[Congressional Record Volume 149, Number 88 (Monday, June 16, 2003)]
[House]
[Pages H5398-H5405]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            MEDICARE REFORM

  The SPEAKER pro tempore (Mr. Franks of Arizona). Under the Speaker's 
announced policy of January 7, 2003, the gentleman from New Jersey (Mr. 
Pallone) is recognized for 60 minutes as the designee of the minority 
leader.
  Mr. PALLONE. Mr. Speaker, I was very pleased to listen to my 
Republican colleagues for most of the last hour when they spoke about 
the issue of Medicare prescription drugs, and I intend to discuss the 
same subject; but I cannot help but begin the debate on this issue this 
evening by pointing out how radical the proposal is that the Republican 
House leadership is putting forth with regard to Medicare. Contrary to 
most of what we listened to and what was said by my Republican 
colleagues, the effort by the House Republican leadership to present a 
Medicare proposal is one that will, in my opinion, would effectively 
kill Medicare the way we know it. For those who think they would be 
able to stay in traditional Medicare and they would get a drug benefit 
that is basically linked to the traditional Medicare program that they 
are in, nothing could be further from the truth.
  The fact of the matter is what the Republican leadership is putting 
forth in the House is nothing like traditional Medicare, and would make 
it very difficult if not impossible for most seniors to stay in 
traditional Medicare. Certainly if they were looking for any kind of 
drug benefit that was meaningful, they would have to go outside of 
traditional Medicare in order to secure it. I just wanted to, if I 
could, just refute some of the statements that were made by some of the 
Members. I listened to the last three or so speakers, and I just wanted 
to contrast what they said to what I believe they are really doing with 
their Medicare proposal.
  The gentleman from Utah (Mr. Bishop) said that Medicare is broken. It 
does not run. Well, let me say, Mr. Speaker, the opposite is true. 
Medicare is the best-run government program that we have, and one of 
the reasons that I believe why the House Republicans, particularly the 
leadership, want to say that Medicare is broken and does not run is 
because they want to set the stage to say this is a lousy program and 
we have to change it dramatically, as I say, radically, in order to 
improve it or in order to keep it as a program that is somehow good for 
seniors.
  If they start out by saying Medicare is broken and does not run, the 
consequence is that we have to fix it; and I would say just the 
opposite is true. Most seniors feel very strongly that Medicare is run 
well and they benefit greatly from it. The only thing they want is to 
add a prescription drug benefit. They do not want to change it. They do 
not believe it is broken. The gentleman from Georgia (Mr. Burns) went 
on to say that when you get to be 65 and you are eligible for Medicare, 
you become something like a second or

[[Page H5399]]

third-class citizen because of the nature of the kind of benefit that 
you get under Medicare.
  Again, it is the same thing, to give the impression to the seniors 
that somehow Medicare is broken. What do they propose to do in order to 
fix it? They propose to privatize it. And when they say it is broken, 
they also talk about how it is running out of money, and the reason it 
is running out of money is because they have borrowed from the Medicare 
trust fund in order to pay for ongoing operations.
  We all know that we have a debt that is $400 billion. They borrowed 
that from the Medicare trust fund. If they continue to borrow money 
from the Medicare trust fund, they make it so the money is not 
available and then they can come back and say that it needs to be 
fixed.
  The gentleman from Georgia (Mr. Burns) also said that we need choice 
and competition. Again, I would say that is a euphemism for 
privatization. If we look at what they are proposing to do with 
Medicare as well as the prescription drug benefit, they essentially 
want to get you out of the traditional Medicare by giving you a 
voucher, saying we will give you a certain amount of money and go out 
and try to buy a health care policy similar to Medicare with the money 
that we are going to give you. But if there is no plan that provides 
the type of health coverage that you want with that set amount of 
money, then would you have to pay more to stay in the traditional 
Medicare program.
  Or if you want to get a prescription drug benefit, you would have to 
join an HMO or some kind of private plan in order to get the 
prescription drug benefit. It is amazing to me because I have listened 
to the President of the United States go out and talk about what he is 
trying to do with Medicare and how he would like to have a prescription 
drug program attached to Medicare. But if we look at what the House 
Republican leadership is doing, essentially they want to privatize 
Medicare. They want to get people out of traditional Medicare, and they 
will only give you a drug benefit if you opt to go out of traditional 
Medicare and join an HMO or some other kind of program that is not 
traditional Medicare.
  Finally, the gentleman from Georgia (Mr. Burns) mentioned three 
principles. He had here on the floor three charts. I wanted to debunk 
those three principles that he mentioned. First of all, for principle 
one, he said we have to guarantee that all seniors have an affordable 
prescription drug benefit under Medicare. He says one of the ways they 
are going to get that is to negotiate prices. Well, let me tell 
Members, they not only do not guarantee that all seniors have a 
prescription drug plan because you will not get it unless you join an 
HMO or somehow privatize, but they specifically say in their 
legislation which is going to be considered tomorrow in the Committee 
on Energy and Commerce, they specifically have a noninterference clause 
which prohibits the Medicare administration or the Secretary of Health 
and Human Services from negotiating prices. So this is not true, this 
principle that they are going to guarantee that seniors have an 
affordable drug plan. There is no way in the world that they allow the 
government to negotiate price and make the health plan affordable or 
make the prescription drug plan affordable.
  The gentleman from Georgia said we will protect seniors with the 
right to choose a benefit package, and we will cap out-of-pocket costs. 
I would venture to say the opposite is true. They are essentially 
saying if you stay in traditional Medicare, you are going to have to 
pay more out-of-pocket costs if you want to stay in traditional 
Medicare.
  Finally, principle three, the gentleman from Georgia said he wants to 
strengthen Medicare for future generations, make structural 
improvements to curb run-away costs. What they are getting to here is 
the cost. They think traditional Medicare costs too much. They want to 
borrow the money to spend on other programs and cut back on the costs 
by telling people we will give you a voucher, go out and buy your own 
private health insurance. If you want traditional Medicare, you have to 
pay extra.
  This is nothing, Mr. Speaker, on the part of the Republican 
leadership, but what I would consider a sort of scam. In other words, 
you say that Medicare is broken, you say that it is costing too much 
money, you say it needs to be fixed, and so you come up with a 
privatization scheme, you come up with a voucher and tell people they 
have to get out of voucher if they want to get any kind of meaningful 
benefit, and you justify it by saying we have to do something to reform 
Medicare.
  Last, the gentleman from Georgia (Mr. Gingrey) said people can stay 
in traditional Medicare if they want to and then he started talking 
about enhanced Medicare. Well, they may be able to stay in traditional 
Medicare if they want to, but it will cost a lot more out of pocket. I 
would venture to say that eventually traditional Medicare would wither 
on the vine. It would be too costly, and it would simply wither away. 
That is what the Republican leadership wants. They want to end 
Medicare. They are going to disguise this, but what this really is is a 
very radical way of trying to kill the way that we normally administer 
health care for seniors, and it is a very dangerous precedent that we 
have to look at in great deal.
  Mr. Speaker, I am joined by the gentleman from Michigan (Mr. Stupak) 
who has a long history of dealing with Medicare issues. We are very 
concerned what is happening this week in the Committee on Energy and 
Commerce with regard to Medicare, and I yield to the gentleman.
  Mr. STUPAK. Mr. Speaker, I thank the gentleman for yielding. The 
gentleman and I did have an opportunity to listen to the last group 
speaking on the floor, and while they seemed very sincere, and I say 
this respectfully, they are freshmen Members, and they have been here 
for 6 months. The gentleman from New Jersey and I have been here for 
over 10 years, we sit on the Subcommittee on Health, and we have been 
through this debate a number of times.
  When we look at it, much of the emphasis by the last group that spoke 
simply is not found in the bill that will be put forth before our 
committee starting at 1 p.m. tomorrow. It will be before the full 
committee starting at 1 p.m. Last year, we went 24 hours around the 
clock, actually it was 36 hours, we ended at 6:30 in the morning. The 
other group before us said the debate has begun. There will be no 
debate. When we start our markup tomorrow at 1, we will do our opening 
statements. Then we will start presenting amendments. We both have some 
amendments, other Democratic Members will have amendments. Some 
Republicans will have amendments. But I can tell Members standing here 
right now, of the Democratic amendments, none of them, or at least any 
meaningful Democratic amendment that is put forth will be accepted by 
the majority party. There will not be a debate. It will be their way or 
no way.
  Mr. Speaker, let me be very clear. A few hundred feet from here the 
Senate is putting forth a bill that seems to have some bipartisan 
support, and many of us on the committee, Democrats and Republicans, 
have looked at it and we think there is an area which we can work with 
in the Senate bill.
  The bill we start marking up tomorrow is not the Senate bill. It is 
not even close to the Senate bill. It does not reflect the Senate bill. 
The bill we see tomorrow that we will have in our committee and begin 
to markup will say this: It will privatize Medicare by 2010. It will 
force seniors into a voucher plan. In other words, seniors are going to 
get a voucher to purchase not only their prescription drugs, but also 
their Medicare.

