[Congressional Record Volume 149, Number 92 (Friday, June 20, 2003)]
[Senate]
[Pages S8265-S8295]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    PRESCRIPTION DRUG AND MEDICARE IMPROVEMENT ACT OF 2003--Resumed

  The PRESIDING OFFICER. The clerk will report the pending business.
  The legislative clerk read as follows:

       A bill (S. 1) to amend Title XVIII of the Social Security 
     Act to make improvements in the Medicare Program, to provide 
     prescription drug coverage under the Medicare Program, and 
     for other purposes.

  Pending:

       Bingaman Amendment No. 933, to eliminate the application of 
     an asset test for purposes of eligibility for premium and 
     cost-sharing subsidies for low-income beneficiaries.
       Dorgan Amendment No. 946, as amended, to provide greater 
     access to affordable pharmaceuticals.


                     Amendment No. 946, as amended

  The PRESIDING OFFICER. There are 4 minutes of debate equally divided 
on the Dorgan amendment.
  Who yields time?
  Mr. BAUCUS. Mr. President, who controls time?
  The PRESIDING OFFICER. The Senator from North Dakota controls 2 
minutes. The manager will control 2 minutes in opposition.
  Mr. DORGAN. Mr. President, this amendment deals with reimportation of 
prescription drugs. It is designed to try to put downward pressure on 
prescription drug prices in this country. It is not my intention or 
desire that Americans go elsewhere to acquire prescription drugs. But 
the fact is that U.S. consumers pay the highest prices in the world for 
prescription drugs. In North Dakota, for example, there is a pharmacy 
in the town of Pembina, and if you buy a prescription drug in that one-
room pharmacy--
  Mr. BAUCUS. Mr. President, the Senate is not in order.
  The PRESIDING OFFICER. The Senate will be in order.
  Mr. DORGAN. Mr. President, 5 miles north of that North Dakota one-
room drugstore, in Emerson, Canada, you will find, if you have breast 
cancer and have to buy Tamoxifen, that the drug that you pay $10 for in 
the U.S. can be purchased for $1 5 miles north.
  The question is, why should that happen? It should not happen. Let 
the market system deal with this. These are FDA-approved drugs. It is 
the same pill put in the same bottle by the same company. We ought to 
have fair pricing for Americans, and if not fair pricing here, then 
allow them to access those prescription drugs from a chain of custody 
in Canada that is safe. We are only talking about licensed pharmacists 
and distributors being able to access that FDA-approved drug from a 
licensed pharmacist or distributor in Canada. We have accepted the 
Cochran language. We don't think that injures this because, in the 
circumstance, we have changed the reimportation amendment to deal only 
with Canada, which has nearly an identical chain of supply and would 
therefore represent a safe drug supply for our pharmacists and 
distributors to access and to be able to pass the savings along to the 
American consumer. That is the purpose of this amendment.
  I reserve the remainder of my time.
  Mr. JOHNSON. Mr. President, I rise today in strong support of 
addressing a major oversight in S. 1, the Prescription Drug and 
Medicare Improvement Act of 2003. The bill has absolutely no provisions 
to control the skyrocketing costs of prescription drugs, and, as 
currently written, is really just a blank check for big drug companies.
  If one looks at the costs of prescription drugs, the numbers are just 
astounding. Seniors in the U.S. who lack drug coverage must pay twice 
as much for the five most popular drugs as purchasers in many foreign 
countries. All Americans who need prescription drugs could benefit from 
improved access to lower-priced drugs from Canada. Brand-name drugs 
cost an average of 38 percent less in Canada than in the United States. 
This could mean literally hundreds of dollars less a year for U.S. 
purchasers.
  For several years now, many of my colleagues have been fighting to 
provide access to lower prescription drug

[[Page S8266]]

prices for seniors and all Americans by sponsoring a reimportation plan 
that is safe, effective and keeps savings in the pockets of seniors. I 
am happy to join several of my colleagues here today to cosponsor and 
support this amendment to the prescription drug bill. I want to 
especially thank Senator Dorgan for his leadership on this issue. He 
has worked hard to try to bring a solution to the skyrocketing prices 
seniors and all Americans must now pay for their prescription drugs.
  As costs continue to rise for consumers, and pharmacies' profit 
margins continue to shrink, a quick look at net profits of drug firms 
paint the real story. While Fortune 500 companies have experienced 
close to only a 1-percent increase in net profits over the last 30 
years, and pharmacies have experienced a net loss of about that amount, 
drug firms have experienced an over 1-percent increase in such profits. 
But still, we seem to ignore the manufacturers exorbitant U.S. prices 
over and over.
  The Dorgan amendment would improve access to lower priced drugs by 
allowing wholesalers and pharmacists to import prescription drugs from 
Canada, which has a similar drug approval and distribution system as 
the United States. The amendment also would enable individuals to 
import prescription drugs from Canada as long as the drugs are for 
their personal use and they do not exceed a 90-day supply.
  This amendment finally says to the drug companies, enough is enough. 
I think if we work together we get a handle on the unrestrained costs 
of drugs in this country. Efforts such as those in the Dorgan amendment 
and those just embraced by many of my colleagues who joined me in 
cosponsoring and supporting the generics amendment yesterday will make 
such an important difference in the true value of what a drug benefit 
can really do to help seniors. I sincerely hope that all of my 
colleagues, on both sides of the aisle, will commit to adopting the 
provisions in the reimportation amendment in order to enhance the value 
of this legislation.
  Mr. HATCH. Mr. President, I rise to oppose the Dorgan amendment on 
drug importation.
  Frankly, given the history of this amendment, I feel a little like we 
are in the movie, Groundhog Day. We have been there and done that. And 
like the Bill Murray movie, we appeared to have gone there and done 
that again last night. When I woke this morning, I had the feeling of 
deja vu all over again.
  Each time the same thing happens. First we consider a flawed drug 
reimportation amendment. Then we adopt a second degree amendment that 
virtually guarantees the amendment can never be implemented. We did it 
in the 106th Congress, and Secretary Shalala--the Clinton 
administration's Secretary of Health and Human Services--could not 
certify the safety of reimported drugs. We did it in the 107th Congress 
again last year when the Senate adopted a reimportation amendment 
during the debate on the ill-fated vehicle, S. 812. And now last night 
we did it in the 108th Congress. The same dynamic played out yet again 
with the Dorgan amendment and the second degree amendment thereto.
  Let me remind my colleagues. Here is what the Bush Administration's 
Secretary of Health and Human Services, Tommy Thompson, said about this 
idea last year: ``Opening our borders to reimported drugs potentially 
could increase the flow of counterfeit drugs, cheap foreign copies of 
FDA-approved drugs, expired and contaminated drugs, and drugs stored 
under inappropriate and unsafe conditions. In light of the anthrax 
attacks of last fall, that's a risk we simply cannot take.''
  I agree with Secretary Thompson that reimportation was not ever a 
good idea. But, it could be even more deadly after September 11th. 
Although I am not a betting man, I can guess what Secretary Thompson 
will say if this unfortunate amendment survives the conference 
committee.
  This year's version of the Dorgan amendment contains a new section 
relating to the effective date of the amendment. This modification 
attempts to make the proposal effective prior to the Secretary 
determining that the benefits of this law outweigh the risk.
  Fortunately, the Cochran amendment we adopted last night by voice 
vote makes it clear that nothing in the Dorgan amendment can take 
effect unless the Secretary finds that the provision: first, poses no 
additional risk to the public health and safety; or, second, will 
result in a significant reduction in the drug costs.
  My preference is for no Dorgan amendment at all. But if his language 
is adopted, it is essential that we have the Cochran correcting proviso 
so that the American public can be protected against unsafe drugs.
  I agree with my friend, John Dingell, the Dean of the House of 
Representatives, and author of the 1988 Prescription Drug Marketing 
Act, PDMA, that helped put rigorous safety controls in the U.S. drug 
distribution system. Mr. Dingell said, ``the very existence of a market 
for reimported goods provides the perfect cover for foreign 
counterfeits.''
  Representative Dingell's Energy and Commerce Committee produced a 
report that succinctly explained why the PDMA was needed: 
``[R]eimported pharmaceuticals threaten the public health in two ways. 
First, foreign counterfeits, falsely described as reimported U.S. 
produced drugs, have entered the distribution system. Second, proper 
storage and handling of legitimate pharmaceuticals cannot be guaranteed 
by U.S. law once the drugs have left the boundaries of the United 
States.''
  This view is consistent with the testimony that the experts at FDA 
have given before Congress numerous times.
  As the FDA's senior associate commissioner for policy, planning, and 
legislation, Bill Hubbard, has warned: ``Even if the Canadian system is 
every bit as good as ours . . . the Canadian system is every bit as 
good as ours . . . the Canadian system is open to vulnerabilities by 
people who will try to enter the U.S. market . . . because that is 
where the money is.''
  A bipartisan group of some 10 former FDA Commissioners have voiced 
their concern about the safety of reimported pharmaceuticals. So has 
the Drug Enforcement Administration.
  We are told by the experts that the number of counterfeit cases is on 
the rise. FDA has opened more than 70 counterfeit drug cases since 
October 1998, including 26 arrests and 20 convictions through last 
June. In the last two months, FDA has issued alerts on counterfeit 
Lipitor. In March, the FDA found that doctored EPO--a product vital to 
patients fighting cancer and other deadly diseases--has been the target 
of counterfeiters in previous instances.
  Let us remember the sage counsel we were all taught in elementary 
school--safety first. Unfortunately, the Dorgan amendment conflicts 
with this important lesson.

  To summarize, my primary reason for opposing this amendment is a 
concern expressed by many public health and safety experts: Opening up 
the current closed U.S. drug distribution system to products of unknown 
pedigree will result in disaster down the road.
  I know that Senator Dorgan and the other cosponsors of the amendment 
are motivated only by their desire to do right by their constituents 
and other Americans trying to obtain affordable pharmaceuticals. We all 
share in that goal. This is why we are working in a bipartisan fashion 
to craft a $400 billion Medicare drug benefit program. Let us focus on 
the Medicare drug benefit during this debate and not get sidetracked on 
ill-conceived measures like the Dorgan reimportation amendment.
  Let me close by saying this to my friend from North Dakota, with whom 
I serve on the Finance Committee: We have worked together on several 
trade issues involving Canada. We have struggled with how to respond 
effectively to the problems associated by the influx of protected 
Canadian softwood lumber and the actions of the less-than transparent 
Canadian Wheat Board.
  My friend from North Dakota does not like it when the actions of the 
Canadian government unfairly benefit Canadian producers of wood and 
wheat relative to American loggers and farmers. This is so even if the 
preferentially-treated Canadian products can undercut the prices 
offered by American producers to American consumers.
  In this debate on drugs, we often hear heart-wrenching stories of 
seniors being forced to choose between paying for drugs or paying for 
food or paying the rent. When it comes to weighing

[[Page S8267]]

the interests of loggers and farmers versus the lowest cost goods, my 
friend from North Dakota carefully, and appropriately, factors in the 
long term interests of preserving vital U.S. industries. He does not 
automatically support policies that result in U.S. consumers, 
particularly our seniors, paying the lowest possible prices for such 
essential products as bread and wood.
  Not so with price-controlled Canadian drugs. First, the Canadian 
government ratchets down the prices of drugs for its citizens. Comes 
now the Dorgan amendment that acts to pass on these controlled prices 
to U.S. consumers. If passing on Canadian government-controlled prices 
is such a good policy for drugs, then I ask why it is so bad when the 
Canadian government acts to artificially hold down the price of wheat 
and lumber and pass these savings along to the American consumer?
  Let us face facts. Money is fungible. If the proper response to 
easing the choice among food, medicine and shelter is always to end up 
with the lowest prices then why should we not applaud equally the 
Canadian Wheat Board and the Canadian drug price control agency?
  My answer is that government price controls, subsidy programs, and 
preferential treatment are never the preferred policy option--whether 
we are talking about food, medicine or the mortgage.
  Let me close by saying that my fundamental objection to the Dorgan 
amendment is the safety risks it would engender. In addition, I have 
concerns over embarking on a policy that has the effect of imposing 
government price controls on a product highly dependent on investment 
capital, and let the Canadian government do the price controlling to 
boot.
  I only hope that we can some day break the cycle of passing a piece 
of legislation with a circuit breaker provision that will always be 
tripped and ensure the underlying language, thankfully, will never take 
effect. Enough of Groundhog Day.
  Mr. FRIST. Mr. President, I rise to oppose the Dorgan amendment on 
importation of foreign drugs. It is essential that my colleagues 
understand the gravity of what we are about to vote on today. My 
colleagues yesterday passed the Cochran second degree amendment by 
voice vote, ensuring that none of the provisions in the Dorgan 
amendment would become effective unless the Secretary of Health and 
Human Services certifies to Congress that the implementation of the 
Dorgan amendment would (1) pose no additional risk to public health and 
safety, and (2) result in a significant cost savings for Americans.
  While this safety and cost savings certification threshold determines 
whether the Dorgan importation language would ever become effective in 
the first place, I believe that in this era of increasing bioterrorist 
threats, now more than ever, we should not pass new drug importation 
legislation at all. Allowing the importation of drugs from Canada by 
pharmacists and wholesalers would simply encourage further 
proliferation of schemes to use Canada as a transshipment point for 
sending unapproved, expired, counterfeit or otherwise dangerous drugs 
to American consumers. The Assistant Deputy Minister of Health Canada 
clearly stated in a May 9 letter this year that, ``The Government of 
Canada has never stated that it would be responsible for the safety and 
quality of prescription drugs exported from Canada into the United 
States, or any other country for that matter.''
  Allowing pharmacists and wholesalers to import drugs directly from 
sources outside the U.S. will further encourage the proliferation of 
purportedly ``Canadian'' Internet Pharmacies that are not from Canada. 
A 2003 Global Options report stated that 33 percent of so-called 
``Canadian'' internet pharmacies are not from Canada. One was 
``Canadarxfree.com'' and the actual country of origin was Mexico. 
Another, ``Trustedcanadianpharmacy.com'' had Barbados as the actual 
country of origin.
  Another troubling real-life example cited by Bill Hubbard, the Senior 
Associate Commissioner for Policy, Planning and Legislation at FDA 
during a June 12, 2003 hearing before the house Government Reform 
Subcommittee was, ``. . . we have an example of an 82-year-old 
gentleman who bought two drugs from a website.--[H]e was told on that 
website and when he made the phone call that he was getting a U.S. 
produced drug, sold in Canada and sold back to him. He got Indian drugs 
that are not approved, have no labeling, no information and he called 
the FDA and was outraged why are we letting this stuff in.'' The FDA 
determined the drugs were counterfeit.
  The so-called documentation requirements in the Dorgan amendment 
could easily be circumvented, forged and lack verification standards. 
In July 2002, the Department of HHS sent a letter to Senator Cochran 
that described the problems with allowing pharmacists and wholesalers 
and even individuals to import drugs from Canada, ``Since counterfeits 
can easily be commingled with authentic product, either by the case, by 
the bottle or by the pill, there is no sampling or testing protocol 
sufficient to protect against the grave public harm they pose.''
  All of my concerns about importation and risks to the health and 
safety of Americans that I have expressed do not even include the 
reasons I believe this Dorgan amendment is truly unnecessary. We are in 
the midst of debating and passing a landmark Medicare prescription drug 
bill. Through this historic legislation we will provide our seniors 
with affordable access to medicines, without exposing them to the very 
real risks of counterfeit, subpotent, unapproved, adulterated, or 
misbranded drugs from importation. We have also gone a step further in 
addressing the affordability of medicines by overwhelmingly supporting 
the Gregg-Schumer amendment yesterday, which will allow generics to 
enter the market faster. Together with the President's recently issued 
final rule, this amended bill will save Americans money by improving 
access to more affordable generic drugs. I commend the President for 
proposing in this 2004 budget request, an unprecedented increase of $13 
million in spending for FDA's generic drug programs. By increasing the 
program's size by almost one-third of its current size, FDA will be 
able to hire more generic drug application reviewers and approve 
generics faster.
  With all of the new information we now have about the dangers of 
importation and fraudulent websites, we owe it to our seniors to pass a 
meaningful, comprehensive Medicare drug benefit without exposing them 
to the very real risk of obtaining counterfeit imported medicines.
  I again urge my colleagues to vote ``no'' on the Dorgan amendment, 
even as modified by my second degree amendment.
  The PRESIDING OFFICER. Who yields time in opposition?
  Mr. FRIST. I yield 2 minutes to the Senator from Mississippi.
  Mr. COCHRAN. Mr. President, even though we adopted the Cochran 
amendment by voice vote, which requires certification that drugs 
imported through Canada are safe, and that they significantly reduce 
costs to American consumers, if the Dorgan amendment passes, it creates 
a new opportunity, a new source for importation of drugs into our 
country from other countries besides Canada. There are manufacturing 
facilities right now in India, in France, and in China, where drugs are 
being manufactured to look like American drugs that have been approved 
in this market but are counterfeit drugs. Some are truly unsafe because 
of the unsanitary conditions under which they are manufactured. Some do 
not contain anything like the ingredients the labels say they contain.
  Mr. President, this is a new threat to the security and safety of 
American citizens. We don't have the Food and Drug Administration 
inspectors, U.S. Postal Service inspectors, or the U.S. Customs Service 
agents to monitor the new importation that will flood into this country 
from Canada--but not necessarily manufactured in Canada, not 
necessarily manufactured in the U.S. and sold in Canada and reimported, 
which is the purpose of this amendment. But it opens a new door, a new 
opportunity, and it is a new threat to the security of the people of 
this country. I urge that we vote no on the Dorgan amendment.
  I yield time to the Senator from Pennsylvania.
  Mr. SANTORUM. Mr. President, I love this idea that we are going to 
let markets work and have free trade.

[[Page S8268]]

What the Senator doesn't tell you is the reason the price is $1 instead 
of $10 is that Canada sets the price. Canada says: If you want to sell 
drugs here, fine, here is what we will pay. If you don't agree, you 
cannot sell the drug. If we really want to sell your drug, we will 
steal your patent and we will make the drug up here and sell it for the 
price we want.
  That is the law in Canada. So if you want free trade, great, we will 
have them set the price for all the agricultural products up there and 
be able to set that and send it back here and call that free trade.
  Mr. DORGAN. Mr. President, we have price controls on prescription 
drugs in this country. It is just that the prescription drug 
manufacturers control the price. My friends want to have a debate we 
are not having. The only access to prescription drugs we are talking 
about is from licensed pharmacies or distributors--accessing 
prescription drugs from a licensed pharmacist or distributor in Canada 
and that would be FDA-approved. We are not talking about counterfeit 
drugs.
  Mr. FRIST. Mr. President, on my leader time, I rise to speak in 
opposition to the Dorgan amendment on the importation of foreign drugs. 
Before the vote, I want to let my colleagues know that I do believe 
this amendment has the potential for opening doors that would be 
dangerous in this day and time. I say this in spite of us passing by 
voice vote the Cochran amendment yesterday, which does two things. It 
says none of the provisions of the underlying Dorgan amendment would 
become effective unless the Secretary of Health and Human Services says 
it poses no additional risk to public health and safety and, two, 
results in significant cost savings for Americans.
  I supported that amendment. We all did; it was a voice vote. That is 
very important. It does change the threshold a bit, but I will vote 
against the Dorgan amendment because I believe in this era of increased 
bioterrorist threats, we, now more than ever, should not open the door 
and pass new drug importation legislation at all. The reason I say 
that, very quickly, is the Canadian Government has stated:

       The government of Canada has never stated that it would be 
     responsible for the safety and quality of prescription drugs 
     exported from Canada into the United States, or from any 
     other country.

  If we open this door, Canada has the potential for--first of all, 
they cannot certify safety but, secondly, become a transshipment port 
for other countries if we open this door to Canada. There are a number 
of statements that have been made. The other concern I have is on the 
documentation requirements. I am afraid, in the Dorgan amendment, they 
could be forged or circumvented, and there is a lack of verification 
standards, I believe.
  Lastly, it is important we understand our underlying bill to which 
the Dorgan amendment is being applied has as its purpose to make drugs 
more affordable and lower that burden overall. I am hopeful we will 
accomplish that with the vote at the end of next week--drugs that are 
certified to be safe, that have gone through the FDA approval. I will 
be voting against the Dorgan amendment. I encourage my colleagues to do 
likewise.
  Mr. DASCHLE. Mr. President, I yield 3 additional minutes of my leader 
time to Senator Dorgan.
  Mr. DORGAN. Mr. President, to respond, we had 2 minutes equally 
divided and I think it is important, perhaps, to have the time truly 
equally divided. Let me respond by saying, if you think the U.S. 
consumer ought to pay the highest prices in the world for prescription 
drugs, then you ought to vote against my amendment. If you believe it 
is unfair that we pay the highest prices in the world for prescription 
drugs and we ought to have downward pressure on drug prices, vote for 
my amendment.
  Don't believe this nonsense about counterfeit drugs and 
transshipments. It is not the case. Let me describe why. Let me do it 
in just the circumstance of one transaction.

  A pharmacist from Grand Forks, ND, under this new law, would be able 
to go to Winnipeg, Canada, and buy FDA-approved prescription drugs only 
from a licensed pharmacist or a licensed distributor in Canada. The 
Congressional Research Service has researched both chains of supply and 
said they are almost identical in the United States and Canada.
  We do not hear questions about drug safety in Canada. Why? Because 
they have exactly the same system we have from the pharmaceutical 
manufacturer to the distributor to the pharmacist. The control chain of 
supply of the same pill put in the same bottle by the same manufacturer 
assures safety in Canada and safety in the United States.
  A licensed pharmacist in the United States can and should be able to 
acquire a lower priced supply of exactly the same drug in Canada and 
pass that savings along to the American consumer. Yes, in fact, it is 
the market at work.
  If my colleagues do not believe in the market and they believe our 
country ought to pay the highest prices in the world for prescription 
drugs, then vote against this. Just vote against this. I understand. 
But if my colleagues believe we ought to put downward pressure on 
prescription drugs and we ought to have a free trade agreement with 
Canada and they believe in markets and free trade, then they should 
support this amendment.
  I yield the floor.
  Mr. GRASSLEY. Mr. President, the Dorgan amendment has been amended to 
further enhance the safety precautions included in the bill. The 
amendment now gives the Secretary of Health and Human Services the 
authority to certify that reimportation would be both safe and would 
save the hard-earned money of U.S. consumers. The HHS Secretary would 
also have the authority to terminate the program if for some reason it 
is not working.
  The fact is, pharmaceutical manufacturers here in the United States 
are reimporting these very same drugs that seniors are forced across 
the border to obtain. But if it's safe enough for the manufacturers to 
do, then it should be safe enough for local pharmacies as well.
  After all, these drugs are manufactured in factories that meet FDA 
standards. And it shouldn't matter whether these drugs come from New 
Jersey, Alberta, or Atlanta. In fact, a Congressional Research Service 
study found United States and Canadian drug development, manufacturing, 
and distribution systems have the same high level of integrity.
  If this amendment is accepted and the bill is enacted, Americans will 
no longer have to drive through an international checkpoint to check 
out their prescription drugs. Instead, they will have the potential to 
save an estimated $38 billion out of the $100 billion Americans spend 
every year on their prescription drugs.
  Consider the savings: A month's supply of Coumadin, a blood-thinning 
drug, costs $40 here in the United States and just $7 in Canada.
  The emphysema drugs, upon which some seniors rely to breathe, can 
cost $1,700 for a 6-month supply in the United States and just $800 in 
Canada.
  Again, let me say that, while the Dorgan amendment provides a step we 
can take right now to help seniors afford their medication, it is only 
a stop-gap--not a solution. For the long-term, there is no substitute 
for passing a comprehensive Medicare prescription drug benefit. We need 
to accomplish this goal so that every senior in America has access to 
affordable prescription drugs.
  With that, I want to again thank the Senator from North Dakota, Mr. 
Dorgan, for his leadership on this issue, and call on the Senate to 
accept this amendment and move forward to pass S. 1 to create a 
comprehensive Medicare prescription drug benefit without delay.
  Mr. FIRST. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to amendment No. 946, as amended. The 
clerk will call the roll.
  Mr. McCONNELL. I announce that the Senator from Utah (Mr. Bennett), 
the Senator from Colorado (Mr. Campbell), the Senator from Nebraska 
(Mr. Hager), the Senator from Indiana (Mr. Lugar), and the Senator from 
Ohio (Mr. Voinovich) are necessarily absent.
  Mr. REID. I announce that the Senator from Delaware (Mr. Biden), the 
Senator from North Carolina (Mr. Edwards), the Senator from Hawaii (Mr.

[[Page S8269]]

Inouye), the Senator from Massachusetts (Mr. Kerry), and the Senator 
from Vermont (Mr. Leahy) are necessarily absent.
  I further announce that, if present and voting, the Senator from 
Massachusetts (Mr. Kerry) and the Senator from Vermont (Mr. Leahy) 
would each vote ``yea.''
  The PRESIDING OFFICER (Mr. Chafee). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 62, nays 28, as follows:

                      [Rollcall Vote No. 232 Leg.]

