[Congressional Record Volume 149, Number 89 (Tuesday, June 17, 2003)]
[Senate]
[Pages S7960-S7974]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   PRESCRIPTION DRUG AND MEDICARE IMPROVEMENT ACT OF 2003--Continued

  Mr. BENNETT. Mr. President, I ask unanimous consent that for the 
duration of today's session, S. 1 be available for debate only, with 
the time until 6 o'clock today equally divided as under the previous 
order.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, it is clear from this unanimous consent 
request that we are waiting for CBO scoring on the Medicare bill. That, 
it is my understanding, will not be in until very late tonight. So as I 
understand this unanimous consent request, if we extend the time past 6 
tonight, it still will be for debate only on this matter; is that 
right?
  Mr. BENNETT. I say to the Senator, my understanding is the same as 
his, but I am not in any position to make a commitment.
  Mr. REID. I would advise Members I don't think they can expect at 6 
o'clock to start offering amendments. I don't think the bill will be 
ready at that time. So if we do go past 6 o'clock, I am confident it 
will be for debate only.
  But I agree to the request at this time, that until 6 o'clock today 
the time be equally divided as requested by the Senator from Utah.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, if I could, through the Chair, ask the 
Senator from Utah if the Senator from Utah is going to speak on the 
bill at this time?
  Mr. BENNETT. That is correct.
  Mr. REID. I ask unanimous consent that following his statement the 
ranking member of the Budget Committee, Senator Conrad, be recognized 
to speak on this legislation now before the Senate.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  The Senator from Utah.
  Mr. BENNETT. Mr. President, we are debating the substance of the bill 
that came from the Finance Committee with respect to a prescription 
drug benefit for Medicare. We all recognize that providing a 
prescription drug benefit for Medicare is long overdue, something that 
has been needed badly for a long period of time. I am heartened by the 
bipartisan nature of the vote that came out of the Finance Committee.
  I am reminded of an occasion when I first came to the Senate and we 
began debating health care. I fell in step with the then-chairman of 
the Finance Committee, Senator Moynihan from New York. Senator Moynihan 
is one whom I met when I was first serving in the Nixon administration 
and he was serving as the domestic counselor to President Nixon. I felt 
close to him from then on.
  As we walked through the door into the Chamber, I said to him: Pat, 
do you think we are finally going to get some health care reform this 
year?

[[Page S7961]]

  And he said: Yes, I do. In the Nixon administration the President 
wanted it and the Democrats in the Congress said no. Later on--I 
believe he referred to the Carter administration--the President wanted 
it and Republicans in the Congress said no.
  He said: This time, the President wants it and the Congress wants it 
and I think we are going to get it done.
  He turned out not to have been right in that instance, perhaps one of 
the few times in his life when his reading of the political tea leaves 
was incorrect because we fell into wrangling. It was on some issues 
that were worth wrangling over, I do not want to suggest they were not, 
but that prevented us from focusing on the core question of whether our 
health care circumstance in this country needed to be improved.
  Fortunately, we have now focused on the overall question of should we 
or should we not have a prescription drug benefit for Medicare. At 
least coming out of the committee, we have a strong bipartisan 
consensus that we should. The reason we should is very clear, if you 
look at the way we practice medicine.
  Medicare was adopted in the 1960s, and it was patterned after the 
best Blue Cross-Blue Shield fee-for-service indemnity plan written in 
the 1960s. Now it seems that plan has been frozen in time for 40 years. 
Unfortunately, it has not had the regulatory flexibility necessary to 
deal with the changes in the way medicine is practiced. It has required 
Congress to step in and make those changes. As Congress has done so, 
Congress has demonstrated that it is slow and it can be bogged down in 
political challenges that prevent changes being made.
  By contrast, if you go to FEHBP, the Federal Employees Health Benefit 
Plan, under which we and other Federal employees are covered, you find 
a degree of regulatory flexibility that allows the people who 
administer the plan the capacity to move and change quickly as the 
medical situation changes. Congress is not required to debate these 
changes and, therefore, hang them up on political considerations. That 
is one of the reasons why the FEHBP has been more effective in 
providing health care services to those who are parties to it. Clearly, 
we in Congress need to finally catch up to the reality that the 
Medicare system is outmoded and structured upon a program that 
desperately needs to be updated.
  Back in the 1960s, the primary concern people had with their health 
care was the cost of going to the hospital. You went to the hospital 
for almost every major circumstance. Now we find through research 
funded by Government, through research funded by the drug companies, 
and products that have emerged from that research, that many of the 
sicknesses you used to go to the hospital for and stayed for 3 or 4 
days can be taken care of by taking a pill. Yet Medicare says if you go 
to the hospital and run up a bill of however many tens of thousands of 
dollars to stay that many days, we will pay for it. But if you take the 
pill that makes the hospital visit unnecessary, we will not. That 
clearly doesn't make sense. There is the need for the benefit of 
prescription drugs, and the Medicare system needs to catch up to that 
circumstance.
  The bill that emerged from the Finance Committee encourages 
competition between plans. It provides us a first glimpse of breaking 
the lockstep mentality Medicare has had since the 1960s. It gives us an 
opportunity to experiment with some competition injected into the 
system. One of the interesting aspects coming out of this debate is the 
difference in expectations on the part of those who are supporting it. 
There are those on the left who are supporting this, saying this is 
just the beginning, and if we get this established, we can see a 
massive increase of governmental programs to bring prescription drugs 
to seniors. There are those on the right who are supporting it who are 
saying this has the degree of competition in it that will bring market 
forces into Medicare in such a way that we will see a massive increase 
in the amount of competition and the amount of market influence on 
holding down costs.
  For both sides, this is a great leap of faith. Neither one knows 
whether the other is right. Neither one knows exactly what will happen. 
I suppose 5 years from now when the Congress gathers we can look back 
and say, Yes, we were right injecting a sense of competition into the 
bill. It has produced tremendous benefits, brought costs down, and made 
things more efficient. Or we might see people look at us saying, Yes, 
we were right passing the bill. It did bring about a major new 
expansion of Federal support for prescription drugs. We will have to 
wait and see.

  But the necessity of getting a drug benefit for Medicare is driving 
the leap of faith on both sides. It is bringing us together in a way we 
haven't seen in this debate in the past.
  Obviously, I am one who believes competition creates market 
efficiencies, and that the experiment will work in the direction of 
getting more competition and more efficiency rather than in the 
direction of getting more government involved. It is a leap of faith 
for me.
  I share the concern of what can happen to the cost. We know Federal 
programs never cost what they are projected to cost. They always cost 
substantially more, particularly entitlement programs. For me and 
others who hold that view to embrace this bill and say we are willing 
to take this leap of faith is indeed, I think, a fairly significant 
step.
  But I come back to the point I made at the beginning. We cannot 
continue to sustain a Medicare Program that does not recognize the role 
prescription drugs now play in the way medicine is practiced. Even 
though it is a huge risk to move in the direction this bill represents, 
it is not as great a risk as allowing the status quo to remain and 
proceed any further. Medicare needs to be brought up to date. This is 
by no means the amount of bringing up to date I would support or that I 
have called for here on the floor. But it is a final recognition of the 
fact that Medicare is outdated, that changes need to be made, and for 
that reason I will take the step.
  I commend members of the Finance Committee on both sides of the aisle 
for the careful and thoughtful way they have approached this challenge. 
I commend them for crafting a bill that, as I say, holds out some hope 
for everybody in the spectrum. But I hope they will continue to address 
this question with as open a mind as possible and with the firm 
understanding that however sacred the word Medicare is in our political 
lexicon, the details of the program should not be sacred but should be 
brought up to date at every possible opportunity to conform with the 
reality of the world in which we live.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I rise to discuss the prescription drug 
bill and the Medicare reform package that is before us now. As a member 
of the Finance Committee, I was involved in the markup of this 
legislation.
  Let me begin by commending the chairman, Senator Grassley, and the 
ranking member, Senator Baucus, our former chairman, for the way in 
which they brought our committee together. That was not easy to do. It 
is an extraordinarily complex undertaking to have an expansion of 
Medicare of this magnitude and to do it in a way that will achieve real 
results.
  I thank the chairman and the ranking member for the way they brought 
us together, and for the tone they set in the committee. We were in 
markup from 9 in the morning until 9 o'clock at night--12 hours of 
togetherness that actually went very well.
  I think we all know why we are here. When Medicare was first drafted, 
the world was a very different place in terms of providing health care. 
As Senator Moynihan used to explain, at the time Medicare was drafted, 
the Merck Manual that contains all prescription drugs was a very thin 
volume. Now when we look at the Merck Manual, it is a very weighty 
tome. There is a dramatic change in the pattern and practice of 
medicine. Perhaps no better example is what happens with stomach 
illness. Twenty years ago, there was not much one could do for somebody 
who suffered from ulcers other than to have surgery. But now with 
prescription drugs that address the underlying causes, stomach surgery 
has been reduced by two-thirds. Yet, in Medicare there is no coverage 
for those prescription drugs. You can't have a modern Medicare without 
a prescription drug component.

[[Page S7962]]

  The problem is millions of Americans don't have any coverage. If we 
look at an outline of where we are, we see that 38 percent of those who 
are Medicare eligible have no drug coverage. Ten percent get their 
coverage through Medicaid, 15 percent through a Medicare HMO, 28 
percent employer-sponsored coverage, 7 percent Medigap, and others, 2 
percent. But nearly 40 percent have no coverage.
  That creates some very tough situations. And we can see there are 
real differences between where somebody lives, how old they are, and 
their income level, as to whether they are in that nearly 40 percent of 
Americans who have no coverage. We see for those over the age of 85, 45 
percent have no coverage. For those who live in rural areas--and I 
represent a rural area, the State of North Dakota--50 percent have no 
coverage. Forty-four percent of those who have between $10,000 and 
$20,000 of income have no coverage.
  What we see is the situation is going to become more challenging and 
more difficult as out-of-pocket expenses for prescription drug 
expenditures jump dramatically. In 2000, those out-of-pocket 
expenditures averaged $644. By this year, it was up to $999--a 50-
percent increase in just 3 years. And in the next 3 years, we 
anticipate another very large increase to $1,454 a year in prescription 
drug costs.
  The implications of that are outlined on this chart. This shows a 
study in eight States. It shows the percentage of seniors who reported 
forgoing needed medicines, and that is listed by chronic condition and 
prescription drug coverage.
  What it shows by the red bar is those without coverage, and it shows 
the percentage of seniors who did not fill prescriptions one or more 
times due to cost. For congestive heart failure, 25 percent of the 
people did not fill their prescriptions because they could not afford 
it; 31 percent of those who suffered from diabetes did not fill their 
prescriptions because they could not afford it; and 28 percent of those 
with hypertension did not fill their prescriptions because they could 
not afford it.
  If we go to the next element of the chart, the percentage of seniors 
who skipped doses in order to make it last longer: For congestive heart 
failure, 33 percent of those without coverage skipped doses; 30 percent 
of those with diabetes skipped doses because they could not afford it; 
and 31 percent of those with hypertension skipped doses because they 
could not afford it. Obviously, that reduces the quality of care and 
ultimately increases the cost. Why? Because those people are more 
likely to be hospitalized. And it is when a senior is hospitalized that 
the cost really escalates.
  I think it is in all our interest--both in terms of the quality of 
health care but also in terms of the cost of health care--that we get 
this right and we make the changes necessary to provide a prescription 
drug benefit in Medicare.
  Here, outlined on this chart, are the specific provisions of this 
legislation. These are estimates of the basic plan which will take 
effect in 2006. This excludes the low-income subsidies. We will talk 
about that in a moment. The premium will average about $35 a month; at 
least that is the projection at this point. The deductibles will be 
$275 a year. From $276 to $4,500 of prescription drug costs a year, 50 
percent will be paid by Medicare, 50 percent by the senior citizen. 
Between $4,501 and $5,812 of prescription drug costs a year, there will 
be no assistance from Medicare. That is the so-called coverage gap, 
what some refer to as the ``doughnut.'' This is an area in which there 
is no assistance, no coverage. The reason for that is not enough money. 
For $5,813 and above in prescription drug costs, Medicare will provide 
90 percent assistance, the senior citizen 10 percent.
  I think that is one of the most important parts of this bill. I would 
support this bill if there were no other provision than just this one. 
To provide 90 percent assistance to those who have catastrophic drug 
costs is going to make a meaningful difference.

