[Congressional Record Volume 146, Number 150 (Thursday, December 7, 2000)]
[House]
[Pages H12036-H12040]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1545
                       PRESCRIPTION DRUG COVERAGE

  The SPEAKER pro tempore (Mr. Thornberry). Under the Speaker's 
announced policy of January 6, 1999, the gentleman from Iowa (Mr. 
Ganske) is recognized for 60 minutes.
  Mr. GANSKE. Mr. Speaker, I am going to talk today about the high cost 
of prescription drugs and a little bit about what happened on this 
issue this year, both here in Congress and why this issue became an 
important issue in the presidential election, and talk about some 
proposed solutions to this problem as we look forward to the 107th 
Congress next year, because, Mr. Speaker, I am afraid we will end up 
this 106th Congress without addressing at least in a major way the high 
cost of prescription drugs. We have done something on this which I will 
talk about a little bit later.
  Mr. Speaker, what is the problem? Why do we have such high 
prescription drug costs? How are those high prescription drug costs 
affecting people in the country?
  Mr. Speaker, this is a photo of William Newton, who is 74 years old. 
He is from Altoona, Iowa. He is a constituent in my district whose 
savings vanished when his late wife, Juanita, whose picture he is 
holding, needed prescription drugs that cost as much as $600 a month. 
Mr. Newton said, ``She had to have them. There was no choice. It's a 
very serious situation and it isn't getting any better because drugs 
keep going up and up.''
  Mr. Speaker, when James Weinman of Indianola, Iowa, just south of Des 
Moines where I live, and his wife, Maxine, make their annual trip to 
Texas, the two make a side trip, as well. They cross the border to 
Mexico and they load up on prescription drugs, which are not covered 
under their MediGap plan. Their prescription drugs cost less than half 
as much in Mexico as they do in Iowa.
  This problem is not localized to Iowa, it is everywhere. The problem 
that Dot Lamb, an 86-year-old woman in Portland, Maine, who has 
hypertension, asthma, arthritis, and osteoporosis, has paying for her 
prescription drugs is all too common. She takes five prescription drugs 
that cost over $200 total each month, over 20 percent of her monthly 
income. Medicare and her supplemental insurance do not cover 
prescription drugs.
  Mr. Speaker, I recently received a letter from a computer-savvy 
senior citizen who volunteers at a hospital that I worked in before 
coming to Congress.

       Dear Congressman Ganske . . . after completing a University 
     of Iowa study on Celebrex 200 milligrams for arthritis, I got 
     a prescription from my M.D. and picked it up at the hospital 
     pharmacy. My cost was $2.43 per pill with a volunteer 
     discount!

  He goes on:

       Later on the Internet I found the following:
       A. I can order these drugs through a Canadian pharmacy if I 
     use a doctor certified in Canada or my doctor can order it 
     ``on my behalf'' through his office, for 96 cents per pill, 
     plus shipping;
       B, I can order these drugs through PharmaWorld in Geneva, 
     Switzerland, after paying either of two American doctors $70 
     for a phone consultation, at a cost of $1.05 per pill, plus 
     handling and shipping.
       C: I can send $15 to a Texan,

which may interest the Speaker,

     and get a phone number at a Mexican pharmacy which will send 
     it without a prescription . . . at a price of 52 cents per 
     pill.

  This constituent closes his letter to me by saying,

       I urge you, Dr. Ganske, to pursue the reform of medical 
     costs and stop the outlandish plundering by pharmaceutical 
     companies.

  Mr. Speaker, I want to make it very clear, I am in favor of 
prescription drugs being more affordable, not just for senior citizens 
but for all Americans. Let us look at the facts of the problem, and 
then we will discuss some solutions.
  There is no question that prices for drugs are rising rapidly. A 
recent report found that the prices of the 50 top-selling drugs for 
seniors rose much faster than inflation. Thirty-three of the 50 drugs 
rose in price at least 1\1/2\ times inflation. Half of the drugs 
increased at twice inflation. Sixteen drugs increased at least three 
times the inflation rate, and 20 percent of the 50 top selling drugs 
for senior citizens rose at least four times the rate of inflation in 
the last year.
  The prices of some drugs are rising even faster. Furosemide, a 
generic diuretic, rose 50 percent in 1999. Klor-con 10, a brand name 
drug, rose 43.8 percent.
  That was not a 1-year phenomenon. Thirty-nine of these 50 drugs have 
been on the market for at least 6 years. The prices of three-fourths of 
this group rose at least 1.5 times inflation, over half rose at twice 
inflation, more than 25 percent increased at three times inflation, and 
six drugs at over five times inflation. Lorazepam rose 27 times 
inflation and furosemide 14 times inflation in the last 6 years.
  Prilosec is one of the two top-selling drugs prescribed for seniors. 
The annual cost for that 20 milligram GI drug, unless one has some type 
of drug discount, is $1,455. For a widow at 150 percent of poverty, the 
annual cost of Prilosec alone will consume more than $1 in $9 of that 
senior's total budget.