                                YEAS--62

     Akaka
     Allard
     Baucus
     Bingaman
     Boxer
     Brownback
     Burns
     Byrd
     Cantwell
     Carper
     Chafee
     Chambliss
     Clinton
     Coleman
     Collins
     Conrad
     Corzine
     Craig
     Crapo
     Daschle
     Dayton
     Dodd
     Dole
     Dorgan
     Durbin
     Ensign
     Feingold
     Feinstein
     Fitzgerald
     Graham (FL)
     Grassley
     Gregg
     Harkin
     Jeffords
     Johnson
     Kennedy
     Kohl
     Landrieu
     Lautenberg
     Levin
     Lieberman
     Lincoln
     McCain
     Mikulski
     Miller
     Murray
     Nelson (FL)
     Nelson (NE)
     Pryor
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Sessions
     Smith
     Snowe
     Specter
     Stabenow
     Talent
     Warner
     Wyden

                                NAYS--28

     Alexander
     Allen
     Bayh
     Bond
     Breaux
     Bunning
     Cochran
     Cornyn
     DeWine
     Domenici
     Enzi
     Frist
     Graham (SC)
     Hatch
     Hollings
     Hutchison
     Inhofe
     Kyl
     Lott
     McConnell
     Murkowski
     Nickles
     Roberts
     Santorum
     Shelby
     Stevens
     Sununu
     Thomas

                             NOT VOTING--10

     Bennett
     Biden
     Campbell
     Edwards
     Hagel
     Inouye
     Kerry
     Leahy
     Lugar
     Voinovich
  The amendment (No. 946), as amended, was agreed to.
  The PRESIDING OFFICER. The Senator from New York.
  Mrs. CLINTON. I rise today to address the matter we are debating in 
the Senate. I believe this legislation to provide a Medicare 
prescription drug benefit holds tremendous promise and also tremendous 
peril.
  I applaud the leaders of this effort, Chairman Grassley and ranking 
member Baucus, for bringing this bill to the floor and working in a 
collegial, bipartisan manner to present it to the Senate and to the 
American people. It is absolutely essential we finally deliver on the 
promise many have made for years that we will pass a prescription drug 
benefit and make it available and absolutely secure to our seniors.
  However, 3 weeks ago this Chamber learned a very important lesson. We 
learned about the importance of details and how a very small change in 
a very large piece of legislation in a conference report can mean 12 
million children would be left out of a child tax credit. Therefore, I 
think it is imperative we spend the time to ask the hard questions 
about this legislation and that we exercise caution. So much is at 
stake for the people we represent.
  For example, right now this bill excludes the lowest income seniors 
who are eligible for both Medicare and Medicaid. In my own State, 
219,000 seniors and New Yorkers with disabilities fall into that 
category. We leave them at risk of a State's decision to curtail or 
limit or even eliminate certain Medicaid drug coverage and long-term 
care coverage.
  Now we are all in a rush to try to do this to help our seniors, but 
we do not want to rush through this legislation at the expense of 
getting it tragically wrong. We have to go over this bill line by line 
and word by word. The details are changing every minute.
  The Congressional Budget Office says one thing, committee staff say 
another thing. We do not know how much it is going to cost. We do not 
know exactly what all of the elements will end up being, particularly 
when we look at what the House has passed. Speaking for New York, that 
is totally unacceptable. Then we read today in the newspaper the 
President has a very different idea about two central features of this 
Senate proposal.
  Let's address the real problems and not gloss over them and not rush 
to some judgment because we are going out on recess in a week. My 
constituents, from the 80-year-old widow in Utica to the 85-year-old 
man living in a nursing home in the Bronx, are counting on me to go 
over this process with care and to cast my vote in a way that will help 
them, not hurt them.
  As I have been talking with my colleagues and certainly as I have 
been reading the commentary in the press, there is a lot of confusion 
about this bill. The question is, what exactly does this bill do? How 
does it work for our seniors? I bet we would get many different answers 
if I were to ask that on the floor of the Senate.
  My constituents and people all over America are trusting us to 
examine this bill carefully and to gauge the consequences. If we do not 
take the time to do it, how will we know we are doing what is right?
  I am deeply concerned in this case that old saying about haste making 
waste could certainly come true. For starters, why is this plan so 
complicated? Why would we purposefully create what I call a new 
Medicare maze instead of establishing a solid, straightforward 
foundation for generations to come? We have to look at how this would 
actually work for the people we say we are trying to help.

  I have tried to map it out. Here is the question: How do you get 
prescription drugs under this plan? I have tried to put myself in the 
position of a senior, a person with a disability. It quickly became 
clear this will be a very confusing and in some instances a 
discouraging process for the vast majority of our seniors.
  Here is where we should start in looking at how to answer this 
question. How do you get your prescription drug benefits under this 
plan? Let's start with the fact that if you are a senior or a person 
with disabilities, you are out of this process--no Medicare benefit for 
nursing home residents, for seniors. Who needs a Medicare benefit more 
than people in our nursing homes? They are the ones frailest, most at 
risk; they need more help in order to keep alive and have some quality 
of life, but they are gone. They are not in this program. If you are in 
a nursing home and you are getting support through Medicaid right now, 
you are not eligible. Instead, they would have to rely on what they do 
now, which is Medicaid. But they would be in an entirely different 
system, totally at the mercy of the individual States.
  I don't know about other States, but in New York we have certainly 
made an effort to keep faith with these frailest people, seniors in 
nursing homes, people with chronic and life-threatening and 
debilitating disabilities, but we are not taking care of them in this 
plan. They drop out of the Medicaid maze before they even get started.
  This plan is really for a senior who has to choose between 
traditional fee for service with a private drug plan or Medicare 
Advantage, the private PPOs.
  We have created a new Government agency. I don't think a lot of 
people recognize that. This new Medicare Advantage will be administered 
by a new agency, the Center for what is called Medicare Choices, 
created under this bill. So we have ourselves a new bureaucracy. We are 
going to be spending money on bureaucrats and administrators, instead 
of on drugs, instead of taking care of our poorest seniors in nursing 
homes. Even before any benefit is available, this new bureaucracy gets 
built up and drains scarce resources out of what we can spend for our 
seniors.
  To go back to our seniors here, our seniors have to choose between 
multiple plans. As you can see, they might have a PPO, with a $45-a-
month premium, or an HMO, with a $32-a-month premium. They may have 
private plans that are available to them. They have to make these 
choices. Certainly I am all for choice, but we know, from what drug 
companies themselves have said, there will be many regions of our 
country where there will not be a lot of choice. So before seniors make 
that choice, they will need to register how the prescription drug 
benefits differ under each of these various proposals and whether the 
drug they need--this is a very personal consideration--whether the drug 
they need will be covered under the plan they are analyzing.
  If a senior looked for the lowest premium--and I can guarantee most 
seniors will look for the lowest premium because most of our seniors 
are hard pressed, on fixed incomes, and they are going to be trying to 
save their dollars, so they will look for the lowest premium--the 
senior would choose the HMO at $32 a month.

[[Page S8270]]

  But suppose this HMO doesn't cover the senior's doctor, someone the 
senior has relied on and trusted for years, but that doctor is not in 
the HMO? So the senior turns to the plan with the next lowest premium. 
On here, that would be private plan 2, where the premium is $37. But 
suppose the formulary used in this private plan doesn't cover the drug 
the senior needs. Let's assume the senior is on a drug for high 
cholesterol, and assuming the senior read the fine print, assuming the 
senior has informed help--which I think is a leap of faith in many 
parts of our country--the senior may sign up for this plan and not 
really know it does not cover the drug that has been prescribed for his 
or her condition.
  So what does the senior do? She is in the plan. She finds out it 
doesn't provide the drug. She has a grievance procedure she can go to. 
Imagine, we have an 80- or 85-year-old widow. She is trying to 
understand this. She is in the plan. She gets to keep her doctor, but 
she doesn't get the drug the doctor wants her to take. The doctor says: 
In my professional judgment, this is the best drug for you, but I am 
sorry, the plan you are in doesn't include it on the formulary--the 
list of drugs that are permitted.
  So what can the senior do? The senior can take a drug off the 
formulary, whether or not the doctor thinks that is the right thing, or 
the senior can file a grievance and can go through this grievance 
process, with a hearing, to try to get the drug that the senior's 
doctor tells her she should be taking for her high cholesterol.
  If we do that, we know we have consumed valuable time. We have 
created yet another bureaucracy. Not only have we created this new 
Government agency to run this program, now we have created a whole 
grievance process, putting lawyers to work, putting advocates to work, 
to try to figure out how to get the drug the woman wants or get the 
doctor the senior wants. So we have used up a lot of paper, used up a 
lot of time, and unfortunately taken hard-to-have, scarce resources out 
of doing what we all want them to do; namely, get the drugs paid for 
that our seniors require.

  Let's suppose we go from year 1--because this doesn't go into effect 
until 2006, so we are not quite sure how it is all going to work, but 
suppose we go from year 1 to year 3. I could not get everything on the 
chart, so we will skip 2007; we will go to 2008. These private plans 
are new. They have not refined all their business models. We know when 
the State of Nevada tried something similar, drug companies said: Wait 
a minute, there is no money in this for me. I don't want to provide 
drugs to the sickest, oldest people in America. I can't make anything 
on that. So they dropped out.
  I think it is fair to assume that at the end of those first 2 years 
when a plan's contract expires, it may decide to drop out, just as 
Medicare HMOs have dropped out. As I am sure all of us have heard from 
our constituents, the number of Medicare+Choice plans has decreased by 
over half in the last 5 years, leaving thousands of seniors in the 
lurch when they pull out of the markets where the seniors live.
  Those who did not pull out, they stayed but at a huge increase in 
price. They cut back benefits and raised premiums--15.5 percent last 
year alone. So all of a sudden, now, we have what used to be a $32 plan 
being a $47 plan. This is a monthly premium.
  Let's say our senior waited it out, finally got the prescription drug 
she needed through a grievance hearing, but then after 2 years the plan 
she was in with the drug she needed did not find the market profitable 
and chose to pull out. The Government would have to be sure there was a 
Federal fallback in place, so our senior might then go into the Federal 
fallback. The Federal fallback would guarantee, for a limited period of 
time, that the senior would get the drug and the doctor of her choice. 
But this would only be for a limited time, only until this new 
Government agency could negotiate with private plans--and they can 
potentially subsidize up to 99.9 percent of their risks--in order to 
get two plans back into the marketplace.
  Our senior would then have a plan at a higher price, with the 
Government basically subsidizing--some might argue, bribing--the 
private plan to come back into the marketplace. But by year 4, our 
senior might again have to change plans for the very same reasons, 
about coverage, including doctors, including drugs, and as you can 
tell, this is the most streamlined version I could put on one chart of 
what it is we are debating.
  I think it is important to recognize that this new Government agency 
is giving a huge gift in a subsidy to these private plans, but it is 
giving another very large gift because it is basically saying you come 
into our plan and we will waive all State insurance regulation.
  I don't know about you, but people who have dealt with insurance 
companies of all kinds sometimes have problems with them, and they go 
to their State insurance commissioner who is close to the problem, and 
they try to get it worked out and get some support. That will be gone. 
You will not have the right to go to your State insurance commissioner 
because this new Government agency up here will have said: All bets are 
off. We beg you to come into the market. We will pay you to come into 
the market. And guess what the sweetener is. We are not going to hold 
you to any of the regulations with which you would otherwise have to 
comply.
  Last year, we passed in this body a prescription drug benefit known 
as Graham-Miller. It was simple, had the same premiums, deductibles, 
and copays, and there were no dropoffs. It was over 50 percent more 
generous than the bill before us today.
  I know many of my colleagues prefer this Medicaid maze because they 
are such strong supporters of competition. So am I. Goodness gracious, 
competition, the free market, we all know that is one of the pillars of 
American success.
  But I don't champion competition for the sake of championing it when 
it comes to health care and when it comes to the elderly and the frail 
and people who use the bulk of prescription drugs in our country. I 
champion it when it actually produces a good result.
  Competition on a skewed playing field that excludes certain plans 
from staying in the market and creates inefficient administrative and 
transaction costs could actually leave customers less informed, less 
well off, and spend these scarce health care dollars on creating a new 
bureaucracy whose primary purpose is to somehow subsidize insurance 
companies.
  I think drug plans should not compete for profits by attracting only 
the healthiest of people and dumping seniors they consider bad risks. 
They should not compete by cutting corners in quality. They should 
compete with each other on quality and price. Of course, the way to do 
that is to set some uniform benefit package to try to have a uniform 
premium so you can compare apples to apples and not apples to oranges 
to kumquats or bananas or whatever else is in the fruit basket. The 
Senate bill has taken some steps to try to rationalize its system. The 
House of Representatives' bill lacks even the basic protection for 
seniors. It lacks what we call a Federal fallback; that is, when your 
HMOs or PPOs or drug insurance programs pull out on you and don't give 
you the drug you need or won't let you see your doctors, then you can 
go into what is called the Federal fallback. The House doesn't even 
have that. They somehow magically assume--although we have seen no 
evidence of it and it defies common sense--that there are going to be 
all of these drug companies and all of these insurance plans competing 
to take care of that elderly woman or that elderly man with all of 
these drug costs.
  As I mentioned, New York State has 219,000 low-income seniors who 
qualify for both Medicare and Medicaid. They are excluded. I fear they 
are being put at risk because they are going to have to rely on State 
programs in these times of big budget problems.
  There are also some other people I worry about when I look at this 
Medicaid maze. For example, retirees who bargain for and obtain health 
care benefits for their retirement. The Congressional Budget Office 
says a third of Medicare retirees with drug benefits would lose 
coverage under this bill. In our State, that is 365,000 people.
  Then we have another. New York has put into place its own 
prescription drug plan to help people who have incomes up to $50,000. 
If you go to New

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York and you have friends or families in New York, you know we have a 
higher cost of living. In our State, middle-class people with big drug 
costs pay for those costs. There are 317,000 who are enrolled in the 
State's EPIC prescription drug program, and nearly 900,000 are excluded 
because they are in nursing homes or they have disabilities and under 
the calculations may have their retiree benefits put at risk, or who 
are going to have their State prescription guarantee also put at risk--
one in three Medicare recipients in New York. Never in the history of 
the Medicare program has a Medicare beneficiary been denied access to a 
covered benefit. I am just so troubled that we are excluding our lowest 
income seniors. I don't know how we justify that.
  I have a letter from our Republican Governor which I ask unanimous 
consent to have printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:


                                            State of New York,

                                                    June 12, 2003.
       Dear New York Congressional Delegation Members: 
     Prescription drug costs continue to strain the budgets of the 
     nation's senior citizens. I applaud your efforts this year to 
     address this important issue. As you begin consideration of 
     legislation to provide prescription drug coverage to all 
     senior citizens, please consider two issues vitally important 
     to New York State.
       First, New York taxpayers continue to support a significant 
     cost for prescription drug coverage for its dual eligible 
     population. The dual eligibles are elderly and disabled 
     individuals who qualify for both the Medicare and Medicaid 
     programs. Medicaid is required to provide medical services 
     not covered by Medicare--including prescription drugs.
       More than 600,000 New Yorkers are considered dual eligibles 
     and each year New York's Meidcaid program spends nearly $1.5 
     billion on prescription drugs for the dual eligible 
     population alone. We have always believed that these costs 
     should be borne by the federal government and strongly 
     support efforts to federalize prescription drug costs for the 
     dual eligible population.
       In addition, New York administers the nation's largest 
     prescription drug program for seniors, EPIC. Today, more than 
     300,000 seniors are enjoying the significant benefits EPIC 
     offers and saving thousands of dollars each on vitally 
     important medicines. Costs for this program exceed $600 
     million annually in State only dollars. Currently eighteen 
     states have programs similar to New York's to provide 
     prescription drug benefits to senior citizens.
       Any federal program created this year to provide 
     prescription drug coverage should recognize state efforts and 
     allow seniors to choose their benefit plan (in New York, that 
     choice would be between EPIC and the federal plan) while 
     providing a direct Medicare subsidy to the state program for 
     individuals that choose that option.
       The Federal government has accepted responsibility of 
     providing health care to senior citizens and I strongly urge 
     an expansion to include prescription drug coverage. I applaud 
     President Bush for his leadership on this issue and our 
     congressional delegation for its commitment to our seniors.
       Your efforts on this important legislation could 
     dramatically improve the health of a segment of our 
     population that has given so much to New York's and America's 
     safety and prosperity. We urge you to work with us to ensure 
     that our seniors get the prescription drug coverage they 
     deserve, and that the federal government assumes its rightful 
     role in supporting services for our dual-eligible population.
           Very truly yours,
                                                 George E. Pataki,
                                                         Governor.

  Mrs. CLINTON. Mr. President, Governor Pataki has written to ask that 
in this plan Medicare cover the drug costs of these seniors and New 
Yorkers with disabilities. The Governor's record explains the 
importance of including these people who are called, in the jargon, 
``low-income dual eligibles.''
  Furthermore, I believe we should eliminate the penalty against 
retirees. By refusing to count retiree benefits as out-of-pocket 
expenses, this bill assures that 365,000 New Yorkers will never make it 
through the coverage gap. We should also try to support States such as 
New York that are putting their own money into programs to provide for 
continuing coverage.
  The gap in coverage is very disconcerting. I don't even really get to 
that on this Medicaid maze.
  I think it is important to recognize there is on average a $275 
deductible and at least a $35 monthly premium that could certainly vary 
widely. As we have seen in these examples, depending upon where you 
live, and depending upon who is available, there is a 50-percent 
subsidy until your costs are $4,500. And then you go cold turkey. Some 
people call that a doughnut hole. That is not my image. There is a 
brick wall which you run into. Spend your money, and after that you get 
no help--none at all--until you get to what is called the catastrophic 
threshold of $5,813 in drug costs.
  Many of us have heard from our constituents. In fact, we are deluged 
in my office with phone calls, e-mails, and other contacts from people 
asking, How is this going to affect me? What does this mean in my life? 
I think that is the real question. How do I get prescription drugs 
under this plan?
  I want to talk about this one story, a woman named Arlene Francis. 
She lives in the Buffalo area. She was married to a Bethlehem Steel 
retiree who passed away. At one time, she had the retiree drug coverage 
that was part of her husband's contract with Bethlehem Steel. As we 
know, Bethlehem Steel went into bankruptcy and was bought by another 
company. All retirees and spouses of retirees lost their coverage.
  Arlene takes Fosamax, a drug for osteoarthritis, which costs $68 a 
month. She has a hormone replacement patch. She takes antibiotics as 
needed. She is pretty healthy, when you think about it. That is not a 
lot for someone to be paying for prescription drugs and getting the 
coverage she needed. But it is a stretch for her because she has a very 
limited fixed income. Her drug costs total $998 a year. She relies on 
our New York program called EPIC, which covers seniors on a sliding 
scale up to $35,000 for singles, such as Arlene, who is a widow, and 
$50,000 for a couple. Under EPIC, her annual fee is $36 a year. Her 
copays are $3. Her share of her yearly $998 drug expense totals $336--
roughly a third of what the cost would be.
  But what happens under this proposal is very troubling to me. She 
would pay monthly premiums every month. Let us say we get it at the 
lowest level of $35 a month. That is $420 a year. She would pay a $276 
deductible and a 50-percent copay. How much would she pay to get $998 
in drugs? She would pay $1,157.
  Arlene and many of my constituents aren't going to get anything from 
this bill. It is voluntary. You argue they don't have to go into it. 
But we are changing the incentive and the structure of delivering drug 
coverage for many people in a State such as ours which already tries to 
help people, which I believe will lead to the limitation or 
the elimination of the program we already have. Under this program, the 
Federal Government isn't lifting the States' costly burden of 
prescription drugs. It even adds some administrative costs on the State 
Medicaid offices that have to do all of these calculations.

  Because a State will not receive reimbursement from the Medicare 
program for the benefits it provides up to the Medicare level, it very 
well could make a rational decision that it is just not going to 
continue doing that, and either cut back or end the program, which will 
be very bad news for the 360,000 seniors in our State, like Arlene, who 
rely on this very cost-effective way of getting their drugs covered.
  When we have the Congressional Budget Office stating that seniors 
with prescription drug costs of $1,115 or less would end up paying more 
through premiums, deductibles, and cost sharing, they are not getting 
anything from this bill.
  On the other end of the income and expenditure level, the bill falls 
short for patients with high drug costs as well. Even seniors who spend 
$5,000 will get only $1,700 in benefits. They have to manage 66 percent 
of the costs on their own.
  I think we could do more to eliminate the gaps in coverage and to 
tear down the brick wall that stops people from getting help while they 
still pay for it until they reach the catastrophic level.
  I will be introducing a series of amendments. But I think it is 
important to recognize the fundamental issues I am raising today about 
the Medicare maze are going to require all of us to work on it.
  I am very pleased that one of the most important ways we can assure 
that competition is helpful instead of harmful is to ensure the plans 
actually do compete on quality.
  So I appreciate that the bill includes a measure I have supported, 
along with Senator Hatch and others, to commission the Institute of 
Medicine to develop ways to think about paying for

[[Page S8272]]

quality outcomes. I have also filed an amendment to encourage the 
development of quality standards so that our seniors have some basis of 
comparison to choose among different plans.
  I believe it is important to provide information about the efficacy 
of drugs and their cost-effectiveness so that seniors and others can 
see for themselves whether we are getting our money's worth for this 
$400 billion investment. I would like that information on the Internet. 
I would like it made available through the long-term ombudsmen, the 
Medicare and Medicaid representatives in every State.
  I started by saying I think this legislation does hold tremendous 
promise. But I have tried to outline some--not all but some--of the 
questions I am having to answer from my constituents who come to me 
with very specific issues, who ask me how this will affect their lives, 
whether this will make them better off or worse off financially.
  I believe it is important for us to be able to really scrub this, 
understand what it does and what it does not do, and also recognize 
that on the other end of this Capitol the House has a very different 
approach. I applaud the work Senators Grassley and Baucus have done. 
But let's not forget, this body tried to protect lower income working 
families by giving them the child tax credit--people who pay a higher 
proportion of their income in taxes than I do, but who were told, at 
the other end of this building, that because they may not pay income 
tax, they should not get help for their children.
  I have to ask, if that is the attitude on the other end of this 
building, if they have already passed a bill that is not going to help 
many seniors but provides even more of a giveaway to drug companies to 
try to get them to offer these plans, how can we trust, at the end of 
the day, that the more thoughtful debate and version we are working on 
here in the Senate will be what comes out of this process?
  I was very disappointed when it was reported in the papers today that 
the President has weighed in on the side of giving subsidies, 
increasing benefits to insurance companies--not in the Senate version, 
but in the House version--and that the President does not want a 
Federal fallback. This is a huge difference in philosophy, in ideology, 
and, I believe, in life experience.
  Medicare has worked. Since 1965, it has removed not only so much of 
the concern and worry and anxiety about growing older, of facing acute 
and chronic health care problems, it has removed a lot of burden from 
the American family.
  My mother just recently turned 84, and I feel very fortunate that I 
am in a position to be able to help her. But I know, very well, that a 
lot of other families trying to save for tuition, for college for their 
kids, trying to make ends meet, when it comes to mortgages and car 
payments, they may not be in that position. Therefore, they look to 
Medicare to really help spread the burden of taking care of our elderly 
from one generation to the next. It is part of our social contract in 
America. We have a basic bargain: If you work hard, if you are 
responsible, we are going to help, through our Government, to make sure 
you do not fall into poverty, that you are not left without health 
care. We are going to do that because that is the kind of people we 
are. Those are the values we have. This could be a giant step back from 
that commitment.

  Let's not also forget that this $400 billion, which we are trying to 
set aside, comes at a time when we are looking at deficits and 
increasing debt, which will impose even more burdens in the future on 
middle-class Americans and their families. So I hope we are able to 
answer the questions and, most fundamentally, explain clearly and 
unequivocally how someone gets their prescription drug benefits.
  I do not know that I could take this chart to a senior center, to a 
nursing home, and explain this. I do not understand why it has to be so 
complicated, why we have to create a new Government agency, why we have 
to waive insurance regulations, why we have to cause this level of 
confusion and uncertainty among people who should have the peace of 
mind in their later years that they do not have to worry about filing 
grievances, fighting for their drugs and their doctors. Why are we 
doing this? Why are we creating these obstacles, this Rube Goldberg 
system that is going to be extremely hard to explain and very hard to 
understand?
  Finally, I do not understand, either, why we are waiting until 2006. 
Medicare went into effect within a year--a totally new system, with no 
new agency to administer it. We were able to do it in a year. President 
Johnson went to Independence, MO, and signed that bill with former 
President Harry Truman, who had been one of the first of our leaders to 
say: We need to take care of our seniors.
  That bill was signed, it has worked well, and it has a very low 
administrative cost. Two to three cents out of your tax dollars, your 
contributions that go into Medicare, go into administration, go into 
any kind of costs that can be compared to the high percentage that 
these private insurance companies spend. Some of them spend 30 to 40 
cents out of your dollar, not on taking care of you but on taking care 
of themselves.
  So at the end of the day, Medicare has worked. I am very proud of our 
country for making that commitment. Yet I worry that what we are about 
to do is not only difficult to understand, difficult to administer, and 
confusing but may very well be the beginning of undoing traditional 
Medicare.
  The report of the President's letter today certainly gives me pause 
that we would not even have a Federal fallback. Our people who live in 
rural States, live in poor urban areas--who are not the most attractive 
clients for insurance companies because--guess what--they get sicker, 
they are poorer--where will they get their care if our Government does 
not have that fallback to provide the safety net?
  And what do we do as States are making these budget cuts to take care 
of the hundreds of thousands of our poor residents in nursing homes, 
our people with disabilities, who depend upon this program?
  We cannot forget about the larger issue at hand. Our fundamental 
responsibility and our goal must be, as a nation, to help our seniors 
by providing a prescription drug benefit that is reliable and 
comprehensive. And if we are to go down the route of introducing 
competition, then let's make sure it is competition on cost and 
quality, not competition to eliminate more and more of the sickest of 
our elderly or the people with disabilities whom we are trying so hard 
to take care of.
  Our goal is not just choice or competition, it is compassion; it is 
coverage for those who need it. We have a rare bipartisan opportunity 
to do this. Let's get it right in the Senate, and then let's fight with 
all of our energy to make sure it is not changed in a conference 
committee with the House, so that we can, in good conscience, tell our 
seniors we have done the best we can to make sure they get the benefit 
we promised.
  Thank you, Mr. President. I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. THOMAS. Mr. President, certainly we are dealing with an issue and 
a proposal where there are huge differences. And there have been huge 
differences for some time. The Senator from New York represents quite a 
different point of view from several years past.
  What we are trying to do is to provide better service, provide some 
options, provide some modernization of a program that is 40 years old, 
that has never been changed. So the question really is, How do we best 
serve all of the people who are in need of service? The question is 
not, How do we maintain and grow a Federal program, and keep it all 
Federal? That is not really what most of us have in mind.
  We want to look at some alternatives. We want to look for choice, 
where people who wish to stay in the program as it now exists may do 
that. And that is what this bill provides. But it also provides an 
opportunity to move to something that could be different, have some 
choices, could even in fact be more efficient, more effective. I am 
afraid it is hard for me to accept the idea that Government programs 
are more efficient than the private sector. I don't think there is much 
evidence of that. Certainly what we are talking about here is having 
some opportunities for a change, some opportunities for some 
alternatives. I understand

[[Page S8273]]

there will be those who will be resisting those changes, but 
nevertheless we do have a bipartisan bill before us that incorporates 
that opportunity. We want to do it.
  We are concerned, of course, about having services that reach out to 
everyone in rural areas. I think I am about as concerned about rural 
areas as anyone in this body. I come from one of the most rural States. 
I have to tell you how pleased I am that we have in this bill a 
substantial program for rural health care, one, by the way, that was 
turned down by many of the folks who are now worried about the rural 
areas in the tax bill. But it is here, and it will respond to the needs 
of rural constituents and rural beneficiaries. And that, of course, is 
of vital importance to all of us.
  With respect to dual eligibles, the Senator, the speaker just 
recently, has raised a concern about how S. 1 treats seniors who are 
eligible for both Medicare and Medicaid programs. Those are known as 
dual eligibles. Under S. 1, these seniors will continue to receive 
their prescription drug benefit through the Medicaid program.
  It is alleged that by having dual eligibles remain in the Medicaid 
program, Congress is treating them as second-class citizens and 
subjecting them to lower quality benefits. I don't believe this to be 
the case, nor is there evidence that it is the case. We worked 
diligently on the development of this package and reflected these 
concerns that were raised all the time during last year's debate. 
Learning from these lessons, we decided it was most beneficial to 
seniors to continue to build off existing Medicare and Medicaid low-
income assistance programs as far as to offer a seamless benefit.
  We do not want to divert scarce resources available for this benefit 
toward the development of a new government bureaucracy. I am confident 
S. 1 establishes this new benefit in a manner that will provide high 
quality, accessible care through a system that is familiar to seniors 
and easy to navigate.
  It is also important to note that the Medicaid program is considered 
by most advocates and beneficiaries to be quite generous and far 
superior to the current Medicare program. Recognizing that this is a 
program for persons with low income, the Federal Government only allows 
States to charge nominal copayments to receive the drug benefit. 
Further dual eligibles have been and should continue to remain the 
joint responsibility of State and Federal Governments. However, in 
recognizing that the Federal Government should play a dominant role in 
delivering this vitally important benefit, we provide in this bill $14 
billion in additional Federal dollars to help pay for increased costs 
associated with the new prescription drug standards included in the 
bill.
  This is because the bill provides minimum standards to ensure that 
benefits provided through Medicaid are the same high quality as those 
provided through Part B of the Medicare program. For these reasons I am 
confident and I think our committee was confident that dual eligibles 
will continue to have access to prescription drugs that they deserve.

