[Congressional Record Volume 149, Number 95 (Wednesday, June 25, 2003)]
[House]
[Pages H5915-H5922]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          THE REPUBLICANS' MEDICARE PRESCRIPTION DRUG PROPOSAL

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 2003, the gentleman from New Jersey (Mr. Pallone) is 
recognized for half the time until midnight as the designee of the 
minority leader.
  Mr. PALLONE. Mr. Speaker, many of my Democratic colleagues took to 
the well this evening to talk about their concerns over the Republican 
Medicare bill, the Republican Medicare prescription drug bill that we 
expect to come to the floor here in the House of Representatives 
tomorrow. But I have to start out this evening by pointing out 
unfortunately that we do not really know what bill is going to come up 
tomorrow. We are waiting. Many of us are actually waiting right now to 
see what the Committee on Rules will do. The Republican bill has not 
actually been filed yet, and the latest information is it may not be 
filed until 11 or 12 o'clock and Committee on Rules will then consider 
the bill an hour after that, which might be one or two o'clock in the 
morning, and at that time Members, particularly Democratic Members, 
would be asked to come, review the bill very quickly obviously, and 
suggest any amendments or changes they might have to the Republican 
bill.
  And I would suggest that that is certainly not the way to operate, 
particularly on a bill that is so important. I think all of us agree 
that Medicare is one of the most important programs that the Federal 
Government has ever offered, and to think that most of us will come 
here tomorrow and will not have even had the opportunity to see the 
bill and that the Republicans in having this Committee on Rules meet 
late at night where they would consider amendments would do such so 
late when most Members will not even be able to offer an amendment, it 
is just really a travesty of the process; and I have to believe that it 
is intentional. I do not think there is any question about it. The last 
vote today in the House of Representatives was about 5 o'clock. Why 
could all this not begin during the day or just after the session 
ended? Why does it have to take place at 12 o'clock midnight or even 
later?
  It puts a great deal of fear in me, and it is pretty obvious from 
looking at some of the proposals that have already been considered in 
the committee, both in the Committee on Energy and Commerce, where I 
serve, as well as in the Committee on Ways and Means, that what the 
Republicans have in mind essentially kills Medicare. And I know that is 
a very severe thing to say. Many of my colleagues have said that this 
evening, that the Republican Medicare prescription drug proposal 
actually kills or destroys Medicare, and one might say to oneself how 
could we make such a statement? What is the basis for our making that 
statement? And I would say that the real reason we say it is because if 
we look at the Republican bill here in the House, it essentially 
privatizes Medicare. What does that mean?
  The Federal Government operates a Medicare program. It is a Federal 
program operated by the government. And what the Republicans are 
proposing in this bill is that rather than have the government run a 
health care program for seniors and pay out the money for the program 
to the doctors and the hospitals, that rather they would give seniors a 
certain amount of money. We call it a voucher. And those seniors would 
instead under the Republican plan be expected to go out and purchase 
their health insurance privately just like somebody might who is 
younger.
  The problem with that, though, is that historically when Medicare was 
started back in the 1960s under President Lyndon Johnson, the majority 
of seniors could not find health insurance. They were unable to buy 
health insurance because the way insurance works, it is like a pool, 
and people who are older tend to be frailer, tend to be sick or tend to 
have to go to the hospital more. Those are not the people that 
insurance companies want to sell a policy to because they cannot make 
any money. And most of the insurance companies have told us that 
effectively they are not going to sell those insurance policies because 
they still cannot make any money today.
  Nothing has changed from the 1960s until this year. Seniors are still 
the most vulnerable and the sickest population, the population that has 
to go to the hospital and to the doctor most often. Why in the world 
would anybody want to sell an insurance policy to seniors or at least 
to a lot of seniors?
  What we are seeing here is that the Republicans, maybe because of 
their ideology, maybe because of their being beholden to the insurance 
companies, whatever reason there is, they essentially want to set up a 
system whereby the traditional Medicare that we have, which is a 
government program that guarantees certain benefits, would now 
essentially be privatized and they would get a certain amount of money 
and hope that they could go out and buy health insurance in the private 
market. It is a very vicious, in my opinion, thing to do. It is a wrong 
thing to do because Medicare has been a very successful program.
  If we look at Medicare at the time when Lyndon Johnson signed the 
first bill, the situation for America's seniors has just changed 
dramatically. Most seniors had no health insurance. Many of them could 
not afford any kind of significant health care. They had to go to a 
clinic or they had to go to charity care in order to pay for their 
health care, but all that has changed. Right now America's seniors have 
high-quality medical care, and they have protection from the 
devastating causes of illness because of this Federal program. And each 
of the 40 million Americans served by America today can attest to the 
program's stability, its affordability, and universal nature that has 
touched all seniors as well as disabled people alike. So why do the 
Republicans want to change that? What possible reason could they have 
to change it?
  I would hope that the Republican majority would realize that if they 
do pass

[[Page H5916]]

legislation that changes and drastically changes Medicare and 
privatizes it that they are not really modernizing the program and what 
they are effectively doing is killing the program.

