARPER, Delaware           MEL MARTINEZ, Florida
BILL NELSON, Florida                 LARRY E. CRAIG, Idaho
HILLARY RODHAM CLINTON, New York     ELIZABETH DOLE, North Carolina
KEN SALAZAR, Colorado                NORM COLEMAN, Minnesota
ROBERT P. CASEY, Jr., Pennsylvania   DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           BOB CORKER, Tennessee
SHELDON WHITEHOUSE, Rhode Island     ARLEN SPECTER, Pennsylvania
                      Julie Cohen, Staff Director
            Catherine Finley, Ranking Member Staff Director

                                  (ii)
























                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statement of Senator Herb Kohl...........................     1

                                Panel I

Leslie Norwalk, Acting Administrator, Centers for Medicaid and 
  Medicare Services, U.S. Department of Health and Human 
  Services, Washington, DC.......................................     2

                                Panel II

Jim Doyle, Governor of Wisconsin.................................    16

                               Panel III

Bette Linton, seniorcare beneficiary, Madison, WI................    26
Tom Frazier, executive director, Coalition of Wisconsin Aging 
  Groups, Madison, WI............................................    30
Patricia Finder-Stone, state president, AARP Wisconsin, Madison, 
  WI.............................................................    40

                                APPENDIX

Prepared Statement of Represenative Thomas E. Petri..............    53
Prepared Statement of Representative Steve Wieckert..............    53
Prepared Statement of State Representative Thomas Nelson.........    54

                                 (iii)



























 
    PRESERVING SENIORCARE: AFFORDABLE DRUG COVERAGE THAT WORKS FOR 
                               WISCONSIN

                              ----------                              --



                       WEDNESDAY, MARCH 28, 2007

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:15 a.m., in 
room 562, Dirksen Senate Office Building, Hon. Herb Kohl 
(chairman of the committee) presiding.
    Present: Senator Kohl.

             OPENING STATEMENT OF SENATOR HERB KOHL

    The Chairman. Hello to everybody. We will commence our 
hearing right now.
    This hearing focuses on a program that is very important to 
me, to most of the witnesses who are here today and, most 
importantly, to more than 100,000 low-income seniors in the 
State of Wisconsin.
    Since September 1, 2002, more than 103,000 seniors have 
participated in Wisconsin's SeniorCare prescription drug 
program. The Federal Medicaid waiver that allows SeniorCare to 
operate is set to expire on June 30 of this year.
    The Bush Administration holds the key to survival of 
SeniorCare, and we believe that they must act now to renew the 
waiver. Without it, this popular and very successful program 
will end, forcing Wisconsin seniors to join Medicare Part D 
with a higher cost to both seniors and to taxpayers.
    SeniorCare is a model for a simple, affordable drug plan, 
and the Administration, I believe, should embrace it. It has a 
one-page application, a $30 annual fee, and a copayment of $5 
for generic drugs and $15 for brand-name drugs.
    It does not have an asset test, a key difference from 
Medicare Part D, that makes it easier for low-income seniors to 
get the extra help that they need. In fact, many SeniorCare 
enrollees would not be eligible for Medicare's low-income 
subsidy because of its difficult asset test.
    SeniorCare has strong bipartisan support in the State of 
Wisconsin, and among the entire Congressional delegation. To 
us, it is a no-brainer. It costs less, it covers more, and 
seniors are happier.
    As an AARP study points out, 94 percent of SeniorCare 
participants are better off than they would be under Medicare 
Part D. That is why so many seniors have chosen SeniorCare over 
Medicare Part D. In fact, enrollment in SeniorCare actually 
increased after January 2006, demonstrating that aggressive 
Part D outreach actually resulted in more seniors finding out 
about SeniorCare and signing up for it instead of Medicare Part 
D.
    Additionally, SeniorCare saves the Federal Government 
nearly $500 on each beneficiary when compared to Medicare Part 
D. The SeniorCare waiver has also saved an estimated $669 
million in Medicaid funding, because seniors with SeniorCare 
have stayed healthier longer, avoiding costlier hospital and 
nursing home care.
    Today we will hear from Leslie Norwalk, acting 
Administrator for the Centers for Medicare and Medicaid 
Services, CMS, who will give the Administration's perspective 
on SeniorCare. CMS ultimately has the authority to grant the 
waiver that would allow SeniorCare to operate through June 30, 
2010. We appreciate Ms. Norwalk's willingness to participate in 
this hearing and to hear the Wisconsin witnesses make their--
our--case for SeniorCare.
    Next, we will hear from four Wisconsin witnesses who will 
make a compelling case for the continuation of SeniorCare. We 
will be pleased to hear from Wisconsin's Governor, Jim Doyle, 
who has been an outspoken champion of SeniorCare. We will also 
hear from Bette Linton, who is currently on SeniorCare and is 
an example of one of the many Wisconsin seniors who would be 
worse off under Medicare Part D.
    Then we will hear from Tom Frazier, the distinguished 
executive director of the Coalition of Wisconsin Aging Groups, 
and also Patricia Finder-Stone, the state president at AARP, 
who will describe the hardships that Wisconsin seniors will 
face if SeniorCare is forced to end, as well as to the economic 
consequences to our State and to the Federal Government.
    Now, we hope the Administration will listen carefully to 
what they hear today. We believe it would be a huge mistake for 
the Administration to pull the plug on SeniorCare. It is a 
program that works for seniors and taxpayers, and we are 
committed to fighting to save it, so that Wisconsin seniors get 
the best and the most affordable drug coverage.
    The Ranking Member, Gordon Smith, will not be able to join 
us this morning because of a conflict with the Finance 
Committee hearing, and so we will now turn to our first panel 
and our first witness, the distinguished Leslie Norwalk.
    Thank you for being here.

STATEMENT OF LESLIE NORWALK, ACTING ADMINISTRATOR, CENTERS FOR 
MEDICARE AND MEDICAID SERVICES (CMS), U.S. DEPARTMENT OF HEALTH 
               AND HUMAN SERVICES, WASHINGTON, DC