  Some argue we should do more, perhaps even serve this population 
differently, but this bill was developed in a manner that we believe 
utilizes scarce dollars efficiently and helps to deliver care that is 
consistent with the current law and easy for seniors to navigate.
  This is a discussion that has already been held to a great extent, 
how you deal with low income and to do it in a way that is consistent 
with what we have had in the past and was equal in benefits to what we 
have had in the past. That is the process that is designed here.
  So as we move on, I hope we can continue to provide the things that 
are really the purpose of this whole bill. And there are two at least. 
One is to provide, of course, drugs, pharmaceuticals to seniors and do 
it in several different ways so that it meets the needs of those 
seniors somewhat dependent on income. The other is to provide some 
opportunities to improve the distribution system for Medicare, again, a 
program that has been in place for 40 years, has had relatively little, 
if any, change. And now we have an opportunity to give some choices to 
the beneficiaries and develop programs that are more efficient than 
what we have had in the past.
  So it is kind of discouraging to have people stand and want not to 
change whatever we have had going on for 40 years. We are not talking 
about changing the benefits. We are not talking about the quality. We 
are talking about making a distribution system that meets the needs of 
the changes that have taken place in our society and be able to do that 
in a way that people would like to and will want to have choices.
  So as we talk about these various amendments that will be raised, I 
hope we will continue to take a look at what it is we have as a goal 
here, to be able to do these things that have been described and focus 
on getting the kind of results we really have in mind when we put 
together this proposal and continue to have bipartisan support for the 
bill.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Alexander). Without objection, it is so 
ordered.
  Mr. BAUCUS. Mr. President, I will take a moment to review the 
schedule under the previous order. Under the previous order, the 
following Senators are to be recognized to offer the following 
amendments:
  Senator Grassley on rural provisions; Senator Harkin on mammography; 
Senator Conrad on fallbacks; Senator Kerry on a grant program; Senator 
Clinton on a study; and Senator Graham has one with respect to 
premiums.
  Republican Senators could offer amendments in an alternating fashion 
between Democratic amendments. A number of these Senators have chosen 
to offer amendments at a later time.
  Thus, I ask unanimous consent that this order remain the order under 
which Senators would be recognized to offer amendments, except that the 
Senator from Florida, Mr. Graham, now be recognized to offer his 
amendment, and immediately following Senator Graham, the Democratic 
leader be recognized for whatever amount of time he wishes to speak, 
and that the pending amendments be temporarily laid aside so the 
Senator from Florida may offer his amendment.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. THOMAS. Mr. President, I agree with what the Senator just said. I 
ask unanimous consent that the order of amendments provide that when a 
Republican amendment is offered, it be considered in an alternating 
fashion with the Democrat amendments; provided further, that it be in 
order for the amendment to be offered in any Republican slot.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.


                           Amendment No. 956

  Mr. GRAHAM of Florida. Mr. President, I am here this morning to offer 
an amendment to the Prescription Drug and Medicare Improvement Act of 
2003. This amendment has as its goal to repeal the ``sick tax,'' which 
is part of the pending legislation.
  I send the amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Florida [Mr. Graham] proposes an amendment 
     numbered 956.

  Mr. GRAHAM of Florida. Mr. President, I ask unanimous consent that 
further reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To provide that an eligible beneficiary is not responsible 
   for paying the applicable percent of the monthly national average 
premium while the beneficiary is in the coverage gap and to sunset the 
                     bill, and for other purposes)

       On page 107, between lines 19 and 20, insert the following:
       ``(d) Beneficiary Not Responsible for Paying Applicable 
     Percent of the Monthly National Average Premium While the 
     Beneficiary is in the Coverage Gap.--

[[Page S8274]]

       ``(1) In general.--Notwithstanding subsection (c), if an 
     individual, with respect to any period of a year, has reached 
     the initial coverage limit under paragraph (3) of section 
     1860D-6(c) for the year but has not reached the annual out-
     of-pocket limit under paragraph (4) of such section for the 
     year, the applicable percent under subsection (c) during such 
     period shall be zero.
       ``(2) Process.--The Administrator shall establish a process 
     for carrying out paragraph (1). Under such process, the 
     Administrator shall--
       ``(A) require eligible entities offering Medicare 
     Prescription Drug plans, MedicareAdvantage organizations 
     offering MedicareAdvantage plans that provide qualified 
     prescription drug coverage, and entities with a contract 
     under section 1860D-13(e) to furnish the Administrator with 
     such information as the Administrator determines necessary to 
     carry out paragraph (1); and
       ``(B) furnish the Commissioner of Social Security with such 
     information as the Administrator determines necessary to 
     collect the appropriate monthly beneficiary obligation 
     pursuant to section 1860D-18.
       At the end of subtitle C of title IV, insert the following:

     SEC. ____. MEDICARE SECONDARY PAYOR (MSP) PROVISIONS.

       (a) Technical Amendment Concerning Secretary's Authority to 
     Make Conditional Payment When Certain Primary Plans Do Not 
     Pay Promptly.--
       (1) In general.--Section 1862(b)(2) (42 U.S.C. 1395y(b)(2)) 
     is amended--
       (A) in subparagraph (A)(ii), by striking ``promptly (as 
     determined in accordance with regulations)'';
       (B) in subparagraph (B)--
       (i) by redesignating clauses (i) through (iii) as clauses 
     (ii) through (iv), respectively; and
       (ii) by inserting before clause (ii), as so redesignated, 
     the following new clause:
       ``(i) Authority to make conditional payment.--The Secretary 
     may make payment under this title with respect to an item or 
     service if a primary plan described in subparagraph (A)(ii) 
     has not made or cannot reasonably be expected to make payment 
     with respect to such item or service promptly (as determined 
     in accordance with regulations). Any such payment by the 
     Secretary shall be conditioned on reimbursement to the 
     appropriate Trust Fund in accordance with the succeeding 
     provisions of this subsection.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall be effective as if included in the enactment of title 
     III of the Medicare and Medicaid Budget Reconciliation 
     Amendments of 1984 (Public Law 98-369).
       (b) Clarifying Amendments to Conditional Payment 
     Provisions.--Section 1862(b)(2) (42 U.S.C. 1395y(b)(2)) is 
     further amended--
       (1) in subparagraph (A), in the matter following clause 
     (ii), by inserting the following sentence at the end: ``An 
     entity that engages in a business, trade, or profession shall 
     be deemed to have a self-insured plan if it carries its own 
     risk (whether by a failure to obtain insurance, or otherwise) 
     in whole or in part.'';
       (2) in subparagraph (B)(ii), as redesignated by subsection 
     (a)(2)(B)--
       (A) by striking the first sentence and inserting the 
     following: ``A primary plan, and an entity that receives 
     payment from a primary plan, shall reimburse the appropriate 
     Trust Fund for any payment made by the Secretary under this 
     title with respect to an item or service if it is 
     demonstrated that such primary plan has or had a 
     responsibility to make payment with respect to such item or 
     service. A primary plan's responsibility for such payment may 
     be demonstrated by a judgment, a payment conditioned upon the 
     recipient's compromise, waiver, or release (whether or not 
     there is a determination or admission of liability) of 
     payment for items or services included in a claim against the 
     primary plan or the primary plan's insured, or by other 
     means.''; and
       (B) in the final sentence, by striking ``on the date such 
     notice or other information is received'' and inserting ``on 
     the date notice of, or information related to, a primary 
     plan's responsibility for such payment or other information 
     is received''; and
       (3) in subparagraph (B)(iii), as redesignated by subsection 
     (a)(2)(B), by striking the first sentence and inserting the 
     following: ``In order to recover payment made under this 
     title for an item or service, the United States may bring an 
     action against any or all entities that are or were required 
     or responsible (directly, as an insurer or self-insurer, as a 
     third-party administrator, as an employer that sponsors or 
     contributes to a group health plan, or large group health 
     plan, or otherwise) to make payment with respect to the same 
     item or service (or any portion thereof) under a primary 
     plan. The United States may, in accordance with paragraph 
     (3)(A) collect double damages against any such entity. In 
     addition, the United States may recover under this clause 
     from any entity that has received payment from a primary plan 
     or from the proceeds of a primary plan's payment to any 
     entity.''.
       (c) Clerical Amendments.--Section 1862(b) (42 U.S.C. 
     1395y(b)) is amended--
       (1) in paragraph (1)(A), by moving the indentation of 
     clauses (ii) through (v) 2 ems to the left; and
       (2) in paragraph (3)(A), by striking ``such'' before 
     ``paragraphs''.

  Mr. GRAHAM of Florida. Mr. President, I have many concerns with this 
legislation. Probably at its core is the fact that we are about to 
adopt a prescription drug benefit for 39 million older and disabled 
Americans, of which there is no current model. Virtually every question 
about this legislation has to be answered at a theoretical level 
because we cannot say the Federal health insurance plan that covers 
Federal employees, or a Blue Cross/Blue Shield plan, or any other plan 
has provisions to dispense prescription drugs through a prescription 
drug-only insurance policy.
  In my judgment, that is a very fundamental concern that we should 
share. Understand that we are about to conduct a gigantic social 
experiment on 39 million Americans, many of whom are the sickest, most 
frail, most vulnerable of our citizens.
  I am here today to talk about a specific troubling aspect of this 
legislation, and that is what has been referred to as the ``sick tax.'' 
What do we mean by that? This bill includes what has come to be known 
as either the donut hole or the benefit shutdown.
  I think it is more like a black hole. Here is how that hole would 
develop. Seniors who sign up for this new benefit will face a gap in 
those benefits. Once a senior has reached $4,500 in drug spending, the 
Medicare prescription drug benefit evaporates, the senior falls into 
the black hole and gets no help with his or her prescriptions for the 
next $1,312.50.
  I know of no insurance plan that has such a gap in coverage. The 
Federal Employees Health Benefits Plan, which has often been touted as 
the model we should use for Medicare, does not have such a gap in its 
benefit structure. If it is not bad enough that Medicare beneficiaries 
will get no help from Medicare during this gap, any contributions from 
the senior's former employer would not count to closing that gap. In 
many instances, individuals were members of unions and they negotiated 
a collective bargaining agreement under which they understood they were 
going to reduce their current income in order to get other benefits 
that would be paid at the point of their retirement.
  Frequently, one of those benefits was some assistance in the payment 
of their prescription drugs. So they have already paid once for that 
benefit by not getting that raise that they had anticipated or not 
getting as much of a raise as they anticipated, and now they are going 
to be penalized a second time by not allowing those employer payments 
that contribute to covering the cost of prescription drugs to count 
toward narrowing the hole; that is, if a senior has a retiree 
prescription benefit, that benefit cannot be used to reach the 
catastrophic limit.
  The final insult is that during this gap--when the senior is paying 
100 percent of the cost--every penny of prescription drugs purchased 
during this period in the black hole will be paid by the senior 
beneficiary. But the senior will still have to keep paying the monthly 
premium.
  This legislation suggests that is going to be $35 a month. Most 
people believe that number is likely to be exceeded in 2006. It 
certainly will be exceeded as medical and particularly prescription 
drug inflation takes hold in future years. The senior will have to 
continue to write that check every month, although they get absolutely 
no benefit.
  Let me be perfectly clear. During months in which seniors are not 
getting any assistance whatsoever, they will continue to pay the 
monthly premium. Collecting monthly premiums, while a senior has fallen 
into this black hole, is the equivalent of levying a tax on the sick. 
They are asked to pay into the program without receiving any benefit.
  The average Medicare beneficiary today spends a little over $2,000 a 
year on prescription drugs. We are talking about people who have 
already spent well over twice that to get to the $4,500 level. So we 
are talking about seniors who have significantly poorer health and, 
therefore, higher prescription drug costs, and that is a group of 
seniors we are going to discontinue from benefits until they have paid 
out of their pocket another $1,300-plus of prescription drug costs.
  Why would there be this gap in prescription drug coverage? Why do we 
do what no other insurance policy in America does today? Surely, none 
of

[[Page S8275]]

my colleagues can believe this gap is a good insurance policy or good 
medicine for seniors. So let's call this gap what it is: a gimmick that 
is designed to lower the cost of this legislation at the expense of 
seniors who are most in need of the drugs.
  What does the gap in coverage mean for a senior? I would like to take 
a few minutes to spell it out so that we will know exactly what we are 
voting for if we approve this legislation.
  The gap with the black hole begins at $4,500 in total drug spending. 
Beneficiaries have to reach a point where their total spending--the 
spending of the beneficiary, the Federal Government, and any other 
source--reaches a level of $4,500, over twice the average Medicare 
beneficiary's annual prescription drug cost.
  Once you reach that point, you receive no assistance for your 
prescription drugs until you have spent out of your own pocket--not 
counting any contribution made by your former employer--until you have 
spent $3,700.
  How does the math work? To get to the $4,500 level, the out-of-pocket 
expenditures by the beneficiary will be, first, a $275 deductible. You 
have to pay that before you get any assistance. Incidentally, you are 
also paying the monthly premium during the time you are meeting that 
deductible requirement. Then between $275 and $4,500, you pay half, the 
Federal Government pays half. You would pay $2,112.50, and the Federal 
Government would pay $2,112.50. By the time the combined expenditures 
reached $4,500, you would have paid $2,387.50 out of your pocket. That 
is the deductible plus your coshare of prescriptions purchased. At this 
point, you would fall into the gap. You would receive no assistance.
  In order to get out of this black hole, you have to have total 
expenditures out of your pocket of an additional $1,312.50 beyond the 
$2,387.50 you have already paid. So you will have to pay a total of 
$3,700 before you can escape. While you are in the black hole, you are 
continuing every month to pay the premium for a policy for which you 
are getting no benefit.
  The sponsors of this legislation say the monthly premium is $35. 
However, look through the hundreds of pages of this legislation and you 
will not find a $35 number. It is going to be up to the private drug-
only insurers to actually decide whether the premium will be $35. It 
could certainly be higher.

  Again, we have no example of this type of prescription-drug-only 
insurance we can point to and say: Here is how we as Federal employees 
have been treated, or here is how a group of public or private 
employees under another standard plan have been treated. The reason is 
that there is no example of what we are about to impose on America's 
older citizens.
  All of this talk of math and gaps may sound theoretical, but the gap 
will affect the lives of real human beings. Let me give one real 
example.
  There are nearly 3 million Medicare beneficiaries in my State of 
Florida. One of those is an 89-year-old woman by the name of Virginia. 
Virginia, a widow of 11 years, is nearly blind. She lives in an 
assisted living facility. Her income is significantly below the median 
income. Her monthly income is $1,535, or $18,420 on an annual basis.
  Virginia recently moved in with a roommate because she could no 
longer afford her own apartment. She could not afford last Christmas to 
buy her grandchildren presents. During her working years, Virginia was 
an editor and columnist for a smalltown newspaper. She was also a poet.
  Virginia is one of the many Medicare beneficiaries in dire need of a 
Medicare prescription drug benefit. She suffers from high blood 
pressure, stomach irritation, pains in her joints, anxiety disorder, 
osteoporosis, hypothyroidism, trouble sleeping, and difficulty with her 
vision.
  This chart lists her conditions. These are the medications that have 
been prescribed. This is the cost per month based on today's cost 
inflated by 3.6 percent per year to reach an estimated cost in the year 
2006 when this plan will commence.
  She is spending $489.22 a month, or $5,870.64 a year, to get the 
drugs she needs. Each day, she needs three medicines for her blood 
pressure and seven others to treat her other conditions. These 
medicines are necessary to reduce her pain and to prevent further 
health complications.
  I would like to be able to tell Virginia the Senate is considering a 
bill that will give her a comprehensive, affordable Medicare 
prescription drug benefit. But I cannot do that. No Member of this 
Senate can tell its citizens, such as Virginia, that we are providing 
them with a comprehensive, affordable Medicare prescription drug 
benefit. Why? Because if this bill is approved, I will have to tell 
Virginia that after she has spent $275 before she gets any help to meet 
the deductible, then beginning on January 18, when her deductible has 
been met, until October 7, 2006, Virginia would expect to pay 50 
percent of the cost of each prescription.
  This chart shows the $35 estimated monthly premium and the out-of-
pocket costs Virginia would have to pay. After spending $275, she will 
spend another $2,112.50 for her 10 medications. Those are the blue bars 
on this graph. Then what happens? If this bill is approved, I would 
have to tell Virginia that after October 7, while the $35 premium 
continues at the same level, she would receive no benefit. All of these 
black bars are what Virginia would have to pay, 100 percent out of her 
pocket. She still needs all the medications on October 8 and 9, 
throughout the rest of the year. Her needs have not diminished.
  On October 7, she falls into the black hole. She would stay there 
until December 27. I am guessing she will not be sending any Christmas 
presents to her grandchildren in 2006, either.
  To make matters worse, I would have to tell Virginia that in addition 
to paying 100 percent of the cost of her prescriptions, she would still 
have to pay the $35 every month and get nothing in return. How do I 
explain to this senior in my State that she would be getting no help 
from the drug benefit but would still be paying the premium? She would 
get no help for nearly 3 months but would pay the premium anyway.
  Between the premiums, which are getting her nothing, and the full 
cost of her medicines, Virginia would have to spend 34 percent of her 
income to get the medications that she needs. Let me repeat that. 
Between the $35 a month premiums and the full cost of medicines that 
she would have to pay while she is in the black hole, Virginia would be 
spending 34 percent of her annual income on prescription drugs.
  I do not think Virginia will believe this is a very adequate 
prescription drug benefit. It is neither comprehensive nor affordable.
  At an absolute minimum, Virginia should not be asked to pay a monthly 
premium during the time that she is getting no benefit.
  This gap is bad medicine. The gap is a gimmick that lowers the cost 
of the plan but at the expense of our seniors. One of the many pieces 
of information we need from the Congressional Budget Office in order to 
make an informed judgment on this bill is the number of Medicare 
beneficiaries who would fall into this gap. However, like so many other 
aspects of this legislation, we not only do not have any practical 
experience, we do not have the theoretical estimates of the 
Congressional Budget Office.
  According to the administrator of the Medicare Program, CMS, 12 
percent of the almost 40 million beneficiaries would fall into this 
black hole. I believe that number reflects the number of beneficiaries 
who would fall into the gap today, in June of 2003. By the time we get 
to 2006, however, when the bill would actually become effective, data 
from the Kaiser Family Foundation suggests that more than 20 percent of 
the beneficiaries would fall into this gap.
  This debate would certainly be informed by more information from the 
Congressional Budget Office, but in the absence of CBO numbers I will 
use the CMS and Kaiser numbers. If CMS is correct, nearly 5 million 
Medicare beneficiaries would fall into the benefit gap if the benefits 
were available today. If the Kaiser projections for 2006 are correct, 
nearly 8 million Medicare beneficiaries would fall into the black hole 
in the first year of this program. Eight million seniors and people 
with disabilities would be forced to pay a premium when they are 
getting absolutely no benefit in return.
  I do not believe we should tax those 8 million Medicare beneficiaries 
whose prescription drugs are high enough to place them in this black 
hole.

[[Page S8276]]

  In my own State of Florida, it is estimated that there will be 
600,000 Medicare beneficiaries who would fall into this black hole. I 
do not want to go home and tell 600,000 of my constituents that instead 
of getting a comprehensive, affordable Medicare prescription drug 
benefit, they are going to get a meager benefit run by private 
insurance, and to top it off they will have to pay the ``sick tax'' 
imposed upon them when they need the benefit the most.

  One goal of a Medicare prescription drug benefit, which I believe is 
commonly shared, is that seniors will find it in their best interest to 
voluntarily enroll in this new program. Last week, we debated a 
provision that would have given greater choice to seniors. They could 
have elected either to stay in the plan that is now being imposed, 
albeit a plan that has no history of a drug-only insurance policy, or 
they could make an election to stay with standard Medicare fee for 
service. That proposal was rejected. In my judgment, that is going to 
suppress voluntary participation in this prescription drug program.
  Surely, the success of any program depends on a high participation 
rate. The ``sick tax'' would be an even further discouragement and 
could doom the program to failure. We know seniors will reject a plan 
that does not provide them the benefits they need. We have already seen 
that with the passage and then the quick rejection of catastrophic 
Medicare benefits in the late 1980s.
  People like Virginia will not enroll in a program that requires them 
to make a monthly payment while they get nothing in return.
  This amendment to suspend the payment of premiums once a 
beneficiary's drug utilization is within the gap in coverage would 
eliminate the unfair provision under which beneficiaries with high drug 
costs would continue to pay premiums while receiving no benefit.
  In summary, the amendment that is before us would say if a 
beneficiary is in the black hole, if they are not receiving any 
benefits, they would not have to pay the monthly premium.
  I bring to the attention of my colleagues that there has been some 
defense given of this legislation which says we cannot vote for any 
amendment which would change the basic structure of the bill; that 
would change, in my judgment, the unwise reliance on an unproven, drug-
only insurance benefit. I want to emphasize, this does not change the 
structure. Rather, this removes a clear inequity but maintains the 
fundamentally flawed structure of this legislation. Yes, it has a cost. 
Again, we do not know what the cost is from CBO, but I am going to 
suggest an offset which will be more than adequate to pay the cost.
  There are some who say we cannot afford any amendments which would 
increase the benefits of this program. That reminds me of the old story 
about the child who shot his mother and his father and then threw 
himself at the mercy of the court because he was an orphan. The fact 
is, we shot a legitimate prescription drug benefit for Medicare by 
passing a reckless tax cut that has absorbed the resources that would 
have enabled us to provide a legitimate benefit.
  The offset that I am offering is an amendment which would secure the 
savings attributable to a clarification of the Medicare secondary 
payment provisions. For most of the history of Medicare, the assumption 
has been that if a person had double coverage, the primary payer would 
be that payer other than Medicare, and Medicare would wrap around that 
primary payer. A recent court opinion has reversed that assumption.
  There is a provision, which is included in Chairman Tauzin's House 
Energy and Commerce Committee mark, supported by the Justice 
Department, that would clarify the circumstances in which Medicare is 
the secondary payer.
  I ask unanimous consent to have printed in the Record a letter dated 
January 17 from the Assistant Attorney General, William E. Moschella, 
outlining the Department of Justice support for this offset.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         U.S. Department of Justice, Office of Legislative 
           Affairs, Office of the Assistant Attorney General,
                                    Washington, DC, June 17, 2003.
     Hon. W.J. (Billy) Tauzin,
     Chairman, Committee on Energy and Commerce, U.S. House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman: This is to advise you of the 
     Department's support for a provision in the Medicare 
     Prescription Drug and Modernization Act, set forth in Title 
     III, Section 301, which would protect the integrity of the 
     Medicare Trust Fund by clarifying that Medicare must be 
     reimbursed whenever another insurer's responsibility to pay 
     has been established. The Section is consistent with the 
     litigation positions taken by this Department and the 
     Department of Health and Human Services (``HHS'') in numerous 
     court cases.
       Congress enacted the Medicare Secondary Payer (``MSP'') 
     statute in 1980 to protect the fiscal integrity of the 
     Medicare program by making Medicare a secondary, rather than 
     a primary, payer of health benefits. To ensure that Medicare 
     would be secondary, Congress precluded it from making payment 
     when a primary plan has already made payment or can 
     reasonably be expected to pay promptly. Congress recognized, 
     however, that in contested cases, payments under such plans 
     would be delayed. To protect, providers, suppliers, and 
     beneficiaries, Congress authorized Medicare to make a 
     ``conditional'' payment when prompt resolution of a claim 
     cannot reasonably be expected. The Medicare Trust Fund must 
     be reimbursed, however, once the primary insurer's obligation 
     to pay is demonstrated.
       Some recent court decisions have held, however, that 
     Medicare has no right to reimbursement unless the primary 
     insurer could reasonably have been expected to make prompt 
     payment at the outset. See e.g., Thompson v. Goetzmann 315 
     F.3d 457 (5th Cir. 2002). These rulings make the statute's 
     reimbursement mechanism inoperative in some jurisdictions. 
     Section 301 of this legislation would end this costly 
     litigation and provide clear legislative guidance regarding 
     Medicare's status as a secondary payer of health benefits. 
     The technical changes in Section 301 make clear that Medicare 
     may make a conditional payment when the primary plan has not 
     made or is not reasonably expected to make prompt payment.
       The technical amendments of Section 301 clarify other 
     provisions of the MSP statute, as well. They make clear that 
     a primary plan may not extinguish its obligations under the 
     MSP statute by paying the wrong party (i.e., by paying the 
     Medicare beneficiary or the provider instead of reimbursing 
     the Medicare Trust fund. The Section clarifies that a primary 
     plan's responsibility to make payment with respect to the 
     same item or service paid for by Medicare may be 
     demonstrated, among other ways, by a judgment, or a payment 
     conditioned upon the recipient's compromise, waiver or 
     release of items or services included in the claim against 
     the primary plan or its insurer; no finding or admission of 
     liability is required. In addition, section 301 makes clear 
     that an entity will be deemed to have a ``self-insured plan'' 
     if it carries its own risk, in whole or in part. Finally, the 
     Section makes clear that the Medicare program may seek 
     reimbursement from a primary plan, from any or all of the 
     entities responsible for or required to make payment under a 
     primary plan, and additionally from any entity that has 
     received payment from the proceeds of a primary plan's 
     payment. These provisions of Section 301 will resolve 
     contentious litigation and are designed to protect the fiscal 
     integrity of the Medicare program.
       We hope that this information is helpful. The Office of 
     Management and Budget has advised that there is no objection 
     to this report from the standpoint of the Administration's 
     program. Please let us know if we may be of additional 
     assistance.
           Sincerely,
                                             William E. Moschella,
                                       Assistant Attorney General.

