[Congressional Record Volume 145, Number 113 (Wednesday, August 4, 1999)]
[Senate]
[Pages S10221-S10222]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself and Mr. Wyden):
  S. 1480. A bill to amend title XVIII of the Social Security Act of 
assure access of Medicare beneficiaries to prescription drug coverage 
through the SPICE drug benefit program; to the Committee on Finance.


   seniors prescription insurance coverage equity (spice) act of 1999

 Ms. SNOWE. Mr. President, today I am introducing the Seniors 
Prescription Insurance Coverage Equity (SPICE) Act along with my 
colleague from Oregon, Senator Wyden. The purpose of this bill is to 
provide Medicare beneficiaries with access to prescription drug 
coverage. The program is voluntary and federal assistance will be 
provided to help pay for the premiums. Senator Wyden and I believe that 
this bill is one solution to the lack of prescription drug coverage for 
America's seniors and we believe that it is a bill we could and should 
enact this year.

[[Page S10222]]

  Lack of prescription drug coverage is a serious problem facing our 
seniors. When Medicare was created in 1965 it was based on the 
inpatient care system that was prevalent at that time. Today, thirty 
four years later, drug therapy often allows individuals to stay out of 
the hospital--but Medicare does not cover drugs. And the lack of 
coverage means that those over 65 years of age end up paying for half 
the costs associated with their prescriptions, while the average person 
under age 65 pays only a third. It also means that seniors are forgoing 
medication because they cannot afford it.
  The SPICE Act creates a voluntary supplemental drug insurance policy 
that all Medicare eligible individuals can purchase. These policies 
will be guaranteed issue--no one can be turned down. SPICE eligibility 
will begin when Medicare eligibility begins. There will be a penalty 
for late entry, just as there is for those who make a late entry into 
the Medicare Part B program. The penalty fee for late entry will be 
waived if the late entry is based on the loss of prior drug coverage 
from a Medicare + Choice plan or a retiree group health plan.
  All seniors will receive some premium support assistance on a sliding 
scale based on income. Every senior will receive at least 25% premium 
support. Those below 150% of the federal poverty line will receive 100% 
premium support. A sliding scale will phase down the premium support 
from 100% to 25% for those between 150% and 175% of the federal poverty 
line.
  The federal premium support will be used to allow seniors to purchase 
SPICE policies from private providers, similar to the Medigap program. 
The policies will all meet a threshold standard developed by the SPICE 
Board, which includes consumers, state insurance commissioners, and 
insurance representatives, and will be designed with seniors needs in 
mind. Medicare+Choice and group health plans which provide drug 
coverage for Medicare eligible individuals will be able to receive the 
actuarial value of the drug benefit if their plans meet or exceed the 
SPICE Board threshold benefit plan.
  Seniors will be given a choice of plans. This will ensure competition 
and help keep the costs down and will allow seniors to choose the plan 
that best meets their needs. To provide an idea of the types of 
choices, plans may offer coverage for different drugs (formularies), 
copays, deductibles, and caps. The SPICE Board will disseminate 
information about these choices, much like the Federal Employee Benefit 
Health Program (FEHBP) does.
  Funding sources for the benefit will come from the on-budget surplus, 
which the Congressional Budget Office (CBO) estimates show to be $505 
billion after the $792 billion tax cut legislation that is currently in 
conference. Additional funding may come from implementing the 
President's FY2000 budget proposal to raise the tobacco tax by 55 cents 
per pack in addition to enacting the 15 cent tobacco increase already 
in law one year earlier than originally planned.
  America's seniors need help in obtaining prescription drug coverage. 
SPICE is a doable proposal that can be passed whether or not we are 
able to move forward on Medicare reform this year.
 Mr. WYDEN. Mr. President, today Senator Snowe and I are 
introducing legislation to provide seniors with insurance coverage for 
prescription drugs. This legislation, the Seniors Prescription 
Insurance Coverage Equity Act, SPICE, is the only bipartisan, market-
based approach to provide seniors with choice and access to coverage 
that is actually paid for. It will give seniors the same kind of 
coverage that their member of Congress has.
  The key issue for seniors around our nation, when it comes to the 
issue of prescription drugs, is affordability. Our proposal will assure 
that each and every senior who voluntarily chooses to enroll in a SPICE 
plan will have the bargaining power of HMOs and of the large insurers 
whose job it is to get the best price they can. At least 13 million 
seniors have no prescription drug coverage at all. Those seniors get 
penalized twice: they have to pay all their costs, and they pay more 
because they can't get the negotiated rate that the insurers and HMOs 
can. This bill will level the playing field for those seniors giving 
them affordability and access.
  We know the kinds of drugs that are coming on the market now can help 
save lives, better the health status of an older person and, in many 
instances, save dollars because seniors taking their prescription drugs 
as they are told to by their doctor will prevent costly 
hospitalizations and the progression of disease. If we were to create 
Medicare today from scratch, there would be no questions about 
including prescription drug coverage. If we want to assure that 
Medicare beneficiaries stay healthy longer we must provide prescription 
drug coverage. If we want to be thoughtful, prudent purchasers of 
health care, we must find a way to assure seniors access to the drugs.
  I believe the Snowe-Wyden proposal is that thoughtful, prudent and 
reasonable way. It assures a variety of options for coverage, and it 
assures that we bring real dollars to the table to pay for the program. 
There is no smoke and mirrors, no IOUs or other budget gimmicks in this 
plan.
  The Snowe-Wyden proposal will be funded by funding from the non-
Social Security on-budget surplus and a 55-cent increase in the tobacco 
tax. During this body's deliberations of the budget resolution, an 
amendment that Sen. Snowe and I offered received 54 votes, including 12 
Republican votes to do just this--fund a prescription drug benefit for 
seniors with an increase in the tobacco tax.
  The SPICE legislation creates a senior-oriented program using the 
Federal Employees Benefit Program (FEHBP) as a model to provide 
benefits that include prescription drugs and other non-Medicare covered 
benefits. This benefit would be open to every beneficiary and be 
voluntary. However, if the senior elected coverage later rather when 
they were first eligible, the individual would pay incrementally more 
the longer he or she waited to choose a comprehensive coverage option.
  The individual senior would be able to select from an array of drug 
policies and Medicare+Choice plans with prescription drugs coverage. 
This would be voluntary. No senior would have to change what their 
current coverage is if they do not choose to do so. All plans would be 
offered by private sector companies. For beneficiaries under 150 
percent of the poverty level--$12,075 for a single senior and $16,275 
for a couple, the federal government would pay the entire premium. For 
those between 150 percent and 175 percent of the federal poverty level, 
the amount the federal government would pay phases down from 100 
percent of premium to 25 percent of the premium amount. For 
beneficiaries at 175 percent of poverty and over, the federal 
government would pay 25 percent of the premium amount.
  Our SPICE benefit will be administered by a new Board that would be 
separate from the Health Care Financing Administration but report to 
the Secretary of Health and Human Services. The Board would approve 
plan designs and premium submissions, approve and distribute consumer 
education materials, develop enrollment procedures and make 
recommendations concerning additional funding, further ability to pay 
mechanisms and other steps needed to assure continuing availability of 
comprehensive coverage as seniors' health needs change over time.
  Many of us would prefer to do an overhaul of Medicare and modernize 
it to include benefits like prescription drugs. However, the thirteen 
million Medicare beneficiaries who need coverage and the millions who 
have coverage that does not truly help them, need a way to get 
meaningful coverage today. This proposal will do that.
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