  I was just with one of my staff members in North Dakota. Her mother 
had a rare form of cancer. At one point her drug costs were running 
$20,000 a month--$20,000 a month. Thankfully, she was insured. As we 
see, nearly 40 percent of seniors in the country are not. How many 
families could withstand a drug cost of $20,000 a month? For this 
particular family, their drug cost now has been reduced. She is past 
the acute phase, thankfully. Their drug costs are still running $2,500 
a month. That is $30,000 a year.
  This provision will help people like that. It will keep people from 
bankruptcy. It will avoid people having to not have treatment. It will 
prevent crises in many families across the country.
  That is not the only part that I think merits support.
  As shown on this chart, these are the low-income provisions. I want 
to direct people's attention to this line. For those who are below 160 
percent of poverty, they will get more assistance. So, for example, in 
that zero to $4,500 range of prescription drug costs, Medicare will 
pick up 90 percent of the cost for those low-income people. They will 
have to provide 10 percent of the cost. This, to me, is another strong 
reason to support this legislation.
  A third key element of this bill that I think merits support--
certainly for those who have rural areas--is the beginning of the 
leveling of the playing field between the rural areas and the more 
urban areas of the country.
  Just to give an example, in my home State, Mercy Hospital in Devils 
Lake, ND, gets exactly one-half as much in Medicare reimbursement to 
treat a heart ailment or to treat diabetes as Mercy Hospital in New 
York City--exactly one-half as much. Now, I would be the first to 
acknowledge there is somewhat of a difference in cost, but it isn't a 
100-percent difference. When we go to buy technology for that hospital 
in Devils Lake, ND, we do not get a discount. When we try to recruit a 
doctor, he does not say to us: Well, you are a rural area, so I will 
take half as much money. That is not the way it works.
  So this incredible divergence, this disparity that exists in current 
law, needs to be addressed, and this bill will begin to address it. It 
does not close the gap, it does not eliminate the problem, but it does 
make meaningful progress. It permanently and fully closes the gap 
between urban and rural standardized payment levels. But unlike the 
legislation I introduced, it does not take effect until 2005. The 
legislation I introduced, along with 30 of my colleagues, would have 
taken effect in 2004.
  It also adopts all of the other provisions of the bill that I 
introduced along with Senator Thomas of Wyoming. It equalizes Medicare 
disproportionate share payments. Those are the ones that are used to 
cover the costs of treating the uninsured. It establishes a low-volume 
adjustment payment for small rural hospitals. It improves the wage 
index calculation which accounts for a hospital's labor costs. It 
ensures that rural hospitals are reimbursed fairly for outpatient 
services.
  It provides a whole series of improvements to critical access 
hospitals, including improved payments for ambulance services, 
increased flexibility in the bed limit, excluding critical access 
hospitals from the wage index calculation for other hospitals, which 
will improve payments to other larger facilities, has new incentives to 
ensure 24-hour access to emergency on-call providers, and has new 
measures to assure the critical access hospitals will receive timely 
Medicare reimbursement. It also authorizes a capital infrastructure 
loan program which will provide $5 million in loans for crumbling rural 
facilities.
  In addition, it provides a series of other provisions which a number 
of us have cosponsored and put before the body, including extending a 
10-percent add-on payment for rural home health agencies, many of which 
are under pressure to close; a new 5-percent increase for rural ground 
ambulance services; a new 5-percent add-on for clinic and ER visits in 
rural hospitals; and a new automatic 10-percent bonus payment for 
physicians serving in rural areas.
  It has measures to address the geographic inequities in physician 
reimbursement, and an extension of improved payment for lab services in 
sole community hospitals.
  This does not close the gap between rural institutions and more urban 
institutions, but it does make meaningful progress in leveling the 
playing field, and that is critically important to rural hospitals.
  Let me say, in my own State we have 44 hospitals.

[[Page S7963]]

  At least eight of them are in danger of closing because of this 
enormous gap in Medicare reimbursement. Over 50 percent of their 
patients are Medicare eligible. If things don't change, these 
institutions are going to have to close.
  Those are positive aspects of the bill. Let me speak for a moment 
about what is in the bill that could and should be improved. The first 
that comes to my mind is the instability in the legislation. Seniors 
want certainty. They want to know what they are getting. But under this 
plan, seniors could be bounced back and forth between different plans 
depending on how many private drug-only plans enter an area. That is 
the first problem. If a senior is in a fallback plan and two private 
plans enter the area, they must leave the plan they are in; they have 
no choice in the matter. The second problem is that every time they 
switch between drug-only and fallback plans, their benefits could 
change.
  Let me illustrate that for my colleagues. Seniors, when forced to 
move between plans--and in 4 years, a senior could be forced into four 
different plans--every time, their premiums could change. The only 
thing that wouldn't change is the stop loss amount, or at least 
couldn't change. The deductibles could change. The coinsurance level 
could change. The coverage gap could change. The covered drugs could 
change. And the access to a local pharmacy at no extra charge could 
change. That is the kind of instability about which I am talking.
  Let me illustrate with this chart. I hope my colleagues are 
listening, or at least for those who are busy with other duties, 
perhaps their staffs are listening. It is very important to understand 
what could happen to a senior. In 2005, if there is only one private 
plan offered in their area, they could enroll either in that plan or in 
the fallback plan. Let's say this particular senior takes the fallback 
plan and enrolls in that for 2006. But then the next year, another 
private plan comes into the area. Then the senior would be compelled to 
drop out of the fallback plan even if they liked it and go into one of 
the private plans.
  Say they take private plan A for 2007. Then private plan A finds it 
is not effective for them financially to be in the plan, and they drop 
out. The next year, our senior citizen could be whipsawed into a third 
plan in 3 years. They could be over in private plan B. Then perhaps 
private plan B decides they can't afford to provide this coverage. They 
drop out, and our senior citizen, in the fourth year, is in their 
fourth plan. As I say, with different formularies--that is, different 
drugs--available to them, with different rules with respect to going to 
the local pharmacy to get their drugs, with different copays, with 
different premiums, with different deductibles, all of these changing--
if that isn't chaos, I don't know what is. This is an area we must 
address on the floor with amendments in order to remove some of this 
uncertainty for seniors moving ahead.
  For those of us who represent rural areas, the fact that only 2 
percent of rural counties had two or more Medicare+Choice plans in 
August 2001 ought to tell us that our people are the most likely to be 
caught up in this whipsaw effect. Our people in rural areas are the 
most likely not to have two private drug-only plans available to them, 
or PPO plans or HMO plans. The reality is, they are not there now. In 
my State, there is virtually no coverage from those kinds of entities, 
almost none. Those who are suggesting that people are going to rush to 
this kind of business when the people who run the companies tell us 
very directly they are not going to--we ought to pay attention to that. 
We ought to listen to that. We ought to respond to it. I don't think it 
is going to do any of us any good to create a circumstance in which a 
senior we represent gets whipsawed back and forth between plans, 
changing premiums, changing deductibles, changing coinsurance, changing 
what drugs are covered and what are not.

  There is one thing I have learned in dealing with seniors, especially 
those who are ill: They need simplicity. They need an assurance of what 
is covered, what isn't covered, and how it works. We should not be 
subjecting them to a changed plan every single year. That is not a plan 
that meets the needs of seniors.
  I urge my colleagues to pay close attention to the debate when we 
begin to offer amendments to try to provide some greater certainty and 
stability to the plan.
  I also am concerned about disappointed expectations. As I travel my 
State, when there is a discussion of prescription drug coverage, I find 
most people think that means they are going to get something similar to 
what Federal employees receive, or they think they are going to get 
something similar to what people in the military receive, or they think 
they are going to get something similar to what big companies provide. 
That is not this plan. Let's understand what this plan is and what it 
is not.
  To provide the same coverage that we provide Federal employees would 
not cost the $400 billion in this plan. It would cost $800 billion. It 
would cost $800 billion in comparison to the $400 billion in this plan 
to provide the prescription drug benefit we provide Federal employees.
  To provide the same level of benefit to our Nation's seniors that we 
provide our members in the military would cost $1.2 trillion, three 
times as much as available in this plan.
  It is critically important that we not overpromise, that we not 
mislead people as to what they are getting and not getting. The fact 
is, there are some who I have heard say this is a 70 percent subsidy. I 
don't know where they get that number. That is exactly the kind of 
language and rhetoric that is going to lead to some very disappointed 
people. There is no 70 percent subsidy here. There may be for people 
who have extraordinarily high drug costs. I already indicated they get 
90 percent of their bill paid for, over $5,800 in drug costs a year, 
but that is a very small percentage of the people.
  It is true that very low income people get a higher percentage paid 
for by Medicare. But overall, we should understand, of the $1.6 
trillion of drug costs for our Nation's seniors, this legislation is 
going to cover 23 percent of that, not 70 percent, as I have heard 
stated during the debate. Twenty-three percent will be paid for by 
Medicare.
  If you look at this $400 billion legislation, $360 billion of the 
cost is for prescription drug payments--$360 billion. The total drug 
cost of our Nation's seniors is $1.6 trillion; $360 billion of $1.6 
trillion is 23 percent, it is not 70 percent. So let's not be 
misleading people about how extensive this benefit is.
  That is not to say it is not a good bill because we are limited to 
$400 billion. This is about as good a bill as you can write for $400 
billion. But I hope we don't mislead anyone as to what it really 
provides.
  One of the things we also need to think carefully about as we 
consider floor amendments is that 37 percent of retirees with employer 
drug coverage will lose it under the Finance Committee plan.
  Why? Because the Congressional Budget Office says when employers look 
at this plan, some substantial number of them will drop their old 
coverage--the coverage they are providing. That will affect 37 percent 
of retirees who currently have employer drug coverage.
  I think we need to take additional steps to provide incentives to 
those employers to keep on providing the drug coverage they provide. 
That is in our economic and financial interests, and it is in the 
interests of seniors to maintain stability in plans that they know and 
like.
  Mr. President, I hope this information is useful to our colleagues. 
As I say, as a member of the Finance Committee and as ranking member of 
the Budget Committee, I support this legislation. I voted for it. I 
think it merits the support of our colleagues. I hope it can pass with 
resounding support here in the Chamber. I hope it will ultimately 
become law. We ought to do this with our eyes wide open. We ought to 
understand exactly what it provides and what its weaknesses are. We 
ought to communicate that clearly to the American people. We ought not 
to overpromise or misrepresent. Disappointed expectations can swamp 
this boat.
  I am hopeful these remarks made clear what is provided and what is 
not and those places where we have an opportunity to improve this 
legislation. I think it is in all of our interests to commit our best 
efforts to do that over the coming days. I yield the floor.