  Mr. GRAHAM of Florida. This amendment is endorsed by the National 
Committee to Preserve Social Security and Medicare. I ask unanimous 
consent that their letter of endorsement be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                    National Committee to Preserve


                                 Social Security and Medicare,

                                    Washington, DC, June 16, 2003.
     U.S. Senate,
     Washington, DC
       Dear Senator: On behalf of the millions of members and 
     supporters of the National Committee to Preserve Social 
     Security and Medicare (NCPSSM), I am writing in support of 
     Senator Graham's ``No Premium in the Gap'' amendment to ``The 
     Prescription Drug and Medicare Improvement Act of 2003.''
       We understand that the amendment would suspend the payment 
     of premiums once a beneficiary's drug utilization is within 
     the gap in coverage. Charging seniors a monthly premium 
     without offering any benefit in return is the equivalent of 
     levying a tax on the sick.
       The amendment would improve the ``The Prescription Drug and 
     Medicare Improvement Act of 2003'' by eliminating the unfair 
     provision under which beneficiaries with high drug costs 
     would continue to pay premiums while receiving no benefit.
       We applaud your efforts and dedication on behalf of 
     America's seniors, and appreciate

[[Page S8277]]

     your continued leadership on these issues. Please support 
     Senator Graham's ``No Premium in the Gap'' amendment and we 
     look forward to continuing to work with you.
           Cordially,
                                              Barbara B. Kennelly,
                                                President and CEO.

  Mr. GRAHAM of Florida. I urge my colleagues to join me in amending 
this legislation and repeal the ``sick tax.''
  Mr. BAUCUS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. THOMAS. 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. THOMAS. Mr. President, I will comment on the amendment, the no 
premium on the donut amendment.
  First, let me say that I wish we did not have a gap in coverage. 
Unfortunately, eliminating the gap in coverage could add as much as 
$200 billion to the cost of this proposal. As we all know, we are 
working within a budget of $400 billion and this bill targets those 
funds to those who need it most.
  Most seniors, however, will not be affected by the gap in coverage at 
all. This is because their drug spending will not reach limit, or 
because they qualify for the additional assistance in the low-income 
benefit, or because they have additional coverage from a retiree health 
plan, or coverage they have purchased themselves.
  Most seniors will not have drug spending in a year that exceeds the 
benefit limit. According to the Congressional Budget Office, 80 percent 
of seniors will not even have prescription drug spending that exceeds 
the $4,500 benefit limit.
  That means that right off the bat only one senior in five would even 
have drug spending high enough to be affected by the gap in coverage at 
all.
  Now, the drug benefit package for lower income seniors does not have 
a gap in coverage. In drafting this bill we have targeted resources to 
those who need it most. We made it a priority not to have any gap in 
coverage for lower income seniors.
  This means that beneficiaries with incomes below about $15,000 and 
couples with incomes below about $20,000 in 2006 will have no gap in 
coverage. That is 41 percent of Medicare beneficiaries who are 
completely unaffected by the benefit limit.
  In addition, beneficiaries who have coverage from a retiree health 
plan will not be affected by the benefit limit when the plan provides 
that additional coverage. Today, about 32 percent of beneficiaries have 
retiree coverage and this bill provides generous Federal assistance to 
retiree-sponsored plans so that they can continue to offer coverage to 
their former workers.
  Other seniors will be able to purchase additional prescription drug 
coverage from their prescription drug plan or through their 
MedicareAdvantage plan. This additional drug coverage will be 
seamlessly integrated into their drug benefit package and will ensure 
that seniors who want additional coverage will be able to get it.
  As a result of the elimination of the gap for 44 percent of seniors 
who have lower incomes and the fact that many seniors have additional 
coverage, we estimate that only about 2 to 12 percent of seniors will 
ever be affected by the gap in coverage.
  Now every single beneficiary who enrolls in the drug benefit will 
have comprehensive coverage including coverage against catastrophic 
drug costs. That coverage is present even for those 2 to 12 percent who 
are in the gap in coverage. These seniors are always protected against 
higher drug costs.
  Any enrollee will have 90 percent of their prescription drug costs 
covered if they have $3,700 in out of pocket spending on prescription 
drugs in a year.
  Now Senator Graham calls the benefit limit a sick tax because he 
believes that seniors should not pay a premium for the coverage for 
catastrophic costs if they hit the benefit limit. This is like saying 
that you should not pay for fire insurance if your house isn't on fire.
  But of course that is not how insurance works. People purchase 
insurance to protect them against unfortunate events like a house fire, 
an accident, or some other tragedy.
  To get the coverage in your insurance policy, you pay an insurance 
premium. If you do not pay the premium, then your insurance policy is 
not going to give you the coverage.
  That is the same idea here with coverage for prescription drugs. Any 
senior who wishes to enroll in the voluntary benefit will pay a monthly 
premium for that coverage. The coverage is voluntary and the premium is 
an affordable $35 per month. And 44 percent of beneficiaries with lower 
incomes will have very low or no premium at all for the coverage 
offered in this bill.
  Finally, if we were to close the gap in coverage for seniors at 
higher income levels it could cost over $200 billion, which would 
require us to take benefits away from the seniors with the lowest 
incomes. Personally, I cannot justify that action.
  Of course, today's seniors receive no assistance from Medicare for 
outpatient prescription drugs, and this bill changes that by adding a 
new comprehensive prescription drug benefit to the program. The average 
senior will save at least 53 percent, about $1,700, off their 
prescription drug costs after paying an affordable monthly premium of 
$35. And lower income seniors will have 80 to 90 percent of their drug 
costs covered.
  We have worked hard to minimize the gap in coverage within the 
resources available for the proposal. We have done that. Most seniors 
will not have spending that hits the benefit limit, and for those who 
do, many of those will have coverage above the limit through the low-
income benefit package, from retiree plans or from additional coverage 
provided by their plan.
  I urge my colleagues to vote against the Graham amendment.
  I urge we not consider the Graham amendment, that, in fact, this has 
been covered and is covered in the bill as it now exists and is 
designed to help those beneficiaries with the lower incomes.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DASCHLE. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DASCHLE. Mr. President, I wish to alert my colleagues this 
morning to an important new study that has just been published by the 
Institute of Medicine entitled ``Hidden Costs, Value Lost: Uninsurance 
in America.''
  According to the Institute's findings, the United States economy 
loses between $65 billion and $130 billion each year because of the 
cost of the undiagnosed or untreated illnesses of those Americans who 
lack insurance. In short, the report found that the cost of not 
providing insurance is higher than the cost of providing insurance.
  If these findings are borne out, this would represent an astonishing 
fact that should force the Congress to rethink our approach to the 
health care and insurance, policies in the country today. The report 
also examined the effect being uninusured has on individuals and their 
families.
  It states:

       Unisured individuals and families bear the burden of 
     increased financial risk and uncertainty as a consequence of 
     being uninsured. Although the estimated monetary value of the 
     potential financial losses that those without coverage bear 
     is relatively small, the psychological and behavioral 
     implications of living with financial and health risks and 
     uncertainty may be significant.

  Recently, I was home in South Dakota meeting with citizens. I saw 
first-hand the effect that the lack of insurance and the fear of losing 
insurance has on the people of my State.
  Day after day, too many South Dakotans know that they are one layoff, 
one bad crop, one accident, or one illness away from being totally 
unprotected. I met with veterans who are picking up a greater share of 
their health care costs, because cuts to their health benefits are 
causing longer waits and worse care in the VA system.
  I met with self-employed people, small business owners and farmers, 
who buy their own insurance and as a result face premium costs as high 
as $20,000 a year. I met with the families of National Guard members 
who just a few weeks ago were afraid that their loved ones might get 
hurt in the line of

[[Page S8278]]

duty in Iraq. Today, they were worried that their husbands or wives 
will lose their health coverage when they return home. And I met with 
citizens from all walks of life who can't afford the high cost of 
insurance and live in constant fear that an illness or an injury could 
throw them and their family into bankruptcy.
  I recently heard from a couple in Springfield, SD, who own a small 
business, but who do not have insurance. The husband is a veteran and 
he has been on the waiting list to receive benefits for himself through 
Veterans Health Administration for a year-and-a-half. In the meantime, 
he has looked for health insurance for both for he and his wife. But, 
the only policy they could find had monthly premiums of $800 and 
deductible of $2,500. In addition, the insurance would not cover the 
couple's pre-existing conditions. This policy was too expensive, so 
they are forced to live without coverage of any kind until the Veterans 
Administration is able to provide it. They may wait for as long as 2 
years.
  To bring resources for Veterans health more in line with the 
overwhelming need, many of us introduced a bill, S. 19, that would 
change the funding process for the Veterans Health Administration. The 
bill would mandate increased funding to correspond to any increase in 
the number of patients. This section, which is identical to S. 50, the 
Veteran Health Funding Guarantee Act introduced by Senator Johnson, 
would help ensure that the VA can provide medical services to every 
eligible veteran.
  Our failure to provide coverage to veterans is one of the most 
glaring examples of the unfairness in our health care system. But the 
problem extends throughout our entire country. Forty-one million 
Americans lack health insurance today, and high costs are driving that 
number even higher. With the release of the Institute of Medicine's 
report, we learn that doing what's right is in fact less costly for our 
country than doing nothing. We can do better. This is a national 
problem and it demands national leadership to fix it.
  We have an obligation to focus on the troubles of our economy and the 
Americans who are struggling to work and raise families. We certainly 
want to do everything we can to keep the Senate's attention focused on 
the crisis in health care. Our citizens are asking for our leadership, 
and we have an obligation to answer their call.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, as we did with the Graham amendment, I 
would now like to allow consideration of the Kerry amendment, and thus 
I ask unanimous consent that all the terms of the previous order remain 
in place except that the pending amendments be temporarily set aside, 
and that the Senator from Massachusetts be recognized to offer his 
amendment.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Senator from Massachusetts.


                           Amendment No. 958

  Mr. KERRY. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Massachusetts [Mr. Kerry] proposes an 
     amendment numbered 958.

  Mr. KERRY. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

   (Purpose: To increase the availability of discounted prescription 
                                 drugs)

       On page 204, after line 22, insert the following:

     SEC. ____. ACCESS TO DISCOUNTED PRESCRIPTION DRUGS.

       (a) In General.--From amounts made available under 
     subsection (c), the Secretary of Health and Human Services 
     shall award grants to covered entities described in section 
     340B(a)(4) of the Public Health Service Act (42 U.S.C. 
     256b(a)(4)) to enable such entities to pay the start-up costs 
     associated with the establishment of pharmacies to provide 
     covered drugs under such section 340B.
       (b) Application.--To be eligible to receive a grant under 
     subsection (a), a covered entity shall prepare and submit to 
     the Secretary of Health and Human Services an application at 
     such time, in such manner, and containing such information as 
     the Secretary may require.
       (c) Funding.--The following sums are appropriated, out of 
     any money in the Treasury not otherwise appropriated to the 
     Prescription Drug Account established under section 1860DD-25 
     of the Social Security Act, $300,000,000 to carry out this 
     section. Amounts made available under this subsection shall 
     become available October 1, 2004, and shall remain available 
     until expended.

  Mr. KERRY. Mr. President, I thank the distinguished ranking member 
and congratulate both him and Senator Grassley on what is obviously an 
extraordinarily important, complicated, and difficult road--to try to 
move toward prescription drug coverage for seniors in America. I wish 
to share a few words, if I may, at the outset, before moving 
specifically to the amendment, and to talk generally about the bill 
itself.
  Obviously, all across our country we have accomplished an 
extraordinary service for seniors through what we have achieved through 
Medicare. It is one of the great social programs of the United States 
of America. I can remember years ago a shared responsibility by 
Republicans and Democrats alike. I think it was President Nixon who 
signed the enormous proportion of it into law in the beginning of the 
1970s. We lifted a great many seniors in this country out of poverty as 
a consequence. It has benefited millions of Americans who would 
otherwise go without quality health care and otherwise either be forced 
into poverty or remain in poverty. The face of poverty in the United 
States of America changed because of this program.
  I might add that it is a Government program. Often, the Government 
comes under great criticism. But the truth is that this is a program 
that has worked, a program that has made a difference in the lives of 
our fellow Americans, and a program that a large proportion of America 
appreciates, respects, and doesn't want to see destroyed. I think we 
have a duty to try to strengthen and improve the program by adding a 
comprehensive, affordable, and guaranteed prescription drug benefit to 
Medicare.
  Notwithstanding the very best efforts of the chairman and ranking 
member and others on the committee on which I serve, there are still 
questions as to whether this in fact does that at this point in time.
  That doesn't mean it isn't perhaps for some people worth voting for. 
I haven't made a final decision with respect to final passage. That may 
depend somewhat on what we achieve over the course of these days. But 
we need to put to the test the question of what we are doing versus 
what we could do. This is a fair standard for us to try to measure.
  My concern today is that the underlying bill as currently drafted is 
a good start, it is a good foundation, but it doesn't fulfill the full 
measure of the promise of comprehensive, affordable, and guaranteed in 
ways in which I think we could do it. Our Nation's seniors, I fear, 
will experience a very severe case of sticker shock when they learn how 
far the bill falls below their expectations for relief.

  Also, I wish we did not have to wait until 2006. I have serious 
questions about why, given it took us only 11 months to set up Medicare 
itself, it takes us 2\1/2\ years to set up the Medicare drug benefit. 
Frankly, it is beyond my acceptance of what is a legitimate reason. I 
know the reasons. I have heard the reasons. But think about that: We 
set up the entire Medicare Program in about 11 months, and now we are 
told to add a benefit within it, we ought to wait about 2\1/2\ years. I 
think it has far more to do about budgets and far more to do about 
elections than it does with the realities of what we need to do.
  Seniors, obviously, need this relief. Nearly 40 percent of Medicare 
beneficiaries report having no--zero--prescription drug coverage. And 
the average amount they pay out of their own pocket for prescription 
drugs has increased from $644 in the year 2000 to $996 in 2003. These 
expenses are projected to grow to $1,147 in 2004 and $1,454 by 2006, 
which is the year when the benefit actually gets implemented. So we are 
talking about a much larger bill than we have today.
  People who are measuring this bill by what we have today are actually 
measuring it short of what the need is because the need is going to be 
the year

[[Page S8279]]

of implementation, 2006, and then we will have more than doubled the 
amount that individuals are paying for prescription drugs. That means 
the average annual out-of-pocket spending by seniors for prescription 
drugs will have doubled over that period. And I think seniors are to 
going to question: Well, if they all knew that, why am I still having 
such a hard time paying for prescription drugs?
  Now, again, I want to underscore, I know how hard it is for the 
chairman and Senator Baucus to try to do this. And the reason it is so 
hard is because we have been given an arbitrary number. And I will say 
something more about that in a minute.
  Let me say, for a moment, what I think is good that we have 
accomplished. No. 1, we have rejected President Bush's efforts to force 
seniors into private plans. We have rejected the President's plan to 
disadvantage seniors who want to stay in traditional Medicare and to 
keep the same doctors they have now. We have rejected the President's 
plan to give a windfall of incentives to PPOs to encourage their 
participation in the program. And we have adopted certain longstanding 
Democratic principles that include significant cost-sharing protections 
for low-income beneficiaries, a guaranteed fallback plan, and some key 
efforts that are targeted at improving the traditional fee-for-service 
benefits under Medicare.
  But there are concerns I expressed in my ``no'' vote in the Finance 
Committee, and I want to express those concerns now on the Senate 
floor.
  First of all, there are crucial areas I would hope we would try to 
find a way to improve. The most important of those is this gap in the 
coverage, in the donut hole as it is called, where seniors are charged 
a premium, but they do not get anything for the premium.
  It seems to me there ought to be adequate protection to ensure, also, 
that employer coverage is not substituted or dropped. We do not want to 
create a situation where employers are covering people today, but 
because you have a fallback situation, they may decide, OK, we are 
going to drop that coverage, and, in fact, people are downgraded in 
what is available to them because there are not enough private people 
coming in to make up for that; therefore, the fallback is what they 
get. In addition, we must improve the stability of the fallback plans 
to minimize confusion and inconvenience to seniors.

  Finally, I think we have to protect lowest income seniors by making 
sure they, too, can get the Medicare benefit. We ought to guarantee--or 
do our best to guarantee--a uniform national premium, somehow, for that 
benefit, and try to eliminate the new increases in beneficiary cost 
sharing under traditional Medicare and be more aggressive about 
providing additional benefits under the program.
  But the stark reality is, all of these constraints are not the fault 
of Senator Baucus or Senator Grassley. There is a reason we are 
operating under this straitjacket where we have had to tell a bunch of 
seniors they are going to pay a premium, they can buy insurance, they 
get to buy insurance up to $3,000--whatever it is--$4,500, and then 
they stop, but they continue to pay premiums. They continue to pay, but 
they are not going to get any benefit. They have to go back and start 
paying their full premium. But then when they get up to the $5,800 of 
catastrophic level, it begins to cut back in.
  The reason we are there is fundamentally that $400 billion is all the 
Congress was given to deal with this--the arbitrary: Let's pick a 
number. Here is what we will put into prescription drugs.
  I think every American has a right to ask--and they will ask over the 
course of the next years--why they were limited to $400 billion when 
the U.S. Congress chose to take $3 trillion off the table in tax cuts 
that went to upper income Americans over the course of the last 2 
years.
  Now, that is a fair question. That is the choice in America today. We 
make choices. People sent us here to make choices. And the choice made 
on behalf of the American people is that it is more important to reward 
people earning $315,000 a year than to make certain a lot of seniors 
don't have a donut hole in their coverage in prescription drugs.
  When I heard Senator Craig Thomas a moment ago say not that many 
seniors are going to be left out, I said, well, that is interesting 
because in the next breath he said we can't afford it because it is 
going to cost $200 billion. Well, if it costs $200 billion, it sounds 
to me as if somebody is being left out to a pretty large amount of 
money.
  You cannot have it both ways. If it is expensive, it means it is 
meaningful to a lot of people. And if it is meaningful to a lot of 
people, we ought to be thinking about why we are not doing it.
  Warren Buffett--the second richest man in the United States of 
America--wrote a letter a couple weeks ago where he said: Well, I own 
my own company. And now that I own my own company, and I've been given 
this very nice dividend benefit by the Republicans, I can pay myself $1 
billion. And when I pay myself $1 billion, I'm not going to have tax, 
in this first year, on $365 million of it. It's tax free. That's it. He 
said he thought it would have been better to give 365,000 families in 
America $1,000 each. He did not think he ought to get that benefit.
  Now, I think it is going to be fair for a lot of seniors in this 
country to ask the question, as we go forward, why Warren Buffett 
thinks that, and a whole bunch of people here think it is OK to do 
something else.

  So if we are going to offer a prescription drug benefit that stands 
the test of time, the test of coverage, the test of fairness, and 
ultimately the test of the compact that Medicare created with our 
seniors, I think we ought to try to eliminate the coverage gap in this 
bill.
  I think it is hard to turn to a senior at some point in time and say: 
Look, we want to help you buy drugs, but we are only going to help you 
up to the point where it gets really expensive. Then, when it gets 
really expensive, you are going to have to start carrying the bigger 
weight until it gets really, really expensive, and then we will come 
back and help you. It seems to me a lot of seniors are going to be 
asking questions about that choice.
  I think we also could do better in protecting seniors with retiree 
coverage. The current bill contains a flawed definition for the true 
out-of-pocket costs by prohibiting any drug spending payments made on 
behalf of Medicare beneficiaries by an employer-sponsored plan from 
counting toward the stop-loss threshold.
  In other words, they have an employer. That employer has given them a 
plan as a retiree, and they retire. They are qualified for Medicare. 
They paid into their retiree plan. It is their deal. But that is not 
now going to count toward their out-of-pocket expense. So they could, 
in fact, be left without the coverage that they deserve as a 
consequence of this definition. And that means that retirees covered 
under employer-sponsored plans will likely never reach the stop-loss 
threshold, and they will effectively be denied benefits under the 
catastrophic portion of the Medicare plan, even though they qualify for 
Medicare and worked just like everybody else for retirement and put 
money into the system.
  Seniors who have retiree prescription drug coverage from their former 
employer worked a lifetime. They made wage concessions over the years, 
with the expectation they were going to receive those benefits. This 
bill comes along and, in effect, denies them benefits and treats them 
unequally in the context of the Medicare plan. It is unfair to change 
those rules after the fact. We ought to try to change it and reward 
employers who do the right thing and provide retiree coverage for their 
employees.
  We also ought to try to strengthen the guarantee of a fallback plan 
and provide seniors with more stability and less confusion. Under the 
current bill, when a fallback program is available, it may not be 
available for very long. Medicare beneficiaries who are in the fallback 
program and like it will have to leave that program if two private 
insurers decide later to serve their region. In other words, the bill 
says there is only a fallback if you don't have two providers. But the 
minute you have two providers in a region, people who may have gone 
into the fallback program will have to turn around and leave the 
fallback program because there are now two providers, even if the two 
providers are providing more expensive premiums than they had in

[[Page S8280]]

the fallback. So they will be forced out of their fallback into a more 
expensive plan which a lot of seniors are going to find both oppressive 
as well as very confusing to them as to why they have to do that.
  Some people are going to argue there is another area of concern. That 
is how we treat low-income seniors in this bill. These are our most 
vulnerable and poorest seniors. They are eligible for both Medicare and 
Medicaid. But under the bill, they are going to get their benefit from 
the Medicaid Program. They won't be allowed to go into the Medicare 
Program because they are poor.
  Some people are going to come to the floor and say: Wait a minute, a 
lot of States offer a better benefit in Medicaid. It is true. Some do. 
But we are not offering them an option. We are telling them they have 
to get it from Medicaid. And the problem is a whole bunch of States 
have a very limited Medicaid drug benefit. For instance, in the State 
of Texas, the benefit covers only three prescriptions. That is not a 
lot of protection. So we are forcing people into Medicaid in a State 
where, because they are poor, they have to take Medicaid, and they may 
only have three prescriptions available to them in the whole program. 
We are asking for trouble if that stays the way it is.
  Moreover, we all know a lot of States are facing the worst deficits 
in a generation. That means States are beginning to cut back their 
benefits. There isn't one of us who hasn't seen a State where a 
Governor is forced to start to clip back on Medicaid. That means we are 
going to see higher copayments. We will have tighter formularies, more 
bureaucracy, and we will not necessarily be achieving the goal we are 
seeking.
  Requiring low-income seniors to stay in a Medicaid prescription 
program is a bad deal for seniors because of the States that provide an 
inferior prescription drug benefit in Medicaid. We are now essentially 
creating the very thing we have always tried not to do. We are creating 
a second-class tier of citizens based on their income within the 
Medicare Program. We will for the first time say to seniors who paid 
into Medicare through a lifetime that just because now in their old 
age, because of their low income, they are going to have to accept a 
lesser benefit. That is wrong. For the first time in the history of the 
Medicare Program, seniors will be denied a benefit simply because of 
their income. It is a terrible precedent. It strains the social compact 
that was the foundation of Medicare in the first place.

  Another concern in the underlying bill is the lack of the guaranteed 
premium or uniformity of it. Under this legislation, insurance 
companies providing the new drug benefit have the freedom to design 
their prescription drug plan. That is great. I am for the marketplace. 
I am all for companies offering a private prescription plan to the 
degree they want to or choose to or can. They can decide what premiums 
and copayments they want to charge. But the point is, under Medicare, 
we have always decided there was a fundamental compact with seniors for 
which they could pay and which ought to have some uniformity of 
treatment in essence. What we are doing now is throwing that whole 
sense of the system into the competitive structure of sometimes very 
limited choices which may ratchet up prices in a way that is going to 
become very complicated for a lot of Senators and Congressmen to 
explain to seniors who are used to the Medicare plan being something 
different in the context of the compact.
  The bill promises an ``average premium'' of about $35 per month. But 
premiums are obviously going to vary from region to region in the 
country which means some seniors may pay $39 a month in Alabama, maybe 
$40 a month in Tennessee, but be charged $160 in New York. I believe we 
have to be very sensitive and thoughtful about what happens to people 
on fixed incomes. This is not your average marketplace. This is not a 
place where people even have the same set of choices.
  When a senior on a fixed income winds up with high blood pressure, 
diabetes, perhaps prostate cancer or a mastectomy, any number of 
different problems that seniors cope with, they are forced into an 
economic status, not choosing to get into one. The question is whether 
we are going to do our best to try to protect them from that kind of 
volatility.
  It is estimated in the first year of the program, approximately 35 
percent of the Part D beneficiaries are going to pay more in premiums 
and out-of-pocket cost sharing than they will save from the new drug 
benefit; 35 percent will pay more than they are going to save from the 
new benefit. And to add insult to injury in that context, the bill 
doesn't just fail to provide an affordable, comprehensive drug benefit, 
but it also increases cost sharing for other Medicare benefits.
  In that context, there are two troublesome cost-sharing requirements. 
It increases the Medicare Part B deductible from $100 to $125. And then 
it indexes it by inflation and permits a new coinsurance for clinical 
laboratory services. That means Medicare beneficiaries will be asked to 
carry the burden of an additional $24 billion in new cost-sharing 
requirements over the next 10 years. Wait until your grandmother finds 
out about that one.
  For all of my concerns, we have certainly come closer than we have 
been at any time in recent years to trying to achieve the great goal of 
putting prescription drugs into some kind of Medicare benefit. I 
believe with additional persistence, with additional negotiations 
between us and the administration, we could make those concerns I just 
expressed go away or we could mitigate them. We could diminish them. I 
intend to support a number of amendments on the floor seeking to do 
that.
  I have an amendment I have just called up that seeks to do one part 
of that. Let me explain it very quickly. I want to talk about an 
amendment I have and I will get to the one I just called up in a 
moment.
  We have talked for a long time in the Senate about mental health 
parity. It is a goal we really want to achieve in this country. Senator 
Domenici has been a champion for it. There have been bipartisan efforts 
to try to get there. I would like to see us end the discriminatory 
practice of charging seniors in Medicare a 50 percent copay for mental 
health services, when we only charge a 20 percent copay for the other 
physician services. Too many seniors have mental illnesses that go 
untreated, and we should try not to make that worse by making it harder 
for people to be able to get the care.
  I have an amendment to bring parity for mental health services for 
seniors. I am also working with Senator Sununu to try to improve the 
Medicare benefit by adding vision rehabilitation services to the list 
of covered services.
  I am also pleased to join with Senator Hutchison and Senator Kennedy 
as a lead cosponsor of an amendment to increase the Medicare indirect 
medical education--so-called IME--payments for teaching hospitals. I 
appreciate very much the efforts of Senator Baucus and Senator Grassley 
to try to accommodate us to find a way to deal with this issue. It is a 
critical issue. Teaching hospitals incur a different set of costs, and 
you cannot measure the Medicare reimbursement against the expenses of 
the hospital in the same way.
  Fifty percent of the doctors in Montana were taught at hospitals in, 
I think, 11 or 12 States, including Massachusetts, New York, 
California, and a few others in the country. So 11 or 12 States are 
spending money in their teaching hospitals to provide the benefit to 
the rest of the country of that quality medical education. When 50 
percent of the doctors in Montana were educated in 11 or 12 States, 
Montana has a benefit, but it is not measured in the Medicare 
reimbursement. We need to make up that difference so we can continue to 
have the quality medical instruction and education in our country from 
which every American benefits.
  In the spirit of improving this legislation, the amendment I offer 
today, which has bipartisan support, would dramatically improve the 
bill for some of the things I said I think are problems. It does it for 
very little money.
  My amendment will help seniors who are in the coverage gap. What it 
does, it doesn't fill the whole ``donut,'' but it will offer 
significant help to seniors who fall into the donut by expanding access 
to the existing prescription drug safety net.
  The Federal Government currently sponsors a discount prescription 
drug program for those qualifying entities, such as a community health 
center or

[[Page S8281]]

a public hospital or the Ryan White grantees, and others. Under this 
program, which is known as the 340(b) covered entities program, they 
have access to discounted prescription drug pricing for their patients 
in the program. In other words, if you have a community health center 
and your community health center has an in-house pharmacy, they could 
fill the prescriptions for seniors at discounted rates. They are 
allowed to do it. We have already had that under law. The problem is, 
we know a whole bunch of community centers and public health hospitals 
don't have the in-house pharmacies.
  The benefit of this is to provide drugs that are significantly lower 
than the retail and wholesale prices. Based on a recent analysis of 200 
very popular drugs, under 340(b) prices, on average, those drugs were 
54 percent lower than the average wholesale price. Another recent 
survey showed that 340(b) prices were 24 percent lower than those 
available to groups purchasing as group organizations. So it is a sound 
program, but it is underutilized. Not all health centers and hospitals 
have an in-house pharmacy.