                              {time}  2215

  Now, I cannot say that I am optimistic about what the Republicans 
might do tonight in the Committee on Rules. It just seems like many 
Republicans, because of their idealogy, want to dismantle Medicare or 
they want to privatize drug coverage, or they want the prices of 
prescription drugs to continue to soar. It really gets to my second 
point which I think was very well made by my colleague, the gentlewoman 
from Ohio (Ms. Kaptur), just a little earlier this evening.
  She pointed out, essentially, that not only do the Republicans, in 
their effort to change Medicare and, I say, essentially destroy 
Medicare, not only do they not want to continue the traditional 
government program that we have had so successfully under Medicare, but 
in putting together what they claim will be a prescription drug 
program, which is the reason, theoretically now, why they are changing 
Medicare, is because they want to provide some kind of prescription 
drug program. However, they are doing it in a way that does not really 
add a meaningful prescription drug benefit, and that makes seniors pay 
a lot of money for their prescription drugs and, in some cases, more 
out-of-pocket than they would have to pay now, even without a benefit 
program. But, most of all, they do not want to address the issue of 
price.
  Mr. Speaker, when I go around to my senior citizens, they tell me 
they like Medicare but, they say, the only thing they do not like about 
Medicare is that it does not cover prescription drugs, and the reason 
they feel that it should cover prescription drugs is because the cost 
of prescription drugs has gone up so much that they simply cannot 
afford to pay for those prescription drugs out-of-pocket.
  Now, one might say to oneself, if the real problem with prescription 
drugs is the increasing costs, then why do the Republicans not want to 
do something about it? Why do they not just say in their bill that one 
of the ways that we are going to help senior citizens is by saying that 
the Secretary of Health and Human Services, or the Administrator in 
Washington of the Medicare program, could take the buying power of all 
of these senior citizens and essentially negotiate lower prices? I mean 
this is what the HMOs do now, they negotiate lower prices when they buy 
prescription drugs. This is what the Veterans' Administration does. 
This is what the military does. They try to negotiate lower prices for 
prescription drugs, as the gentlewoman from Ohio said, by buying in 
bulk.
  But what we find in this Republican bill is that they not only do not 
want to do that, in the same way that they were concerned about 
insurance companies, wanting to help them, now they want to help the 
drug companies by not allowing any mechanism in the bill that would 
lower drug costs or that would allow the Federal Government to lower 
drug costs.
  So what we have, and the gentlewoman from Ohio pointed it out very 
effectively, we actually have in the Republican prescription drug bill 
a clause which is entitled the ``Noninterference Clause'' that says, 
``In carrying out its duties with respect to the provision of qualified 
prescription drug coverage to beneficiaries under this title, the 
Administrator,'' and that refers to the Medicare Administrator, ``may 
not require a particular formula or institute a price structure for the 
reimbursement of covered outpatient drugs; interfere in any way with 
negotiations that are taking place between some of the other elements 
of the plan; or otherwise interfere with the competitive nature of 
providing such coverage through such sponsors and organizations.''
  This is a little roundabout way of saying that the Administrator of 
the Medicare program cannot do anything to interfere with price. He 
cannot negotiate price reductions. He cannot say to the drug companies, 
well, one of you give me a better price than the other. And the reason 
for that is because essentially, they do not want the drug companies to 
have to worry about possibly losing some money or not making as much 
money because the price goes down.
  I only mention this by way of introduction, because there are a lot 
more things that I want to say tonight about the Republican bill that 
is going to be before us tomorrow, Mr. Speaker. But I only say this 
because I think that the sort of hallmark of this Republican 
legislation, and the greatest criticism that I have and that most of my 
Democratic colleagues have about it, is one, it tries to destroy 
Medicare by privatizing it, which may be, in some ways, a boon to the 
insurance companies or a way of helping the insurance companies; and 
secondly, it does nothing about lowering the price of prescription 
drugs, which again I think is some significant effort on the part of 
the Republicans to help the prescription drug companies.
  So instead of looking at this legislation as a way of trying to help 
seniors improve Medicare by simply adding a prescription drug benefit, 
what we see is the Republican Party and the Republican leadership in 
the House essentially being in bed with the insurance companies and the 
drug companies to make sure that whatever is offered for Medicare and 
for prescription drugs does not in any way harm them or their 
interests.
  Mr. Speaker, I do not have any problem if an insurance company or a 
drug company wants to make some money. There are a lot of drug 
companies in my State of New Jersey, and God bless them, they should 
make money and they should hire more people. But it is ridiculous that 
in crafting this legislation that is so important to the future of 
America's seniors, that the two things that are most important, the two 
things that are most important to the Republicans is that they do not 
do anything to hurt the insurance companies or anything to hurt the 
drug companies. I think that says a lot about where they are coming 
from with this bill that we expect to be considered tomorrow.
  Mr. Speaker, I yield to the gentleman from Ohio (Mr. Brown), who is 
the ranking member on our Subcommittee on Health and who has been here 
every night talking about the need for a prescription drug benefit, but 
realizes, as I do, that this Republican bill falls short and, in fact, 
hurts the Medicare program.
  Mr. BROWN of Ohio. Mr. Speaker, I thank the gentleman from New Jersey 
(Mr. Pallone), my friend, and the fabulous work he has done and the 
courage he has shown in standing up to very powerful interest groups in 
this country in supporting and fighting for a drug benefit.
  I noticed something that the gentleman just said as I was sitting 
here watching this evening, that this bill does nothing to hurt the 
drug industry or the insurance industry. In fact, this bill, by and 
large, was written by the drug and insurance industries.
  Let us talk for a moment about price. When any of us, Republicans or 
Democrats, people on that side of the room and people on this side of 
the room, go to a town meeting or go to a senior center or walk down 
the street or walk downtown or walk through a shopping mall and talk to 
people of all ages, especially seniors, but people of all ages about 
the whole issue of prescription drugs, the first thing they say is, why 
are our drug prices higher than the drug prices anywhere else in the 
world? And these are prescription drugs generally made in the United 
States, developed in the United States, manufactured in the United 
States. And, in fact, these drugs often, much of the research and 
development for these drugs was done in America and funded by U.S. 
taxpayers through the National Institutes of Health.
  So we have the most profitable industry in America, 20 years running, 
whether it is return on investment, return on sales, return on equity, 
the drug industry, we have an industry that enjoys the lowest tax rate 
in America, in large part because of what this Congress and this 
President have done in giving them tax advantages. And, on top of that, 
we have an industry where much of the research, almost half of the 
research and development which leads to this industry's profits, to the 
drugs this industry manufactures, almost half of the research and 
development has been done by taxpayers, a full half has been done by 
taxpayers and by foundations. We put