[[Page S7964]]

  I suggest the absence of a quorum and ask unanimous consent that the 
time of the quorum call be charged equally to both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. BUNNING. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Crapo). Without objection, it is so 
ordered.
  Mr. BUNNING. Mr. President, I rise in support of S. 1, the 
Prescription Drug and Medicare Improvement Act of 2003. Last week, the 
Finance Committee took a historical step by passing the Medicare bill 
out of the committee by a strong bipartisan vote of 16 to 5, thanks to 
the great leadership of Senators Grassley and Baucus.
  This is one of the most important bills we will consider this 
Congress. As a new member of the Finance Committee, I was proud to 
support it. It is a commonsense bill that strengthens and improves the 
Medicare Program by guaranteeing a prescription drug benefit for 
America's seniors. I hope the bipartisanship momentum that was created 
within the Finance Committee will continue during the Senate floor 
debate.
  Talk is cheap. Congress has been talking about passing a drug bill 
for years. Now we have a golden opportunity and we must seize it. Our 
seniors have waited too long. It would be irresponsible to leave them 
hanging any longer. Under the budget that we passed, we have set aside 
$400 billion for a Medicare prescription drug benefit. This is a real 
commitment by Congress to the 40 million Americans who have relied on 
Medicare, many of them literally all their lives.
  It has been almost four decades since Medicare was created, and it is 
long past time for Congress to strengthen it and to help bring it into 
the 21st century.
  In 1965, when Medicare became law, prescription drug coverage was not 
included in the benefit package. Back then, it did not make any sense. 
Prescription drugs played a much smaller role in medical care. But 
because of technology and advances in health care, and much research 
that has been done since then, these drugs now do so much more in 
helping to ensure the good health of America's seniors. These medicines 
help seniors live longer. They help them live more active and 
fulfilling lives.
  Medicine has changed in a way no one could have predicted back in 
1965. However, Congress has failed so far to strengthen Medicare and to 
recognize these advances and to account for the changes in health care. 
We now have a chance to make up for that lost ground.
  If we are going to maintain a decent Medicare Program for seniors and 
fulfill our promises to them, we owe it to them to do the best we can 
to make sure Medicare fully recognizes their needs and the advances in 
modern medicine.
  We have all heard of the amazing advances in prescription drugs, but 
for many seniors these new lifesaving drugs are unaffordable. Under the 
bill before us today, many more of these drugs will be within reach of 
all seniors. This is a good bill for them, and it is a good bill for 
America.
  Part of this legislation deserves special mention. First, the bill 
gives seniors a new option when it comes to getting their health care. 
Now under Medicare, most seniors are enrolled in traditional fee-for-
service plans. That is understandable. It is what they know and it is 
what they are comfortable with. About 12 percent of seniors are 
currently enrolled in Medicare+Choice plans. These are managed care 
plans like HMOs.
  Under this legislation, seniors will have another new option: 
Preferred provider organizations, or PPOs, for their health care. 
Outside of Medicare, many Americans have found PPOs to be a solid 
alternative instead of fee for service or HMOs that some patients find 
to be too restrictive. Wisely, the bill includes incentives to make 
sure that PPOs will cover both rural and urban areas, and all seniors 
in these areas will be eligible to enroll.

  Coming from a small, rural State such as Kentucky this is especially 
important to me. In many rural parts of my State, seniors do not have a 
choice because the economics just do not work. But the chairman of the 
Finance Committee wisely crafted this bill to provide incentives to 
ensure that seniors in rural America have choices, too. If it is good 
for Iowa, I think it is going to be good for Kentucky.
  This bill does not require seniors to move into a PPO or an HMO for a 
better drug benefit. This idea has been part of other plans on Capitol 
Hill, and I disagree with it. Instead, under this bill seniors can 
receive an equal drug benefit under traditional Medicare. We give 
seniors the choice. It is voluntary. I know many seniors, especially 
our older or maybe our oldest seniors, will not want to switch out of 
traditional fee for service. They should not be forced to do this.
  My mother-in-law is very happy with what she has, and I am sure she 
will not change no matter what. That is fine. After promising her she 
would always get the care she is now receiving, it would be wrong for 
us to pull the rug out from under her or anybody like her.
  In order to be fair to all, this legislation says the drug benefits 
will be equal in both traditional Medicare and managed care plans, so 
seniors will not be penalized for staying with traditional Medicare 
Programs they know and are comfortable with.
  Another positive about the bill's benefits is the fact that seniors 
will have more of a choice to find a drug plan that best suits their 
needs. This is very similar to what Federal employees do when they 
choose their health care plans. For example, the benefit structure for 
plans can differ slightly and the formularies for the plans will likely 
be a little different one from another. It is this flexibility and 
choice for seniors which really helps make this bill a winner.
  I am also pleased the legislation provides a strong benefit to 
seniors who have the hardest time affording drug coverage, those who 
have incomes below 160 percent of the poverty level.

  All along I have argued that rich people such as Warren Buffett and 
Bill Gates do not need our help. We need to first focus on helping 
seniors who need it most and can afford it least. I am very pleased 
this bill does just that.
  At 160 percent of poverty, an individual's annual income is $14,368 
for a single person, and for a couple annual income is $19,392. Many 
seniors in this category and certainly those who live on less struggle 
every day to pay for their medicines. Some have to actually choose 
between food and medicine. Some skip taking doses of their medicine. 
These are choices that no none in the year 2003 should have to make.
  For the 3 million seniors who make even less, the bill provides them 
with an even more generous benefit. These are our seniors for whom 
Congress has the largest responsibility. This bill certainly does right 
by them.
  Finally, I am pleased the legislation provides immediate help right 
now to many low-income seniors. In the year 2004 they will receive $600 
a year so they can better afford their prescriptions. This is an 
immediate benefit for those who need help the most and will help bridge 
the gap until 2006 when this new drug program is fully up and running.
  Congress has a golden opportunity to pass a good prescription drug 
bill. We absolutely cannot let it slip through our fingers. Too many 
seniors struggle daily to pay for their prescriptions. In the past, 
Presidents and Congresses have promised too much, too many times, for 
older Americans. It is standup time. It is time to deliver. It is time 
to get the job done. Our seniors deserve it. America deserves it.
  I yield the floor and 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. SMITH. 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. SMITH. Mr. President, I rise today in support of the Prescription 
Drug and Medicare Improvement Act of 2003.
  I am so pleased to be on the Senate floor today for this historic 
event. Within the next 2 weeks, for the first

[[Page S7965]]

time in our Nation's history, the Senate is going to pass a real 
prescription drug benefit for all seniors.
  This historic time does not come a moment too soon. For years, 
seniors all over the country have been making hard choices--choices 
between filling a prescription and buying food; choices between losing 
their homes or buying the drugs they need to stay alive and healthy.
  The prospect of providing senior citizens with access to life saving 
prescription drugs under Medicare for the first time is truly exciting. 
It is truly a historic achievement of the 108th Congress.
  When I talk to senior citizens around Oregon, access to prescription 
drugs is the issue by far that resonates most clearly among them.
  The Senate special Committee on Aging held a field hearing in Oregon 
last August. I was privileged to chair that hearing. We were tasked the 
issue of adding prescription drugs to the Medicare program. The room 
was packed with seniors from all around the State.
  When I asked them to tell me how much they spent each month on drugs, 
their answers were astounding. They were astronomical.
  And of course, there were the seniors who were paying for their 
drugs. Others made the decision not to fill prescriptions or to skip 
doses, cut their pills in half or try cheaper remedies.
  One of our star witnesses was 76-year-old Roy Dancer, a retired 
educator from Beaverton, OR. He testified that many of his friends in 
his small retirement community have out-of-pocket expenses for 
prescription drugs that well exceed $5,000 per year, including one 
resident with no insurance whose drug costs exceeded $8,500 per year.
  Mr. Dancer was an active member of his community. One of the ways he 
maintained his health was by taking eight prescription drugs daily. His 
wife, Betty, was also being kept healthy and active by using multiple 
medications daily for her high blood pressure, diabetes, and arthritis.
  Mr. Dancer told the committee that he had once gone to Mexico to 
purchase prescription drugs to save money.
  That is just one small snapshot of a relatively healthy couple in a 
relatively affluent retirement community with relatively healthy 
residents.
  At that field hearing, the committee also heard from an Oregon 
geriatrician who described the irreplaceable benefits of modern 
prescription drugs, and the importance of patient compliance with a 
prescribed drug regimen to achieving the full potential benefits of 
contemporary medical care.
  This Aging Committee field hearing was held just 2 weeks after the 
Senate's failed attempt to pass a prescription drug benefit last year. 
And let me tell you, this failure weighed heavily on me during that 
hearing.
  We are talking about basic access to life saving medicines--many of 
them developed in this country--and in many cases these folks just 
could not afford to buy them.
  It was a truly humbling experience to listen to the stories of these 
good people and know that we had not helped them.
  I want to be able to go back to the seniors in Oregon this year and 
tell them what the U.S. Senate has finally done for them.
  This year, I joined the Finance Committee, and we have had many, many 
meetings to discuss how to design a drug benefit this year that we can 
actually pass and get to the President's desk. And with this bill, I 
think we have accomplished that.
  Every Senator comes to the floor with their views of what is the 
perfect. The question again becomes, Will our individual views of the 
perfect thwart the good? Truly, this bill represents a lot of good, and 
it certainly is a very good start.
  When this bill is signed into law, no senior will again ever have to 
lose their home when they lose their health.
  This bill provides substantial assistance to low income seniors, 
while making improvements to the Medicare program, all in a way that 
will ensure the financial viability of the Medicare program in the long 
term.
  This bill doesn't give anyone a free ride. Every senior is asked to 
contribute something for this sweeping new benefit. However, low-income 
seniors, in particular, are protected from high drug costs under this 
legislation.
  While everyone will pay something for their prescriptions, payments 
for low-income seniors are tied to their ability to pay. Very low-
income seniors will pay very little for their prescriptions, while 
moderately low-income seniors will pay a little more.
  Higher income seniors will pay a small premium to have access to a 
plan with moderate cost sharing, and, importantly, protection against 
catastrophic drug expenses. The peace of mine from this coverage alone 
is, for me, one of the most important provisions in this bill.
  In addition to making prescription drug coverage available and 
affordable to all seniors, this bill updates the Medicare program to 
include new choices for seniors.
  Making preferred provider organizations, available to seniors has 
enormous potential to improve care coordination and provision of 
preventive services for seniors.
  Let me tell you why this is important.
  Medicare beneficiaries with multiple chronic conditions are by far 
the most expensive group of seniors to care for. Their care is also the 
most complex, creating quality of life challenges for many seniors, 
their multiple health care providers, and their families.
  Beneficiaries with 5 or more chronic conditions represent 20 percent 
of the Medicare population but account for 66 percent of the cost. 
These seniors to go the doctor four times as often, and fill five times 
more prescriptions than healthier seniors.
  I believe there is an enormous potential to improve care for this 
rapidly growing group of seniors while keeping costs down for Medicare 
by coordinating their health care better.
  Preferred provider organizations can help do that. And while no 
senior in America will have to move into a PPO, they will now have the 
option to do so. In my mind, that is a substantial improvement to 
Medicare.
  For the first time in a long while, this bill also addresses one of 
the biggest problems in Medicare--the inequity between rural and urban 
America. I would like to thank Chairman Grassley again for his personal 
commitment to this issue and for his tireless efforts on behalf of 
rural States such as Oregon.
  In addition to correcting some of the Medicare reimbursement issues 
that have disadvantaged people and health care providers who live and 
work in rural areas, this bill contains numerous protections to ensure 
that rural Americans have access to the same health care choices as 
urban Americans and at the same cost.
  These improvements were critical to win my support for this bill, and 
they represent just a few of the improvements in this bill over last 
year's bill as it was debated.
  Several months ago, the Senate Budget Committee calculated that a 
comprehensive, responsible drug benefit that the country could also 
afford would cost around $400 billion. Subsequently, the Budget 
Committee set aside $400 billion for the addition of a prescription 
drug benefit in Medicare and improvements to the program.
  This bill strengthens Medicare in a substantial way. It uses the $400 
billion set aside for this purpose without running the program into the 
ground in the long term.
  I know I am not alone in striving to update Medicare in such a way 
that the program will be there for our children who will want to 
participate in it.
  Americans across the country are asking for our help. They cannot 
afford to wait another year while we search for the perfect solution. 
This bill represents years of careful research, debate, and compromise, 
and it is going to strengthen and improve Medicare for generations to 
come.
  I look forward to working with every one of my colleagues over the 
next few weeks to improve this bill and to get it to the President's 
desk before the end of summer.
  Mr. President, I thank you for the time.
  Mr. President, I ask unanimous consent that the time spent in quorum 
calls during today's session be charged equally to both sides.
  The PRESIDING OFFICER (Mr. Chafee). Without objection, it is so 
ordered.
  Mr. SMITH. Mr. President, I suggest the absence of a quorum.