    Ms. Norwalk. Thank you.
    Good morning, Chairman Kohl and distinguished members of 
the Committee. I appreciate the opportunity to appear before 
you today to discuss SeniorCare, a program that provides 
prescription drug coverage to eligible seniors in Wisconsin.
    Prescription drugs are integral to the delivery of safe, 
modern medical care. Accordingly, adding a comprehensive drug 
benefit to Medicare has been a priority at CMS for more than a 
decade, culminating in the 2003 enactment, and January 2006 
implementation, of Medicare Part D.
    More than 90 percent of Medicare beneficiaries have 
prescription drug coverage through Part D or another creditable 
source, at a cost significantly lower to both taxpayers and 
seniors than originally estimated.
    Before Part D, many States played a vital role in offering 
direct pharmaceutical assistance to their residents. Eligible 
low-income seniors often received drug coverage through 
Medicaid. For others, States commonly extended drug coverage 
through State pharmaceutical assistance programs, or SPAPs. On 
the eve of Part D implementation, 21 States had SPAPs that 
provided low-income enrollees with subsidies for prescription 
drugs.
    Additionally, prior to Part D, CMS recognized the need to 
work with States to extend pharmacy coverage to low-income 
elderly and disabled individuals not otherwise eligible for 
Medicaid.
    In January 2002, HHS and CMS announced a model 
demonstration called Pharmacy Plus, which allowed States to 
expand Medicaid coverage for prescription drugs to seniors and 
other individuals with family incomes up to 200 percent of the 
Federal poverty level. These Medicaid Section 1115 
demonstrations were intended to test how providing a pharmacy 
benefit to a non-Medicaid-covered population would affect 
Medicaid costs, utilization and future eligibility trends.
    CMS approval for Pharmacy Plus waivers required States to 
establish budget neutrality, meaning that the services provided 
under the demonstration could not exceed the costs that 
Medicaid would otherwise have incurred in the demonstration's 
absence.
    The overarching theory for Pharmacy Plus was that 
prescription drug programs for seniors would keep them 
healthier, target scarce resources more effectively, and 
generate offsetting savings in Medicaid, and that is known as 
diversion.
    In addition to Wisconsin's SeniorCare program, CMS approved 
Pharmacy Plus demonstrations in Florida, Illinois and South 
Carolina, but denied waivers in Delaware and Hawaii because 
they did not meet the budget-neutrality requirements.
    Medicare Part D has significantly altered the landscape in 
which States provide prescription drug coverage to residents 
age 65 and over, as well as those who are disabled.
    Before January 2006, SeniorCare was one of few affordable 
drug coverage options for most low-income seniors in Wisconsin 
not qualified for full Medicaid benefits. Today, they and their 
counterparts across the country have access to comprehensive 
prescription drug coverage through Medicare.
    Individuals duly eligible for Medicare and Medicaid now 
receive their coverage through the Medicare program. At last 
count, more than 571,000 Wisconsin seniors are receiving drug 
coverage through Part D or other creditable sources.
    The low-income subsidy, or LIS, in Part D provides eligible 
Medicare beneficiaries with substantial help in paying 
premiums. Most LIS-qualified individuals received 100 percent 
subsidy, and therefore pay no premium for Part D coverage, and 
small copayments of around $1 to $5.35.
    Part D has had a significant impact on the ability of 
Pharmacy Plus demonstrations to divert seniors from Medicaid 
and save the requisite dollars to show budget neutrality.
    Now the Medicare drug benefit, and not the Medicaid 
demonstration, is chiefly responsible for diverting individuals 
from full Medicaid eligibility.
    Given the difficulties of establishing and maintaining 
Medicaid budget neutrality in this new Part D environment, all 
States, except Wisconsin, have discontinued their Pharmacy Plus 
programs. With CMS's assistance, Illinois and South Carolina 
have successfully transitioned their demonstrations into Part D 
wraparound programs.
    CMS has reached out to Wisconsin, and is eager to work with 
the State to accomplish the same. Several States have worked 
with CMS to reconfigure or transfer their SPAP coverage or 
Pharmacy Plus waivers to wrap around the new Medicare drug 
benefit.
    With Part D at its core, States are able to provide 
beneficiaries the same or better coverage than before at a 
lower per-beneficiary cost. Currently, 24 States and the U.S. 
Virgin Islands operate qualified SPAPs to supplement Part D. 
These SPAPs pay premiums, copayments and deductibles, or fill 
in the gap for seniors, or some combination thereof.
    Wisconsin SeniorCare, the sole remaining Pharmacy Plus 
waiver, is set to expire at the end of June. The program has 
helped many individuals. However, it has failed to meet the 
State's own expectations as a demonstration project.
    Enrollment is roughly half of what the State originally 
projected, and $109 million in State expenditures for 2007 is 
similarly overstated. In the current fiscal year, Wisconsin 
will spend only about $35 million on SeniorCare.
    Finally, the State's rationale for how SeniorCare would, in 
fact, accomplish Medicaid diversion appears to have been 
flawed. More individuals aged 65 and older have enrolled in 
Medicaid than the State assumed for every year of the 
demonstration, in spite of the demonstration's generous 
assumptions of Medicaid enrollment growth for seniors as a 
comparison point for budget-neutrality calculations.
    I greatly appreciate the leadership Wisconsin has 
demonstrated in providing prescription drug coverage to its 
most vulnerable citizens at a time when there were no other 
options.
    CMS wants to avoid any interruptions in SeniorCare 
enrollees' drug coverage, and is committed to partnering with 
the State to establish an outreach and transition plan in which 
we can all take confidence, much like we have done in 24 other 
States.
    That being said, we believe the transition to Medicare Part 
D must be made as quickly as possible. CMS looks forward to 
working with Wisconsin to transition SeniorCare into a program 
that wraps around Part D so that Wisconsin seniors experience 
as little disruption as possible.
    I promise to listen, and am happy to answer any questions 
that you might have.
    The Chairman. Thank you.
    Well, as you know, SeniorCare--as I have discussed here 
this morning--the waiver expires on June 30 of this year. As 
you know, SeniorCare is a highly, if not wildly, popular 
program in the State of Wisconsin. Yet, as you have made clear, 
apparently the intention on the part of yourself and the 
Administration is that the waiver will not be renewed.
    So we want to know why you would take a program that is so 
popular, so successful, and clearly not a program that is by 
any stretch more expensive than Medicare Part D, why would you 
take a program like this and scuttle it?
    Ms. Norwalk. The main reason that we need to change the way 
that the program is structured is how it is funded.
    These individuals, we don't know enough about their assets 
in terms of whether or not they would qualify for Medicaid or, 
in fact, whether or not they would qualify for the low-income 
subsidy under the Medicare program. The State hasn't done any 
particular analysis around their assets that is specific to the 
population that has been enrolled.
    So, because of that, and because of the increases in the 
number of individuals or number of seniors who have qualified 
for Medicaid above what the State assumed, they simply don't 
meet their budget-neutrality requirements that they had 
promised to meet in 2002.
    In fact, the number of seniors that enrolled in Medicaid 
far exceeds, by several thousand, the number that they had 
estimated would be diverted from the program.
    Moreover, while I totally appreciate that Pharmacy Plus has 
been successful in Wisconsin, and I am glad that a program that 
HHS and CMS began started, the assumptions under which it was 
made, the GAO has since questioned as being faulty assumptions.
    So, one of the things that the GAO said was that, ``Neither 
data from State experience nor other research supports the 
saving assumptions necessary for budget-neutrality in the 
Pharmacy Plus demonstrations.''
    They go on to state that, ``Based on conversations with 
Wisconsin health care financing officials, and a review of 