  One of the biggest barriers to participating in 340(b) for many of 
the qualifying entities is the very expensive upfront capital cost of 
putting in place a pharmacy in their facility. So what I would do is 
establish a $300 million grant fund from the prescription drug trust 
fund created under the bill for HHS to award grants to health centers, 
hospitals, and other qualifying 340(b) institutions to help them with 
the startup costs associated with establishing a pharmacy in their 
entity. CBO scoring of this bill showed there is about a $10 billion 
surplus available in the current scoring, and so we have come in under 
the $400 billion. We have some cushion here. If we took that $300 
million and made it available to these in-house entities to create 
those discount drug centers, then we could have those people who fall 
into the donut hole go to those centers, get the discount drugs, and 
significantly reduce the impact of the donut, which I think is a 
worthwhile effort.
  We estimate there are up to 2,000 organizations in communities all 
across the country who would be assisted to set up in-house pharmacies 
as a result of this amendment. That will mean seniors all across the 
country who find themselves in the coverage gap will be able to 
purchase their prescription drugs for as much as 50 percent below the 
wholesale price. That savings is very significant in the context of 
what we are facing here.
  My amendment is endorsed by the National Association of Community 
Health Centers, the National Association of Public Hospitals, and the 
Public Hospital Pharmacy Coalition. I hope it can earn the support of 
my colleagues so we can address one of the unintended consequences of 
dealing with only a $400 billion benefit, such as we are today.
  I thank my colleagues for the opportunity to share these thoughts 
with them. I hope we can pass this amendment or have it accepted at the 
appropriate time.
  I yield the floor and suggest the absence of a quorum.
  The assistant legislative clerk proceeded to call the roll.
  Mr. THOMAS. 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. THOMAS. Mr. President, as we hear more and more about this bill, 
of course, it causes us to reflect on it and that is the purpose of 
having conversation, that is the purpose of having debate. There will 
be much more of that, of course, but it is interesting to listen to 
what is being discussed, much of it based on the fact we need more 
money for this and more money for that, when we are adding to Medicare 
$400 billion, continuing to support the basic Medicare Program as it is 
financially, and adding to it this additional amount.

  Medicare will be improved in every way as this happens. So I know it 
is a logical time to talk about how we might do more, how we might 
provide a Government program, as the Senator from New York talked about 
this morning, for everyone; take all the payments out, and that is a 
point of view.
  I think, however, the concept of this business of Medicare is one in 
which we all pay into it, we pay something for it. Obviously, one of 
the principles of health care is for the recipient to pay something. We 
have found when they do not, it is out of control entirely.
  We have a lot of worrisome times about Medicaid where there is no 
initial payment and we have overutilization. These are all part of the 
elements that go into it. I know it is great to talk about giving 
everything to everyone, but the fact is, that is not what is going to 
happen.
  We have to get a balanced program that does what we really want to 
do. We talk about the gaps and helping people. The fact is, there is no 
gap for people who are below 160 percent of poverty. If we are going to 
assist someone, we assist those who are less able to assist themselves. 
That is what it is all about. That is what we seek to do.
  Is it perfect? Of course not. If there were 100 of us sitting here 
working on the plan, we would probably have 100 different ideas as to 
how to do it, but we have to come to some consensus as to what our 
goals are and how we can best achieve those goals. Over time, it is 
something that is useful.
  We have to keep that in mind as we go forward. Obviously, there are 
all different kinds of ideas, such as the fact we had a tax reduction 
and, therefore, we should be able to spend more. We had a tax reduction 
because we have an economic problem. We are trying to fix the economy--
that is why we had a tax reduction--along with terrorism and other 
needs. To say we should pay more because we already had a tax reduction 
is not relative. That is not where we are.
  Out-of-pocket expenses, of course, are always important, and should 
be. That is one of the keys. Here we have a program on which we have a 
certain amount of money we can legitimately spend. How do we best do 
that? How can we deal with everyone the same? Do we do more for those 
with low income and those who are less able to afford it? Of course. 
The true out-of-pocket limit targets the drug benefit to those who need 
it the most. That is what it is about.
  The purpose of out of pocket is to protect seniors from high out-of-
pocket costs. It is that simple. Spending that counts toward the out-
of-pocket limit spending by the beneficiary. If the beneficiary drug is 
covered by some other source, such as a retiree's health plan, that 
money does not count out of pocket.
  Seniors with additional coverage are not penalized for having 
additional coverage. They are protected if they have $3,700 out-of-
pocket spending. In addition, they continue to benefit from additional 
drug coverage beyond that point, of course.
  In addition to out-of-pocket spending by the beneficiary, spending by 
family members or friends also counts toward the out-of-pocket limit, 
as does spending by State pharmacy assistance programs, by State 
pharmacy plus programs. These programs target resources to lower income 
seniors who need additional assistance. They are in place now.
  Allowing this spending to count toward the out-of-pocket limits 
allows these lower income seniors to receive additional assistance and 
still be protected against prescription drug costs that are not covered 
by Medicare drug benefits.
  We should care about what the individual beneficiary has to pay, not 
what others pay on their behalf. This is the purpose of out-of-pocket 
limits in the proposal. Those who reach the amount of spending 
available will have 90 percent of their drug costs covered.
  The House and Senate bills encourage employers to continue providing 
benefits by allowing them to avail themselves of 100 percent of the 
subsidies for offering standard benefit. If employers want to provide 
more, they are free to do so.
  These are tough issues as to how we deal with some limitation on the 
spending and how we distribute it. We will hear more about it, and, 
indeed, we should.
  There will be finally some principles involved as to the best way to 
spend the amount of money that is legitimately available. I hope we 
continue to focus primarily on those who are in that category of 160 
percent of poverty level, and that is where it will continue to be.
  Mr. President, we will continue to hear more. We certainly should 
hear

[[Page S8282]]

more. We will continue to have more amendments, and that is fine. The 
Senator from Massachusetts was a member of the committee. We worked on 
it in the first place, and he has had an opportunity for input. Many of 
these proposals have already been voted on in the committee. Of course, 
if they are being proposed again, they were not successful in 
committee. Nevertheless, they should be brought up to this body, and 
they will.
  Again, my hope is we can take a look at where we want to be in the 
year 2006, but what we want the result to be and make the adjustments 
that are necessary to get us to that point and not be taking up issues 
that are not even a part of debate. We are going to have to be very 
careful that we keep it limited to the issues that do impact Medicare 
and are in this area. I know we will continue to do that.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BAUCUS. 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. BAUCUS. Mr. President, we are now awaiting the arrival of Senator 
Lincoln from Arkansas who has two amendments she wishes to offer. She 
will be arriving shortly. Until she arrives, I have a few words about a 
particular provision in the bill. It is called MARCIA, Medicare Appeals 
Regulatory and Contracting Improvements Act. Last year I joined my 
colleagues, Senator Grassley, Senator Kerry, and now-Governor 
Murkowski, in introducing what we called the Medicare Appeals 
Regulatory and Contracting Improvements Act, otherwise know as MARCIA.
  Today this bill is an essential part of our Medicare improvement 
proposal, the underlying bill. The purpose of the provision is to make 
Medicare a better business partner to providers, a smarter purchaser of 
services for our taxpayers, and a more customer-friendly organization 
for our beneficiaries. MARCIA will strengthen and improve Medicare and 
will help bring the program's administration into the 21st century.
  The provisions provide for regulatory improvements. I have heard from 
hundreds of doctors, as I know all in this body have, and many 
providers who complain that the sheer number and complexity of Medicare 
regulations can drive them crazy and, at times, drive them out of 
business.
  While we cannot make Medicare into a simple program, this bill would 
make and does take some helpful steps in the right direction.
  For one thing, it will require the Secretary on a regular basis to 
review the thousands of pages of statutes and regulations to see if 
there are any inconsistencies in Medicare's many requirements.
  Just a couple of days ago, the majority leader from Tennessee held up 
a book which showed the Medicare requirements back, I think it was 
1965. It was a fairly thick volume, actually. Then alongside that he 
also held up a book with the current Medicare regulations, which was a 
gigantic volume. It is similar to the problems we face in the Tax Code, 
as we all know.
  I am not standing here to say the provisions of this bill are going 
to make Medicare simple and easy, that we are going to cut the number 
of pages down to half. But I am saying we are trying to do our very 
best, and the provisions in this bill should help reduce some of the 
inconsistencies and the complexities that do now occur in the Medicare 
regulations. At least we are focusing on that problem and requiring the 
Secretary to address that, specifically giving that direction.
  Second, our legislation would cut down on the CMS practice of using 
so-called interim final rule authority to impose major new regulations 
without even giving the public an opportunity to comment. It just 
stands to reason that the public should have an opportunity to comment 
on rules because it is more likely if they do, the rules are going to 
be better rules or, on the other side of the coin, if there is not an 
opportunity for the public to comment, there is going to be a tendency 
over time for CMS or any agency to be a little less sensitive to what 
that is really all about, which is about serving people because, after 
all, we are all public servants, including CMS personnel. Our real job 
is to serve the people in the country, and I think this will help move 
CMS in that direction.
  The third provision would make sure that new regulations cannot be 
applied retroactively. Intuitively, I think it makes sense that it does 
not apply retroactively. I think these new requirements are just a 
simple matter of fairness.
  The underlying bill, as we are talking about the regulatory 
provisions, would also make improvements to the Medicare appeals 
system. In the year 2001, on average it took 441 days to complete an 
appeal before an administrative law judge. The next level of appeal 
took almost 2 years. It is true certain provisions in the 2000 law that 
we passed tried to speed up the appeals process, but unfortunately that 
law did not provide the resources or the realistic timeframes necessary 
to make these changes work.
  MARCIA, the regulatory provisions, would make some important 
improvements to get this appeals system back on track so our Medicare 
beneficiaries and providers can get justice more quickly. Clearly, 441 
days for the first level of appeal and 2 years for the second is not 
right, for a whole host of obvious reasons.
  The bill also requires CMS to submit a plan to develop and train a 
group of dedicated Medicare ALJs, administrative law judges. This plan 
would ensure that administrative law judges remain truly independent, 
which I think is a crucial feature of any fair appeals system.
  Medicare contractors will also have to bid and compete for contracts 
under this bill. That is a very significant change from current 
practice. Essentially, under the current practice, Medicare 
contractors, especially talking about the intermediaries, are 
essentially nominated by the intermediaries. They themselves nominate 
who it is going to be, and there is no limit to how long a contracting 
period can be. I think it tends to be a little bit too close and there 
is not enough fresh air to help assure, at least the best we can, that 
the contractor selection process is one that provides more efficiency 
and better service to our people.

  The Medicare contractors will have to bid now. They are going to have 
to compete for contracts under this bill--that is new--thereby assuring 
that the Medicare Program and the taxpayers are getting the best 
service for the lowest price the market will allow.
  In assessing the bids, CMS will have to consider customer service and 
accuracy. That is required when CMS is now selecting contractors and 
getting bids from contractors. Again, we are talking generally about 
the so-called intermediaries who are the ones who deal directly with 
providers. They deal between the providers and the beneficiaries and 
the Government.
  In assessing the bids, CMS will have to consider customer service and 
accuracy, as I said, and contractors will also have to provide much 
more information to providers and to beneficiaries. If the providers 
raise questions about Medicare claims or policies, contractors will 
have to answer them in writing. That, too, is new.
  The bill also would require the Secretary to standardize the way in 
which Medicare conducts audits, the way it conducts prepayment and 
postpayment reviews of provider claims. We often hear of great, almost 
gross, inconsistencies among different parts of the country, different 
regions. It makes sense to standardize this a little bit better. I am 
encouraged that CMS has already taken steps in this direction to make 
the audit process more fair but to ensure that providers are treated 
fairly and consistently, I believe the law has to require it.
  Finally, I am pleased this bill also contains money for continued 
strong enforcement against waste, fraud, and abuse in the Medicare 
Program. I have long believed the Medicare integrity programs must be 
firm, but they must also be fair. This bill takes important steps to 
ensure honest dealing with taxpayer money and fair treatment for the 
professionals who serve our seniors every day.
  Essentially, these are provisions that hopefully address a good part 
of the regulatory complaints, the legitimate

[[Page S8283]]

complaints that all of us in this body have been hearing about from 
doctors and hospitals as they try to do their very best job in 
providing care, in this case, to seniors. I think these are good, solid 
provisions.
  Turning to another matter, as we did for Senator Graham and Senator 
Kerry, I would now like to make it possible for the Senator from 
Arkansas to offer her amendments. I ask unanimous consent that the 
pending amendments be temporarily set aside and that the Senator from 
Arkansas be recognized to offer up to three amendments in succession.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Arkansas.
  Mrs. LINCOLN. Mr. President, I begin by complimenting my colleagues 
from the Finance Committee: Senator Grassley, our chairman; the ranking 
member, Senator Baucus; and all of the other members on the committee 
who have really focused on what is most important to the American 
people, and that is to get a good, commonsense product out of the 
Senate that encourages our seniors and lets them know that we do 
understand that this is a critical issue. It is critical not only in 
terms of the quality of life for our seniors but also in regard to 
economics. We want them to understand we can provide cost savings not 
only to our Nation but to our aging families by providing a 
prescription drug package which will allow them to be healthier 
individuals; to not cause or create greater costs for this country and 
for the other parts of the health care system in this great Nation 
through acute care or difficulties in long-term care, in nursing homes 
and emergency rooms, but being able to have a quality of life and 
providing a good economic way to deal with the aging process.
  As we went through this bill in committee, we talked an awful lot 
about ways that we could improve Medicare; looking at coordination of 
care, at how we could provide a better, commonsense way of 
administering health care to our elderly in this country not only 
through a prescription drug package but recognizing that disease 
management is an enormous part of what we are doing for our elderly, 
and that with the multiple diseases they are dealing with, if we can 
manage that disease management of multiple diseases and have a 
coordination of care, we are going to get a better bang for our buck in 
Medicare.
  I am excited about the possibilities and want to compliment my 
colleagues on a lot of hard work that has been done, particularly 
recognizing that rural areas of our Nation also have great needs. I 
certainly applaud the chairman and the ranking member on that.
  Today I bring up several of the amendments I have to offer. Many of 
these amendments we discussed in the committee. In my approach in the 
committee I was willing to visit with the chairman and the ranking 
member and say I hoped we could work through whatever we needed to in 
order to get these passed and get them in part of the bill. Those 
discussions are ongoing and I compliment my colleagues for working with 
me on these critical issues.
  Hopefully we can resolve them without going to a vote, but I want 
these amendments placed and filed and in the queue so my colleagues 
have an opportunity to comment on them and work with me in order to get 
them done.


                     Amendment No. 934, as Modified

  First is amendment 934 which has already been filed. Medicare Part B 
does not currently cover insulin or syringes used to inject insulin for 
the majority of enrollees in the Medicare Program. This is a horrific 
oversight in a program that should be designed to deal with our elderly 
but, more importantly, dealing with, again, some of these diseases that 
are predominantly in our aging population, especially when we see that 
of the 7 million or so Americans over 65 with diabetes, 40 percent 
inject insulin every day to control their diabetes.
  Providing syringes for insulin will go a long way to helping seniors 
keep their diabetes in control. It is a fabulous preventive measure. It 
is obviously a critical area of need for our seniors. The management of 
blood glucose levels for diabetes helps prevent long-term complications 
like kidney failure, blindness, amputation, and a multitude of other 
chronic illnesses and problems that arise when diabetes is not kept in 
check.
  Syringes are required to inject insulin because there is no oral or 
inhaled form of insulin. The lack of coverage for syringes means 
syringe purchases will not count toward their yearly maximum out-of-
pocket expenses and their copayments. This will lead to the reuse of 
syringes that are not FDA approved for more than one use. We recognize 
it is a very minimal cost to the overall package and makes a huge 
difference.
  I encourage my colleagues to take a look at this amendment. I 
compliment the ranking member and the chairman for being willing to 
work with me as we go through this process. I hope it is something we 
can get accepted. If it is not, I hope my colleagues will recognize for 
this very small amount of money we can make an enormous difference in a 
huge population of our elderly who are suffering from diabetes. I look 
forward to working with my colleagues on that.
  I call up amendment 934 as modified.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arkansas [Mrs. Lincoln], Ms. Collins, and 
     Mr. Miller, proposes an amendment numbered 934, as modified.

  (Purpose: To ensure coverage for syringes for the administration of 
      insulin, and necessary medical supplies associated with the 
                       administration of insulin)

       On page 8, line 12, insert ``(including syringes, and 
     necessary medical supplies associated with the administration 
     of insulin, as defined by the Administrator)'' before the 
     semicolon.
       On page 174, line 14, insert ``(including syringes, and 
     necessary medical supplies associated with the administration 
     of insulin, as defined by the Secretary)'' before the comma.

  Mrs. LINCOLN. I ask unanimous consent to lay that amendment aside to 
proceed to the next amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 935

  Mr. President, the next amendment I bring up has to do with the 
graduate medical education 2-year program in geriatrics. One of the 
provisions of my geriatric care act bill pertains to the Medicare 
graduate medical education financing of this second year of a 
geriatrics fellowship training. It clarifies that geriatric training 
programs are eligible for 2 years of fellowship support. This can be 
done administratively. We have worked with Tom Skully at CMS, and he is 
interested in making something such as this happen.
  The fact is, out of 125 medical schools in this great country, only 
three have a department of geriatrics. At a time when we are getting 
ready to see 41 million Americans over the age of 65 blossom into well 
over 70 million Americans over the age of 65, it is not just a critical 
measure to provide a prescription drug package.
  We have to be prepared with the types of physicians and medical 
technicians who can care for our aging population, who understand what 
coordination of care actually means in bringing together this disease 
management. In understanding that it is not just one medical visit, but 
that has to be coordinated with a nutritionist, perhaps dealing with 
depression, a psychologist, they have to deal with orthopedics, they 
have to deal with a multitude of other disease management areas.
  If we can include that 2 years of funding for geriatric training, 
then we will be able to not only train the geriatricians we need, but 
we will also be able to maintain the level of academic geriatricians 
who will be the ones teaching geriatric medicine and geriatricians for 
the future. It is a critical part of what we have to do.
  We worked out a compromise in the committee after having come through 
the committee, and in talking to CMS they suggested some changes. These 
are only technical changes. I don't think anyone will have a problem 
with them. I hope not. I want to make sure I get them out there and 
make sure we can work through those differences. I look forward to 
working with the chairman on that.
  I call up that amendment, which is amendment 935.

[[Page S8284]]

  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arkansas [Mrs. Lincoln] proposes an 
     amendment numbered 935.

 (Purpose: To clarify the intent of Congress regarding an exception to 
  the initial residency period for geriatric residency or fellowship 
                               programs)

       Strike section 410 and insert the following:

     SEC. 410. EXCEPTION TO INITIAL RESIDENCY PERIOD FOR GERIATRIC 
                   RESIDENCY OR FELLOWSHIP PROGRAMS.

       (a) Clarification of Congressional Intent.--Congress 
     intended section 1886(h)(5)(F)(ii) of the Social Security Act 
     (42 U.S.C. 1395ww(h)(5)(F)(ii)), as added by section 9202 of 
     the Consolidated Omnibus Budget Reconciliation Act of 1985 
     (Public Law 99-272), to provide an exception to the initial 
     residency period for geriatric residency or fellowship 
     programs such that, where a particular approved geriatric 
     training program requires a resident to complete 2 years of 
     training to initially become board eligible in the geriatric 
     specialty, the 2 years spent in the geriatric training 
     program are treated as part of the resident's initial 
     residency period, but are not counted against any limitation 
     on the initial residency period.
       (b) Interim Final Regulatory Authority and Effective 
     Date.--The Secretary shall promulgate interim final 
     regulations consistent with the congressional intent 
     expressed in this section after notice and pending 
     opportunity for public comment to be effective for cost 
     reporting periods beginning on or after October 1, 2003.

  Mrs. LINCOLN. I ask unanimous consent that amendment be laid aside 
for my next amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 959

  Mrs. LINCOLN. The next amendment is amendment numbered 959. I am 
offering this amendment that authorizes a 3-year, five-State 
demonstration project of direct access to outpatient physical therapy 
services within the Medicare Program without the sometimes burdensome 
requirement of seeking a physician referral.
  This is not a new concept. Several health professionals currently 
enjoy practice without referral under Medicare for their respective 
scopes of practice--dentists, podiatrists, chiropractics, optometrists, 
nurse practitioners. They all practice independent physician referral.
  Non-Medicare citizens in my State of Arkansas and 36 other states, 
including Iowa, Utah, Maine, Arizona, Wyoming, Pennsylvania, the home 
State of our Presiding Officer, Tennessee, Oregon, Kentucky, Montana, 
West Virginia, South Dakota, North Dakota, Florida, New Mexico, and 
Massachusetts, all of which have Senators represented on this 
committee, allow direct access to licensed physical therapists as 
authorized by their State law.
  However, Medicare requires its beneficiaries in my home State and 
yours to obtain a referral in order to access the services of a 
physical therapist. I certainly believe it is time to study the example 
of the States in a demonstration project to see if the referral 
requirement is indeed necessary. We are talking about seniors who are 
striving so diligently to claim the final years of quality of life. 
Physical therapy, occupational therapy, vocational therapy, all of 
these therapies are the tools that allow these individuals to go back 
into their home and to live their life, with the quality of life, with 
the dignity they want in their end-of-life years. It is so critical 
they can get the necessary access to these services in order to be able 
to do that.
  I encourage my colleagues and certainly the ranking member, Senator 
Baucus, and our chairman, Senator Grassley, to work with me on this 
program. I believe it is budget neutral. It simply is moving forward on 
the concept that many of our States have already embarked on. It is 
very practical on behalf of the aging community that we are working on 
right now.
  With that, I call up amendment 959.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arkansas [Mrs. Lincoln] proposes an 
     amendment numbered 959.

  (Purpose: To establish a demonstration project for direct access to 
         physical therapy services under the medicare program)

       At the end of subtitle B of title IV, add the following:

     SEC. ____. MEDICARE DEMONSTRATION PROJECT FOR DIRECT ACCESS 
                   TO PHYSICAL THERAPY SERVICES.

       (a) In General.--The Secretary shall conduct a 
     demonstration project under this section (in this section 
     referred to as the ``project'') to demonstrate the impact of 
     allowing medicare fee-for-service beneficiaries direct access 
     to outpatient physical therapy services and physical therapy 
     services furnished as comprehensive rehabilitation facility 
     services on--
       (1) costs under the medicare program under title XVIII of 
     the Social Security Act; and
       (2) the satisfaction of beneficiaries receiving such 
     services.
       (b) Deadline for Establishment; Duration; Sites.--
       (1) Deadline.--The Secretary shall establish the project 
     not later than 1 year after the date of enactment of this 
     Act.
       (2) Duration; sites.-- The project shall--
       (A) be conducted for a period of 3 years;
       (B) include sites in at least 5 States; and
       (C) to the extent feasible, be conducted on a statewide 
     basis in each State included under subparagraph (B).
       (3) Early termination.--Notwithstanding paragraph (2)(A), 
     the Secretary may terminate the operation of the project at a 
     site before the end of the 3-year period specified in such 
     paragraph if the Secretary determines, based on actual data, 
     that the total amount expended for all services under this 
     title for individuals at such site for a 12-month period are 
     greater than the total amount that would have been expended 
     for such services for such individuals for such period but 
     for the operation of the project at such site.
       (c) Waiver of Medicare Requirements.--The Secretary shall 
     waive compliance with such requirements of the medicare 
     program under title XVIII of the Social Security Act to the 
     extent and for the period the Secretary finds necessary to 
     conduct the demonstration project.
       (d) Evaluations and Reports.--
       (1) Evaluations.--
       (A) In general.--The Secretary shall conduct interim and 
     final evaluations of the project.
       (B) Focus.--The evaluations conducted under paragraph (1) 
     shall--
       (i) focus on the impact of the project on program costs 
     under title XVIII of the Social Security Act and patient 
     satisfaction with health care items and services for which 
     payment is made under such title; and
       (ii) include comparisons, with respect to episodes of care 
     involving direct access to physical therapy services and 
     episodes of care involving a physician referral for such 
     services, of--

       (I) the average number of claims paid per episode for 
     outpatient physical therapy services and physical therapy 
     services furnished as comprehensive outpatient rehabilitation 
     facility services;
       (II) the average number of physician office visits per 
     episode; and
       (III) the average expenditures under such title per 
     episode.

