Congressional Record, Volume 148 Issue 80 (Monday, June 17, 2002)

[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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