[Congressional Record Volume 148, Number 99 (Friday, July 19, 2002)]
[Senate]
[Pages S7095-S7096]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   MEDICARE PRESCRIPTION DRUG BENEFIT

  Mr. ALLARD. Mr. President, I think it is vitally important that the 
Senate pass a Medicare prescription drug benefit plan now. Our seniors 
need it, our seniors have been waiting for years for it, and our 
seniors deserve it now.
  Medicare is a health care entitlement program for the elderly. Since 
Medicare was established in 1965, Congress has considered adding a 
prescription drug benefit to the program. In the 106th Congress, the 
Senate got serious about enacting a benefit but was unsuccessful in 
their efforts.
  I hope the Senate is successful now. I am concerned, however, that 
the legislative process has been derailed. The majority leader decided 
to bring to the floor S. 812, the Greater Access to Affordable 
Pharmaceuticals Act. This legislation did not proceed through the 
Committee on Finance. In order for a revenue measure to not face a 
Budget Act point-of-order, legislation must proceed through the 
Committee on Finance. S. 812 did not. As a result, the Senate is left 
with assuming budget points-of-order against any and all revenue 
legislation as we continue debate this week.
  This is unacceptable. Seniors need drug coverage now. But the Senate 
majority has stalled the process. I hope seniors across the United 
States realize what has happened. This faulty procedure is robbing 
seniors of their drug benefit, which Congress and the President support 
but which the Senate is denying. Politics is superseding policy and 
that is simply unacceptable.
  Because S. 812 did not proceed through the Committee on Finance, next 
week the Senate will take up the Graham-Miller, tripartisan, Hagel-
Ensign, and Smith-Allard amendments in an attempt to provide a 
prescription drug benefit. We can only hope that the Senate will waive 
the budget point-of-order raised against these measures.

  I have serious concerns about the legislation introduced by Senators 
Graham and Miller. Graham-Miller would be a temporary drug benefit, 
without secure financing. Graham-Miller would raise drug prices 
significantly, and Graham-Miller would not be able to be implemented as 
proposed. Graham-Miller would have an immeasurable and possibly 
unlimited cost.
  Senator Graham's bill does not even have a CBO score. That is another 
concern I have. Preliminary estimates are that it would cost at least 
$400 billion to $800 billion over only 6 years. With two-thirds of 
seniors already obtaining their prescription drugs independent of 
Government, the Graham plan, frankly, is too generous at a time when 
Social Security solvency is at risk. According to CBO, Medicare 
beneficiaries will utilize $1.8 trillion worth of drugs over the next 
10 years. But $1.1 trillion of this $1.8 trillion will be paid by third 
parties, such as employers, States, and Medicare+Choice plans. Drug 
benefit proposals should focus on reducing the $700 billion that will 
be paid by beneficiaries, not shifting the remaining $1.1 trillion to 
the Federal budget. Seniors and taxpayers need a plan that provides a 
benefit that does not blanket seniors with costs completely covered and 
that does not break the Nation's bank. Graham-Miller's cost alone is 
reason to oppose it.
  Other Senate drug proposals are less expensive. The tripartisan 21st 
Century Medicare Act of 2002, introduced by Senators Grassley, Snowe, 
Breaux, Jeffords, and Hatch, is estimated to cost about $350 billion 
from the years 2005 to 2012. For days, weeks, and months, the Senate 
Finance Committee members and staff have worked tirelessly to write a 
bill that expands drug plan options for seniors and refines and 
enhances Medicare+Choice, Medigap, and other programs. This tripartisan 
bill will establish a universal, voluntary prescription drug benefit 
with affordable premiums and special protections for low-income 
seniors. The tripartisan bill would add a new voluntary fee-for-service 
option to fit modern health benefit packages, and it will strengthen 
another drug option under Medicare+Choice.
  I am pleased that this tripartisan group of Republican, Democrat, and 
Independent Senators have joined together to provide a Medicare 
prescription drug benefit. The tripartisan plan expands drug options 
for seniors so they can choose a plan that fits their needs.
  I also laud the work of Senators Hagel, Ensign, Gramm, and Lugar who 
introduced the Medicare Prescription Drug Discount and Security Act. 
The Hagel-Ensign plan would offer beneficiaries a voluntary drug 
discount card that they could use to purchase prescription drugs. The 
bill would cover catastrophic drug costs for beneficiaries under 600 
percent of the Federal poverty level, so that seniors making less than 
about $53,000 will pay no more than $1,500 to $5,500 in out-of-pocket 
expenses. The bill also does not require monthly premiums, deductibles, 
or benefit caps. This bill is fiscally responsible, costing about $150 
billion over 10 years. I commend Senators Hagel and Ensign for their 
work in offering this voluntary plan for seniors who need it most.
  Senator Smith and I also have introduced an amendment to S. 812 that 
would provide a Medicare prescription drug benefit. Under our plan, the 
voluntary Medicare prescription drug plan, a Medicare beneficiary 
already enrolled in Medicare Parts A and B will have the option of 
choosing a new, voluntary prescription drug plan called Rx Option. This 
would cover 50 percent of their prescription drug costs toward the 
first $5,000 worth of prescriptions that the senior purchases.
  Currently, Medicare Part A has a $812 deductible and Part B has a 
$100 deductible. The Smith-Allard plan would create one deductible for 
Part A and Part B of $675 that would apply to all hospital costs, 
doctor visits, and prescription drug costs. Once this $675 deductible 
is met by the Medicare recipient, Medicare will pay 50 percent of the 
cost toward the first $5,000 worth of prescription drugs that the 
senior purchases.
  In addition, there is no benefit premium that would be required. Our 
plan is revenue-neutral. It is voluntary and will lower Medigap 
premiums by $550 per year.
  According to the National Bipartisan Commission on the Future of 
Medicare, the Federal Government pays about $1,400 more per senior if 
the senior has a Medigap plan that covers his Part A and Part B 
deductibles. This generally is attributed to the fact there is 
overutilization of hospital and doctor visits by the senior because no 
deductible is required under Medigap, and seniors are more inclined to 
visit the hospital or doctor without having to pay a deductible.
  The Smith-Allard plan would require seniors pay a deductible. As a 
result, Medigap utilization will decrease and savings are achieved. In 
other words, there is an incentive created for the senior to go to the 
doctor when he needs to and not simply because it cost him nothing.
  The Smith-Allard plan would work as a stand-alone drug benefit or as 
a complementing, additional drug benefit in conjunction with the other 
drug options about which I talked earlier. Our plan has a number of 
features that both the Graham-Miller plan and the House-passed Medicare 
Modernization and Prescription Drug Act do not have.
  I would like to take a minute to go over a chart I put together on 
Smith-Allard. This is the Smith-Allard proposal as compared to current 
law, as compared to the Democrat plan referred to as Graham-Kennedy, 
and as compared to the House GOP plan for prescription drugs.
  This is assuming the senior has Medigap supplemental insurance. Under 
current law, there is no deductible with the doctor or the hospital 
when they have Medigap insurance coverage.
  With the Smith-Allard plan, there would be a $675 deductible that 
would combine for both Part A and Part B of Medicare. Under the 
Democrat plan, there is no deductible, and in the House plan there is 
no deductible.

