[Congressional Record Volume 148, Number 80 (Monday, June 17, 2002)]
[House]
[Pages H3587-H3593]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             THE NEED FOR A MEDICARE PRESCRIPTION DRUG PLAN

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2001, the gentleman from New Jersey (Mr. Pallone) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. PALLONE. Mr. Speaker, this evening, and I have a couple of my 
colleagues on the Democratic side that will join me, I am going to be 
talking again about the need for a Medicare prescription drug plan. I 
think, as you know, we have a situation where tomorrow, hopefully, if 
not Wednesday, we are finally going to see an opportunity in committee 
for the Republican leadership in the House to present what they claim 
to be a prescription drug plan, and hopefully an opportunity for the 
Democratic proposal also to be considered, both in the Committee on 
Energy and Commerce as well as in the Committee on Ways and Means.
  I know that some of my colleagues know that for the last 2 months 
myself as well as some of the Members who are going to be joining me 
tonight have been demanding really that the Republican leadership bring 
up a prescription drug plan and allow us to consider prescription drugs 
on the floor of the House. It has been far too long since the 
Republican leadership has essentially stalled on a proposal. But now we 
hear that tomorrow, if not Wednesday, they are finally going to allow 
the two committees of jurisdiction to consider the prescription drug 
issue.

                              {time}  2000

  I would point out, however, though, that my concern over the 
Republican proposal, which we still do not have, but we have been 
provided some sort of vague description of, is not a Medicare 
prescription drug plan; in other words, it is not going to cover all of 
the seniors who are currently under Medicare and provide them with a 
prescription drug guaranteed plan under Medicare. Rather, what the 
Republicans propose to do is to simply throw some money to private 
insurance companies in the hope that they will offer drug-only policies 
and that some seniors would be able to take advantage of those. They 
also do not address the issue of cost at all; they do not have any 
mechanism to bring costs down.
  Democrats have been saying all along in our proposal which we have 
put forward, basically, it would provide a Medicare-guaranteed drug 
benefit, a generous benefit; 80 percent of the cost would be paid for 
by the Federal Government, every senior would be guaranteed the benefit 
across the country, and we would bring costs down by basically saying 
or mandating that the Secretary of Health and Human Services negotiate 
lower drug prices because he now represents or has the negotiating 
power for 40 million American seniors.
  Now, I would like to yield some time, but I want to point out, Mr. 
Speaker, that the problems with the GOP drug plan have been pointed out 
many times by many experts. Over the weekend, actually in Sunday's New 
York Times, Sunday, June 16, there was an article called ``Experts Wary 
of GOP Drug Plan.'' I am not going to get into it now; I may a little 
later this evening. But basically they say in this article that drug-
only coverage is not affordable and that insurers will not provide it. 
So essentially under the Republican plan, most seniors, if not every 
senior, will not be able to get a decent prescription drug program, if 
any at all.
  With that, I would like to yield to the gentlewoman from Texas (Ms. 
Jackson-Lee), who has joined me on many of these lonely evenings when 
we have tried to get the point across that we need to debate the 
prescription drug proposal; even if it is a lousy proposal on the part 
of the Republicans, let us debate it. Let us have an opportunity to 
contrast it with the Democratic proposal. I am pleased to say to the 
gentlewoman that it looks like, I am keeping my fingers crossed, but it 
looks like tomorrow or Wednesday, at least in committee, that 
opportunity will present itself. So I yield to the gentlewoman.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the distinguished 
gentleman. The reason I have joined the gentleman is because I can 
think of, among the many issues that we have to contend with, no issue 
that has prolonged itself disastrously as much as providing seniors the 
opportunity to have a prescription drug benefit with Medicare. I would 
like to just put these words on our screen, because there must be 
someone across America sighing right now: Seniors have waited long 
enough.
  I am trying to count the months that have gotten down to 48 months, I 
think, and if I am not mistaken, that may be 4 years, and I think it 
has probably been 4 years and counting that we have tried day after 
day, month after month, and session after session to be able to respond 
to seniors who are in need. So if I can say anything, I can share with 
my colleagues this evening that I can take the time to talk about what 
we have come up with, because I believe seniors have waited too long. I 
can at least share our thoughts as to how we hope the hearings will 
proceed on Wednesday.
  Let me just take a slightly different twist, because the gentleman is 
right. There are many experts on this legislative process that we hope 
will come into fruition on Wednesday, and I am hoping that we can 
challenge the pharmaceutical companies to look at what we have put 
forward and begin a real partnership in terms of answering the concerns 
of seniors. One, I do not see how they cannot acknowledge that seniors 
have waited too long and that, in fact, we have a proposal that is fair 
and balanced. I was trying to discern what the Republicans are 
offering. Let me just share why I think this is effective.
  One of the things that we have to address with seniors is to give 
them a plan that is real, that does not have a lot of smoke and 
mirrors, because if we do that, it is confusing, it is stressful for 
seniors. I have been in pharmacies, and I believe when we debated last 
week, we talked about our good friend from Arkansas who owned a 
pharmacy, and I applauded him for the small pharmacies, the mom-and-pop 
or the family-owned pharmacies, how much they extend themselves to help 
our seniors and explain to them about the drugs, to try to share with 
them that they cannot take half of the amount that the prescription 
requires. But I can imagine, if we were to utilize what we think might 
be the Republican plan, the confusion of many seniors around the Nation 
trying to understand what they have.
  Ours is plain and simple. It has no gaps, it has no gimmicks. The 
premium is $25 a month, the deductible is $100 a year; coinsurance, 
beneficiaries pay 20 percent, plain and simple; Medicare pays 80 
percent, plain and simple. Out-of-pocket limit, $2,000 per beneficiary 
per year. We must realize that sometimes this is an economic hit, if 
you will, for our seniors who are husbands and wives with high 
prescription drug costs. It takes a large amount out of their 
collective income and, therefore, putting this amount so that they know 
what they can budget and know the options that they have, pretty plain 
and simple.
  Additional low-income assistance. Of course, many of our 
congressional districts, whether we are urban or rural, have 
individuals who have incomes that are not going through the roof. So we 
are prepared to give assistance for