[[Page H5917]]

all of that together, and then we say, why is it fair that this 
industry charges American consumers more than consumers in any other 
country in the world?
  I have sponsored a dozen or so bus trips to Canada for seniors in my 
district and people who are not seniors, on some occasions. It is about 
a 2\1/2\ hour ride from Lorain in my district. We have taken trips from 
Medina and we will take them from Akron. It is about a 2, 2\1/2\, 2\3/
4\ hour drive to Canada. They buy their prescriptions, they have saved 
literally hundreds of dollars per person, sometimes even more than 
that.
  But why should drugs made in the United States and, in many cases, 
underwritten by taxpayer research, why should those drugs cost two and 
three times more here than they do in Canada? The reason is, frankly, 
because of the drug industry's influence on my colleagues on the other 
side of the aisle. The reason is President Bush's close alliances with 
the drug companies and the fact that the drug industry funds large 
parts of his campaign.
  The gentleman from New Jersey may remember a couple of years ago, 
last year when we considered this drug bill about this time of year, we 
were in the middle of our committee work and the gentleman from 
Louisiana (Chairman Tauzin) recessed the committee for the day at about 
5 or 6 o'clock because all of the Republican Members had to go off to a 
fundraiser headlined by President Bush, sponsored by the CEO of Glaxo 
Wellcome, a British drug company who makes millions of dollars a year, 
sponsored by them and headlined by President Bush. President Bush 
personally thanked the CEO of Glaxo Wellcome for all of the work they 
did in raising literally millions of dollars. Then, it is no surprise 
that come election time, the drug industry put in literally $80 
million, hard money, soft money, independent expenditures, all the way, 
directly or indirectly, they put money into campaigns, they put that 
kind of money into these political campaigns. We can see the chart, if 
the gentleman from New Jersey would point out the chart next to him and 
in front of me, about drug company contributions, and if the gentleman 
would explain that.
  Mr. PALLONE. Well, the gentleman mentioned Glaxo. Down here I guess 
is line 6, GlaxoSmithKline in the last congressional campaign gave $1.3 
million to congressional candidates. Twenty-two percent went to 
Democrats, 78 percent went to Republicans. And then if you look at all 
of the PhRMA, which is the prescription drug trade company, they spent 
$3.1 million, 5 percent for Democrats, 95 percent for Republicans. So 
those statistics alone give us an idea of where the money is going.
  Mr. BROWN of Ohio. Mr. Speaker, if the gentleman will yield, the 
issue is partly campaign money, but the real issue is the fact that 
Republicans and President Bush have invited the drug companies into 
their offices, into the Oval Office to meet with the President's 
people, into the Lincoln bedroom, if you will, in terms of putting big 
amounts of money into the White House, big amounts of money into 
President Bush's campaign and getting out pieces of legislation that 
benefit them.

  In this country we continue to pay two and three and four times what 
the Canadians pay, the French pay, the Germans pay, the Japanese, the 
Israelis, the Finns, the Brits, all of the wealthy countries in the 
world, we pay two and three and four times what they do. And this drug 
bill, written by the drug companies and introduced by the Republicans, 
there is nothing in this bill, nothing in this bill to get prices under 
control. And that is what is outrageous, when the drug industry 
continues to fleece the American public. And it does not just hurt 
every senior who reaches into his pocket to pay the high cost of drugs, 
it is also what it does to American business, what it does to GM, or 
what it does to GoJo Industries in Akron or what it does to Inyacare in 
Elyria.
  On the one hand, taxpayers are paying for all of this research and, 
on the other hand, Medicaid and other tax-supported institutions in 
this country are paying high prices for prescription drugs. I yield 
back to the gentleman.
  Mr. PALLONE. Mr. Speaker, I just wanted to explain, if I could just 
briefly, and then I would ask the gentleman from Ohio (Mr. Brown) to 
comment on it as well, why I say that what the Republicans are 
proposing here is basically a boondoggle for the insurance companies as 
well as for the drug companies, and why, the very fact of the 
Republicans trying to do their bidding is going to destroy the program.
  I talked earlier about two things. I said on the one hand, we know 
that insurance companies, generally speaking, do not want to cover 
senior citizens because they are older, they are frailer, they are more 
expensive. So in suggesting in the bill, in mandating, I should say, in 
the Republican version of the bill, in the House version, that by a 
certain year seniors will get a voucher and they will have to go out 
and shop for their insurance privately, we know that no insurance 
company is going to want to offer that insurance.
  So what the Republicans do is they subsidize the private insurance 
companies. Basically, at our Committee on Energy and Commerce Committee 
markup the other day when we were both there, some questions were asked 
by the Democrats about how this process is going to work. How is it 
that you are going to give a voucher to seniors and they are going to 
go out into the private sector to buy insurance instead of Medicare 
when we know that insurance companies do not want to offer that 
coverage because they cannot afford it? The response that came back 
from the Republicans and the counsel for the Republicans: we will just 
keep giving them more and more money, higher and higher subsidies, 
until someone finally provides this type of insurance privately.
  Now, what does that do? That means that these insurance companies are 
going to have a windfall, but they are not going to provide the same 
kind of coverage that seniors have now under the government-run 
Medicare program, so the seniors are going to get less services and the 
Federal Government is going to be paying more money. It undermines the 
very nature of the program and simply lines the pockets of the 
insurance companies. Talk about that, and then we will go to the drugs.
  Mr. BROWN of Ohio. Mr. Speaker, if the gentleman will yield, Congress 
continues, as they have done with Medicare HMOs, as President Bush has 
pushed for, and as the Republicans in their drug plan, cowritten by the 
drug and insurance industries suggest and propose, we have continued to 
``subsidize'' is one word, ``pay off'' is another one; we continue to 
dump more and more millions and tens of millions, hundreds of millions 
of dollars, ultimately billions of dollars we dump into these insurance 
companies, and what are we getting?
  There was a study put out literally today by a group called Families 
USA, a group that represents seniors and especially families around the 
country, a large organization.