                              {time}  2115

  If you cannot afford anything over and above that voucher, you are 
going to be left behind as they privatize a system that has served our 
seniors for so many years.
  Thirdly, it will not cover every senior. This plan that is going to 
be put forth tomorrow, we looked at it tonight to get ready for it 
tomorrow, has a gap in it. Once you hit $2,000, you go off the 
coverage. You continue to pay your monthly premium, which is 
anticipated to be about $35, and you get no coverage for it, and you 
stay there until you incur up to $3,700 out of pocket, and then you 
kick back in. There is a gap. The gap is designed for most seniors who 
fall between the $2,000 and

[[Page H5400]]

$3,000, that is their out-of-pocket expense for prescription drug 
coverage, so you are going to be paying a premium and getting no 
coverage? It does not make any sense. It is truly a gap policy. We have 
had this debate before. So look very closely and watch the markup in 
the Committee on Energy and Commerce.
  The last group talked about, the last group of Members wanting to 
debate it, I am happy to come down here Wednesday evening, I am sure 
the gentleman from New Jersey would, too, and let us talk about it. The 
reason why I say Wednesday is because Tuesday we start the markup at 1 
o'clock; we will still be going most of the day Wednesday. So why not 
come back here and have a real good, honest debate about this bill, 
because the bill described, and again I think with all sincerity to the 
other group that was here earlier, just is not the bill we are working 
on tomorrow.
  The House Republican prescription drug plan is not the Senate bill. 
Many of us have looked at the Senate bill. There are some areas we can 
work with, and we look forward to doing that. So while we seem to have 
some negotiating going on a few hundred feet away by the other body in 
the Capitol here, we will not even get a simple amendment to be offered 
tomorrow by many of us, will be defeated on a party-line vote, there 
will not be any debate, there will not be any negotiations, there will 
not be any working together.
  Why is this bill suddenly coming on our calendar? I think the House 
Republican leadership realized that the Senate was gaining a little 
momentum, they do have a bill that is starting to take on some 
bipartisan cooperation here and they are farther ahead than the House 
is on Medicare. So what do they do? They roll out the plan they had 
last year which barely passed this House and did not go anywhere 
because it really does not provide prescription drug coverage for all 
Americans. It is not affordable. Many of us will be left behind.
  When you take a look at it, I come from northern Michigan, a very 
rural district. I have half the State of Michigan. I am a very rural 
district. This scheme put forward by the Republicans tomorrow starting 
in our Committee on Energy and Commerce simply will not work. This plan 
puts seniors in the same dilemma as we saw last year. They will be 
asked to give up traditional Medicare and be forced into an HMO with a 
private insurance plan backing it up.
  An HMO is nothing more than a private insurance plan. They want to 
take traditional fee-for-service Medicare, force you in this HMO and 
they say, when you do this, you will have choice. You can stay in your 
traditional plan, pay a heck of a lot more, or you go into our HMO. I 
am from northern Michigan. I do not have the Federal employees health 
insurance program. I said when I ran for office, I would not take any 
kind of health care from the Federal Government until all Americans had 
it. So I do not accept even their prescription drug plan we have here.
  I have a plan that I have had in place for a long time. 
Unfortunately, this year this plan is doing much like the Republican 
plan. It has decided to put me in an HMO, a PPO, preferred physician 
organization. I can stay in my traditional plan, or I can go into the 
PPO. Being from northern Michigan where we have a small population base 
spread out over many, many miles, there are not enough people there to 
go into an HMO, or a PPO. So while I have this insurance card that says 
I get this 80/20 coverage, the reality is that none of the doctors or 
the pharmacies in my area participate in this PPO. Therefore, I have to 
pay out of pocket what the PPO will not pay. Since I am not in their 
plan, they do not get the reduced rate for me. So instead of being 80/
20, I am paying about 50/50. Every time myself or my family have to go 
to the doctor, we have to shell out 50 percent and the so-called 
insurance or private insurance company will pay the other 50 percent. 
My deduction has gone up, they cover less; and since I am in a rural 
area where they do not have PPOs or HMOs, I have to pay more.
  Look what happens when you go to these HMOs or PPOs. They are nothing 
but insurance plans. What has happened to the cost of insurance in the 
last couple of years? It has gone up 25, 35 percent. If we allow them 
to put in this voucher system and give every senior in this country a 
voucher and say, you would have your choice, go buy the plan you want, 
you are buying private insurance. They are not going to be able to 
afford it. Seniors are on a fixed income. They cannot afford a 25, 35 
percent increase. No matter where I go in my district, and I was in my 
district today talking to the credit union league, the Blue Ox Credit 
Union chapter out of Alpena, Michigan, and what were they telling me? 
The cost of the health insurance has gone sky high. Not only are they 
concerned about prescription drug coverage that they would like to see 
for their parents and grandparents, but just the simple cost of 
insurance has gone up 25, 35 percent.