[[Page H3588]]

those incomes up to $13,290, no premium or coinsurance. Again, plain 
and simple. Then we have a sliding scale.
  Now, in contrast, let me just say that as I am trying to read what 
may come out on Wednesday, I know for a fact that Republicans have no 
defined benefits, so we cannot get our hands around what kind of help 
our seniors will get. That is a concern to me. They create a drug 
benefit with a $250 deductible. That is pretty high. They have an 80-20 
coinsurance split between the government and the beneficiaries, but 
they have a scale that does not make sense. The first thousand, and 
then a 50-50 coinsurance split for the next thousand, and that looks 
like it is just going up and up and up until you cap out at $4,500. 
That hurts the constituents that I know. It does not seem to clearly 
define where we are going with it.
  No defined premium. We have already said; we have it right here. 
Plain and simple, understandable to a senior citizen, they can pretty 
well grasp that is what I am going to have to pay, and that is not in 
the Republican plan.
  One of the things, when I speak to my mother, because I have gone 
with her to the pharmacy, and I am very delighted that she has had the 
family pharmacist who has tried to help her wade through this large 
mass of prescription drugs that she needs. We are so grateful that we 
have the opportunity to see seniors live healthy lives because they are 
having, to a certain extent, better access to health care, as we 
mentioned last week, because of Medicare when in 1965 President Johnson 
saw fit to put it in place.
  We have in the instance of the Republican plan no guaranteed access 
to drugs that seniors need. The plan they are offering seems to put in 
strictures the access to certain drugs, access to certain covered 
drugs. Does that mean that they are going to cover only popular drugs, 
or does that mean that they are going to only cover hard-to-access 
drugs so that the popular drugs that the senior needs, such as for 
heart disease and diabetes and high blood pressure, typical ailments, 
does that mean because they are so popular, they will not have access 
to those drugs? I am confused about that and disturbed.
  I yield to the gentleman.
  Mr. PALLONE. Mr. Speaker, I think the gentlewoman is really 
contrasting what the Democrats have in mind versus what the Republicans 
have in mind. The most important thing I think the gentlewoman said is 
that we are very clear about what we are doing, and they are very 
unclear about what they are doing.
  Essentially what the gentlewoman describes in terms of the Democrat 
proposal is no different from what we have right now under Part B. I do 
not want to sound too bureaucratic, but I think seniors understand that 
right now, if they need their hospital bill paid, that is basically 
paid for under Part A. If they need their doctor bills paid, then they 
pay a premium which is so much a month, fairly low, a low deductible, 
and 80 percent of the cost of the doctor bills are paid for by the 
Federal Government under Medicare.
  What the gentlewoman described as the Democratic proposal is 
essentially a new part for Medicare, we call it Part D, but it is very 
similar to Part B with doctor bills. In other words, you pay a defined 
premium, $25, there is $100 deductible, and then 80 percent of the 
cost, up to $2,000, is paid for by the Federal Government. After that 
the entire thing is paid for by the Federal Government. For those 
people who are below a certain premium, the entire thing is paid for by 
the Federal Government, just like Part B with doctor bills. So it is 
clear what we are doing. And we are doing it under Medicare, which has 
been a very successful government program.
  The problem with the Republicans is that they do not like Medicare. 
They do not like government programs. So they are coming up with 
whatever they possibly can do to avoid Medicare. They may say they are 
providing a Medicare prescription drug benefit, but the only reason 
that they can say it is because they are addressing the over-65 
population, not because they are actually expanding Medicare to provide 
a guaranteed benefit.
  I do not want to, I hate to read, but The New York Times article on 
Sunday was so much to the point, because if I could just read 2 
paragraphs, it says, ``Under the proposal,'' the Republican proposal, 
``Medicare would pay subsidies to private entities to offer insurance 
coverage for the cost of prescription drugs. Such drug-only insurance 
does not exist, and many private insurers doubt whether they could 
offer it at an affordable price. I am very skeptical that drug-only 
private plans would develop,'' said Bill Gradison, a former Congressman 
who is President of the Health Insurance Association of America.
  This is the industry, the health insurance industry. The gentleman 
from California (Mr. Thomas), the chairman, Republican chairman of the 
Committee on Ways and Means, insisted, ``We should rely on private 
sector innovation delivering the drug benefit. The private sector 
approach offers the most savings per prescription.'' But the policy 
director for AARP said, ``There is a risk repeating the HMO experience 
with any proposal that relies heavily on private entities to provide 
Medicare drug benefits.''
  Now, what I am hearing is the Republican leadership, in this case the 
chairman of the Committee on Ways and Means, the gentleman from 
California (Mr. Thomas), just does not like the fact that Medicare is a 
government program. He is saying even though the insurance people are 
saying, we are not going to offer these policies; you can give us these 
subsidies, we are not going to offer these policies, seniors are not 
going to have this benefit, but he still insists that it has to be 
outside of Medicare, or private.
  Then, when the other person representing the HMOs points out, well, 
you have already done this with the HMOs, you were hoping that by 
throwing them some money that you would get them to offer prescription 
drugs, they have not done it. More and more are dropping out. Fewer and 
fewer policies are available.
  So I guess the frustration for me and for both of my colleagues is 
that we know that Medicare works. We know that trying this private 
sector giving money to insurance companies did not work with the HMOs. 
We know that the insurance companies say they are not going to do it.
  The gentlewoman started off this evening talking about 4 years. Well, 
the gentlewoman knows 4 years ago the Republican leadership passed the 
same thing on the floor, drug-only policies. And everyone said, it will 
not work, nobody is going to sell them. So for the life of me, I just 
do not understand how they can come back here again with the same old, 
tired stuff that does not work, proof that it does not work, and they 
still insist.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, if the gentleman will yield, 
and I see the distinguished gentleman from Connecticut, who has 
certainly spent a lot of time on these issues. I appreciate the 
gentleman reading the article, and I think that was worthwhile to show 
the contrast.
  The gentleman used the word ``skepticism'' I think was in the 
article, and I want to add the word ``speculating.'' So this is a 
program that speculates that it might work, and that is the frustration 
that I see that the gentleman is expressing, and that is the 
frustration I have, recalling again our debate last week, and it was 
the frustration of going home every single week having our constituents 
ask us when. So if the Republicans are going to be serious, let us not 
play around with what is sometimes a life-and-death question for our 
senior citizens as it relates to health care.
  I would simply close by saying, there is no doubt, the data is clear, 
that when we passed Medicare, we put years of life on our seniors in 
America, just as when we passed Social Security in the 1940s to give 
destitute individuals who really had worked all of their lives some 
ability to live past retirement to have income. Medicare provided the 
health care component to it.
  Now we come to modernizing Medicare, we all believe in that, and 
modernizing it is the goal with now the expanded life span, if you 
will, of our seniors. In order to make that life extension whole, they 
have to have prescription drugs. Nothing in the Republican plan speaks 
to making that a reality.
  So I am hoping that we can be, if you will, encompassing, and I hope 
we can be bipartisan. Why not look to a plan that exists?
  I will conclude simply by saying that I will be optimistic. Why can 
our pharmaceutical companies not look at a realistic plan that we have 
as Democrats,