                              {time}  2230

  They did a study of the average salary of CEOs for big insurance 
companies, the big HMOs that will benefit from this Medicare 
privatization plan. So understand, President Bush wants seniors out of 
traditional Medicare, put them in these private insurance HMOs. Now the 
average pay for the CEOs of these largest insurance companies, HMOs 
that will be handling Medicare if the Republicans get their way, is 
more than $15 million.
  Now, contrast the $15 million salary, plus I am not even counting 
stock options and all that, but just their base salary, contrast $15 
million the CEO of the insurance companies make with the $130,000, 
which is what the CEO, if you will, Tom Scully of the Center for 
Medicare and Medicaid Services makes, the agency that runs Medicare for 
our government.
  So you have got $15 million on the average for the CEO of the 
insurance companies which will run Medicare if the Republicans get 
their way, versus $130,000 running Medicare the way it is done now, 
traditional Medicare.
  You make one other comparison. You have the insurance companies are 
spending three and four times on administrative expenses more than 
Medicare spends. Medicare's administrative expenses are between 1 and 2 
percent. Insurance company Medicare expenses are between three and four 
times that amount. And then the last comparison if you are in 
traditional Medicare, you stay in Medicare. They do not cut you

[[Page H5918]]

out. They do not throw you off. They do not decide to abandon you. They 
do not take your plan out of the county. If you are in a private 
Medicare HMO, even with these big salaries they are paying the 
executives, maybe because of that, they pull out of a county. They drop 
tens of thousands, hundreds of thousands of seniors out of their plan.
  One CEO in particular, United Health Care, a big insurance company 
HMO, paid Norm Payson, last year he was paid $76 million. And that $76 
million could cover about 30,000 seniors for prescription drugs. So 
look at what you have got. You have got big salaries, high 
administrative expenses, and organizations that will dump seniors out, 
that is, unreliable care; or you have lower salaries, smaller 
bureaucracy, a government program which will never ever dump seniors, 
which will provide reliable care, which will always be there for those 
seniors.
  It is a pretty easy choice. You have the Republican plan, the 
privatized plan; or you have the Democratic plan, traditional Medicare, 
which seniors in this country have used and plans that have obviously 
served seniors well for 38 years.
  Mr. PALLONE. I agree with the gentleman completely. And my only point 
I am trying to stress here tonight and the gentleman certainly made the 
same point is because of the fact that the Republicans want to cater to 
the insurance interests and to the prescription drug pharmaceutical 
companies' interests, they are essentially going to destroy the 
Medicare program, in other words, if you look at the insurance aspect. 
If they keep giving more and more larger subsidies to private insurance 
companies so they will eventually cover senior citizens, there will be 
so little money left in the traditional Medicare program that is 
government run that it will be broke. The government will not be able 
to pay for it anymore.
  So essentially by giving all this money to the private insurance 
companies to get them to try to insure seniors, we will make it much 
more difficult for the traditional Medicare program to operate.
  Let us go to the prescription drugs part. We know there are several 
problems with the Republican plan on prescription drugs. First of all, 
it is not very generous. In other words, you will have to pay a lot 
more than out-of-pocket and not get much of a benefit. In the case of 
the House plan, there is a huge doughnut hole so that if your expenses 
are over $2,000 until maybe $4,000 or $4,500, you get no benefit. In 
the case of the Republican plan in the Senate, it only pays for 50 
percent of your coverage. So seniors are going to have to pay a lot of 
money out of pocket, and they are going to have to get very, very 
little in return. In addition to that, in order to get the plan, they 
have to join an HMO. So, again, here we go back to the same thing again 
which is the Republicans are saying if you wanted to get any kind of 
drug benefit, and it is not even a good benefit, you have to join an 
HMO; and if no HMO wants to join the drug plan, we will give them more 
money so eventually they will.

  But the real problem is we know that unless something is done by the 
Federal Government to control the price of the drugs, the cost of the 
drugs is going to rise and the Federal Government will not be able to 
pay for the program. In other words, I am saying because you do not 
have any way of controlling prices either through negotiation or some 
other means, the cost of prescription drugs is going to continue to go 
up and the drug companies are going to get all of this money.
  But at the same time, the Federal Government is going to have an 
increasing problem paying for it. In other words, if you were able to 
control prices in some way by having the Secretary or the Medicare 
administrator negotiate prices, you would save money for the program 
and you would not have to keep shelling out all these dollars or 
limiting the generosity of the program so that seniors do not get much 
of a benefit. They are going to kill the whole idea of the drug program 
by not having some limitation on price.
  Mr. BROWN of Ohio. It can be so simple. In Canada, what the Canadian 
people do, what the Canadian Government does is they have created a 
small office with a board called the Pricing Board and the Pricing 
Board negotiates on behalf of 29 million Canadians with individual drug 
companies, German companies, French companies, American companies, 
Canadian companies. They negotiate price and then the drug is sold, for 
every drug manufactured, then the drugs are sold to retailers, sold 
wholesale into Canada at those much, much lower prices because they 
have negotiated them on behalf of 29 million Canadians. Then the drug 
stores negotiate, and they end up with much lower prices.
  So it would not be difficult for this Congress to figure out a way, 
there are a dozen ways, the Canadian way is a very simple and effective 
way obviously because you can tell from the prices there, but it is not 
difficult to come up with a way to bring prices down.
  The reason that the Republicans have not chosen any of those methods 
is anybody's guess; but it is hard to believe that they are doing it 
for any other reason than their political closeness, if you will, 
political allegiances to the big drug manufacturers.
  I know it offended our chairman in the markup and it offends some 
Republicans, including the President, to suggest that their behavior on 
this bill is connected to their drug company contributions. But when 
you saw the drug companies spend 80 or $90 million last year, 85 
percent of it going to Republicans, when they spend that kind of money, 
it is hard to believe that the Republicans would do anything without 
the drug companies' approval.
  I would argue the Republicans have not just not done anything without 
drug company approval. I suggest they have turned over the writing of 
the legislation to the drug companies. They could not have done a less 
effective job. They could not have done a worse job of controlling 
prices, of ratcheting drug prices down than this bill does.
  As the gentlewoman from Ohio (Ms. Kaptur) pointed out, as the 
gentleman from New Jersey (Mr. Pallone) pointed out earlier this 
evening, this bill not only does not do anything to try to restrain 
prices, to ratchet prices down; it expressly prohibits the government 
from doing anything to get the price down. It is so logical to say to 
the Secretary of Health and Human Services, all you have to do is 
negotiate on behalf of U.S. consumers, Medicare beneficiaries or the 
entire consuming public of all ages. You simply need to negotiate 
price.
  Another way we could do it is say that Medicare should pay no more 
than the Canadian price or the average price of the G-7 nations, the 
largest economies in the world, whatever price they are paying. There 
is a lot of ways to do it; but the way not to do it is the Republican 
way of doing nothing and actually prohibiting the government from doing 
anything from getting prices down. The higher prices are hurting 
seniors individually, hurting American business, and American 
competitiveness in this economy that continues to drift, continues to 
stagnate; and it obviously is hurting U.S. taxpayers because we are 
paying too much for drugs.
  I yield back because I think the gentleman wants to share with other 
Members of the House the language that is actually in the Republican 
drug bill.
  Mr. PALLONE. Absolutely. And I mentioned this noninterference clause, 
and I will mention it again. Before I do that, just quickly, I know we 
have spent a lot of time tonight, not only us but our Democratic 
colleagues earlier this evening, talking about what is wrong with the 
Republican plan. Maybe we should quickly explain what our alternative 
is, and the gentleman talked about it in terms of the price.
  We are saying forget about all this nonsense of changing Medicare and 
privatizing Medicare. Forget about all this nonsense about having to go 
to an HMO to get your prescription drugs. Just take the same Medicare 
program that has been so successful and add a prescription drug benefit 
in the same way that we added a few years ago a program under part B 
that pays for your doctor bills.
  In other words, without getting too complicated, Medicare part A pays 
for your hospitalization. Medicare part B is a program where you pay a 
certain amount of money per month for a premium, and when you go to 
your doctor there is a $100 deductible for the whole

