[Congressional Record Volume 146, Number 77 (Monday, June 19, 2000)]
[House]
[Pages H4659-H4664]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE DEMOCRATIC PLAN FOR A MEDICARE PRESCRIPTION DRUG POLICY
The SPEAKER pro tempore (Mr. Ose). Under the Speaker's announced
policy of January 6, 1999, the gentleman from Pennsylvania (Mr.
Pallone) is recognized for 60 minutes as the designee of the minority
leader.
Mr. PALLONE. Tonight, Mr. Speaker, once again I would like to talk
about the need for a Medicare prescription drug policy, and talk a
little bit about the Democratic plan, the President's plan, in contrast
with what I consider the lack of plan that the Republican leadership
appears to have come up with and apparently is attempting to move
through the House over the next week or two.
My colleague, the gentleman from Maine (Mr. Allen), has been a leader
on this issue and introduced legislation more than a year ago to deal
most specifically with the issue of price discrimination.
As he has said many times and I will reiterate, there are really two
aspects to this Medicare prescription drug proposal. One is to provide
the benefit, and the other is to make sure that the price
discrimination that we have witnessed so often in the last few years
does not continue.
I would like to commend the gentleman for all that he has done to
address this issue of price discrimination with his legislation, and
also with his effort to get so many cosponsors to that bill.
Mr. Speaker, I yield to the gentleman from Maine (Mr. Allen).
Mr. ALLEN. I thank the gentleman for yielding, Mr. Speaker.
Here we are again, back in the well of the House, talking about a
problem that is a matter of immediate concern to seniors and others all
across the country.
A little history. I want to talk in a few minutes about the debates
that are going to come up this week and next week here in the Congress
over the issue of prescription drugs, but a little history is worth
recalling.
It was almost 2 years ago when I released the first study done by the
Democratic staff of the Committee on Government Reform which shows
that, on average, seniors pay twice as much for their prescription
medications as the drug companies' best customers, being big hospitals,
HMOs, and the Federal government itself buying either for Medicaid or
through the Veterans Administration.
That is an astonishing difference, a difference of about 100 percent
of the most commonly-prescribed prescription drugs.
We released that first study on July 2, 1998. In September I
introduced legislation, September of 1998, that would provide a
discount to every senior who is on Medicare, to all Medicare
beneficiaries. The bill would work very simply. It simply would provide
that pharmacists would be able to buy drugs for Medicare beneficiaries
at the best price given to the Federal government. It is called the
Prescription Drug Fairness for Seniors Act, H.R. 664, in this Congress.
Then, in October of 1998, we did the first of the international
comparisons. That was a study to show that Mainers pay on average 72
percent more than Canadians and 102 percent more than Mexicans for the
same drug in the same quantity from the same manufacturer. Those two
studies have been replicated in the first place in over 115 districts
around the country, and in the second case, by dozens.
I want to thank the gentleman from New Jersey (Mr. Pallone), who has
done so much to help drive this issue, being here night after night
after night and organizing the Health Care Task Force as the gentleman
does.
It is very clear what Democrats are advocating for. On the one hand,
we are saying we need a discount. It is very simple, it does not cost
the Federal government any significant amount of money, it does not
create any new bureaucracy, but it would yield about a 40 percent
discount for seniors who are already on Medicare paying out-of-pocket
for their own prescription drugs.
Let us remember that over half of all seniors have either no coverage
at all, 37 percent, or very inadequate coverage from HMOs or through
MediGap itself, so we are dealing with over half of the senior
population which does not have adequate coverage for prescription
drugs.
Now, 2 years after we began this effort, the Republicans are finally
coming up this week and next with a plan. It is interesting what that
plan is, because we have been advocating for the kind of discount I
described, and also a benefit to make Medicare updated, to make it more
like what the plans of Aetna, Signa, United, the Blue Cross companies
provide employees, a health care plan with prescription drug coverage.
That is what we want for Medicare. Those plans negotiate lower prices
for their beneficiaries. Medicare beneficiaries should get lower
prices. But also, a discount is not enough. We have to have the benefit
under Medicare.
It all seems very simple, but in Washington not much is very simple.
What we notice are two things happening this week. On the one hand, the
Republicans are coming up with a prescription drug plan that relies on
HMOs and private insurance companies. On this foundation is built a
plan that, the
[[Page H4660]]
truth is, will not help America's seniors, because instead of updating
Medicare, instead of strengthening Medicare, instead of providing a
Federal prescription drug benefit, what the Republican plan does is
turn to HMOs. It says that they have been so successful in providing
benefits for Medicare beneficiaries that we should let them provide
prescription drug coverage, as well.