[[Page H3589]]

see the vitality of it, and work with us to be able to assure that 
Medicare is reformed, expanded, and has a prescription drug benefit 
plan that works so that our seniors will have access to the drugs they 
need?

                              {time}  2015

  I cannot foresee or cannot imagine how my colleagues can turn their 
back on millions of seniors who would take advantage of this plan to 
make sure that they remain healthy and have access to the prescription 
drugs that they need.
  So I thank the gentleman very much for bringing this to our attention 
on the floor, bringing it to our attention that we have until 
Wednesday, which we hope that we will see a fair hearing, a bipartisan 
hearing, and that the proposals that we are offering, that really offer 
closing the gaps and not relying on gimmicks, will have the opportunity 
to be heard in the committee hearings.
  Mr. PALLONE. Mr. Speaker, I yield now to the gentleman from 
Connecticut (Mr. Larson).
  Mr. LARSON of Connecticut. Mr. Speaker, I thank the gentleman from 
New Jersey for yielding, and I join with the distinguished gentlewoman 
from Texas in addressing this very important issue that in so many 
respects he has been like the lone sentinel on the watchwall of 
freedom, making sure that everyone understands the importance and 
significance of this issue.
  As the gentlewoman from Texas has pointed out, there is not a weekend 
that I travel home that I do not hear from senior citizens about this 
issue, and basically we are all hopeful, as she pointed out, that there 
would be a solution here, hopefully a bipartisan solution. After all, 
we have got a Presidential race where both major candidates and the 
third-party candidate all agreed that we needed to have prescription 
drug relief for senior citizens, and everybody, at every gathering, 
talked about the greatest generation ever, and heralded Tom Brokaw's 
book, and talked about the great sacrifices these individuals have 
made, and gave them great hope that truly every Member of Congress, 
most members in local statehouses, all campaigned on the issue in 2000 
that we would provide relief for seniors.
  So everyone every weekend we come home, and there still has not been 
a debate on the floor. They cry out and ask why, and it is, with 
hopefully some optimism, that we are going to have an opportunity not 
only to debate, but hopefully to pass some constructive legislation.
  I applaud the gentleman for not only reading the article from the New 
York Times, but for laying out the Democratic initiative. I know from 
having spoken to colleagues on the other side of the aisle of their 
deep interest in solving this problem as well. I can express it no 
better than the woman on 60 Minutes, however, who said, I feel like I 
am a refugee from my own health care system; I have to get on a bus and 
travel to Canada in order to get the prescription drug relief that I 
need, in order so that I am not forced between making the nightly 
decision between the food I am going to eat, the prescription drugs I 
am going to provide, and, in our area of the country, whether or not 
there will be the money there to heat our homes in the winter or cool 
them in the summertime. These are real, everyday concerns.
  We wonder sometimes aloud in this body why more people do not vote, 
why do they not come out. It is because they hear the platitudes and 
never see the ensuing policy. The time for platitudes is over.
  As one gentleman said to me the other day, I am grateful that people 
are finally recognizing the greatest generation ever; I am glad we have 
been heralded in books and on film and in oratory of every elected 
official, but what we would really like, what we really need is 
prescription drug relief. We do not need platitudes. We need 
prescription drug relief, and that is why this initiative is so 
important.
  I happen to have signed on to the Allen bill, which I believe we need 
to have in conjunction with what we move forward to, irrespective of 
whatever policies pass here, but I can also say this, and I mean not to 
disparage anybody on the other side, anyone who at least puts forward a 
plan and thinks this is a step in the right direction toward dialogue, 
but in truth, hailing from the First Congressional District, the home 
of the managed care and health industry, they know that the proposals 
that have emanated from the other side, at least the ones that advocate 
having a private sector solution, are unworkable and untenable. 
Insurance is pretty straightforward when it comes to actuarial 
concerns, and trying to actuarially underwrite prescription drugs, as 
one executive told me, is like trying to underwrite haircuts. That is 
how difficult it would be, and that is what would make this almost 
impossible to price out.
  So knowing that this cannot possibly work, knowing the tremendous 
concern that exists in this body and in the other body to have a remedy 
for seniors, knowing the great sense of community that we all felt 
after September 11, is this not the time for us to come together and 
help out a population that has already lived through one day of infamy 
on December 7, 1941, and have experienced yet another?

