[Congressional Record Volume 148, Number 106 (Tuesday, July 30, 2002)]
[Senate]
[Pages S7529-S7545]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  GREATER ACCESS TO AFFORDABLE PHARMACEUTICALS ACT OF 2001--Continued


                           Amendment No. 4326

  The PRESIDING OFFICER. Who yields time?
  The Senator from Kentucky.
  Mr. McCONNELL. Madam President, it is my understanding that I have 15 
minutes remaining.
  The PRESIDING OFFICER. The Senator is correct.
  Mr. McCONNELL. Madam President, I yield 5 minutes to the Senator from 
Tennessee who, as we all know, is the only physician in the Senate.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. FRIST. I thank the Chair.
  Madam President, I rise in support of the McConnell amendment on 
medical malpractice to the Greater Access to Affordable Pharmaceuticals 
Act. It goes to the heart, I believe, of an issue that has reached 
crisis proportions in the United States.
  Much of the argument and debate on Friday and a little bit yesterday 
and today centered on how best to frame this debate. Our opponents to 
the McConnell amendment have tried to frame this as a debate focused on 
corrupt insurance companies and HMOs.
  What is absolutely critical for my colleagues and the American people 
to understand is that this debate is not about insurance companies. 
This debate is about patients, patients who are suffering today and, 
even more important, unless we act on this crisis, will be hurt in the 
future.
  It is about patients versus skyrocketing medical liability insurance 
premiums that, in large part, are driven by the current medical 
liability system. This amendment strikes right at the heart of that 
problem.
  Why is this debate important? I go back to patients. How do patients 
suffer because of these skyrocketing insurance premiums? They suffer in 
two ways: No. 1, lack of access to health care. If in the future you 
are a patient, you will see a decrease in access when you want to go to 
a physician, such as an obstetrician or a neurosurgeon or an orthopedic 
surgeon. They have all seen these skyrocketing premiums, and these 
doctors are not going to be there. Why? Because they happen to live in 
Mississippi where their premiums are $50,000 or $100,000 or in Florida 
where an obstetrician premium might be $150,000 or $200,000. They might 
decide, A, to pack it up and leave and go to another State or, B, to 
stop practicing or, C--and this is what we see happening all over the 
country--to stop delivering babies. If your doctor delivered your first 
baby and you want him to deliver your second baby, you had better call 
far in advance. Because of these skyrocketing premiums, many physicians 
are leaving that specialty.
  In addition we saw what happened in Nevada where the trauma surgeons 
basically said, we cannot stay in business, we cannot keep delivering 
these services, because malpractice premiums are too high. They were 
actually forced to close down shop for a period of time. Thank goodness 
it was just for a few days.
  I mention the impact on doctors because this is important. For 
example, if one is an obstetrician and he pays $200,000 a year for his 
insurance premiums, as in Florida, and he delivers 100 babies, which is 
the average for an obstetrician in Florida delivers, that means for 
every baby the doctor delivers there is a $2,000 tax or premium.
  Now, one might say that this is the worry of the doctor. Well, the 
doctor can leave. He can switch specialities. He can relocate or 
retire, early retirement, none of which is very satisfactory. But if a 
doctor is going to stay in practice, ultimately the doctor is going to 
pass the cost on to the patient. Who else will pay it? It has to be 
passed on to the patient.
  Americans are watching this debate and they hear the ranting and 
raving against the bad insurance companies. Let's go back to the effect 
of the problem, which is on that individual patient. Then let's look at 
the root cause, which is this runaway tort liability system, which this 
amendment takes the first step at fixing.
  Patients are hurting in two ways. First, they suffer from a lack of 
access to care. Specialist are leaving areas, and doctors are refusing 
to deliver babies.
  The second way patients suffer is the overall cost of defensive 
medicine. Ask your physician right now: Do you practice defensive 
medicine? According to a recent Harris poll, 76 percent, or three-
fourths, of physicians believe concern for medical liability litigation 
has hurt their ability to provide quality care in recent years. Eighty 
percent of physicians say they ordered more tests than they thought 
were medically necessary because they worried about malpractice 
liability. It is called defensive medicine. It is something the 
consumer does not see, the patient does not see, but America pays for 
it. How much? Fifteen, 20, 30, 40, 50--about $50 billion.
  I close by stating my strong support for the McConnell amendment and 
look forward to continued debate during the course of this afternoon.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. I yield 7 minutes to the Senator from Illinois.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. I thank the Senator from Massachusetts for yielding the 
time.
  I readily acknowledge the expertise of Senator Frist. He is a widely 
respected heart surgeon. He certainly is a man who understands the 
practice of medicine, unlike anyone else in the Senate. I do not come 
as an expert on the practice of medicine. If I have any expertise, it 
is in trial practice because before I was elected to Congress, I was a 
trial attorney. I made my living defending doctors and hospitals, and 
suing doctors and hospitals. I understood medical malpractice then, but 
as I read this amendment I am troubled.
  Let me acknowledge first, yes, there is a national problem with 
medical malpractice insurance across America. It costs too much in many 
areas, and we are finding that in many parts of the country doctors 
cannot afford to continue to practice because of the cost of premiums. 
But the answer from Senator McConnell on the Republican side is to 
suggest that the reason the premiums are so high is because of jury 
verdicts.
  They overlook the obvious. Let me point to a source of information 
not considered liberal in nature, the Wall Street Journal, which on 
June 24 of this year published an article. I ask unanimous consent that 
this article be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

[[Page S7530]]

             [From the Wall Street Journal, June 24, 2002]

                      Delivering Ms. Kline's Baby

              (By Rachel Zimmerman and Christopher Oster)

       As medical-malpractice premiums skyrocket in about a dozen 
     states across the country, obstetricians and doctors in other 
     risky specialties, such as neurosurgery, are moving, quitting 
     or retiring. Insurers and many doctors blame the problem on 
     rising jury awards in liability lawsuits.
       ``The real sickness is people sue at the drop of a hat, 
     judgments are going up and up and up, and the people getting 
     rich out of this are the plaintiffs' attorneys,'' says David 
     Golden of the National Association of Independent Insurers, a 
     trade group. The American Medical Association says Florida, 
     Nevada, New York, Pennsylvania and eight other states face a 
     ``crisis'' because ``the legal system produces multimillion-
     dollar jury awards on a regular basis.''
       But while malpractice litigation has a big effect on 
     premiums, insurers' pricing and accounting practices have 
     played an equally important role. Following a cycle that 
     recurs in many parts of the business, a price war that began 
     in the early 1990s led insurers to sell malpractice coverage 
     to obstetrician-gynecologists at rates that proved inadequate 
     to cover claims.
       Some of these carriers had rushed into malpractice coverage 
     because an accounting practice widely used in the industry 
     made the area seem more profitable in the early 1990s than it 
     really was. A decade of short-sighted price slashing led to 
     industry losses of nearly $3 billion last year.
       ``I don't like to hear insurance-company executives say 
     it's the tort [injury-law] system--it's self inflicted,'' 
     says Donald J. Zuk, chief executive of Scpie Holdings Inc., a 
     leading malpractice insurer in California.
       What's more, the litigation statistics most insurers 
     trumpet are incomplete. The statistics come from Jury Verdict 
     Research, a Horsham, Pa., information service, which reports 
     that since 1994, jury awards for medical-malpractice cases 
     have jumped 175 percent, to a median of $1 million in 2000. 
     During that seven-year period, the median award for 
     negligence in childbirth was $2,050,000--the highest for all 
     types of medical-malpractice cases, Jury Verdict Research 
     says. (In any group of figures, half fall above the median, 
     and half fall below.)
       But Jury Verdict Research says its 2,951-case malpractice 
     database has large gaps. It collects award information 
     unsystematically, and it can't say how many cases it misses. 
     It says it can't calculate the percentage change in the 
     median for childbirth-negligence cases. More important, the 
     database excludes trial victories by doctors and hospitals--
     verdicts that are worth zero dollars. That's a lot to ignore. 
     Doctors and hospitals win about 62 percent of the time, Jury 
     Verdict Research says. A separate database on settlements is 
     less comprehensive.
       A spokesman for Jury Verdict Research, Gary Bagin, confirms 
     these and other holes in its statistics. He says the numbers 
     nevertheless accurately reflect trends. The company, which 
     sells its data to all comers, has reported jury information 
     this way since 1961. ``If we changed now, people looking back 
     historically couldn't compare apples to apples,'' Mr. Bagin 
     says.
       Some doctors are beginning to acknowledge that the 
     conventional focus on jury awards deflects attention from the 
     insurance industry's behavior. The American College of 
     Obstetricians and Gynecologists for the first time is 
     conceding that carrier's business practice have contributed 
     to the current problem, says Alice Kirkman, a spokeswoman for 
     the professional group. ``We are admitting it's a much more 
     complex problem that we have previously talked about,'' she 
     says.
       The upshot is beyond dispute: Pregnant women across the 
     country are scrambling for medical attention. Kimberly 
     Maugaotega of Las Vegas is 13 weeks pregnant and hasn't seen 
     an obstetrician. When she learned she was expecting, the 33-
     year-old mother of two called the doctor who delivered her 
     second child but was told he wasn't taking any new pregnant 
     patients. Dr. Shelby Wilbourn plans to leave Nevada because 
     of soring medical-malpractice insurance rates there. Ms. 
     Maugaotega says she called 28 obstetricians but couldn't find 
     one who would take her.
       Frustrated, she called the office of Nevada Gov. Kenny 
     Guinn. A staff member gave her yet another name. She made an 
     appointment to see that doctor today but says she is 
     skeptical about the quality of care she will receive.
       In the Las Vegas area, doctors say some 90 obstetricians 
     have stopped accepting new patients since St. Paul Cos., 
     formerly the country's leading provider of malpractice 
     coverage, quit the business in December. St. Paul had insured 
     more than half of Nevada's 240 obstetricians. Carriers still 
     offering coverage in the state have raised rates by 100 
     percent to 400 percent, physicians say.
       Dr. Wilbourn says his annual malpractice premium was due to 
     jump to $108,000 next month, from $33,000. The 41-year-old 
     solo practitioner says the increase would come straight out 
     of his take-home pay of between $150,000 and $200,000 a year. 
     In response, he is moving to Maine this summer.
       Dr. Wilbourn mourns having ``to pick up and leave the 
     patients I cared for and the practice I built up over 12 
     years.'' But in Maine, he has found a $200,000-a-year 
     position with an insurance premium of only $9,800 for the 
     first year, although the rate rises significantly after that. 
     Premiums in Maine are relatively low because a dominant 
     doctor-owned insurance cooperative there hasn't pushed to 
     maximize rates, the heavily rural population isn't notably 
     litigious and its court system employs an expert panel to 
     screen out some suits, says Insurance Commissioner Alessandro 
     Iuppa.
       Until the 1970s, few doctors faced big-dollar suits. 
     Malpractice coverage was a small specialty. As courts 
     expanded liability rules, malpractice suits became more 
     common. Dozens of doctor-owned insurance cooperatives, or 
     ``bedpan mutuals,'' formed in response. Most stuck to their 
     home states.
       St. Paul, a mid-sized national carrier named for its base 
     in Minnesota, saw an opportunity. An insurer of Main Street 
     businesses, St. Paul became the leader in the malpractice 
     field. By 1985, it had a 20 percent share of the national 
     market. Overall, the company had revenue of $8.9 billion last 
     year, with about 10 percent of its premium dollars coming 
     from malpractice coverage.
       The frequency and size of doctors' malpractice claims rose 
     steadily in the early 1980s, industry officials say. St. Paul 
     and its competitors raised rates sharply during the 1980s.
       Expecting malpractice awards to continue rising rapidly, 
     St. Paul increased its reserves. But the company 
     miscalculated, says Kevin Rehnberg, a senior vice president. 
     Claim frequency and size leveled off in the late 1980s, as 
     more than 30 states enacted curbs on malpractice awards, Mr. 
     Rehnberg says. The industry's rate increases turned 
     malpractice insurance into a very lucrative specialty.
       A standard industry accounting device used by St. Paul and, 
     on a smaller scale, by its rivals, made the field look even 
     more attractive. Realizing that it had set aside too much 
     money for malpractice claims, St. Paul ``released'' $1.1 
     billion in reserves between 1992 and 1997. The money flowed 
     through its income statement and boosted its bottom line.
       St. Paul stated clearly in its annual reports that excess 
     reserves had enlarged its net income. But that part of the 
     message didn't get through to some insurers--especially 
     bedpan mutuals--dazzled by St. Paul's bottom line, according 
     to industry officials.
       In the 1990s, some bedpan mutuals began competing for 
     business beyond their original territories. New Jersey's 
     Medical Inter-Insurance Exchange, California's Southern 
     California Physicians Insurance Exchange (now known as Scpie 
     Holdings), and Pennsylvania Hospital Insurance Co., or Phico, 
     fanned out across the country. Some publicly traded insurers 
     also jumped into the business.
       With St. Paul seeming to offer a model for big, quick 
     profits, ``no one wanted to sit still in their own 
     backyard,'' says Scpie's Mr. Zuk. ``The boards of directors 
     said, `We've got go grow.''' Scpie expanded into Connecticut, 
     Florida and Texas, among other states, starting in 1997.
       As they entered new areas, smaller carriers often tried to 
     attract customers by undercutting St. Paul. The price 
     slashing became contagious, and premiums fell in many states. 
     The mutuals ``went in and aggravated the situation by saying, 
     `Look at all the money St. Paul is making,''' says Tom Gose, 
     President of MAG Mutual Insurance Co., which operates mainly 
     in Georgia. ``They came in late to the dance and undercut 
     everyone.''
       The newer competitors soon discovered, however, that ``the 
     so-called profitability of the '90s was the result of those 
     years in the mid-80s when the actuaries were predicting the 
     terrible trends,'' says Donald J. Fager, president of Medical 
     Liability Mutual Insurance Co., a bedpan mutual started in 
     1975 in New York. Except for two mergers in the past two 
     years, his company mostly has held to its original single-
     state focus.
       The competition intensified, even though some insurers 
     ``knew rates were inadequate from 1995 to 2000'' to cover 
     malpractice claims says Bob Sanders, an actuary with Milliman 
     USA, a Seattle consultancy serving insurance companies.
       In at least one case, aggressive pricing allegedly crossed 
     the line into fraud. Pennsylvania regulators last year filed 
     a civil suit in state court in Harrisburg against certain 
     executives and board members of Phico. The state alleges the 
     defendants misled the company's board on the adequacy of 
     Phico's premium rates and funds set aside to pay claims. On 
     the way to becoming the nation's seventh-largest malpractice 
     insurer, the company had suffered mounting losses on policies 
     for medical offices and nursing homes as far away as Miami.
       Pennsylvania regulators took over Phico last August. The 
     company filed for bankruptcy-court protection from its 
     creditors in December. A trial date hasn't been set for the 
     state fraud suit. Phico executives and directors have denied 
     wrongdoing.
       In the late 1990s, the size of payouts for malpractice 
     awards increased, carriers say. By 2000, many companies were 
     losing money on malpractice coverage. Industrywide, carriers 
     paid out $1.36 in claims and expenses for every premium 
     dollar they collected, says Mr. Golden, the trade-group 
     official.
       The losses were exacerbated by carriers' declining 
     investment returns. Some insurers had come to expect that big 
     gains in the 1990s from their bond and stock portfolios would 
     continue, industry officials say. When the bull market 
     stalled in 2000, investment gains that had patched over 
     inadequate premium rates disappeared.
       Some bedpan mutuals went home. Scpie stopped writing 
     coverage in any state over