  Let us look at a widow living on $16,700 a year. That is 200 percent 
of poverty. That is a lot more than a lot of widows have. If she has 
diabetes, hypertension, and high cholesterol, so she is taking a 
glucophage, Procardin, and Lipitor, her drug costs are going to be 13.7 
percent of her income. If she is just taking that drug Prilosec for 
acid reflex disease, we can see that one drug alone even at this income 
represents about 8.7 percent of her total income.
  My friend from Des Moines, the Iowa Lutheran hospital volunteer 
senior citizen, as do the Weinmans from Indiana from their shopping 
trips in Mexico for prescription drugs, know that drug prices are much 
higher in the United States than they are in other countries.
  A story from USA Today comparing U.S. drug prices to prices in 
Canada, Great Britain, and Australia for the 10 best-selling drugs 
verified that drug prices are higher here in the United States than 
overseas.
  For example, that drug Prilosec for acid reflux is 2 to 2\1/2\ times 
as expensive in the United States. Prozac was 2 to 2\1/2\ times as 
expensive. Lipitor was 50 percent to 92 percent more expensive. 
Prevacid was as much as four times more expensive. Only one drug, 
Epogen, was cheaper in the United States than in the other countries.
  High drug prices have been a problem for the past decade. Two GAO 
studies from 1992 and 1994 showed the same results. Comparing prices 
for 121 drugs sold in the United States and Canada, prices for 98 of 
the drugs were higher in the United States. Comparing 77 drugs sold in 
the United States and the United Kingdom, 86 percent of the drugs were 
higher in the United States, and three out of five were more than twice 
as high.
  Look at this chart that shows some of the high drug prices in the 
United States, that is the first row, compared to the European price: 
Prozac, $36.12 in the United States; the European price, $18.50. 
Claritin, one of the most popular antihistamines: in the United States, 
$44; in Europe, $8.75. We can go right down this list. Here is one, 
Premarin. In the United States, it is $14.98; in Europe, $4.25.
  Mr. Speaker, the drug companies claim that drug prices are so high 
here because of research and development costs. I do want to say that 
there is a great need for research. For example, around the world, we 
are seeing an explosion of antibiotic-resistent bacteria, like 
tuberculosis, and we are going to need research and development for new 
drugs.
  A new report by the World Health Organization outlines that concern 
on infectious diseases. However, data from PhRMA, the pharmaceutical 
trade organization, that I saw presented in Chicago several months ago 
showed little

[[Page H12037]]

