[Congressional Record Volume 146, Number 37 (Wednesday, March 29, 2000)]
[Senate]
[Pages S1851-S1853]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           PRESCRIPTION DRUGS

  Mr. KENNEDY. Mr. President, the Senate Finance Committee is today 
holding the second in a series of hearings on prescription drugs. It is 
the 14th hearing on Medicare reform and how we will deal with the 
challenges facing the Medicare system.
  I had an opportunity to testify before the Finance Committee as did 
several of my colleagues. Both Republicans and Democrats are urging the 
Senate Finance Committee to take steps to provide important our senior 
citizens relief from the cost of prescription drugs. It is a national 
crisis. It affects seniors in New England, it affects seniors in the 
Southwest, it affects seniors all across this Nation. We have a 
responsibility to our seniors to address the issue this year. It would 
be inexcusable for us to have an adjournment without addressing the 
prescription drug crisis that is affecting the health, well-being, and 
livelihood of millions of senior citizens all across this Nation.
  I want to take just a few moments of time to review exactly where we 
are in this challenge that is facing the Senate of the United States as 
an institution. The Budget Committee is meeting today to make 
recommendations on the issue of prescription drugs, and the Finance 
Committee has responsibility in examining why action is so important 
now.
  The drug crisis for seniors is reflected in two important ways:
  One, coverage is going down.
  Those seniors who currently have drug coverage are seeing it 
evaporate. The costs being paid by those senior citizens with coverage 
are going through the roof.
  This chart is a clear indication of the situation facing our senior 
citizens. There are approximately 35 million senior citizens receiving 
Medicare. Twelve million of these seniors have no prescription drug 
coverage whatsoever. This is almost one third of all senior citizens.
  Almost another third--11 million--have employer-sponsored coverage 
through their former employers. They have coverage.
  Then we have Medicare HMOs, which cover 3 million seniors; 4 million 
seniors purchase Medigap coverage that includes a limited drug benefit; 
4 million seniors have coverage through Medicaid; and 3 million have 
coverage through the VA and other means.
  This chart really tells the story. We have 12 million seniors on 
Medicare with no prescription drug coverage.
  What about those seniors with employer-sponsored coverage? How 
reliable is that coverage for our senior citizens?
  Look at this chart. There has been a 25% drop in firms offering 
retiree health coverage between 1994 and 1997, a 3-year period. A 
quarter of all persons receiving employer-sponsored retiree coverage 
have been dropped.
  The rather ominous fact is that current coverage is declining in an 
even more dramatic way. More and more firms are unilaterally dropping 
prescription drug coverage from their retiree programs. The number of 
seniors who are in these employer-sponsored programs is going down 
dramatically.
  Let's look at the 3 million who have coverage through Medicare HMOs. 
This year alone, more than 325,000 Medicare beneficiaries lost their 
HMO coverage. That is true in the western part of my State. It is true 
in Connecticut, it is true in many parts of New England and it is true 
in many other areas of the country.
  We know the drug coverage is only an option under HMOs; Medicare HMOs 
are not required to provide drug coverage. Medicare HMOs are leaving 
the market, and those remaining are drastically reducing the level of 
drug coverage. Seventy-five percent of all seniors covered through 
Medicare HMOs have limited coverage--capped at less than $1,000 this 
year. The number of plans with such limited coverage has doubled since 
1998. Thirty-two percent have imposed caps of less than $500, an 
increase of 50 percent since 1998.
  On the one hand, many HMOs are dropping coverage. Those maintaining 
coverage are putting limitations on the dollar amounts they actually 
cover. In the last 2 years, 75 percent have unilaterally declared that 
they won't provide any coverage in excess of $1,000, and 32 percent 
have limited coverage to $500.
  Here we have no coverage.
  Here we have falling coverage.
  Here we have collapsing coverage.
  And now we look at the question of the Medigap.
  Look at the situation with Medigap. To qualify for Medigap coverage 
that includes a drug benefit, one must get that coverage at the time 
they first enroll in Medicare.
  This chart shows that drug coverage through Medigap is unaffordable. 
This is the sample premium for a 75-year-old: In Delaware, $2,600; New 
York, $1,900; in Iowa, $2,000; in Maine, $2,400; Mississippi, $2,400.
  Individuals have to apply for Medigap plans with drug coverage at the 
time they first qualify for Medicare; they

