[Congressional Record Volume 144, Number 140 (Thursday, October 8, 1998)]
[Extensions of Remarks]
[Pages E1969-E1970]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




CLOSING THE HUGE HOLE IN MEDICARE'S BENEFITS PACKAGE: STARK INTRODUCES 
                   MEDICARE PRESCRIPTION DRUG BENEFIT

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Thursday, October 8, 1998

  Mr. STARK. Mr. Speaker, I rise today to introduce the Medicare 
Prescription Drug Coverage Act of 1998 to remedy a huge hole in the 
program's benefits package--outpatient prescription drug coverage. 
Twice in the past 10 years, Congress has almost provided this benefit, 
and twice we have failed. We established a drug benefit in the Medicare 
Catastrophic legislation of 1988, but it was repealed the next year 
before the benefit could start. A drug benefit was a key component of 
H.R. 3600, the Health Security Act of 1994, reported by the Ways and 
Means Committee, but failed to pass that year.
  It is time to debate this issue again and try some new approaches.
  While Congress has done nothing, drug costs have been soaring out of 
the reach of millions of seniors enrolled in traditional Medicare.
  In 1995, 46% of seniors enrolled in fee-for-service Medicare were 
without drug coverage. Almost one-quarter of beneficiaries enrolled in 
Medicare HMOs (about 4% of all beneficiaries) do not have a drug 
benefit.
  And in the face of projections that prescription drug prices are 
about to spike again, following a brief slowdown during the 1993-94 
health care reform debate, the number of seniors with no drug benefits 
could accelerate.
  By 2007, the Health Care Financing Administration projects drug costs 
will account for over 8% of total health care costs, up from 6% in 
1996. Viewed another way, that could mean double-digit price increases. 
For many beneficiaries with modest incomes, no retiree health coverage, 
and too many assets to qualify for Medicaid, these economic trends mean 
they will be forced to rely on traditional Medicare--with no drug 
coverage.
  In effect, we are rapidly creating a large underinsured class of 
Medicare beneficiaries.
  So as we approach the millennium, I will pose the question again: Why 
doesn't Medicare have a drug benefit? Why do nearly all Americans who 
have private insurance, which includes every member of Congress, enjoy 
drug coverage, while millions of seniors do not?
  Most Americans have heard stories about seniors who must make 
repeated, difficult choices to buy either prescription drugs or other 
necessities--like food. The health toll this produces is not easy to 
quantify. Researchers report that seniors without drug coverage 
frequently decide to go without medications for conditions such as 
headaches and muscle aches. What is less well known is that

[[Page E1970]]

many of these same seniors also decide to skimp on drugs to treat 
potentially serious diagnosed conditions, including leg swelling and 
diabetes.
  This year, I have heard from many, many distraught seniors who have 
written to tell me they are going broke trying to pay for drugs their 
doctor told them they must take. I believe that some will wind up in 
worse health when they decide to forgo or cut back on the very drugs 
designed to keep them clinically stable.
  The absence of a prescription drug benefit in Medicare that forces 
elderly people to skip and skimp on drugs is inexcusable. It is time 
for Congress to debate and enact legislation that will provide all 
seniors who want it access to affordable Medicare-sponsored drug 
coverage.
  There really aren't any good alternatives. Trends in employer-
sponsored retiree health coverage--which has traditionally featured a 
drug benefit--show it is eroding. A somber General Accounting Office 
report released last summer warns that ``while an estimated 60 to 70% 
of large employers offered retiree health coverage during the 1980's, 
fewer than 40% do so today, and that number is continuing to decline 
despite the recent period of strong economic growth.'' That's a polite 
way of pointing out that the number of U.S. companies offering their 
retirees health coverage in the last decade has been dropping like a 
stone.
  For those seniors who don't--and won't--have retiree health coverage, 
purchasing a supplemental policy with good drug coverage may soon be 
unaffordable. Supplemental Medigap policies now costs on average more 
than $1,200 per year, according to the American Association of 
Retired Persons. But Medigap policies with drug coverage can cost far 
more. The range in costs for Medigap policies with drug coverage is 
also large: In Los Angeles, Bankers' Life Insurance and Casualty sells 
a drug-Medigap policy for $6,381 at age 65. At age 75, the same policy 
costs $9,174! The difficulty that seniors have in affording 
comprehensive supplemental insurance is illustrated by the fact that in 
1994-95, a mere 15% of seniors purchasing a Medigap policy had drug 
coverage.

