[Congressional Record Volume 149, Number 89 (Tuesday, June 17, 2003)]
[Senate]
[Pages S7944-S7947]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       PRESCRIPTION DRUG BENEFIT

  Mr. DASCHLE. Madam President, I commend the distinguished majority 
leader for his statement and for the effort he has made to bring the 
debate on prescription drugs to the floor over the course of the next 2 
weeks.
  I share his hope and his goal that by the end of this period, we can 
have achieved what I think all Senators want--a good, vigorous debate 
about what is the best approach to take with regard to a prescription 
drug benefit under Medicare--and complete that debate prior to the July 
4 recess. I have indicated to him personally that it would be my 
intention to work with him to accommodate that goal. I do hope we can 
move to the amendment phase of the debate sooner rather than later, 
preferably this afternoon.
  I also commend Senators Grassley and Baucus for their effort in the 
Finance Committee. The vote of 16 to 5 was an indication of their 
success in accommodating the concerns and the ideas of many of our 
colleagues. They have worked on this for a long period of time and I 
think deserve our commendation for the effort they have made on a 
bipartisan basis. During the committee process, I indicated it would be 
my hope that I could work as vigorously as they did in achieving the 
bipartisan tone that was accomplished during the markup last week.
  I must say, I do not share the enthusiasm for the legislation that 
some of my colleagues do, and I wish to talk about that this morning. 
We may have a different perspective on how close this may be, but I 
also recognize that we have made the perfect the enemy of the good at 
times, and I do not want to do that in this case.
  I hope we can make a good down payment. I hope we can achieve a 
start. I have been concerned about how shaky a start this may be, but 
it is a start. If we are going to commit $400 billion over the next 10 
years to provide meaningful drug benefits, I hope we can do so 
maximizing the use of those resources, providing the most efficient 
utilization, and a mechanism, an infrastructure, for prescription drugs 
that will accommodate many of the goals and hopes we have for at long 
last modernizing Medicare in a way we know must be done.

  I hope we do not overpromise. It is so easy to make proclamations 
about how good this accomplishment is, and I think we may create false 
expectations, high expectations, for this legislation that just will 
not be realized once the full impact of the bill is felt in the 
countryside.
  Some have said, for example, that this is just like FEHBP, the 
Federal Employees Health Benefits Plan, for Senators. It is not. There 
is about a $1,000-a-year difference in the value of benefits between 
what Senators get and what seniors are going to get.
  To do what Senators get, we are told by economic analysts, it would 
take about $800 billion over a 10-year period, not $400 billion. So 
this is not FEHBP. This is something substantially below FEHBP.
  We also must acknowledge that a senior who has $5,000 of drug costs 
will get a benefit of about $1,700; $3,300 will still come out of 
pocket out of that $5,000. So people need to be aware this is not 
FEHBP; that this is not going to address all of the concerns and needs 
that seniors have with regard to their drug costs.
  Having said that, I believe we put down a marker, we set a 
foundation, and we should work with the administration and with 
especially the Department of Health and Human Services to address some 
of these concerns, and over time I believe we can make this an even 
better bill. Whether it is in the next 2 weeks, the next 2 months, 2 
years, or 2 decades, we are going to make this a better bill, a better 
program.
  There are a number of concerns I have with regard to how we can make 
it better that I hope we can address through amendments. The first 
amendment Democrats will offer is simply to give seniors more choice; 
to say to them: You can pick a private sector plan if you wish, but we 
also think you ought to be able to pick a plan that is strictly a 
Medicare plan; that you can simply extend your current Medicare 
benefits for doctors and hospitals to

[[Page S7945]]

prescription drugs as well, and that should be an option for you as you 
make your decision with regard to what choices may be right for you. 
That will be one of our key amendments. As I said, it will be our first 
amendment.
  I am concerned as well about the volatility of premiums. There are 
those who suggest there will not be much variation, and yet in 
testimony we were given just last week during the markup, the experts 
told us they could not guarantee there would not be great volatility.
  We are concerned about the past example of Medicare+Choice, the 
premium for such plans can cost $16 in Florida and cost $99 today in 
Connecticut. That variation is what we are afraid could be part of this 
plan unless we do something about it.
  Seniors are going to have four cost issues about which to be 
concerned. The first is the premium. The second is the initial cap on 
benefits and the stop-loss; that is, at what point do they lose all 
coverage and at what point do they get catastrophic coverage--and I 
will get to that in a minute, the gap when they pay all of the costs. 
They will also have co-payments and the deductible. All four of those 
variables could change dramatically. The deductible is currently $250, 
thereabouts, in the bill, but it could go up. The co-payments are 50-
50, but it could go up. The stop loss is around $3,700 out-of-pocket. 
That could change. And you have, of course, the premium itself which is 
estimated to be $35, but there is no guarantee.