  The local credit unions cannot even afford to cover their employees 
anymore. So we are going to force seniors, take away traditional 
Medicare, put them into this insurance plan, if you will, give them a 
voucher; whatever your voucher pays for, that is what you get. If you 
want anything more than that, you are going to have to pay for it. How 
are they ever going to keep up with these costs of insurance that we 
see in a private plan? It does not make any sense to me. Medicare is 
sound. Ninety-seven percent of all seniors in this country are part of 
Medicare. It is one of the best-run programs. Less than 1 percent of 
every dollar, less than one penny is used for the administration of the 
program. Sure it costs a lot of money. Seniors are living longer. That 
is the success of the Medicare program. Should we have a prescription 
drug benefit plan? You bet. We Democrats will be in the markup fighting 
for it. We are going to take a look at that Senate plan, and hopefully 
we can make it part of it.
  I have always advocated the Federal Supply Service. In this country, 
the biggest purchaser of prescription drugs is the Federal Government. 
We provide drugs for the Veterans Administration, we provide drugs for 
Medicaid, we provide drugs for Indian Health Services and government 
services. There is an agency within the Federal Government called 
Federal Supply Service, FSS. The Federal Supply Service sits down and 
negotiates with the drug companies. Since we are the biggest purchaser, 
the Federal Government is, we get the best possible price, and we 
negotiate it with the drug companies for no matter what the medication 
is. We negotiate that price.
  In a survey done by the Committee on Government Reform in my 
district, I am sure they have done it in the district of the gentleman 
from New Jersey, found that if we could use the Federal Supply Service 
price, use the purchasing power of the Federal Government and have the 
seniors go buy their drugs at their local pharmacy, we could reduce the 
cost of those drugs by 40 to 50 percent. For instance, if I do not have 
any insurance, let us take Zocor, to lower your cholesterol. The last 
time we did this survey which was in 2000, it was just over $100 for a 
30-day supply of Zocor. If I am under the Federal Supply Service, the 
FSS, it costs $42.
  Why can we not use the purchasing power for those seniors who do not 
have some kind of prescription drug coverage or MediGap policy and pass 
that on to them? We do not need a part D of Medicare. We do not need a 
new program that costs billions of dollars. The infrastructure is 
already set up. Why can we not do that? That will be one of the 
amendments we will be offering in our markup on prescription drug 
coverage. And I am sure like last time, the Democrats will vote for it, 
all the Republicans will vote against it, and we will end up losing 
that argument. But here is just a simple idea without creating more 
Federal Government, bigger bureaucracy: take the purchasing power of 
the Federal Government and pass it on to our citizens. It makes sense 
to me. But instead, we are going to have this big scheme, they are 
going to call it part D of Medicare, they are going to give you a 
voucher and move you into a private insurance company. They are going 
to provide you with this policy that has a gap in it between those who 
have 2 to $3,000 worth of coverage, you are going to pay your monthly 
premium but you get no coverage, it is called a gap policy, and then 
they are going to privatize Medicare with this voucher and it is not 
the Senate plan.

[[Page H5401]]

  I would have thought they would at least bring forth the Senate plan, 
attempts to privatize Medicare by relying upon health insurance 
companies to offer Medicare benefits in rural areas. We already know it 
has failed. Rural areas are smaller, less population, we are spread 
out. These areas just are not appealing to big private insurance 
companies when they can operate with higher profits in densely 
populated areas.
  Plus, let us face it. The HMOs, the PPOs, these private companies, if 
they are not forced to take everybody, they will cherry pick. They only 
want the healthiest seniors in their plan. They do not want those who 
have chronic illnesses or disease, or maybe cancer or heart disease 
running in their family; they do not want them part of their plan. Why? 
Because it costs too much money. So these programs of Medicare+Choice 
and HMOs and all this really just do not exist in rural areas for that 
reason, because the private companies pulled out when they realized 
they could not make any more money. They cherry pick and only want the 
healthiest ones. In fact, I think in the last year, if my memory serves 
me correctly, 400,000 Americans have lost their insurance coverage 
under Medicare, Medicare+Choice in this country, because they pull out. 
As soon as they stop making money, they pull out and they leave you. If 
you look at the Republican proposal that will be before our committee 
tomorrow, there is no way you get back in. If your HMO or PPO or 
Medicare+Choice plan pulls out of your area, what remedy do you have to 
get back into the system? There is not one. That is one of the problems 
with this bill.