increase in research and development, especially in comparison with 
significant increases in advertising and marketing by the 
pharmaceutical companies.
  Since 1997, the FDA reform bill, advertising by drug companies has 
gotten so frequent that Healthline recently reported that consumers 
watch, on the average, nine prescription drug commercials on TV every 
day.
  Look at the 1998 figures for the big drug companies. In every case, 
marketing, advertising, sales, and administrative costs exceeded 
research and development costs. In 1999, four of the five companies 
with the highest revenues spent at least twice as much on marketing, 
advertising, and administration as they did on research and 
development. Only one of the top ten drugs companies spent more on 
research and development than on marketing, advertising, and 
administration. Administration costs have not increased that much, so 
we know that the real increase in drug company spending has been in 
advertising.
  For the manufacturers of the top 50 drugs sold to seniors, profit 
margins are more than triple the profit rates of other Fortune 500 
companies. The drug manufacturers have profit rates of 18 percent 
compared to approximately 5 percent for other Fortune 500 companies.
  Furthermore, as recently cited in the New York Times, of the 14 most 
medically significant drugs developed in the last 25 years, 11 had 
significant government-funded research. For example, Taxol is a drug 
developed from government-funded research which earns its manufacturer, 
Bristol-Myers-Squib, millions of dollars each year.
  Mr. Speaker, as I said at the start of this special order speech, I 
think the high cost of drugs is a problem for all Americans, not just 
the elderly. But many nonseniors are in employer plans, and they get 
prescription drug discounts from their HMOs. In addition, there is no 
doubt that the older one is, the more likely the need for prescription 
drugs. So let us look at what type of drug coverage is available to 
senior citizens today.
  Medicare pays for drugs that are part of treatment when a senior 
citizen is a patient in a hospital or in a skilled nursing facility. 
Medicare pays doctors for drugs that cannot be self-administered by 
patients, like drugs that require intramuscular or intravenous 
administration. Medicare also pays for a few other outpatient drugs, 
such as drugs to prevent rejection of organ transplants, medicine to 
prevent anemia in dialysis patients, and oral anti-cancer drugs. The 
program also covers pneumonia, hepatitis, and influenza vaccines. The 
beneficiary is responsible for 20 percent of co-insurance on those 
drugs.
  About 90 percent of Medicare beneficiaries have some form of private 
or public coverage to supplement Medicare, but many with supplementary 
coverage have either limited or no protection against prescription drug 
costs, those drugs that you buy in a pharmacy with a prescription from 
your doctor, as compared to those drugs that you would get if you are a 
patient in the hospital.

                              {time}  1600

  Since the early 1980s, Medicare beneficiaries in some parts of the 
country have been able to enroll in HMOs which provide prescription 
drug benefits. Medicare pays the HMOs a monthly dollar amount for each 
enrollee; but some areas like Iowa have had such low payment rates that 
no HMOs with drug coverage are available. That is typically a rural 
problem, but also a problem in some metropolitan areas that have 
inequitably low reimbursements.
  I must say that I have led the fight to try to ``even up'' that. This 
is one of the things I think we ought to look at when we are talking 
about solutions.
  Employers can offer their retirees health benefits that include 
prescription drugs, but fewer employers are doing that. From 1993 
through 1997, prescription drug coverage of Medicare-eligible retirees 
dropped from 63 percent to 48 percent. Beneficiaries with MediGap 
insurance typically have coverage for Medicare's deductibles and 
coinsurance, but only three of 10 standard plans offer drug coverage.
  All three plans have a $250 deductible. Plans H and I cover 50 
percent of the charges up to a maximum benefit of $1,250. Plan J covers 
50 percent of the charges up to a maximum benefit of $3,000. The 
premiums for those plans are significantly higher than the other seven 
MediGap plans because of the costs of that drug benefit.
  This chart shows the difference in annual costs to a 65-year-old 
woman for a MediGap policy with or without a drug benefit. For a 
MediGap policy of moderate coverage, she would pay $1,320 for a plan 
without prescription drug coverage; but if she wants prescription drug 
coverage, she is going to pay $1,917. If she wants extensive coverage 
without drugs, her premium is $1,524 a year, with drugs her premium 
would be $3,252 to insurance.
  Why is there such a price gap? Well, because the drug benefit is 
voluntary. Only those people who expect to actually use a significant 
quantity of prescriptions purchase a MediGap policy with drug coverage; 
but because only those with high costs choose that option, the premiums 
have to be high to cover the costs of a higher average expenditure of 
drugs.
  So what is the lesson that we learn from the current Medicare 
program? The lesson is adverse selection tends to drive up the per 
capita costs of coverage unless the Federal Treasury simply subsidizes 
lower premiums.
  The very low income, elderly and disabled Medicare beneficiaries are 
also eligible for payments of their deductibles and coinsurance by 
their State's Medicaid program. These beneficiaries are called dual 
eligibles, and the most important service paid for entirely by Medicaid 
is frequently the prescription drug plans offered by all States under 
their Medicaid plans. There are several groups of Medicare 
beneficiaries who have more limited Medicaid protection.
  Qualified Medicare beneficiaries called Q-M-Bs or QMBs have incomes 
below the poverty line, so it is less than $8,240 for a single person 
or $11,060 for a couple. And they have assets below $4,000 for a single 
person or $6,000 for a couple. Medicaid pays their deductibles and 
premiums. Specified low-income Medicare beneficiaries, S-L-I-M-Bs, or 
SLIMBs, have incomes up to 120 percent of poverty, and Medicaid pays 
their Medicare part B premium.
  Qualifying individuals 1 have income between 120 percent and 135 
percent of poverty. Medicaid pays part of their part B premium, but not 
deductibles. Qualifying individuals 2 have income between 135 percent 
and 175 percent of poverty, and Medicaid pays part of the part B 
premiums.
  Now, the QMBs and the SLIMBs are not entitled to Medicaid's 
prescription drug benefit unless they are also eligible for full 
Medicaid coverage under their State Medicaid plan. Q1s and 2s are never 
entitled to Medicaid drug coverage.
  A 1999 Health Care Financing Administration report showed that 
despite a variety of potential sources of coverage for prescription 
drug costs, beneficiaries still pay a significant proportion of drug 
costs out of pocket and about one-third of Medicare beneficiaries had 
no coverage at all.
  Mr. Speaker it is also important to look at the distribution of 
Medicare enrollees by total annual prescription drug costs, because it 
will make a difference in terms of what kind of plan we devise and how 
successful it is and how much we will need to subsidize such a plan.
  This chart from the Medicare Payment Advisory Commission, MPAC, 
Report to Congress shows that in 1999, 14 percent of those in Medicare 
had no drug expenditures, 36 percent had less than $500, 19 percent had 
less than $1,000, 12 percent less than 1,500 and down the line.
  Please note that if you add up those who have no drug expenditures at 
14 percent and those who have drug expenditures of $500 to $1 at 36 
percent, 50 percent then, 14 percent plus 36 percent, had drug 
expenditures of less than $500 per year. Then if you add in the next 
group, 69 percent had drug expenditures of less than $1,000 a year. The 
problem is with those who have much higher drug costs.
  Now, as we look at plans to change Medicare to better cover the costs 
of prescription drugs, we are going to have to face some difficult 
choices. Mr. Speaker, there is currently no public consensus or, for 
that matter, policy consensus among the policymakers on how we do that. 
There are a lot of questions we have to answer.