Then it says that the plan provides that there should be room for
private insurance companies to offer prescription drug coverage, stand-
alone prescription drug coverage. So one of the things we notice is
this is the plan that the Republicans are rolling out in the House this
week.
What we also notice is that, not by coincidence, the pharmaceutical
industry is running ads suggesting that what this country's seniors
really need is private insurance. What we can see is the Republicans in
Congress are working hand in glove with the pharmaceutical industry,
hand in glove with the HMOs and the private insurance industry.
Here is the most interesting ad. This ad has appeared as a full-page
ad in the Washington Post. This is either from Roll Call or the Hill
magazines here. It is in Congress Daily. Everywhere we go in Washington
we see this particular ad. I have never seen it in anything less than a
full page in whatever publication it has been in.
It is an interesting ad. It says, ``Read label before legislating.
Private drug insurance lowers prices 30 percent to 39 percent.
Shouldn't seniors have it?'' Now, I think seniors should get that kind
of discount. That is exactly the kind of discount that is reflected in
the Prescription Drug Fairness for Seniors Act. But my bill would
provide that Medicare would negotiate lower prices for all 39 million
Medicare beneficiaries. Under that kind of plan, Medicare would have
real leverage to drive down prices.
What is interesting about this particular plan, this particular
advertisement, is that a portion of it reads as follows: ``12 million
senior Americans now have no prescription drug insurance coverage. As a
result, most of them pay full price for their medicines. That is
because they don't have the market clout that comes with a drug
insurance benefit.''
Now, it is interesting, until last week the pharmaceutical industry
was attacking my proposal and others on the grounds that if it provided
a 20, 30, 40 percent discount to seniors, that they would have to cut
back on research and development costs.
Here is an advertisement sponsored by PHARMA, the pharmaceutical
industry, basically calling for a 30 to 39 discount.
The question that might arise is, why do they not simply give seniors
a 30 to 39 percent discount now? They set the prices, they can lower
them tomorrow. But they do not. This is an industry ad saying, protect
us from ourselves. We are charging seniors far more than we charge
insurance companies, big hospitals, and HMOs, and the way to do that is
to give private insurance to seniors.
Now, to some extent we might say, well, does that not make sense? But
the truth is, there is a glitch. There is a problem. The insurance
industry says, we are not going to provide private insurance for
prescription drugs. They have said it over and over and over again.
Yet, the Republicans in this House are bringing forth a plan that
depends on HMOs and private insurance companies.
How does this work? What does it mean? Well, the private insurance,
Chick Kahn, head of the Insurance Association of America, has said, we
are not going to provide private insurance for prescription drugs
because it is like ensuring against haircuts. There are so many
claimants, in other words. They say to people up in Maine, if Maine
were a low-lying State and 85 percent of the people every year put in a
claim for flood insurance, we would not be able to buy flood insurance
in Maine at any price. But 85 percent of seniors in this country take
some form of prescription drugs.
So despite the fact that the insurance industry is saying, we will
not provide prescription drug insurance for seniors, the Republicans in
this House are bringing up a plan that depends on private insurance for
seniors. It will not work.
Why are they doing this? What is the purpose of the plan? The only
conclusion we can come to is that the Republican plan is not a plan to
help seniors afford their prescription drugs. What it is is a
prescription for Republican Congressmen. It is a prescription to help
them in November by having the appearance of a prescription drug plan
for seniors but not the reality of a prescription drug plan for
seniors. It is an illusion.
That is why it does not matter to the Republican leadership in this
House whether the plan works or not, whether the insurance industry
will actually provide insurance or not, or whether the plan will ever
become law or not. It is designed as political cover. It is designed as
a prescription drug theme for the fall elections, but not a
prescription drug plan for seniors.
It is America's seniors who need the help. It is America's seniors
who write to me, and I am sure to the gentleman from New Jersey, and
send us a list of the cost of their prescription drugs. Then they show
us what they are earning.
I have had people in my district say, ``Here is the list.'' I can
remember a couple of women who wrote to me with basically the same
kinds of numbers. They both said, ``My husband and I take about $650 of
prescription drugs a month, but our two social security checks only
come to $1,350. We cannot make do,'' so they do not take the medicines
that their doctors tell them they have to take.