  So when we walk into the Committee on Energy and Commerce meeting 
starting at 1 o'clock tomorrow, you can be sure that we will be there 
to fight this amendment to protect Medicare so that it will be 
available to all seniors and all disabled Americans no matter where 
they live and no matter what their income is.
  When you take a look at it, another part of this bill that bothers me 
tremendously is the Republican bill. Again we saw it last year. We 
debated it for 36 hours in committee. None of our amendments were made 
in order. But if you take a look at it, there is nothing there to 
reduce the price of prescription drugs. You give people a voucher, you 
have nothing to reduce the cost in increase of insurance, there is 
nothing there to reduce the price of your prescription drugs. The 
voucher might work for a year or two, but then the insurance is going 
to catch up to you and you are going to have to pay more for that 
voucher, and you are going to get less coverage for your 
pharmaceuticals.
  The bill does not include any provision to hold down pharmaceutical 
prices that the big drug companies charge. There is not even a 
guarantee in the Republican bill as to what your monthly premium is 
going to be. In fact, I am glad the gentleman from New Jersey brought 
it up, there is also language in this bill that states, the Secretary 
of Health and Human Services will be forbidden from negotiating for 
better drug prices on behalf of the American people. What happened when 
we had the anthrax coming in here? Remember we had Cipro; we had 
companies who were willing to make Cipro for us. They wanted $3 a 
tablet. The Secretary of Health and Human Services did his job, went 
and negotiated; we have got Cipro now being produced to provide us all 
over the country. What did he do? He negotiated a price to about $1 a 
tablet, two-thirds of a savings they achieved just through simple 
negotiation, again going back to Federal Supply Service, used the 
purchasing power of the Federal Government to bring down the cost.
  In this bill we will be marking up tomorrow, it is called the 
noninterference clause, which prevents the Secretary of Health and 
Human Services to negotiate on your behalf to lower your drug prices. 
When you get that voucher, who is going to stand and negotiate for you? 
The drug companies? The insurance companies? No, they have got a vested 
interest. So you would look to the Secretary of Health and Human 
Services, and you would think the Federal Government would be there, it 
is their plan, that they would be negotiating a price for you. They are 
forbidden from doing it.
  There are many, many more interesting provisions in this Republican 
scheme that we will see over the next few days. This plan intends to, 
with all due respect, bribe private insurance into a scheme, that rural 
areas will be shunned under this plan, just as we have been in 
Medicare+Choice. This idea could result in rural seniors getting stuck 
with higher premiums compared to our counterparts or beneficiaries who 
live in the cities.
  I will introduce an amendment just like I did last year, because we 
saw the same thing. My amendment last year ensures that seniors, no 
matter where they live, rural, urban, will not pay higher premiums than 
their counterparts in the cities. No matter where you live, my 
amendment will say, you will pay the same monthly premium, whether you 
live in New Jersey or Michigan, Detroit or Menominee, Michigan or 
Alpena, you are going to pay the same monthly premium. That will be an 
amendment we will bring. I can predict right now on a party-line vote, 
we will lose that amendment. So urban areas would pay less than the 
rural areas under the Republican scheme. If you are going to subsidize 
these companies, whether it is insurance companies or the 
pharmaceutical companies in the name of undercutting Medicare, it is 
reprehensible that you are going to stick it to the poor rural seniors 
who will have to pay more for a doomed experiment in privatization with 
Medicare, a system that has worked so well.
  As I said earlier, the Republican plan has no set premium or cost 
sharing. In other words, insurance companies would design a 
prescription drug plan, deciding what to charge you and what drugs they 
want to cover. The Republican plan will in many cases deny coverage for 
medicines that a doctor may choose to prescribe for you and would 
really require seniors to change pharmacies or change coverage.

                              {time}  2130

  The Democratic plan that we will put forth, and there are going to be 
two or three of them, will guarantee prescription drug coverage under 
Medicare. It will guarantee fair drug prices. It will guarantee a 
premium of only $25 per month, $100 yearly deductible, and the maximum 
our beneficiaries would pay under the Democratic plan out of pocket is 
$2,000 per year. Some people say that we cannot do that, that is just 
too expensive. We just provided universal healthcare service for Iraq, 
in the Iraqi bailout bill. $79 billion we spent. In there was a 
provision to provide universal health service in Iraq. If we can 
provide universal health service and prescription drug coverage in 
Iraq, can we not do it here in this country? And will it cost us a few 
bucks? You bet, because we are a much better country, but I think it is 
something our seniors deserve and we will be there.
  The Republican plan is not a real Medicare benefit. It is based upon 
a privatization model that has failed in my district and will fail 
throughout this country. We will continue to fight in the Committee on 
Energy and Commerce to ensure that every senior, regardless of where 
they live, will be able to obtain prescription drugs they require to 
live a healthy life and that this coverage will be provided through the 
Medicare program. No gimmicks, no so-called reform, which really means 
privatize it. It is going to be a straight-up proposal put forth by the 
Democrats. And I hope we can have a meaningful discussion in the 
committee, but having been here more than 10 years and having sat on 
this committee now for 9 years, the Health Subcommittee, when one party 
gets control, unfortunately any amendment put forth by the other party 
in good faith to even negotiate or bring forth a point is usually voted 
down on a party-line vote.
  So once again, as I started tonight, and I appreciate the gentleman 
yielding to me, I would ask our Republican friends who spoke a little 
earlier, let us sit down Wednesday night here and let us have a debate 
on this, what plan really covers who, what, when, where and how. And I 
think that is only fair. By then we would have a day and a half debate 
in the Committee on Energy and Commerce. We can see the shape of the 
bill, and let us come back before the American people and debate the 
merits of the plan because there is no doubt in my mind, the plan that 
we will be seeing on this House floor is not