  There is no defined benefit. One plan could have a lot more benefit 
than another. And seniors in their late eighties or early nineties are, 
I think, going to find it very confusing with all these variables with 
regard to their costs and also extremely different options and 
variables when they get to their benefits. So there is no defined 
benefit.
  As I say, there is still a large issue with regard to the benefit 
falloff, the initial benefit cap for the package overall. It has been 
described as a donut hole, a coverage gap, but the benefit cap, the 
benefit stop that kicks in at about $4,500 in drug spending, will mean 
that seniors between $4,500 and at least $5,800 are going to have to 
pay all of the premium costs and get no benefit whatsoever during that 
period of time. So we are going to have to deal with that as well, it 
seems to me, and that is a function of cost.
  We also have another issue about which we are concerned. We are told 
by CBO that 37 percent of beneficiaries--this is CBO--37 percent of 
beneficiaries with retiree prescription drug coverage will lose it 
under this bill; 37 percent, one out of three retirees, one out of 
three at least. I guess you could not say necessarily it is one out of 
three employees; it could be more than that.
  Thirty-seven percent of beneficiaries with retiree coverage today 
will lose that prescription drug coverage when this bill kicks in. 
There is only one way to stop that from happening: To incent employers, 
to try to discourage them in as many ways not to drop that coverage, 
and we are going to try to do that.
  The way we write the language on how retirees can be dropped, the way 
we incent employers by providing them with benefits to keep that 
coverage--we are going to try to do that as well. To provide 100 
percent of the incentive it is going to take for companies not to drop 
their employees would cost more money. This bill currently has some. So 
we are going to see if we can get closer to that full amount to ensure 
that we do not find any more companies than absolutely necessary or 
possible that will drop their employee benefits.
  So we have a number of significant concerns about the way this is 
written, about the benefits, about the uncertainty, about the costs, 
about whether or not Medicare can play more of an upfront role.
  We have one other issue, the volatility of the benefit itself. South 
Dakota is a good example of a concern that many of us have. In South 
Dakota we do not have any Medicare+Choice. Companies do not want to 
serve the rural areas. So we are concerned about what it is going to 
take to bring companies into South Dakota to compete for the benefit 
plan to be provided in our region. If we cannot find anybody, under the 
bill, Medicare kicks in for 1 year. Once Medicare has kicked in, at the 
end of 1 year's time, these private companies can come back in and the 
Medicare plan that seniors had counted on for that year no longer would 
exist and there would be competition again for the private sector plans 
competing if they wish to serve that particular area.
  So there is this constant change. If there is anything seniors do not 
like, it is change and this uncertainty that comes with change.
  Not only that, we learned last week another disconcerting aspect of 
this. A decision would be made sometime in September on whether plans 
would exist for the coming year. If it can be determined by September 
that the plans cannot be put into effect for that coming year in a 
given region, then what happens is Health and Human Services 
establishes a Medicare plan, but they have to contract with a private 
company to provide that Medicare plan for the following year beginning 
in October.
  So what happens under the bill between October and January is this: 
They find out first that no two plans can compete, so the Medicare plan 
is supposed to kick in. They contract for the Medicare plan, decide 
what the premium, the benefits, the stop loss, and the deductible are 
going to be. They somehow notify all the seniors in the region. They 
begin to try to implement the plan between October and December and 
make all of these decisions with regard to plans, benefits, 
notification, implementation, and administration. Technically it is 
supposed to kick in on January 1.
  Now, if my colleagues have seen Government work that fast in any 
other area than perhaps a military intervention somewhere, I would like 
to see where it is. I am very concerned--frankly, extremely concerned--
about whether or not that is even humanly possible.
  Keep in mind, this is not going to be a one-time experience. We are 
going to repeat this every single year perhaps. We are going to make a 
decision in every region whether or not these plans can compete. 
Whether it is Alaska or South Dakota, my guess is they will not find 
them. They will then say, okay, we are going to have 3 months to fully 
implement a Medicare fallback even though we do not know who the 
contractor for that Medicare fallback will be on October 1.