documents, we found that the State's demonstration savings 
estimates were a residual of the budget-negotiating process, 
derived from determining how much was needed in savings to 
demonstrate budget-neutrality, rather than from research or 
data about what was realistic.''
    As an example of that, the number of people who are 
eligible for the Medicaid program that are seniors actually 
declined over the past 4 years. I don't have the number for 
2007. Yet, the assumptions that we have put in for meeting 
budget neutrality show an increase, so we would say that 2 
percent more every year would be eligible for Medicaid, and 
that is how we assumed their budget-neutrality calculations.
    But what, in fact, has happened was the opposite. Fewer 
people were eligible, and yet an increasing number of people 
actually went on the Medicaid rolls that were seniors.
    So the diversion aspect that the State had to meet in order 
to qualify for this Medicaid demonstration, they failed to meet 
over the 5 years. That is really the key point.
    It is not so much that we don't want to help Medicare 
beneficiaries in Wisconsin. Of course we do, just like we have 
done in 24 other States.
    But the financing of that help needs to change. The 
financing of that help needs to come through the Medicare 
program, and through the State, rather than through Medicaid. 
These individuals are not likely to qualify for Medicaid if 
they can't spend down to meet the LIS asset test any more than 
they would meet the Medicaid asset test.
    The Chairman. The average annual Federal subsidy for a 
SeniorCare participant is $617, which is about half of what the 
Federal Government spends to subsidize a Part D participant.
    You have talked about some very technical budget-neutrality 
rules, but isn't it true, Ms. Norwalk, that, at the end of the 
day, SeniorCare costs the Federal Government less in its 
current form than it would cost to transfer everyone to 
Medicare Part D?
    Ms. Norwalk. I actually think that analysis is based, if I 
understand correctly, on an AARP study from May 2005. I would 
like to point out there are some significant differences that 
have happened in the past 2 years since the AARP did that 
study.
    To begin with, the Federal budget has saved over $189 
billion from its initial estimates of the cost of the program. 
Moreover, that study is based on a $35 average premium. Well, 
the average premium now across the country is $22, and in 
Wisconsin there is a premium for $14.80. So there alone, the 
costs are overstated for the beneficiary by $240 purely in 
premiums.
    Moreover, the number of plans in Wisconsin that have a $0 
deductible are the majority of them. There is even a plan in 
Wisconsin that doesn't have a coverage gap for a premium under 
$50.
    So I think that there are lots of options that are 
available for beneficiaries, with or without the SeniorCare 
program, that the AARP report doesn't take into account when 
determining savings.
    Finally, I think they overstate the amount that it costs 
the Federal Government, because of the differences in cost that 
we have seen over the past 2 years. The cost to the Federal 
Government for a non-LIS beneficiary is actually significantly 
less than the AARP report recognizes. It is about $892 a year, 
rather than the--I don't remember the number you just quoted. 
What is it, like $1,200?
    In any event, I appreciate that at the time when the 
analysis was done, that was the best information that they had. 
But a significant amount has actually happened under the 
Medicare Part D program, including satisfaction rates I suspect 
are very similar to what you are seeing with the SeniorCare 
program. Every study that we have seen done, every poll, 
including J.D. Power and Associates, has a satisfaction rating 
for Medicare of 75 to 80 percent of those who are enrolled.
    So we totally appreciate that both programs are critically 
important to Medicare beneficiaries, and want very much to 
continue the concept of SeniorCare.
    What we have done in States like, say, Pennsylvania, where 
they have over 200,000 people on their PACE program, which is a 
similar program to that in Wisconsin, where they can wrap 
around the Part D program, and people who had PACE before Part 
D and after Part D see a very similar product.
    So, for example, in Wisconsin, you would have a $15 
copayment for the brand-name drugs and $5 for generic or 
perhaps less, depending on the plan that the State worked with.
    What I would like to do is move, rather from a discussion 
about ``Gee, SeniorCare has to exist in its current form,'' is 
figure out how it is that we can make SeniorCare work with no 
more cost to the State by wrapping around the programs that 
currently exist in Wisconsin to provide seniors with something 
that looks very similar and is as easy as possible for them, 
appreciating that a transition can make many people nervous.
    But, we have had so much success in the 24 other States we 
have worked with, we feel that our past experience and that 
success will bode well for transitioning the Wisconsin program 
from one that is Medicaid-based to one that is Medicare-based, 
with some help from the State and the same funds that the State 
has set aside for this program.
    The Chairman. As you know, Ms. Norwalk, SeniorCare does not 
have an asset test. If SeniorCare ends, many beneficiaries who 
move to Medicare Part D will not qualify for the low-income 
subsidy because of the complicated asset test. They will have 
higher out-of-pocket costs and could face the dreaded ``donut 
hole,'' where many seniors will not be able to afford their 
drugs.
    How can you argue that all of Wisconsin's seniors will be 
better off under Medicare Part D?
    Ms. Norwalk. I actually think that what we have seen in 
other States that have had wraparound programs is that they 
have seen very similar costs.
    Now, every individual is different, and that is one of the 
reasons that the Part D program has been so successful, is that 
Medicare beneficiaries have been able to choose a plan that 
makes the most sense for them: plans that have no deductibles, 
plans that fill in the coverage gap with both brand and 
generics, or plans that have very low premiums, like $14.80. 
Every beneficiary needs something different.
    But one of the things that we have found for other States, 
for the concern about, ``How do I choose the right plan?''--
even though the Medicare program has provided significant 
numbers of tools for beneficiaries, including 1-800-MEDICARE, 
which is available 24-7, and significant help from CMS and our 
partners across the country--one of the things that many States 
have done is that the State decided that they would be the 
authorized representative of the beneficiary.
    They said, we will work with these X number of plans that 
have low premiums or no deductibles, and we will automatically 
enroll beneficiaries in those plans and work with those 
particular plans to wrap around their benefits, so that they 
see the exact same thing that they do now.
    They get a card that has ``SeniorCare'' on it, it has a $15 
copayment for brand-name drugs, it has a $5 copayment for 
generics, or whatever it happens to be, perhaps less depending 
on the particular plan that the State works with. But we have 
had such success there that we think the out-of-pocket costs 
actually may be no more.
    Of course, as you know, the SeniorCare program, in many 
instances, has a deductible that far exceeds the deductible 
under Medicare. For certain populations, it is $500. For other 
populations--the higher the income level, of course--it is 
$850.
    Now, most of the plans in Part D in Wisconsin have no 
deductible. Consequently, there are lots of instances when 
beneficiaries have lower drug costs, maybe up to $850, where 
they would be better off.
    Now, I appreciate that the AARP analysis didn't have the 
benefit of knowing what was going to be offered in 2007. But I 
think if they took another look at this, they may come out with 
very different results, as we have done with many other States 
in working with them to wrap around the Medicare Part D 
program.
    The Chairman. Well, we are very much appreciative of your 
willingness to come here and testify and, as I understand, to 
hang around a little bit to hear some of the subsequent 
testimony, particularly from the Governor and the panel. It 
shouldn't take too long, and we hope it will be instructive and 
that you will find it useful.
    Ms. Norwalk. I am sure. Thank you for having me this 
morning.
    The Chairman. Thank you for being here.
    [The prepared statement of Ms. Norwalk follows:]