[[Page H5402]]

the plan the Senate is negotiating in a bipartisan manner. It is a bill 
that we saw last year which is a voucher system, which privatizes 
Medicare, has a gap in coverage, and for those of us in the rural areas 
it certainly will be discriminatory towards us not only in coverage, 
but also in price.
  So with that I yield back to the gentleman from New Jersey. I thank 
him for the opportunity to be here tonight, and if he has any 
questions, I will stay for a little while longer. But I also see the 
gentleman from Washington (Mr. McDermott) has joined us. I am sure he 
has a lot of insight on this, being a physician, or a psychiatrist, I 
should say.
  Mr. PALLONE. Mr. Speaker, but still a physician. I want to thank the 
gentleman from Michigan (Mr. Stupak), and just before I yield to the 
gentleman from Washington (Mr. McDermott) because I am very pleased 
that he is with us this evening, not only because he is a physician, 
but also because he is on the Committee on Ways and Means which is the 
other committee that will be dealing with the markup of the Medicare 
bill tomorrow, I just wanted to highlight a couple things that the 
gentleman from Michigan said, though, because I think they really make 
the point so well.
  First of all, I suppose we should not give the impression that we as 
Democrats do not have an alternative to the Republican bill, and, in 
fact, we do.
  Essentially what we have said is look, we have no problem with 
traditional Medicare. We think Medicare works. We think that the only 
thing that needs to be done is to add a prescription drug benefit. So 
we as a Democratic Caucus have been saying let us just continue on with 
the existing Medicare program and let us add a prescription drug 
benefit, and we have proposed adding a new part D to Medicare that 
provides a voluntary prescription drug benefit to all Medicare 
beneficiaries and does not require them to join an HMO or a PPO or do 
any privatization or use a voucher or anything. It is very much modeled 
on part B, which pays for their doctor bills right now. They would 
simply pay a premium of $25 a month. They would have a deductible of 
$100 a year. Beneficiaries or seniors pay 20 percent. Medicare pays 80 
percent. And the most they would spend out of pocket for that 20 
percent is up to $2,000 per year at which case everything beyond that 
is paid for. And most importantly, we have a provision in our bill that 
would require the Secretary of Health and Human Services to negotiate 
price reductions.
  So I just want to put it on the table that we do not see a problem 
just adding a drug benefit for everyone to traditional Medicare and 
continuing with traditional Medicare, which has been a very good 
program.
  As my colleague from Michigan mentioned, the Senate, the other body, 
on a bipartisan basis has come up with a proposal that, in my opinion, 
is not as good as the House Democrats' proposal that I just mentioned, 
but because it does not provide as generous a benefit, I think it only 
provides 50 percent coverage of their costs and there is a higher 
deductible and there is a point when they have to pay everything out of 
pocket, but at least the other body, the Senate, has not done anything 
to privatize Medicare with their proposal. They can still stay in 
traditional Medicare. They can still get their prescription drug 
benefit under traditional Medicare. They do not have to join an HMO. 
They do not have to join a PPO.
  I mean, I obviously like what the House Democrats have proposed 
better than the Senate, but the main thing is that the other body does 
not privatize Medicare and does not require them to join an HMO or a 
PPO to get a benefit.
  We are wondering to ourselves where is all this coming from? Where 
are the House Republicans coming from, as the gentleman said, in that 
essentially they have rejected the Senate bill and they want to do all 
these things to end traditional Medicare and force seniors out of it?
  There are two theories, and I will just mention two. One is it is 
strictly ideologically driven. They are just so bent on getting rid of 
traditional Medicare because it is a Government program that they will 
not look at the practical side of the fact that it works. That is one 
theory. Maybe some of them are driven by that. The other theory that I 
have is that they are in the pockets of the drug companies. We know 
that the drug companies now are spending all kinds of money as they 
have in the past to lobby because they do not want any kind of price 
reduction. They do not want any kind of a real benefit because they are 
fearful that somehow they are going to make less money.
  So I do not know what the reason is, but the one thing that I have to 
mention is this effort to avoid any mention of price in the House 
Republican bill. And as the gentleman said, they go so far that they 
have this noninterference clause, and one of the first things that I 
did today was to try find out if they continued this noninterference 
clause that they had in the previous Congress that would prohibit the 
Secretary of Health and Human Services from negotiating price. And here 
it is, gentlemen. I am just going to read it. It says that the 
administrator of the program shall not interfere in any way with 
negotiations between PDP sponsors and Medicare advantage organizations 
and other organizations and drug manufacturers, wholesalers, or other 
suppliers of covered outpatient drugs.
  So they are going to allow the competition of the marketplace, but 
they are not going to allow the Secretary or the Medicare or Health and 
Human Services to negotiate any kind of price reductions. They are 
forbidden from doing it. And again, I say it is just because the House 
Republican leadership is just in the pockets of the drug companies.
  This was in the New York Times June 1, and it said: ``Lobbyists for 
the drug industry are stepping up spending to influence Congress, the 
States and even foreign governments as the debate intensifies over how 
to provide to prescription drug benefits to the elderly, industry 
executives say.
  ``Confidential budget documents from the leading pharmaceutical trade 
group show that it will spend millions of dollars lobbying Congress and 
State legislatures, fighting price controls'' . . .'' subsidizing 
``like-minded organizations' and paying economists to produce op-ed 
articles and monographs in response to critics.
  ``The industry is worried that price controls and other regulations 
will tie the drug markets' hands as State, Federal and foreign 
governments try to expand access to affordable drugs.''
  So I do not know if it is their right-wing radical ideology. I think 
it is probably because they are essentially being bought and sold by 
the drug companies.
  But the bottom line is we are not going to see any price reductions 
here. And the issue of affordability, as the gentleman mentioned, is 
absurd when he talks about this huge gap. Between $2,000 and $3,700 a 
year, they are going to help them up to $2,000, but once they go over 
that up to $3,700, there is this huge doughnut hole, and we know that 
that is the biggest amount of money that seniors spend.
  In other words, the biggest problem for seniors is not the 
catastrophic, which only hits a few people, or the $2,000 or under, 
which hits a lot, but most people can still afford to pay that. The 
biggest problem for the average middle class senior is this $2,000 and 
$3,700 a year. That is where they cannot pay. That is where they start 
to have to split the pills and go without whatever, and that is where 
the huge cost savings is that the Republicans are not providing 
coverage for that doughnut hole.

  I have spoken too long, and I would like to recognize the gentleman 
from Washington (Mr. McDermott) who has been such a leader on this 
issue. And I want to say one thing if I could to him. I know he has 
always been an advocate for universal health care, and I agree with him 
that that is the real answer here, but it is really sad to see that we 
have a government program that works, that at least does provide 
universal coverage for seniors and now the Republicans want to destroy 
even that rather than trying to build and provide more coverage for 
people who are not seniors. They are even trying to destroy the very 
universal coverage program we have, that at least seniors have. So I 
yield to the gentleman.
  Mr. McDERMOTT. Mr. Speaker, I thank the gentleman from New Jersey 
(Mr. Pallone) for not only yielding to me, but also for coming out here 
and doing this.