  So I have to say, as we walk through a lot of these concerns, my 
colleagues will understand why many of us worry about setting these 
high expectations and then find out how seniors will deal with them and 
address them in a way that does not cause confusion, fear, anxiety, 
frustration that is so unnecessary if we would just do this right.
  Mr. DURBIN. Will the Democrat leader yield for a question?
  Mr. DASCHLE. I am happy to yield.
  Mr. DURBIN. I ask the Democratic leader, as a member of the Senate 
Finance Committee which is deliberating on this 653-page bill, if he 
would acknowledge or at least respond to the following: I believe the 
positive aspect of this is that for those who started out this debate 
saying we are going to eliminate Medicare, that Medicare is going to be 
replaced with a private plan, private insurance, that argument is out 
the window. Medicare recipients will be able to continue their basic 
Medicare coverage for hospitals and doctors. It will not be an either/
or situation. I think that is positive.
  We have finally reached a point where we have an honest debate over 
prescription drugs, and I think for those of us on this side of the 
aisle who have been pushing for it for so long, those are two very 
positive aspects of this debate. I ask the Democratic leader if he 
would agree with that.
  Mr. DASCHLE. I would certainly agree with that, and before the 
Senator came on the floor I commended those responsible for making this 
a better bill and bringing us to this point. I think that while perhaps 
it is a shaky start, it is a very important start and we can deal with 
all of these other issues. Those are two issues we have dealt with, and 
I am grateful for the fact that we have made progress.
  Mr. DURBIN. I want to ask the Democratic leader three specific 
questions about this bill that I think go to the heart of the challenge 
we face.
  It is my intention to vote for this bill but also vote for amendments 
which I think will improve it. First, the cost of

[[Page S7946]]

prescription drugs goes up 10 to 20 percent a year, and as these costs 
rise, seniors are paying more out of pocket. In 653 pages of 
legislation, how much is dedicated to controlling the costs of drugs, 
keeping them affordable, not just for seniors but for all American 
families?
  Mr. DASCHLE. In response to the Senator from Illinois, some of the 
bill's proponents would say that is what they hope to achieve through 
competition, but we have not seen that work. Medicare+Choice was 
supposed to be competition, and it has not worked.
  What we need to do is to have real competition with a Medicare 
benefit plan that will kick in, that will allow us to compare what 
could be done in the private sector with what could be done in the 
public sector. We have seen real cost containment in the Veterans' 
Administration. We have seen it in the Defense Department. To a certain 
extent, we have seen it in other governmental agencies, such as the 
Indian Health Service. We have not seen it yet with Medicare+Choice. 
That is No. 1. No. 2, we will be offering an amendment offered at least 
by Senators Gregg, Schumer, and others on access to generic drugs which 
will give people an option to buy the generic version of a given drug, 
and that will help. Senator Dorgan will offer an amendment for 
reimportation of drugs sold cheaper in other countries to allow greater 
cost containment. Those three things could go a long way to addressing 
the issue of costs more effectively, and that is what this amendment 
process is going to be all about.

  Mr. DURBIN. The second question is: When seniors have to figure out 
whether or not they want to get involved in this program, they have to 
make a calculation: Is it worth it to pay a premium each month and face 
a deductible at the end of the year? Will I be ahead or behind? As I 
understand it, we have heard a lot about a $35 monthly premium, but 
that is not mandated in this bill. There is no requirement that it be 
$35 a month. It could be considerably more. The $250 deductible that is 
in here I guess could be changed as well. So for the seniors who are 
trying to decide whether this makes sense based on their personal 
budgets--and that is what it comes down to--have we not created kind of 
a moving target as to what this is going to cost each senior across 
America?
  Mr. DASCHLE. Well, there is not only one, there are four moving 
targets. The first moving target, as the Senator suggests, is the 
premium. It is suggested it be $35 a month, but there is no guarantee. 
It could be $100. It could be $20. No one knows. They will not know 
until they are able to determine just what it is going to take to bring 
a benefit to a given region. That is only the first.
  The suggested deductible is $275. There is no guarantee. Nobody knows 
whether it is going to be $500 or $100. There is no guarantee on the 
copay. It is supposed to be 50/50. It could be 70/30. There is no 
guarantee on the so-called initial cap on benefits, or the benefit loss 
at some point, whenever that kicks in. It could be $4,500. It could be 
different. That is the benefit cap beyond which one has to pay all of 
the costs of a prescription drug.
  So there are those four variables. As the Senator suggests, more 
clarity and certainty in this legislation would go a long way to 
eliminating a lot of the anxiety seniors have about this.
  Mr. DURBIN. The last question I will ask the Democratic leader--and I 
see others are in the Chamber--it is my understanding that when 
Medicare was created under President Johnson, from the date of the 
passage of the legislation until Medicare went into effect was less 
than a year. It is also my understanding that this prescription drug 
protection, whatever it offers, is not going into effect until 2006--is 
my understanding correct--after the next election? Is that correct?
  Mr. DASCHLE. Unfortunately, the Senator is correct. Some suggest it 
takes that long to set up the infrastructure, but as he also noted, 
Medicare took 11 months. When we established Medicare, 11 months later 
it was up and running. If an entire health care system can be developed 
with a payment regime for doctors as well as hospitals--and I might add 
there were two different payment regimes, Part A and Part B--in 11 
months, I do not understand why it would have to take 3 years for us to 
do this. But that is what is incorporated in the bill.