I have other women who have written to me and said, I do not want my
husband to know, but I am not taking my prescription medication because
he is sicker than I am, and we cannot both afford to take our
medication. That is wrong in this country. It is absolutely wrong. We
have the power in this Congress this year to do something about it.
As the gentleman knows, our task forces on the Democratic side have
been working away developing plans that are not good politics, just
good policy, policy that will help America's seniors, a benefit under
Medicare that will help so people can get payment for their
prescription drugs; so they are not driven to the hospital because they
cannot afford to take their medications; so they can pay their rent and
their food and their electric bills and still get medications that they
need.
That is what we are trying to do on this side of the aisle, but on
the other side of the aisle what we have is private insurance. An
astonishing ad, this one is. It says, in effect, protect us against
ourselves. We are charging seniors too much and we know it, and if only
the private insurers would come in and cover America's seniors, then we
would reduce our prices to seniors.
But they know that this will never happen. Here is the pharmaceutical
industry with its own misrepresentation yet again to the people of the
country. They are advocating a plan that will never happen because in
fact the insurance industry will never provide stand-alone prescription
drug coverage to seniors.
This ad is a fraud, and the Republican plan is a fraud. It will not
work. It will not happen. It is a prescription for Republican
legislators in the fall.
I think what we need in this country is a recognition that this issue
will not go away. This problem that seniors face today will not go away
until it is fixed.
{time} 2200
Every year, prescription drug spending goes up 15 to 18 percent year
after year after year. So if we think we have got a big problem this
year, a year from now, it will be 15 to 18 percent larger than it is
right now. That is what we face in this country.
I just want to thank the gentleman from New Jersey (Mr. Pallone)
because this is a battle. We have a raid against the pharmaceutical
industry and the HMOs. What we need to do, there is no reason, there is
absolutely no reason to say that the only way we can give seniors
prescription drug coverage is to pay private insurers to pay HMOs to
provide that coverage when the insurers say they will not do it anyway.
I mean, it makes no sense. We need a stronger and better and more
comprehensive Medicare. We need a plan that will provide continuity and
predictability and stability and equity. That is what we need.
[[Page H4661]]
All the talk about choice and all the talk about private insurance is
really a smoke screen. It is not about policy that will work for
America's seniors. That is what we need to be doing. Seniors need help.
They need it now. We can give it to them if we handle this issue right
in the coming weeks.
I thank the gentleman from New Jersey very much for yielding to me.
Mr. PALLONE. Mr. Speaker, I want to thank the gentleman from Maine
(Mr. Allen) for putting really so succinctly the difference, if you
will, between what the Democrats are proposing and trying to accomplish
here versus this Republican essentially sham proposal.
It reminds me so much of the debate over HMO reform, the Patients'
Bill of Rights. Because as my colleagues know, I guess it was about a
year ago, maybe 6 months ago, the American people were crying out, we
all would go to town meetings and hear from all our constituents about
the need for HMO reform.
The Democrats came up with the Patients' Bill of Rights, which is a
very good bill to address the concerns and abuses within the HMO
system. We heard the Republicans kept stalling and saying they did not
want to deal with it, they did not want to deal with it. Nothing was
happening in committee.
Finally, the pressure got so great that they decided to push a bill
which essentially accomplished nothing. But beyond the fact that the
legislation that was being pushed, particularly on the Senate side, was
so weak and so lacking in any kind of basic protections for those who
were being abused by the HMOs was the fact that it was very obvious
that it was not being done because they really wanted to pass the bill,
it was being done so they could say they were doing something.
Lo and behold, 6 months have passed, we have had conferences between
the House and Senate, nothing has happened, and we are getting very
close to the election without an HMO reform bill.
I think the same thing is happening here. The gentleman from Maine is
absolutely right. We keep coming to the floor talking about the need
for a Medicare prescription drug program. The pressure builds because
it is a real concern out there. All of a sudden, now we get a statement
from the Republican leadership saying that they are going to do
something which is a sham. They may have it in committee this week,
they may bring it to the floor next week so they can pass something by
the July 4th recess.
What does that mean? The Senate will not act. If the Senate acts,
there will be a conference. The conference will not go. It will never
get to the President. The politics of this is really disgraceful
because this issue, just like the HMO reform issue, is something that
needs to be addressed, and it is not going to be.
The gentleman talked about the Republicans using this insurance plan.
It reminds me so much, I read a little bit about what happened in the
1960s when Medicare was first started. We were getting the same
arguments then. There were all these people, all these senior citizens
that had no health insurance.