[[Page H5403]]

  I think that a lot of people in this country right now do not realize 
how important tomorrow really is. This is the first time when we have 
got both the House and Senate working on the same issue, and my belief 
is the President of the United States has told them bring me a bill or 
you are never going home, because he knows if they do not do something 
on this issue of drug prescription prices and access to prescriptions, 
they are going to wind up losing the next election on that issue alone. 
So they are going to do something. So it is very important for people 
to watch what is going on here.
  What is fascinating about what we are hearing tonight, we have heard 
my colleagues from Michigan and New Jersey talk about what is going on 
over in the Committee on Energy and Commerce. There are about 45 people 
over there, sitting and making amendments and working away and putting 
together a pie; and then over in another part of the building, there 
are another 50 of us in the Committee on Ways and Means.
  We are making our pie, and somehow those pies have got to be put 
together. We cannot pass them both. So where is the real pie going to 
be made? I mean that is the question that people ought to wonder. Is it 
going to be in the Committee on Rules? Is what is going on in these two 
committees just for show? And then ultimately the majority leader will 
bring out the bill and say here it is, rubber-stamp it and let us get 
out of here. I think this process, as we listen to this, we realize why 
this is such a difficult process.
  One of the things that my distinguished colleague from New Jersey 
brings up and echoed by the gentleman from Michigan, this business 
about the Secretary of Health and Human Services, on behalf of us as 
Americans, us taxpayers, is absolutely by law prohibited from going in 
and doing any negotiation. Now, when the Government negotiates for the 
Veterans' Administration, it is all right; and when the Government 
negotiates for a lot of other places, but in this one area we are going 
to put a fence around the pharmaceutical industry and say we are not 
going to use the power of the Government.
  Now, that is one part of the bill. Then we go down a little further 
where the Republicans are promising that there will be two choices in 
everybody's district. Well, that is nice, but we have already heard 
from the gentleman from Michigan. Everybody knows what happened with 
the HMOs. Everybody was promised there will be a lot of HMOs and they 
will go out there and they will be competing. And pretty soon there was 
one and then there was none, and most people do not even have an HMO 
anymore.
  So this idea that there are going to be two competing plans out there 
is a really nice idea. The insurance industry said we do not want it 
because we have never done this and we do not want to get into this. So 
the Republicans figured out a way to make it appealing to them. They 
said, look, go out there and be one of these companies and we will take 
90 percent of the risk and they can take the profit. But, remember, 
once we have cut that deal with them, our Secretary of Health and Human 
Services on the side of the Government cannot even go in and negotiate 
as a part of something he is accepting 90 percent of the risk on. I 
mean, boy, talk about buying a pig in a poke. I cannot imagine a more 
senseless kind of arrangement for them to be trying to deal with this 
problem of pharmaceuticals.

                              {time}  2145

  Now, I think the other thing that people have to really understand, 
and I think the gentleman has already alluded to it, I sat on the 
Medicare Commission several years ago. We were planning to do some 
revamping of Medicare. It became very clear very soon that the 
leadership of that committee was interested in only doing one thing, 
and that is getting rid of the traditional Medicare program and giving 
everybody a voucher.
  Right now, seniors have a guaranteed set of benefits, things that 
they can count on, and what was going on in that Medicare Commission 
was how can we shift from these guaranteed benefits to a guaranteed 
contribution. Those are all fancy government words. What that means is 
they looked across and said, how much is being spent all across the 
country? Well, the average is $4,500, so we will give $4,500 to every 
senior citizen in this country and let them go out and individually 
find an insurance company that will take them.
  The government is not going to stand up and fight for them. The 
government is not going to try to drive down the prices. It is on you, 
grandma. Here is your $4,500, there is the street and the door, and go 
start. Go look.
  Now, anybody who looks at that says to themselves, this cannot 
possibly work, anybody who has a parent. My dad died a few years ago, 3 
years ago, at 93, and my mother is now 93. The idea of handing my 
mother a voucher and saying, Ma, you have got to go out and find 
yourself an insurance company, is so crazy, it shows so little 
understanding of older people and what their needs are. They do not 
want more choice; they want certainty.
  My mother every once in awhile will call me up, there be some mail 
come up, and she will say, ``Jim, could you come over here and read 
this brochure and tell me if I should get into this or not? I don't 
know if it is a good idea or not.'' She cannot make those kind of 
decisions for herself. She is having a little trouble with her memory 
at 93.
  She will say, ``You know, I used to be able to remember some things a 
lot better than I do now.''
  You are going to send my mother out looking for this? Luckily, she 
has four kids in Seattle, so we will be there to help her. My mom will 
be taken care of. But there are a lot of older people in this country 
who are not fortunate enough to have somebody around to help them 
through this mystery that we are creating here for them.
  Now, another funny thing about this, people have to really 
understand, in the Committee on Ways and Means, they have already 
written the bill. The bill is already printed. I heard about it because 
I said to one of the Republicans, ``Hey, what is in the bill?'' So he 
told me. He is giving me all of this stuff. I said, ``Is it written 
down somewhere? Could I go look at it?''
  He said, ``It is upstairs in a locked room. If you go in there, you 
cannot take any paper or pencil or anything, and you can just read it, 
and that is all.''
  So I asked the chairman, ``Could I get in there?''
  He said ``No.''
  I said, ``Why not?''
  He said, ``Because you would go outside and tell the press right 
away.''
  Now, here is the major social program in this country. I have been 
here 15 years, 13 years on the Committee on Ways and Means, and I am 
not given access to look at it one day before it is going to happen 
tomorrow.
  Mr. PALLONE. I know the gentleman was on this Medicare Commission, 
and the commission basically rejected by a vote this voucher proposal. 
I just wish we could just develop it a little more, because I think 
this is the one thing that people just do not understand, that they 
probably would not even believe what the gentleman just said.
  If I went to my constituents and asked five of them, did you hear 
what the gentleman from Washington (Mr. McDermott) said, they would not 
believe that is what the House Republicans are proposing. But it is, in 
fact, what they are proposing in this bill.
  I basically said to a couple of my Republican colleagues exactly what 
the gentleman said. This was their response. I said, see if we can 
develop it. They said well, it is not exactly like that. I said, ``What 
happens if there is not anything? What happens if the senior goes out 
and tries to take this $4,500 voucher and tries to buy this private 
health insurance and it is not available?'' They said, ``Oh, it will be 
available, because we will make it profitable for them to go into this 
business.''
  So, on further reflection, I understood. I wanted to get the 
gentleman's comment on this. What they will do? Because there is no 
defined benefit. Right now if you get Medicare, you have to get certain 
benefits and certain things. They will simply reduce the benefits. So 
maybe somebody eventually will be out there who will take the $4,500 
and give your mother the insurance, because they will not provide what 
Medicare now provides. They will just cut back on the level of 
benefits, what she gets, whatever. So eventually

