[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.
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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.
____________________