[[Page S7531]]

     than California. ``We lost money, and we retreated,'' says 
     the company's Mr. Zuk.
       New Jersey's Medical Inter-Insurance Exchange, now known as 
     MIIX, had expanded into 24 states by the time it had a loss 
     of $164 million in the fourth quarter of 2001. The company 
     says it is now refusing to renew policies for 7.000 
     physicians outside of New Jersey. It plans to reformulate as 
     a new company operating only in that state.
       St. Paul's malpractice business sank into the red. Last 
     December, newly hired Chief Executive Jay Fishman, a former 
     Citigroup Inc. executive, announced the company would drop 
     the coverage line. St. Paul reported a $980 million loss on 
     the business for 2001.
       As carriers retrench, competition has slumped and prices in 
     some states have shot up. Lauren Kline, 6\1/2\ months 
     pregnant, changed obstetricians when her long-time 
     Philadelphia doctor moved out of state because of rate 
     increases. Now, her new doctor, Robert Friedman, may have to 
     give up delivering babies at his suburban Philadelphia 
     practice. His insurance expires at the end of the month, and 
     he says he is having difficulty finding a carrier that will 
     sell him a policy at any price.
       Last year, Dr. Friedman says he paid $50,000 for coverage. 
     If he gets a policy for next year, it will cost $90,000, he 
     predicts, based on his broker's estimate. ``I can't pass a 
     single bit of that off to my patients,'' because managed-care 
     companies don't allow it, he says.
       Dr. Friedman says he is considering dropping the obstetrics 
     part of his practice. Generally, delivering babies is seen as 
     posing greater risks than most gynecological treatment. As a 
     result, insurers offer less-expensive policies to doctors who 
     don't do deliveries.
       Mr. Golden of the insurers' association argues that 
     whatever role industry practices may play, the current 
     turmoil stems from lawsuits. The association says that from 
     1995 through 2000, total industry payouts to cover losses and 
     legal expenses jumped 52 percent, to $6.9 billion. ``That 
     says there are more really huge verdicts.'' Mr. Golden says. 
     Even in the majority of cases in which doctors and hospitals 
     win--the zero-dollar verdicts--there are still legal expenses 
     that insurers have to pick up, he adds.
       Industry critics point to different sets for statistics. 
     Bob Hunter, director for insurance at Consumer Federation of 
     America, an advocacy group in Washington, prefers numbers 
     generated by A.M. Best Co. The insurance-rating agency 
     estimates that once all malpractice claims from 1991 through 
     2000 are resolved--which will take until about 2010--the 
     average payout per claim will have risen 47 percent, to 
     $42,473. That projection includes legal expenses and suits in 
     which doctors or hospitals prevail.
       While the statistical debate rages, pregnant women adjust 
     to new limits and inconveniences. Kelly Biesecker, 35, spent 
     many extra hours on the highway this spring, driving from her 
     home in Villanova, Pa., to Delran, N.J., so she could 
     continue to use her obstetrician. Dr. Richard Krauss says he 
     moved the obstetrics part of his practice from Philadelphia 
     because malpractice rates had skyrocketed in Pennsylvania. 
     Ms. Biesecter, who gave birth to a healthy boy on June 5, 
     says Dr. Krauss was the doctor she trusted to guard her 
     health and the health of her baby: ``You stick with that guy 
     no matter what the distance.''
       Dr. Krauss, 53, left Philadelphia last year only after his 
     malpractice premium rose to $54,000, from $38,000, and then 
     was cancelled by a carrier getting out of the business, he 
     says. After getting quotes of about $80,000 on a new policy, 
     he moved. New Jersey hasn't been a panacea, however. His 
     policy there expires July 1, and the carrier refuses to renew 
     it. The doctor says he hopes to go to work for a hospital 
     that will pay for his coverage.

  Mr. DURBIN. The article points out the reason the premiums are rising 
so high is because the insurance companies miscalculated. They went 
into the business without adequate reserves. They have seen their 
investments plummet, as everyone else has on Wall Street, and they are 
trying to make it up with new malpractice insurance premiums at the 
highest possible levels. So, instead of blaming the juries that find a 
doctor or hospital at fault, let us also take into account the 
insurance companies' economic and accounting problems which have led to 
this crisis today.
  Let's look specifically at this amendment. Senator McConnell is 
consistent. When we brought up the bill about corporate corruption, he 
offered an amendment relating to trial lawyers. He believes that trial 
lawyers are the root of all evil. That amendment did not pass.
  Now we come to a bill involving the cost of prescription drugs. 
Senator McConnell returns with another amendment related to trial 
lawyers.
  It is said that if the only tool you own is a hammer, every problem 
looks like a nail. It appears that when it comes to the issues in the 
Senate, for some Senators the answer to every problem is to go after 
the trial lawyers.
  I suggest that when we take a look at the McConnell amendment, there 
are at least four areas that should be troubling to everyone following 
this debate. First, Senator McConnell limits the period of time when 
someone can discover an injury or act of malpractice and bring a 
lawsuit. If they wait too long, they lose their chance to go to court. 
That is something we ought to think about long and hard.
  Secondly, Senator McConnell says that once someone has discovered 
that they have an injury caused by a doctor or a hospital and go to 
find an attorney, he limits in this amendment the amount of money that 
an attorney can receive for a contingency fee. A contingency fee is the 
poor man's ticket to the courthouse. If injured victim is not a 
millionaire, the only way that an attorney will take a complicated 
medical malpractice case is for a percentage of what they ultimately 
recover. If they recover zero, they are paid zero. But if they recover 
a substantial amount, they receive a percentage. Senator McConnell 
wants to limit the contingency fee to limit the number of attorneys who 
will take these cases to court.
  The third issue is this: Senator McConnell creates a new tax on 
punitive damages. What he says is, if someone has done something so 
outrageous or deliberate, with conscious malice and disregard, that a 
jury would impose punitive damages on that doctor or hospital--and I 
can give a litany of possibilities--Senator McConnell says, sorry, the 
Government is going to take away half of the punitive damages verdict; 
albeit, for good reasons. But nevertheless, this is a new tax created 
by Senator McConnell on a jury verdict.
  Finally, what the Senator says in this bill is, if one had the 
foresight to buy medical or life insurance, for example, to cover their 
health or life, and they are injured or killed because of medical 
malpractice, any jury verdict will be reduced by the amount of the 
insurance payment that one happens to receive from the policy they took 
out on their own life. These people invest in insurance and pay for it 
over a lifetime. But the amendment would take away part of that amount 
from a jury award. Those four things are fundamentally unfair.
  We have talked in the corporate corruption debate about 
accountability. We have said corporate officials should be held 
accountable for their conduct. The same is true of people in the 
practice of medicine. They should be held accountable, too. If they are 
guilty of wrongdoing, injuring innocent people, then they should be 
held accountable.

  Unfortunately, the McConnell amendment goes too far and takes away 
accountability. It is certainly the type of an amendment which 
insurance companies are happy to see. It reduces their ultimate 
exposure, but what it does is close and limit the courthouse doors for 
ordinary people who have become victims.
  To give one illustration from my State: A young woman in April of 
1989 went into a hospital for treatment for breast cancer. The doctor 
inserted a 16 centimeter-long catheter in her vein in her upper chest. 
After her chemotherapy was completed, the catheter was supposed to be 
removed. In July of the following year, the doctor removed the 
catheter, but he did not take it all. In December 1991, over 2 years 
after her initial treatment, she went in for an X-ray and discovered 
that 9 centimeters of this catheter was lodged in her heart, causing 
pain, causing her discomfort all of the time.
  Ultimately, the doctors decided it was too risky to engage in surgery 
to remove the fragment, and so they decided to let the catheter piece 
remain lodged inside her heart. She will live with that foreign object 
inside her for as long as she lives. The doctor's mistake will be a 
pain that she feels every moment for the rest of her life.
  Under Senator McConnell's amendment, there is a serious question as 
to whether or not she could have ever brought the lawsuit. Did she wait 
too long? It took more than 2 years to discover this situation. She 
would have to fight, under the McConnell amendment, to prove that this 
was a reasonable amount of time, that the pain should not have alerted 
her sooner.
  Secondly, the amendment limits the attorney's fees. If this woman 
goes to consult an attorney and says, ``I am in pain; the doctor did 
something wrong; I

[[Page S7532]]

have the X-ray,'' Senator McConnell would say her attorney cannot be 
paid more than a limited amount on contingency fees to go to the 
courthouse. Is that reasonable?
  Fortunately, those provisions in the McConnell amendment did not 
apply and this lady went to court. She ultimately was awarded $1.5 
million for pain and suffering, and an additional $500,000 for the 
increased risk of future injury.
  Sadly, there are cases such as this that happen every day in America. 
The vast majority of doctors in our Nation are conscientious, hard-
working, wonderful people, but mistakes are made. Sometimes they are 
tragic, sometimes they show gross negligence, and sometimes they are 
intentional, such as the removal of the wrong kidney when they leave a 
cancerous kidney in a person and remove the wrong one. What Senator 
McConnell is saying is that person who has been aggrieved and injured 
would be limited in their opportunity to recover.
  I urge my colleagues to oppose this amendment.
  Mr. LIEBERMAN. Mr. President, I rise to address the pending McConnell 
medical malpractice amendment. I have long agreed with my colleague 
from Kentucky that our legal system needs reforming, and I have joined 
him in supporting a bill in many ways similar to this amendment in the 
past. But I cannot support him today, because I do not believe that 
this prescription drug debate is either the right time or the right 
place to address the medical malpractice issue.
  The Senate has been debating the critical and urgent issue of how to 
provide seniors with prescription drug coverage for 2 weeks. As my 
colleagues know, we are having a very hard time finding common ground 
on the issue. The last thing we need now is to inject into this debate 
a highly controversial issue which we all know for a certainty will 
prevent us from ever fulfilling our goal of giving seniors the 
prescription drug benefits they need. We should be focused on debating 
and passing a prescription drug bill, not other issues. For that 
reason, I will vote to table this amendment.
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time?
  The Senator from Kentucky.
  Mr. McCONNELL. Madam President, I will address several of the myths 
that have been stated during the course of this debate. Myth No. 1 is 
that average medical malpractice premiums in California are higher than 
they are in States that have not enacted medical malpractice reform.
  Obviously, that statement is absurd on its face. The fact is, the 
opponents of my amendment cited numbers from the Medical Liability 
Monitor arrived at by some playing of games with the numbers to prove a 
predetermined result. The editor of that publication, the Medical 
Liability Monitor, takes issue with the manner in which the other side 
has fudged the numbers. She states unequivocally that: We do not 
believe an average premium exists, nor do we attempt to produce such a 
spurious number. She concludes in her letter to Senator Frist: I find 
it particularly offensive, especially when I have spent my entire 
career pursuing objectivity, honesty, and balance in everything I 
produce.
  She also noted in a recent National Journal article that insurers in 
California hold the lines fairly well because they have tort reform in 
place.
  Myth No. 2: Medical malpractice premiums are not a burden on health 
care costs. It has been said on the other side, they account for only 
.6 percent of all health care costs--so it is said.
  First, the studies cited by my Democratic friends do not take into 
account large segments of the medical malpractice community. Moreover, 
a 1996 study by two Stanford economists found that commonsense medical 
malpractice reforms, many of which are included in my amendment, could 
reduce health care costs by 5 to 9 percent without jeopardizing quality 
of care. Using this study, the Department of Health and Human Services 
projected that reducing the practice of defensive medicine would save 
Federal taxpayers between $23 and $42 billion.
  Myth No. 3: It has been stated that companies have to raise premiums 
because they lost money on bad investments such as Enron. The fact is, 
the American Academy of Actuaries states insurers typically invest the 
vast majority of premiums in fixed income investments, not stocks. They 
also state that insurers do not set rates to recoup investment losses.
  It has been suggested that somehow the door to the courthouse will be 
closed because there is a reasonable cap on attorneys' fees, which of 
course would guarantee that the victim got more of the money and the 
lawyer a little bit less--but certainly not enough to make them 
unwilling to take cases.
  My friend from Illinois says contingency fees are the poor man's 
ticket to the courthouse. Apparently our trial lawyer friends will only 
punch the ticket if they can get more than a third of their clients' 
awards. My amendment limits the lawyer's fee to 33 percent of the award 
up to $150,000 and 25 percent above $150,000. So the suggestion is 
being made that if the lawyers do not get more than a third of the 
money involved, they somehow will not represent the injured victim.
  One of our colleagues on the other side in a previous life got an 
award of $27 million, as the Washington Post reported. Under my 
formula, he would have gotten only $6.75 million, plus costs. I don't 
think that is much of a disincentive to represent an injured victim.
  Mr. KYL. Will the Senator yield for a request?
  Mr. McCONNELL. I yield.
  Mr. KYL. Directly on this point, I learned in law school sometimes it 
is hard for people to get a lawyer to take their case if they do not 
have a very good case. Lawyers charge a higher and higher and higher 
contingency case. But if the case was a pretty good case, back when I 
was in law school, contingency fees were pretty low.
  As I understand your amendment, limiting the contingency fee to one-
third of what is recovered is a pretty high contingency fee. Under the 
Federal Tort Claims Act, since the late 1940s, the limit has been 25 
percent, and there has been no dearth of cases. It is actually higher 
than we already have under the Federal Tort Claims Act.
  Continuing this line of thought, if you have a good case, then the 
contingency fee tends to be lower. The worse the case is--the less 
likelihood of succeeding--generally, the higher the contingency fees.
  What would you say to the argument that we have to have no limit on 
the contingency fees or cases will not be taken?
  Mr. McCONNELL. I say to my friend from Arizona there is no evidence 
that there are not lawyers willing to take the cases. What this 
underlying amendment is about is protecting the victim and giving the 
victim more of the money and giving the lawyer a little bit less 
without taking away any incentive.
  Statistics indicate the poor victims, on the whole, get about 48 
percent of the money; 52 percent goes to the lawyers and the costs and 
the courts. This is a pro-victim amendment that benefits these injured 
parties over whom many have expressed so much concern.
  Mr. KYL. One final question: Your amendment in no way limits the 
amount that the individual can recover in economic damages, or pain and 
suffering damages, at all, but it would put at least an upper limit of 
one-third on a contingency fee that the lawyers could charge for that 
plaintiff or victim?
  Mr. McCONNELL. My amendment would cap attorneys' fees at 33 percent 
of the first $150,000 awarded and 25 percent of the award above 
$150,000.
  Mr. KYL. I think the amendment is an excellent amendment in support 
of victims, and therefore I am very pleased to support it.
  Mr. McCONNELL. I thank my friend from Arizona very much.
  This is a national problem that affects States all across the 
country. It has been caused by the failure of the National Government 
to act. The Federal Government is the single biggest purchaser of 
medical services. It buys $400 billion in medical services each year. 
The purchase and delivery of medical services substantially affects 
interstate commerce. Patients and doctors routinely cross State lines. 
Parties buy medical services from doctors and hospitals in other 
jurisdictions. And doctors and hospitals sell medical services to 
citizens from different