       (2) Interim and final reports.--The Secretary shall submit 
     to the Committee on Finance of the Senate and the Committees 
     on Ways and Means and Energy and Commerce of the House of 
     Representatives reports on the evaluations conducted under 
     paragraph (1) by--
       (A) in the case of the report on the interim evaluation, 
     not later than the end of the second year the project has 
     been in operation; and
       (B) in the case of the report on the final evaluation, not 
     later than 180 days after the closing date of the project.
       (3) Funding for evaluation.--There are authorized to be 
     appropriated such sums as may be necessary to provide for the 
     evaluations and reports required by this subsection.
       (e) Definitions.--In this section:
       (1) Comprehensive outpatient rehabilitation services.--
     Subject to paragraph (2), the term ``comprehensive outpatient 
     rehabilitation services'' has the meaning given to such term 
     in section 1861(cc) of the Social Security Act (42 U.S.C. 
     1395x(cc)).
       (2) Direct access.--The term ``direct access'' means, with 
     respect to outpatient physical therapy services and physical 
     therapy services furnished as comprehensive outpatient 
     rehabilitation facility services, coverage of and payment for 
     such services in accordance with the provisions of title 
     XVIII of the Social Security Act, except that sections 
     1835(a)(2), 1861(p), and 1861(cc) of such Act (42 U.S.C. 
     1395n(a)(2), 1395x(p), and 1395x(cc), respectively) shall be 
     applied--
       (A) without regard to any requirement that--
       (i) an individual be under the care of (or referred by) a 
     physician; or
       (ii) services be provided under the supervision of a 
     physician; and
       (B) by allowing a physician or a qualified physical 
     therapist to satisfy any requirement for--
       (i) certification and recertification; and
       (ii) establishment and periodic review of a plan of care.
       (3) Fee-for-service medicare beneficiary.--The term ``fee-
     for-service medicare beneficiary'' means an individual who--
       (A) is enrolled under part B of title XVIII of the Social 
     Security Act (42 U.S.C. 1395j et seq.); and
       (B) is not enrolled in--
       (i) a Medicare+Choice plan under part C of such title (42 
     U.S.C. 1395w-21 et seq.);
       (ii) a plan offered by an eligible organization under 
     section 1876 of such Act (42 U.S.C. 1395mm);
       (iii) a program of all-inclusive care for the elderly 
     (PACE) under section 1894 of such Act (42 U.S.C. 1395eee); or

[[Page S8285]]

       (iv) a social health maintenance organization (SHMO) 
     demonstration project established under section 4018(b) of 
     the Omnibus Budget Reconciliation Act of 1987 (Public Law 
     100-203).
       (4) Outpatient physical therapy services.--Subject to 
     paragraph (2), the term ``outpatient physical therapy 
     services'' has the meaning given to such term in section 
     1861(p) of the Social Security Act (42 U.S.C. 1395x(p)), 
     except that such term shall not include the speech-language 
     pathology services described in the fourth sentence of such 
     section.
       (5) Physician.--The term ``physician'' has the meaning 
     given to such term in section 1861(r)(1) of such Act (42 
     U.S.C. 1395x(r)(1)).
       (6) Qualified physical therapist.--The term ``qualified 
     physical therapist'' has the meaning given to such term for 
     purposes of section 1861(p) of such Act (42 U.S.C. 1395x(p)), 
     as in effect on the date of enactment of this Act.

  Mrs. LINCOLN. I ask unanimous consent that amendment be laid aside so 
I can bring up my final amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. LINCOLN. Before I get to my final amendment, I want to touch on 
one other issue and that is the issue of our rural ambulance providers. 
I see my colleague, Senator Thomas. He and many others who are in the 
rural health caucus have done a tremendous job in working through this 
bill and providing great access issues for our rural areas. I am 
encouraging my colleagues, as well as the ranking member and the 
chairman, to work with us on the issue of the rural ambulance 
providers.
  We do not have an amendment as of yet and I am hoping we can work 
through some of those details as we move forward in this piece of 
legislation. I encourage them to work with us and hopefully we can 
finish that on Monday and move expeditiously on a piece of legislation 
that will benefit all of the seniors across the Nation.


                           Amendment No. 963

  My last amendment is an amendment we have brought on the fallback 
issue, which is a critical piece of this bill. I think it is absolutely 
essential, as we look toward making sure private industry can play a 
role in providing a Medicare prescription drug package. We have seen, 
over the course of many past years, where private industry has 
certainly the option, even today, to participate in Medicare and the 
application of it. In some of our areas across this great Nation they 
are reluctant to do so because the profitability is not there for them.
  We want to make sure there is every opportunity for private industry 
to come in and provide a product for everyone across this Nation. But 
if, in fact, in the time it takes to implement this program certain 
areas of our Nation find themselves in the same predicament they are 
today, which is private industry does not find it quite profitable 
enough to come in there, we want to make sure there is a fallback. We 
don't want anyone left behind. We think all seniors in this great 
Nation are equally important. We are going to make sure, across this 
great Nation, if for some reason there is an area that does not meet 
the test for private industry, there is a fallback.
  In that fallback we want to make sure they have the same contract 
benefit the private industry does. We have talked a little about this 
issue in the past. We want to make sure, as we move forward on all 
these issues, again, that the fallback measure that is going to be 
there in some of our less populated areas is going to have that 2-year 
contract ability.
  In the Finance Committee, when we brought the bill up, we found in 
many instances it primarily affects our rural States, and primarily 
rural areas. We want to make sure we offer them the same opportunity we 
do in private industry.
  It improves stability, provides a more stable benefit by reducing 
year-to-year variability in premiums and cost sharing, and provides 
better assurances that needed medications and local pharmacists will be 
covered. It improves choice. After all, that is what we are here to do, 
to provide our seniors with as much choice as we possibly can.
  It provides that once seniors are in a fallback plan, they have the 
option to remain in that plan for 2 years. One of the concerns we have 
had in our State is that when we have seen private plans come in, they 
come in and then they leave and then they come back. Seniors do not 
know what they can depend on. They have to make different decisions. 
Each year, because there is no standard design here, their choices are 
going to be different. They are going to have different premiums, 
different formularies, different pharmacies they can go to. So we want 
to make this the least confusing possible. Providing them the ability 
to have the same stability in the fallback as they do in the private 
plans I think is very important. And I think it is fair. Therefore, we 
do improve on fairness, providing the seniors in the fallback plan the 
same rights given to seniors who are in a drug-only plan, the 
opportunity to stay in for that same 2 years.
  Continuing the first bidding rights for drug-only plans--maintaining 
first bidding rights for the drug-only plans, allowing fallback plans 
to enter a region only after it has been determined the two private 
drug-only plans will not be available--I encourage my colleagues to 
look at this. If there are two private plans, there is no fallback. You 
do not have to worry about a 2-year contract. You do not have to worry 
about a 1-year contract. That is because the fallback doesn't even 
exist. These are just emergency measures, to make sure individuals in 
rural areas are going to get the same benefit and they are going to be 
covered. We are not asking anything more of a Government fallback plan 
than we are of private industry. If private industry is there, you do 
not have to worry about it because the fallback is not going to exist.

  I encourage my colleagues to take a look at this. It comes at a very 
minimal cost. It adds substantial stability to the system and, 
certainly, by not costing much more in dollars.
  We again plead with our colleagues to make sure those seniors in 
rural States will have the same benefit there as have other seniors 
across this great country. We look forward to working with them if 
there are any concerns they have.
  Mr. President, I appreciate your patience in allowing me to bring 
before the Senate my amendments to this very important bill and to 
encourage my colleagues. These are probably some of the most important 
policy decisions we will be making. As we embark on this journey to 
provide a critical component of health care to an enormous population 
in our Nation, as far as I am concerned, one of the most important as 
well as the most vulnerable, I think it is critical for all of us to 
look at ways we can improve this bill. Once this bill is passed, once 
it is signed into law, are changes going to be easy to make? No, they 
are not. So it is critical for each of us to take the time and 
recognize where we can make these slight changes and improvements in a 
bill. It is going to make a remarkable difference in the lives of the 
elderly of this Nation.
  I encourage my colleagues to take a look at these very simple 
amendments that I think will be improving amendments to a bill that is 
moving down the pathway, something we encourage everyone to support in 
the coming days as we come to completion on a remarkable piece of 
legislation and a remarkable help to the seniors of this Nation.
  I thank the Chair and my colleagues for their indulgence today and 
for being able to offer these amendments.
  The PRESIDING OFFICER. Did the Senator offer her last amendment?
  Mrs. LINCOLN. I do so now.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The legislative clerk read as follows:

       The Senator from Arkansas (Mrs. Lincoln), for herself, Mr. 
     Conrad, Mr. Miller and Mr. Carper, proposes an amendment 
     numbered 963.

  The amendment is as follows:

(Purpose: To allow medicare beneficiaries who are enrolled in fallback 
   plans to remain in such plans for two years by requiring the same 
  contracting cycle for fallback plans as Medicare Prescription Drug 
                                 plans)

       On page 83, strike lines 1 through 7, and insert the 
     following:
       ``(5) Contract to be available in designated area for 2 
     years.--Notwithstanding paragraph (1), if the Administrator 
     enters into a contract with an entity with respect to an area 
     designated under subparagraph (B) of such paragraph for a 
     year, the following rules shall apply:
       ``(A) The contract shall be for a 2-year period.
       ``(B) The Secretary is not required to make the 
     determination under paragraph (1)(A) with respect to the 
     second year of the contract for the area.

[[Page S8286]]

       ``(C) During the second year of the contract, an eligible 
     beneficiary residing in the area may continue to receive 
     standard prescription drug coverage (including access to 
     negotiated prices for such beneficiaries pursuant to section 
     1860D-6(e)) under such contract or through any Medicare 
     Prescription Drug plan that is available in the area.

       At the end of title VI, add the following:

     SEC. ____. MEDICARE SECONDARY PAYOR (MSP) PROVISIONS.

       (a) Technical Amendment Concerning Secretary's Authority to 
     Make Conditional Payment When Certain Primary Plans Do Not 
     Pay Promptly.--
       (1) In general.--Section 1862(b)(2) (42 U.S.C. 1395y(b)(2)) 
     is amended--
       (A) in subparagraph (A)(ii), by striking ``promptly (as 
     determined in accordance with regulations)'';
       (B) in subparagraph (B)--
       (i) by redesignating clauses (i) through (iii) as clauses 
     (ii) through (iv), respectively; and
       (ii) by inserting before clause (ii), as so redesignated, 
     the following new clause:
       ``(i) Authority to make conditional payment.--The Secretary 
     may make payment under this title with respect to an item or 
     service if a primary plan described in subparagraph (A)(ii) 
     has not made or cannot reasonably be expected to make payment 
     with respect to such item or service promptly (as determined 
     in accordance with regulations). Any such payment by the 
     Secretary shall be conditioned on reimbursement to the 
     appropriate Trust Fund in accordance with the succeeding 
     provisions of this subsection.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall be effective as if included in the enactment of title 
     III of the Medicare and Medicaid Budget Reconciliation 
     Amendments of 1984 (Public Law 98-369).
       (b) Clarifying Amendments to Conditional Payment 
     Provisions.--Section 1862(b)(2) (42 U.S.C. 1395y(b)(2)) is 
     further amended--
       (1) in subparagraph (A), in the matter following clause 
     (ii), by inserting the following sentence at the end: ``An 
     entity that engages in a business, trade, or profession shall 
     be deemed to have a self-insured plan if it carries its own 
     risk (whether by a failure to obtain insurance, or otherwise) 
     in whole or in part.'';
       (2) in subparagraph (B)(ii), as redesignated by subsection 
     (a)(2)(B)--
       (A) by striking the first sentence and inserting the 
     following: ``A primary plan, and an entity that receives 
     payment from a primary plan, shall reimburse the appropriate 
     Trust Fund for any payment made by the Secretary under this 
     title with respect to an item or service if it is 
     demonstrated that such primary plan has or had a 
     responsibility to make payment with respect to such item or 
     service. A primary plan's responsibility for such payment may 
     be demonstrated by a judgment, a payment conditioned upon the 
     recipient's compromise, waiver, or release (whether or not 
     there is a determination or admission of liability) of 
     payment for items or services included in a claim against the 
     primary plan or the primary plan's insured, or by other 
     means.''; and
       (B) in the final sentence, by striking ``on the date such 
     notice or other information is received'' and inserting ``on 
     the date notice of, or information related to, a primary 
     plan's responsibility for such payment or other information 
     is received''; and
       (3) in subparagraph (B)(iii), , as redesignated by 
     subsection (a)(2)(B), by striking the first sentence and 
     inserting the following: ``In order to recover payment made 
     under this title for an item or service, the United States 
     may bring an action against any or all entities that are or 
     were required or responsible (directly, as an insurer or 
     self-insurer, as a third-party administrator, as an employer 
     that sponsors or contributes to a group health plan, or large 
     group health plan, or otherwise) to make payment with respect 
     to the same item or service (or any portion thereof) under a 
     primary plan. The United States may, in accordance with 
     paragraph (3)(A) collect double damages against any such 
     entity. In addition, the United States may recover under this 
     clause from any entity that has received payment from a 
     primary plan or from the proceeds of a primary plan's payment 
     to any entity.''.
       (c) Clerical Amendments.--Section 1862(b) (42 U.S.C. 
     1395y(b)) is amended--
       (1) in paragraph (1)(A), by moving the indentation of 
     clauses (ii) through (v) 2 ems to the left; and
       (2) in paragraph (3)(A), by striking ``such'' before 
     ``paragraphs''.

  Mrs. LINCOLN. I yield the floor.
  Mr. BAUCUS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mrs. LINCOLN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                      Amendment No. 963 Withdrawn

  Mrs. LINCOLN. Mr. President, there seems to be some confusion as to 
the last amendment which I submitted. At this point, I ask unanimous 
consent to withdraw that amendment, and I will reintroduce it on 
Monday.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. LINCOLN. Thank you, Mr. President.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending 
amendments be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 964

  Mr. BAUCUS. Mr. President, on behalf of the Senator from Vermont, I 
send an amendment to the desk and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus] for Mr. Jeffords, 
     proposes an amendment numbered 964.

  The amendment is as follows:

     (Purpose: To include coverage for tobacco cessation products)

       Beginning on page 8, strike line 1 and all that follows 
     through page 9, line 2, and insert the following:
       ``(A) In general.--Except as provided in subparagraphs (B), 
     (C), and (D), the term `covered drug' means--
       ``(i) a drug that may be dispensed only upon a prescription 
     and that is described in clause (i) or (ii) of subparagraph 
     (A) of section 1927(k)(2);
       ``(ii) a smoking cessation agent that is approved under 
     section 505 of the Federal Food, Drug, and Cosmetic Act as a 
     non-prescription drug and is dispensed upon a prescription;
       ``(iii) a biological product described in clauses (i) 
     through (iii) of subparagraph (B) of section 1927(k)(2); or
       ``(iv) insulin described in subparagraph (C) of such 
     section;

     and such term includes a vaccine licensed under section 351 
     of the Public Health Service Act and any use of a covered 
     drug for a medically accepted indication (as defined in 
     section 1927(k)(6)).
       ``(B) Exclusions.--
       ``(i) In general.--The term `covered drug' does not include 
     drugs or classes of drugs, or their medical uses, which may 
     be excluded from coverage or otherwise restricted under 
     section 1927(d)(2), other than subparagraphs (E) and (G) 
     thereof insofar as they relate to smoking cessation agents, 
     or under section 1927(d)(3).

  Mr. BAUCUS. Mr. President, I ask unanimous consent, again, that all 
pending amendments be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 965

  Mr. BAUCUS. Mr. President, I send a second amendment to the desk on 
behalf of the Senator from Vermont and ask for its immediate 
consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus] for Mr. Jeffords, 
     proposes an amendment numbered 965.

  Mr. BAUCUS. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

    (Purpose: To establish a Council for Technology and Innovation)

       At the end of subtitle B of title IV, add the following:

     SEC. ____. COUNCIL FOR TECHNOLOGY AND INNOVATION.

       Section 1868 (42 U.S.C. 1395ee), as amended by section 534, 
     is amended--
       (1) by adding at the end of the heading the following: ``; 
     council for technology and innovation''; and
       (2) by adding at the end the following new subsection:
       ``(c) Council for Technology and Innovation.--
       ``(1) Establishment.--The Secretary shall establish a 
     Council for Technology and Innovation within the Centers for 
     Medicare & Medicaid Services (in this section referred to as 
     `CMS').
       ``(2) Composition.--The Council shall be composed of senior 
     CMS staff and clinicians and shall be chaired by the 
     Executive Coordinator for Technology and Innovation (as 
     appointed or designated under paragraph (4)).
       ``(3) Duties.--The Council shall coordinate the activities 
     of coverage, coding, and payment processes with respect to 
     new technologies and procedures, including new drug 
     therapies, under this title in order to expedite patient 
     access to new technologies and therapies.
       ``(4) Executive Coordinator for technology and 
     innovation.--The Secretary shall appoint (or designate) a 
     noncareer appointee (as defined in section 3132(a)(7) of 
     title 5, United States Code) who shall serve as the Executive 
     Coordinator for Technology

[[Page S8287]]

     and Innovation. Such executive coordinator shall report to 
     the Administrator of CMS, shall chair the Council, shall 
     oversee the execution of its duties, shall serve as a single 
     point of contact for outside groups and entities regarding 
     the coverage, coding, and payment processes under this title, 
     and shall prepare reports to Congress required under section 
     1869(f)(7).''.

  Mr. BAUCUS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. NELSON of Florida. 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. NELSON of Florida. Mr. President, I wanted to come to the floor 
and offer some comments about the Medicare prescription drug bill. I 
wanted to give my accolades to the chairman and ranking member of the 
Finance Committee for how they have so expertly crafted a bill in a 
bipartisan fashion which is how this body ought to be operated, and so 
often we are operating exactly the opposite way. There are just too 
many partisan votes around here. They have shown, Senators Grassley and 
Baucus, that the spirit of bipartisanship in fact does live and that 
good work products can be accomplished.


                          Antispam Legislation

  Before I make my remarks on the legislation, I want to recall to mind 
another bipartisan work product that was produced out of the Commerce 
Committee yesterday and will be coming to the floor. It is the antispam 
legislation. I have reserved for the floor to offer a major amendment 
to it. It is very possible that we will work out and the prime sponsors 
of the bill will accept my amendment, but it has to do with the 
question of spam, which is all of that unwanted e-mail everybody gets 
on their computer.
  I was just absolutely dumbfounded; One day I went in my Tampa office 
and I said: How about printing out for me the e-mail we received today, 
just one day. And they produced a full letter-sized sheet, single 
spaced, of e-mail that we did not want, that had come anyway. Of those 
e-mail messages, two of them were pornographic which, if that is 
happening in the office of a Senator, you can imagine what is happening 
all across the country. That is exactly what is happening.
  People are fed up. They want the Federal Government to do something 
about it. Fortunately, we have finally gotten the political will now 
that we are going to do something about it.

  I bring this up not only as an example of bipartisanship reflecting 
what Senator Baucus has done with this masterful crafting of a 
legislative package, but I wanted to alert the Senate to the fact that 
the antispam bill is going to come. I am going to have an amendment 
that will improve it.
  In the bill the only penalty is a misdemeanor. What I want to do is 
to strengthen that penalty and to give the prosecutors the tools so 
that the violation of sending unwanted and undisclosed in its address 
e-mail becomes an element that will trigger the Racketeer Influenced 
Corrupt Organization act, RICO.
  What that does is give prosecutors the tools to go after the criminal 
enterprise and then take their assets. Let me tell you what is in this 
morning's paper. Here is a good example of an e-mail scam that used a 
retailing giant's name in an attempt to capture credit card numbers and 
other personal data on a nationwide basis. They sent out millions of 
these e-mails. What they did is, they took a retailer, Best Buy, and 
they sent a message that said they wanted to offer something on Best 
Buy. Of course, it was all fraudulent. It was claiming to be Best Buy's 
fraud department. They said they were informing people their credit 
card number had supposedly been used in a suspicious purchase through 
Best Buy dot com. And then it instructed the card holders to go to a 
special Web link to help resolve the problem.
  Then when those Best Buy customers went to that Web link, they 
offered their credit card number and then ``Katie bar the door.''
  Here is obviously a deceptive scheme, taking the advantage of a 
legitimate business, using a deceptive message in order to obtain 
credit card numbers which they then will use fraudulently to bilk 
people of millions of dollars. And because they send out hundreds of 
millions of these e-mail messages, it is time for us to get serious and 
not just come in with an antispam bill that is going to spank people on 
the hand with a misdemeanor but is going to go after the assets of the 
criminal enterprise under the RICO Act.
  I bring this to the attention of the Senate. That debate will be 
coming up hopefully fairly quickly. I must say, ever since I happened 
to talk about this down in Tampa that day I just checked my e-mail in 
the Tampa office, I have gotten so many calls and letters to say: Right 
on, Bill, right on.
  We can't even use our computer and our e-mail anymore, because we are 
so cluttered up with e-mail. It is time for the Federal Government to 
do something about it.
  We have a crime against mail fraud. The Presiding Officer, as a 
former U.S. Attorney, knows all about prosecuting mail fraud. If you 
did that kind of scheme I just showed you in today's Orlando Sentinel, 
and instead you used the mails and you sent out 100 letters like this 
same thing, posing as a department store, saying we have reason to 
think your credit card has been stolen, give us your card number so we 
can correct this--of course, it is a deceptive scheme; it gets your 
credit card number so they can charge--you would prosecute under the 
mail fraud statute. But that is sending out a hundred letters--my 
goodness gracious--through e-mail--snap, just like that, 175 million e-
mail messages. Think how many people are going to bite and how many 
credit card numbers are going to be stolen--just in this particular 
case.

  That is why we have to give them strong penalties in the bill that is 
going to be considered by the Senate. That is why we have to be able to 
hook it as one of the elements that triggers the RICO Act--the 
Racketeer Influenced and Corrupt Organization Act--so that the 
prosecutors can go after the assets of the organized criminal thug 
ring.


                           Prescription Drugs

  Mr. NELSON of Florida. Mr. President, I came to talk today about this 
prescription drug bill. I certainly support this bill, and I am going 
to vote for it. I commend the chairman and the ranking member for how 
they have crafted this legislation. I commend the Finance Committee for 
how it has put it together. If I had my druthers, we would have passed 
those amendments that we would have had in the last few days that we 
didn't pass because, clearly, giving an option for seniors to go 
directly through Medicare for a prescription drug benefit is, in my 
opinion, keeping faith with the seniors. So many of us have already 
suggested that we wanted to modernize Medicare from a 1965 health 
insurance system funded by the Federal Government for senior citizens--
modernize that to the year 2003.
  If you were writing Medicare today instead of in 1965, 38 years ago, 
would you include a prescription drug benefit? Of course you would 
because the miracles of modern medicine, the miracles of prescription 
drugs so often today will take care of the ailments and the chronic 
problems; so that when the Medicare system was set up in 1965--38 years 
ago--the state of the art of medical care was centered around a 
hospital and doctors. But hospitals and doctors have new tools today. 
Some of those tools, by the way, that I will share with you sometimes 
come directly out of America's space program. They are the spinoffs of 
technology. Some of them have come out of the State of the Presiding 
Officer at the Marshall Space Flight Center. I am telling you, there is 
some miracle equipment that has come out of the space program.
  Part of the miracle of modern health care is prescription drugs. For 
that, I give great commendation to NIH, to our universities, and all 
the research institutions, and to the research departments of the 
pharmaceutical companies that are producing these new wonder drugs of 
today. But we ought to be modernizing Medicare with a prescription drug 
benefit that is a part of Medicare. The problem is, we cannot get the 
votes to do that.
  So what the Finance Committee has done is fashion a plan whereby you 
can offer in the private sector, through a preferred provider 
organization--a PPO is a managed care kind of concept--and they will 
provide it or the senior citizen can go and get two separate drug

[[Page S8288]]

plans and directly there. But if they fail, there is a backup of the 
Federal Government doing its own prescription drug plan, according to 
the elements in the outline of what they have done in the legislation.
  I would prefer it if a senior citizen could, in fact, go to the 
private sector or have the choice of getting their prescription drugs 
directly from Medicare. That would be the senior citizen's choice. But 
we could not get the votes for that amendment.
  So we are proceeding on with the bill, and I am certainly going to 
support the bill because it is a major first step along the way to 
providing prescription drugs for senior citizens. We need to keep faith 
with those seniors. This is what a lot of us have talked about and said 
we wanted to do, and this is a first major step to do it. Since the 
Senator from Montana has come back in, I have been commending him on 
this package saying that I wish we had adopted a couple of the 
amendments that were offered over the last couple of days, but that I 
support the package. I commend him. This is a major first step on the 
road to keeping faith with our seniors. I appreciate what he has done.

  I would like to take a few moments to critique some parts of the 
bill.
  Mr. BAUCUS. Mr. President, before the Senator critiques the bill, if 
the Senator from Florida will yield, I very much appreciate his kind 
remarks. As virtually every Senator knows, this is not the perfect 
bill. Each Senator would like to change it a little bit. This Senator, 
in particular, would like to have had more money, frankly. We have $400 
billion over 10 years. If we had a little more, maybe we could 
accommodate many of the provisions to which the Senator is referring. 
They are good ideas. But I think this legislation is a good first step, 
a chapter in a very long Medicare book. Chapter 1 was in 1965, when it 
was first enacted. There will be many more chapters as we work to 
improve Medicare, so that our senior citizens get the benefits they 
rightly deserve.
  I thank the Senator very much for his working with us. He has given 
us some great ideas. I think over time, in the next couple to 3 years, 
we will have another chance. I thank the Senator.
  Mr. NELSON of Florida. Mr. President, I think the Senator from 
Montana is ``Merlin the Magician'' to finally be able to craft a 
package that will get through in a bipartisan fashion with a huge 
number of votes in this Chamber. And I think if it is appropriate with 
the ranking member--and I believe parliamentary-wise, it is 
appropriate--I will lay down a couple of amendments now that can be 
taken up at a separate time, and then I will discuss them.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending 
amendments be temporarily laid aside so the Senator from Florida may 
proceed to offer up to two amendments.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 938

  Mr. NELSON of Florida. Mr. President, I send to the desk amendment 
No. 938.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Florida (Mr. Nelson) proposes an amendment 
     numbered 938.