  We asked people to sacrifice in this Nation, and they have stepped up 
and done so throughout their lifetimes. Now it is the time for us to 
pay it forward, to make sure that they have the prescription drug 
relief that they need to live out their final days in dignity, to be 
able to get the kind of relief that their doctors have told them they 
must have to sustain their lives.
  For the life of me and the people that I represent, they are 
confounded by the fact that a Congress and an executive branch that 
believes that this is necessary has yet to move and yet to act. The 
time is now, and as the gentlewoman from Texas said, we hope that we 
are able to move bipartisanly with a plan that works; but if not, then 
let us seize the day here and let us move the Democratic initiative 
forward, and let there be an up-or-down vote in this Chamber on where 
people stand on this issue so that senior citizens get to know where 
people stand on the issue and can distinguish between lip service and 
platitudes and those that are putting forth a policy that is workable. 
And collectively I think we owe that to the American public and clearly 
to those senior citizens.
  I commend the gentleman once again for bringing this to the 
forefront.
  Mr. PALLONE. Mr. Speaker, I want to thank my colleague from 
Connecticut, but he raised three points, if I can remember them now, 
that I would like to develop just a little bit because I thought they 
were very important.
  First, with regard to the possibility of passing something, I really 
cannot emphasize enough, and I know that he obviously believes the 
same, that what we really need here is a bill that is going to pass. It 
is going to pass this House; it is going to pass the other body; it is 
going to be signed by the President. I really do not think that is 
going to be possible unless there is a basic understanding that this 
has to be a Medicare benefit, and I think that some of my colleagues on 
the other side of the aisle, maybe those who really would like to get 
something passed, have tried to frame this in terms of what is a more 
generous benefit.
  Clearly, the Democratic benefit is much more generous. As our 
colleague from Texas pointed out, we are talking about a very low 
deductible, $100, as opposed to $250 for the Republican. We are talking 
about a lower premium. We are talking about an 80 percent benefit that 
starts from the first $100 after the deductible and goes up to $2,000 
when it is 100 percent. The Republicans are talking about 80 percent 
for the first $1,000, then 50 percent for the next $1,000, and then I 
think it goes down to zero, sort of like a donut hole where a person 
gets no Federal money up to $4,000.
  What I have tried to say, if our colleagues on the Republican side 
were willing to sit down, we could probably work out the difference in 
terms of the benefit; the Democratic benefit clearly more generous, the 
Republican benefit clearly a lot more stingy. Maybe we could work out 
some compromise there in terms of the benefit, the amount that the 
Federal Government is going to provide.
  The problem that I have is that is not what the Republican leadership 
is doing. They are acting as if they are providing this benefit, and 
they want to argue the dollars, but really they are not providing any 
benefit because they are not putting this under Medicare, and they are 
back to their same

[[Page H3590]]