  Mr. DURBIN. I say to the Democratic leader, those are the three areas 
that jump forward as you look at this bill, the uncertainty in terms of 
cost, the complete lack of cost controls and reduction in prices for 
prescription drugs for American families, and the fact this is being 
delayed until after the next election strikes me that those who are 
proposing this are afraid once seniors actually see these uncertainties 
they may decide this is not as good a bargain as they had hoped.
  Although this is a step forward, the alternatives we will offer on 
the floor are going to create more certainty, more price competition, 
and a better approach for seniors.
  I thank the Democratic leader.
  Mr. NELSON of Florida. Would the Democratic leader yield for a 
question?
  Mr. DASCHLE. I am happy to yield.
  Mr. NELSON of Florida. Recognizing that several States, including the 
State of the distinguished Democratic whip, Nevada, have implemented 
prescription drug plans of which they were not able to get any 
insurance company to step forward to offer prescription drugs under 
that plan because the insurance companies could not make any money, are 
we likely to see this revolving door the distinguished Senator from 
South Dakota has talked about, that two companies are supposed to 
compete and offer prescription drugs to the senior citizens but they do 
not step forward, and they go back to the backstop, which is the 
Medicare plan, and then there is the thought they will step forward 
again but they don't, and then they backstop back to the Medicare 
prescription drug plan? Does that suggest not only uncertainty but 
chaos?
  Mr. DASCHLE. The Senator from Florida has put his finger on one of 
the big concerns many Members have, the volatility, as he called it, 
the revolving door.
  What private insurance companies have stated in the past, insuring 
drug coverage for seniors is almost like insuring for a hair cut. A 
hair cut is inevitable. So is the utilization of prescription drugs for 
seniors. Because we cannot make the actuarial analysis work, there is 
no choice; either not to go in or to be significantly subsidized to 
make a profit, to make this work. That is why for so long we have not 
seen Medicare+Choice work very well. It has not been adequately 
subsidized and ultimately people have just not found it in their 
interest to sign up.
  What we have seen is that the Medicare system has worked, has served 
this segment of our population very effectively, and we are simply 
trying to ensure that there is some stability. If seniors want to stay 
with Medicare, let them do so, rather than this revolving door, rather 
than being the guinea pigs in the private sector to find a way to 
devise a formula, where some private insurance companies could offer 
benefits that may or may not work over a period of years.
  This process of selection and deselection and analysis and ultimately 
implementation in a matter of 3 months every year could pose some 
serious problems for seniors in Florida or South Dakota.
  Mr. NELSON of Florida. Therefore, we could clear up that uncertainty, 
stop that revolving door, if, in fact, we gave seniors the automatic 
choice they could get their prescription drugs through Medicare, but if 
they had a better option, a more favorable menu of prescription drugs 
in the private sector, they could opt for that?
  Mr. DASCHLE. That is exactly what we would be suggesting with the 
first amendment the caucus will propose. The distinguished Senator has 
characterized it exactly right. Why not give seniors a little more 
choice? But with that choice, perhaps a little more certainty that 
regardless of what may happen in the private sector they will always 
have the Medicare plan available as a choice. That is all we are 
asking. If Medicare cannot compete effectively, no one will use it and 
everyone will go to the private sector. If it can compete, if it can 
provide a comparable benefit, why not have it, instead of going through 
this backup business every year.
  That will be a key priority amendment for us when we have the debate.
  Mr. NELSON of Florida. I would like to ask one more question of the 
distinguished Democratic leader. At the end

[[Page S7947]]

of the day, if we are not able to improve the bill with some of these 
amendments that have been discussed, it is either yea or nay. If we 
know that this kind of chaos and uncertainty is coming down the road 
when the legislation kicks in in 2006, is the theory of the Senator 
from South Dakota that half a loaf is better than no loaf at all?
  Mr. DASCHLE. I have come to the conclusion, that this may not even be 
half a loaf but it is a start. As a start, it affords an opportunity to 
come back in 2 months, 2 years, within the next two decades, and gives 
us a chance to build. It has the elements of a foundation upon which we 
can improve a system of prescription drug health care delivery to 
seniors for the first time in our lifetime, for the first time in the 
lifetime of Medicare. That to me is a valuable asset to put in the bank 
so that I am prepared to accept the many deficiencies in this bill in 
an effort to get something started.
  I don't expect I will enjoy unanimous support for that point of view 
within our caucus, perhaps within the Senate. But it seems to me we 
have to start somewhere. If we fall victim to making the perfect the 
enemy of the good, then I believe we will have lost yet another year 
and there will be no help for seniors under any circumstances. I don't 
find that acceptable.
  Mr. NELSON of Florida. I thank the Senator from South Dakota.
  Mr. DASCHLE. I yield the floor.

                          ____________________