[[Page H12038]]

  Here are a few: First, should coverage be extended to the entire 
Medicare population or targeted towards the elderly widow who is not so 
important that she is in Medicaid, but is having to choose between her 
rent, her food, and her drugs? Should the benefit be comprehensive or 
catastrophic? Should the drug benefit be defined? What is the right 
level of beneficiary costs-sharing? Should the subsidies be given to 
the beneficiaries or to the insurers? How much money can the Federal 
Treasury devote to this problem? Can we really predict the future costs 
of this new benefit?
  These are all really important questions, Mr. Speaker. Maybe we can 
learn something from what has happened in the past.
  I want to talk a little bit about what happened in 1988 and then what 
happened earlier this year on prescription drug benefits. The 
prescription drug benefit has been discussed since the start of 
Medicare in 1965. The reason why adding a prescription drug benefit is 
now such a hot issue is that there has been an explosion in new drugs 
available, huge increases in demands for those drugs, largely fueled by 
all of the advertising dollars by the pharmaceutical companies and a 
significant increase in the costs of those drugs in the last few years.
  I will tell you what, it is great that we have a lot of these new 
drugs. My parents are on some of those drugs. My dad is very well alive 
today because he is on some of those drugs. Well, let us look at what 
happened when Congress tried to do something about prescription drugs 
in 1988 and again this year.
  That is because the outcome of reform in 1988 made a big difference 
with what happened here in Congress in the year 2000. The Medicare 
Catastrophic Coverage Act of 1988 would have phased in catastrophic 
prescription drug coverage as part of a larger package of benefit 
improvements.
  Under the Medicare Catastrophic Coverage Act, catastrophic 
prescription drug coverage would have been available in 1991 for all 
outpatient drugs subject to a $600 deductible and 50 percent 
coinsurance. The benefit was to be financed through a mandatory 
combination of an increase in the part B premium and a portion of the 
new supplemental premium, which was to be imposed on higher income 
enrollees.
  It is also important to note that the Congressional Budget Office 
estimated the costs at that time as $5.7 billion. Well, only 6 months 
after the cost estimates, only 6 months later, the cost estimates had 
more than doubled, because both the average number of prescriptions 
used by enrollees and the average price had risen more than previously 
estimated. That plan passed this House by a margin of 328-72.
  President Reagan enthusiastically signed into law this largest 
expansion of Medicare in history. The only problem was that once 
seniors learned their premiums were going up, they hated the bill. They 
even started demonstrating against it. Scenes of gray panthers hurling 
themselves on to the chairman of the Ways and Means Committee, Mr. 
Rostenkowski, were broadcast to the Nation; angry phone calls from 
senior citizens flooded the Capitol switch boards.
  The very next year, the House voted 360-66 to repeal the Medical 
Catastrophic Coverage Act of 1988, and President Bush then signed the 
largest cut in Medicare benefits in history. Well, that experience left 
a lot of scars on the political process that became evident earlier 
this year when the Democrats and the Republicans made their proposals 
on prescription drugs.
  What was the lesson? Well, Dan Rostenkowski wrote an article for the 
Wall Street Journal on January 20, early this year, that I think a lot 
of Members from Congress read. His most important point was this: the 
1988 plan was financed by a premium increase for all Medicare 
beneficiaries. Rosti said in his piece: ``We adopted a principle 
universally accepted by the private insurance industry. People pay 
premiums today for benefits they may receive tomorrow.''
  He goes on to say apparently the voters did not agree with those 
principles. By the way, the title of his Op-Ed piece was ``Seniors Will 
Not Swallow Medicare Drug Benefits.'' Former chairman of the Committee 
on Ways and Means Rostenkowski did not think seniors had changed much 
since 1988. And apparently the drafters of this year's Democratic and 
Republican bills agreed with him, because the key point that the 
spokesman for each of those bills made to Congress and to senior 
citizens was that their bill would be voluntary.
  There were shortcomings in both plans this year, but before I briefly 
describe each plan, let me acknowledge the hard work that a lot of 
Members on both sides of the aisle made in working on those bills. The 
House Republican plan this year was estimated to cost seniors $35 to 
$40 a month by the year 2003, with possible projected rises in 15 
percent a year. Premiums could vary among plans.
  There would be no defined benefit plan and insurers could cover 
alternatives of ``equivalent value.'' There would be a $250 deductible, 
and the plan would then pay half of the next $2,100 in drug costs. 
After that expense, patients were on their own until their out-of-
pocket expenses hit $6,000 a year. At that time a catastrophic 
provision would kick in and the Government would pay the rest.
  The GOP plan would have paid subsidies to insurance companies for 
people with high drug costs. If subscribers did not have a choice of at 
least two private plans, then a ``government plan'' would have been 
available.