drug-only policy of having this function through private insurance, 
which, as my colleague says, I know where he is from, in Hartford the 
insurance companies do not want to do.
  Unless everyone comes to the table with the notion that they are 
going to provide a Medicare benefit, I think that the Republicans, and 
I will be cynical, are just blowing smoke and really do not want to 
pass anything. They just want to talk about it.
  Mr. LARSON of Connecticut. Mr. Speaker, will the gentleman yield?
  Mr. PALLONE. I yield to the gentleman from Connecticut.
  Mr. LARSON of Connecticut. Mr. Speaker, it has been my observation 
that a proposal of that nature is something I have aptly named, in my 
opinion, the Marie Antoinette plan. We all know in history the story of 
Marie Antoinette, who, when approached about the plight of the French 
citizens saying they were starving because they had not bread, she 
replied, well, let them eat cake.
  What this privatization proposal, the buying of a drug benefit, is, 
is seniors crying out that we need prescription drug relief and, in an 
insensitive manner, saying, they need prescription drug relief, let 
them buy insurance. It just simply is actuarially not capable of being 
written at a price that anyone could remotely pay for, and so, 
therefore, the skepticism with respect to this, I think, has been well 
chronicled.
  But we are a better body than that. We need to rise above this and 
speak to the better angels that exist in this body and appeal, as I 
have heard Members from both sides come down with their concern to 
address this. We need the membership of both sides to have a debate on 
this and to pass a bill that seeks to provide relief for our senior 
citizens, and we need to do so because of the commitment and promises 
that have been made by virtually every Member in this Chamber.
  Mr. PALLONE. Mr. Speaker, I know we are just beating a dead horse 
here, but there was a report that was done by Families USA that came 
out a few weeks ago, and basically it said private health plans cannot 
provide prescription drug coverage; that is just not going to happen. 
It kind of follows up on what the gentleman said, and if I could just 
mention, I just want to read a little bit from the summary.
  It says, At the time H.R. 4680 was being considered, that is the bill 
we had last session that had the drug-only policies, it said, At the 
time H.R. 4680 was being considered, the insurance industry, acting 
through the Health Insurance Association of America, made clear that it 
had no intention, no intention, of offering drug-only policies. The 
health insurance industry reasoned that drug-only insurance policies 
would be subject to adverse risk selection; that is, they would 
disproportionately attract consumers who have existing health 
conditions, are sick or disabled, and are among the oldest of the old. 
As a result the policies would be very expensive and would have very 
few takers among healthier Medicare beneficiaries. The failure to 
attract beneficiaries with low drug costs would further drive up 
premium prices and lead to an increasingly unaffordable price spiral.
  Then they go on to talk about how we have the example with HMOs and 
that that is what is happening.
  Mr. LARSON of Connecticut. Mr. Speaker, I think that is very 
charitable because I think it is next to impossible to underwrite for 
that kind of a circumstance, and while I think the industry has gone 
out of their way not to offend the powers that be, I think when we ask 
them directly, is this possible, could they possibly come up with a 
solution, the answer, frankly, is no. And so we ought to just get on 
with it and recognize that every day that we do not respond to the 
concerns, that is another senior at night that is sitting down and 
making that decision between food, between cooling their homes in the 
summer or heating them in the winters, and the prescription drugs that 
they have to buy.
  I am sure it is true for my colleague in New Jersey, as it is for me 
in Connecticut. I have been going home now, I have only been a Member 
for 2 years, but over the last 3\1/2\ years in telling people that this 
is what we are fighting for down here, and they watch TV, probably the 
only generation that watches consistently C-SPAN, and they say, we hear 
the Members talking about it, but we see no action from our Congress, a 
Congress that can come together in an instant and bail out the airlines 
when there was a crisis at hand, a Congress that can respond when it 
needs to, and yet here are these valiant citizens have been reaching 
out, in many respects storming the United States Capitol, whether it be 
through e-mail, whether it be through their various organizations and 
associations, speaking out again, emphasizing that this is the number 
one issue that they face.

                              {time}  2030

  Everyone agrees that perhaps, and most notably, this should have been 
included under Medicare in 1965 in its inception, and we probably would 
not be here this evening talking about that; but it was not, so, 
therefore, the Democratic proposal is logical from the outset.
  As my colleague heard me say earlier, I think we have to go deeper in 
terms of the kinds of cuts that we can get in the cost of the prices, 
which will make it even more affordable. And to those ends, I think we 
have to engage the pharmaceutical industry to help out that valued 
industry as well, and not at the expense of research and development, 
that they have invested in this and the great products they have turned 
out. This is a wonderful industry. But when you can travel to Canada or 
Mexico or anywhere in the Western industrial society and get 
prescription drugs that are 40 percent less, on average, there is 
something wrong here.
  It is up to us to sit down and have frank conversations that address 
that issue as well. We can do so under the sanity of a policy that is 
put forward under Medicare, where it should rightfully belong. And 
again I applaud the gentleman for bringing this forward.
  Mr. PALLONE. If I could just ask the gentleman to comment a little 
bit on the price issue, because I think it is so important. We have not 
talked about it too much tonight; but the gentleman brings it up, and I 
think it is very important that he does so.
  The problem we face, or one of the major problems, maybe the most 
important problem, is one of price, because seniors tell us they cannot 
afford them. They go to the pharmacy, and they cannot afford the 
prices. And for the last 6 years, prices of prescription drugs have 
gone up, in double digits every year. Much higher than inflation in 
general.
  The one thing we have to understand, and again I understand the 
gentleman understands this, but my colleagues on the other side need to 
understand, and they, the Republicans, are determined, by at least 
everything we have seen, they are determined not to address the price 
issue. Now, we have not actually seen the Republican proposal. I am on 
the Committee on Energy and Commerce, and we will have opening 
statements tomorrow and we are going to have a markup on Wednesday; but 
we still have not seen the bill. But there have been statements made by 
Republican colleagues that say that they may actually put in the bill 
language that says that there can be no effort to control or deal with 
price in the bill.
  Now, whether the bill finally has that language or not, I do not 
know; but you can be sure that it is not going to have any language 
that would effectively control price. It may only have language that 
says we cannot.
  Mr. LARSON of Connecticut. Well, the great irony here, and again if 
the gentleman will yield, a gentleman who I have great respect for, the 
gentleman from Minnesota (Mr. Gutknecht), was down here on the floor 
earlier talking about this anomaly, I will say, where we are talking 
about free markets being able to set the price. And what has happened 
here in this country, the great shame that has taken place here in this 
country is that the profitability or the profits garnered in this 
industry have been done almost exclusively on the backs of the elderly 
and those who can least afford to pay it.
  And why do we know this and why have we asserted that it is a free 
market approach? Because every survey, every study that has been done, 
whether it be internally in our own country, whether it be in Mexico, 
in Canada, whether it be in the United Kingdom, Australia, Japan, or 
Germany, what we found consistently is that their citizens are able to 
enjoy, on average, a 40