[[Page H5919]]

year, and 80 percent of the costs of your doctor bill is paid for by 
the Federal Government and 20 percent is paid for by you. Very simple 
program. You pay a small premium, 80 percent of the costs by the 
Federal Government, 20 percent co-pay by you, a $100 deductible which 
is not much. You might go through that on your first doctor visit.
  What we are saying is do the same thing with the prescription drug 
benefit. Add another part to Medicare, charge $25 a month for a 
premium, have a $100 deductible for the first $100 drug expense you pay 
in the course of the year; and then after that, 80 percent of the cost 
of your prescription drugs are paid for by the Federal Government and 
20 percent are paid for by you up to a certain level, 3, $4,000 
catastrophic when it is all paid for by the Federal Government.
  But most important, what we put in the Democratic alternative which 
is what my colleague from Ohio mentioned, is we have mandated that the 
Secretary of Health and Human Services or the Medicare administrator 
has to negotiate lower prices because now that person has 40 million 
seniors that they can negotiate in bulk as the gentlewoman from Ohio 
(Ms. Kaptur) said and try to get a lower price.
  Now, if you do that, you save so much money that you can afford to 
essentially have a program that covers all seniors and gives them a 
guaranteed benefit and does not have any doughnut hole or time, if you 
will, when they are not covered. I used this chart during the Committee 
on Commerce of a dunking doughnut, and I said the GOP is dunking 
seniors because one out of every two seniors is in the hole. I guess it 
is a cute way to say that under the House Republican plan one out of 
two seniors is going to be in a situation where at some point they are 
going to have to pay 100 percent of their drug costs because the 
Republicans say that up to $2,000 we will pay a certain percent, but 
after that we will not, and so for one out of two seniors they will be 
in a situation where they do not have any coverage during the course of 
the year.
  Mr. BROWN of Ohio. That is exactly my argument. Under the Republican 
plan, you just simply do the math, and we know that seniors around the 
country will do the math. I hope they do the math before tomorrow when 
we vote on this bill because once they have, they will see they are not 
getting very much in this benefit. For a senior in the United States 
under the Republican plan who has $5,000 in drug costs, the government 
will only pick up $1,000. Four thousand of that will come from out-of-
pocket costs. So $5,000 drug costs, saving only 20 percent of that. The 
government will only pay 20 percent. The senior will pay $4,000 out-of-
pocket costs. What is so disingenuous about the Republican plan is that 
it is hard to figure out because they charge a premium. They say it 
might be $35, but the only time it has ever been tried it was $85 a 
month. Then there is a $250 deductible. Then they pay 20 percent of the 
first $2,000, but after $2,000 they pay zero percent. The government 
does of the next $2,100. It is very complicated.
  That is what you are talking about. The Democratic plan operates the 
same way traditional Medicare does. It is a simple $35 premium, $250 
deductible, 20 percent co-pay, and then 100 percent coverage by the 
government of catastrophic coverage if you have huge drug bills.
  It is very simple by the way the Democrats do it because it operates 
the same way that traditional Medicare does. Seniors know how Medicare 
operates. The Republican plan is so confusing, so Rube Goldberg-like, 
so complex, so difficult to understand, I challenge my Republican 
friends on the other side of the aisle to try to explain it. I do not 
think anybody can explain it very well. But they will have to explain 
it when seniors see, if this bill passes, seniors see how difficult it 
is to understand that.
  The point the gentleman made too is that not only is the Democratic 
plan simple and the Republican plan a Rube Goldberg, complex, almost 
unfathomable kind of plan, but the Republican plan does nothing to keep 
prices down. And the Democratic plan gives the Secretary of Health and 
Human Services the right to negotiate and bring prices down the way the 
Canadians do and to reimport drugs, to bring drugs in from Canada if 
they are not cheap enough in the United States.