It was the majority of seniors that had no health insurance. The
Republicans then in both the House and the Senate in the 1960s were
arguing that we should set up some kind of private insurance program
for the seniors. The Democrats rejected that. The Democrats passed the
current Medicare program. The President, then Johnson, signed it. We
have had a very good program. Why not build on the existing program?
What the President has proposed and what the Democrats in the House
and the Senate have proposed is basically adding another part to the
existing Medicare program. We have part A for hospitalization. We have
part B for one's doctor bills, which is voluntary. One pays so much of
a premium per month.
What the Democrats are proposing is that we set up another part C or
D, whatever we want to call it, where one pays so much a month and one
gets a prescription drug program. Everybody who is in Medicare is
eligible for it. It is universal. It is affordable. It is voluntary. It
is a defined benefit program so one knows that one will get all
medically necessary drugs.
It has the effort to address the price discrimination that the
gentleman from Maine mentioned with the benefit provider so that,
basically, we have these benefit providers that negotiate a better
price for the seniors than many of them would get now in the open
market.
Why not build on the existing Medicare program and do just that? Why
go back to this private insurance model which, as the gentleman from
Maine said, does not work.
I just wanted to mention one more thing, and I want to yield back to
the gentleman from Maine because he has been doing such a good job.
Chip Kahn, who is head of the Health Insurance Association of America,
made that statement before the Committee on Ways and Means last week
where he said, This insurance-only program will not work. The insurance
companies will not sell it. It is a sham. He also came before our
Committee on Commerce and said the same thing.
One thing that he said that concerns me a little, he said, I was
pleased to see that the Republicans at least have said that, if their
private insurance program does not work and they cannot get it sold,
then they will fall back on some sort of government assistance for the
people who cannot buy private health insurance. Of course I said, well,
it is not really clear what they are going to do. What is this fall
back? Is it Medicare? They have not said.
I said to Chip Kahn, I said, Well, Chip, does it make sense to have a
private insurance program with a fall back when we already have an
existing Medicare program that does work that we can just add a
prescription drug benefit to it? He said, Well, I am not really in a
position to comment. Health insurance people do not let me say yes or
no whether that makes sense. Certainly I agree there is nothing wrong
with having a Medicare program.
They already realize that this will not work. That is why the
gentleman from California (Mr. Thomas) is now starting to talk about
some sort of fall back. What does one need the fall back for? Do the
Medicare program the way it has been working for 30 years.
Mr. ALLEN. Mr. Speaker, will the gentleman yield?
Mr. PALLONE. I yield to the gentleman from Maine.
Mr. ALLEN. Mr. Speaker, the gentleman from New Jersey is exactly
right. It is interesting. The Republican plan, because of its reliance
on the private sector to deal with the problem of Medicare
beneficiaries, is incredibly complex. I mean, basically they create a
whole new bureaucracy to deal with this, and then they expect a variety
of different private insurance companies and HMOs to pick up and deal
with this particular problem.
Well, let us look at what is going on in Medicare right now, in
Medicare, managed care. Remember, we passed Medicare Plus Choice plan
in 1997. The thought was, well, the HMOs will come into Medicare, and
they will save us money because the private sector is always more
efficient than the public sector. But in truth, the Medicare system,
when one is in Medicare, there is no money being paid for profit. The
overhead expenses and administrative expenses are far lower than in any
private sector health care company.
Look at what is happening with Medicare managed care right now. What
we see is, every year, the benefits change. The prescription drug
benefits, which in some cases were free, free prescription drugs
essentially for no additional premium when Medicare managed care was
created. Now the caps keep coming down every year. Now 62 or 70 percent
of all plans have an annual prescription drug cap of $1,000 or less.
The premiums go up. The copays go up. The benefits go down.
But most striking, it is not available in most places. In seven out
of ten counties in this country, Medicare managed care is not even
available. It really only works, to the extent it works at all, in
larger urban areas. Rural America gets left out. Frankly, maybe that is
a good thing right now.
But it is only very limited in my home State of Maine. I mean, no
more than 1,500 people in the State of Maine have Medicare managed care
plan. Managed care is not working very well with this particular
population. We know that because, every July 1, the
[[Page H4662]]
health care plans report to HCFA, and, again, last year, they dropped
400,000 people because it simply was not cost effective. They could not
make a profit on those 400,000 Medicare beneficiaries. So they just
dropped them from the plan.
July 1 is coming up again. My colleagues are going to see plans all
across this country, managed care plans, simply dropping their Medicare
beneficiaries because they are not making money on this.