    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    The Chairman. We now move to our second panel, which will 
be the Governor of Wisconsin, Jim Doyle. Jim Doyle is the 
former Wisconsin attorney general, and he is now in his second 
term as our Governor.
    Governor Doyle has worked diligently to save and expand the 
SeniorCare program. He is a very strong proponent of it. His 
efforts prove how strongly he feels about its very important 
role in our State's health care system. We certainly do thank 
him for following that conviction to make this journey here to 
Washington to testify before this Committee today.
    With that, we would like to hear from you, Governor Doyle.

         STATEMENT OF JIM DOYLE, GOVERNOR OF WISCONSIN

    Governor Doyle. Good morning, Senator. Let me express my 
deep thanks to you for this hearing and for the work that you 
have done for seniors in Wisconsin, and particularly for 
SeniorCare.
    I want to also acknowledge and thank Ms. Norwalk.
    We continue to hope that we are going to be able to 
convince CMS that extending the waiver for SeniorCare for 3 
more years is the best thing, not only for seniors in 
Wisconsin, but also the fact that we can do this in a manner 
that saves the Federal Government money and saves the State of 
Wisconsin money.
    I am currently here with a cane because I am currently in 
rehab for a little hip procedure that I had. Yesterday, I was 
in the pool at the rehab center. I had one of these instances 
that I know you, Senator, have frequently, where I was there 
and there was a class of seniors in the warm-water pool who 
were going through their exercises. They noticed that I was 
over in the other pool doing my rehab work, and you could tell 
people were talking with each other.
    As they came out of their pool at the end of their class, I 
would say about three-quarters of the group--I would think it 
was about 20--about 15 of them came over to me and said, 
``Please save SeniorCare. Please save SeniorCare.'' It was only 
one more instance of what happens to me frequently and, I know, 
to you as well, Senator, as you go though Wisconsin.
    All of us in Government appreciate the fact that there are 
often programs that work that people are very concerned about, 
and aren't tremendously favorable toward the Governmental 
program.
    In my experience as Governor, SeniorCare is the singularly 
most popular program, in which more people come up to me who 
are either enrolled in it themselves or who are sons and 
daughters of parents who are enrolled it it, who want to talk 
about what a positive experience SeniorCare has been.
    I don't think I have, in my time--and you could draw on 
your own experience--I don't think I have had a single negative 
comment made to me about SeniorCare, and yet hardly a day goes 
by that I don't have people talking to me in a positive way.
    I say this because one of the purposes we often hear talked 
about in Washington is about how States should be laboratories 
and how we should be able to develop programs in our States 
that help lead the Federal Government toward good policy.
    While we recognize all of the work that has been done on 
Part D--and in Wisconsin, we have certainly lived up to our 
obligations, and we have had senior specialists, and you will 
hear from some, who have spent a lot of time working to make 
sure that people are participating in Part D and are enrolled 
in the right program. We have done a lot of that work in 
Wisconsin.
    But I also hope that we all recognize that maybe Part D 
isn't exactly the way we might want it to be in the end. As we 
work toward furthering, improving nationally, how we provide 
prescription drug care for seniors, that it is good to have 
some programs like SeniorCare out there that serve as models 
and serve as places that policymakers can go and look and think 
about how they might want to improve Part D as we move forward, 
and have some options.
    In fact, there is really only one left, in SeniorCare. But 
I hope it is one that the Federal Government recognizes the 
importance of maintaining for purposes of having some other 
alternatives and some other places that they can look to for 
developing policy.
    You know, since 2002, Wisconsin has been a National model 
for providing affordable, comprehensive drug coverage to older 
citizens through our SeniorCare program, and it has proven to 
be popular, efficient and cost-effective.
    In fact, when the Federal Government started offering its 
own coverage through Medicare, SeniorCare's enrollment didn't 
go down, it went up. So today, more than 105,000 seniors trust 
and rely on this program for lifesaving medicine at prices they 
can afford.
    Again, I really want to acknowledge and thank Ms. Norwalk 
and people at CMS, who have worked with us.
    One of the things that we did as part of our agreement with 
CMS to continue SeniorCare was to develop a wraparound program. 
Compared to the other 24 States with wraparound programs, our 
wraparound programs was developed by working and looking at 
those States.
    But compared to SeniorCare, the wraparound program has such 
little popularity that we couldn't even get bidders to come in 
to bid on the wraparound program in Wisconsin.
    So, I think that really tells you where the marketplace is 
on this in Wisconsin. People vastly, vastly prefer SeniorCare. 
As I say, since Part D came into place, our SeniorCare 
enrollment has gone up significantly.
    As you know, SeniorCare operates under a waiver from the 
Federal Government that is expiring soon. I want to thank and 
acknowledge that Secretary Leavitt and I were able to work out 
an agreement that allowed SeniorCare to continue past January 
1, 2006. I thank the Secretary for his consideration and for 
allowing that and for at least giving us a fighting chance to 
be in the position that we are right now to have SeniorCare 
continue.
    But without additional action from the Bush Administration, 
the waiver will end on June 30 and our 105,000 citizens who are 
on SeniorCare will face a new world. Most of them will be 
forced into the Medicare Part D program, and we believe that 
they will face higher payments, they will face more complicated 
bureaucracy, and some of them will face the donut hole.
    I don't think you will find a voice in Wisconsin of either 
political party that doesn't agree that SeniorCare is the 
preferable program. Throughout the past year, as our seniors 
had to choose between SeniorCare and Part D, they 
overwhelmingly chose SeniorCare.
    During that time, SeniorCare enrollment increased over 26 
percent. We believe it is obvious why: An AARP study found that 
94 percent of SeniorCare participants are better-served under 
SeniorCare than they would be under Medicare Part D.
    As you do, Senator, and as I mentioned earlier, I talk to 
seniors all over the State. They love SeniorCare, and they are 
obviously very concerned about what will happen to them if it 
is taken away.
    I believe the argument for SeniorCare is compelling. While 
the Medicare drug plan tends to be complex and bureaucratic, 
SeniorCare is very simple to administer and easy for people to 
navigate. While the Medicare plan is expensive and comes with 
the donut hole, SeniorCare has no gaps in coverage and much 
lower out-of-pocket costs.
    While the Medicare plan makes it illegal for the Federal 
Government to negotiate lower drug prices, in Wisconsin, we use 
that very negotiating power to be able to get big discounts on 
the most commonly prescribed drugs. Because of our very low 
administrative costs and the discounts we negotiate, the 
program is not only affordable for seniors, but it saves 
taxpayers money.
    The fact is, at the heart of our request for an extended 
waiver is this fact of lower costs. Both seniors and the 
Federal Government will spend more by ending SeniorCare than by 
extending it. In the State fiscal year 2006 alone, SeniorCare 
reduced drug costs for Wisconsin seniors by almost $200 
million. Of the $253 million in drug costs billed to the 
SeniorCare program in fiscal year 2006, the Federal Government 
paid only $46 million, or about 18 percent, of those total drug 
costs after the rebates are taken into account.
    In fact, the average annual Federal subsidy for the 
SeniorCare waiver participant is $617. The Federal Government 
pays almost twice as much as that under Medicare, or about 
$1,200 per senior.
    The SeniorCare waiver has consistently achieved budget 
neutrality, which is the requirement for these waivers. Our 
most recent analysis shows that the program saved about $669 
million in Medicaid funding through the fourth year of the 
waiver.
    These savings are the direct result of reduced Medicaid 
costs for health care services, because seniors with SeniorCare 
prescription drug coverage have stayed healthy longer and have 
saved us Medicaid costs.
    We are projecting that the savings to Medicaid will 
continue to be significant under the proposed waiver extension 
for State fiscal years 2008 through 2010. As shown in our 
waiver application, there are projected savings of $697 million 
to the Medicaid program alone during the waiver extension 
period. These savings translate into $404 million in reduced 
Federal expenditures.
    Last June, I asked the Federal Government to consider 
continuing the waiver, and in October, we submitted our formal 
application for our 3-year extension. To date, formally what we 
have received is a brief letter from the Department 
acknowledging the receipt of our waiver extension application.
    So I thank you for today's hearing, and I hope I can shed 
some light on this urgent issue, and I hope it can be part of 
our effort to persuade the Secretary and CMS to extend 
SeniorCare. With their approval, we will continue to receive 
Federal funding for the program. Without their approval, we 
will lose our Federal match, and this extremely successful and 
popular program will cease to exist.
    Again, I want to emphasize how important it is for the 
States to be laboratories, and for us, particularly with 
SeniorCare, where we have demonstrated that without asset 
qualifications, that we are able to reach seniors and provide 
them with a very simple, good and effective program.
    Of course, we are going to continue to work with you, and 
we will continue to work with CMS, and we will do whatever 
ultimately we are required to do.
    But I do hope that we continue SeniorCare in Wisconsin and 
continue it as an example for the Federal Government and for 
you, Senator, and other Members of Congress to be able to 
continue to look at as we look for ways to improve providing 
prescription drug coverage for seniors, not only in Wisconsin 
but across the United States.
    I want to thank you, Mr. Chairman, for your tireless 
support of SeniorCare and for giving our citizens a strong 
voice in Washington. I continue to look forward to working with 
you and other members of our delegation of both political 
parties to make sure that seniors in our State can continue to 
get affordable, comprehensive drug coverage.
    I know that these budget-neutrality issues can get very 
complex, but I would hate to see SeniorCare get lost in an 
argument between Medicaid and Medicare. For most people in 
Wisconsin, and certainly people on SeniorCare, the argument 
about whether this is Medicaid or Medicare, which--we all 
understand or deal with these budgets, but it kind of gets 
lost. They see it as Federal Government and State Government 
and a program in which the Federal Government has very 
successfully partnered with the State Government to provide 
really meaningful coverage for seniors in Wisconsin.
    SeniorCare, to me, is the example of the program we should 
be looking for, where the State of Wisconsin has stepped up. I 
want to emphasize that even in very, very difficult budget 
times--and when I first became Governor, our State faced the 
worst budget crisis in its history, and there was pressure. We 
really had to decide what our priorities were, because we had 
to make very, very deep cuts.
    But even in that very, very difficult time, Wisconsin put 
its money into the SeniorCare program. Even in that time when 
everything else was getting cut, our priority was the 
preservation of SeniorCare.
    I am very proud that we came through that very difficult 
time with SeniorCare not only intact, but a growing, strong 