[[Page S7096]]

  The prescription drug deductible is not covered in current law. It is 
combined in the Smith-Allard plan. There is no deductible in the 
Democrat plan and the House plan.
  The average supplemental insurance premium under current law is 
$1,611. Under the Smith-Allard plan, this comes to $1,061. This remains 
the same under both the Graham-Kennedy and House GOP plan.
  Prescription drug premium: Under current law, there is no coverage. 
Under the Smith-Allard plan, the prescription drug premium would be 
zero. Under the Democrat plan, the monthly charge that is talked about 
as $25 a month, this amounts to a $300-a-year premium, and the House 
GOP plan, which is $30 a month, amounts to an annual premium of $420.
  Total annual premiums and deductible: Under current law, we stay at 
the $1,611 level. Under the Smith-Allard plan, it is $1,736. Under the 
Democrat plan, the Graham-Kennedy proposal, it is $1,911. And the House 
GOP plan is $2,281.
  Let's look at the 10-year cost to the Medicare Program. Obviously, we 
do not have anything under current law. The Smith-Allard plan would 
remain at zero. The 10-year cost of the Medicare Program to the 
taxpayer is zero.
  The Graham-Kennedy plan gets up to $600 billion, and some estimates 
are running between $400 billion and $800 billion; $600 billion is the 
number we use on this chart.
  The House GOP plan comes in at $350 billion. Some are estimating $370 
billion currently.
  Who provides the drug benefit? Under current law, it is not covered. 
Under the Smith-Allard plan, Medicare provides that drug benefit. In 
the Graham-Kennedy bill, Medicare provides it. And under the House GOP, 
it is provided by the private insurance industry.

  What is the comparison of drug coverage? Currently, there is no 
coverage. In the Smith-Allard plan, there is 50 percent coverage of all 
drugs up to $5,000. In the Graham-Kennedy plan, the senior pays $10 for 
generic drugs and $40 for brand name drugs. Then in the House GOP, 
there is 20 to 30 percent coverage up to $1,000 the senior pays, and 
then 50 percent between $1,000 and $2,250, and 100 percent over the 
$2,250, up to $5,000.
  Let's look at the catastrophic coverage under these various plans. 
Under the Smith-Allard proposal, it is optional. Seniors can decide 
whether they want to take it or not. Coverage could be provided with 
savings if they decide to take that optional provision. In the Graham-
Kennedy plan, it is over $4,000, and in the House GOP plan, it is over 
$5,000.
  The nice thing about the Smith-Allard plan and one reason I am 
presenting it to the Senate today and have introduced the legislation 
with Senator Smith is because it provides another option, and it is 
compatible with these other drug plans, particularly the first one we 
talked about, the tripartisan plan, with an Independent, Democrats, and 
Republicans supporting the plan. Our bill is very compatible with that 
kind of a plan.
  The amendment I will be offering with Senator Smith is simply to 
provide seniors with an option so that as we move forward with this, it 
may be they do not want to pay the $25-a-month premium or the $30-a-
month premium. They can say: I will offset that by increasing my 
deductibles in Part A and Part B on Medicare. I think it is the kind of 
choice we ought to offer seniors. It will balance any of the plans that 
happen to pass the Senate, and we ought to pass it in the Senate in 
order to give seniors some choice.
  I am pleased the Senate is working to pass a prescription drug 
benefit for Medicare's 40 million enrollees. The Senate should be 
pleased that many Members have worked hard in recent years to add a 
drug benefit. We should be pleased that we are debating various 
proposals now. But our efforts are in vain if we do not pass a drug 
benefit this year. Our efforts are in vain, I repeat, if we do not pass 
a drug benefit this year. I urge my colleagues to set aside politics 
and pass a Medicare prescription drug benefit now.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Mr. KYL. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KYL. Mr. President, I ask unanimous consent to speak until the 
hour of 11:20 a.m. in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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