[[Page S7533]]

States. Indeed, our most famous hospitals, such as the Mayo Clinic, are 
known for this.
  Does anyone deny this is a substantial commercial activity? Thus, 
there is a commerce clause and a spending clause basis for the Federal 
Government to act.
  Regardless of the problem caused by our civil justice system, some of 
our colleagues will point the finger at anyone but big personal injury 
lawyers. No matter what the trial lawyers do, no matter what abuses 
they may commit, some colleagues absolutely refuse to admit that there 
are any abuses or excesses in our civil justice system. Some of our 
colleagues say they are for accountability and responsibility in 
helping average Americans. They say that is what the debate is all 
about on corporate governance and prescription drugs. But when it comes 
down to it, some of our colleagues are for accountability and 
responsibility and helping average people only when it does not affect 
the interests of big, wealthy, powerful trial lawyers. In short, they 
are about accountability for everyone but the personal injury bar.
  Our friends who share that view will do anything that will impede big 
personal injury lawyers being able to run rampant through our legal 
system. We have seen them over the last few weeks. They will protect 
big, powerful trial lawyers over American victims of terrorism when it 
comes to punitive damages. We have seen that those colleagues will 
shield big, powerful trial lawyers from having to disclose basic 
information about their fees and costs to their clients. We have seen 
that some will not restrict big, powerful trial lawyers from ambulance 
chasing victims by reserving a respectful period of bereavement before 
soliciting business. And now we have seen those same folks urging the 
Senate not to help medical professionals by adopting the most modest of 
pro-victim reforms to our medical malpractice liability system. The AMA 
would like to go further than this amendment goes.
  And now we've seen that my Democrat friends urging the Senate not to 
help medical professionals by adopting the most modest of pro-victim 
reforms to our medical malpractice liability system. Again, my 
amendment is pro-victim because it: doesn't limit pain and suffering 
one penny; ensure that the victims, not their lawyers, get most of the 
compensation; allows them to get punitive damages; and improves overall 
patient care by providing that half of a punitive damages award goes to 
improving medical standards and practices.
  My colleagues: this is a chance to do something to help doctors, to 
help patients, to help our medical delivery system without capping by 
one nickel a patient's pain and suffering damages. The question, then, 
is whether you are going to vote with the trial lawyers or are you 
going to vote with the doctors and their patients.
  If my Democrat friends are serious about doing something to improve 
the delivery of medical services, they'll break with the trial lawyers 
for a change and listen to the medical community and adopt my 
amendment--an amendment that has already passed the Senate once.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. KENNEDY. Madam President, we have 6\1/2\?
  The PRESIDING OFFICER. Yes.
  Mr. KENNEDY. I yield a minute and a half to the Senator from 
Delaware.
  Mr. CARPER. I thank the Senator for yielding.
  Mr. McCONNELL. I ask that Senator Enzi be added as a cosponsor to the 
amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CARPER. The Senator from Kentucky and I agree on a variety of 
issues that relate to what we are talking about. Tomorrow, the Senate 
Judiciary Committee holds hearings on class action reform. I think it 
is a situation that calls for a national or a Federal solution.

  Many of us heard from our constituents around the country that we as 
a Congress need to do something to address asbestos reform legislation 
because there are a lot of folks who are being hurt from asbestosis and 
they are not getting anything out of it. Their damages are not being 
covered. Meanwhile a lot of people who are not sick, will never be 
sick, are diluting the money that should be going to people who really 
have asbestosis or diseases related to asbestos. Those are issues that 
I think cry out for a national solution.
  The one we are talking about here today, medical malpractice, is a 
problem in a number of States--I will acknowledge that--but it is a 
problem that can be fixed in a number of States. Delaware is one of 
those States in which legislation is pending today to address this 
issue and where it is most appropriately addressed.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. I yield myself the remaining time.
  At a time when the American people are calling for greater corporate 
accountability, it is unbelievable that our Republican colleagues would 
bring to the floor an amendment which would do just the opposite. The 
McConnell amendment would allow the entire health care industry to 
avoid accountability for the care they provide.
  The Amendment would deprive seriously injured patients of fair 
compensation. At virtually every stage of the legal process, the 
amendment systematically rewrites the rules of civil law to tip the 
balance in favor of defendants. It would arbitrarily shield health care 
providers and their insurance companies from basic responsibility for 
the harm they cause.
  While those across the aisle like to talk about doctors, the real 
beneficiaries will be insurance companies. This amendment would enrich 
the insurance industry at the expense of the most seriously injured 
patients; men, women, and children whose entire lives have been 
devastated by medical neglect and corporate abuse.
  This proposal would also shield HMOs that fail to provide needed 
care, nursing homes that neglect elderly patients, drug companies whose 
medicine has toxic side effects, and manufacturers of defective medical 
equipment.
  It would drastically limit the financial responsibility of the entire 
health care industry to compensate injured patients for the harm they 
have suffered. When will the Republican Party start worrying about 
injured patients and stop trying to shield big business from the 
consequences of its wrongdoing? Less accountability will never lead to 
better health care.
  Substandard medical care is a growing problem. The Agency for 
Healthcare Research and Quality at HHS found that the number of adverse 
effects from medical treatment has more than doubled in recent years, 
rising from 302,000 in 1993 to 710,000 in 2000. A Healthcare Research 
and Quality study also found that adverse effects of medical drugs have 
increased by more than 44 percent in recent years, rising from 657,000 
in 1993 to 992,000 in 2000. A 1999 study, by the Institute of Medicine 
at the National Academy of Sciences determined that at least 44,000 
patients, and perhaps as many as 98,000 patients, die in hospitals each 
year as a result of medical errors. That is more than die from auto 
accidents, breast cancer, or AIDS each year. Despite these alarming 
numbers, less than one-half of 1 percent of the nation's doctors face 
any serious sanctions from Medical Review Boards each year.
  These statistics make clear that we need more accountability in the 
health care system, not less. In this era of managed care and cost 
controls, it is ludicrous to suggest that the major problem facing 
American health care is ``defensive medicine.'' The problem is not 
``too much health care,'' it is ``too little'' quality health care.
  The restrictions on compensation for seriously injured patients which 
the McConnell Amendment seeks to impose would not even result in less 
costly care. The cost of medical malpractice premiums constitutes less 
than two-thirds of 1 percent 0.66 percent of the nation's health care 
expenditures each year. Malpractice premiums are not the cause of the 
high rate of medical inflation. Over the decade from 1988 to 1998, the 
cost of medical care rose 13 times faster than the cost of malpractice 
insurance. Did you get that? The cost of medical care rose 13 times 
faster than the cost of malpractice insurance.
  The restrictions in this amendment are not only unfair to patients, 
they are also an ineffective way to control medical malpractice 
premiums. There

[[Page S7534]]

is scant evidence to support the claim that enacting malpractice limits 
will lower insurance rates. There is substantial evidence to the 
contrary. Malpractice premiums are no higher on average in the 27 
States that do not place limitation on malpractice damages, than in the 
23 States that do have such limits.
  Do we understand that? The premiums are no higher where you do not 
have these kinds of limitations than in the States that do. And you 
know what that means. The doctors are paying the higher premiums. Who 
do you think is keeping the difference? The insurance companies. The 
insurance companies. They are the ones that are making out.
  The evidence clearly demonstrates that placing arbitrary limitations 
on the malpractice damages does not benefit the doctors it purports to 
help. Their rates remain virtually the same. It only helps the 
insurance companies earn even larger profits.
  The malpractice premiums are not affected by the imposition of the 
limits on recovery, so it stands to reason the availability of 
physicians does not differ between the States that have limits and the 
States that do not.
  I will use the chart that shows the difference between the States 
that do have limits and those that do not.
  Physicians In Patient Care: States without caps on damages, with 233 
per 100,000 residents; the States with caps on damages, 223--virtually 
identical.
  The point here, in summation, is accountability and responsibility in 
the whole area of the health care industry and the profits that are 
going to result if this amendment is successful. It will not mean 
better health care. It will mean, less attention to protecting patients 
all the way through the health care system.
  It will mean larger profits. It will mean larger profits for an 
industry. It will mean less corporate responsibility. I hope this 
amendment will not be successful.
  Since malpractice premiums are not effected by the imposition of 
limits on recovery, it stands to reason that the availability of 
physicians does not differ between states that have limits and states 
that do not. AMA data shows that there are 233 physicians per 100,000 
residents in states that do not have medical malpractice limits and 223 
physicians per 100,000 residents in states with limits. Looking at the 
particularly high cost specialty of obstetrics and gynecology, states 
without limits on damages have 29 OB/GYNs per 100,000 women while 
states with limits have 27.4 OB/GYNs per 100,000 women. Clearly there 
is no correlation.
  If this amendment were to pass it, it would sacrifice fair 
compensation for injured patients in a vain attempt to reduce medical 
malpractice premiums. Doctors will not get the relief they are seeking. 
Only the insurance companies, which created the recent market 
instability, will benefit.
  Even supporters of the industry acknowledge that enacting tort reform 
will not produce lower insurance premiums:
  Victor Schwartz, the American Tort Reform Association's General 
Counsel, told Business Insurance,

       . . . many tort reform advocates do not contend that 
     restricting litigation will lower insurance rates, and `I've 
     never said that in 30 years.'

  Debra Ballen, Executive Vice-President of the American Insurance 
Association even released a statement earlier this year (March 13, 
2002) acknowledging,

       [T]he insurance industry never promised that tort reform 
     would achieve specific premium savings . . ..

  A National Association of Insurance Commissioners study shows that in 
2000, the latest year for which data is available, total insurance 
industry profits as a percentage of premiums for medical malpractice 
insurance was nearly twice as high 13.6 percent as overall casualty and 
property insurance profits 7.9 percent. In fact, malpractice was a very 
lucrative line of insurance for the industry throughout the 1990s, 
averaging profits of 12 percent per year. Recent premium increases have 
been an attempt to maintain high profit margins despite sharply 
declining investment earnings.
  Insurance industry practices are responsible for the sudden dramatic 
premium increases which have occurred in some states in recent months. 
The explanation for these premium spikes can be found not in 
legislative halls or in courtrooms, but in the boardrooms of the 
insurance companies themselves.
  There have been substantial increases in recent months in a number of 
insurance lines, not just medical malpractice. In 2001, rates for small 
commercial accounts have gone up 21 percent, rates for mid-size 
commercial accounts have gone up 32 percent, and rates for large 
commercial accounts have gone up 36 percent. According to industry 
sources, auto insurance rates are projected to climb by 23 percent 
between 2000 and 2003, and homeowners insurance is projected to climb 
by 21 percent over the same period. These increases are attributable to 
general economic factors and industry practices, certainly not medical 
liability tort law.
  Insurers make much of their money form investment income. During 
times when investments offer high profit, companies compete fiercely 
with one another for market share. They often do so by underpricing 
their plans and insuring poor risks. When investment income dries up 
because interest rates fall and the stock market declines, the 
insurance industry then attempts to increase its premiums and reduce 
its coverage. This is a familiar cycle which produces a manufactured 
crisis each time their investments turn downward.
  One of the leading insurance industry analysts, Carol Brierly Golin, 
editor of Medical Liability Monitor, concluded:

       As the economy enjoyed a magic carpet ride in the 1990s, 
     insurers kept rates artificially low because they earned more 
     money investing than by writing policies . . . The insurance 
     companies wouldn't be in this position if they hadn't been so 
     hungry for investment profits . . . (Dec. 19, 2001).

  This analysis of why we are seeing a sudden spike in premiums was 
confirmed by a June 24, 2002 Wall Street Journal article describing 
what happened to the malpractice insurance industry during the 1990s.

       Some of these carriers rushed into malpractice coverage 
     because an accounting practice widely used in the industry 
     made the area seem more profitable in the early 1990s than it 
     really was. A decade of short-sighted price slashing led to 
     industry losses of nearly $3 billion last year.
       I don't like to hear insurance-company executives say it's 
     the tort [injury-law] system--it's self-inflicted, says 
     Donald J. Zuk, chief executive of Scpie Holdings, Inc., a 
     leading malpractice insurer in California . . .
       The losses were exacerbated by carriers' declining 
     investment returns. Some insurers had come to expect that big 
     gains in the 1990s from their bond and stock portfolios would 
     continue, industry officials say. When the bull market 
     stalled in 2000, investment gains that had patched over 
     inadequate premium rates disappeared.

  Proponents of the McConnell amendment justify the extreme 
restrictions they would place on the rights of injured patients as 
necessary to control medical malpractice premiums. The real 
beneficiaries of the amendment would be the insurance industry, which 
would pocket the money it saved on claims. The insurance premiums which 
doctors pay would not significantly change. The real losers, of course, 
would be the most seriously injured patients, who were denied fair 
compensation for their life-altering injuries. I strongly urge my 
colleagues to reject this amendment.
  The PRESIDING OFFICER. All time has expired.
  The Senator from Nevada.
  Mr. REID. Madam President, I move to table the McConnell amendment. I 
ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the motion.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES, I announce that the Senator from North Carolina (Mr. 
Helms) is necessarily absent.
  I further announce that if present and voting the Senator from North 
Carolina (Mr. Helms) would vote ``no.''
  The PRESIDING OFFICER (Mr. Carper). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 57, nays 42, as follows:
  The result was announced--yeas 57, nays 42, as follows:

                      [Rollcall Vote No. 197 Leg.]