                              {time}  1615

  A new bureaucracy called the Medicare Benefits Administration would 
have overseen those private drug insurance plans.
  Under the Republican plan, the Government would have paid for all the 
premiums and nearly all the beneficiary's share of covered drug costs 
for people with incomes under 135 percent. For people with incomes 135 
to 150 percent of poverty level, premium support would have been phased 
out.
  It was assumed that drug insurers would use generic drugs to control 
costs. The cost of the GOP plan was estimated to be $37.5 billion over 
5 years and about $150 billion over 10 years. But the CBO, the 
Congressional Budget Office, had a very hard time predicting costs 
because there was no standard benefit in the plan.
  Now, the premiums under the Clinton-Gore plan were estimated to cost 
those seniors who signed up, remember it was a voluntary plan like the 
GOP plan, $24 a month in 2003, rising to $51 a month in 2010. But then 
the Clinton administration talked about adding $35 billion in expenses 
for a catastrophic component like the GOP plan, which would have made 
the premiums higher and similar, in my opinion, to what the Republicans 
were proposing.
  Under the Clinton plan, Medicare would have paid half of the cost of 
each prescription, and there would have been no deductible. The maximum 
Federal payment would have been $1,000 for $2,000 worth of drugs in 
2003, rising to $2,500 for $5,000 worth of drugs by 2009.
  The Government would have assumed the financial risk for prescription 
drug insurance, but it would have hired private companies to administer 
the benefits and negotiate discounts from drug manufacturers. That was 
pretty similar in both the Clinton-Gore and the Republican plans.
  But, and here is the crucial point, in order to cushion the costs of 
the sicker with premiums from the healthier, both the Clinton-Gore plan 
and the GOP plan calculated premiums, and this is the most important 
point, they calculated those premiums based on the premise that 80 
percent of all of the people in Medicare would sign up for the plan. In 
other words, one has got to have a lot of people who are healthy in the 
plan paying their premiums to keep the premiums lower for those who 
have higher drug costs.
  Well, right away the partisan attacks started on both plans. The 
Democrats said Republicans are putting seniors into HMOs. HMOs provide 
terrible care. This is not fair to seniors. The Republicans said the 
Democratic plan is a one-size-fits-all plan, it is too restrictive, it 
puts politicians and Washington bureaucrats in control. Now, tell me, 
anyone who has watched TV and saw all the political ads in this last 
campaign knows that is exactly what each side was saying about the 
other.
  I could criticize each plan in depth, but I do not have that much 
time. Suffice it to say that the details of each of those plans was 
very important to how they would work.