program. It shows the commitment that the State of Wisconsin 
has made to this very, very important issue of providing 
comprehensive prescription drug coverage for our seniors.
    It also shows the commitment that the Federal Government--
and again, I want to emphasize, of both political parties--that 
the Federal Government has made to this program as well. 
Together, we have developed a very, very strong and a very, 
very popular program in Wisconsin.
    I hope that we are able to persuade CMS and the Secretary 
that this is a program fully worthy of being continued for 3 
more years.
    Again, thank you very much, Senator Kohl. I appreciate that 
you have taken your very valuable time to really explore this 
issue and to come to an understanding of how important 
SeniorCare is, I believe not only to the people of Wisconsin, 
but SeniorCare stands as a model of something that can be very 
helpful to the entire United States.
    Thank you.
    The Chairman. That is a very good statement, Governor 
Doyle.
    The question I want to ask you surrounds the issue of, why 
is this being done? I mean, you have made a very, very powerful 
point, and it is clearly a fact, that SeniorCare is enormously 
successful, wildly popular and, according to every analysis, 
not expensive compared to Medicare Part D.
    So we have over 100,000 people who are enrolled. It is a 
growing enrollment program. Every one of those 100,000-plus are 
happy with the program, don't want to see it eliminated.
    As you pointed out, States are laboratories, and this is 
certainly a successful kind of a health care experiment that 
does work.
    The people at CMS--Ms. Norwalk, who is here, and others, 
Secretary Leavitt--they are smart people. I think they have an 
awareness and an understanding of this program's success in 
Wisconsin.
    So cutting through all the technicalities, trying to 
understand in real-life terms what we are talking about here, 
in your opinion, why are they moving, if not having decided, 
moving in the direction of scuttling this program?
    Governor Doyle. In my opinion, I believe that there is 
tremendous pride in Part D and a tremendously strong desire to 
show that Part D has accomplished everything for everybody. So, 
I think we are really fighting against very strong momentum to 
show that Part D can be used in ways to cover all problems and 
to do it very well.
    Now, we all know what we have been through in Wisconsin 
with Medicare Part D, and you will hear from a panel later, and 
I don't know to what extent they will touch on this, but this 
has been a very, very difficult time for seniors.
    We have been good partners--I want to really emphasize 
this--with CMS and the Secretary. Because we didn't just sit 
back and complain that Part D is a mess, which in many ways it 
was, but we really did--we increased our number of senior 
specialists dramatically in the State who were out there 
working with people.
    I know your office and our other Congressional delegation, 
we worked hard, because it is important. If Part D is the 
vehicle for getting this done, then we wanted to get as many 
people enrolled in the right program in Part D.
    But I think we all have to understand, there are some very 
big shortcomings to Part D. To try to sort of jam everybody 
into this system creates some real difficulties.
    So I think, again, I appreciate--and I want to express my 
thanks to Secretary Leavitt, who did go out of his way to allow 
SeniorCare to continue after January 1, and to allow it to at 
least give us a fighting chance to be here. I want to express 
my thanks to the Secretary for doing that.
    But I think what we are practically up against is a real 
desire by this Administration to show the world that Part D is 
a great thing, and yet we have a few--we actually only have one 
that is left out there, like SeniorCare, which says, ``Hey, you 
know, maybe Part D is or is not a good thing, but there are 
some other ways to go about doing this.'' At least in 
SeniorCare, it is actually an easier, more understandable and a 
better way to do it.
    So I think we are kind of up against the whole big Part D 
machine here, and that is kind of what we are trying to just 
say: ``Well, let us just be one little voice out there that 
says that whatever you think of Part D, one way or another, 
that there is a way that we have found to do this in Wisconsin 
that actually works better.'' I hope that that voice prevails.
    The Chairman. That is very good. Well, we appreciate your 
being here today.
    Ms. Norwalk is seated behind you, and of course, she is a 
fine woman, and probably doesn't agree with your conclusions. I 
would ask if she wishes to make a response now, because this is 
a chance to have an informal exchange.
    Do you want to say a word or two or three, whatever is on 
your mind? Then we will go to the next panel. But we thank you 
for your willingness to come forward once more and make a few 
remarks.
    Ms. Norwalk. Sure. Happy to be here.
    We certainly do appreciate all the help that we have had 
from the State of Wisconsin in terms of Part D.
    I appreciate that your perspective, Governor, that this is 
all about Part D.
    It is really about whether the Medicaid program should be 
paying for individuals that would highly unlikely be able to 
qualify for Medicaid, either from an asset reason--although I 
appreciate that you may not have the specifics there, not 
having surveyed them. But that aside, there is another program, 
and that other program would, I think, be the reason that 
people did not qualify for the Medicaid program.
    You did mention something about negotiating, and I do want 
to clarify the negotiation point for Part D, because it is 
widely misunderstood.
    The prescription drug plans negotiate on behalf of Medicare 
beneficiaries every day to the tune of billions of dollars in 
price concessions, including things like rebates. So the Part D 
program, one of the reasons it is much less expensive than 
originally estimated is because of the large price concessions 
they have been able to extract from prescription drug 
manufacturers.
    I am glad that the State also has had success in getting 
rebates for the seniors in Wisconsin for the SeniorCare 
program, but likewise, the Part D program has had great success 
in doing that.
    That is why you see premiums much lower than the AARP 
report estimated. That is why I think the AARP report and some 
of the numbers that we have been discussing today are very 
overstated both in terms of Federal costs, as well as in terms 
of beneficiary costs.
    I appreciate that whatever happens, it is not so much that 
we want SeniorCare to go away, we want SeniorCare to be 
transformed into a different sort of program than it is, still 
with the State's help so that beneficiaries in Wisconsin are no 
worse off than they are today.
    I think that there are lots of examples of how we can do 
that in different forms, and look forward to working with the 
State to end up with just that result.
    Thank you.
    The Chairman. Last comment, Governor Doyle?
    Governor Doyle. Well, I know Ms. Norwalk has this argument 
all the time about the negotiations, and she can debate Members 
of Congress. But I would say, could you imagine if the Federal 
Government actually, on behalf of all potential Medicare 
recipients, was the one out negotiating, what those discounts 
would be? But that is not our issue before us today.
    I do want to talk about the Medicaid-Medicare issue, if I 
could, for just a moment.
    Wisconsin made a decision not to asset-test. CMS has now 
been asking us to go back, as Ms. Norwalk just mentioned, and 
to do a survey of people to see how many, if the asset test was 
applied, would no longer be eligible for Medicaid prescription 
drug assistance.
    We have been very reluctant to do this. I think you can 
appreciate this, Senator, because even if we go out and start 
surveying people on this, it really cuts to the very core of 
what SeniorCare is designed to do.
    I also believe, and I believe we have demonstrated this to 
CMS, that by not having the asset test for SeniorCare and 
allowing people to get their prescription drugs easier, we keep 
many people out of Medicaid-funded nursing care and other cares 
for much longer periods of time.
    That is really where we save the Federal Government 
Medicaid money. Because these people would, if asset-tested, 
would eventually have to spend down those assets and go into 
Medicaid.
    This is how, in 2002--we are not changing the rules of the 
game here--this is how in 2002, a prior Administration, and a 
Republican Administration, in Wisconsin demonstrated budget 
neutrality in 2002. That is how we are demonstrating again, as 
we go for our renewal in 2007.
    So this is something that we have been trying to engage CMS 
in. Again, Ms. Norwalk and her team have worked with us in a 
lot of different ways, and we really want to express our 
appreciation for that.
    But I do think that the non-asset-tested SeniorCare 
demonstrates that over time, we do keep people who would then 
spend down those assets and become Medicaid-eligible, we keep 
them out of Medicaid for a longer period of time, save the 
State money and, obviously, save the Federal Government a lot 
of Medicaid money to do it.
    That is what we have been working to demonstrate to CMS. 
That is what was demonstrated back in 2002 with the original 
budget neutrality of this program for the waiver, and that is 
the same standard that we are working on now.
    The Chairman. OK, well, in my personal life I have always 
operated under the principle that it is smart to give a woman 
the last word. [Laughter.]
    Ms. Norwalk. Bless you.
    The Chairman. So this will be the last word. Go ahead.
    Ms. Norwalk. Thank you.
    Just to address that particular point that the Governor 
raised, now that we have 5 years of experience with the 
SeniorCare program, it is not so much that we were suggesting 
that SeniorCare should have had an asset test all along, but 
rather that, with that 5 years of experience, if we knew more 
about who was enrolled in SeniorCare, we could do a number of 
things.
    One, figure out whether or not their assets were such that 
they would have actually spent down to Medicaid. We are not 
sure about that, because we don't know. I don't know if they 
have very expensive homes, or whatever it happens to be. If it 
is, that is fine from the SeniorCare program perspective.
    But when we are looking at a couple of things: both whether 
or not they would be able to spend down to the Medicaid program 
for purposes of comparing SeniorCare, with or without the 
waiver, whether SeniorCare existed or not, what would have 
happened with Medicaid and the numbers of people who enrolled 
who were seniors; and then second, for determining--both of you 
raised this point--in terms of who is better off under the 
Medicare program, and given that the limited-income subsidy 
help, you pay no premiums and you pay only very small 
copayments.
    In fact, the copayments you pay under the LIS program in 
Medicare are significantly less than the copayments that are 
paid under SeniorCare. Because we don't know the asset 
information about that, we don't know actually how many of 
those in SeniorCare might be better off under the Medicare 
program.
    So for both purposes, we thought that asset question was 
very important and critical for determining, after 5 years of 
experience, whether or not they were actually budget-neutral in 
terms of the number of people on Medicaid and who would be 
better off under the Medicare program, not so much that we 
expected SeniorCare to have an asset test.
    But it was an important piece of information for us to do 
the analysis to figure out, on a go-forward basis, whether or 
not they could continue to meet budget-neutrality, now that we 
aren't starting from scratch in 2002 but have 5 years of 
experience.
    Given the GAO's concern, thought that it would be important 
for us to find out that information, because the GAO thought 
that our assumptions were, in fact, significantly more generous 
than they would have preferred for the State.
    The Chairman. Thank you so much for being here. This 
testimony has been extremely important, and thanks a lot.
    Governor Doyle. Thank you, Senator.
    Ms. Norwalk. Thank you.
    [The prepared statement of Governor Doyle follows:]