                              {time}  2245

  And that simply makes all the difference in the world; that our plan 
is simple, and our plan will bring drug prices down, and our plan is a 
generous, adequate benefit for America's seniors.
  Mr. PALLONE. And again, because the gentleman and I feel very 
strongly about the fact that we feel the Republicans are just catering 
to the insurance companies and to the prescription drug companies, the 
very reason why the Republican plan, in my opinion, is so complicated 
and ultimately, I think, breaks Medicare and destroys Medicare is 
because they are going out of their way to try to cater to these two 
special interests. Because to the extent that they feel the necessity 
of privatizing and having seniors eventually buy private health 
insurance, they are essentially breaking the system.
  And in the same way because they refuse to have any kind of 
negotiated price and bring prices down, they are making the 
prescription drug program essentially not a generous plan because what 
they want to do essentially is have more seniors buy drugs at higher 
prices but not allow them to have a plan that is really something that 
is going to be meaningful for them and help them.
  I feel strongly what is going to happen if this Republican plan were 
to ever become law, and hopefully it does not, but probably what would 
happen is most seniors would not opt for it because they would find it 
is not worth having. And just to illustrate that, I think pretty 
dramatically, the Consumers Union put out a report on June 17, just a 
week ago, that was entitled ``Skimpy Benefits and Unchecked 
Expenditures. Medicare prescription drug bills fail to offer adequate 
protections for seniors and peoples with disabilities.'' And in talking 
about how skimpy these benefits were and why most seniors probably 
would not opt for them, they gave some examples which I thought were 
pretty significant.
  Specifically, we found, the report says, that the average Medicare 
beneficiary, without prescription drug coverage, spending $2,318 in 
this year, 2003, would find that his or her out-of-pocket costs for 
prescription drugs, including premium deductible copayments and the 
donut, are higher in 2007 despite the new prescription drug benefit, 
and would total $2,954 in real 2003 dollars.
  So what they are saying is for the average Medicare beneficiary, who 
spends about $2,300 a year in out-of-pocket costs, if they had to pay 
the premium and they were under the deductible and the copayments in 
the donut hole that the Republicans here in the House have proposed, 
they would actually end up spending more money out-of-pocket with the 
Republican plan than they are spending now. So why in the world would 
anybody buy it?
  What is going to happen here is that the senior citizens are going to 
realize that this is not even worth having, and they are going to vote 
with their feet. They are not even going to take advantage of the plan 
because they are going to realize that it is worthless.
  Here is another example. A Medicare beneficiary with the relatively 
low expenditures in 2003 of $500, in other words these are the seniors 
that do not spend much for drugs, maybe a third of the senior 
population, would find his or her out-of-pocket payments for 
prescription drugs are $790 in 2007. So, again, if they do not spend 
much money on prescription drugs, they would have absolutely no reason 
to opt for this Republican plan.
  Then they go to a person in the top third of prescription drug 
spending with costs of $3,000 in 2003 would find his or her out-of-
pocket costs reaching $4,000 in 2007.
  I do not want to go on and on here with this, but the only point I 
want to make is that it is such a hoax. Because we can talk here all 
night about why they are privatizing and why that is bad or why they 
have the donut hole or why they are not doing anything about price, but 
the bottom line is nobody is even going to want this plan. Why in the 
world would they even buy it when it is going to cost them more if they 
have it, for most seniors, than if they do not?

[[Page H5920]]

  That is what all the senior groups are pointing out. This is a huge 
hoax because most seniors will calculate and figure out it is not even 
worth having this plan. That, I think, is the worst aspect of all. 
Because there is all this hype, with the President getting on TV and 
saying we are going to do this plan and we are going to provide 
prescription drugs, and it is not anything anybody is even going to 
want because it is not worth having.
  Mr. BROWN of Ohio. Mr. Speaker, if the gentleman will yield, the 
President has been bringing Members to the White House today and 
lobbying them, and I also know the President this week has raised a lot 
of drug company money and insurance company money. The President is 
using the power of the Presidency trying to get people to pass this. 
And from the reports coming out of the meetings from Members whom I 
have talked to, in both parties, the President is not talking about the 
details of the bill. He is just saying you have to do this for me. We 
need a prescription drug benefit. Seniors deserve it. But he is not 
doing the math for them.
  If every Member of Congress tonight, tomorrow morning, before we vote 
on this tomorrow during the day would sit down and calculate, listen to 
the discussions like this and calculate individual numbers about what 
seniors are going to get, and then would look at what drug prices are, 
as the gentlewoman from Ohio (Ms. Kaptur) pointed out, what drug prices 
are in Canada, France, and Germany, what they are in the United States, 
and how this bill does nothing about that, and then look at how this 
bill privatizes Medicare in 2010, I think Members, particularly if they 
began to listen to what people at home are saying, would have a very 
different take on this bill, no matter what the President said, no 
matter how many campaign contributors that Republican leadership and 
the President of the United States want to honor by passing this 
legislation.
  Mr. PALLONE. Mr. Speaker, I yield to the gentlewoman from Ohio.
  Ms. KAPTUR. Mr. Speaker, I would just like to thank my very able 
colleagues, the gentleman from New Jersey (Mr. Pallone), who led this 
fight in the committee, and also the gentleman from Ohio (Mr. Brown), 
who has helped turn this into a major national issue, finally, as it 
should be. The sad fact is that here in the House the bill that is 
going to be produced is, I suppose you could say is a mouse. It will 
not be a lion that roars for all Americans seniors.
  If you earn $8,000 a year on Social Security, the Republican plan 
will cause you to pay whatever is left over after $2,000 of expenses up 
to the level of, I think it is over $3,500. You are not covered. Where 
are you going to get that kind of money if you only earn $8,000 a year 
on Social Security?
  The amendment I am waiting here to offer, it is now 11 p.m. at night 
here in Washington, would require the executive branch to negotiate 
price across the government for Medicare part D, in the same way as we 
negotiate for the Department of Veterans Affairs and the Department of 
Defense. They call it the FSS negotiated price. And I will just go 
through a couple of these drugs here, but the main point is that the 
Republican radical right bill forbids negotiated pricing in Medicare. 
It actually, in title VIII of the bill, forbids negotiated pricing, 
which we already do in the VA, in the Department of Veterans Affairs.
  Let us go through a couple of the costs. If you look at a drug like 
K-Dur 20, which helps if you have low potassium levels, U.S. retail 
price for that is $55.99, the Canadian price is $29, and the price that 
is negotiated through the Department of Veterans Affairs is $25.58. A 
negotiated price, because you have group buying, reduces the cost to 
all.
  To send an individual senior out there in their own little canoe in a 
very big ocean, they have very little consumer power. Only with group 
buying, as we do through the Department of Veterans Affairs, do you 
really get the same kind of prices that the Canadians have. Group 
buying. Yet the Republican bill denies that negotiated price.
  Another drug. If you look at Prozac, for depression, U.S. retail 
price over $300. The VA negotiated price $186.98. It is obvious. It is 
obvious, is it not, that a negotiated pricing is what should be 
embedded in the bill? But it is not in there. In fact, it is forbidden.
  If we really want to understand why, and the gentleman from Ohio (Mr. 
Brown) and the gentleman from New Jersey (Mr. Pallone) have really 
become experts at identifying what is going on around this Capitol, we 
should take a look at the contributions of the major pharmaceutical 
companies. Take a look at a company like Bristol-Myers Squibb, who gave 
over a $1.5 million in the year 2002 for lobbying Members of Congress. 
Eighty-three percent of those funds went to the Republican side of the 
aisle. Millions and millions of dollars from companies that make 
billions by overpricing the American consumer. It is very clear that 
they have at least six lobbyists here for every one of us.