  Mr. NELSON of Florida. I ask unanimous consent that further reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

   (Purpose: To provide for a study and report on the propagation of 
                            concierge care)

       At the end of subtitle B of title IV, add the following:

     SEC. ____. GAO STUDY AND REPORT ON THE PROPAGATION OF 
                   CONCIERGE CARE.

       (a) Study.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study on concierge care (as defined in 
     paragraph (2)) to determine the extent to which such care--
       (A) is used by medicare beneficiaries (as defined in 
     section 1802(b)(5)(A) of the Social Security Act (42 U.S.C. 
     1395a(b)(5)(A))); and
       (B) has impacted upon the access of medicare beneficiaries 
     (as so defined) to items and services for which reimbursement 
     is provided under the medicare program under title XVIII of 
     the Social Security Act (42 U.S.C. 1395 et seq.).
       (2) Concierge care.--In this section, the term ``concierge 
     care'' means an arrangement under which, as a prerequisite 
     for the provision of a health care item or service to an 
     individual, a physician, practitioner (as described in 
     section 1842(b)(18)(C) of the Social Security Act (42 U.S.C. 
     1395u(b)(18)(C))), or other individual--
       (A) charges a membership fee or another incidental fee to 
     an individual desiring to receive the health care item or 
     service from such physician, practitioner, or other 
     individual; or
       (B) requires the individual desiring to receive the health 
     care item or service from such physician, practitioner, or 
     other individual to purchase an item or service.
       (b) Report.--Not later than the date that is 12 months 
     after the date of enactment of this Act, the Comptroller 
     General of the United States shall submit to Congress a 
     report on the study conducted under subsection (a)(1) 
     together with such recommendations for legislative or 
     administrative action as the Comptroller General determines 
     to be appropriate.


                           Amendment No. 936

  Mr. NELSON of Florida. Mr. President, I send another amendment to the 
desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Florida (Mr. Nelson) proposes an amendment 
     numbered 936.

  Mr. NELSON of Florida. I ask unanimous consent that further reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To provide for an extension of the demonstration for ESRD 
                             managed care)

       At the end of subtitle C of title II, add the following:

     SEC. ____. EXTENSION OF DEMONSTRATION FOR ESRD MANAGED CARE.

       The Secretary shall extend without interruption, through 
     December 31, 2007, the approval of the demonstration project, 
     Contract No. H1021, under the authority of section 
     2355(b)(1)(B)(iv) of the Deficit Reduction Act of 1984, as 
     amended by section 13567 of the Omnibus Reconciliation Act of 
     1993. Such approval shall be subject to the terms and 
     conditions in effect for the 2002 project year with respect 
     to eligible participants and covered benefits. The Secretary 
     shall set the monthly capitation rate for enrollees on the 
     basis of the reasonable medical and direct administrative 
     costs of providing those benefits to such participants.

  Mr. NELSON of Florida. Mr. President, I will tell you just very 
briefly about these amendments, and I want to make comments basically 
on the underlying bill. I think these amendments are such that it is my 
understanding that they may be accepted--perhaps even in a managers 
package. But one of them involves extending the Federal role in the end 
stage renal disease demonstration project, which is a project that we 
have in Florida. I will speak about it later. It will stand on its 
merit.

  The other is amendment No. 938 to require a GAO study to examine the 
extent of how concierge care has been expanded in the country and what 
we need to do about it. I am working with Senator Breaux on this 
particular amendment.
  What is happening is we have a Federal health insurance system for 
senior citizens that is available to all senior citizens if they 
qualify on the age. Lo and behold, a practice is arising around the 
country where some physicians are saying: I will no longer serve you 
unless you pay me a dollar amount per patient per year--in the case of 
some physicians in Florida, $1,500 per year. At the same time they are 
cutting the number of patients they see, they are saying: For this 
$1,500 entrance fee that you pay, we are going to give you specialized 
treatment, same day appointments, hot towels; you can call us at any 
time of the night--all of that personalized concierge care for $1,500 a 
year per patient. But if you do not pay us that, you cannot be my 
patient, and, oh, by the way, I still want to receive reimbursement 
from the Federal Government for the reimbursable services I am giving 
to you, the senior citizen.
  That was not how Medicare was set up. Medicare was set up for all 
senior citizens, not just those who can pay $1,500 a year to see the 
doctor.
  This concierge care popped up here and in several other States. This 
amendment is to require a GAO study to examine the extent to which this 
might ultimately be a destructive force against the Medicare 
reimbursement system and the entire Medicare system because the logical 
conclusion of this kind of concierge care is we would have completely 
two tiers of service within Medicare. We would have those who could pay 
the $1,500 per year, and, by the way, that is just in one case. There 
is another case in California where they are having to pay $24,000 per 
year per patient just to be under the care of that particular doctor. 
So we would

[[Page S8289]]

have two tiers under Medicare. We would have the Medicare recipients, 
the senior citizens, who qualify, and they would pay that money and 
would go to certain doctors, and the doctors who were not going to 
charge that, who would be left over, would get all the rest of the 
Medicare patients who could not afford to pay the fee.
  That is not the way Medicare was set up, and that is not how Medicare 
is intended to deliver health care services to senior citizens that are 
paid for by the Federal Government.
  Instead of just coming in here and breaking down the door, I took the 
suggestion of the senior Senator from Louisiana. In this bill, he has a 
special provision having to do with speciality hospitals, but he first 
did a GAO study to show the extent to which those speciality hospitals 
were being utilized. That became the basis for changing the law. That 
is what I will be doing by offering this amendment No. 938 which we 
will discuss at a future time.
  I inquire of the Senator from Montana--I am just getting ready to get 
into my comments about the bill--does the Senator from Montana know of 
somebody else who wishes to speak and, if so, can he give me an 
indication of how long he would like me to speak? I yield to the 
Senator.
  Mr. BAUCUS. Mr. President, I ask the Senator from Florida how long he 
wishes to entertain us and to educate us.
  Mr. NELSON of Florida. With the enormity of this subject, Mr. 
President, I could go all the way from 5 minutes to 55 minutes. So what 
is the pleasure of the Senator from Montana?

  Mr. BAUCUS. I was expecting a longer speech, frankly. I suggest the 
Senator speak for, say, 10, 15 minutes or whatever time the Senator 
wishes to take.
  Mr. NELSON of Florida. I yield to the distinguished majority leader.
  Mr. FRIST. Mr. President, for scheduling this afternoon, in 15 or 20 
minutes I am going to speak for 20, 25 minutes, and then Senator Byrd 
is going to come over later as well. We have plenty of time, but if 
sometime in the next 30 minutes or so I may have the floor for 20 or 30 
minutes, that will be helpful.
  Mr. NELSON of Florida. I thank my colleagues. I was actually willing 
to step down and let the distinguished majority leader go ahead. He is 
very kind.
  I would like to point out some critiques. I want it nailed down that 
I support this package. I think we can improve it, but at the end of 
the day, if we have not been able to improve it by the amendment 
process, it is my intention to vote for it because I think it is a 
major step in the right direction. Over the course of time, we are 
going to be able to add to the law and improve it so that at the end of 
the day, perhaps in a year or two down the road, we are going to have a 
prescription drug benefit under Medicare for senior citizens.
  This legislation does many things, not the least of which is the most 
comprehensive attempt at expanding one of our Government's most 
successful experiments, this Medicare Program.
  Today, almost 80 percent of our seniors take at least one 
prescription drug a day and over half of them take an average of four 
prescription drug medications each day. Prescription drugs are 
responsible for keeping people out of the hospital and helping them 
maintain their health. Spending money on medicines not only reduces the 
suffering of millions but it also reduces their health-care-related 
costs.
  Let me give an example. There is a lady named Ms. Rita Salls from 
Sebring, FL. She takes at least 12 medications each day and sometimes 
even more than that. Those medicines are what allow her to continue to 
live on her own, an independent life.
  Like many of our colleagues, when we first ran for the Senate, we 
talked to our constituents--and we still do--and we said we were going 
to try to enact this prescription drug benefit under Medicare.
  What do many of our seniors without the prescription drug coverage 
do? They have to skip doses to make their prescriptions last longer or 
they have to spend less on food. Can you imagine in the year 2003 in 
the United States of America that there are senior citizens who are 
having to make a choice between food or their medicine because they do 
not have enough money? In some cases, they are completely unable to 
fill a prescription solely based on its cost. The need for this benefit 
has never been clearer.
  While this legislation is certainly an exceptional effort to fulfill 
our promise for a prescription drug benefit, it does fall short in some 
categories.
  My first concern is as it relates to the provider of the drug 
benefit. Given Medicare's mixed experience with Medicare HMOs--what we 
call Medicare+Choice; it is an HMO created under Medicare-- we have not 
had too good of an experience with that because those Medicare HMOs 
have folded up and are cancelling out beneficiaries all across the 
country, particularly in rural areas such as Montana, and many of the 
rural counties in my State. How do I know that? Before I came to the 
Senate, I was the elected State insurance commissioner of Florida and I 
saw in county after county, as the regulator, where I had to go beg, 
cajole, and wheedle when a Medicare HMO stopped serving a rural county 
to get another Medicare HMO to come in and fill that role.

  Should these companies come in, I still believe there should be the 
Government's fallback provision in the bill. It is certainly a very 
important provision. I wish it were in place permanently as the first 
option a senior could go to, but that amendment from a couple of days 
ago did not pass. In other words, I believe all seniors should have the 
option of receiving their drug benefit through Medicare rather than 
just through the private insurer. I think that ought to be the senior 
citizen's choice and yet that is not the case with the bill.
  Another worry I have is how this plan is going to treat low-income 
seniors. In my State of Florida, over one-third of the seniors have 
incomes low enough to qualify for the low-income benefit of this 
legislation. This is especially true in Florida because the State 
pharmacy assistance plan in the State of Florida provides only a very 
limited benefit and is only available to a very small fraction of low-
income seniors in Florida.
  This Grassley-Baucus compromise provides premium and deductible 
assistance to seniors well above what Medicaid is required to do and 
what my own State is doing, but under the bill, some low-income seniors 
will not be eligible for the Medicare benefit because the plan insists 
that they continue to receive their benefit through Medicaid. 
Furthermore, beneficiaries will be subjected to an asset test in order 
to qualify for the benefit, which could deter some eligible 
beneficiaries from seeking the assistance in the first place.
  Another grave concern I have is the coverage gap faced by the seniors 
under this legislation. Beneficiaries with drug costs in excess of 
$4,500 a year will find themselves continuing to pay a premium while 
not getting any benefit until the catastrophic provision kicks in, 
which is around $5,700. It is as if we are penalizing the sicker 
beneficiaries who depend on more prescription drugs.
  Assistance to seniors should focus on individuals like Mr. and Mrs. 
Lomax of Longwood, FL. Mr. Lomax is 67 years old. He cannot afford to 
quit working because he and his wife would not be able to afford their 
prescription drug costs. So he continues to provide them coverage 
through his employer, because the cost of his medications add up to 
over $600 per month. Under this bill, Mr. Lomax would be required to 
pay over $4,200, over 40 percent of his annual drug costs.
  Another critique I would make of the bill is it fails to address an 
issue not only affecting our Nation's seniors but anyone who has to 
purchase prescription drugs. I have talked to my former chairman of the 
Finance Committee and now the ranking member, Senator Baucus, about 
this. We realize these are the hard realities because nothing in the 
bill today guarantees that when Medicare or private plans on behalf of 
Medicare purchase their drugs from manufacturers that they get the very 
lowest possible price. If taxpayers are going to have to face the long-
term burden of ensuring a viable prescription drug benefit for years to 
come, we should make certain the Government uses its purchasing power 
to the best of its ability.

  That is a question that no doubt will be answered over the years as 
this new bill becoming law begins to be added to and perfected over the 
course of time.

[[Page S8290]]

  In addition to expanding coverage of drugs in Medicare, this 
legislation does include some very worthy provisions aimed at easing 
the States' increasing burden of providing care to our Nation's 
immigrants. Immigrants and Florida, the two so often go hand in hand 
because of the desirability of coming to this wonderful country of 
ours. Where do so many of them come? To the shores of the State of 
Florida.
  In this bill, by allowing the States the option to cover legal 
immigrant children and pregnant women through Medicaid and the State 
Children's Health Insurance Program, SCHIP, States will finally be able 
to obtain Federal dollars to offset the States' costs for immigrants. 
Similarly, increases in Federal reimbursement for providers of 
emergency treatment to undocumented aliens is welcome.
  Florida ranks fifth among States with the highest population of 
illegal immigrants. Providing uncompensated care to illegal and legal 
immigrants is a major and growing problem for many of our hospitals in 
Florida. This provision in the bill will go a long way in helping to 
ease that situation.
  Another major component of this proposal would increase funding to 
rural health care providers by more than $30 billion over the next 10 
years, but I must say I am troubled by the way this bill pays for 
necessary increases in provider reimbursements by passing along their 
costs to Medicare's beneficiaries. They are already struggling to pay 
for their share of the health care costs. Their share of these costs 
can often exceed 45 percent of the total. So I think it is 
unconscionable to think that as we ask them to pay an additional $35 
per month for drug coverage and an increased deductible we would ask 
them to pay for things they have not had to pay for in the past such as 
new deductibles and copayments on such things as outpatient lab 
services.
  Furthermore, we are again threatening the ability of some of our 
sickest beneficiaries to receive the care they so desperately need. 
While we all agree that the method for payment of anticancer agents 
should be reformed, reducing the reimbursement from 95 to 85 percent of 
the average wholesale price without appropriate increases in payments 
for essential patient services could further jeopardize access to 
quality cancer care in a physician's office setting.
  I, along with my colleagues, will do all we can over the course of 
the next several days to improve this legislation with amendments 
ensuring that the Government maximizes its purchasing power and 
ensuring a beneficiary's coverage is stable. They will, hopefully, be 
accepted. It will strengthen this legislation.

  This is a starting point. We must also ensure that is a solid 
foundation for a comprehensive benefit that fulfills our promises to 
America's seniors.
  Mr. BAUCUS. I know the people in Florida very much appreciate the 
hard work the Senator does. Part of that is on behalf of senior 
citizens.
  I ask unanimous consent that the pending amendments be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 967

  Mr. BAUCUS. Mr. President, on behalf of the Senator from Iowa, Mr. 
Harkin, I send an amendment to the desk with respect to approving 
access to mammography services.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Mr. Harkin, 
     proposes an amendment numbered 967.

 (Purpose: To provide improved payment for certain mamography services)

       At the end of subtitle B of title IV, add the following:

     SEC. ____. IMPROVED PAYMENT FOR CERTAIN MAMMOGRAPHY SERVICES.

       (a) Exclusion From OPD Fee Schedule.--Section 
     1833(t)(1)(B)(iv) (42 U.S.C. 13951(t)(1)(B)(iv)) is amended 
     by inserting before the period at the end the following: 
     ``and does not include screening mammography (as defined in 
     section 1861(jj)) and unilateral and bilateral diagnostic 
     mammography''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to mammography performed on or after January 1, 
     2004.

  Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending 
amendments be temporarily set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 968

  Mr. BAUCUS. On behalf of Senator Harkin, I send a second amendment to 
the desk restoring certain reimbursements for nursing home services.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Mr. Harkin, 
     proposes an amendment numbered 968.

  Mr. BAUCUS. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To restore reimbursement for total body orthotic management 
      for nonambulatory, severely disabled nursing home residents)

       At the end of subtitle B of title IV, add the following:

     SEC. ____. REIMBURSEMENT FOR TOTAL BODY ORTHOTIC MANAGEMENT 
                   FOR CERTAIN NURSING HOME PATIENTS.

       (a) In General.--Not later than 60 days after the date of 
     the enactment of this Act, the Secretary shall issue product 
     codes that qualified practioners and suppliers may use to 
     receive reimbursement under section 1834(h) of the Social 
     Security Act (42 U.S.C. 1395m(h)) for qualified total body 
     orthotic management devices used for the treatment of 
     nonambulatory individuals with severe musculoskeletal 
     conditions who are in the full-time care of skilled nursing 
     facilities (as defined in section 1861(j) of such Act (42 
     U.S.C. 1395x(j))). In issuing such codes, the Secretary shall 
     take all steps necessary to prevent fraud and abuse.
       (b) Qualified Total Body Orthotic Management Device.--For 
     purposes of this section, the term ``qualified total body 
     orthotic management device'' means a medically-prescribed 
     device which--
       (1) consists of custom fitted individual braces with 
     adjustable points at the hips, knee, ankle, elbow, and wrist, 
     but only if--
       (A) the individually adjustable braces are attached to a 
     frame which is an integral component of the device and cannot 
     function or be used apart from the frame; and
       (B) the frame is designed such that it serves no purpose 
     without the braces; and
       (2) is designed to--
       (A) improve function;
       (B) retard progression of musculoskeletal deformity; or
       (C) restrict, eliminate, or assist in the functioning of 
     lower and upper extremities and pelvic, spinal, and cervical 
     regions of the body affected by injury, weakness, or 
     deformity,

     of an individual for whom stabilization of affected areas of 
     the body, or relief of pressure points, is required for 
     medical reasons.

  Mr. BAUCUS. I ask that all pending amendments be set aside.
  The PRESIDING OFFICER. Without objection, it is ordered.


                           Amendment No. 969

  Mr. BAUCUS. On behalf of the Senator from Connecticut, Mr. Dodd, I 
send an amendment to the desk permitting open enrollment on a drug 
benefit for 2 years.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Montana (Mr. Baucus), for Mr. Dodd, 
     proposes an amendment numbered 969.

  (Purpose: To permit continuous open enrollment and disenrollment in 
  Medicare Prescription Drug plans and MedicareAdvantage plans until 
                                 2008)

       At the end of subtitle C of title II, add the following:

     SEC. ____. PERMITTING CONTINUOUS OPEN ENROLLMENT AND 
                   DISENROLLMENT UNDER MEDICARE PARTS C AND D 
                   UNTIL 2008.

       (a) Under Medicare Prescription Drug Plans.--Subclause (II) 
     of section 1860D-3(a)(1)(A)(i), as added by section 101, is 
     amended to read as follows:

       ``(II)(aa) during 2006 and 2007, may change an election 
     under this clause at any time; and
       ``(bb) during 2008 or a subsequent year, may make an annual 
     election to change the election under this clause.''.

       (b) Under MedicareAdvantage Plans.--Section 1851(e) (42 
     U.S.C. 1395w-21(e)), as amended by section 201, is amended--
       (1) in paragraph (2)(A), by striking ``through 2005'' and 
     ``December 31, 2005'' and inserting ``through 2007'' and 
     ``December 31, 2007'', respectively;
       (2) in the heading of paragraph (2)(B), by striking 
     ``during 2006'' and inserting ``during 2008'';
       (3) in paragraph (2)(B)(i), by striking ``2006'' and 
     inserting ``2008'' each place it appears;
       (4) in paragraph (2)(C)(i), by striking ``2007'' and 
     inserting ``2009'' each place it appears;
       (5) in paragraph (2)(D), by striking ``2006'' and inserting 
     ``2008''; and
       (6) in paragraph (4), by striking ``2006'' and inserting 
     ``2008'' each place it appears.

  Mr. BAUCUS. Mr. President, I ask that all pending amendments be laid 
aside temporarily.
  The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page S8291]]

                           Amendment No. 970

  Mr. BAUCUS. I send an amendment on behalf of Senator Dodd expanding 
low-income protections to 250 percent of poverty.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Mr. Dodd, 
     proposes an amendment numbered 970.

 (Purpose: To provide 50 percent cost-sharing for a beneficiary whose 
  income is at least 160 percent but not more than 250 percent of the 
poverty line after the beneficiary has reached the initial coverage gap 
 and before the beneficiary has reached the annual out-of-pocket limit)

       Section 1860D-19(a) of the Social Security Act, as added by 
     section 101, is amended by adding at the end the following 
     new paragraph:
       ``(5) Reduction of cost-sharing for additional low-income 
     beneficiaries.--
       ``(A) In general.--In the case of an additional low-income 
     beneficiary (as defined in subparagraph (B)), such individual 
     shall be responsible for cost-sharing for the cost of any 
     covered drug provided in the year (after the individual has 
     reached the initial coverage limit described in section 
     1860D-6(c)(3) and before the individual has reached the 
     annual out-of-pocket limit under section 1860D-6(c)(4)(A)), 
     that is equal to 50.0 percent.
       ``(B) Additional low-income beneficiary.--Subject to 
     subparagraph (H), the term `additional low-income 
     beneficiary' means an individual--
       ``(i) who is enrolled under this part, including an 
     individual who is enrolled under a MedicareAdvantage plan;
       ``(ii) whose income is at least 160 percent, but not more 
     than 250 percent, of the poverty line; and
       ``(iii) who is not--

       ``(I) a qualified medicare beneficiary;
       ``(II) a specified low-income medicare beneficiary;
       ``(III) a qualifying individual;
       ``(IV) a subsidy-eligible individual; or
       ``(V) a dual eligible individual.

  Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending 
amendments be laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 942

  Mr. BAUCUS. Mr. President, I call up amendment No. 942 on behalf of 
the Senator from Washington, Ms. Cantwell.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Ms. Cantwell, 
     proposes an amendment numbered 942.

     (Purpose: To prohibit an eligible entity offering a Medicare 
  Prescription Drug plan, a MedicareAdvantage Organization offering a 
MedicareAdvantage plan, and other health plans from contracting with a 
    pharmacy benefit manager (PBM) unless the PBM satisfies certain 
                             requirements)

       On page 204 after line 22, insert the following:

     SEC. 133. PHARMACY BENEFIT MANAGERS TRANSPARENCY 
                   REQUIREMENTS.

       (a) Medicare.--Subpart 3 of part D of title XVIII of the 
     Social Security Act (as added by section 101) is amended by 
     adding at the end the following new section:


         ``pharmacy benefit managers transparency requirements

       ``Sec. 1860D-27. Notwithstanding any other provision of 
     law, an eligible entity offering a Medicare Prescription Drug 
     plan under this part or a MedicareAdvantage organization 
     offering a MedicareAdvantage plan under part C shall not 
     enter into a contract with any pharmacy benefit manager (in 
     this section referred to as a `PBM') to manage the 
     prescription drug coverage provided under such plan, or to 
     control the costs of such coverage, unless the PBM satisfies 
     the following requirements:
       ``(1) The PBM is not owned by a pharmaceutical 
     manufacturing company.
       ``(2) The PBM agrees to pass along any cost savings 
     negotiated with a pharmacy to the Medicare Prescription Drug 
     plan or the MedicareAdvantage plan.
       ``(3) The PBM agrees to make public on an annual basis the 
     percent of manufacturer's rebates received by the PBM that is 
     passed back to the Medicare Prescription Drug plan or the 
     MedicareAdvantage plan on a drug-by-drug basis.
       ``(4) The PBM agrees to provide, at least annually, the 
     Medicare Prescription Drug plan or the MedicareAdvantage plan 
     with all financial and utilization information requested by 
     the plan relating to the provision of benefits to eligible 
     beneficiaries through the PBM and all financial and 
     utilization information relating to services provided to the 
     plan. A PBM providing information under this paragraph may 
     designate that information as confidential. Information 
     designated as confidential by a PBM and provided to a plan 
     under this paragraph may not be disclosed to any person 
     without the consent of the PBM.
       ``(5) The PBM agrees to provide, at least annually, the 
     Medicare Prescription Drug plan or the MedicareAdvantage plan 
     with all financial terms and arrangements for remuneration of 
     any kind that apply between the PBM and any prescription drug 
     manufacturer or labeler, including formulary management and 
     drug-switch programs, educational support, claims processing 
     and pharmacy network fees that are charged from retail 
     pharmacies and data sales fees.
       ``(6) The PBM agrees to disclose the retail cost of a 
     prescription drug upon request by a consumer.''.
       (b) Employee Retirement Income Security Act of 1974.--
       (1) In general.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1185 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 714. PHARMACY BENEFIT MANAGERS TRANSPARENCY 
                   REQUIREMENTS.

       ``The provisions of section 1860D-27 of the Social Security 
     Act shall apply to a group health plan, and a health 
     insurance issuer providing health insurance coverage in 
     connection with a group health plan, in the same manner as 
     such provisions apply to an eligible entity offering a 
     Medicare Prescription Drug plan under part D of title XVIII 
     of the Social Security Act or to a MedicareAdvantage 
     organization offering a MedicareAdvantage plan under part C 
     of title XVIII of that Act.''.
       (2) Clerical amendment.--The table of contents in section 1 
     of the Employee Retirement Income Security Act of 1974 is 
     amended by inserting after the item relating to section 713 
     the following:

``Sec. 714. Pharmacy benefit managers transparency requirements.''.

       (3) Effective dates.--The amendments made by this 
     subsection shall apply with respect to plan years beginning 
     on or after the date of enactment of this Act.
       (c) Amendments to the Public Health Service Act Relating to 
     the Group Market.--
       (1) In general.--Subpart 2 of part A of title XXVII of the 
     Public Health Service Act (42 U.S.C. 300gg-4 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 2707. PHARMACY BENEFIT MANAGERS TRANSPARENCY 
                   REQUIREMENTS.

       ``The provisions of section 1860D-27 of the Social Security 
     Act shall apply to a group health plan and a health insurance 
     issuer providing health insurance coverage in connection with 
     a group health plan, in the same manner as such provisions 
     apply to an eligible entity offering a Medicare Prescription 
     Drug plan under part D of title XVIII of the Social Security 
     Act or to a MedicareAdvantage organization offering a 
     MedicareAdvantage plan under part C of title XVIII of that 
     Act.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to group health plans and health insurance 
     issuers in connection with group health plans for plan years 
     beginning on or after the date of enactment of this Act.
       (d) Amendment to the Public Health Service Act Relating to 
     the Individual Market.--
       (1) In general.--The first subpart 3 of part B of title 
     XXVII of the Public Health Service Act (42 U.S.C. 300gg-51 et 
     seq.) is amended--
       (A) by redesignating such subpart as subpart 2; and
       (B) by adding at the end the following:

     ``SEC. 2753. PHARMACY BENEFIT MANAGERS TRANSPARENCY 
                   REQUIREMENTS.

       ``The provisions of section 1860D-27 of the Social Security 
     Act shall apply to health insurance coverage offered by a 
     health insurance issuer in the individual market in the same 
     manner as they apply to an eligible entity offering a 
     Medicare Prescription Drug plan under part D of title XVIII 
     of the Social Security Act or to a MedicareAdvantage 
     organization offering a MedicareAdvantage plan under part C 
     of title XVIII of that Act.''.
       (2) Effective date.--The amendment made by subsection 
     (c)(1)(B) shall apply with respect to health insurance 
     coverage offered, sold, issued, renewed, in effect, or 
     operated in the individual market on or after the date of 
     enactment of this Act.
       (e) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Subchapter B of chapter 100 of the 
     Internal Revenue Code of 1986 is amended by inserting after 
     section 9812 the following:

     ``SEC. 9813. PHARMACY BENEFIT MANAGERS TRANSPARENCY 
                   REQUIREMENTS.