[[Page S1852]]

are effectively closed out from purchasing a Medigap plan that includes 
drug coverage later.
  What we are seeing here is an explosion of the Medigap premiums. As a 
result, protection against the cost of prescription drugs through 
Medigap is also in free fall. The only seniors with reliable drug 
coverage are the 4 million covered through Medicaid.
  At the same time we are seeing this very significant decline in 
coverage, drug costs are growing at double-digit rates. We go from 
1995, 9.7 percent; 10.1 percent in 1996; 14.2 percent in 1997; 15.7 
percent in 1998; and 16.0 percent in 1999. This is against a background 
of a virtual flat rate of inflation. The inflation rate in 1995 was 2.5 
percent; 1996, 3.3; 1997, 1.7; 1998, 1.6 and in 1999, 2.7. The 
inflation rate is virtually flat, yet we have seen dramatic increases 
in costs and reduction in coverage for drug benefits.
  We have a situation where Congress is going to act. We need coverage 
for all, universal coverage. We must include both basic and 
catastrophic coverage. We should try to take care of those senior 
citizens represented in this group here: the 57 percent with incomes 
under $15,000 plus the 21 percent with incomes between $15,000 and 
$25,000--a total of close to 80 percent of all senior citizens have 
incomes below $25,000. We have to take care of these seniors. I believe 
coverage ought to be universal. This is what we currently do in both 
Medicare and Social Security.
  Close to 80 percent of our senior citizens have incomes below $25,000 
a year. This is extraordinary. Almost 60 percent have incomes below 
$15,000. Overall, their incomes are very modest indeed.
  So coverage is collapsing at the same time costs are exploding. And 
who is it impacting? It is impacting close to 80 percent of the elderly 
people in this country with incomes below $25,000.
  This chart gives an idea of typical patient profiles. These are the 
types of ailments that typically affect so many of our seniors: 
Osteoporosis, heart trouble, high blood pressure, enlarged prostate, 
arthritis, ulcers, high blood pressure, heart disease and anemia.
  Look at the typical cost per year. If 150 percent of poverty is 
$11,985, and we saw on the last chart about 60 percent of our seniors 
have incomes in that range, look at the outlays these seniors have: 20 
percent of their entire income, just to cover the of essential drugs 
needed to treat osteoporosis and heart trouble. The costs only increase 
for other typical conditions. These are their out-of-pocket 
expenditures for drugs; this does not even deal with other health-
related needs they might have. It is an extraordinary burden they have.
  This is why we believe that Medicare drug coverage needs to be 
universal. It should cover all of our senior citizens. It should 
provide basic coverage. It should also reach those with higher drug 
costs through catastrophic coverage. We know only about 10 percent of 
the seniors need catastrophic coverage today. But many of our seniors 
are very concerned that they may face catastrophic needs in the future.
  I am a strong believer that the next century is going to be the life 
science century, with major breakthroughs in medical treatment. For 
example, in my State of Massachusetts, if we had a breakthrough in 
Alzheimer's disease, we would empty half of all the nursing home beds. 
The savings would be astronomical. The cost of the prescription drugs 
might be large, but the savings through keeping Medicare beneficiaries 
out of hospitals and nursing homes can be dramatic, significant. That 
is why I think we need both basic and catastrophic coverage.

  We must be guided by these principles. We want coverage that is 
affordable for the individual senior citizen. It should also be 
affordable to the Federal Government. That is why Senator Rockefeller 
and I have advanced a Medicare drug program. A number of our colleagues 
have advanced other programs. What is important is that we take action 
and take it now.
  I have here before me what we call the chairman's mark. The Budget 
Committee of the Senate of the United States is meeting even as I 
speak. They have in their chairman's mark what they call a reserve fund 
for Medicare. They are talking about reserving $20 billion for 
Medicare. In the chairman's mark they describe a reserve fund for 
Medicare:

       Whenever the Committee on Ways and Means of the House or 
     the Finance Committee reports a bill or an amendment or a 
     conference report that implements the structural Medicare 
     reform--

  In other words, nothing is available for prescription drugs without 
comprehensive Medicare reform. I am all for Medicare reform. But I do 
not know why we ought to hold a good, effective prescription drug 
benefit program hostage until we get comprehensive Medicare reform. 
This is what the program requires.
  Then it says:

     and improves the solvency of the Medicare Program without the 
     use of transfers or new subsidies from the general fund.