So what do the Republicans do? They say we have got a prescription
drug plan, and it relies on HMOs and private insurance companies. With
all of the complexity, with all of the inequity, they are saying what
we really need is more of a system that is not working.
That is why I keep coming back to the thing that this is bad policy.
It is terrible policy. At a recent caucus, a Republican pollster made a
presentation, and that material got out and has been published and so
on. Now it is very clear that the Republican pollster said for
Republicans it is more important that people think, that people believe
you have a plan than the content of the plan. So the appearance of the
plan is more important than the content of the plan. That is bad.
Basically, if we get the policy right, we will be doing the right
thing. That is why, if we are going to make changes to Medicare, if we
are going to deal with the Medicare population, if we are going to deal
with the biggest problems that Medicare beneficiaries have today, which
is the inability to pay for their prescription drugs, then we need to
do it through Medicare. Medicare is reliable. It is universal. It is
equitable. It is simple. It is cost effective.
I find the cost of providing a benefit would be significant. But
there is not anybody in this Chamber who says it is too expensive who
does not support a tax cut that is much larger than the annual cost of
providing a prescription drug benefit under Medicare.
We can do this. We can do this this year. But we cannot do it with
sham proposals, with private insurance companies who say we are not
going to provide the insurance.
Let us get to a real proposal. Let us get the Democratic benefit and
the Democratic discount on the floor for a debate. Then I think we can
do the right thing for America's seniors.
Mr. PALLONE. Mr. Speaker, I agree with the gentleman from Maine (Mr.
Allen). I guess I just worry that the public does get confused because
the Republican leadership proposal is designed to confuse them. I mean,
one of the things that I know of, they try to give the impression
somehow that if one does not go along with their proposal, and one has
an HMO, and one would like the HMO or one has an existing pension plan
that provides for prescription drugs, that somehow that is going to
change.
One of the things that I have made clear is that the Democratic
proposal is a Medicare benefit, but it is voluntary. We have actually
built into the President's proposal, the Democratic proposal, the idea
that about 50 percent of the costs for an HMO or 50 percent of the
costs if somebody has a drug benefit now through their pension or
whatever would be paid for.
We would not discourage people from leaving their HMO if they like it
and they have a drug benefit or leaving their other private plan that
they might have through an employer that they like, because we are
going to build in that about 50 percent of the cost of that drug plan
in both of these cases would be paid for by the government through this
Medicare program.
But what we are saying is that for those people who do not feel that
they have a good program either because they have nothing or because
they do not have a good program that they will be guaranteed a benefit
if they do opt to pay for their premium per month just like they do
with part B.
It just seems to me it makes a lot more sense to say on the one hand
everybody is covered who wants it. If one does not want it, one does
not have to opt for it. Everybody has got a specific benefit that they
know is guaranteed. Then if one wants to opt out, one can. But not to
build, as the gentleman, says, this bureaucracy which is very similar
to the existing HMOs.
Mr. Speaker, I want to thank the gentleman from Maine (Mr. Allen) for
joining me this evening. We are going to continue the battle on this.
Mr. Speaker, I wanted to go into a little detail about what the
Democratic proposal is, which is essentially the President's plan. In
describing what the Democrat proposal is, I am relying on the testimony
that was made before the Committee on Commerce, of which I am a member,
last week by Nancy-Ann DeParle, who is the administrator of the Health
Care Financing Administration, which administers Medicare and would
also continue to administer the prescription drug proposal under the
President's plan which, as I said, is essentially the Democrats' plan.
I want to outline this because I do not want to just talk about why
the Republican proposal is bad, I want to explain what the Democratic
proposal is and why it is a good plan.
Basically, under the President's plan, it is voluntary. It is
affordable. It is competitive. It has a quality drug benefit that would
be available to all beneficiaries. The President's plan dedicates over
half of the on-budget surplus to Medicare and also extends the life of
the Medicare trust fund to at least 2030.
So what we are doing is we are using the budget surplus that has been
generated with the good economy to pay for this Medicare prescription
drug program.
Most important, the coverage is available to all beneficiaries under
the President's plan.
{time} 2215
And I say that because I believe that the Medicare program has
worked, and it makes sense to put this prescription drug plan under the
rubric of the existing Medicare program. The advantage of doing that is
that everyone, regardless of income or health status, gets the same
basic package of benefits. All workers pay taxes to support the
Medicare program; and, therefore, all beneficiaries should have access
to this new drug benefit, just like they have for everything else in
the Medicare program.