[[Page H3591]]

percent differential in terms of what they pay, not for generics but 
for the exact same prescription drugs. Shame on us.
  And that is why I think people in this body, if we are allowed an 
opportunity to vote, and I cannot even believe as an American that I am 
standing here on the floor of Congress and saying if we are allowed the 
opportunity to vote. These are the people that we are sworn to serve, 
and yet bringing this issue that universally everybody agrees with to 
the floor has been the most agonizing, painstaking process. I hope 
that, as the gentleman has pointed out, the efforts are, in fact, real. 
If they are not, I hope the Members of this body, bipartisanly, join 
together to issue some form of discharge petition, like we did on 
campaign finance reform, and come together, both sides, to address the 
concerns of our seniors; put aside the special interests, whatever they 
may be, and come up with a plan that provides relief for these seniors.
  Mr. PALLONE. Well, I am hoping, and I am trying not to be so cynical, 
but the gentleman does point out that there is a real possibility that 
the Republicans may not even allow us to bring up our proposal and have 
a vote on it. I hope that is not true. But the best thing, or one of 
the most important things about the Democratic proposal is that because 
we are putting this program under Medicare, now the Secretary who 
administers Medicare, the Health and Human Services Secretary, now will 
have these 30 or 40 million seniors that fall under Medicare. We have a 
mandate in the Democratic bill that he has to negotiate prices down, 
and he will have the power to do so because he has the 30 or 40 million 
seniors in Medicare that he now represents. I have no doubt that that 
will lead to a price reduction of maybe 30 percent because of his 
negotiating power.
  The Republicans have nothing like that in there. The only thing 
President Bush has talked about is the drug discount cards, which are 
essentially a farce because they are already available. The cards are 
available. I am not saying the cards are a farce, but for him to 
suggest that somehow the Federal Government would lend its name to it 
is meaningless. The cards are out there. You can buy them any day. Most 
seniors are aware of them. They do provide some discount, but the 
Federal Government is not doing anything. I guess the only thing 
President Bush is saying is just promote the cards, go out and buy one, 
which I think is meaningless.
  If we do not control price in some meaningful way, whatever plan we 
pass here will not work because seniors are not going to be able to 
afford it in the long run.
  Mr. LARSON of Connecticut. Well, if the gentleman will continue to 
yield, he is absolutely correct. Again, I think the gentleman from 
Maine (Mr. Allen), who has been as dauntless as the gentleman from 
Connecticut has been in coming down here and addressing this issue, if 
we do not do something about price, and as the gentleman points out 
with the ability to negotiate with the large number of Federal 
employees that we have, we are able to drive down the cost of 
prescription drugs, so by placing prescription drugs in a Medicare 
program, which is a Federal program, and as the gentleman points out 
with the large numbers of people, we are going to be able to negotiate 
a price that will be fair and competitive for everyone, but it will be, 
on average, far less. And then the combination of those two things, 
both being in the Medicare program and having the ability to negotiate 
down, will be extraordinarily helpful.
  I think also, in the process, and I was on the floor earlier talking 
about the need for research and development in aeronautics, we also 
have to recognize the continued commitment on the part of this country 
to invest in research and development in these related fields. And I 
think that that is so essential to our future. We know how productive 
the field has been.
  I hail from the State of Connecticut, home of a number of 
pharmaceutical companies and the insurance industry. New Jersey has 
been a long-standing State that has been influential in terms of some 
of the major breakthroughs that we have had in pharmacology. So we want 
to continue to promote that and work together along those lines, but we 
also want to make sure that we are not doing so at the expense of the 
elderly population in this country. And that, unfortunately, is what 
has happened; and we have to put an end to that.
  I think we have a good plan to do that, and again I commend the 
gentleman for bringing it to the floor this evening.
  Mr. PALLONE. I want to thank the gentleman for joining me tonight. I 
totally agree that the whole research component is something that we 
have to continue. Certainly my home State has been, for many years, a 
leader in research amongst pharmaceuticals. But what we are seeing is 
that so much of the price does not come from research, but rather from 
advertising. The majority of it really is, and we already provide a lot 
of money for research at the Federal level, and we also essentially 
underwrite a lot of the research in terms of the kinds of tax credits 
or tax breaks that we give to the pharmaceuticals. And I think it is 
important to make sure that we are helping with the research, but not 
providing the money that is going towards advertising and some of the 
other things that are unrelated to research.
  Mr. LARSON of Connecticut. Mr. Speaker, I would add, and I speak for 
myself here, but looking at this problem long term, I certainly for one 
am more than willing to extend opportunities to pharmaceutical 
companies who have invested their own money, who have done the research 
and development in bringing a product to market to allow them the 
opportunity to recoup the moneys on research and development, but as 
the gentleman from New Jersey (Mr. Pallone) adroitly points out, not in 
the advertising field, not in the promotional areas, not through the 
gifts to docs and trying to influence people one way or another, but 
truly as a research and development component and for the risks that 
they have taken in terms of bringing these things to market.
  Clearly, we do not live in a risk-averse society, but what we should 
be doing is rewarding risk once it has been able to come to the market 
and provide them with an opportunity and award them, so to speak, for 
the valiant research and development that they have done.
  Mr. PALLONE. I thank the gentleman from Connecticut (Mr. Larson).