  Therefore it prohibits any use of any of the surplus at a time where 
we have an important and significant surplus projection. The surplus 
should be used to assist the Medicare program in a modest way. They 
prohibit any use of that surplus. It also requires and ensures 
additional reimbursement for Medicare providers. So we have to have a 
comprehensive reform of the Medicare system and we have to also have 
the major changes for Medicare providers before we can ever come to 
consider the $20 billion that is going to be recommended as possible 
funds that could be used for a prescription drug program. This is half 
of what the President of the United States has asked for, half of his 
$40 million request.
  This is what it says. Under the budget:

       Prescription drug benefit. The adjustments made pursuant to 
     the prescription drug benefit may be made to address the cost 
     of prescription drugs.

  It is optional. It is optional. I do not think that is what the 
seniors or the American people--not just seniors, but all Americans are 
really interested in. They want us to take action and they want us to 
take action now. They do not want to set up an arbitrary barricade for 
us before we can take action.
  I do not understand why our Budget Committee is effectively binding 
the Senate of the United States and prohibiting it from being able to 
take action on a prescription drug benefit this year unless it goes 
through the hoops which they have established in the committee. Even if 
you were able to get through all those hoops, it provides woefully 
inadequate funding over the next 5 years.
  Last year the Budget Committee had $100 billion over 10 years for 
Medicare, although in reality that money was not dedicated solely to 
Medicare and Medicare prescription drug coverage. Yet this year they 
are talking about $20 billion over 5 years. The problem has gotten 
worse, not better. As we have seen, even though they had their program 
last year and said they are really all for prescription drug coverage, 
they do not have any program.
  That is a very unsatisfactory way to proceed when we are talking 
about one of the central concerns for not only seniors but also for 
their families. Seniors do the best they can. So often, when the 
parents are unable to pay, the burden falls on other family members to 
chip in and help pay for mom or dad's necessary prescription drugs.
  The fact is, when the Medicare system was adopted in 1965, it was to 
be universal in nature and have the confidence of the American people. 
It was a pledge to the American people--if they worked hard and played 
by the rules, when they retired these seniors who fought in this 
country's wars would be free from the dangers of absolute financial 
ruin due solely to their health.
  We passed Social Security to provide for them to live with some sense 
of dignity, and Medicare was passed to give assurance that they would 
be able to live their golden years in with the peace, security, and 
dignity in knowing their health care would be covered.
  At that time, only 3 percent of all private health insurance programs 
had a prescription benefit, so the Medicare system did not put in a 
prescription drug benefit. Now almost every private employer-based 
health plan--99 percent of them--have a prescription drug benefit. But 
not Medicare. This is a serious coverage gap that exists, and every 
senior citizen has to be concerned about this gap in coverage. It 
demands action.
  We can develop a program this year with our current circumstances, 
with the economic benefits under the existing surplus. We can enact a 
benefit

[[Page S1853]]

package now that can benefit seniors. We ought to pass it this year. 
Sure, we can phase it in, we can build it up, but we want it now. Not 
like the Budget Committee saying maybe sometime off in the future and 
giving us absolutely no assurance. That is a mistake. That is flawed 
policy. That is, I think, a completely inadequate response to the 
challenges our seniors face.
  Next week, when we debate the budget, we will have the opportunity to 
address this issue. I hope the overwhelming majority of the Members 
will support an effort that will come from our side, from our leaders 
to commit this body to take action and take it now. We will have a 
chance to vote on that. It ought to be something to which every senior 
citizen in this country pays attention. We will make every effort to 
fashion a program to provide assistance to our seniors. We are 
committed to that. We will not be discouraged from that opportunity by 
these budget recommendations.

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