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    The Chairman. So we will now move to our third panel.
    Our first witness will be Bette Linton, a SeniorCare 
beneficiary from Fitchburg, who we are fortunate to have in 
Washington today.
    Our second witness will be Tom Frazier, the distinguished 
executive director of the Coalition of Wisconsin Aging Groups, 
a State-wide nonprofit, nonpartisan federation of over 600 
member organizations. The Coalition is involved in education, 
training, leadership development and advocacy for Wisconsin's 
aging network.
    Our third witness will be Patricia Finder-Stone, the AARP 
Wisconsin State president. She is a registered nurse and a 
Green Bay-area resident for nearly 50 years. Ms. Finder-Stone 
is familiar with the concerns and challenges facing our aging 
community in Wisconsin.
    So we thank you all for being here.
    We will start, Bette, with your testimony.

 STATEMENT OF BETTE LINTON, SENIORCARE BENEFICIARY, MADISON, WI

    Ms. Linton. Thank you, Senator Kohl, for inviting me to one 
of the most beautiful capitals in the world. It is a privilege 
to be here at this time, when the cherry blossoms are in bloom. 
I am happy to represent the SeniorCare plan.
    Sometimes, we think that good health is simply the absence 
of illness. If you were asked today, ``Are you healthy?'', most 
of us would respond, ``I hope so,'' or ``I think so.''
    Being healthy, in my view, is a way of living that 
emphasizes taking steps to prevent illness and to prolong our 
lives. These steps enable us to achieve a state of well-being 
given our own individual set of circumstances.
    Each stage of life has its own challenges. With the 
development of new drugs, diagnostic and surgical techniques, 
as well as the advances in medicine, we are offered new ways to 
prevent illness and to prolong and enjoy our lives. But the 
downside of this is that the cost of health care is soaring.
    So here is my experience.
    Prior to a fall that I had last year, I had been taking two 
prescription drugs routinely, one for acid reflux and the other 
for an occasional urinary tract infection. The medication for 
reflux came to about $140 a month, $1,680 per year, which came 
out of my own pocket. On a monthly Social Security check of 
just $648, it was a significant expense.
    Exactly one year ago last Friday, I dropped an empty 
laundry basket while I was going upstairs. In trying to 
retrieve it, I stepped backward three steps and landed on a 
hard concrete floor. I broke my right femur in three places and 
lay for 1\1/2\ hours before someone came home, called an 
ambulance and took me to a hospital.
    The pain was intense. Today, I have a long steel rod, four 
screws and a plate in my right leg. Before flying to 
Washington, I wondered what the security door through the 
airport was going to sound like. [Laughter.]
    While in the hospital and the nursing home for rehab, I was 
given pain medications as well as pills to help me sleep. 
Ambulation during the past year has taken me from a wheelchair 
to a walker and, finally, my cane. Once at home, the home 
health agency installed grab bars and benches to ensure my 
safety.
    That summer, last summer, a nurse introduced me to the 
SeniorCare plan. As I said before, for several years I have 
been paying significant costs for the medications I mentioned 
earlier. The SeniorCare plan offered me huge savings.
    Someone--because I am not very good at figures--compared 
the cost of my medication under Medicare Part D with the costs 
under SeniorCare. Under Medicare Part D, the cost of my 
medication and premiums would be $684 a year under the least 
expensive plan. With SeniorCare, the cost would be $180 per 
year, an impressive savings for me of $504.
    So who has helped me pay for these costly expenses? 
Medicare helped with hospitalization, rehab and some home 
health assistance. Living on a Social Security check of just 
$648, I might have had to live in a small rented room with 
limited options for quality living, but I am one of those very 
fortunate senior citizens: My son has given me a room in his 
home 4 days a week, and my daughter cares for me from Friday 
through Sunday noon.
    My daughter was the nurse who introduced me to the 
SeniorCare plan. But, you know, when I think of the elderly 
people who have to take many, many medications each day and who 
must decide whether they can afford medications or buy a 
preferred meal, I know that I am truly blessed.
    Earlier, I stated, ``Being healthy is a way of living that 
emphasizes taking the right steps to prevent illness and to 
prolong life.'' I believe that my SeniorCare plan has enabled 
me to achieve this goal--and I had my card right here, but I 
can't find it now. Anyway, I value my SeniorCare plan very 
much.
    Thank you for having me this morning.
    [The prepared statement of Ms. Linton follows:]

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    The Chairman. That is a great statement, Bette. Thank you 
so much for coming here to make it.
    Tom, let's hear from you.