  Mr. Speaker, before we close tonight, I wanted to just basically go 
through the Democratic proposal in a little more detail. I know that 
our colleague, the gentlewoman from Texas (Ms. Jackson-Lee), went into 
it somewhat; but I wanted to give a little more information about it.
  The Democratic bill is called the Medicare Prescription Drug Benefit 
and Discount Act, and of course the most important thing is that it 
provides an affordable prescription drug and reliable benefit to all 
seniors; and as our colleague, the gentlewoman from Texas (Ms. Jackson-
Lee) said, seniors have waited long enough. But basically the purpose 
of the Democratic bill is four-fold. First, it lowers the cost of drugs 
for all seniors. It offers an affordable guaranteed Medicare drug 
benefit. It insures seniors coverage of the drug their doctor 
prescribes, and it does not force seniors into HMOs or private 
insurance.
  In terms of the actual premium and benefit, no gaps, no gimmicks. The 
premium is $25 a month. The deductible is $100 a year. Co-insurance 
beneficiaries pay 20 percent; Medicare, meaning the Federal Government, 
pays 80 percent. Out-of-pocket limit is $2,000 per beneficiary per 
year; and if one is below a certain income, then the premium is paid 
for. So it is very similar to part B, the way one now pays doctor 
bills, maybe even a little more generous than that.
  To just give an example, to give some idea in terms of income for 
seniors, if a senior's income was up to $13,290, there would be no 
premium or co-insurance. So just like in part B if one falls below that 
income, he is not paying the $25 a month and is not paying the 20 
percent. It is all being paid for by the Federal Government. So as the 
gentlewoman from Texas (Ms. Jackson-Lee) said, there is not going to be 
anybody who is not going to be able to afford this because of their 
income. If a person's income is between $13,290 and $15,505, the 
premium assistance is on a sliding

[[Page H3592]]

scale; so he would not have to pay $25 a month. He might pay 15 or 10 
or 5, depending on what his income is.
  But probably the most important thing is what my colleague from 
Connecticut (Mr. Larson) and I have already discussed, and that is 
lowering the drug prices. And as my colleague from Connecticut pointed 
out, the question of affordability of drugs is not just an issue for 
seniors. It is an issue for everyone. We are addressing it here in the 
context of seniors, but a lot of things we talk about could be applied 
across the board. But in any case, the Democratic Medicare benefit 
lowers drug prices because it uses the collective bargaining power of 
Medicare's 40 million beneficiaries to guarantee lower drug prices. 
Medicare contractors compete for enrollees by negotiating discounts, 
and it reduces drug prices for everyone by stopping big drug company 
patent abuses.
  I do not want to keep going through this, but I think that it is very 
important to understand that this is a Medicare benefit. This does not 
rely on private insurance companies. There is no privatization the way 
the Republicans have proposed.
  We just want to give an example of what a senior would save. A senior 
with drug costs of, say, $3,059 a year, which is the average senior 
drug spending that would be anticipated in the year when this proposal 
went into effect, some people might say, gee, $3,059 is a lot; but that 
is the average, what we estimate will be spent when this plan goes into 
effect. So a senior with drug costs of $3,059 per year would spend $300 
in premiums, that is the $25 a month, $100 deductible, and $592 co-
insurance, which is the 20 percent per prescription, for a total of 
$992.