  So here we stand at a few minutes to midnight waiting for the 
Republicans to produce a bill. Nobody knows where they are. The doors 
are closed. Such an important bill that will serve our people, 
hopefully serve our people, for generations to come. We cannot even 
find the bill. What are they doing? Where are they?
  I would say to the majority leader, the gentleman from Texas (Mr. 
DeLay), this is no way to run the country. You should have had this 
bill on the floor 2 weeks ago. We should have gone through every line 
so every Member here would understand what is in it. But rather than 
that, you are having your fund-raisers. And, in fact, Pfizer Company 
just contributed $200,000. That was the price of one of the big seats 
at the roundtable dinner President Bush just had, and they were able to 
contribute. You think there is no connection? We were not born 
yesterday, were we?
  So we have a bill that forbids negotiated pricing, even though we 
know that is one of the few protections we can offer seniors. The 
Democratic bill provides a real defined benefit. Every senior 
qualifies. It has a $25 premium per month. It does not force you to pay 
those high costs, over $2,000. It has negotiated pricing. It is for 
everyone. And it lets you keep your doctor. It lets you have negotiated 
pricing, and it does not make you go into an HMO, a Medicare HMO, which 
have all failed in most places in the country. And that is what the 
Republican bill does, it tries to privatize that and put you out of the 
overall Medicare system.
  So I just want to thank my colleagues for being here tonight and 
allowing me to share in this special order, and thank you both for your 
royal, royal fight to in order to get fair and affordable prescription 
drug coverage for all of our seniors.
  Mr. BROWN of Ohio. If the gentleman will yield for just a moment, and 
I know the gentleman from Connecticut (Mr. Larson) is here, but the 
gentlewoman from Ohio (Ms. Kaptur) just talked about privatization, as 
we have. We know that idealogically, in addition to the drug company 
and the insurance industry contributions to the Republicans and how 
that seems to affect their thinking, we also know that some Republicans 
just do not like Medicare. There is a history of it.
  Donald Rumsfeld, Gerald Ford, and Bob Dole voted against it when it 
was created 38 years ago. Newt Gingrich tried to cut it so he would 
have money for his tax cuts. Same old story. But the gentleman from 
California (Mr. Thomas), who is the number one point man in this entire 
Congress to privatize Medicare, he said this morning, and the gentleman 
from California (Mr. Thomas) is the Republican chairman of the 
Committee on Ways and Means, he said, ``To those who say that the bill 
would end Medicare as we know it, our answer is, we certainly hope so. 
Old-fashioned Medicare isn't very good.''
  That is like Newt Gingrich saying Medicare would wither on the vine 
and Bob Dole, just a few years ago, before he ran for President, saying 
I fought the fight to try to stop Medicare from being created. These 
guys do not like Medicare.
  Mr. PALLONE. I just want to say, they operate on the premise, and 
they keep saying it over and over again, I have heard it on the other 
side in the well, on the Republican side, that Medicare is broke, 
Medicare needs to be fixed, and Medicare does not work. It is not true. 
They say those things in order to set up Medicare to be changed 
significantly.
  The bottom line is my seniors tell me Medicare works. Medicare is 
good.

[[Page H5921]]

That is what the gentleman from California (Mr. Thomas) is essentially 
saying, keep this line up that Medicare is bad and broken, then you can 
make all these changes because you say you are going to improve. But it 
is not being improved. It is actually being destroyed by what they are 
trying to do.
  Mr. Speaker, I now yield to the gentleman from Connecticut (Mr. 
Larson).
  Mr. LARSON of Connecticut. I thank the gentleman from New Jersey, Mr. 
Speaker, and I am proud to join my colleagues from Ohio, the 
gentlewoman and the gentleman from the Buckeye State, as we talk this 
evening. And as my colleagues have eloquently expressed, I want to 
associate myself with their remarks.
  I think Roosevelt said it best of our colleagues on the other side of 
the aisle: The Republicans seem frozen, frozen in the ice of their own 
indifference. Their indifference to what this proposal will mean to the 
elderly. The hypocrisy of having this much-needed benefit not take 
effect until 2006 shows the indifference of Members having to return to 
their districts and go to senior centers and telling them that the 
much-waited benefit that they so desperately need will not be there for 
another 3 years. We can afford trillions in tax cuts, but we cannot 
afford to put into effect a program that will benefit them.