Now, a universal benefit helps ensure that enrollment is not
dominated by those with high drug costs, the so-called problem adverse
selection, which would make the benefit unaffordable and unsustainable.
One of the criticisms of the leadership plan is that what may happen is
that only people with high drug costs would opt into it. What we want
to do is create an insurance pool, just like with Medicare in general,
that everybody is involved with. Because it is only when we have a
large insurance pool with people of all categories of use for drug
benefits that we can be successful.
And, again, under the President's plan it is strictly voluntary. If a
beneficiary has what they think is better coverage under an HMO or some
kind of pension plan or something through their employer, they do not
have to opt into it. As I said, what we are really going to do is to
make sure that those plans get extra money, up to 50 percent of the
cost of what it cost them for a drug benefit, the existing HMO would
get or the existing employer benefit plan would get, in order for the
individual to continue to use that plan if they do not want to opt into
the Medicare plan.
Now, for beneficiaries who choose to participate under the
President's plan, the Democratic plan, Medicare will pay half of the
monthly premium, with beneficiaries paying an estimated $26 per month
for the base benefit in 2003. As the program is phased in from 2003 on,
it becomes more generous; and, of course, the premium goes up
accordingly. The premiums would be collected just like the Medicare
part B program as a deduction from Social Security checks for most
beneficiaries who choose to participate.
Low-income beneficiaries would receive special assistance so that if
they are below a certain income, just like now for part B, for those
seniors in part B now, which pays for their doctor bills, if they are
below a certain income, they get part of the premium paid for. If they
are at a very low income, the complete premium is paid for. We would do
the same thing with this prescription drug plan using the same
criteria. The income basically that would be used for those criteria
would be the same.
Under the President's plan, Medicare would pay half the cost of each
prescription with no deductible. The benefit will cover up to $2,000 of
prescription drugs when coverage begins in 2003
[[Page H4663]]
and increase to $5,000 by 2009, with 50 percent beneficiary
coinsurance. After that, that would be adjusted for inflation. But most
important, also, we have a catastrophic benefit. So that basically
above a certain amount, I believe it is $3,000 out of pocket, all the
costs would be paid for by Medicare and by the Government.
The price discrimination issue that my colleague, the gentleman from
Maine (Mr. Allen), mentioned is addressed in the President's plan
through competitive regional contracts to provide the service. In other
words, basically in each region of the country we would ask people to
apply or compete to be the benefit provider; to be the entity that
would go out and negotiate a price for the drugs and provide the
medicine or prescription drug benefits for the individual. And
basically that would be reviewed by HCFA on some kind of yearly or
biannual basis. If it was not working out so that prices remained too
high, then they could drop those benefit providers that were not
performing.
I think that is important. Because, again, if we do not have some way
to address the price discrimination issue, then I do not think that
this program would work. And, again, there is nothing in the Republican
proposal to address the issue of price discrimination or provide this
kind of fair price that has been proposed in the President's program.
I want to talk, again, about those people who are in HMOs. We are not
saying that individuals in HMOs cannot continue in those HMOs and get a
drug benefit. In fact, what is going to happen is that this Medicare
program is going to provide money to the HMO for that drug benefit.
Under the President's plan, essentially we strengthen and stabilize the
Medicare+Choice HMO program.
Today, most Medicare+Choice, or HMOs, offer prescription drug
coverage using the excess from payments intended to cover basic
Medicare benefits. They are only getting the amount of money that the
Federal Government assumes would pay for basic Medicare benefits
without the drug benefit. But under the President's proposal, those HMO
plans in all markets will be paid explicitly for providing a drug
benefit in addition to the payments that they receive for current
Medicare benefits.
So they will no longer have to rely on the rate in a given area to
determine whether they can offer a benefit or how generous it can be.
And that is where we get into the problem where some of the HMOs drop
the drug benefit or start charging more for the drug benefit. They will
not have to do that because there will not be the regional variations.
They will be getting money directly from Medicare, directly from the
Federal Government, to pay for half the cost of the drug benefit. And
that also will be true for any kind of employer plan that someone might
have that they receive through their employer that they want to keep as
well.
I think that the concern that I have, if I contrast the Democratic
plan, which I think is really a Medicare benefit that is available to
all, that ends price discrimination, that has a defined benefit, if I
contrast that with the Republican plan, the basic problem with the
Republican plan is that it is imaginary. It is not going to work. It is
just political cover. It is empty promises. My colleague talked about
that before. And it is not an entitlement to anything.