                                YEAS--57

     Akaka
     Allen
     Baucus
     Bayh
     Biden
     Bingaman

[[Page S7535]]


     Boxer
     Breaux
     Byrd
     Cantwell
     Carnahan
     Carper
     Cleland
     Clinton
     Conrad
     Corzine
     Crapo
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Miller
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Shelby
     Smith (OR)
     Specter
     Stabenow
     Thompson
     Torricelli
     Wellstone
     Wyden

                                NAYS--42

     Allard
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Craig
     DeWine
     Domenici
     Ensign
     Enzi
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Santorum
     Sessions
     Smith (NH)
     Snowe
     Stevens
     Thomas
     Thurmond
     Voinovich
     Warner
       

                             NOT VOTING--1
                                     

       
     Helms
       
  The motion was agreed to.
  Mr. REID. Mr. President, I move to reconsider the vote.
  Mr. DASCHLE. I move to lay that motion on the table.
  Mr. REID. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. 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. REID. Mr. President, the amendment that is going to be the 
subject of discussion this afternoon is being copied, and it takes a 
few minutes always to do that.
  I ask unanimous consent that during that period of time, the Senator 
from California, Mrs. Feinstein, be recognized to speak as in morning 
business for up to 15 minutes.
  The PRESIDING OFFICER. Is there objection?
  Mr. GREGG. Reserving the right to object, is it my understanding the 
piece of legislation which increases spending by $400 billion over the 
next potentially 8 or 10 years is not available for us to read?
  Mr. REID. I say to my friend, the amendment which is a step in the 
direction of helping senior citizens who need prescription drugs is 
available. It is just being copied. The Senator's floor staff asked for 
a copy of it, and Senator Graham did not have an extra copy. It is hot 
off the press right here.
  Mr. GREGG. It is good to know we are going to have a chance to take a 
look at this piece of legislation.
  Do we expect to vote on this piece of legislation that is just hot 
off the press today that is a $400 billion expansion of the expenditure 
of the Federal Government over the next 10 years?
  Mr. REID. I say to my friend, it is our purpose to allow the Senate 
to vote on a good prescription drug benefit for senior citizens, 
something that is long overdue and, as the Senator knows, in 1965 when 
we passed Medicare, there was not a prescription drug benefit. This 
will be a downpayment for that. Yes, we would like to vote on it today.
  Mr. GREGG. I thank the Senator.
  The PRESIDING OFFICER. Is there objection?
  Mr. GREGG. I have no objection.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from California is recognized for 15 minutes.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. FEINSTEIN. I thank the Chair.
  (The remarks of Mrs. Feinstein pertaining to the submission of S. 
Con. Res. 133 are located in today's Record under ``Statements on 
Submitted Resolutions.'')
  Mr. KENNEDY. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. REID. 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. REID. Mr. President, the next amendment to be offered is from the 
Senator from Nevada, Mr. Reid. I have an amendment that we have worked 
on for a couple of years dealing with prescription drugs and allowing 
those people who have health insurance plans to have prescription drug 
benefits for contraceptives. I am not going to be able to do that 
because this legislation is, of course, winding down one way or the 
other. Everyone seems to have focused on a prescription drug benefit 
for Medicare. That does not take away from how important I believe my 
amendment is.
  I am terribly disappointed, and I suggest there are advocacy groups 
all over America that are disappointed as they hear me say this. 
Members of my own staff are terribly disappointed because they have 
worked on this sometimes days at a time. We have been able to get 
little bits and pieces of it over the years.
  Federal employees, for example, have a benefit that other people in 
the country do not have; that is, in their prescription drug plans, 
their health care, they can have contraceptives under the benefits of 
their plan. That should apply to everyone in America. We are not going 
to be able to do that today, and I am disappointed.
  I am happy, though, to designate Senator Graham to offer the 
amendment on which he has spent such an inordinate amount of time. 
Senator Graham and I came to the Senate together. He was a very 
successful and popular Governor. It is said that he is probably the 
most popularly elected official to ever come from the State of Florida. 
Whether that is true or not, I do not know. I do know he is a great 
legislator. The work he has done on this amendment has been exemplary. 
There is not anyone who understands Medicare and the tax aspects of it 
better than the Senator from Florida. He has spent not hours, days, or 
weeks; he has spent months on this legislation. Always available to 
anyone who has a question, he explains it in detail so it is 
understandable.
  I would only say that the people of Florida are well served by the 
work he has done, and I hope this amendment that he is going to offer 
would pass the Senate. It is something that not only the people of 
Florida need but the people of Nevada, Delaware, and our entire country 
need. It is not everything that I want, but it is certainly a giant 
step forward. So I, under the unanimous consent order that is now in 
effect, designate my spot to the Senator from Florida.
  The PRESIDING OFFICER. The Senator from Florida.


          Amendment No. 4345 to Amendment No. 4299, As Amended

  Mr. GRAHAM. I wish to express my appreciation for the graciousness of 
our colleague from Nevada for his very kind remarks. I share his sense 
of the importance of the debate we are about to begin. It is a debate 
which has been waiting for 37 years.
  As history would have it, it was exactly 37 years ago today, July 30, 
1965, President Lyndon B. Johnson signed the law that created the 
Medicare Program. President Johnson did not sign the legislation in 
Washington, but he went to Independence, MO, the home of an American 
who had spent much of his political career attempting to secure a 
health care benefit for older and poorer Americans, President Harry S 
Truman, and his wife Bess. He wanted them not only to be able to 
witness the signing of the Medicare legislation, but President Johnson 
then went the next step and gave to President Truman and his wife the 
first two Medicare cards.
  President Truman had been fighting for decades for help for insurance 
for America's senior citizens, most of whom had been denied private 
insurance coverage because of preexisting conditions. In his remarks at 
the signing of the Medicare legislation, President Johnson declared: No 
longer will older Americans be denied the healing miracle of modern 
medicine. No longer will illness crush and destroy the savings they 
have so carefully put away over a lifetime, so they might enjoy dignity 
in their later years. No longer will young families see their own 
incomes, their own hopes, eaten away simply because they are carrying 
out their deep moral obligations to their parents and to their uncles 
and to their aunts. And no longer will this Nation refuse the hand of 
justice to those who have given a lifetime of service and wisdom and 
labor to the progress of this progressive country.

[[Page S7536]]

  There was one thing left out of the law President Johnson signed on 
that day 37 years ago. That was prescription drug coverage. Today, 
because prescription medications are so much more vital to health care 
in the 21st century and, frankly, because they are so expensive, we 
have the opportunity and the challenge to finish the job. Today we are 
poised to give this, the greatest generation, what they deserve. Today 
we can add a meaningful prescription drug benefit to the Medicare 
Program so that nearly 40 million older and disabled Americans who rely 
on Medicare are not choosing between medicines and the necessities of 
life.
  In 1965, the average older American spent on prescriptions $65. That 
was not $65 a week or $65 a month but $65 for an entire year. What is 
happening today, July 30, 2002?
  Today the average senior American spends $2,149 on prescription drugs 
each year. The average senior today has to worry about what will happen 
to his or her health and financial security if, like about 20 percent 
of Medicare beneficiaries today, his or her prescription drug needs 
escalate, grow to a level of $3,300 or greater.
  The average senior today has to work because the options for 
prescription drug coverage are few and those that are available are 
withering.
  Medigap coverage is expensive and generally is capped. 
Medicare+Choice coverage is available only to some, and it is almost 
totally unavailable in rural areas of America. Employer-funded retiree 
coverage has been shrinking dramatically over the last decade.
  The Senate has been debating a Medicare prescription drug benefit for 
the past 2 weeks. It has been actively considering such a benefit for 
the past 6 years. In 2000, I was proud to vote for a comprehensive 
prescription drug benefit for all Medicare beneficiaries. It lost. In 
2001, I introduced another version of a comprehensive, universal bill. 
It lost. With my friends and colleagues, Senators Miller and Kennedy, I 
introduced an amendment a week ago today in hopes of again providing a 
comprehensive, affordable prescription drug benefit for all seniors. 
This proposal gained 52 votes, a majority of the Senate, but we did not 
have the 60 votes necessary to prevail against the point of order.

  What now? One thing we know, time is not our friend. It is certainly 
not America's seniors' friend. In another year, if we put this off from 
2002 to 2003, the average senior will be spending $2,439 on drugs. If 
we wait 2 years, the average senior will be spending $3,059 on 
prescription drugs. In another year, the percentage of seniors spending 
more than $3,300 on drugs will not be the 20 percent today but will 
exceed 24 percent. By 2005, the number will have grown to about 35 
percent of our seniors. In another year, Medigap coverage will be more 
expensive, fewer seniors will have access to Medicare+Choice, and fewer 
seniors will be covered by a previous employer's retiree program.
  There is no basis for delay. Whatever we do, the time to act is now. 
I am offering a proposal, and I am joined by Senators Gordon Smith--and 
I thank Senator Smith for the great contribution he has made to the 
development of this proposal--Zell Miller, who has been a stalwart for 
months in this effort, and Senators Lincoln, Bingaman, Kennedy, and 
Stabenow. Together, we are offering this amendment which will make a 
significant difference in the lives, the health, and the financial 
security of our grandparents, our parents, our aunts and uncles, our 
neighbors, the people we love the most, who will be affected the most 
by this legislation.
  The bipartisan Medicare Prescription Drug Costs Protection Act is 
estimated by the CBO to cost $390 billion over 10 years. It offers all 
seniors protection against catastrophic drug bills, and it provides 
special assistance for seniors with the lowest income.
  What will this plan do? First, for a low annual fee of $25, this 
legislation will offer all seniors who decide to voluntarily enroll up 
to 30 percent discounts and Federal supplements on the drugs they 
purchase--a very substantial benefit. This will also bring to all 
seniors the peace of mind in knowing, if I should have that heart 
attack, if I should be diagnosed with cancer or diabetes or any of the 
perils of old age, I will have, once I have paid $3,300 out of my 
pocket, or in conjunction with a stated prescription drug benefit, 
beyond that, I will have my prescription drugs paid, with only a $10 
copayment per prescription. That will give enormous peace of mind to 
our seniors who are fearful of that catastrophic health event that will 
drive them into economic poverty.
  Moreover, this legislation will offer to those seniors who are the 
neediest, coverage for all of their costs. It will cover all seniors 
who are 200 percent, or lower, of poverty in their income. That means 
for an individual who earns less than $17,720, or a couple with an 
income of less than $23,880, all of their costs will be covered except 
for a copayment of $2 for each prescription which is generic, $5 for a 
brand name prescription.
  According to some recent information submitted by the Urban 
Institute, in the year 2002, a 200 percent of poverty standard would 
represent 47 percent of the almost 40 million Medicare beneficiaries in 
the United States.
  There is also an important consideration of the effect of this 
legislation on employers. Today, the largest segment of seniors who get 
some assistance with their prescription drugs, do so because a previous 
employer is providing that assistance. More people get assistance 
through that means than through a Medicare+Choice, HMO, or through a 
Medigap policy they have purchased. So it is very important that 
employers have a continuing commitment to participate in the health 
care costs of their retirees.
  I am pleased, therefore, to State that the Congressional Budget 
Office predicts that no employer will drop existing coverage because of 
the benefit that is in this legislation. This is a very important 
assurance for seniors who are receiving assistance today.
  I might say that competing plans have been evaluated by the 
Congressional Budget Office as causing up to one-third of the seniors 
who are currently receiving employer retiree benefits with their drug 
costs to lose those benefits.
  Is this proposal the perfect Medicare prescription drug benefit? I 
must admit it is not. I had hoped we could provide a more comprehensive 
and more affordable drug benefit which would be universally applicable 
to all seniors. This proposal is a responsible step towards providing 
what seniors want and need. While providing assistance for all seniors, 
it targets the seniors who need help the most--the sickest and those 
with the lowest income.
  There are always, here, voices for delay: Why do we need to do this 
on July 30? Why can't we wait? Why can't we wait until September? Or 
why can't we wait until next January? Why can't we put off the hard 
decisions?
  If we wait until January of 2003, and if we start this process again 
in the next Congress, and if we go to the Congressional Budget Office 
and say, then: Here is the same plan that was introduced on July 30, 
2002; please tell us what it is going to cost over the next 10 years--
we have been told as of today it will cost $390 billion--the estimate 
is that same bill in January of 2003 will be given a 10-year cost of 
$470 billion.
  Why? Why in the world would the same plan just 6 months later cost 
approximately $80 billion more over 10 years? The answer is, the 
perfect storm of economic circumstances. It is the convergence of, 
first, the fact that the cost of prescription drugs, including both 
inflationary cost of the drugs, plus increased utilization has been 
going up at a rate of approximately 18 percent every year. You just ask 
the people who buy substantial amounts of prescription drugs what their 
costs are today in comparison to what their costs were just 12 months 
ago. And the number of seniors who will be participating is increasing 
dramatically.
  I was born in 1936. The year 1936 was the second lowest birth rate 
year in the 20th century in the United States. The reason? We were in 
the middle of a depression. Not very many families were adding to their 
size in 1936. So last November, when I reached 65, had I not been 
employed here in the Senate, I would have become a Medicare 
beneficiary. But you know what? I would not have had to have stood in a 
very long line to sign up because there are not a lot of people who 
became 65 in November of last year because there weren't very many 
people born in November of that year 65 years ago. But if

[[Page S7537]]

we wait another 10 years, we are going to be on the leading edge of one 
of the most significant bubbles of population in the history of the 
United States of America.