[[Page S7966]]

  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. KENNEDY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Chafee). Without objection, it is so 
ordered.
  Mr. KENNEDY. I understand there is a division in the time. How much 
time do we have on our side?
  The PRESIDING OFFICER. Sixty-five minutes.
  Mr. KENNEDY. I yield myself such time as I might consume.
  The history of America is that of a people always fighting for an 
ever more perfect union, a nation of genuine fairness and opportunity 
for all, and that meets the basic needs of all Americans.
  We fought to create public schools, so all children can receive an 
education to help them succeed, and to equip them to participate fully 
in our society.
  We have battled for civil rights, so that no one is denied 
opportunity because of race, gender, religion, national origin, or 
disability.
  We fought for a fair minimum wage, so that those who work 40 hours a 
week, 52 weeks a year, should never live in poverty.
  We created Social Security and Medicare, so that those who work their 
entire lives, and contribute so much to the nation, will be cared for 
in their golden years.
  But ours is always an unfinished republic. With each generation, and 
in each era, we continue to perfect our democracy and to fight for 
progress.
  And today, one of the great challenges of our time is at long last to 
right an injustice that has harmed millions of our fellow Americans, 
the fact that Medicare today does not provide a prescription drug 
benefit.
  Many of us in the Senate have battled for such a benefit for almost a 
quarter of a century. In fact, Senator Strom Thurmond and I introduced 
the first legislation to create a prescription drug benefit in 1977. 
And in more recent times, Democrats have led the charge. In 1999, 
Senator Rockefeller and I introduced key legislation to provide 
prescription drug coverage in Medicare. In 2002, Democrats led the way 
once again in offering the Graham-Miller-Kennedy Medicare prescription 
drug bill.
  For too many years, the prospects of enacting a Medicare prescription 
drug benefit were jeopardized by the insistence of many Republicans and 
the Bush administration to destroy Medicare by forcing seniors to leave 
their family doctors and join HMOs and PPOs. In fact, President Bush 
proposed to use a prescription drug benefit as bait, telling seniors 
that if they wanted prescription drug coverage, they had to leave 
Medicare to get it. While purporting the give seniors choices within 
Medicare, his plan in fact gave seniors only one option, to leave the 
Medicare they love to get the prescription drugs they need. The only 
winner in this misguided policy would be the insurance industry, which 
stood to gain $2.5 trillion dollars from the privatization of Medicare.
  Democrats and senior citizens locked arms to fight this proposal. We 
stood up for Medicare and its promise to provide the health care needs 
of seniors citizens in retirement. Senior citizens across America said 
it's wrong to coerce them into leaving their family doctors and joining 
HMOs and PPOs to get the drug benefits they need and deserve.
  In recent days, the voices of America's 35 million senior citizens 
were finally heard. Last week, a bipartisan group of Senators rejected 
the President's backwards priorities, and President Bush retreated from 
his insistence on privatizing Medicare. Instead of holding the needs of 
seniors hostage to an ideological agenda, Republicans' willingness to 
put aside ideology and work with Democrats to create a prescription 
drug benefit now paves the way for the largest expansion of Medicare in 
its 37-year history. After many years of battling for a Medicare 
prescription drug benefit, we now face the very real prospect that 
Congress can pass, and the President will sign, a bill that provides 
the prescription drug benefit within conventional Medicare.
  In fact, if you think Medicare should be privatized, then you should 
oppose this bill.
  This promising moment comes at a time of crisis for millions of our 
senior citizens. Too many elderly citizens choose between food on the 
table and the medicine they need. Too many elderly Americans are taking 
only half the drugs their doctor prescribes, or none at all, because 
they cannot afford them. Today, the average senior citizen has an 
income of around $15,000, and prescription drug bills of $2,300. That 
is the average, and many senior citizens incur drug costs in the 
thousands of dollars each year.
  Senior citizens are faced with a deadly double whammy. Prescription 
drug costs are out of control, and private insurance coverage is drying 
up. Last year, prescription drug costs soared by a whopping 14 percent. 
They have shot up at double-digit rates in each of the last 5 years. 
Whether we are talking about employee retirement plans, Medigap 
coverage, or Medicare HMOs, prescription drug coverage is skyrocketing 
in cost, and becoming more and more out of reach for the elderly.
  This chart reflects the rise in costs as compared to what our seniors 
are receiving in their Social Security COLA increase, going from 1998 
where there was a 10 percent increase in the cost of prescription drugs 
but seniors were getting only 2.1 percent. In 1999, it was 19.7 percent 
and the increase in the cost of living was at 1.3 percent. Then we go 
throughout 2000, 2001, 2002, and today in 2003 it is expected to go up 
to 13 percent with seniors receiving a very modest 1.4 percent.
  When we are talking about what is happening to the quality of life of 
our seniors, we are talking about these absolutely vital, indispensable 
medications, prescription drugs, which they need and which are costly. 
The fact is, so many of our seniors are on fixed incomes that with very 
modest increases in the cost of living they are constantly being 
squeezed, and this is putting the kind of pressure on them and on their 
lives and on their families which has caused such extraordinary pain, 
suffering, and anguish among the seniors; and not only among the 
seniors but among their families as well.
  The costs are one of the dramatic aspects of the whole prescription 
drug issue, and we are going to make a downpayment hopefully with the 
acceptance of the legislation that came out of our committee. The 
initial McCain-Schumer legislation which now is supported unanimously 
from our committee will help to move generic drugs on to the market 
more quickly and be available to our seniors under this program.
  It used to be that the only seniors with reliable, adequate, 
affordable coverage were the very poor on Medicaid, but even that 
benefit is eroding. Today, because of the State fiscal crisis created 
by the recession and the let-them-eat-cake attitude of the Republican 
party, even the poorest of the poor can no longer count on protection. 
States are now facing the largest budget deficits in half a century, an 
estimated $26 billion this year, and $70 billion next year.
  This chart is a pretty good reflection of the situation of our 
seniors on the issue of affordable, reliable and quality drug 
coverage. Thirteen million have absolutely no coverage; 10 million have 
employer-sponsored coverage; 5 million are under Medicare; 2 million 
are under Medigap; 3 million are under Medicaid and a small amount on 
other public coverage.

  It used to be said of this group, it was the one group listed here 
that had dependable, reliable, certain drug coverage for those under 
Medicaid, but that is no longer true. We are seeing the numbers covered 
under Medicaid going down every year. With the States now facing very 
sizable deficits, they are cutting back on the Medicaid and the 
coverage.
  The result is States are cutting back on the prescription drug 
coverage for those least able to pay. Thirty-nine States expect to cut 
their Medicaid drug benefit this year. In my home State of 
Massachusetts, 80,000 senior citizens were about to lose their 
prescription drug coverage under the same senior Advantage Program on 
July 1. Emergency action by the State legislature solved the problem 
but only after making substantial reductions in the coverage.
  Ten million of the elderly enjoy high-quality, affordable retirement 
coverage through a former employer, but retiree coverage is plummeting, 
too. In just 8

[[Page S7967]]

years, from 1994 to 2002, the number of firms offering retiree coverage 
fell by a massive 40 percent. The employer-sponsored column on this 
chart shows 10 million employer sponsored retirees.
  We have 13 million with no coverage, 10 million with the employer 
sponsored, and we saw a gradual reduction for the poorest of our 
seniors. So let's see what is happening now. The firms offering retiree 
health benefits have dropped 40 percent from 1994 to 2002. In 1994, 40 
percent of the firms offered retiree health benefits. Go back to 1988; 
it was about 85 percent; in 1994, it was 40 percent; in 2002, it was 
just over 20 to 22 percent. So we are seeing that availability 
constantly squeezed.
  Medicare HMOs are also drastically cutting back. Since 1999, more 
than 2.5 million Medicare beneficiaries have been dropped by their 
Medicare HMOs. Of the HMOs that remain in the program, more than 70 
percent limit drug coverage to a meager $500 a year or less and half 
only pay for generic drugs.
  I have another chart showing groups of seniors. We talked about the 
employer sponsored seniors and the pressure they are under; we talk of 
the pressure under the Medicaid. Let's look at those 5 million under 
the Medicaid HMO and see what has happened to them: 2.4 million have 
been dropped, and of the remaining, take a look at what has happened. 
The Medicare HMOs are reducing the level of drug coverage. Sure, some 
provide it, but 86 percent limited the coverage to less than $1,000 in 
2003; 70 percent imposed caps of less than $500. So although they are 
providing, if the average expenditure of a senior is $2,300 and HMOs 
are limiting it to less than $3,500, it is an empty promise.
  We have those with no coverage. We have those in the employer 
retirement programs who are seeing reductions; we have the HMOs seeing 
reduced coverage. We have seen in the Medicaid where there has been 
reduced coverage as well. We also see that Medigap plans that offer 
drug coverage are priced out of reach for most seniors, and the 
coverage offered by these plans is severely limited.
  Thirteen million beneficiaries, as I mentioned, have no prescription 
drug coverage at all. Only half of all senior citizens have coverage 
throughout the year. It is time to mend the broken promise of Medicare. 
It is time to provide every senior citizen in this great country of 
ours with solid, reliable, comprehensive prescription drug coverage.

  As we enter this debate, our great challenge is fairness for all 
senior citizens who need Medicare's help to afford the prescription 
drugs they need. The resources within this Republican budget are 
limited. The Republican budget provides only enough funding to cover 
about a quarter of the needs of America's senior citizens over the next 
decade. They are going to be spending $1.8 trillion. This is $400 
million. They are spending $1.8 trillion, and this is $400 million, 22 
percent. There will be large gaps.
  It is very important to remember this is a downpayment. Those who are 
supporting this program are strongly committed to building on this 
program. It is a downpayment. We are going to come back again and again 
and again to make sure we are going to meet the challenges provided by 
this bill and out there across this country we recognize what our 
seniors are facing. We must ensure that the resources are available to 
be used equitably.
  As I mentioned, this bill is a downpayment on our commitment as 
Democrats to provide for the needs of our senior citizens. We will do 
everything we can to increase the resources available to provide an 
ample prescription drug benefit. If we do not succeed today, we will 
battle the Republican budget tomorrow, next month, next year, carry 
this issue into the next election, if necessary, until we have in place 
a White House and Congress that support Medicare and give the 
prescription drug benefit the resources it deserves. However, we must 
get started.
  This bill does much that is good. It provides a low-income benefit 
that assures 40 percent of all seniors that they can get help with drug 
expenses with minimum premiums and copays. It saves the average senior 
with average drug costs approximately $600 a year--not as much as we 
should be providing but a good downpayment toward a contract with the 
seniors.
  This next chart is for a senior with an average income of $15,000. 
They average $2,300 in prescription drugs. This is how the program 
works. For $420 in premium, they will pay $1,298 in cost sharing, and 
they get a benefit of $604, not as much as we would like to have, but 
nonetheless that $604 for an average income senior citizen is an 
important resource and assistance to them.
  The next chart shows the same senior citizen with $15,000 of income. 
Say they have $10,000--we have taken the average income and the average 
amount of expenditure for prescription drugs, and now we have the 
average income of $15,000--this senior has $10,000 for prescription 
drugs. That is a lot of money, but there are certain pills, for 
example, dealing with treatment of cancer, that are $68 each. These 
expenditures can be run up relatively easily, and they are run up by 
many of our seniors. This is $10,000; they would pay in $4,500 and they 
would receive $5,462 in savings under this bill. This is a not 
insignificant amount of savings.
  The next chart shows families with lower incomes. We are going from 
$9,000 to $12,000, to $13,000. This reflects the current monthly drug 
costs, so we are talking $2,300 a year at $190 a month for the average. 
This is the way this bill treats them. The monthly costs for a senior 
with a $9,000 income would be $5, and they would save $185. If there 
was a $12,000 income, and they still had to pay the $190, which again 
is the average, their monthly cost would be $10, and they would save 
$180. If the income was $13,500 and they spent the $190, their monthly 
cost would be $23, and they would save $168.