  The hard fact is that a Medigap policy with drug coverage is not 
now--and will never be--within the financial reach of millions of 
Medicare beneficiaries, particularly the very old, who are spending 
down their assets.
  That brings us to Medicare managed care. Remember, one quarter of 
those who are enrolled today don't have any drug coverage. Those who do 
are facing ever-higher deductibles and copayments, and ever-lower 
annual reimbursement caps. In Massachusetts, where state law has long 
required all HMOs to offer drug coverage, Medicare managed care plans 
are now asserting that last year's Balanced Budget Act says they don't 
have to comply!
  Only recently have seniors begun to understand that the comprehensive 
drug benefit they were promised in glossy HMO marketing materials is 
the equivalent of a ``low introductory rate'' pitch made by credit card 
companies. It's great while it lasts. But after that, you could be in 
trouble.
  The Medicare Prescription Drug Coverage Act is carefully designed to 
help those who most need an outpatient drug benefit--who don't get it 
from a former employer, from Medicaid or any other federal health 
program, and who pay an extra premium under Part B for Medicare drug 
coverage.
  I am introducing this bill, roughly modeled on the 1994 legislation, 
so that consumers, pharmaceutical providers and others can study the 
issue over the winter, comment and suggest changes for a revised bill 
to be introduced at the beginning of the 106th Congress. I am leaving 
the numbers for the deductible, the caps, and the premiums blank, so 
that groups can comment on what they think the appropriate combination 
of figures should be.
  In a separate statement, I am reprinting some of the literature that 
is available on the cost of different prescription drug benefit plans 
at different deductible levels. Clearly, there is a tradeoff between 
the size of the benefit and its affordability: Striking the right 
balance is the key to the passage of successful legislation.
  There is a critical distinction between previous proposals for 
Medicare drug coverage and the legislation I am introducing today: If 
you already have an adequate prescription drug benefit, you will not 
have to ``pay again'' in higher Part B premiums. If you have coverage, 
there will be no change and no new cost to you. If you do not have a 
prescription drug benefit, you will face a higher Part B premium, but 
if you are low income, you will get assistance in paying for it. While 
it is tempting to say that the decision to enroll in the prescription 
drug benefit could be voluntary, the adverse risk selection (i.e., only 
sick people needing lots of costly prescriptions would be likely to 
sign up) would make the cost of premiums to those enrollees 
prohibitive.
  Adding an outpatient drug benefit to Medicare is not cheap. But IF 
prices are set at the ``wholesale'' level that physicians, medical 
suppliers and other purchasers pay, and IF all budgetary savings are 
not immediately earmarked for tax cuts, then Medicare drug coverage is 
affordable.
  In the next Congress, we will have another opportunity to reshape 
Medicare to make it a better program. As we work to stabilize the 
program's financing, we must also improve it for those it was created 
to serve--our nation's seniors.
  Without drug coverage, more and more seniors will fall through the 
widening cracks of a health care system that is getting leaner and 
meaner.
  Without drug coverage, we'll see more seniors who can't afford to 
take their medications treated in the emergency room, where health care 
costs are highest.
  Adding a prescription drug benefit to Medicare along with a 
requirement that costs be held to reasonable levels and a reasonable 
rate of growth is a clear way out of this dilemma. It is legislation 
that is 33 years overdue. I hope my colleagues will join me in 
vigorously advocating for passage of the Medicare Prescription Drug 
Coverage Act in the 106th Congress.

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