  Today, we have 40 million Americans eligible for Medicare. Do you 
know how many Americans we are going to have eligible for Medicare in 
the year 2013? Fifty-one million. That is what is driving these costs. 
Every year that we delay, it becomes that much more expensive to 
initiate the program, to look at a 10-year window of how much this is 
going to cost. The time for the Senate to act is now.
  If we act now, in July, we will have the full month of August to work 
with our colleagues in the House where a bill has already been passed, 
a bill that is substantially different than the one we will be 
considering in this amendment but one which I think is the basis of 
reasonable compromise.
  Just a few hours ago the President signed corporate governance 
legislation. I know my good friend, Senator Smith, was at the signing 
of that legislation. I commend him for his role in the creation and 
passage of that legislation. Many people thought that it was going to 
be impossible to reach agreement between a different House bill and a 
Senate bill. But, in fact, it was only a matter of a few days when 
serious, conscientious people came to such an understanding. I believe 
we can do the same thing with our conference with the House on this 
legislation, but we need to use the month of August as the time to 
begin to build that consensus towards a common piece of legislation.
  There is no benefit in the cry for delay, delay, delay. We need every 
day that we can have to see that we arrive at a consensus that will 
lead the Congress to develop legislation which it can pass and the 
President can sign into law. We need to avoid adding yet another year 
of inflation and millions of additional seniors coming into the 
Medicare population, so we can pass this at today's price of $390 
billion and not wait until next year when the same program is going to 
cost $470 billion.
  This is the type of good-faith compromise that I hope will bring all 
parties together. It has the best chance of becoming the law of the 
land and providing to our grandparents and parents and all of our loved 
ones who depend upon Medicare this critical additional benefit.
  In closing, I would like to remind all of you of something else that 
President Johnson said 37 years ago today when he signed the Medicare 
bill into law:

       Many men can make many proposals. Many men can draft many 
     laws. But few have the piercing and humane eye which can see 
     beyond the words to the people [those words] touch. Few can 
     see past the speeches and the political battles to the doctor 
     over there . . . trying to tend to the infirm; to the 
     hospital that is receiving those in anguish, or feel in their 
     heart the painful wrath at the injustice which denies the 
     miracle of healing to the old and to the poor.

  This debate is not about specific concepts. It is not about 
economics. It is not about public administration. This debate is about 
real people, people, as President Johnson said 37 years ago, who served 
this Nation with honor and dignity. The lives of almost 40 million of 
our fellow citizens are going to be impacted by the vote we are going 
to cast today. They are America.
  On our behalf, I ask all our colleagues to support this legislation. 
On behalf of the cosponsors, I send to the desk the amendment and ask 
it be immediately considered. The sponsor's names are Senator Smith of 
Oregon, Senator Miller, Senator Lincoln, Senator Bingaman, Senator 
Kennedy, and Senator Stabenow.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Florida (Mr. Graham), for himself, Mr. 
     Smith of Oregon, Mr. Miller, Mrs. Lincoln, Mr. Bingaman, Mr. 
     Kennedy, and Ms. Stabenow, proposes an amendment numbered 
     4345 to amendment No. 4299 as amended.

  Mr. GRAHAM. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  Mr. GRAHAM. Mr. President, I ask unanimous consent to have printed in 
the Record the preliminary Congressional Budget Office estimate of the 
proposal to establish an outpatient prescription drug benefit in 
Medicare.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

    PRELIMINARY CBO ESTIMATE OF GRAHAM-SMITH PROPOSAL TO ESTABLISH AN
            OUTPATIENT PRESCRIPTION DRUG BENEFIT IN MEDICARE
                        [In billions of dollars]
------------------------------------------------------------------------
                                                               2003-2012
------------------------------------------------------------------------
As a stand-alone bill:
    Medicare.................................................      306.9
    Refinancing..............................................     -126.8
    Low-Income Subsidy.......................................      187.6
    Other....................................................       22.0
                                                              ----------
          Total..............................................      386.6
Prescription drug benefit after interaction with Edwards'
 generic-drug proposal:
    Medicare.................................................      302.3
    Refinancing..............................................     -126.8
    Low-Income Subsidy.......................................      184.7
    Other....................................................       22.0
                                                              ----------
          Total..............................................      382.1
Budgetary Effect of Combination of Graham-Smith and Edwards
    Direct Spending:
        Edwards' Generic Drugs...............................       -5.9
        Graham-Smith Medicare Drug Benefit...................      382.1
                                                              ----------
          Total..............................................      376.2
    Revenue, on-budget.......................................        1.5
    Revenue, off-budget......................................        0.7
                                                              ----------
    Revenue, combined........................................        2.2
    Effect on Surplus:
        On-budget............................................      374.7
        Combined.............................................      374.0
------------------------------------------------------------------------
CBO staff have not reviewed the legislative language of the Graham-Smith
  proposal. This preliminary estimate is subject to revision upon such
  review.

  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. SMITH of Oregon. Mr. President, I rise today to urge my 
colleagues on both sides of the aisle to support the Graham-Smith 
amendment. This is our best and perhaps our last opportunity to come 
together and actually pass a meaningful prescription drug benefit in 
the Senate this year. I admit that this is a difficult issue. It is a 
privilege to work on it, though, because I hear of no single issue more 
on the minds of the American people--particularly our senior citizens--
than this issue. It is critical that we give them more than a war of 
words for yet another year--we must give them some results that work 
toward wellness rather than just rhetoric.
  I know I have colleagues on the left who don't believe we are 
spending enough. I know I have colleagues on the right who do not like 
the delivery system that is provided in this bill. But I believe it is 
critical we clear the 60-vote hurdle because if we don't, the seniors 
will get nothing for yet another year. That I think is unacceptable.
  We are running out of time. Seniors are running out of money to pay 
for their prescription drugs. They can't afford to wait another year 
for us to reach a compromise. We simply have to act now on a proposal 
Senator Graham and I bring to the floor that is affordable for them and 
affordable for the Government.
  I believe this is a focused plan that we all ought to support so we 
can at least keep this process going to get something to conference, so 
then we can get something to vote on in September, and so that our 
seniors can get the medicine they need.
  To review this bill: First and foremost, it is voluntary and it is 
comprehensive. Our bill focuses on providing a comprehensive benefit to 
our neediest low-income seniors--people who are least able to pay for 
their prescription drugs. Those who are below 200 percent of the 
Federal poverty level will never have to choose between food and 
lifesaving drugs again.
  I think that is a remarkable and significant proposal in itself. We 
voted on different iterations of that before. We are bringing it 
together again in this amendment.
  The latest figures from the Urban Institute say 47 percent of our 
Nation's seniors live with incomes below 200 percent of poverty, which 
translates into $17,720 for individuals and $23,880 for couples. We 
don't have the money for us to do everything in the world, to enact a 
prescription drug benefit that covers every cost for everybody. But 
under our plan, low-income seniors receive the most help because they 
need the most help, and they need it today. But even they have a copay. 
Some will say it is too small. But it is, I believe, enough to at least 
get the attention of low-income seniors when you ask them to pay $2 for 
a generic drug prescription or $5 to get a branded product. I think 
that promotes good consumerism among our seniors.
  Second, our proposal addresses the fear that millions of seniors feel 
every day--the fear that the loss of their

[[Page S7538]]

health will result in the loss of their home. Our bill will ensure that 
no senior, no matter what their income, will ever have to pay more than 
$3,300 per year in prescription drug costs. I think that is 
significant. Some will describe it as a doughnut; others will say it is 
a cliff.
  But I will tell you that I believe seniors in this country appreciate 
that in this bill they will get a discounted price, a discount card, 
and those in combination may equal up to 30 percent of the cost of a 
prescription. Moreover, they get an insurance policy that says you 
don't have to lose your home if you lose your health because, as to 
your prescription drug costs, the Government will be there to make sure 
that doesn't happen. The Graham-Smith amendment will ensure that they 
don't have to spend themselves into poverty, but it does ask them to 
pay something in addition to the copay. Each American who voluntarily 
signs up for this bill will pay $25 per year. In terms of discounted 
prices, a discount card, and an insurance policy against catastrophic 
illness, $25 is a well priced policy.

  Finally, with this, every senior can expect, as I indicated before, 
somewhere between 20 percent to 35 percent of the cost of each of their 
drugs to flow to them in a discount. That is because we are using the 
delivery system--as all Republicans, or nearly all the Republicans, 
already voted on--in the Hagel-Ensign bill.
  The Graham-Smith amendment would allow all employer-sponsored plans, 
the Medicare supplemental plan, the Medicare+Choice plan, 
pharmaceutical benefit managers, PBMs, pharmacies, and even States 
working with private companies to compete to deliver the benefits. This 
market-based competition, which so many of my Republican colleagues 
have already supported, will generate lower prices for all of our 
seniors.
  Another provision we took from the Hagel-Ensign bill--a provision 
that was critical if this was to win my support--which all of my 
colleagues on this side of the aisle have already supported, was the 
Hagel-Ensign formulary language.
  When I first talked to Senator Graham about this, I told him my 
reluctance to vote for his bill in the first instance was, in large 
measure, over the formulary issue because, as set out in the bill 
previously before us, it essentially took 90 percent of current 
prescription drugs available to seniors and said they are not available 
under this plan. So 10 percent of available drugs, in my view, is too 
restrictive.
  While under the Hagel-Ensign language there is a formulary which is a 
part of this bill, we make no such restriction, but leave to the 
experts the ability to make a more liberal formulary plan that will 
serve the health needs of our seniors. We did not want to limit drug 
choices for seniors. I think this is an important part of this bill 
that ought to attract the support of many of my colleagues.
  Americans across the country are asking for our help. There are 
Americans who cannot afford to wait one more year because we have been 
unwilling to compromise on a prescription drug plan. This is our last 
chance to keep this process moving forward. I need 60 votes, America 
needs 60 votes on this bill, because seniors deserve more than lip 
service from the Senate. They deserve a prescription drug benefit from 
the U.S. Government--and a process and a plan that build on what we 
already have at a cost we can afford, at a cost that allows seniors to 
be included, and in a way that seniors themselves can afford this plan 
as well.
  It is critical that we do this now, so that during the August recess 
we stop the haggling over whether we have a bill in the Senate, but get 
something to conference so that we can work out with the House and the 
White House the kind of bill that ultimately will win the support and 
the hearts and the minds of the American people.
  I say to all of my friends in this body--whether you are a Republican 
or Democrat, whether you like this bill or not--it is the last train 
leaving the station, in my view. It has enough in it that ought to 
attract your support because it keeps the train moving instead of 
derailing it, to the great disadvantage and harm of the senior citizens 
of this country.
  I plead with you for your support. If we can get it up and get past 
60 votes, we can make amendments. We can make improvements. Then we 
will get to the House of Representatives and a conference, and to the 
kind of product that ultimately can pass muster for the White House, 
the House, and all of us.
  I thank you for the time. I plead with my colleagues: Don't lose this 
opportunity.
  I ask for their votes and yield the floor.
  The PRESIDING OFFICER (Mr. Corzine). Who yields time?
  Mr. GRAHAM. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DASCHLE. 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. DASCHLE. Mr. President, 37 years ago today President Lyndon 
Johnson traveled to Independence, MO, to the home of Harry Truman to 
sign Medicare into law. In signing the bill, LBJ said:
  No longer will older Americans be denied the healing miracle of 
modern medicine. No longer will illness crush and destroy the savings 
that they have so carefully put away over a lifetime so that they may 
enjoy dignity in their later years. . . .
  No longer will young families see their own incomes, and their own 
hopes, eaten away simply because they are carrying out their deep moral 
obligations to their parents, to their uncles, and their aunts.
  Medicare, he stated, would provide light and hope to older Americans 
``fearing the terrible darkness of despair and poverty.''
  To a remarkable degree, Medicare has fulfilled that promise.
  But today the high cost of prescription drugs, combined with seniors' 
increasing need for such drugs, is once again destroying the life 
savings and threatening dignity and security of millions of older 
Americans.
  We have debated many important questions over the last 2 weeks, but 
the fundamental question facing us is, Are we willing to work together 
constructively to renew the promise of Medicare? Or will we refuse to 
help even the most hard-pressed seniors with prescription drugs?
  We have considered three very different plans so far. The bill I 
supported, the Graham-Miller-Kennedy bill, was the only true Medicare 
prescription drug benefit among the three plans. It would have created 
a guaranteed Medicare prescription benefit for all seniors. It included 
reasonable premiums of $25 a month. It included affordable copays of 
$10 for generic prescriptions and $40 for brand name ones.

  Our Senate Republican colleagues offered a very different plan, not a 
guaranteed Medicare benefit. It would have forced seniors into HMOs to 
get prescription drug coverage and given HMOs billions of dollars in 
taxpayer subsidies and seniors' premiums to entice them to offer 
seniors a prescription drug plan.
  There were no guarantees. HMOs and insurance companies would decide 
who gets prescription drug coverage, what coverage is included, and how 
much it costs. The plan used accounting gimmicks to hide huge costs to 
seniors. A coverage gap meant millions of seniors would have no 
coverage at all over a period beyond a few hundred dollars, even if 
they continued paying premiums. A new $10 copay for home health visits 
was also required. But basically and fundamentally their premise was 
that HMOs could deliver prescription drug benefits and all health care 
better than Medicare.
  Well, HMOs don't even exist for the most part in South Dakota and 
rural States. In areas where they do exist, HMOs have proven to be a 
poor fit with health needs of seniors. More and more HMOs are pulling 
out of Medicare+Choice. Many that are not leaving the program have 
dramatically cut benefits or increased premiums or both.
  Two fundamentally different plans, one fundamental similarity: 
Neither plan got 60 votes. Our proposal, the Medicare benefit, got 52 
votes, a majority of the Senate. Their plan to create pharmaceutical 
HMOs received 49 votes.