  So the help, the assistance for the 40 percent of our seniors at the 
lower end of the income is very substantial, as it should be. We have 
seen where, even for the average income for the senior, it still 
provides about $600. For those with an average income for seniors, with 
higher amounts of prescription drug expenses, it provides a very 
important and substantial relief for them.
  In addition to this--this is one of the most appealing aspects of 
this program--this bill offers immediate relief for seniors. We are 
talking about next January. Five million low-income seniors will 
receive a $600 prescription drug credit card on January 1, 2004. The 
most they will pay for it is $25. But for those of limited income, they 
will get that free, and they will have the first $600 prior to the time 
the program goes into effect, which will be in 2006. This will be 
available to them in January 2004. All seniors can receive savings 
through the drug discount card. This is enormously important. If a 
senior doesn't use the whole $600, they can carry that over for another 
year.
  Help is on the way, immediately, for 5 million seniors starting in 
January of next year. That, I believe, is enormously important and 
positive news for many seniors.
  While this bill does much that is good, it still has serious gaps and 
omissions. It will still leave many elderly suffering from severe 
financial strains as they try to purchase the prescription drugs they 
need. It doesn't provide the retiree health plans with the fair 
treatment they deserve to assure they can continue to meet the needs of 
retired workers. It could be improved by changes to ensure the coverage 
provided every senior citizen will be as stable and reliable as 
possible. During the course of this debate, Democrats and Republicans 
in the Senate will try to address these needs. If we are unsuccessful, 
we will continue to fight over the years ahead to fill in the gaps in 
this program.
  At bottom, the issue of providing adequate prescription coverage for 
seniors is a question of priorities. For the administration and for too 
many Republicans in Congress, tax cuts for billionaires are more 
important than health care for senior citizens. But Senator Grassley, 
and I see him on the floor here today, and Senator Baucus and the other 
members of the Finance Committee deserve enormous credit for the 
excellent job they have done, designing a benefit within a $400 billion 
straitjacket imposed by the budget resolution.
  I also pay tribute to the majority leader, Senator Frist, for his 
strong leadership, assisting the Finance Committee, contributing to the 
shaping of this program which I think is commendable. It needs work but 
it is a very important, significant, and positive start.

[[Page S7968]]

  Because this program covers only about a quarter of the elderly's 
drug expenditures, it still leaves too many elderly--those with incomes 
below 160 percent of poverty--with unaffordable costs. Forty percent, 
those with incomes below 160 percent of poverty, will have 
comprehensive, affordable coverage through this program or through 
Medicaid. This is a tremendous achievement. But others, particularly 
the middle class with moderate incomes and high drug expenses, still 
face high drug costs. The benefits under this bill--a $275 deductible, 
50 percent cost-sharing, an out-of-pocket limit of $3,700 with 
continued copayment obligations after the limit is reached, are far 
less generous than those enjoyed by most younger Americans, even though 
the elderly's need for prescription drugs is much greater.

  We have talked about what they call the doughnut hole, where there is 
very comprehensive coverage for those at the lower end and very 
substantial help for those at the higher end, and less help and 
assistance for those in the middle. That will be one of the issues 
which we will have a chance to address here on the floor, to try to see 
if we can't provide some additional help to those who will not be 
benefitted as extensively as those other two groups. That will be in 
the form of amendments that will be introduced and hopefully supported.
  Also, I mentioned the serious issues that work because of the 
interaction of this program in terms of retiree benefits that can 
potentially threaten retirees, and is an issue that must and should be 
addressed. I am hopeful it will be before final passage.
  A final area where this bill could benefit from improvements is in 
the rules and regulations established for the private insurance plans 
that are the vehicle for delivering prescription drug benefits to 
senior citizens and the disabled, and for the fallback plans that will 
deliver the benefit when there are not two insurance plans meeting 
Government standards in each region of the country. The sponsors of 
this bill have done much to assure that individuals who enroll in 
private plans will pay a reasonable premium, and that there will always 
be coverage available in every area of the country. But more can be 
done and should be done to assure that premiums are reliable and 
affordable everywhere and that senior citizens do not have to change 
plans frequently because of instability in the market.
  Many Democrats were concerned that last year's Republican bill could 
prove unworkable because private insurance plans might not be willing 
to provide the drug benefit. The concern was especially strong in rural 
areas, where HMOs and PPOs have been unwilling or unable to provide 
services. Under the compromise plan, there will be a government drug 
plan available in any place where there are not at least two private 
drug plans meeting Medicare standards available. To increase stability 
of choices for senior citizens, private drug plans must remain 
available in any region they choose to enter for at least 2 years. 
Thus, the bill guarantees that every senior citizen, no matter where 
they live, will be able to receive the benefits provided in the bill.
  The Republican bill last year relied solely on competition to keep 
drug plan premiums reasonable for senor citizens, leaving senior 
citizens vulnerable to exorbitant charges and profiteering if 
competition was ineffective. This year's bill establishes tight 
regulatory criteria to assure that plan premiums are fair. It uses the 
same rules that govern the Federal Employee Health Benefits program.
  Specifically, the bill states that a plan cannot be approved to 
participate in the drug program unless its premiums are ``reasonably 
and equitably reflect the cost of benefits'' provided under the plan. 
In the FEHBP program this requirement has been interpreted to allow 
health plans a maximum markup of one percent over costs.
  Democrats have been concerned that private drug-only plans might deny 
beneficiaries access to off-formulary drugs in order to reduce costs 
and maximize profits. Last year's Republican bill contained no 
independent appeal rights and did not require that beneficiaries 
receive off-formulary drugs at the preferred drug rate even if an 
internal appeal were successful. The compromise program requires the 
plans to cover at least two drugs in each therapeutic class, 
establishes a strong independent appeal process, and provides that off-
formulary drugs can be obtained at the preferred drug rate if an appeal 
is successful.
  This week the Senate has an opportunity to make the bill better. But 
we must also guard against it becoming worse. This bill provides fair 
treatment and the opportunity for new choices for senior citizens who 
want to stay in Medicare as well as for those who might consider a 
private insurance alternative.
  The President's plan, by contrast, sought to stack the deck against 
Medicare--and against senor citizens. Instead of the trustee of the 
Medicare program, his plan would have made the Government little more 
than a shill for HMOs and the insurance industry. Seniors would have 
been poorer, their medical options would have been constrained, their 
ability to choose their own doctors would have been compromised, and 
all so that wealthy HMOs and insurance companies can become even 
wealthier.
  If all senior citizens can be forced out of Medicare and into HMO and 
private insurance, the revenues of the insurance industry will increase 
by more than $2.5 trillion over the next decade. Same on the insurance 
industry for supporting this plan, and shame on the administration for 
putting the interests of wealthy and powerful political supporters 
above the interests of the senior citizens who have built this great 
country.
  The bill before the Senate says no to this outrageous scheme. But I 
anticipate that amendments will be offered during the course of this 
debate to tilt the scales once again against senior citizens and for 
private insurers. It is unlikely that any Member of the Senate will 
publicly demand, as the President did, that senior citizens give up 
their choice of doctors in order to get prescription drugs. But there 
are more subtle ways of unraveling Medicare. Amendments may be offered 
to uncap Federal payments to private insurers, so that they have an 
open tap to the Federal treasury, even if their services cost more than 
those same services provided by Medicare. We need help for senior 
citizens, not corporate welfare for insurance companies that seek to 
undermine Medicare.
  There are other ideas that could destroy our bipartisan compromise. 
The President says that he has embraced the bipartisan Senate 
compromise. But some are considering implementing a vast experiment on 
senior citizens all over this country. This experiment--called 
``premium support''--is yet another attempt to force senior citizens 
into HMOs and other private insurance plans. It is more subtle but just 
as unacceptable as the President's original proposal. It could 
dramatically raise Medicare premiums and victimize the oldest and 
sickest of the Medicare population. It is a poison pill that could kill 
the prospects for reform and destroy all the progress that has been 
made in the Senate.
  I am also gravely concerned by other proposals that would establish, 
for the first time, a means test for Medicare benefits.
  One of the reasons that Medicare is such a popular and successful 
program is that all individuals, rich and poor alike, contribute, and 
all benefit. Senior citizens want Medicare, not welfare. And tying 
catastrophic benefits to a person's income is the camel's nose under 
the tent that could lead to the dismantling of Medicare and its 
replacement with welfare.
  As this debate progresses, there will be a vast array of facts and 
figures discussed in this chamber. Many of the issues will be discussed 
in language that will seem technical and arcane to the average 
American. All of us must strive to remember why this debate is 
important and what it is really about.
  The typical Medicare enrollee is a seventy-five year old widow, 
living alone. Her total income is just $11,300 a year. She has at least 
one chronic condition and suffers from arthritis. In her younger years, 
she and her husband worked hard. They raised a family. They stood by 
this country through economic hard times, the Second World War, the 
Korean War, and the Cold War. They sacrificed to protect and build a 
better country--not just for their children but for all of us. Now it

[[Page S7969]]

is time for us to fulfill our promise to her. It is time to assure her 
the affordable health care she deserves. It is time to pass a 
prescription drug benefit under Medicare.
  I suggest the absence of a quorum, and I ask unanimous consent that 
the time be equally charged to both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DODD. 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. DODD. Mr. President, what is the business before the Senate?
  The PRESIDING OFFICER. The bill, S. 1.
  Mr. DODD. I thank the Presiding Officer.
  Mr. President, yesterday we began what can truly be expected to be an 
historic effort to transform the Medicare Program in this country, an 
effort, if it is successful in these coming days, that would provide 
for the most sweeping changes to that program since its inception in 
1965.
  We began debate this week on the need for coverage of prescription 
medicines under the Federal Medicare Program. While it is a debate that 
is sure to be spirited in the coming days, it is my hope the debate 
will, in the end, result in a significant move forward that will 
strengthen the Medicare Program for its 41 million beneficiaries and 
for the millions of future beneficiaries who will depend on this 
critically important program for their health and their well-being.
  Over the past month, I have had the opportunity to convene a series 
of forums on senior health care in my home State of Connecticut in an 
attempt to frame the scope of this debate. At these forums, I heard 
from many constituents on many matters regarding their health care, but 
the present lack of coverage for prescription drugs under the Medicare 
Program was far and away--without even a close second--the most 
important question that was raised to me by literally dozens and dozens 
of seniors in my State.
  I would guess in similar forums being held in other States around the 
country by our colleagues they have encountered virtually the same 
reaction as did I with my seniors in Connecticut: When are we going to 
get a prescription drug benefit? When are we going to get it under 
Medicare? And will it be meaningful enough to make a difference in our 
lives? Over and over and over again, in all parts of my State, this was 
the call that I received from my constituents.
  At these forums, I heard from seniors who literally could not afford 
to fill prescriptions called for by their doctors. I heard from elderly 
Medicare beneficiaries forced to choose between purchasing groceries or 
filling their drug prescriptions. I heard from seniors who were forced 
to skip dosages of their medicines in an attempt to stretch their 
limited supplies of needed medicines. And I heard from Medicare 
beneficiaries requiring more than 10 prescribed medicines a day unable 
to afford to fill even half of those needed prescriptions.
  Clearly, what I heard from hundreds of Connecticut's more than 
500,000 Medicare beneficiaries--in a State, I might add, that has 3\1/
2\ million people--is their grave concern over the present lack of a 
prescription drug benefit under the Medicare Program.
  Our goal over the next 2 weeks is very clear: to ensure that all 
Medicare beneficiaries have access to their needed prescribed 
medicines. To achieve anything less in this debate would be an 
abdication of our responsibility to ensure that Federal programs 
correspond with the times in which we live.
  The simple fact is that pharmaceuticals have and will continue to 
better the lives of millions of Americans. When the Medicare Program 
was first enacted in 1965, few could even begin to imagine the great 
strides we have realized in health care as a result of the development 
and widespread dissemination of pharmaceutical medicines. However, the 
present lack of a prescription drug benefit under the Medicare Program 
fails to reflect these great gains that have been made, leaving more 
than half of all Medicare beneficiaries without any coverage for their 
needed medicines. This is unacceptable, and it must be remedied.