The one thing that really disturbs me is if we set up a system, as
the Republican leadership has proposed, where this is basically a
private insurance plan, we get away from the basic universality of
Medicare that we have had for a long time. If we start breaking up
Medicare and suggesting that one part of it, in this case the
prescription drug plan, can be outside of the Medicare drug program, I
think it undermines the whole Medicare program and the whole ideology
of the Medicare program.
I have been concerned because I think that is the goal of some of my
Republican colleagues. They do not really like Medicare. They do not
like the fact that Medicare was set up as a government program. They
would rather have all of Medicare, perhaps, to be some kind of a
private insurance program, and the prescription drug benefit becomes
sort of the first way to accomplish that.
The other problem with the Republican plan is that since it does not
have a defined benefit, we are never going to know exactly what kind of
benefit one gets. In other words, we say in the Democratic plan that if
the medicine, the prescription drug, is medically necessary, if the
doctor feels, and he is going to write a prescription that this drug is
medically necessary, then the individual gets it. That is the
definition of the benefit. But we do not have that under the Republican
plan. We do not necessarily know what kind of drugs are going to be
covered. And it is going to depend upon the whims of the private
insurance market whether or not they can offer certain drugs or cover
certain things at a given time.
Seniors need to have a certain amount of certainty. I think one of
the biggest problems that exists now when HMOs change their drug
benefit plans or they simply drop seniors altogether is that I get a
call saying what happened, I thought I had a certain HMO, I thought I
had a certain drug benefit plan and all of a sudden I do not. We need
certainty, and that is essentially what the Democrats are proposing.
There was a very interesting article, I thought a really enlightening
article, in The New York Times, Mr. Speaker, just yesterday, Sunday. It
was on the front page. It was by Robert Pear, and it was entitled
``Party Differences on Drug Benefits Continue to Grow.'' And it talked
about this whole Medicare debate in terms of what the Republican
leadership proposes as opposed to what the President and the Democrats
are proposing.
I do not like to read, but I just thought that there were certain
parts of this article that really sort of explained the differences
between what the Democrats proposed and what the Republicans proposed,
and why I feel that the Democratic plan really is a good plan that will
work whereas the Republican plan simply will not work and it is just
something they are putting forward. I would just like to read certain
sections of this article, if I could, because it does draw such
contrasts between the Democrats and the Republicans on the issue.
It says, about halfway down the front page in the article from
yesterday's New York Times, ``Democrats want more uniformity in
premiums and benefits. They say the Republicans' free-market approach
will confuse beneficiaries and encourage insurers to seek out healthy
customers with relatively low drug costs, a practice known as
cherrypicking.''
This is the whole idea of breaking the insurance pool. The reason why
Medicare works is because so many people, almost everyone, most
seniors, are involved with it. So it creates this huge insurance pool
that does not depend on whether a person is sick or how much health
care or hospitalization is needed. Well, we break that system by
allowing insurance companies, through private insurance, to cherrypick
those who use the least amount of drugs; and all of a sudden, we do not
have a workable plan.
Well, the article says that, ``The Republican proposal assumes that
insurers can be induced to offer drug coverage subsidized by the
government just as health maintenance organizations have been induced
to sign contracts with the government to care for 6.2 million Medicare
beneficiaries. But when asked if insurers would be interested in
offering drug coverage under Mr. Thomas','' the Republicans', ``bill,
Charles Kahn,'' this is Chip Kahn, ``President of the Health Insurance
Association of America, said: No, I don't think so. They would not sell
insurance exclusively for drug costs. The government may find some
private entities to administer drug benefits, but the government would
have to accept all or nearly all of the financial risk.''
Well, this again goes back to what my colleague from Maine was saying
before. Who is going to offer a benefit or an insurance policy that has
a benefit that almost all seniors need? The whole basic idea of
insurance is risk. And if we have a situation where they have to insure
and probably pay out money to almost every senior, they are not going
to sell the policy.
``President Clinton,'' again from the New York Times, ``would offer
the same drug benefits to all 39 million people on Medicare. House
Republicans, by contrast, would describe a
[[Page H4664]]
model insurance policy, known as standard coverage. Insurers could
offer alternative policies with different premiums and benefits.''
That is the problem. Rather than having that defined benefit under
the Democratic plan, we have under the Republican proposal a standard
coverage that does not mean anything because the insurance companies do
not have to provide the benefits that are under the standard coverage.
They can vary as they see fit.