  STATEMENT OF TOM FRAZIER, EXECUTIVE DIRECTOR, COALITION OF 
              WISCONSIN AGING GROUPS, MADISON, WI

    Mr. Frazier. Good morning, Senator. I am pleased to be here 
today. Thank you very much for inviting me.
    I want to make the point that thousands of older people in 
Wisconsin would suffer significant harm if Wisconsin's 
SeniorCare waiver is not extended.
    In preparing for this testimony today, I asked for stories 
about people, and I would like to just give you three. I have 
many, but I would like to give you three stories.
    The first is a woman on SeniorCare, takes four generic 
drugs and four brand-name drugs, and her annual cost under 
SeniorCare is about $990. The cheapest Part D plan would cost 
over $5,000, a difference of over $4,000. She does not qualify 
for the extra help due to assets.
    A 75-year-old widow takes six medications for high 
cholesterol, osteoporosis and a heart condition. Her income is 
actually below the Federal poverty level, but she recently sold 
her home and moved into an apartment, so she does not qualify 
for the extra help, again, due to those assets. The least 
costly Part D plan would cost her over $4,000 a year in out-of-
pocket expenses. Under SeniorCare, she would pay $960 a year, a 
difference of over $3,000.
    Another SeniorCare enrollee actually wanted to see if she 
would actually be better off in Part D. So she and her 
husband's combined income would require an $850 deductible 
under the SeniorCare program before she would qualify for the 
assistance. Under SeniorCare, her costs are about $2,500 a 
year. Under Part D, her costs would be about $7,300 a year in 
premiums, copayments and deductibles. Needless to say, she 
chose to stay in the SeniorCare program.
    The worst thing is that the people who can least afford 
their prescriptions will be the ones hurt the most, and that is 
the major point I want to make today.
    Out of the 104,000 people on the SeniorCare program in 
Wisconsin, 48,000 of them, nearly half, fall into what we call 
Level 1, which is an income of $16,000 or less per year. Those 
people pay a $30 enrollment fee, and then they pay a $5 and a 
$15 copayment for a generic or a brand-name drug. If they don't 
qualify for extra help under Part D, they will have a 
deductible, a copayment, a monthly premium, and no help if they 
are unfortunate enough to reach the donut hole.
    One of the factors in Wisconsin that is somewhat unique, we 
are the second-worst State in the country in getting our 
applications for extra help approved. Over two-thirds of our 
applications are denied, and that is one of the reasons.
    We think that is largely due to the asset test for Part D, 
which is so low--$7,600 for an individual and $12,000 for a 
couple. It is just extremely low, and for some reason, I guess, 
older people in Wisconsin have managed to save a little bit of 
money in their golden years.
    The other thing is, as you have already heard, and I don't 
want to belabor this, but the SeniorCare application and 
process is simpler. This is the SeniorCare application: one 
page, back and front. This is the extra-help application for 
the Social Security Administration. We have a cover letter, we 
have a page of instructions, we have five pages of actual 
application. Then, of course, we do have the paperwork 
reduction notice at the end of it. [Laughter.]
    SeniorCare is popular because it costs less, both for 
individuals and the Government, it is simpler to use, it covers 
almost every drug that somebody needs to take, and, as you have 
heard, there is no donut hole.
    In summary, thousands of low-income older persons will face 
much higher out-of-pocket costs, and I think you heard the 
examples: $3,000, $2,000, almost $5,000. Those people will not 
be able to afford their prescription drugs, and I don't think 
the Federal Government, the State Government, or anybody wants 
that to happen.
    I think there are two compelling reasons to continue 
SeniorCare.
    First, it costs less, so why should we change it?
    Second, CMS defends Part D on the basis of choice. ``We 
need to give people choice. One plan does not fit everyone.'' I 
have heard that time and time again. We have already got 54 
Part D plans to choose from in Wisconsin. Why don't we just 
consider SeniorCare as choice number 55 and let them have one 
more choice?
    A lady from northwestern Wisconsin may have said it best. 
``Without SeniorCare, I couldn't possibly make it. My monthly 
income is so low, I can barely get my bills paid.'' If she is 
forced off SeniorCare, Senator, I can assure you she will not 
get her bills paid, and that would be a shame. It would be a 
shame that our Government has let her down.
    Thank you.
    [The prepared statement of Mr. Frazier follows:]

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    The Chairman. Thank you, Tom. That is a great statement.
    Patricia, would you let us hear from you?

   STATEMENT OF PATRICIA FINDER-STONE, STATE PRESIDENT, AARP 
                     WISCONSIN, MADISON, WI

    Ms. Finder-Stone. Chairman Kohl and distinguished Committee 
members, who are unable to be with us today, I am Patricia 
Finder-Stone. I am president of the AARP Wisconsin, and I am a 
registered nurse. Thank you for inviting AARP to testify on the 
importance of the Wisconsin SeniorCare prescription drug 
program.
    AARP played a critical role in enacting SeniorCare, and we 
strongly support renewal of the waiver that helped create it. 
SeniorCare was tailored to meet the needs of Wisconsin 
residents with limited incomes, and it provides greater 
assistance to some individuals than is available under Medicare 
Part D. AARP also strongly supports and played a critical role 
in enacting the Medicare Part D benefit.
    Part D is helping millions of beneficiaries, including 
thousands in Wisconsin not eligible for SeniorCare, to afford 
the drugs they need. However, SeniorCare is able to provide 
greater coverage for some people with low incomes in Wisconsin, 
because Wisconsin contributes State funds and it gets millions 
of dollars in discounts and rebates from drug companies.
    Without the waiver, Wisconsin would not be able to use the 
savings from drug companies. That is because Medicare only 
counts payments by State programs toward Part D's coverage if 
the State program does not get savings from drug companies. 
Without those savings, the State would not be able to provide 
its current level of coverage if it were to reconfigure 
SeniorCare to wrap around the Part D benefit. The result would 
be higher costs for beneficiaries, for the State and for 
Medicare.
    In fact, SeniorCare currently costs the Federal Government 
less than half of what Part D costs for the average enrollee, 
$617 for SeniorCare versus $1,331 for Part D.
    Unlike Part D's low-income subsidy program, SeniorCare has 
no asset test. A report that we commissioned in 2005 found that 
80 percent of SeniorCare enrollees who meet the Part D low-
income subsidy income criteria do not meet its asset test.
    I have personally helped Medicare beneficiaries enroll in 
SeniorCare, and I was touched by how grateful people were and 
how easy the one-page application is. However, because of the 
asset test, people applying for the Part D low-income subsidy 
must fill out a daunting eight-page application form, to which 
Tom referred.
    The extra help Part D offers to those that are least able 
to afford their drug is one of the most important features and 
a key factor in our support of Part D. But the asset test is 
keeping millions of people who need the low-income subsidy from 
getting it. AARP believes that we should encourage people to 
save for retirement, not penalize those that do so with an 
asset test.
    We have been working with Senator Smith, along with Senator 
Bingaman, on legislation that takes a solid first step toward 
AARP's goal on eliminating the asset test by raising the asset 
limits and streamlining the application process. We greatly 
appreciate their leadership on this issue, and we especially 
want to thank you, Senator Kohl, for being a cosponsor.
    However, SeniorCare has never had an asset test, and this 
onerous provision has never been imposed on beneficiaries in 
our State. That is a strong argument for renewing the waiver.
    The insurmountable cost of providing equivalent coverage is 
a strong argument for renewal, and the lower per-capita cost to 
the Federal Government compared to Part D is yet another 
powerful argument for renewing the waiver.
    We therefore urge CMS to re-authorize the SeniorCare waiver 
and to help us ensure that no one is worse off under Part D.
    Thank you again for inviting us today, and I would be happy 
to answer questions that you have.
    [The prepared statement of Ms. Finder-Stone follows:]

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    The Chairman. Thank you.
    Tom, briefly, given your experience working with SeniorCare 
beneficiaries, is there any question in your mind that 
SeniorCare saves the Federal Government money compared to 
Medicare Part D?
    Mr. Frazier. No. There is not.
    The Chairman. Ms. Finder-Stone, in 2005, AARP commissioned 
a study on SeniorCare and looked at the feasibility of 
Wisconsin switching to a Medicare Part D wraparound at the same 
level of coverage that beneficiaries have today.
    What factors contribute to your findings that the 
transition to a wraparound would be more costly to Wisconsin 
and the Federal Government?
    Ms. Finder-Stone. Well, we feel that Wisconsin is using 
tools that might not be appropriate for Part D to use in 
negotiating better drug prices, because we use tools like a 
preferred drug list.
    The waiver is a Medicaid-based program, and those tools are 
commonly used in Medicaid. However, Part D is a Medicare 
program, and individual Part D plans already have formularies.
    Many people have serious concerns about the Federal 
Government establishing a single National formulary, because 
they fear that it might create access problems that AARP would 
not want to see.
    The Chairman. Thank you.
    Well, we want to thank you for your testimony, all three of 
you. The importance of your coming here is, I think, 
exemplified by the fact that both the Governor and Ms. Norwalk 
have stayed to listen to your testimony, which indicates how 
important your testimony is to this whole process.
    I think it has been a great hearing. I think the Governor 
has been very powerful in his statement. Ms. Norwalk has been 
very strong in her position, and I know she is an open-minded 
woman, and I have hope that she will be much impressed by what 
has transpired here this morning.
    With that, I declare the hearing closed.
    [Whereupon, at 11:21 a.m., the Committee was adjourned.]
                            A P P E N D I X