[[Page H12039]]

  I believe that if one lets plans design all sorts of benefit 
packages, as did the GOP plan, it becomes very difficult for seniors to 
be able to compare apples to apples, to compare equivalency of plans in 
terms of value.
  I also think the plans can tailor benefits to cherry-pick healthier, 
less expensive seniors, and to gain the system. Representatives of the 
insurance industry shared that opinion in a hearing before my 
committee. In my opinion, a defined benefit package would have been 
better.
  I had concerns about the financial incentives that the House 
Republican bill would offer insurers to enter markets in which no drug 
plans were available. Would those incentives encourage insurers to hold 
out for a better deal?
  I had doubts that the private insurance industry would ever offer 
drug-only plans. In testimony before my committee, Chip Kahn, the 
president of the Health Insurance Association of America, testified 
that drug-only plans would not work.
  In testimony before the Committee on Commerce on June 13, this year, 
Mr. Kahn said, ``Private drug-only coverage would have to clear 
insurmountable financial, regulatory, and administrative hurdles simply 
to get to the market. Assuming that it did, the pressures of ever-
increasing drug costs, the predictability of drug expenses, and the 
likelihood that people most likely to purchase this coverage would be 
the people anticipating the highest drug claims,'' that adverse 
selection problem, ``would make drug-only coverage virtually impossible 
for insurers to offer a plan to seniors at an affordable premium.''
  Mr. Kahn predicted that few, if any, insurers would offer that type 
of product.
  I could similarly criticize several particulars of the Clinton-Gore 
bill in the spirit of bipartisanship; but I think we should look at the 
fundamental flaw of both plans, and that is that ``adverse risk 
selection'' problem.
  If the Clinton plan had comparable costs for a stop-loss provision on 
catastrophic expenses, the premiums would have been comparable to the 
GOP plan. Under those bills, a plan who signed up for drug insurance 
would have paid about $40 per month or roughly $500 per year.
  After the first $250 out-of-pocket drug cost, the enrollee would have 
needed to have twice $500 in drug costs, or $1,000, in order to be 
getting a benefit that was worth more than the cost of the premiums for 
the year. Put another way, the enrollee must have had $250 for that 
deductible plus $1,000 in drug expenses or $1,250 in annual drug costs 
in order to get half of the rest of his drug expenses up to a maximum 
of $2,100 paid for by the plan.
  Now, look at this chart again. Look at this: 69 percent of the people 
in Medicare in 1999 had less than a thousand dollars. If the cost of 
the plan, signing up for the plan was going to be more than $1,000, 
would they sign up for something that was going to cost them more than 
what they were already paying? I do not think so. In fact, I know they 
would not.