[[Page S7539]]

  But still, we didn't give up. The Hagel-Ensign bill was offered, and 
for the first time Medicare would have linked seniors' benefits to 
their incomes, which was a major concession. The Hagel-Ensign bill did 
not get 60 votes either.
  Now we are considering a fourth proposal, the Graham-Smith amendment. 
It is not the comprehensive coverage that Democrats all voted for, but 
it is an important first step. The Graham-Smith proposal offers real 
protection for every senior for just $25 a year. Let me emphasize, $25 
a year. Seniors get up to a 30-percent discount on all prescriptions, 
coverage against catastrophic expenses over $3,300 a year. Low- and 
moderate-income seniors would receive extra help. The program would pay 
for all of their benefits for just a small copay on prescriptions of $2 
for generic drugs and $5 for brand name drugs.
  CBO predicts that the Graham-Smith proposal would result in few or no 
employers dropping retirees prescription coverage, versus an estimated 
one-third of seniors who would have lost benefits under the Republican 
plan.
  I have to say that the two Senators responsible for this plan deserve 
a great deal of credit for their persistence, for their effort to come 
up, yet again, with another approach, with a recognition that perhaps 
there are those unwilling to spend more than about $400 billion in 
resources on a drug plan. They have come up with a way to address 
health benefits for all seniors, yet recognizing the limited resources 
we have to do so. I don't know that you could come up with a better 
framework than the one they have proposed.
  I will say this: I met a woman in Mitchell, SD, a few weeks ago when 
I was home in Mitchell. Her name is Margaret McBrayer. She is 75 years 
old. She and her husband raised 11 children. Since 1956, she has had 21 
surgeries, 3 aneurisms, and 1 stroke. She takes 11 prescriptions a day. 
Her average prescription costs are $814 a month, if she takes all brand 
names. If she uses generic brands, she can still spend $625 a month, 
two-thirds of her total monthly income.
  Medicaid used to pay all but $2 per month per prescription. But this 
past February, Mrs. McBrayer lost her husband to bone cancer. She also 
lost her Medicaid coverage. As a widow, rather than half of a couple, 
her income is now too high for Medicaid--less than $12,000 a year, but 
too high for help.
  So Margaret McBrayer is left to figure out how to pay for her own 
prescriptions. Her children help, but she is worried that they will end 
up spending all of their retirement savings on her prescription drugs, 
too.
  Some doctors who know Margaret McBrayer call her ``the Miracle 
Woman'' because of all the health difficulties she has overcome, and 
the courage and dignity with which she has done it.
  Fortunately, it doesn't require a miracle for us to help her--and 
Medicare's 40 million other beneficiaries--with the high cost of 
prescription drugs.
  The reason LBJ traveled to Independence 37 years ago today to sign 
the Medicare bill was to honor Harry Truman--the man who had begun the 
fight for medical insurance for seniors 20 years earlier.
  In his remarks that day, LBJ said Americans loved Harry Truman not 
because he gave 'em hell, but because he gave people hope.
  We can walk away from this effort and give each other hell--blame 
each other for failure--or we can accept good-faith compromise and give 
the American people hope, and continue working to provide an 
affordable, reliable prescription benefit for all seniors. the choice 
is in our hands this afternoon.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Michigan is recognized.
  Ms. STABENOW. Mr. President, I rise to join my colleagues on both 
sides of the aisle in support of this very important downpayment on a 
comprehensive Medicare prescription drug benefit.
  First, I commend my friend, the senior Senator from Florida, for his 
tremendous leadership on the comprehensive proposal that received 52 
votes, as well as this proposal to move it forward in the right 
direction. He has been a stalwart. I commend Senator Graham and his 
staff, who have worked very hard in pulling all this together. Also, I 
thank Senator Smith of Oregon for his willingness to step forward in a 
bipartisan way and work with us to do what can be done.
  As has been indicated, we had two competing proposals put forward 
last week, with very different philosophies--one with a private sector 
insurance company, HMO model; the other with a model to expand Medicare 
as we know it today. One, the Medicare expansion effort, received 52 
votes. The other, private insurance, received 48 votes. Neither one had 
the 60 votes that are necessary to make this law and move it forward.
  So we went back to the drawing board and, as is true in this great 
democracy of ours when you are not able to get exactly what you would 
like to see happen, you listen to people and you find a way to move 
forward, to take a step forward in the right direction.
  That is what this amendment is. This is a downpayment on 
comprehensive coverage. It is a step in the right direction. It will 
lower prices for all of our seniors. Every person who is on Medicare 
will see the prices, the costs, of their prescription drugs going down. 
That is important.
  I also mention that the underlying bill, and the efforts we have been 
using to add more competition, will lower prices for everyone, whether 
you are in business, a farmer, a worker, or part of a family struggling 
with prices. The goal is to bring down prices for everyone.
  This amendment addresses specifically those on Medicare. It has been 
said that the promise was made 37 years ago today that we would provide 
for older Americans and the disabled universal health coverage; they 
would know that health insurance, health coverage, was there for them. 
Unfortunately, because the way we provide health care has changed, that 
promise has been eroded; so we are trying to fix that, trying to 
modernize Medicare so it covers the way health insurance is covered 
today.
  This amendment begins that process. It says to those in the category 
of up to 200 percent of poverty--and in my home State of Michigan, that 
involves 46 percent of Michigan's beneficiaries who are on Medicare--46 
percent of Michiganians on Medicare will find that, without a monthly 
premium, without a deductible, with a very small copay of $2, or up to 
$5, they can receive the prescription they need, the medicine they 
need. No longer will they have to choose between food and medicine and 
paying the rent or paying the electric bill.
  So we have accomplished one goal in this amendment right off the bat, 
which is making sure that those with the greatest need are not having 
to choose between the daily necessities of life and getting their 
critical medicine.
  We then said that for everybody else, we want to make sure we start 
this downpayment with a discount. That discount will fall somewhere 
between 20 and 30 percent of the cost of a prescription. That is a good 
discount to begin the process of lowering prices and creating the kinds 
of prescription drug coverage that people need and deserve.

  Then we have said that, for a simple $25 annual fee--I might say, 
this is not per month, per week, it is just once a year for $25--you 
can become part of an insurance policy that says once your out-of-
pocket costs equal $3,300 for your prescriptions, you will then be able 
to get your costs covered. There will be, I believe, a small copay 
involved. But we are talking about the ability for people to--with a 
minimum of $10--be able to get coverage for any prescription drugs 
above $3,300 out of pocket a year.
  This is a major insurance policy. There are many seniors who are 
paying $400 or $500, and some are paying more. I have read stories from 
constituents paying $700 or $800 a month, who are literally selling 
their homes, losing their retirement, and are not able to get the 
medications they need for cancer, for heart conditions, for diabetes, 
for a variety of other serious ailments. For them, we are saying that 
you are not going to have to go through that. We will put in place a 
maximum amount that someone has to spend out of pocket, and, beyond 
that, they are going to have their prescription drugs

[[Page S7540]]

covered. That is very important for those who are the sickest in the 
country.
  So we have addressed both of those aspects--those who are struggling 
to meet the daily needs of life, those who are the sickest and have the 
highest bills and are finding themselves in extremely difficult 
situations. We are also making sure that everyone is getting their 
prices lowered through substantial discounts.
  We have also guaranteed there are no new State costs, and we have 
addressed a number of other issues raised by colleagues on both sides 
of the aisle. I simply say again that this is a critical day to get 
something done.
  You know, there are those who have accused folks on both sides of the 
aisle of playing politics, of just wanting to have an issue, of not 
wanting to get things done. Well, if that were the case, the votes were 
taken last week, the issues have been laid out. If that were all this 
were about, we would have ended it. But we know that people expect more 
from us. They are tired of talk, tired of another election coming 
around, with everybody talking about the high prices of prescription 
drugs and the need to modernize Medicare and still nothing getting 
done.
  So this is an effort on both sides of the aisle to bring people 
together and do what we can do, to do the achievable, make the 
downpayment, to take the first step.
  I hope we do not lose this opportunity. I believe this is a very 
important day--in fact, a historic day--for all of us, and hopefully we 
are going to see colleagues wanting to come together and showing 
leadership on both sides of the aisle to make an important step forward 
to begin to modernize what has been a great American success story 
called Medicare.
  I thank the Chair. I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. Mr. President, I am going to be very brief because 
Senator Mikulski and others wish to speak as well. I actually did not 
come with prepared remarks, but I do have a bit to say about my State 
of Minnesota. I will make one or two points and then thank some of my 
colleagues for their fine work.
  There are 644,000 Minnesotans enrolled in Medicare. By the way, one 
of the reasons I am glad of what we are doing as part of the Medicare 
framework is that Medicare was an enormous step forward, not just for 
senior citizens but for our country. Senior citizens means we are 
talking about our parents or grandparents.
  For my mother and father, who never made a lot of money, Medicare 
made an enormous difference. Both of them have passed away. Both had 
Parkinson's disease. My father had advanced Parkinson's disease. 
Medicare was a huge step forward.
  A second factor, if you will, is the median income of senior citizens 
and the disabled enrolled in Medicare is $15,173 in Minnesota.
  There is this stereotype about how you have all of these high-income 
senior citizens who are playing all the swank golf courses around the 
country. The fact of the matter is, the income profile of senior 
citizens is not that high. It certainly is not in my State. It 
certainly is not for the Medicare enrollees.
  The impact of this amendment is 644,000 beneficiaries and 258,000 
Minnesotans--that is 40 percent of the population--with incomes below 
200 percent of poverty are going to be eligible and will receive all 
the needed drugs for nominal copayments. I do not have such 
intellectual distance from this issue that I think this is 
insignificant. That is important. That is very important.

  Mr. President, 386,000 Medicare beneficiaries will be receiving the 
discount which could go from 20 to 30 percent. That is the estimate. 
Then finally, 119,000 senior citizens and disabled Medicare 
beneficiaries will benefit from the catastrophic coverage, and that is 
the catastrophic stop-loss protection.
  Of course, it is an insurance policy that means a lot to people who 
worry: My God, we are going to go under because of catastrophic 
expenses.
  I have two or three points to make. The first one is--and I hope 
Senator Graham, Senator Smith, and Senator Lincoln, who have done so 
much work on this legislation, believe me--I would far prefer to have a 
broader, more inclusive piece of legislation. Senator Stabenow, who is 
leaving the Chamber, has also done tremendous work. I say to Senator 
Stabenow, I am sorry I did not mention her name from the go.
  I would rather this legislation be much broader in scope of coverage, 
no question about it. We had a bill before us earlier, the Graham-
Miller bill, on which we received 52 votes, but we did not get 60 
votes. By the budget rules, we were not able to pass it.
  We are trying to get 60 votes to pass legislation that will be a 
first installment. We have to do more. We have to have coverage of all 
recipients. It has to be broader coverage, and we know that. We are 
trying to make sure we get something done that is concrete and makes a 
positive difference in the lives of people. That is why we are here as 
legislators. That is what this effort is about. That is why it deserves 
60 votes. That is my first point.
  My second point is, if I have my way--I guess I get to say it once 
because I am not going to have my way with this proposal, and this 
would get not 60 votes, I say to Senator Graham, but far fewer--I would 
have more cost containment so we could cover more people. I still 
believe--and I want to do a careful examination of how CBO makes some 
of its analyses--Health and Human Services ought to say to the 
pharmaceutical industry that has been making these huge what I call 
Viagra-like profits over the years: We represent 40 million Medicare 
recipients; we want a discount; we want the best price; we want what 
you give in Canada; we want the price you give to veterans.
  We can get the prices down and cover a lot more people. Someday we 
are going to get to this whole question of cost containment because 
that is where this is heading ultimately.
  My last point is, if you take this Graham-Smith initiative--and I 
thank all colleagues. I have been in some of the meetings. I cannot 
imagine the zillions of hours they have been in meetings. I have been 
in plenty of discussions.
  If we add this to drug reimportation, albeit a little weakened on the 
floor of the Senate, and we add access to generic drugs, then we have 
this amendment and the Stabenow amendment that enables States to do 
better by way of Medicaid and by way of providing a discount for people 
who do not have any health insurance coverage at all for prescription 
drugs--if we put that package together, I would call this a significant 
first step. It is a first step only, but it is an important one. It 
makes a difference for people. Then we are going to have to build on it 
and do better in the future.
  Last point--I promised that four points ago--I hope this gets 60 
votes. I think it should. I think it is obviously an effort to stay 
under this $400 billion. That is another issue that drives me nuts. I 
am so glad I did not vote for these Robin-Hood-in-reverse tax cuts. 
They have eroded the revenue base and have made it impossible for us to 
make investments in education and health care. We are stuck now with 
this arbitrary number to keep it under $400 billion. We have done that.
  We have tried to bring people together. We have tried to have a 
bipartisan initiative. We need 60 votes. I hope colleagues will vote 
for this so we can move forward. As for the naysaying--I am opposed; I 
do not like it; I do not want it--enough. Let's pass this and then 
improve it and then leave with legislation of which we can be proud as 
an important first step.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Maryland.
  Ms. MIKULSKI. I thank the Chair.
  Mr. President, today I thought very long and hard making up my mind 
with respect to the legislation we are presently debating. I tell my 
colleagues that I am going to support the Graham-Stabenow plan.
  The reason I am going to support this benefit is that it provides 
catastrophic coverage for those who have drug bills over $3,300 a year. 
For a $25 annual fee, it will provide catastrophic coverage for those 
who have prescription drug bills over $3,300 a year. This is absolutely 
essential to those seniors who have illnesses that cause them to pay 
this tremendous amount of money and who fear they could lose their life 
savings just to stay alive.

[[Page S7541]]

  This benefit also provides a comprehensive benefit for seniors with 
meager incomes. For the middle class, it provides a discount, ranging 
from 20 to 30 percent, plus a 5-percent subsidy.
  This bill has three parts to it: Catastrophic coverage, which I 
really like; help for those with meager incomes, which I think is a 
national necessity; and discounts for those in the middle class.
  For those who worked very hard on this bill, I salute them. It is a 
beginning. It is the first step. It is a downpayment on a comprehensive 
drug coverage. But it cannot be the only step.
  Today we are giving the middle-class seniors a discount card, but we 
cannot discount the middle class.
  They are the ones who are going to get squeezed between shrinking 
savings and rising prescription costs, and they are the ones I will 
fight to help.
  I think about ordinary Americans, those in manufacturing whose jobs 
are either on a fast track to Mexico or a slow boat to China, where 
they are afraid their companies, like my steelworkers, are going to go 
into bankruptcy and they are going to lose their pension, they are 
going to lose their health care. Then I think about the retail clerks 
who work in little shops, many of whom are in Baltimore, and in my 
little rural communities. Many of them work for 25 or 30 years, barely 
making the minimum wage, and though they had some savings, they are now 
just over the line in terms of qualifying for the benefit. Yet at the 
same time, we are going to give them a discount. I could go through 
example after example.
  My preference was expressed last week when we voted for a universal 
Medicare coverage bill, one that was under Medicare, covered all 
seniors, no means testing, no deductibles, and modest copays. I 
supported that plan without reservation. We got 52 votes, a majority of 
the Senate, but we have a new Senate now, and the majority is not good 
enough. We now need to have a supermajority, or 60 votes, to waive the 
Budget Act. We did not get those last eight votes because some of my 
colleagues thought the benefit was too expensive to provide a universal 
prescription drug benefit.
  Last year, many of those same colleagues who now say we do not have 
the wallet, were the first in line to pass excessive tax cuts. Those 
tax cuts went to the top 1 percent. Those who got it did not need it, 
and it certainly did not help the economy. When we were deliberating 
those tax bills last year, I knew this year would come. I knew we would 
come to the point where we would not have enough revenue to pass a 
prescription drug benefit.
  I am really agitated about this because for many years, particularly 
working with President Bill Clinton, we exercised fiscal discipline. I 
personally worked for balanced budgets. I worked very hard to create a 
surplus, the first surpluses since the Johnson administration. Why did 
I work so hard? I mended old ways and old habits. Well, I worked 
because I knew it was going to be good for the economy and that also 
one day we would need it for a prescription drug coverage.
  Instead, Congress gave the tax cut to the wealthiest, those who live 
off of expense accounts, while I worry about the middle class who have 
to live off a budget.
  So we cannot afford it? I am not so sure about it because when we 
have the will, we often find the wallet. Today is not the day where we 
are going to be able to find that wallet. I believe with the 
catastrophic coverage for those with the situation over $3,300, we do 
take a very important step. I think the sensitivity to those meager 
incomes is what we in America should be all about.
  For the middle class, we get them started, but we need to let them 
know we have to be able to do more.
  The limited coverage bill that I am supporting today is not 
everything I wanted, but it does give seniors peace of mind that an 
illness with huge drug bills will not push them into financial ruin. 
For that $25 annual fee, there will be catastrophic coverage.
  For some time, the whole issue of the consequences of health care has 
been an obsession of mine. I know the costs of long-term care. I know 
that when I came to this Senate the cost of nursing home care was 
enormously expensive, but to qualify for Government help under Medicaid 
families often had to push themselves into family bankruptcy, couples 
made out better if they divorced, or seniors were forced to spend down 
their savings to get help for nursing home care. Widows were 
impoverishing themselves so their husbands could qualify for Medicaid 
and nursing home care. I said then, as I say now, I believe in family 
and personal responsibility but not family bankruptcy because of the 
cruel rules of Government. The cruel rules of Government should not 
force people into family impoverishment.