[[Page H5404]]

there will be some junk plan out there for her to purchase, because 
somebody who is looking to make a buck will come up with something.

  But then my understanding is that, let us say that she can find some 
junk plan that does not provide any benefits that are meaningful or 
does not operate in a meaningful way. If she wants to stay in 
traditional Medicare, they are going to charge her more to do it. She 
will not be able to go back to the traditional Medicare because they 
will charge her the difference. They may charge her $500 or $1,000. She 
will be forced with the junk plan.
  I want the gentleman to develop it a little. We do not really know.
  Mr. McDERMOTT. The bill is going to come out of your committee, but 
the one in our committee, I understand there is a provision in it that 
sets this as a goal for 2010. They are going to put it in the bill now. 
They figure everybody is going to forget about it. It will not affect 
anybody, so nobody will jump up and down before the next election, 
because 99.9 percent of the people will not understand it is in there, 
because it does not affect them.
  What they want is to get it in place and started out there, and every 
imaginable problem one can think of I think will happen, because how 
does my mother, or how do I know what I should say to my mother? 
Mother, you should buy this plan.
  Let us say they are in Seattle and there are maybe three plans, so we 
have some choice. And I say this one is a little more expensive, this 
is less expensive, this is really expensive. How do I know which one to 
tell her she should take? Do I know what her health care needs are 
going to be over the next 5 years?
  Mr. PALLONE. But, at the same time, even though this is not until 
2010 for the voucher for Medicare in general, they are essentially 
doing the same thing with prescription drugs. If you want to get a 
prescription drug benefit, you would have to join one of these private 
plans, or whatever it is. Otherwise you do not get the benefit.
  So, by luring people with the prescription drug benefit, that that is 
the only way they can get it, if they go out and buy this drug only 
policy or join an HMO, effectively they are doing the same thing before 
2010.
  Mr. McDERMOTT. They are using the drug benefit as a come-on. You see 
these ads from automobile sales, sales at Sears or something. There is 
always something that looks really good. It is a come-on. They are 
going to get people on the drug thing, because that is the thing people 
are hurting on most. But they have not looked at what it does to the 
other part of it, which takes away the benefits.
  The home health care, that will be such a target to get rid of. Why 
have home health care? Either be in the hospital or go to a nursing 
home. Why should we be wasting our money? Can you just imagine how they 
would cut the benefits? You are in home health care and you have to 
take medication, and instead of having somebody come twice a day, if 
they might need to, you come every other day.
  It is all those things that will be cut, little by little by little 
by little, and you and I will be stuck with our parents and their 
problems. Neither of my parents have cost me a dime.
  Mr. PALLONE. Me neither.
  Mr. McDERMOTT. We bought a hearing aid for my mother. It cost $800. 
My brothers and I and my sister each threw in $200 and bought her a 
hearing aid. That is the only thing we had to do. People do not 
understand what they are cutting away now.
  Mr. PALLONE. I yield to the gentleman.
  Mr. STUPAK. As you were saying, if the Secretary of Health and Human 
Services cannot negotiate, so we give your mother, who is 93 years old, 
this voucher, who negotiates for her? It is $4,500. There is no 
guarantee it will not go up. What happens if it does go up?
  So how do these plans, who are not under the care of the government, 
keep your costs down? They will restrict the access to the 
pharmaceuticals, because that is the most rapidly rising part of health 
care. So instead of providing that benefit, they will provide you with 
a voucher to take care of all your health care needs and then for the 
prescription drugs, if you have some left over, but only if that plan 
will cover the prescription drug you need.
  It is really crazy. Any drug that is not in the plan's formulary 
would not be covered. Beneficiaries would have to pay then 100 percent 
out-of-pocket of the costs of that drug because it is not in their 
plan, it is not in that voucher that they got. I think the gentleman 
from Washington makes a great point, how do we know what mine, yours or 
your parents' health care needs will be 3 or 4 years from now? Once you 
go into these plans, can you come back in to traditional Medicare? 
Probably, but at a cost you cannot afford.