  For this reason, I am heartened that it appears that today, for the 
very first time--for the very first time since we began discussion of 
this subject matter--we are on the cusp of passing in the Senate 
comprehensive Medicare reforms that will, at long last, add a 
prescription drug benefit to the Medicare Program.
  I am particularly pleased the measure reported by the Senate Finance 
Committee last week, and that is before us this afternoon, represents a 
very significant departure from previous plans supported by the 
administration that would have required Medicare beneficiaries to leave 
the traditional fee-for-service Medicare Program in order to receive 
coverage for their prescribed medicines. Such a move would have been 
unconscionable, as 89 percent of all Medicare beneficiaries today are 
in the traditional program.
  To force those beneficiaries to have to leave their present system of 
coverage, and most likely the doctor they have come to know and trust, 
would not only create great disruption, but it would also, for the 
first time since the program's inception, create a tiered benefit 
system under Medicare that would more greatly reward those who choose 
to join a private preferred provider organization or health maintenance 
organization over those who wanted to stay in the traditional Medicare 
Program.
  That is what the administration was originally advocating. That is 
what many, unfortunately, in the other body, the House of 
Representatives, are still pursuing and still advocating. So I hope, as 
a result of the change we have seen in the last week, this breakthrough 
will make a huge difference in the lives of Medicare beneficiaries who 
want to retain the ability to stay under the traditional Medicare 
Program if they so choose.
  And so while I am pleased the bill before us soundly rejects a tiered 
benefit system--and I commend the distinguished Senator from Iowa, the 
chairman of the committee, and the distinguished Senator from Montana, 
for rejecting the idea of a tiered benefit system, I am deeply 
concerned that the plan presently taking shape, as I mentioned, in the 
other body, the House, appears to rely on such a flawed plan. And until 
we have resolved the matters between these two bodies, this fundamental 
difference will still be out there and need to be addressed.
  President Bush, just last week, visited my home State of Connecticut 
and called on Congress to pass a prescription drug benefit before July 
4th. For my part, I call on the President not to sign any Medicare 
reform measure that would force seniors to join private plans in order 
to receive a more generous prescription drug benefit. Such a measure 
would signal an end to the Medicare Program as we know it and should be 
rejected out of hand. In fact, I would hope the President would say, 
categorically, that while he wants Congress to pass a bill before July 
4th--he must say, with equal strength, that he will not sign a bill 
that denies people under traditional Medicare the opportunity to have 
an adequate prescription drug benefit or forces them to have to make a 
choice between staying in traditional Medicare and getting no 
prescription drug benefit or going to a private plan where they can get 
that prescription drug benefit but having to give up traditional 
Medicare as the price. The President needs to state that he will reject 
any proposal on his desk that incorporates that idea.
  The bill before us, S. 1, the Prescription Drug and Medicare 
Improvement Act of 2003, represents a strong step forward on this 
issue. However, no bill is perfect, and S. 1 clearly leaves much room 
for improvement. In the coming weeks, I plan to work with my colleagues 
to specifically address concerns over the present bill's lack of 
adequate provisions to ensure that those companies presently providing 
their retirees prescription drug coverage receive adequate Federal 
support for their laudable efforts. Any measure that we enact should be 
crafted so as to support, not supplant, the valuable efforts of 
employers already providing prescription drug coverage for their 
retirees.
  Additionally, I remain concerned that the gap in coverage in the 
present

[[Page S7970]]

bill--the so-called donut hole--will leave many Medicare beneficiaries 
facing high prescription drug costs with no assistance at the very time 
when it may be needed most. These may be the people who are the most 
sick, under the most dire medical circumstances. And if they were to 
reach that threshold of approximately $4,500 in prescription drug 
costs, they will have to maintain paying the premiums without receiving 
any benefit until they reach the upper limit of the gap, approximately 
$5,800 in drug costs. This gap in coverage could provide a huge 
hardship on literally hundreds of thousands of Medicare beneficiaries. 
I hope we are going to be able to close the so-called donut hole, 
especially for those in the lower income category who can least afford 
any gap in their coverage.
  I am also concerned that S. 1 fails to adequately protect Medicare 
beneficiaries from the very understandable confusion and uncertainty 
that may surround these beneficiaries just as they begin to navigate 
the intricacies of a brand new program. Specifically, I am worried 
that, if enacted, the underlying bill would require Medicare 
beneficiaries choosing a prescription drug plan to stay with that plan 
for a minimum of 1 year. With the enactment of such broad and sweeping 
changes to Medicare as S. 1 would provide, I am fearful that many 
Medicare beneficiaries will face great uncertainty trying to find the 
best plan to meet their particular medical needs.
  I believe we can greatly relieve this uncertainty by allowing those 
initially choosing prescription drug plans for the first time the 
opportunity to move from one plan to another as they determine what 
each plan will specifically offer and which plan best fits their own 
needs. We ought to give our senior citizens that opportunity. All 
Medicare beneficiaries are not the same merely because they have 
reached the same age. They are under very different circumstances with 
very different medical needs. We ought to show them the dignity and 
respect they deserve as an older generation to give them the ability to 
choose the plan that serves their needs best and not force them to have 
to make decisions that may do them great harm.
  In the coming weeks I will offer several amendments to the 
legislation that will address these very specific issues and possibly 
other ones as well.
  On July 30, 1965, President Lyndon Baines Johnson traveled to the 
Truman Library in Independence, MO, to sign the Medicare Program into 
law. In attendance on that day was the former President of the United 
States, Harry S. Truman, 81 years of age at the time. On that day, 
President Johnson remarked:

       No longer will older Americans be denied the healing 
     miracle of modern medicine. No longer will illness crush and 
     destroy the savings that they so carefully put away over a 
     lifetime so that they might enjoy dignity in their latter 
     years.

  Almost 38 years later, we face a similar struggle of ensuring seniors 
access to modern medicine, this time in the form of prescribed 
medicines.
  So it is with a great sense of hope that I join the debate this 
afternoon. Medicare's nearly 41 million beneficiaries clearly need 
assistance in affording their needed medicines. Our effort over the 
next 2 weeks will greatly determine to what extent we assist in that 
effort.
  Clearly, a great opportunity is presently before us. I look forward 
to working with all of my colleagues on both sides of the aisle, 
Republicans and Democrats, to ensure that we seize this opportunity. It 
may not come again. While the bill before us may be less than perfect 
and the resources we are limited to may not be as adequate as we would 
like, we have an opportunity over the next couple of weeks to take the 
legislation presented to us by the Finance Committee, to work on that 
legislation and hopefully improve it in several of the areas I have 
mentioned.
  What greater gift could we give, 38 years after Medicare's creation, 
to retirees and future generations of retirees than to grant them 
access to this wave of new medicines and prescription drugs, that 
cannot only extend life but can substantially improve the quality of 
life for people, which will give them the opportunity to enjoy years of 
retirement with their children and grandchildren and friends. Surely 
these wonderful miracle drugs ought not to become the exclusive domain 
of only those who can afford to buy them.
  Mr. President, I do not want to have to face constituents in my State 
ever again who will report that they had to make a choice between 
putting food in their mouths or medicines that they need; that they had 
to choose between the medicines they need because they can't afford all 
of them that the doctors have prescribed, or that they reject 
altogether the medicines that they have been prescribed because they 
can't afford them. We can't do everything for everyone, but it seems to 
me providing a meaningful prescription drug benefit that will really 
serve the underprivileged in our society, particularly those age 65 and 
above, is something this Congress ought not to fail to do in its 
responsibilities.
  I look forward to the debate. I look forward, more than anything 
else, to voting for a package in the end that will do that which most 
of us would like to see accomplished and seeing to it that the elderly 
will receive the full promise given to them back in 1965 that a 
Medicare Program is going to be there for them, and this time we are 
going to include in the program coverage for needed prescribed 
medicines.
  I commend those who have moved so diligently and worked so hard to 
bring us to this very optimistic moment. I am hopeful in the coming 
days we can complete the job by adding some improvements here and 
presenting a bill to the American public which they will applaud if we 
correctly do our job.
  I suggest the absence of a quorum and ask unanimous consent that time 
thereunder be equally divided.
  The PRESIDING OFFICER (Mrs. Dole). That has been provided.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mrs. LINCOLN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                         Child Care Tax Credit

  Mrs. LINCOLN. Madam President, I am rising today to encourage my 
colleagues. I have gotten an understanding that the Republican 
leadership will be meeting in the morning to talk about the conference 
with the House on the opportunity we have to provide 12 million 
children in this country some help through the tax relief package that 
was passed in the Senate.
  I also thank my Senate colleagues for, in a resounding way, reaching 
out to this country and to those 12 million children, as well as their 
working families, and saying we do believe it is important that the tax 
relief package we provide be balanced both in its fiscal responsibility 
and in its ability to reach out to all working families in this Nation 
and give them the relief so that they, too, will have the opportunity 
to be able to participate in stimulating the economy of the country. 
After all, that is what we are really looking for, stimulating the 
economy and making sure we are strengthening our Nation. I think there 
is no better place to go than to the working American families.
  So I encourage my colleagues today, as I come to the floor not to ask 
immediately but to request of the leadership, to really thoughtfully 
put together what it is we need to do in order to expedite moving to 
conference on this issue. I also plead with the President that his 
efforts and opportunities will certainly weigh in with the Members of 
the House, encouraging them to move forward. They have already voted in 
the House in a motion to instruct the conferees to the Senate position. 
This is something we can do, and do it quickly and in a very fiscally 
responsible manner by paying for it. But we can do something now that 
is going to help working families in the next several months.
  It is critical, as we move forward with the previous tax package 
passed, to provide relief to all Americans across this great land by 
July 1, and that we, too, recognize not only those precious 12 million 
children who are out there, but the working families they are a part 
of, recognizing that these families are preparing in the late summer to 
get their children ready to go back to school. They certainly could use 
those resources in multitudes of ways--bringing their families 
together, preparing their children for the school year. We desperately 
want to make sure that happens.