  How do I know they would not? Because we already have those options 
in the current Medicare plan. We have those three options that I talked 
about earlier where one can voluntarily sign up for a drug benefit. But 
most people do not because the premiums are higher than what their drug 
costs are. They would have to be fools to be paying more for an 
insurance premium than what the premium is going to give them if it is 
voluntary. This is just the mindset that people have.
  I think Regis could have asked, Who would have signed up for those 
plans? The final answer would have been those seniors with over $1,250 
in annual drug expenses. Well, remember also that the premiums were 
premised on that 80 percent participation rate. I think it is highly 
doubtful that anywhere near 80 percent of seniors would have signed up 
for either of those plans. If only those with high drug costs signed up 
for the plans, then we know what would have happened. The premiums 
would have had to go up significantly, or we would have had to transfer 
significantly more sums from the Federal Treasury to subsidize that 
benefit.
  Well, one way to avoid that adverse risk selection in a voluntary 
system would be to offer the drug benefit one time only, when a 
beneficiary enrolls in Medicare. The problem with that is that one is 
still going to get adverse risk selection because, at the age of 55, 
there are a number of people who do have high drug costs, and of course 
they are going to sign up; whereas, a lot of people have no drug costs, 
and they may simply decide I do not want to sign up right now, I will 
wait until later.
  The authors of the GOP bill recognized that problem. So what they 
tried to do was say, well, if you do not sign up initially, then later 
on when you sign up, you may have to pay a higher premium.
  But I tell my colleagues this, if seniors were going to do that, they 
would do that right now. All the seniors would voluntarily sign up for 
one of those three options. It would bring down the cost of premiums. 
But they do not do that.
  Another way to control adverse risk is to try to devise a risk 
adjustment system. We tried to do that in some other areas in Medicare. 
I will tell my colleagues what. It is really tougher to do risk 
adjustment. A uniform benefit package would help control adverse risk 
selection. Consumers would be able to select plans based on price and 
quality rather than benefits. If plans are allowed a slight variation 
of benefits, some plans may be likely to attract low-cost 
beneficiaries.
  The GOP plan had some weak community rating and guaranteed issue 
provisions, but it is hard to see how the adverse risk selection would 
have been solved by their solutions.
  Now, one sure way to avoid adverse risk selection would be to say we 
have a uniform benefit, prescription drug benefit, and everyone, when 
they sign up for Medicare, is going to be in that prescription drug 
plan.
  That was the approach of the Medicare Catastrophic Coverage Act in 
1988. We saw what happened to that law. That lesson was not lost on 
people in this Chamber this year. To say that mandatory enrollment had 
little appeal to policy makers in this election year was an 
understatement.
  Finally, we could avoid adverse selection for a voluntary benefit 
like prescription drug coverage if we simply subsidized the benefit to 
such an extent that is such a good deal that everyone will do that. But 
we are really talking about large sums of Federal dollars when we do 
that. We cannot even predict what the costs are going to be. There are 
new drugs coming on board that could cost thousands of dollars per 
treatment where treatments have to be repeated and repeated and 
repeated. We could easily be talking about a trillion dollar drug 
benefit.
  That cost reminds me again of that article by Mr. Rostenkowski. As 
Congressman Rostenkowski said, ``The problem was and still is a lack of 
money. Yes, we have a projected surplus, but the 10-year cost of more 
highly subsidized drug coverage would, in my opinion, easily double or 
even triple the projected cost of both proposals.''
  Now, there are several reasons why even in this time of a surplus I 
think we need to think hard about this. First, we have made a 
bipartisan commitment not to use Social Security surplus funds. Second, 
there are people in this country who have no health insurance, much 
less prescription drug coverage. Should we expand coverage for some 
while the totally unprotected group grows? Third, Medicare is closer to 
insolvency than it was back in 1988. Should not our first priority be 
to protect the current Medicare program?
  Given those constraints, what can we do to help seniors and others 
with high drug costs? Here are some modest proposals for helping 
seniors and others with their drug costs. First, let us allow those 
senior citizens, those qualified Medicare beneficiaries, specified low-
income Medicare beneficiaries, qualifying individuals who are not so 
poor that they are in Medicaid in addition to Medicare, but are just 
above that, many of whom are having to make difficult decisions because 
they are living solely on their Social Security and they have very high 
prescription drug costs, why do not we allow these individuals, say, up 
to 175 percent of poverty, to get into or access the State Medicaid 
prescription drug plans? We could pay for it from the Federal side. We 
would not have to require any match from the States.
  The plans are already in existence. The bureaucracy is already there. 
The

[[Page H12040]]

States have already negotiated discounts with the pharmaceutical 
companies. We know who these individuals are because they are already 
getting discounts on their premiums and co-payments and deductibility.