                              {time}  2300

  Mr. Speaker, as the gentleman has pointed out this evening, the most 
galling thing for seniors and for Members of Congress, several on the 
other side of the aisle who have recognized the importance of using the 
full faith and credit of the United States Government to leverage the 
cost of prescription drugs, at the end of the day, this is a cost 
issue. When we think about it, what we have done is asked our senior 
citizens to subsidize not only all the private plans in the United 
States of America and all the programs that are available to Federal 
employees, but basically all the programs available around the globe 
because pharmaceutical companies have stated that while those prices 
can be fixed, the only prices in the industrialized world that are not 
are those that are imposed on the backs of those who can least afford 
them, the seniors of the United States.
  All this lip service to the Greatest Generation ever is dashed when 
we talk about the hypocrisy of making a program available 3 years from 
now. For someone in my district who has to make the choice between the 
food they put on their table, heating and cooling their homes, and the 
prescription drugs that they need to take, we have turned them into 
refugees from their own health care system. They have to board buses 
and go to Canada in order to get the drugs at a price that they can 
afford. We are a better Nation than that. The indifference of the other 
party to the needs of these elderly, the indifference in their 
proposal.
  I come from the insurance capital of the world. The HMOs are not 
going to cover a program that is actuarially infeasible to make a 
profit on. To have a program that is full of the so-called doughnut 
where we know that the elderly will fall into this hole, and the 
programs could be pulled at any moment with no specific guarantee, none 
of the entitlements that are under the Medicare system. And the further 
indifference, to try to delude the elderly into thinking their plan 
comes under Medicare by creating a new subsection which basically 
defers responsibility to the future and to companies that are unwilling 
to write the prescription drug benefits.
  I applaud the gentleman for being down here night after night. When I 
go to my district, my constituents ask why are the Democrats not saying 
anything? And as the gentlewoman from Ohio said, it is because all of 
the deliberations are taking place behind closed doors, and what can 
and cannot be said will be determined after midnight upstairs on the 
third floor with no member of the press present, with no C-SPAN cameras 
covering what goes on in the Committee on Rules, and that will 
ultimately determine the fate of seniors and whether or not Democrats 
will be able to put their proposals side by side and have them voted up 
or down.
  I thank the gentleman for waging this fight. I fear we will have to 
take this fight to the streets in order to get our point across.
  Mr. PALLONE. Mr. Speaker, I yield to the gentlewoman from Ohio (Ms. 
Kaptur).
  Ms. KAPTUR. Mr. Speaker, I associate myself with the remarks of the 
gentleman from Connecticut (Mr. Larson) and to say it is important to 
remind ourselves why Medicare was first set up. The gentleman talked 
about actuarial soundness.
  We have Medicare because the private market will not serve this 
segment of American society. That is why Lyndon Johnson worked so hard 
after 50 years of Democratic effort to enact Medicare in this Congress. 
To say to seniors you can go out in a private HMO Medicare, we will 
call it Medicare but it is really not Medicare because it is not 
guaranteed, all of the HMOs dealing with Medicare in my region have 
collapsed.
  They are not going to be there. It is just like physicians trying to 
take assignment. How many physicians do not take assignment even today? 
Do we think that without Medicare we are going to be able to serve this 
population? We have to have the strength of group buying and of the 
Medicare program nationally for this drug benefit or, indeed, for all 
seniors across this country to be helped.
  I want to thank these fine Members of Congress, but Americans first, 
who are here tonight, to be voices for those who expect us to do the 
job for 40 million people who cannot be in this Chamber tonight; and I 
am proud to be here a few minutes before midnight with the gentleman 
from New Jersey (Mr. Pallone), the gentleman from Connecticut (Mr. 
Larson), and the gentleman from Ohio (Mr. Brown), who understand the 
Johnson-Roosevelt legacy and refused to cower before this radical right 
wing which has taken control of this Chamber.
  Mr. PALLONE. Mr. Speaker, I want to say I think all of us feel very 
strongly that we want to look at this practically. We are not 
ideologically driven. We are not driven by campaign contributions. We 
just feel it is time to add a prescription drug benefit to Medicare; 
and we feel strongly that Medicare works, it is a good program. It is 
not something that needs to be scrapped because the seniors are not 
telling us they do not like Medicare.
  The simple thing the Democrats say is we need a prescription drug 
benefit. It is time for that. Let us simply add it to the existing 
Medicare program. Let us set it up like we do with part B and have a 
low premium and a low deductible and 80 percent of the cost paid for by 
the Federal Government. And as the gentlewoman from Ohio (Ms. Kaptur) 
said, we have to have negotiated prices because otherwise the cost of 
the program is going to become so prohibitive the Federal Government 
would not be able to pay for it eventually.
  Ms. KAPTUR. It will just become an entitlement program for all of 
these pharmaceutical companies to load up and raid the pockets of 
seniors across this country, bankrupt them, really.
  Mr. PALLONE. Exactly. We are going to have the debate tomorrow, I 
hope. I just do not understand why something which is so simple is not 
understood by our Republican colleagues, and I come to the conclusion 
that they are in the pocket of the special interests, whether it is the 
insurance companies or the pharmaceutical companies. Otherwise it does 
not make sense.
  Mr. BROWN of Ohio. Mr. Speaker, I would add it is pretty clear there 
are two things going on. One is the huge contributions from drug and 
insurance interests and connections between that and the Republican 
plan, essentially since it is pretty clear those interest groups wrote 
the plan.
  Second, they just do not like Medicare. There is clear evidence of a 
38-year history of that. But the proof is in the pudding. One, it is 
what the legislation looks like. The second way the proof is in the 
pudding is that this debate is held in the middle of the night. The 
Committee on Rules will meet later this evening. It is already 5 after 
11 in Washington. The Committee on Rules will meet behind closed doors 
with no C-SPAN and no reporters basically there to make these 
decisions.
  And while the Senate is debating their plan, which is moving toward 
some bipartisanship, for several days, we will have a debate tomorrow 
of only a few hours. That will be the end of it. The Republicans do not 
want the public to learn about this. That is why it

[[Page H5922]]

is so important that our colleagues speak out and make sure that people 
understand the difference between the simple Democratic plan that 
adequately covers seniors and ratchets down the price of prescription 
drugs, and the Republican confusing plan which gives very little 
benefit, is written by the drug companies, pushes seniors out of 
traditional Medicare into private plans, and does nothing about getting 
prices down.
  Mr. PALLONE. Mr. Speaker, in closing, I thank the Members, and we 
will go onward to the Committee on Rules. Let us hope that they 
actually meet sometime before midnight. We will certainly carry this 
forward tomorrow because we are not going to stop until we have the 
opportunity to have a really good Medicare prescription drug plan.

                          ____________________