[[Page S7971]]

  I encourage our Republican leadership to come together to visit on 
moving forward in the conference, recognizing that we have a tremendous 
responsibility not only to the economy of this Nation, particularly in 
strengthening our country, but, more importantly, to the future of the 
country.
  When you look at those who will be the future leaders of the 
workforce, the individuals who will be there to continue the great 
legacy of this land--the children of our country--we must give those 
working families the opportunity to take advantage of the same kind of 
tax relief that other families are going to be getting; they, too, have 
to take that opportunity to reinvest in this great country and, more 
importantly, in their families and their children.
  So I encourage my colleagues, as well as the leadership on the other 
side, to make sure that in the morning they will meet in a wholehearted 
fashion looking for the opportunity we have before us to be fair and 
balanced for the multitudes of children and working families across 
this country.
  I, too, encourage the President to weigh in on this issue. He has a 
tremendous opportunity to make a difference, and I hope he will choose 
to do so.
  I yield the floor and 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. INHOFE. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. INHOFE. Madam President, I am very concerned because what I see 
coming at us right now is a very fast train. And that train is a giant 
giveaway entitlement program. We might be in a position to do something 
about now, but if we wait, we will not be able to do anything about it.
  Medicare already accounts for roughly 12 percent of the Federal 
spending and will only grow as more and more baby boomers retire. When 
Medicare was proposed in 1965--and I am one of the few people around 
old enough to remember that--I can recall the estimate of Medicare Part 
A that would cost $2.9 billion in 1970. This was 1965. The actual 
expenditures in 1970 were $5.3 billion, roughly twice what they were 
estimating back in 1965. The estimate for 1980 was $5.5 billion. This 
is Medicare now. The actual expenditures that year totaled $25.6 
billion. That is five times the estimated amount.
  The predicted expenditures for 1990 were $9.1 billion, but the actual 
expenses totaled $67 billion, nearly seven times the estimated amount. 
Currently, 76 percent of the Medicare beneficiaries already have some 
form of drug coverage.
  We have talked about the fact that something that is not broken does 
not need to be fixed. When we start looking at establishing an 
entitlement program today and go by the Medicare model, this is 
something that none of our kids and grandkids are going to be able to 
afford.
  So if we keep in mind that 67 percent of the Medicare beneficiaries 
already have some form of drug coverage--much of it is better than the 
proposal on the table now--many of these individuals could lose this 
coverage if a prescription drug benefit is added to Medicare.
  CBO estimates that 37 percent of the beneficiaries with employer-
based prescription drug coverage would lose that coverage. This 
accounts for 11 percent of the total Medicare population.
  Many pharmaceutical companies already offer programs that give low-
income seniors their prescription drugs for free or for reduced prices. 
If this bill is passes in this form, the companies may eliminate these 
programs, forcing more people into the Medicare rolls.
  One might say, well, we can legislate this and not allow them to do 
that. That solution is not going to work. That would be an attempt to 
micromanage the private sector, and that would not work. I do not think 
there is any Member of this Senate who, if they owned a company that 
was giving away free programs, then the Government came along and 
offered something, that they would continue that practice. That is 
exactly what would happen.
  The need to get this legislation to the floor and passed by the end 
of June, along with the need for bipartisan support, has led to a 
series of compromises that have resulted in a hodgepodge of a bill. 
There are elements of this bill that are not only bad policy but will 
have a detrimental effect on the system as a whole; for instance, the 
extension of instant Medicaid benefits to illegal aliens, placing an 
additional burden on Medicaid; loss of employer-based benefits, thus 
expanding an already large entitlement program.
  According to an editorial in the Wall Street Journal yesterday, 
Monday, seniors already own 60 percent of all the wealth of the country 
and their worth is only increasing. We cannot continue to finance 
entitlement programs on the backs of current American workers, which is 
what this bill does.
  The bill is not means tested. We are giving multimillionaires, even 
billionaires, the same benefit offered to seniors on fixed incomes. In 
other words, the Bill Gateses and Warren Buffetts would get the same 
benefit as a retired schoolteacher.
  There is a need for Medicare reform to ensure the solvency and 
stability of the program. However, the current version of this bill 
does not meet those needs.
  I look forward to working with my colleagues to improve this 
legislation through amendments designed to encourage employers to 
retain the drug coverage they currently offer, to allow seniors to take 
advantage of private plans and better options, and to keep the costs 
low.
  I will read a little bit of the editorial I read on the plane coming 
back to Washington. It says:

       The bill that passed the Senate Finance Committee last week 
     would cover just 50 percent of the drug expenses between $276 
     and $4,500 annually, then zero up to $5,800, and 90 percent 
     thereafter. That's nowhere near as good as many seniors 
     currently have with employer-sponsored coverage. Most 
     employers will drop or scale back that coverage once they 
     realize that the feds are willing to pick up part of their 
     tab.

  That is human nature. That is what we are talking about.

       The Congressional Budget Office estimates that 37 percent 
     of those with employer coverage could lose it.

  I ask unanimous consent that the entire article be printed in the 
Record at the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. INHOFE. We want something to happen. We know there are some plans 
out there that have been offered that take into consideration that we 
do not want one Government program that is going to end up being an 
entitlement program. If it ends up the way it is today, I am going to 
serve notice right now that after every effort we can make to pass 
amendments, if they do not work and we end up with what we have today, 
I am going to be opposing this plan, and hopefully there will be 
several others who will do the same thing.

                               Exhibit 1

                          Medicare Drug Folly

       Runaway trains are hard to stop, but someone has to try and 
     derail the bipartisan folly now moving ahead under the guise 
     of Medicare ``reform.'' Permit us to put a few facts on the 
     table, in the (probably fanciful) hope that somebody in the 
     White House still cares more about the long-run policy than 
     the short-term politics.
       Let's start with the amusing irony that the supporters of 
     this giant new prescription drug benefit are many of the same 
     folks who were only recently moaning that a $350 billion tax 
     cut would break the budget. That tax cut will at least help 
     the economy grow. But the new Medicare entitlement is nothing 
     more than a wealth transfer (from younger workers to 
     retirees) estimated to cost $400 billion over 10 years, and 
     everyone knows even that is understated.
       The real pig in the Medicare python doesn't hit until the 
     Baby Boomers retire. Social Security and Medicare Trustee Tom 
     Saving told us last week that the ``present value'' of the 
     Senate plan--the value of the entire future obligation in 
     today's dollars--is something like two-thirds the size of the 
     current $3.8 trillion in debt held by the public.
       Bill Clinton's Medicare administrator, Nancy-Ann DeParle, 
     correctly calls it the ``biggest expansion of government 
     health benefits since the Great Society.'' She's delighted to 
     see it, but for the rest of us it is a recipe for tax 
     increases as far as the eye can see.
       And these estimates are before Democrats ``improve'' the 
     benefit, as they are already agitating to do. That's because 
     the dirty secret of this bipartisan lovefest is that the 
     proposed drug benefit isn't all that great.

[[Page S7972]]

     The bill that passed the Senate Finance Committee last week 
     would cover just 50% of drug expenses between $276 and $4,500 
     annually, then zero up to $5,800, and 90% thereafter.
       That's nowhere near as good as many seniors currently have 
     with employer-sponsored coverage. Most employers will drop or 
     scale back that coverage once they realize that the feds are 
     willing to pick up part of their tab. The Congressional 
     Budget Office estimates that 37% of those with employer 
     coverage could lose it.
       A Goldman Sachs analyst last week called this bill the 
     ``automaker enrichment act,'' saying companies like Ford and 
     GM would see a 15% reduction in their annual drug spending 
     and a huge decrease in unfunded liabilities. So unborn 
     taxpayers will soon have to pick up the tab for sweetheart 
     labor deals negotiated by carmakers and their unions a 
     generation or two ago.
       Understood in these terms, a universal drug benefit is 
     neither necessary nor morally justifiable. Some 76% of 
     seniors already have some prescription drug coverage, as the 
     nearby chart shows. The average Medicare beneficiary spends 
     an affordable $999 a year out of pocket on prescription 
     drugs, and less than 5% have out of pocket expenses over 
     $4,000.
       Seniors already own 60% of all the wealth in this country, 
     and are getting richer. A report in Health Affairs estimates 
     that by 2030 about half will have incomes of $40,000 and 
     about 60% will have assets of $200,000 or more. We're all for 
     a prosperous old age, but it is hardly a step toward social 
     justice for comfortable retirees to be further subsidized by 
     working taxpayers with mortgages and kids. The problem of 
     genuinely poor seniors can be handled with a drug discount 
     card or a means-tested subsidy.
       We understand, of course, that these facts are unlikely to 
     interfere with the political calculus driving this giant step 
     toward Canadian health care. The Democrats want to expand the 
     welfare state, while Republicans have convinced themselves 
     that they'll get credit with seniors and be able to take 
     health care off the table for 2004.
       The Republicans are fooling themselves in the long run, and 
     perhaps even about next year. Republicans can never win an 
     entitlement bidding war. They will spend the rest of their 
     public lives sounding like Scrooge for not expanding 
     benefits, or raising taxes on their own voters to pay for the 
     subsidies, or imposing price controls on drug makers that 
     will stifle innovation. This is how parties of the right 
     became me-too socialists in Europe.
       The sheepish support for this from the likes of otherwise 
     conservative Senators Rick Santorum and Mitch McConnell gives 
     the game away. They're playing loyal spinners, but their 
     heart doesn't seem to be in it. They're going along for the 
     ride with a Republican White House that seems to have 
     forgotten that it has an obligation to more than its own re-
     election.
  Mr. INHOFE. 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. HATCH. Madam President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. Madam President, I would like to take this opportunity to 
discuss a particular interest of mine: how the ``Prescription Drug and 
Medicare Improvement Act of 2003'' will protect beneficiaries in rural 
areas.
  As we worked to develop S. 1, members of the committee were 
especially attuned to the concerns expressed by some that private 
entities will be unwilling--or perhaps unable--to provide services to 
Medicare beneficiaries living in rural communities. That is why we 
included a number of safeguards to make certain that rural elderly and 
disabled patients have access to the Medicare improvements made in S. 
1.
  I cannot overstate how particularly important this is for my home 
state of Utah, since most of the 29 counties and 82,144 square miles in 
Utah are rural.
  According to the 2000 Census, Utah's population density was only 27.2 
persons per square mile, roughly one third of the national average of 
79.6 persons per square mile.
  So I am very interested in seeing to it that Medicare beneficiaries 
in rural areas--whether they are in Utah or for that matter in the 
State of New York, I want to make sure these beneficiaries get a fair 
shake.
  There is no question that the Medicare beneficiaries who live in 
these rural communities--towns and small cities like Moab, St. George, 
Green River, Blanding, Beaver and Vernal--deserve access to the same 
services that are available to Medicare beneficiaries living in Salt 
Lake City, or for that matter, New York City.
  I cannot criticize colleagues who are concerned that the new private 
sector-oriented delivery mechanisms we have designed in S. 1 may not be 
available to beneficiaries in rural areas. That being said, I want to 
provide assurances to my colleagues that the Committee worked hard to 
design a plan that would protect the elderly and disabled who reside in 
rural areas.
  Indeed, it is not surprising that criticisms have been expressed that 
there could be gaps in coverage in rural areas given the experience 
with Medicare+Choice and Medicare HMOs.
  These Medicare+Choice plans were established with the intent of 
providing Medicare beneficiaries throughout the country with access to 
both traditional Medicare and Medicare+Choice plans.
  Unfortunately, it has not worked out that way. For a variety of 
reasons, the companies responsible for these plans found that they 
could not offer services in all areas.
  Not surprisingly, many of the communities that were left without 
access to these HMOs are in rural areas.
  I am particularly sensitive to this, because Utah is one of those 
States in which the Medicare+Choice plan operated for one year and then 
chose to discontinue.
  This was a great disappointment to all--beneficiaries, the provider, 
and the Government alike.
  So I, among all others, find it completely understandable that there 
may be a question about whether the plans will be available in rural 
communities.
  I have a simple answer to that question. The new private drug plans 
created in A. 1 are completely different from the Medicare+Choice 
model.
  We have learned from our experience with Medicare+Choice and we have 
worked to ensure we do not repeat past mistakes.
  Let me take this opportunity to explain how the program will work.
  Our legislation establishes a new Center for Medicare Choices within 
the Department of Health and Human Services. This new Center will be 
headed by an administrator who will oversee both the new drug plan and 
the new Medicare Advantage program.
  To operate the prescription drug plan, the new administrator will 
create at least 10 regions throughout the country. These regions must 
be at least the size of a State.
  If beneficiaries remain in the traditional Medicare program, they may 
receive pharmaceutical assistance through a new stand-alone program 
certified by the Government to provide coverage in that region. S. 1 
requires that at least two stand-alone drug plans would be offered to 
Medicare beneficiaries in each region.