                              {time}  1630

  We could simply give them a card that would enable them to access the 
State formulary for their State Medicaid drug programs free for those 
individuals, at no cost for them. We could pay for it through the 
Federal side. Estimates are that that would probably cost about $60 to 
$80 billion over 10 years. It might be more than that, but that is a 
lot less than what we are talking about with the other plans. We can 
afford that. It would be an important first step.
  We ought to also fix the funding formula in which some States, 
particularly rural States, have such low reimbursement rates that 
Medicare HMOs are never there. We ought to raise that floor, reduce the 
gap between some States and other States, so that we have an equitable 
benefit through the Medicare plan. And that would require a floor of at 
least $600. We already have Medicare HMOs that are leaving areas where 
they are getting paid $550 per month per beneficiary. Raising it to 
$480 or $450 is never going to induce those Medicare+Choice plans to go 
into the rural areas.
  And in response to my constituents who want to purchase their drugs 
from Canada or Mexico or Europe, we started to address that problem in 
Congress this year, and it has been signed into law, and that is on the 
reimportation of drugs that are made in this country, packaged here, 
shipped overseas, whether or not they can legally come back into the 
country. However, we need to go back to that issue, because there were 
some loopholes in that legislation that passed the House and the Senate 
that we need to fix. We need to strengthen that law. That would help a 
lot. That would increase the competition. In my opinion it would 
automatically result in lower drug prices, not just for senior citizens 
but for everyone.
  I think we should enact full tax deductibility for the self-insured. 
I think that we should look at those 11 million children that do not 
have any health insurance and, consequently, do not have any 
prescription drug coverage. Roughly 7 million of those kids already 
qualify for Medicaid in the State Child Health Insurance Programs. 
Those children should be enrolled. We should do things to help those 
States get those kids enrolled.
  Many pharmaceutical companies do have programs to help low-income 
people afford prescription drugs. Both physicians and patients need to 
be better educated to take advantage of those discounted drugs. 
Currently, 16 States have pharmaceutical assistance programs targeted 
to Medicare beneficiaries different from the Medicaid solution.
  My colleagues, the gentleman from Florida (Mr. Bilirakis) and the 
gentleman from Minnesota (Mr. Peterson), have a bill, the Medicare 
Beneficiary Prescription Drug Assistance and Stop Loss Protection Act, 
which would allow beneficiaries up to 200 percent to get into programs 
like that. But that would require, in many States, the creation of 
whole new bureaucracies. I think there is a simpler solution. The 
solution is to utilize the State Medicaid drug programs.
  I think that we should revise the FDA Reform Act of 1997, and we 
should restrict direct marketing to consumers in a way that does not 
limit their free speech but at least requires that they provide equal 
time to discussing the possible complications of those new drugs as 
they do to the benefits.
  Finally, I think the new Congress could actually get signed into law 
a combination of the above in a bipartisan fashion. Yes, it is more 
limited than what the Clinton-Gore administration has proposed; it is 
more limited than what passed this House, but it has many advantages in 
that it is a step-by-step progression and it is something that I think 
is common sense and responsible until we are able to look at a more 
comprehensive prescription drug benefit in the context of making sure 
that Medicare stays solvent when the baby boomers retire.
  This is a complicated subject. At the beginning of the speech, I said 
there was not yet a consensus on how we go on this. But I know this: On 
something this important, the only things that get done in Washington 
are done in a bipartisan way. There will be some on both sides that say 
it does not go far enough; there will be some that say my proposal goes 
too far, that we do not want to expand Medicare beneficiaries into 
State Medicaid drug plans. But I think I am hitting a down-the-middle 
approach to this, and I am going to be reintroducing my bill in the 
beginning of this next Congress. I sure hope that a lot of Members will 
take some time, listen to this special order speech, look at the bill 
and the information that we will be providing to them, and think about 
this as a solution that we can do for now.
  Finally, I want to say this: For a long time, in its wisdom, Congress 
has gone through what is known as ``regular order'' with legislation. 
That means a bill, and all of its details, is dropped in that bin over 
there. It is made public. We have hearings on those bills. We compare 
language to other bills. We look at the implications of the legislative 
language. We have subcommittee markups with amendments and debate. And 
then we have a full committee markup with amendments and debate. Then 
we have it go to the Committee on Rules to be brought to the floor. The 
Senate does the same thing. It is an orderly process. That was not done 
this year. That was not done. And I think the legislation was not as 
strong as it should have been because we did not go in regular order.
  So I very much hope that when we look at this issue again this coming 
year, 2001, that instead of just rushing something to the floor, that 
we have full debate and discussion; that people know what the 
provisions mean when the bill reaches the floor; that it does not 
become just a ``Republican bill'' or a ``Democratic bill,'' but in our 
wisdom we debate the various provisions in a free way, debating 
amendments to improve the bill, voting them up or down, and doing 
things in a regular order.
  Mr. Speaker, we did not get it done this year, at least I certainly 
do not think we are in these last few days of the 106th session, but I 
think we have a good chance to do something on this next year. So I 
urge my colleagues to look over my proposal, and we will be getting 
information to my colleagues.

                          ____________________