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          Prepared Statement of Representative Thomas E. Petri

    Chairman Kohl and Ranking Member Smith:
    I would like to take this opportunity to thank you for 
holding this important hearing on SeniorCare and its impact in 
Wisconsin. I strongly believe that Secretary Leavitt should 
approve the pending waiver to extend the program through 2010.
    Today's hearing will highlight the immense popularity and 
cost effectiveness of SeniorCare. Over 100,000 senior citizens 
participate in the program, and receive prescription drugs in a 
manner that is affordable and easy to understand. Not only are 
seniors in Wisconsin satisfied with the program, but taxpayers 
are saving money. The average federal subsidy for a SeniorCare 
waiver participant is $617, less than half the $1,174 the 
federal government spends to subsidize a Part D participant.
    If SeniorCare is not continued, some of our most vulnerable 
seniors will face potential breaks in prescription drug 
coverage, confusion, and needless expense.
    Wisconsin has created a program that works well for our 
seniors and taxpayers. I am encouraged that this Committee will 
be examining this issue closely, and I will continue to work 
with my Wisconsin congressional colleagues to support our 
seniors. This hearing will provide important information for 
the Department to consider as it evaluates Wisconsin's waiver 
request, and I again commend Chairman Kohl for calling this 
hearing.
                                ------                                


       Prepared Statement of State Representative Steve Wieckert

    Thank you for holding a hearing on Wisconsin's Senior Care 
program. I am especially concerned about Senior Care's future, 
as are so many Wisconsin citizens. One reason in particular I 
am so fond of the Senior Care program is not only because I 
believe it is helping Wisconsin's citizens, but because I was 
the author of the Senior Care program in the Wisconsin 
Assembly.
    I ask that the decision on whether to extend the Senior 
Care waiver be extended for another two years, which would mean 
the waiver would be extended until at least June 30 of 2009.
    While originally 4 states have been granted these waivers 
for their own prescription drug programs for seniors, only 
Wisconsin remains as the only state that still has the waiver 
in effect. The reason I believe that is important for the 
federal government to continue this waiver and allow 
Wisconsin's program to remain helpful to our seniors is because 
of the cost saving nature of the way that the plan was 
designed. I know that ``budget neutrality'' is a major review 
criterion for extending our program.
    From the beginning, our early legislative drafts had the 
participation of private drug companies, which helped pay for 
our plan. For example, currently about $44 million of Senior 
Care is paid for through drug rebates in Wisconsin each year. 
If Senior Care was required to be redesigned through a federal 
withdrawal of participation, program costs could skyrocket by 
more than $44 million a year.
    It would certainly benefit so many more U.S. Senior 
Citizens if the federal Medicare Part D plan was modeled after 
Wisconsin's Senior Care.
    I ask the committee do all it can to work toward the 
extension of the Wisconsin Senior Care program.
    Thank you for this opportunity to submit written testimony 
to your committee.

        Prepared Statement of State Representative Thomas Nelson

    Thank you Mr. Chair and members of the Special Committee on 
Aging. I want to offer my thanks to Chairman Herb Kohl for 
conducting this hearing and for his leadership on SeniorCare. I 
apologize that I am not able to offer my remarks in person but 
appreciate the opportunity to enter my comments into the public 
record.
    The SeniorCare program has been tremendously successful in 
Wisconsin and is far superior to the alternative, federal 
program, Medicare Part D. Currently, over 103,000 Wisconsin 
seniors are enrolled in SeniorCare.
    The popularity of Senior Care reflects the program's 
simplicity and cost-efficiency. Where Medicare Part D has been 
widely criticized for its difficult application process. 
SeniorCare has a simple one-page enrollment form--and no 
doughnut hole. The savings to Seniors are clear when you 
compare SeniorCare's $30 annual fee to the monthly premium and 
$265 annual deductible of Medicare Part D. Additionally, 
Seniors and taxpayers enjoy savings from overall lower costs 
negotiated with drug companies. Not surprisingly, among 
eligible Seniors, 94% would fare better under SeniorCare than 
Part D.
    For some time, the states have served as laboratories for 
constructive social policy change. Over the years, Wisconsin 
has led the way in welfare reform, campaign finance reform, and 
workers' compensation--just to name a few issues. Often, these 
successful, new approaches to solving old problems are 
implemented at the federal level or replicated in other states. 
It is unfortunate that the Bush Administration has turned this 
process on its head. Rather than promoting the Wisconsin-born 
and widely successful SeniorCare program, the administration is 
seriously considering forcing Wisconsin Seniors into Medicare 
Part D, or what I call, SeniorCare Lite.
    U.S. Health and Human Services Secretary Mike Leavitt has 
stated that a major constraint in renewing the SeniorCare 
waiver is ensuring that the program is budget-neutral. 
SeniorCare costs the federal government half as much as 
Medicare Part D. Where Part D costs the government $1,174 per 
participant, SeniorCare costs $617 per enrollee and leverages 
private and state dollars. The fact that Secretary Leavitt 
seemingly ignores this fact makes me question his leadership 
and overall competence as HHS Secretary.
    The Secretary's failure to appreciate SeniorCare cost-
efficiency follows a long and disturbing pattern of poor 
performance by key Presidential cabinet members and 
administrative personnel--notably former U.S. Defense Secretary 
Donald Rumsfeld and most recently, current U.S. Attorney 
General Alberto Gonzalez.
    While the Bush Administration's resistance to embrace and 
support SeniorCare might suggest SeniorCare is a partisan 
issue, to the contrary, Democrats and Republicans alike in 
Wisconsin are united, four-square behind SeniorCare. To my 
knowledge, not a single elected official has publicly opposed 
this program. A big reason why SeniorCare enjoys universal, 
political support in Wisconsin is because everyone recognizes 
its positive impact on so many Seniors and their families. At a 
time when Seniors face rising prescription drug costs, Seniors 
can turn to a program that offers much needed financial relief. 
By saving on average $1,629 per year, Seniors have considerably 
more disposable income to pay home heating costs, groceries, 
and other expenses.
    Last month, I launched a petition drive to save SeniorCare. 
Many other legislators and organizations across Wisconsin have 
signed on, generating thousands of e-mails, letters and phone 
calls in support of SeniorCare. To say the least, public 
support has been overwhelming. Consider two stories told by a 
pair of concerned families:

    ``When reading that Senior care may be discontinued, I was 
alarmed. I have had my Mother on Senior care since it started 
and I know how much it has saved her. She is now almost 97 
years old and her assets have been depleted a long time. As of 
now four of us, her children, who are retired are using our 
funds to pay for her care. Also she lived in a retirement 
assisted living residence and so many of those elderly people 
were so very confused regarding the Medicare D program. Many 
elderly do not have family who can help them fill out the 
paperwork. I personally told them who to contact for Senior 
care. I have also been at the pharmacy watching these wonderful 
Seniors struggle to get their prescriptions. Even the 
pharmacist tried to explain why some drugs are covered and some 
not. Senior Care was so simple and cost effective, so please do 
your best to have it continued.''
    ``I heard that there is word that Senior Care may be 
discontinued. I hope that you can do all you can to save it as 
it has helped many like myself who do not have money for 
medications. My brother died because he could not afford $500 a 
month for his medication for cancer. He was a Marine veteran, 
wounded on Iwo Jima about March 8, 1945 much before Senior Care 
began. Thank you.''

    These are just two of the countless stories demonstrating 
SeniorCare's importance and begs leadership from Washington, DC 
to do the right thing and renew the federal waiver. Please, Mr. 
Chair, on behalf of the 103,000 Seniors and their families, do 
whatever you can to save SeniorCare.
    Thank you for the opportunity to present testimony on this 
important issue.

                                 
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