  Now some may ask, ``How does that ensure rural Medicare beneficiaries 
will have access to prescription drugs distributed by private 
companies? How is this different from the Medicare+Choice HMOs?''
  The answer is this.
  The Medicare+Choice program is organized by counties. In other words, 
Medicare+Choice plans can choose to offer coverage in one county, but 
not in another.
  These plans may ``cherry pick,'' or choose to operate in the more 
lucrative areas, ignoring the less profitable ones. For example, they 
can offer coverage in suburban counties where the cost of doing 
business might be lower or in counties where, for one reason or 
another, Medicare beneficiaries are healthier.
  Under the new program, plans offering stand-alone prescription drug 
coverage will not be able to cherry pick in this way, because they must 
operate in all areas of a much larger region.
  If a plan wants to offer coverage in Salt Lake City, it will be 
required to offer coverage in St. George, Moab, Beaver, Vernal, and 
Green River. In order to provide coverage in Salt Lake City, a plan 
will be required to offer coverage in every county and every community 
and to every Medicare beneficiary in Utah. That is true of other states 
and their rural problems as well. I am naturally talking about my own 
home State of Utah but it applies throughout the country.
  We envision these regions, in many cases, encompassing more than one 
state, and combining rural areas and urban areas.
  Medicare+Choice does not work this way. And so, we have designed the 
plans envisioned under S. 1 based on the lessons learned with 
Medicare+Choice.

[[Page S7973]]

  Another criticism some in this body have voiced relates to the 
concern that prescription drugs might be available in a predominantly 
rural region, but with higher premiums for Medicare beneficiaries 
living in rural areas.
  Once again, the concept of regions addresses this issue. Plans will 
be required to charge the same premium for an option throughout the 
region.
  Let me add, however, that this does not ensure premiums will be 
identical between regions.
  This important issue was raised during the Finance Committee's 
consideration of this legislation by my friend and colleague, Senator 
Olympia Snowe.
  In order to address this very valid concern, our legislation gives 
the Secretary of Health and Human Services the discretion to make 
adjustments in geographic regions so there will not be a large 
discrepancy in Medicare prescription drug premiums across the country.
  Other may wonder why we establish regions at all. Why not have a 
single premium throughout the country and private entities would bid to 
provide prescription drugs nationwide?
  One reason we did choose this approach is that only a few private 
entities are currently able to provide nationwide coverage. Limiting 
competition to those few companies would neither ensure beneficiaries 
the best prescription drug prices nor a significant choice among 
coverage options.
  The approach we have chosen is one that ensures beneficiaries will 
have access to prescription drug coverage. It provides for competition, 
and minimizes regional differences in beneficiary premium costs.
  But some may still wonder whether private plans will choose to enter 
predominantly rural States or regions?
  My Finance Committee colleagues and I have worked hard to ensure that 
plans have the appropriate incentives to participate in all 50 states.
  Even so, no one can guarantee with complete certainty that private 
prescription drug plans will choose to operate in all of the States all 
of the time.
  For this reason, we worked very hard to make certain there is a 
safety net, a ``fallback'' plan that would provide seniors with the 
coverage they need in the event only one or even no private sector 
plans enter a region.
  If only one plan, or even if no plans, are willing to offer stand-
alone prescription drug coverage within a region, the government will 
enter into an annual contract with an entity to provide a prescription 
drug fallback plan.
  This fallback plan would be given a one year contract to offer the 
standard drug plan to all Medicare Part D beneficiaries in the region. 
The fallback plan will be an insurance policy provided by the federal 
government to ensure that Medicare beneficiaries in rural communities 
have prescription drug coverage available in the event that private 
plans are slow to begin providing service in their area.
  Some in this body argue that if the fallback option is so attractive 
we should make it available all the time to anyone who wants it. 
Indeed, these colleagues argue that this so-called ``permanent 
fallback'' should be offered to beneficiaries in addition to the 
private stand-alone drug plans that would be offered to those Medicare 
beneficiaries remaining in traditional Medicare.
  While this may sound attractive at first, it is not.
  Making the fallback plan a permanent option will undermine the very 
structure upon which we have built S. 1.
  Not only would it drastically increase costs--thus pushing the bill 
over the $400 billion 10-year limit--it would also be a disincentive 
for private plans to enter the market.
  I will oppose any amendment that will make the fallback plan 
permanent.
  First and foremost, including a permanent fallback plan creates an 
uneven playing field.
  The government fallback is a non-risk bearing entity which means that 
it will operate in regions without any risk for gains or losses. The 
government pays the fallback plan for the administrative costs 
associated with delivering the drug benefit.
  If we make the fallback plan permanent, we are basically requiring 
privately delivered drug plans, which are at least partially 
responsible for bearing the risk of delivering this benefit, to enter 
this same market and compete with these government fallback plans.
  I think this is not only unfair, but it also sets up our drug plan 
for failure. There isn't a private health plan out there that will 
enter such a lopsided market where we give their competitors such a 
large financial advantage.
  In addition, including a permanent fallback plan will add billions of 
dollars to the cost of this bill because we will be relying, at least 
partially, on an inefficient, more costly government-style delivery 
system to provide beneficiaries with drug coverage.
  When the Senate was debating the Medicare prescription drug issue 
last year, this was one of the biggest criticisms against the drug 
benefit plan offered by our colleague from Florida, Senator Graham.
  The Graham drug benefit plan created a one-size-fits-all drug benefit 
delivered by the federal government. This is not what Medicare 
beneficiaries want. Beneficiaries want choice in drug coverage. They do 
not want to be forced into government-run plans and offered a one-size 
fits all benefit.
  The intent of S. 1 is to introduce a new model to deliver care to 
Medicare beneficiaries.
  We are harnessing the efficiencies and quality of a private-delivery 
system in order to offer Medicare beneficiaries a meaningful drug 
benefit. This drug benefit will include multiple choices, but it only 
works when all options are expected to participate under the same 
rules.
  In S. 1, we included the government fallback as a safety net to 
ensure that every senior or disabled beneficiary has access to 
prescription drug coverage, but it is a fallback of last resort. And 
that is because even the Congressional Budget Office estimates that it 
is a more costly, less efficient model to deliver care.
  I urge my colleagues to remember these points when the Senate 
considers an amendment that would make the fallback plan a permanent 
option under the stand-alone drug plans.
  Let me make one thing perfectly clear. The stand-along benefit 
offered under Medicare Part D will not be the only way in which 
Medicare beneficiaries in rural areas can obtain prescription drug 
coverage.
  In addition, the Medicare Advantage plans--including the current HMOs 
and new preferred provider organizations, called PPOs--will offer 
beneficiaries comprehensive, integrated coverage, including coverage 
for hospital services, outpatient care, and prescription drugs.
  Private sector entities will bid to become one of three PPO plans in 
a region.
  And, HMOs can continue to contract to provide all Medicare services--
including drugs--for a county.
  My Finance Committee colleagues and I have worked very hard to 
provide appropriate incentives to encourage the preferred provider 
organizations to participate in every region and in every State, 
whether they are predominantly rural or urban. However, if for some 
reason, PPOs decide not to bid in a specific region, the beneficiaries 
in these regions still will have the option to obtain prescription drug 
coverage through traditional Medicare and the new Medicare Part D plans 
that I described earlier.
  The bill that we approved in committee provides options for Medicare 
beneficiaries in urban and rural areas to obtain prescription drugs 
through traditional Medicare and the new Part D prescription drug 
program, or through the new Medicare Advantage program with its 
comprehensive health care coverage plans.
  Furthermore, the ``Prescription Drug and Medicare Improvement Act of 
2003'' ensures all Medicare beneficiaries that prescription drug 
coverage will be available even if private entities are unable to 
provide the coverage in their region.
  This legislation is preferable to previous bills we have considered, 
because it provides Medicare beneficiaries with more choices and more 
comprehensive coverage. It provides private entities with more 
incentives to cover rural communities, and it assures Medicare 
beneficiaries who live in those rural communities that they will have 
access to prescription drug coverage.
  Just think of what we are doing here. We have a drug benefit that 
will begin

[[Page S7974]]

January 1, 2006, and it is a voluntary program.
  We will issue a prescription drug card which will be offered to 
beneficiaries from January 1, 2004, through at least January 1, 2006, 6 
months after the prescription drug benefit plan is implemented. The 
prescription drug plan will be implemented on January 1, 2004.
  The drug benefit with the Medicare Part D is a Medicare Program. At 
least two stand-alone drug plans must be offered in each region. All 
Medicare beneficiaries will be able to participate. Those who remain in 
traditional Medicare will have a drug benefit equal to those who go 
into the new Medicare Advantage Program, formerly known as 
Medicare+Choice. Beneficiaries will be offered either standard drug 
coverage or drug coverage that is an actuarial equivalent to the 
standard drug plan. Either drug plan will be available to those 
remaining in traditional Medicare or those who begin the Medicare 
Advantage Program, this new program.
  The national average of monthly premiums for the drug benefit will be 
$35 per month in 2006. All drug plans will have mandatory deductibles 
and beneficiary out-of-pocket cost-sharing limits.
  Every beneficiary will have a choice between three prescription drug 
plans. The Medicare Advantage Program will offer either a PPO option or 
an HMO option. A stand-alone drug benefit will be offered to 
beneficiaries remaining in traditional Medicare. A maximum of three 
Medicare Advantage PPO plans will be offered per region. They will 
compete for the opportunity and the privilege of serving the people in 
that particular region. Health and Human Services will certify all of 
these drug plans before they are offered to Medicare beneficiaries. In 
any event, they will be offered to all Medicare beneficiaries, seniors 
and disabled.
  I was a member of the tripartisan group last year that put forth the 
tripartisan plan. Had we not done that, we wouldn't be as far along 
today as we are. I have to say I was proud to be a member of that 
tripartisan plan, along with Senators Grassley, Snowe, Breaux, and 
Jeffords. There were five of us. We took on that assignment, and we 
came up with a lot of ideas that have been improved upon in this bill. 
This was a very important bill.
  There is no easy solution in these areas. In spite of the desire of 
some to have simple private sector solutions, those are not in the 
cards with the votes we have in the Senate today or in the near future, 
I have to say as well.

  This bill is as close as we can go towards having two completely 
different but nevertheless useful options: traditional Medicare for 
those who do not want to leave, but this new Medicare Advantage for 
those who really want to try something different where they may have 
advantageous benefits over time.
  We believe the competition fostered by this bill is going to be good 
competition, that it should help to keep costs down. But, most 
importantly, we believe all seniors should have a right to prescription 
drug benefits, and this plan will give it to them.
  We will have lots of crying and moaning and groaning about different 
ideas around here, some of which I might like just as much as what we 
have in here, but we could not get them done. So we have come together 
in the art of the doable to get a bill that literally gives both sides 
of these options a chance to be able to excel and do better for our 
senior citizens. That is important. That is real important. This bill 
is important. It is the first time in history we have done this. 
Frankly, a $400 billion bill over 10 years is a very important bill 
that will do an awful lot of good for our seniors and for those who 
really are hard up in our society and for those who have to do without 
food or split their pills or do any number of things in order to be 
able to get the medications they need.
  I am proud of this bill. Each one of us probably could, if we were 
dictators, come up with what we think might even be a better bill. But, 
fortunately, that isn't the way this representative republic works. We 
have to work within the framework of the Congress. Sometimes that is a 
messy, mixed up, sometimes very inefficient method of legislating, but, 
in the end, this country has survived because we have the greatest form 
of government in the history of the world. And this process, as sloppy 
as it might be from time to time is bringing about a bill that will do 
an awful lot of good for an awful lot of seniors in our society at a 
time when they need it the most.
  I just hope we can reduce the number of amendments and get this bill 
passed as soon as we can, get together with the House in a conference, 
and, of course, come up with a final package that, hopefully, will even 
be improved that will take us throughout this next century in a way 
that will protect our seniors and those who have suffered for want of 
pharmaceutical prescription drugs.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Alexander). The Senator from Arizona.
  Mr. McCAIN. Mr. President, I ask unanimous consent to address the 
Senate as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. McCain pertaining to the submission of S. Res. 
173 are printed in today's Record under ``Statements on Submitted 
Resolutions.'')
  The PRESIDING OFFICER. The Senator from Kentucky is recognized.
  Mr. McCAIN. Mr. President, I note the presence of the Senator from 
Kentucky. I ask unanimous consent to engage him in a 2- or 3-minute 
dialog.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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