                              {time}  2045

  So for that $3,059, they would be saving $2,067, which is very 
comparable to what you do now with part B for your doctor bills.
  Mr. LARSON of Connecticut. Mr. Speaker, the gentleman said earlier in 
the evening that while this is a benefit that will clearly benefit 
everyone with regard to prescription drugs, you said that this was like 
part D of the Medicare program. Could you explain that again, because I 
think this is the thing that most seniors understand. I know in the 
State of Connecticut, for example, we have a program for seniors as 
well. By this coming under a Federal program and the Federal Government 
offering this to its recipients, this is going to allow a State that is 
currently doing this to offer greater benefits to people and reach 
upward where I believe some of the people are harmed the most by 
prescription drugs and are in desperate need of relief.
  Mr. PALLONE. Mr. Speaker, as the gentleman points out, and New Jersey 
is typical, some States have provided prescription drug programs 
depending on income; and in New Jersey, it is income-related, and we 
finance it through casino revenue funds for people below a certain 
income. Those programs would continue in the State. The State would 
then get money to pay for those programs. I do not know how Connecticut 
works, but most States are not as generous as New Jersey. And this 
applies to any Medicare beneficiary.
  In New Jersey it is a little over $20,000 per year income that you 
are able to tap into the casino-funded prescription drugs program. But 
remember, this is not income-based, because Medicare is not income-
based. So if you are making $25,000 a year or $30,000 or even $100,000 
a year, you would still be able to take advantage of this benefit by 
paying your $25 a month premium, and you pay 20 percent, and the 
Federal Government pays 80 percent.
  Frankly, I think that is important because most of the people that 
contact us are the people not getting what the States are offering. In 
other words, a lot of States have no benefit. Some States like New 
Jersey and Connecticut have some benefit, but most seniors in New 
Jersey are still not getting any kind of meaningful coverage through 
the State program because it is very expensive for the State. We are 
doing something now that will click in for every Medicare beneficiary.
  We have part A, which is the hospital bills; part B is the doctor 
bills; part C is HMOs; and part D would be the new prescription drug 
program. It is like part B, you pay a low premium, and you get the 
benefit, and it starts and applies to everyone across the board.
  Mr. LARSON of Connecticut. Mr. Speaker, I stand here very proud of 
the Democratic initiative and our efforts to bring this to the floor in 
a timely fashion and hopefully provide the relief that is so 
desperately needed by our seniors out there.
  Mr. PALLONE. Mr. Speaker, I thank the gentleman for joining us.
  I am going to be quoting this New York Times article over the next 2 
weeks or so because I think that it provides independent backup, if you 
will, for what I have been saying about the Republican plan. Again, I 
am glad and I hope the Republicans will bring this up in the Committee 
on Energy and Commerce and the Committee on Ways and Means on 
Wednesday, and that they will bring it to the floor of the House the 
following week for a vote. Hopefully they will allow the Democrats to 
bring up our proposal as a substitute so we can have a good debate. If 
they do that, I will be very happy that at least we have an 
opportunity. But we have to stress that the Republican proposal is not 
a Medicare benefit. It is just giving some money to insurance 
companies, and that is not going to work because the policies are not 
going to be offered, and seniors are not going to have a benefit.
  If I can go back to this New York Times article again, and I went 
through parts of it, but I would like to cover a little more of it. As 
I said, the headline is ``Experts Wary of GOP Drug Plan. Some Say `Drug 
Only' Coverage Isn't Affordable for Insurers.''
  Mr. Speaker, this is an article by Robert Pear. It says, ``A 
Republican plan to provide prescription drug benefits to the elderly 
through private insurers is drawing a skeptical reaction from many 
health policy experts. The plan, they say, would face problems like 
those that have plagued Medicare's attempt to encourage the use of 
health maintenance organizations.''
  Basically what the Republicans are doing with their proposal is doing 
the same thing they did with HMOs, throwing some money in the hope they 
will provide some coverage. They do not provide the coverage, and they 
have been cutting back and throwing seniors out of the plan.
  The article in the New York Times goes on to say, ``Private health 
plans were once seen as Medicare's best hope for controlling costs. In 
1998, the Congressional Budget Office predicted that half of all 
beneficiaries would eventually be in such managed care organizations. 
But the market has been extremely unstable. Many HMOs have found 
Federal payments inadequate and pulled out of Medicare, dropping 2.2 
million beneficiaries since 1998.''

  Mr. Speaker, I would ask the other side of the aisle, we know that 
the experience with HMOs in terms of providing prescription drug 
benefits has not worked. Why would they want to replicate that again by 
going to private insurers and expecting them to come up with a drug 
benefit? It is not going to happen.
  The article in the New York Times goes on to say, ``Many companies 
sell insurance to fill gaps in Medicare coverage, but premiums for such 
Medigap policies have increased rapidly in recent years, and only 3 of 
the 10 standard policies include drug benefits.
  ``Richard Barasch, chairman of Universal American Financial 
Corporation of Rye Brook, New York, which sells Medigap coverage to 
400,000 people, said he seriously considered offering a separate 
insurance product just for drug costs. But after much research, he 
concluded it was not feasible because most of the buyers would be 
people with high drug expenses.''
  So if Members do not believe the HMO experience shows that private 
drug policies will not work, what about Medigap coverage? Medigap is 
supplement coverage you can buy to cover things that are not covered by 
Medicare. This article shows that the Medigap experience is not 
offering any meaningful drug coverage either through private insurers. 
The examples show HMOs are not providing the coverage. Medigap is not 
providing the coverage. Why do my Republican colleagues think that they 
will be providing coverage through private insurers?
  At the end of the article it says, ``HMOs have long boasted that they 
hold down costs, but their ability to do

[[Page H3593]]

so has been challenged by hospitals and doctors demanding higher 
payments. Companies managing Medicare benefits would face similar 
pressures from drugstores.
  ``The National Association of Chain Drugstores recently sent a 
bulletin to its members opposing the Republicans' Medicare drug 
proposal. Crystal S. Wright, vice president of the association, said, 
`This could be an economic disaster for community pharmacies. Benefit 
managers are likely to get even more leverage than they currently have 
to reduce pharmacy reimbursement.' ''
  So the drugstores are saying, we are not going to be able to get 
adequate reimbursement, so we are going to go out of business. Where is 
it we expect this Republican plan to work?
  The last thing the New York Times article says, ``House Republicans 
said insurers could set different premiums and benefits, so long as the 
overall value of each drug plan was equivalent to that of the standard 
coverage suggested by the government. The Republican plan is part of a 
bill costing $350 billion over 10 years.''
  Well, again, I do not understand what my Republican colleagues 
expect. Experience is that private insurance does not work to provide 
these kind of drug benefits. The insurance companies say they are not 
going to sell it. The pharmacies say it will not work. The only reason 
I can imagine that they are proposing it is they know this is a major 
issue that is going to face them in the election. They have promised 
the American public that they are going to provide a prescription drug 
plan, and so they come up with this sham which they hope to pass 
through the House, probably on a totally partisan vote, send to the 
other body, and never hear from it again, but they can say to the 
voters that they have tried. But they are not trying, they are just 
putting out something that is a sham. Hopefully as Democrats we will 
show the sham for what it is and to ask our colleagues to vote for the 
Democratic alternative which would provide a meaningful guaranteed 
benefit under Medicare for all seniors.

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