  When it came to long-term care, I wrote something called the Spousal 
Anti-Impoverishment Act. I made sure the senior could keep the home or 
the family farm and some savings to get help when a spouse was in a 
nursing home. That was a very important step. I hope we can do more.
  Today, seniors are worried about going broke for their prescriptions. 
This limited coverage will help lift that fear and ease the burden of 
many seniors. For that catastrophic coverage alone, this bill is worth 
voting for.
  In closing, later on this week the Senate will be voting on 
legislation to defend the homeland. It is called homeland security. But 
I ask, What does the ``homeland'' stand for and what are we trying to 
make secure?
  I absolutely salute our military, law enforcement, and intelligence 
agencies that are working against terrorism, but I have senior citizens 
living in terror of whether they can afford their prescription drugs.
  I believe not only in universal freedom, I believe in universal 
public education, and universal health care for seniors. If we want 
Americans to live free from fear, we need to take the fear away of 
losing their savings and not keeping up with the cost of prescription 
drugs. Today is a downpayment. We must do more. I intend to vote for 
this bill today and return to find other alternatives later.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Arkansas.
  Mrs. LINCOLN. Mr. President, I rise in support of this amendment, 
which I have been proud to promote over the last couple of weeks. I 
want to especially thank Senator Bob Graham of Florida and Senator 
Gordon Smith for their leadership in drafting this amendment. The hours 
and the patience that they have put into this is forthcoming in what we 
have been able to produce.
  I also want to express my appreciation to Senator Bingaman for his 
guiding vision and the eloquence with which he first offered this 
proposal to our colleagues in meetings last week, and to Senator Debbie 
Stabenow. If we could harness the kind of energy, dedication, and 
commitment that Senator Stabenow has for our seniors in providing them 
a quality prescription drug benefit, we would certainly be doing our 
job for the benefit of the seniors in this country.
  I also thank Senator Feinstein who has been very instrumental in 
making sure that we do not adjourn without helping low-income seniors 
and those with the highest drug costs. This amendment is the product of 
many long hours of discussions among many of these Senators and so many 
others who bridge the spectrum of political philosophies in this body, 
and I believe that it represents the deliberative process envisioned by 
our forefathers for what the Senate was intended to do.
  Through this debate, I have been firm in my conviction that we must 
help as many seniors as possible this year--not next year, not the year 
after, but this year. This amendment allows us to help everyone while 
providing the most help to the neediest and the sickest.
  We have had two opportunities to vote on more expansive prescription 
drug packages, and I was pleased to support an amendment offered by 
Senators Graham and Miller that would have done far more for our 
seniors. Regrettably, that package did not garner the 60 votes needed 
to overcome a Senate procedural rule. So we stand today with a new 
opportunity that I believe offers the best hope for Arkansas seniors.
  I have said all along we must help the neediest and the sickest of 
our seniors and provide drugs at a reduced cost for those in between. I 
am not willing to tell seniors, who spend more than $3,300 a year on 
drugs, that we

[[Page S7542]]

cannot help them this year. I am not willing to tell the seniors who 
struggle to live on less than $1,500 a month for their rent, groceries, 
utility, and health care costs that we cannot help them this year. So I 
am proud to support this amendment, which will ensure that seniors who 
are at or below 200 percent of the Federal poverty level will get 
prescription drugs through Medicare.
  For all seniors who spend more than $3,300 a year on drugs, I want to 
be able to say to those seniors: Stop worrying. The Government will 
cover the rest of your prescription drug costs with a minimal copay.
  What does this mean for the seniors of Arkansas? It means a great 
deal. Under this plan, one of every two seniors in Arkansas will have 
all of their prescription drug costs covered under Medicare with a 
minimal copayment. There will not be any additional paperwork as part 
of this program, and there will not be fees to enter the program. If 
you are on Medicare, you can be automatically enrolled in the 
prescription drug program. That should be welcome news for the 56 
percent of Arkansas seniors whose annual income is below the 200 
percent of poverty level.
  For those individuals who have annual incomes above $17,720 and those 
couples whose income is over $23,880, there is also a benefit. In 
addition to the peace of mind that will come from knowing the 
Government will cover drug costs that exceed $3,300 a year, these 
seniors will also benefit from drug discounts negotiated by the 
Government and a 5-percent subsidy. Drug costs could be reduced by as 
much as 30 percent.
  I wish we could do more for this group of seniors, and I publicly 
pledge to keep pushing until we have done so. Is it an ideal benefit? 
No, but it is a start. I have always said in this body that legislation 
is not a work of art; it is a work in progress. That is what this body 
was intended to do, to deliberate and work through these issues to come 
up with a solution.
  Last week's votes were like a flashing neon sign declaring it is not 
possible to get a more generous drug benefit this year. A 5-percent 
subsidy negotiated drug discount and a catastrophic benefit for middle- 
and high-income seniors is better than no benefit at all, especially 
considering the ever increasing costs of prescription drugs, an issue 
we will have to address. We will have to continue to address the ever 
increasing costs of prescription drugs in the years to come and the 
cost of what it is going to mean to us and the seniors of this Nation.
  We must also remember and never underestimate, with the out-of-pocket 
limit for all seniors in this proposal, we will be providing for the 
initiative to bring down the costs of employer-sponsored plans, as well 
as any supplemental plans, such as Medigap or others. That is a real 
savings and a benefit to all of these individuals who need prescription 
drug coverage.
  I thank John and Betty Scroggins of Monticello, AR, who took the time 
over a series of phone calls with my staff to share their health care 
struggles. The Scroggins are now retired. They worked all of their 
lives driving trucks. After they pay their drug bill each month, they 
have less than $1,000 to cover utilities, groceries, and other living 
expenses. For John and Betty, under this plan, the Government will pay 
for all of their prescription drugs with a minimal copay.
  I also thank Lila Lee Moore, a volunteer social worker at a health 
care clinic in Little Rock, who told me about a couple whose Social 
Security income is $1,100 a month but their drug costs exceed $800 a 
month.
  I also send a very special thank you to 18-year-old Jessica Mann of 
Jonesboro, AR, who wrote asking me to help her grandparents who 
struggle just to make ends meet due to the high cost of medical care 
and prescription drug medicines.
  Jessica said: I believe that when people such as my grandparents have 
worked hard their whole lives, they deserve a better and less worrisome 
time in their retirement years. They have given so much to make it 
better for my generation, please help us to make it better for theirs.
  Each of these people have helped me form the template against which I 
have measured these prescription drug proposals. The amendment before 
the Senate helps meet these needs. We are talking about moving forward 
on behalf of the seniors of this Nation, not saying, once again, that 
we are going to put it off for another year or another day, but that we 
are bound and determined to do what we can to make each and every one 
of their lives a little bit better.
  I urge my colleagues to support this amendment and help the Senate 
move forward in the efforts on behalf of the seniors of this Nation.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. I thank my colleague and friend for his courtesy.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. NELSON of Florida. Mr. President, I am here to support my 
colleague from Florida and to thank him for his leadership, which has 
been bipartisan in nature. It reflects the bipartisan yearning and 
desire of the people of this country, and particularly of our State.
  Most people understand that Florida has a higher percentage of those 
over age 65 than the rest of the country. That is true. But wherever 
you are, age 65 and older, there are seniors who are facing choices in 
the year 2002 that seniors should not have to face. The choice that 
many seniors have to face is: Do I buy groceries or do I buy medicine?
  It is unimaginable to me that in this land of plenty, in this time of 
abundance, in this land of beneficence, in this land of great 
generosity, that we have among us, the generation that we owe so much 
to, our seniors, the generation that has built the strong economy upon 
which all now enjoy, the generation that has reestablished and secured 
the freedoms with which each of us participate in each day and 
sometimes takes for granted, it is unimaginable to me in the year 2002 
that of that great generation there are those who would have to make a 
choice--because they cannot afford it--between buying groceries to eat 
and the medicine they need on a daily basis.
  Why are we trying to do what we are trying to do? It is because 
Medicare was set up 37 years ago when health care was centered around 
acute care in hospitals. If Medicare had not been set up in 1965, but 
instead, if we were designing a system which would take care of senior 
citizens by designing a health insurance plan funded by the Federal 
Government for senior citizens, would we include prescription drugs? 
The answer is, obviously, yes, because prescription drugs are so much a 
part of our health care today, so much a part of our quality of life, 
so much a part of the miracles of modern medicine that give us a 
greater quality of life. So if that is how we would design it, and yet 
it was designed 37 years ago, should we not modernize that system? The 
answer to that is, obviously, yes.
  Then it comes to a question of cost. And if the cost is such that we 
cannot get through this Senate because we have to operate with 60 out 
of 100 votes in order to pass anything, and we got to 52 votes with 
Senator Graham's and Senator Miller's amendment--that was a much more 
comprehensive plan than trying to find a plan that we can fashion, that 
we can get 60 votes to get it through this Chamber, this is what we 
have come up with. Some would say it has two prongs, but it really has 
three. There is the one that would take care of the most poor; i.e., it 
would take care of those up to 200 percent of the poverty level. They 
would have a fully funded Medicare prescription drug benefit. It would 
also take care of those the most sick. It would take care of the most 
poor and the most sick, the most sick being those stricken by a 
catastrophe, who have to spend a lot of money out of pocket. When they 
get to a certain level, a level in excess of $3,000 out of pocket, the 
Federal Government is going to take care of that, and, indeed, you are 
going to be able to buy that protection for $25 a year. That is called 
catastrophic coverage, and that is a pretty good deal.

  There is a third element, or prong, to this amendment. Those who 
would detract from this amendment would say it doesn't take care of the 
middle class. It certainly doesn't take care of the middle class as 
much as the original amendment offered by Senators Graham and Miller, 
but of course that costs a lot of money. What does this do

[[Page S7543]]

for the middle class besides the catastrophic coverage for $25? It has 
a system in place that will have discounts up to 30 percent of the cost 
of those drugs, through a system designed to use bulk buying, plus an 
additional 5-percent reduction by virtue of a Federal subsidy.
  So it takes care of the most needy--that is, the poorest--by taking 
care of those with incomes up to 200 percent of the poverty level. It 
takes care of the most sick--when we have a catastrophic illness--for 
$25 a year, for anything out of pocket over something just in excess of 
$3,000 per year it takes care of that. And for everybody else it 
clearly reduces the price, up to 30 percent plus another 5-percent 
subsidy.
  That is not everything we want. That is not a total across-the-board 
prescription drug benefit under Medicare. But it is clearly a step in 
the right direction so we go about doing what we need to be doing: 
Modernizing Medicare that was set up 37 years ago.
  That is why I rise to add my voice to the support for this amendment 
and encourage its adoption.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Miller). The Senator from Louisiana is 
recognized.
  Mr. BREAUX. Mr. President, I rise to make a couple of comments--I 
will not be that long--on the pending business, prescription drugs. It 
was said before that this is sort of a unique day in the sense that 
this is the 37th anniversary of the signing of the Medicare Act back in 
1965. What we did in 1965 was unique. It was very important. It was 
very special. What we did in 1965, with Medicare, was to say: We are 
going to establish a Medicare Program for our Nation's seniors that is 
going to be comprehensive. It is going to cover all seniors. It is 
going to be universal, in the sense that all seniors will be eligible 
for the same benefits under the Medicare Program. So we had a program 
that said to every senior: We are going to cover you. Regardless of 
where you live, regardless of your status in life, you are going to be 
covered for hospital care and other related conditions as well.
  We should have, at that time, added prescription drugs. Congress did 
not. Prescription drugs were not as important in 1965 as a hospital bed 
was in 1965. So Congress, in its wisdom, at that time said we are going 
to provide comprehensive coverage for hospitals, and later on it became 
also coverage for doctors and physicians as well.
  The unique feature about that bill is that it covered everybody and 
it treated everybody equally. I think when you look at a proposal we 
have before us today that says this program is going to be 
fundamentally changed. In the sense that it is no longer universal, it 
is no longer comprehensive, we are going to pick and choose who gets 
what, and different people who are eligible for Medicare will get 
different things--I think that is fundamentally breaking faith with the 
American people who, when they look at Medicare, think of it as being 
universal and comprehensive. That is the first mistake.
  Many people who talked about the tripartisan bill--some of our 
colleagues on the floor, some in the private sector--said we don't like 
the tripartisan bill because it has a gap. They called it a doughnut. 
The gap in the tripartisan bill was between $3,450 worth of drug 
expenses and $3,700 of prescription drug expenses. If you were poor, 
you still got your drugs taken care of through that gap, but if you 
were not under 150 percent of poverty, you did not get coverage in that 
relatively small gap between $3,150 and $3,700. Why? Because of the 
extreme cost associated with covering even that small gap.
  The point I made is that many people who were critical of the 
tripartisan bill said: You have a gap, so we can't support it. If we 
had a gap, this plan has a canyon, because it says to the Nation's 
seniors: If you are under 200 percent of poverty, we will cover your 
drugs, but if you make one dollar more, you are in a different 
category.
  I think the figures I have seen indicate it is approximately $17,720 
of income as an individual. I think is the number. But if you make one 
dollar more than 200 percent of poverty, you are in a totally different 
category, you are in a category that says you have to pay about 95 
percent of the drug costs. Ninety-five percent of the drug costs? What 
kind of help are we giving to someone who makes one dollar above 200 
percent of poverty?
  One of the charts I saw said 70 percent of seniors are over 200 
percent of poverty. Are we going to say to that group of seniors: 
Somehow you are going to be treated differently than anyone else the 
Government treats under Medicare because you make one dollar more than 
200 percent of poverty? You are going to be required to pay 95 percent, 
and the Federal Government will pick up 5 percent of your drug costs? 
Is that fair? That is not what we did in 1965 when we said everybody 
would have comprehensive, universal coverage and access to a health 
care plan.