Again, in this New York Times article from yesterday, ``Nancy-Ann Min
DeParle, administrator of the Health Care Financing Administration,
which runs Medicare, said elderly people could be refused if they had a
large number of choices.'' And she is talking about the Republican
plan. ``It's difficult for seniors to navigate among plans,'' Ms.
DeParle said. ``Moreover,'' Ms. DeParle asked, ``do seniors want and
need all these choices? If you let plans design all sorts of benefit
packages, that promotes choice, but it also promotes cherrypicking of
the healthiest seniors. That's why we need defined benefits. Seniors
want to know what's covered. It must be predictable.''
The Republicans keep talking about choice, but look at the example
with the HMOs and how much confusion that has caused now in Medicare,
where so many of them are dropping the plans or changing their plans
and the seniors call us up and complain to us. Well, I frankly feel
that if we have a defined benefit plan under Medicare that is certainly
preferable. If someone wants to use an HMO, they can, but at least
provide a guaranteed benefit.
``Democrats fear,'' again in the New York Times, ``that the market
for drug insurance would be filled with turmoil as insurers went in and
out from year to year. In the last two years, dozens of HMOs have
pulled out of Medicare or curtailed their participation, disrupting
insurance arrangements for more than 700,000 elderly people, and more
health plans are expected to withdraw this year. Democrats say drug
benefits should be fully integrated into Medicare, like coverage of
hospital care and doctors' services. The bill,'' this is the Republican
bill now, ``says Medicare officials must ensure that every beneficiary
has a choice of at least two plans providing prescription drug
coverage. One could be an HMO; at least one must be a traditional
insurer. But Democrats say even if benefits have two options, both may
be high priced plans. Under the House Republican proposal, Medicare
officials could offer financial incentives to get insurers to enter
markets in which no drug plans were available.''
Now, that is fine. In other words, just like HMOs, the Republican
plan would say, and this is what the gentleman from California (Mr.
Thomas) has said, well, if we cannot find any insurance companies to
provide this prescription drug coverage, then we will just give them
more money and then they will do it. Well, that is all very nice, but,
again I am going back to this New York Times article, ``Chris Jennings,
the health policy coordinator at the White House, said the availability
of these incentives would encourage insurers to hold out for more
money. It would encourage insurers to hold Medicare hostage, Mr.
Jennings said. The policy says that if insurers don't participate in
the marketplace, we'll give them more money.''
Now, do my colleagues think an insurer will decide to participate in
the market at the beginning, when they get less money, or will they
hold out a little longer and then they might get more?
{time} 2230
``That's the most inefficient, ridiculous incentive mechanism one
could imagine.''
That is, essentially, what we are getting now with the HMOs. HMOs
that are pulling out of the Medicare senior market are coming back to
Congress and saying, okay, we will stay in the markets if you give us
more money, if you give us a higher reimbursement rate. Insurance
companies that theoretically are going to tap into the drug benefit
programmed under the Republican plan, they will do the same thing, they
will say, well, we cannot offer the plan now. Give us more money. And
then they will hold out until they get more money. And even then there
is no guarantee that we are going to get a good benefit plan.
I do not want to keep talking all night, Mr. Speaker, because I know
that we are going to be dealing with this issue again and again. And I
certainly plan to come again on other nights in special orders with my
colleagues on the Democratic side to keep making the point that what we
really need here is a Medicare benefit, a Medicare prescription drug
benefit, that is voluntary; that provides universal coverage to
everyone who wants to opt for it; that is designed to give all
beneficiaries meaningful defined coverage; that has a catastrophic
protection so that, if over a certain amount, the Government pays for
all benefits; that has access to medically necessary drugs and,
basically, defines what is medically necessary by the physician, not by
the insurance company; and that, basically, says that if you are low
income, we will pay for your premium, just like we do for part B for
your doctors bills; and, finally, that is administered in a way that
has purchasing mechanisms so that we can keep the price fair and not
provide for the price discrimination that exists right now under
current law for so many people.
That is what we will push for regardless of what the Republicans come
up with. And certainly, we are more than willing, as Democrats, to work
with the Republicans to fashion a plan that will work. But, so far,
what we are hearing from the other side of the aisle is a sham, is not
something that is designed to provide a meaningful benefit, and that
ultimately will not pass here, not pass the Senate, not land on the
President's desk in time for the end of this Congress. And that is what
I do not want to see.
The Democrats want to see something that will pass and be signed by
the President and become law so that Medicare beneficiaries can take
advantage of it and that it not just be a political issue for this
November election.
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