  So, the points brought up tonight are well taken, and I appreciate 
the gentleman coming and joining us from the Committee on Ways and 
Means. As you do your markup, we will be doing ours. And do not feel 
too bad. Those on the Democratic side, we have not seen the Republican 
proposal. We know we will see it tomorrow at 1 o'clock. Then we will 
make some statements about it, and then when the real markup begins, 
they will slip a substitute in there so we will be scrambling to make 
sure our amendments are corresponding to the bill, but we do not even 
have the courtesy to see it before we even begin this markup. Probably 
the greatest program we can put forth right now is prescription drugs. 
Our parents, we, everyone needs it. But yet here we are, the night 
before the beginning of the markup, whether it is the Committee on Ways 
and Means or the Committee on Energy and Commerce, and we cannot see 
the bill.
  Mr. PALLONE. We are speculating upon what is in it.
  Mr. STUPAK. We are basing it upon past years' experience.
  Mr. McDERMOTT. It is like the story about the eight blind men 
describing an elephant. One is describing the leg, one is describing 
the trunk, and one is describing the ears. We really do not know what 
we are going to do tomorrow. They are going to try to come out here and 
run flim flam on people. ``You are going to get a drug benefit.'' What 
it is worth, or is it worth anything, people will have no idea. It will 
just be a line in a campaign ad.
  Mr. PALLONE. I think I have been longer than even you.
  Mr. McDERMOTT. I think you and I came together.
  Mr. PALLONE. Maybe. You remember before we came, the Congress had 
passed a catastrophic health care bill, and then, when we came, there 
was the clamor to repeal it and it was repealed. Essentially it reminds 
me of that, where the Republicans are saying we are going to give you a 
drug benefit, but when you look at the details, it is probably going to 
be a benefit that is not even worth the paper it is written on. For the 
next few years, everybody will think they are getting it. When it kicks 
in, they will realize it is not even worth having, and they will be 
outraged. That is what we faced when we came in 15 years ago, or 
whatever it is.
  The other thing that is really bothering me, I listened to our 
Republican colleagues earlier and they talked about how Medicare is 
broke and it has to be fixed. The biggest problem with Medicare now is 
they are borrowing from the trust fund. If anything, they are going to 
make it go broke, because they keep borrowing it to pay for other 
costs. When my colleague from Washington mentioned the voucher, all I 
kept thinking was how this becomes budget driven.
  In other words, say you give them $4,500 now. But next year, when 
they say we do not have the money for that, we cannot afford $4,500, so 
maybe you will continue to get the $4,500, but inflation will not keep 
up with it. Once you get into that voucher type system, you can 
regulate how much the government spends and just limit the amount of 
the voucher or the amount of the program so that essentially the whole 
Medicare program becomes budget driven, rather than what the real cost 
is. It is a way for them to calculate the cost and have it be budget 
driven. It is a very dangerous precedent.
  Mr. STUPAK. The gentleman from Washington said when we get these 
bills tomorrow, we will start working on them, and we are not sure 
where we can go with them.
  I think we can guarantee the American people a number of things we 
will not do. We will not provide a voucher system. At least the 
Democrats will fight to make sure there is no voucher system.
  We will not privatize Medicare and shift you into an HMO or some 
other

[[Page H5405]]

insurance company plan, Medicare-Plus, Medicare-Choice, whatever it is 
going to be.
  We will make sure that any prescription drug plan, at least from our 
side of the aisle, will not have a gap in it, so those who have from 
$2,000 to $3,700 out-of-pocket cost will not be paying a premium and 
get nothing in return for it.
  We know that the plan we will be seeing tomorrow, whether it is Ways 
and Means or Energy and Commerce, is not the bipartisan plan being put 
forth by the Senate. In fact, in Energy and Commerce we will probably 
put that plan forth in a bipartisan manner to try to get a plan that 
will truly work.
  We Democrats will continue to fight to make sure and ensure that 
every senior, regardless of where they live, will be able to obtain 
prescription drugs that they require to live a healthy life, and this 
coverage will be provided through a Medicare program that cannot be 
taken away or you are priced out of it.
  Mr. PALLONE. I wanted to say when the gentleman was talking about 
rural areas before, I want to thank the gentleman for joining us, when 
the gentleman from Michigan was talking about rural areas, because I 
know your district in the northern part of Michigan, I have actually 
been there, is very rural. But the bottom line is you take my State, 
because you even mentioned HMOs may exist in densely populated areas. 
Of course, New Jersey is the most densely populated State in the 
country.

                              {time}  2200

  But what the gentleman mentioned about HMOs dropping seniors has 
happened in my State, in my district dramatically over the last few 
years. We have had, I think, something like 80,000 seniors in New 
Jersey who were in HMOs and who joined in order to get a prescription 
drug benefit who have been dropped. So I understand what the gentleman 
is saying, that rural areas in particular have a problem because they 
may not even have an HMO or PPO; but even in as densely a populated 
State like New Jersey where we have them, they have dropped the seniors 
at will. It is almost a joke to suggest that somehow, no matter where 
one is in the country, that these HMOs are going to provide a 
meaningful drug benefit. We do not know that they will.
  Mr. STUPAK. Well, we have sat through the budget battles, the 
gentleman and I, and through the committee now for about 10 years; and 
we have seen first to start out was Medicare Choice, Medicare+Choice, 
Medicare Access; they always have these nice names. They said, okay, so 
many seniors can go into it. Every year we have never hit the target 
yet for what we have provided as an experiment. Because what happens is 
that they come in, start to insure in an area, see the costs are going 
up a little too much, and then they pull out, and then the seniors have 
to scramble to try and get coverage, and it just has not worked at all.
  Mr. Speaker, it is not going to work for prescription drugs; and let 
us face it, they are going to get a prescription drug plan and if they 
take their plan, they are going to give up traditional Medicare, get a 
privatization of it, a voucher with a gap for prescription drug 
coverage. It is not going to work. It is not the Senate plan. They are 
not even guaranteed a price, and no one is there to help them out. They 
are on their own. This choice sounds great; but what seniors want is 
the security that Medicare provides, not some choice that they cannot 
understand or be able to predict what is going to happen 3 or 4 years 
from now.
  Mr. PALLONE. Mr. Speaker, I really want to thank the gentleman, 
because I think that what the gentleman pointed out is that we are not 
ideologically driven in the way that the Republicans are on the other 
side. We just want to do what is practical.
  The bottom line is we know that this privatization does not work. 
Medicare started back in the 1960s because most seniors were not 
insured and they could not get coverage, so the notion that you are 
going to get a voucher and go out and buy health insurance privately, 
it did not work 30 years ago, and it is not going to work today any 
more than it did then.
  The same is true with the HMOs. We have had the experience with the 
HMOs, and they have dropped the seniors. I think in here they even make 
permanent the medical savings accounts, another thing that they talked 
about a few years ago which has not worked out. I think there are only 
a few thousand of them around the country, yet they are talking about 
them again.
  The bottom line is that we as Democrats want to keep traditional 
Medicare. We just want to add a prescription drug benefit, and we want 
to make it one that is affordable and that everybody can take advantage 
of. And to the extent that the Republican proposals here in the House 
do not measure up to that, we simply have to speak out and say that it 
does not measure up and we should not allow them to destroy traditional 
Medicare.
  Mr. Speaker, I want to thank the gentleman again.

                          ____________________