  That is not an insignificant number of people you are talking about. 
I looked at some of the statistics with regard to how many people you 
are talking about. In my State--and my State is a poor State--it is 
about 230,000 people making over 200 percent of poverty. What am I 
going to tell the seniors in Louisiana: If you are poor, you are going 
to get all this help, but if you make one dollar more, excuse me, you 
are out of luck?
  What are they going to say? They are going to say: I paid taxes all 
my life, I worked hard all my life, but now, for the first time under 
Medicare, you are going to treat me differently than anybody else? My 
State is a poor State, and 230,000 people would fit into that category 
of being outside of 200 percent of poverty.
  Now I have the numbers. In the United States, nationwide--these are 
the numbers from the Kaiser Family Foundation--there are about 
18,450,000 seniors who are eligible for Medicare who are outside the 
200 percent of poverty--18 million people plus. We are telling those 18 
million-plus seniors they are going to be treated quite differently 
when they are called upon to pay 95 percent coinsurance on their 
prescription drugs. Are we telling them that we are giving them 
something? We are not giving them what we are giving other parts of our 
society who are seniors. These are working people who have paid taxes 
and in their retirement think, if you are going to have a National 
Government program, they should be treated like everybody else.
  The 200 percent of poverty is nice to talk about--how many people we 
are helping. But a substantial portion of the 200 percent under poverty 
are already covered with prescription drugs under the Medicaid Program. 
At about 75 percent of poverty, you have coverage under Medicare for 
prescription drugs already. They already have prescription drugs under 
the State Medicaid Program. If you are about 75 percent of poverty, in 
my State, you are covered for prescription drugs--the poorest of the 
poor.
  So we are really saying: Between 75 percent of poverty and 200 
percent of poverty, we are really going to give you a great deal of 
help. But if you are over 200 percent of poverty, you are out of luck.
  They say we have a catastrophic plan. I am all for catastrophic 
coverage. It should be there. But let's be honest about how many people 
it covers.
  If you look at $3,300 of catastrophic coverage where the Government 
picks up the lion's share of 90 percent--I take it, in their plan--of 
the cost of drugs after you reach the $3,300 out-of-pocket costs, how 
many people is that? I am told approximately 10 percent of the seniors 
are going to have actual out-of-pocket costs of $3,300 and above on an 
annual basis, not including insurance, not including a union package, 
not including a former employer's package, and not including any 
Medigap coverage they have.
  If it has to be out of pocket $3,300, you are talking about 
approximately 10 percent of the remaining number of seniors. What do we 
have? We are spending almost $400 billion, and we are selectively 
saying some are going to get it, some are not going to get it, and some 
are going to get a little bit more.
  The tripartisan bill had about $370 billion of Medicare reform, plus 
prescription drugs--$340 billion on prescription drugs. That was 
universal and comprehensive and at a $24-a-month premium. It had a $250 
deductible and 50 percent coinsurance. Everybody was treated alike. 
Everybody would know what they were going to get and how they were 
going to get it.

[[Page S7544]]

  Some say: We want a Government-run program. We want private insurance 
companies delivering prescription drugs.
  What are we coming to? It is the exact same system that I have as a 
Member of the Senate and that 9 million other Federal employees have. 
Do you think we do not have a Government-run health program? Of course 
it is a Government-run program. It is run by the Office of Personnel 
Management--a Federal agency that goes out and solicits bids from 
private companies, such as Blue Cross and Aetna, to provide 9 million 
Federal workers with comprehensive, universal health coverage which 
includes doctors, hospitals, and, yes, it includes prescription drugs.
  We are talking about saying that these providers who are big, healthy 
insurance companies ought to assume some risk. Why do we say that? 
Because if they are doing the providing and they make a bad deal, they 
should have to pick up the cost of making a bad deal. That is the risk. 
That is what makes them negotiate with pharmaceutical companies, to get 
the best possible deal from pharmaceuticals for prescription drugs at 
the best possible price.
  If I am a pharmacy benefit manager--so-called PBM--and I have no risk 
other than my contract, why am I worried about what type of price I get 
for prescription drugs if I know the Government is going to eat the 
cost of anything over what I bid? There is no risk. If there is no 
risk, there is not going to be any incentive to go out and get the best 
possible deal on prescription drugs.
  But to get back to the program that we have, some of my colleagues 
say we have to have a Government-run program. The Government-run 
program we have as Federal employees is exactly the same program we 
have recommended under the tripartisan approach. The Office of Health 
and Human Services' Medicare office would contract. They would do the 
approvals. They would supervise it. They would make sure it was being 
run properly. They would make sure no one was trying to scam it. And 
they would make sure that every part of the country had a competitive 
model to deliver drugs in their area.
  Some have said: I am from a rural area. We are not going to have a 
lot of private companies coming to the most rural part of the country. 
We said: All right, we understand your concern. We will modify our 
bill. We will say that if there is a rural part of the country or any 
part of the country where you do not have private providers competing 
to bring prescription drugs to individuals at the best possible price--
if that doesn't happen in your area--the Federal Government will do it 
just as under the Graham model. The Federal Government will contract 
with the PBM. They will have only the management fee at risk when they 
have that provision for those drugs. And in the most rural areas, you 
would be guaranteed a Government-run program just like in the Graham 
model, if you did not have the private system to be available because 
they just did not want to go to any part of the country.

  As to the concerns that have been expressed about wanting a 
Government-run program, ours is a Government program that utilizes the 
best of what Government can do combined with the best of what the 
private sector can do.
  Some on their side of the aisle may say we only need a private sector 
program. Some on my side of the aisle may say we need a Government-run 
program. The answer truly is somewhere in between. You need the best of 
what Government can do merged with the best of what the private sector 
can do in order to get a delivery system that would have Government 
oversight, Government supervision, and Government guarantees when the 
private sector does not participate to make sure the beneficiaries get 
the product. That is what the tripartisan bill attempted to do.
  The final point I will make is that this fight is not over. This 
proposal, our tripartisan proposal, and the previous Graham proposal--
none will have had 60 votes. The fact is that we are not going to be 
able to do anything unless we find a way to get 60 votes to provide 
prescription drugs. For the past several years, we have been giving 
seniors excuses. I daresay this time we are going to give them one more 
excuse.
  The Republicans will say: It is the Democrats' fault that we didn't 
get this done. The Democrats will say: No. It is the Republicans' fault 
that we didn't get this done. What we will have given seniors once 
again is a bucket of excuses. They can't take those excuses to a 
drugstore and buy one prescription.
  It is time that we as Members of Congress try to recognize we have to 
combine the best of ideas from both sides of the aisle and come up with 
an agreement that can get the job done. We are dedicated, and we will 
continue to work in that direction.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Nevada is recognized.
  Mr. REID. Mr. President, before the Senator from Louisiana leaves the 
floor, let me just say we have people on both sides of the aisle--
especially on this side of the aisle--who look to him for guidance. He 
knows these numbers, having been a member of the Finance Committee as 
long as he has, and having served in Congress for as long as he has--
both in the House and in the Senate. He does commendable work. His work 
on this legislation is no different.
  Mr. President, the Republican leader is going to be here shortly, I 
am told.
  How long does the Senator from New Mexico wish to speak?
  Mr. BINGAMAN. About 6 minutes.
  Mr. REID. When the Republican leader shows up, we certainly will----
  Mr. GRASSLEY. Can't we go back and forth?
  Mr. REID. I don't know. I guess whoever gets recognized. How much 
time is the Senator talking about?
  Mr. GRASSLEY. About 7 minutes.
  Mr. REID. Mr. President, I ask unanimous consent that the Senator 
from Iowa, the ranking member of the Finance Committee, be recognized 
for 7 minutes; following that, the Senator from New Mexico be 
recognized for 6 minutes; and following that, the Senator from Texas be 
recognized forever.
  (Laughter.)
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. I see my colleague from Nevada. I ask unanimous consent 
that he follow Senator Gramm.
  I ask for the courtesy of both Senator Grassley and Senator 
Bingaman--that when the Republican leader appears, they allow us to 
move forward with an important unanimous consent agreement.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, I rise to oppose the amendment before 
us. For the third time in as many weeks, a mostly partisan Democrat 
prescription drug bill is about to fail on this floor. And beyond 
failing here, today's amendment, from what I've heard of it, fails 
seniors and taxpayers as well. I still haven't seen the bill language 
itself. But from what I've heard, it fails seniors because it fails to 
cover most of them. From what we know of the proposal--and we are only 
this afternoon getting the details--most middle income seniors will get 
next to nothing when it comes to prescription drug coverage.
  My friends on the other side of the aisle have accomplished quite a 
feat--they have managed to write a Medicare prescription drug proposal 
that does less with more money. Their proposal provides generous 
coverage to beneficiaries below 200 percent of poverty. There is 
nothing wrong with that. I agree that scarce resources should be used 
wisely by Congress to target money where it is needed the most.
  However, their proposal provides almost no assistance to Medicare 
beneficiaries whose incomes exceed $18,952 a year. A senior at 201 
percent of poverty will receive no meaningful coverage under the Graham 
proposal until she has spent 17 percent of her income on drugs. A 
married couple at 201 percent of poverty will spend 25 percent of their 
annual income on drugs before both gain catastrophic coverage 
protection. To make matters worse. Three-quarters of seniors above 200 
percent of poverty have other prescription drug coverage. Since these 
plans cover some drug expenses, and because the Graham plan does not 
have a basic benefit, these folks will receive no help even if they 
have total drug expenses over $3,300. A typical senior above 200 
percent of poverty will receive approximately $6 of assistance every 
month

[[Page S7545]]

toward their prescription drug expenses.
  The Congressional Budget Office has given Graham a preliminary cost 
estimate of $389.5 billion. Keep in mind, though, that CBO did not have 
legislative language to review at the time they completed their cost 
estimate. So, depending on what legislative language is included in the 
Graham proposal--it could cost more than $400 billion.
  The tripartisan bill with an official CBO cost estimate of $370 
billion provides a solid benefit for all Medicare beneficiaries. Lower-
income enrollees are provided with additional protections, which, as I 
said before, is appropriate.
  What the tripartisan bill has that Graham does not is a significant 
drug benefit for every single Medicare enrollee. Under our 21st Century 
Medicare Act, enrollees will save on average 50 percent off their drug 
bills. And, lower-income enrollees will see a 95 percent savings in 
their drug bills.
  The Graham bill fails these people. It fails them badly. Indeed, 
these failures amount to a massive failure for this body. Under Senator 
Daschle's leadership, Democrats and Democrats alone have tried to write 
partisan legislation on the Senate floor time and time again this 
summer.
  That has gotten us nowhere. It has led to chaos, to partisanship and, 
as I said just a minute ago, to failure.
  So, where are we now? It looks like we are ready for another mostly 
partisan vote on a pretty much partisan bill--another vote that will 
fail to get 60 votes, and will fail to give seniors the help they need.
  We could have been somewhere far different from this. The House 
passed a bill. We could have been in conference with the House at this 
point. The President wants a bill. We could have been in the Rose 
Garden. Senator Daschle says he wants a bill, but what has taken place 
here over the last 3 weeks means he really wants something else: an 
issue.
  Had regular order been followed, had the Finance Committee been given 
the right to work its bipartisan will, we could have had far more than 
just an issue. We could be far closer to providing real, affordable and 
universal prescription drug benefits than we are today. The sponsors of 
the Tripartisan bill, the only bipartisan bill in all of Washington to 
provide comprehensive, universal coverage on at a cost that is far 
lower than that in the amendment before us now, were ready and willing 
to talk to anyone about compromises. We still are.
  But we were denied the right to a markup in the Finance Committee. I 
believe that if it had been given the chance to work its will, the 
Finance Committee would have reported out a bipartisan proposal, based 
on the tripartisan 21st century Medicare Act we introduced earlier this 
month.
  I've said it before, everyone in this chamber knows that for anything 
of this magnitude to pass--and adding a prescription drug benefit to 
Medicare is the single greatest entitlement expansion in history--it 
needs to get 60 votes.
  And everyone in this chamber knows that the only way to get 60 votes 
is to have bipartisan support. The proper place to find bipartisan 
support is in the Finance Committee, not on the Senate floor.
  By bypassing the Finance Committee entirely and doing drafting on the 
floor--literally on the backs of envelopes--the Democrat leadership has 
led us to where we are today: In shambles.
  Mr. President, I urge my colleagues to sweep up the shambles on the 
Senate floor and start over. We can and should do better.
  I ask unanimous consent that a statement by several organizations be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                                    July 29, 2002.

The Graham-Smith Proposal: Changing the Nature of Medicare is No Way to 
               Celebrate the 37th Anniversary of Medicare

     To: Members of the United States Senate:
       On June 14, 2002, our organizations sent a letter to 
     Chairmen Tauzin and Thomas in support of their Medicare 
     legislation. We were very clear when we gave our support that 
     our goal was to ensure a voluntary prescription drug benefit 
     which would be available to all Medicare beneficiaries.
       The Graham-Smith low-income/catastrophic amendment provides 
     complete drug benefits for only the very poor. The Washington 
     Post reports that ``millions of seniors `in the middle' would 
     not qualify for any prescription drug benefits at all under 
     the Graham-Smith legislation.'' In short, the middle class 
     would, in fact, receive no meaningful coverage under the 
     Graham-Smith amendment. This means test violates the 
     fundamental principle of Medicare social insurance that it is 
     a universal program, not an anti-poverty program. It is 
     ironic that on the same day that America's senior celebrate 
     the 37th anniversary of the enactment of Medicare (July 30, 
     1965), the United States Senate will be considering a 
     proposal that takes us a very significant step away from the 
     general entitlement that Medicare has always been.
       The passage of such legislation would change the nature and 
     intent of America's 37-year-old Medicare program. We 
     respectfully ask you to oppose this amendment and enact 
     meaningful prescription drug coverage which would give all 
     Medicare beneficiaries access, coverage and choice.
       American Osteopathic Association, Kidney Cancer 
     Association, Cancer Research Institute, Pancreatic Cancer 
     Action Network, Pulmonary Hypertension Association, Center 
     for Patient Advocacy, Endocrinology Associates, National 
     Coalition for Women with Heart Disease.

                          ____________________