       ``The provisions of section 1860D-27 of the Social Security 
     Act shall apply to a group health plan in the same manner as 
     they apply to an eligible entity offering a Medicare 
     Prescription Drug plan under part D of title XVIII of the 
     Social Security Act or to a MedicareAdvantage organization 
     offering a MedicareAdvantage plan under part C of title XVIII 
     of that Act.''.
       (2) Clerical Amendment.--The table of contents for chapter 
     100 of such Code is amended by inserting after the item 
     relating to section 9812 the following:

``Sec. 9813. Required coverage of young adults.''.

       (3) Effective date.--The amendments made by this subsection 
     shall apply with respect to plan years beginning on or after 
     the date of enactment of this Act.

  Mr. BAUCUS. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.

[[Page S8292]]

  The legislative clerk proceeded to call the roll.
  Mr. FRIST. 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. FRIST. Mr. President, on this Friday we have had a number of 
speakers come forward over the course of the morning and the afternoon 
on the topic of how best to improve Medicare, strengthen Medicare, 
preserve it, and build upon what we have learned in the past to bring 
it up to date and to give seniors the opportunity to receive the type 
of health care available today of which most people in the private 
sector are able to take advantage but to which, because of the 
structure of Medicare today, seniors simply do not have access in a way 
they really deserve: Things such as prescription drugs, which, as we 
heard debated 20 or 30 minutes ago by the distinguished Senator from 
Florida, are so absolutely critical to the health care toolbox, to the 
armamentarium out there today to take care of seniors and individuals 
with disabilities to prevent more serious illness for people on those 
pills that keep their blood pressure down at a reasonable level, that 
prevent debilitating strokes, prevent massive heart attacks; if they do 
not take that pill, those acute diseases that become chronic diseases 
occur, or episodic acute diseases occur.
  There is such a high barrier for prescription drugs that they are 
less likely to reach out and get the drugs. The whole purpose is to 
reverse the burden in a way that is sustainable over time. As 
politicians, we want to help people, we want to help them now. But if 
we do it in a shortsighted way, we can create bigger problems for 
people 3 years out, 5 years, 10, 15, 20 years out, or at this time we 
must think 30 years out.
  In the next few minutes, I will again step back and look at where we 
are in health care, what we are doing. Then we will be able to come 
back in next week and look at a lot of the individual amendments. They 
can be very technical. They involve a lot of terms that are unfamiliar 
to even a lot of Senators but also to the public at large.
  In the next few minutes, I want to take this big-picture look and 
introduce the demographic challenge that should be the backdrop for all 
of our discussions when we look at health care for seniors, for 
promises we are making today that we are writing into legislation to 
make sure we are doing it in a way that can be sustained over time. 
This is talking to seniors but, even probably more directly, to the 
near seniors and to the younger generation because it is their health 
care we are talking about. It is their money we are using, in large 
part, to pay for the health care security for seniors today. Thus, I 
think we have to look at it in this intergenerational way.
  In the big picture, the U.S. health expenditures for the dollars 
spent in 2001 and 2002 are similar, although this chart shows the most 
recent data for today of all health care dollars spent in the United 
States of America. The red on the chart is public expenditures, public 
programs--what is government--and the blue is the private sector. It is 
an interesting chart because it shows about half of the health care 
dollars run through government programs--Federal, State, and local--and 
half of the health care dollars are spent in the private sector.
  What we have the opportunity to do now is marry these two with 
public-private partnerships, to take care of one segment of these 
health care dollars, and that is this 17 percent, this bright red 17 
percent--almost a quadrant--but 17 percent of the overall health care 
dollar which is spent on and for and by senior citizens and individuals 
with disabilities, about 40 million people. That is 17 percent.
  What we were concentrating on the last week, really the last several 
months, is this part of the pie. Medicaid, which is lower income, other 
Federal programs, other State and local programs are the other public 
programs--46 percent of the overall pie.
  What we are going to be doing is capturing the very best out of the 
private sector, in terms of health care delivery, technology, 
prescription drugs--which, remember, are not up in this red sector--
capture the best of the private sector with the best of the public 
sector, marry the two, and thereby give the seniors who fall into this 
sector here, this piece of the pie, better health care, better value 
that can be sustained over time. We are capturing the best of this 
section with the best of this section, marrying public and private.
  It is a new concept. Traditionally, Medicare has been command and 
control, Washington, DC-based: we dictate; we say what is in it, what 
is not in it. We dictate, micromanage the decisions. The problem with 
health care today, with the advances in health care delivery, with the 
new innovations, with the human genome project, with the new 
technology, it is not being adopted into this sector. To me, that is 
sort of the big picture I want to begin with.
  The challenge, if we are looking long term, if one of the goals of 
what we do now is we must be responsible for the future, we need to 
recognize what the demographic backdrop is. What does the future look 
like? The future looks different now, from a demographic standpoint--
demographic being numbers of people, ages of people, genders of people. 
That is what I am talking about when I am talking about demographics. 
That backdrop is changing more radically than ever, than at any time in 
the history of this country. I will tell you why shortly. It is 
changing in several ways.
  This chart is the number of Medicare beneficiaries. That 17 percent I 
just showed you was of the overall health care dollar, how many people 
fall in that section of that pie chart. Just look at two bars on this: 
This is the year 2000; this is in the year 2030. The important thing is 
there are 40 million beneficiaries--beneficiaries just means seniors, 
people who are in the program in the year 2000. You see it goes up, but 
just jump over and you can see it is 77 million in the year 2030. It 
seems like a long time from now, but it is not. That is not very long 
from now. But from this green bar to this green bar is a doubling in 
the number of seniors.
  Historically, we did not have that. I will show why we had this 
doubling that we have to face up to if we are responsible legislators.
  No. 1 is the baby boom. I love this chart because it is the way I 
view the baby boom. You see, it really is a baby boom. This, along this 
Y axis, is births per woman. You can see how it has changed over time. 
This is 1940, 1950, 1960, 1970, 1980, 1990, 2000--so we are about where 
this dotted line is now.
  You can see that we had this baby boom, this fertility curve, this 
increase in population right after 1945, up to about 1970, with the 
peak around 1959, 1960. You just add 60 or 65 years to this part of the 
chart and you quickly get out to 2010, 2015, 2020. That is what we need 
to look for. In other words, this fertility curve, this baby boom, this 
increase in the population has just moved right across this chart, and 
this baby boom is going to begin to hit us in about 2008--5, 6, 7 years 
from now. It just begins to hit, and then over the next 5, 10, 15 years 
it peaks and then goes back down. But it goes back down over a period 
of about 30 years. So we are talking 2010 out to 2040, 2050.

  The big thing is this anomaly is unprecedented in entitlement 
programs. This is what we have to prepare for.
  If this is the Medicare system here, and we are taking care of 
seniors, we are going to have a doubling in the number of seniors. One 
of the reasons is because of the baby boom. The other reason--and I am 
proud of this reason. I think we all are. I am, as a physician, because 
physicians focus their lives on health care and improving length of 
lives as well as quality of life. This is probably, to me, the easiest 
way of looking at the fact that people are living longer now than they 
did 10 or 15 years ago, and as we improve health care, as we do better 
with preventive care and better technology and get people to eat better 
and exercise more, we are going to continue to have these seniors--
which are already doubling in number--live longer. Let's just take an 
example.
  This is what it was like in 1940, 1950, 1960. What this means is--
let's say I am 65 years old. If I am 65 years old, in the year 2000 I 
would be predicted to live another 20 years. This is years of life 
remaining at age 65. That is pretty good.
  Let's say if it were for me, 60 years old, I would be 65 plus 15 is 
80.2 years of age. If I were a woman, I would be able to say I am 65 
years of age, and I am

[[Page S8293]]

going to live 20 more years. That is pretty interesting.
  But the good news is that when Medicare started, when you were 65, 
say, back in 1965, if I was 65 years of age, they would say I am only 
going to live 13 more years. But because health care has gotten better 
now, I am going to live 15 more years, and if I am out in 2030, I am 
going to live 17 more years.
  You have not only more seniors but each one of those seniors is 
living longer. Thus they are going to be in the Medicare system for a 
longer period of time than what we would have thought or predicted 
back, either in 1965, the year 2000, or 2030.
  If we are good, which I think we are in terms of science, technology, 
health care, this is going to increase more and more. I don't know 
where it is going to stop. Nobody really knows, in terms of how long 
people will live. But it is interesting, doubling the number of seniors 
because of the fertility curve, and each one of those seniors will live 
longer, of which we are all proud.
  As an aside, this differential between women and men is pretty 
remarkable. If I am talking to a woman 65 years of age, I say you are 
going to live 20 more years. If I am talking to a man, you are only 
going to live 15 years. Why is that? There are a lot of hypotheses, and 
we don't fully know why the difference, why it is. But the point is 
they both are going to live longer.
  This is sort of a summary chart. In 1970, we had 20 million people. 
Now we have 40 million people. You are going to see this line break. In 
2030, we are going to have 77 million people. Again, the summary chart: 
A lot more people coming out of the system. That is one component.

  Let's say this is the Medicare system. We say trust fund but it is 
not really a trust fund like in a bank or the way you envision money 
accumulating and then paying it out. That is just not the way it 
happens. It is a pay-go system, which means for every senior over here 
taking out for health care, you have workers--that is most of the 
people who are probably listening to me right now, people who have been 
working--who have to support it. The moneys they pay on April 15, or 
whenever they pay their taxes, go out to support these seniors. The 
money we are spending is not money seniors paid in in the past; it is a 
pay-go system. That is why this trust fund is not really a trust fund.
  What is interesting there, not only do we have a doubling of the 
number of seniors, but we have fewer workers paying into the system, 
which the very next day are paying out to support an increasing number 
of seniors. This is fascinating because it, too, is a part of that 
fertility curve, in the 1940s and 1950s.
  You will see in 1970 there were 7 of these individuals, 7.3 to be 
exact--paying taxes to support every senior in the system. What is 
interesting is that in the year 2000 that has come way down. Instead of 
having 7 people over here working to support each senior, you have 
3.9--say 4. You have these 4 working. So, therefore, they are having to 
work twice as hard or pay twice as much for taxes, or work twice as 
many hours a day than they were working in the past because you have 
fewer of them supporting each worker--for health care.
  Again, with the fertility boom, as it comes through, this is going to 
fall, by 2030, to only 2 or 2.4 workers, and they are going to have to 
work that much harder to support whatever we promise and whatever 
health care we give to seniors.
  All of sudden, we saw a huge challenge. We can promise so many things 
right now. We can promise to improve their benefit. We can promise to 
give them whatever they ask for and what they want. But in doing so, if 
we fulfill our obligation to both this generation and also the next 
generation, we need to do so in a way that can be sustained. We have a 
doubling of the number of seniors with fewer people paying in, which 
compounds the challenge of technology and adding benefits and the 
challenge of looking at chronic care.
  The product of that is, if we didn't change the law at all--if we 
just kept the Medicare law as it is, which is not realistic because it 
will change no matter what--we are spending about $226 billion a year 
now. In 2030--not with this bill--we are going to be spending $448 
billion and fewer people are going to be paying into that system to 
expend the $448 billion that we have today. That is why you will hear 
again and again from Members such as the Senator from Oklahoma, Mr. 
Nickles, and also the Senator from New Hampshire, Mr. Gregg. They will 
again and again remind me and our colleagues in our caucus that 
whatever we do, we need to do it in a way that can be sustained over 
time. We can't be making promises that cannot be in any way upheld or 
fulfilled in the future by putting an unnecessary and unfair burden on 
that next generation.
  This is a chart which I almost hesitate showing. This summarizes and 
puts things in perspective why we have to address Medicare now.
  No. 1, because seniors deserve better health care security. It is 
just too obvious to me that without prescription drugs, and without 
preventive care and disease management within Medicare today, they are 
not getting what they deserve.
  The second issue is as important as Social Security. At some point we 
need to come back and address Social Security as well as the cost of 
the demographic shift because of our responsibility to seniors and that 
next generation.
  But if we look--this is the financial challenge--at the unfunded 
promises over the next 75 years--I am not going any further out than 75 
years, but it is important having gone out 30 years to mention the next 
75 years--if you add up all of the unfunded promises, promises that are 
made, mandates that are in the law but we haven't determined how to 
best pay for them; as comparison, the debt held by the public of $3.6 
trillion, just for comparison purposes--if we look over the next 75 
years for Social Security, what is the shortfall there? That is why we 
have to come back and address it at some point, and I am not sure when 
it will be. But it is $3.6 trillion, and somebody is going to pay for 
it. We are going to have to address that.
  But Medicare and health care for our seniors--this is not the bill on 
the floor; this is today, the current law as it exists--there is a 
$13.3 trillion Medicare shortfall over the next 75 years.
  That is one of the reasons I think it is important for us to address 
Medicare now, relatively early in this Congress, why we should not 
delay, why we do need to finish the bill next week, and have the House 
do the same, have the President sign it as soon as possible, but also 
stress the point that we have to get this thing right. We have to do it 
responsibly because what we are doing as a product of modernizing 
Medicare is making sure we get the very best value, that it is an 
efficient system, that it is adding a brandnew benefit of prescription 
drugs which even isn't calculated in this. This $13.3 trillion is 
Medicare as we have it today.

  One of the things we are going to do is add the $400 billion benefit 
over a 10-year period--not 75 but a 10-year period on top of this 
already $13.3 trillion Medicare shortfall. We are going to add a 
benefit on top of that. That is why we can't just add a benefit on top 
without addressing Medicare overall. That is why you heard the 
President from day 1 say yes, we have to have prescription drugs; yes, 
we have to improve the nature of the benefits; but at the same time we 
have to address reform because not to do so would be irresponsible as 
the leader of the United States of America. And the same thing goes on 
in this body today.
  That is why the bill we have brought to the floor is not just a 
Medicare package and not just a bill that says let us promise pills to 
seniors, but says, yes, those medicines are critical and vital, but at 
the same time we have to address the overall integrated delivery of 
health care which, I would argue, allows us to have a more efficient 
system, a system that has more value, and a system that allows us to 
address, as we look out to the future, this huge unfunded promise we 
have made in the past.
  When we are in the middle of talking about each of these individual 
amendments and the technical nature of materials, it is hard to back up 
and look at some of these principles that underlie doing this thing 
right--doing it in a bipartisan way, allowing ample time, as we have 
had all week, to fully debate the amendment process.
  This is the issue Senator Dorgan talks about a lot, and he talks 
about

[[Page S8294]]

the Finance Committee a lot. And we are beginning to talk about it a 
lot on the floor. I don't want to get into the debate, but it will be a 
backdrop for much of the discussion next week.
  If you look at Medicare beneficiaries and a pie chart of 40 million 
people, all of those 40 million people are not very expensive in what 
they actually expend in terms of health care expenditures.
  Over here, these are all the beneficiaries. This is 100 percent of 
the 40 million people. Over here is health care expenditures.
  The point of this is, if you just focus on the orange, 6 percent of 
all Medicare beneficiaries, about one in two--if this whole body were 
filled right now, there would be only about five or six of them in the 
whole body, just six desks, who would be responsible for 50 percent of 
all the money we put in Medicare. Of that $220 billion which we put in, 
only six desks--you probably see these six desks around me--would be 
responsible for half of that money. Why? Because they are sicker; they 
have more chronic diseases.
  Right now, I think as we say in approaching a program that is 
sustainable that gives very good care, wouldn't it be great to be able 
to identify this 6 percent which accounts for 50 percent of these 
expenditures--or it could be the top 15 percent or 14 percent--this 6 
percent, and the 8 percent which accounts for 76 percent--wouldn't it 
be great if we made absolutely sure that in that population we gave 
them the very best care possible in terms of prevention, in terms of 
management, in terms of coordination, in terms of an integrated way of 
taking care of their health care problems and making sure they are 
treated and cared for?
  I am absolutely convinced--and I say this having taken care of 
thousands of Medicare patients, which I was blessed to be able to do 
before coming here--if we had the data system to be able to identify 
who they are and had them in the appropriate system to manage their 
care, they would be better cared for with a better value for the 
dollar.
  But this is a fascinating chart on which very few people have 
focused. We will get back to it I think in the debates next week.
  I mentioned Senator Dorgan. He and I have been discussing the same 
charts many times. This chart is very similar to the prescription drug 
expenditures as well. We can focus on certain populations.
  This is an extension of Senator Dorgan's conversation, and my 
conversation with him. These ``CCs'' are ``chronic conditions.'' A 
chronic condition is something such as congestive heart failure. 
Congestive heart failure is when the heart gets big, it just does not 
pump quite as well. It is like water behind a dam; it begins to fill up 
in the body. It fills up in your lungs. You get short of breath and 
swelling in your feet. If you see people who are a little short of 
breath, typically it is an element of congestive heart failure, if they 
have heart disease at all.
  But what is interesting is, if you look at Medicare expenditures, for 
people who only have one chronic condition such as heart failure, they 
account for about 4 percent of expenditures. If they have two chronic 
conditions--say, heart failure and diabetes--they would account for an 
additional 7 percent of expenditures. If they have three or four or 
five chronic conditions, they account for about 65 percent of 
expenditures.
  What I am suggesting is, if you could identify people with five 
chronic conditions or four chronic conditions--and right now, it is 
amazing, because in Medicare, in our data base, you really cannot do 
that, but in a newer system, an up-to-date system, if you could 
identify these people and then manage them better, to make sure you had 
integrated care, coordinated care--maybe it would be a phone call from 
a nurse once a week, to say: Have you weighed yourself today to see if 
you picked up any weight? If you have picked up weight, you better come 
in and see us because your lungs are filling up with water. But in a 
newer system we could catch it before they are hospitalized, and all of 
a sudden you have saved the hospitalization or maybe someone's life.
  That sort of integrated care is just not a part of Medicare today, 
and it should be. Thus, if we better manage these people--and 
``management'' is not a great word. If we better treat them, if we 
better care for them, we would cut overall costs and improve the 
quality of care. We simply cannot do that in the Medicare program 
today.
  Thus--and this comes to what this bill is all about--how do you 
address some of those issues? The bill on the floor allows us to 
address each of the issues I have mentioned.
  In 2006, seniors, after having had access to a prescription drug 
card--and every senior could have a drug card in about 9 months from 
now. If we can pass this bill next week, get it through conference, 
have the President sign it, probably 6 to 8 months after that every 
senior could have a prescription drug card that would give them some 
benefit in terms of lowering the cost of their prescription drugs. That 
is a pretty good, immediate response, if we can get this bill through 
on time.
  In the year 2006, though, the prescription drug card begins to be 
replaced by three options an individual senior would have. They could 
keep what they have today--traditional Medicare--and with that they 
could have access to an insurance drug package; No. 2, they could take 
advantage of Medicare+Choice, which is a coordinated care, integrated 
care type program; or, No. 3, they could take advantage of a PPO, which 
is an integrated health care, coordinated health care delivery system 
that includes prescription drugs, preventative care, and that chronic 
disease management.
  Thus, as we look ahead in designing this program--and this, as shown 
on the chart, is sort of the general outlay of the bill itself--you 
will hear about a lot of amendments over the next week, and those 
amendments will talk about, for example: Well, what about the size of 
the drug package in each? A decision in the bill was made to have this 
same drug benefit under traditional Medicare and Medicare+Choice, 
which, by the way, has 5 million people in it. And this other program 
has 35 million people in it today. This prescription drug benefit is 
the same.

  Some people might say: Well, we ought to change the benefit. Some 
people will say: Let's make sure this is a truly competitive model that 
takes advantage of what we know in the private sector works, which has 
more market-based principles--yes, that is highly regulated by the 
Government--to make sure those benefits are delivered; and those 
benefits have to be a part of each PPO that comes forth and bids, but 
let's make this more competitive. And Monday and Tuesday and Wednesday 
we are going to hear a lot about how to make this a really up-to-date 
system and as competitive as possible, which would improve quality and 
improve the value of each dollar put into the system.
  So you will hear about market-based competition. It will be maximized 
in this area, as shown on this part of the chart. Again, people will be 
able to keep exactly what they have today. So I say to seniors who are 
listening, you do not have to worry about things being taken away from 
you or the question: What is Government going to do? Are they going to 
come in and take away benefits you already have? No. You are going to 
get access to additional benefits, even if you stay in traditional 
Medicare. You will be able to take advantage, like 5 million people do, 
of an HMO.
  People start running when they hear that word HMO, but let me tell 
you, 5 million people who are in these HMOs are pretty pleased because 
they have access to prescription drugs today or people can choose this 
PPO model, which is the model that works best in the private sector 
today. It is the model most people who have employer-sponsored 
insurance today have. It definitely is the model of the future because 
of this continuity of care delivered in a seamless way as we look to 
the future.
  Mr. President, I am going to cover just one more little bit different 
concept as a preface to what we will be talking about next week in the 
Medicare debate, and that is on what is called the donut. Now I am 
coming back down from 35,000 feet to about 5,000 feet to look at what 
will be one of the hot topics and an issue that will be debated in 
terms of what is called a gap or a donut. I guess those are the two 
words that are used mainly.
  The concept is that people will get a lot of assistance, especially 
if you are

[[Page S8295]]

under the poverty level or under 160 percent of the poverty level. 
There is no donut for 44 percent of all seniors. There is no gap. There 
is no donut. I will come back and talk a little about what the donut 
is. If you are under 160 percent of poverty--that is about $16,000, 
$17,000, if you are married, of income every year as a senior--there is 
no donut, there is no gap.
  This chart I show you deals with those individuals who are below 100 
percent of the Federal poverty level. What this chart shows, in the 
blue, is the percent of your total expenses in a year that is paid for 
by the plan. The green is the amount that is paid for by the 
beneficiary.
  So if you have $1,000 of drug expenses a year, and you are below the 
poverty level, you will have almost 98 percent of all of your drug 
expenses paid for by the plan, and you will pay $25--very little. It is 
a very generous benefit.
  I will have one more chart that goes above the poverty level to 160 
percent of the poverty level.
  If you have $2,000 of expenditures in drugs a year, again, if you are 
below the poverty level, the plan pays for 98 percent of all your drug 
expenses. If you have $3,000 of expenditures a year, again, the plan 
pays for about 95 or 98 percent of all your drug expenses. You can see 
that goes up. If you have $7,000 of drug expenditures a year, again, 
the plan pays about 98 percent of that.
  And this is one of the beauties. Remember, none of these people get 
prescription drug coverage through Medicare today. I do not know what 
it is below the poverty level, how some of them get it through other 
plans. In fact, if you look at all seniors, about two-thirds do get 
some element of prescription drug coverage somewhere. And we have to be 
very careful because we do not want to have everybody coming to a 
Government program.
  But the point I want to make is, if you are under the poverty level 
or indeed at 160 percent of the poverty level, the plan itself is very 
generous. We are going to hear on the floor next week the question: Is 
that too generous? Or maybe it is not generous enough. It is hard to 
argue it is not generous enough, given the fact that 44 percent of all 
seniors are going to have no donut and get a very generous benefit, and 
everybody is going to get a benefit.
  Referring to the same chart again, for example, this shows, for an 
individual who has $1,000 of drug expenses or $2,000 of drug expenses, 
how much they are going to pay for those prescription drugs. So whoever 
is listening to me right now, they would be able to know how much they 
could spend on drugs every day and know where they are going to fall.
  For example, if you were a heart transplant patient of Bill Frist 10 
years ago, you would have probably had about $7,000 in drug expenses 
every year. Every time I transplanted a heart or a lung, the patient 
would have anywhere from $5,000 to $7,000 of drug expenses every year. 
Drugs are expensive and can take your life savings. For every patient I 
had who had a heart or a lung transplant, they did not go through that 
procedure without expending $6,000 to $7,000 on prescription drugs 
every year.
  Most of them are seniors. That is one of the reasons why this plan 
means so much to me. I have a personal interest in that these are 
people whose faces I have looked into and eyes I have looked into over 
the years.
  Let me go above 160 percent and you see it looks different. What I 
want to focus on, of the 40 million people out there, of the seniors, 
the 50 percent richest, 50 percent highest income people. They still 
get a lot of help. Just graphically look at it. Remember in blue and 
gray here is the percent paid by the plan. This is 100 percent at the 
top. So you can see it is anywhere from 30 to 50 percent coming all the 
way through. This chart, you can look at it all sorts of different 
ways, but the point I want to make, in the bill, when we talk about 
gap, it doesn't mean you will be left out. If you fall into what is 
called a donut or gap, you benefit all the way up until that level, and 
then through that gap you pay for your prescription drugs. But then at 
the other side of the gap you are picked up again.
  Thus, at the end of a year, what happens? The gap is right about 
$4,500 to about $5,800. I am looking to my staff member because the 
figures have changed a little bit as we tried to narrow the gap over 
the last several weeks. But that means the gap is somewhere right 
around $4,500 to this bar here, this is $6,000. But, remember, if you 
are an individual and you are listening to me and you have $4,500 in 
expenditures, still about 45 percent of all your expenditures are paid 
for by the plan. And if you are in the gap, the so-called donut, it is 
little bit less, it is a couple percentage points less, but still right 
at 42 percent, at $5,000. And then if you are into $6,000, you are back 
up around 40 percent, $6,000, $7,000, $8000, coming up. The reason why 
I show this chart is because I have seniors calling me now and saying: 
What about if I am in the hole of that donut? What about if I am in 
that gap? Does that mean the Government excludes me, doesn't help me? 
The answer is absolutely no. You just pick where you are on here and 
graphically you can see that these are for the wealthiest seniors, and 
the bar graph I showed you for the poor. I am showing you the two ends, 
the two extremes. But above 160 percent of poverty, this is the gap 
right here. So still you are getting huge assistance at the end of the 
year.
  Again, probably the best example, because the gap is between $4,500 
and $5,800, would be the $6,000 that at the end of the year you are in 
the gap between $5 and $6,000, and you are still getting about 40 
percent of your drugs paid for. Some people say it should be higher; 
some people say lower. The point is, on the gap itself, it doesn't mean 
you are left out in the cold. Over time we tried to minimize it and 
keep it as small as possible.
  We will come back to that later. It is a concept that takes a little 
bit of time to explain. Depending on who is arguing which side in terms 
of the gap, there will be some, as you try to make the point, who make 
that gap sound real bad. Others might minimize it. The reality is, you 
will be helped wherever you are, even if you are in the gap. You will 
get huge help as you go forward.

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