[Congressional Record Volume 149, Number 96 (Thursday, June 26, 2003)]
[Senate]
[Pages S8647-S8678]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page S8647]]

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                                 Senate

   PRESCRIPTION DRUG AND MEDICARE IMPROVEMENT ACT OF 2003--Continued


  Amendments Nos. 1014, 1015, 1059, 1106, 1086, 1067, 1033, 935, 959, 
                          1038, 1095, En Bloc

  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the pending 
amendments be temporarily set aside and that the following amendments 
be called up en bloc: No. 1014, by Senator Bond, study of pharmacy 
services; No. 1015, by Senator Dodd, study of blind and disabled; No. 
1059, by Senator Hatch, HHS review; No. 1106, by Senator Hatch, 
citizens councils; No. 1086, by Senator Murkowski, pharmacy access; No. 
1067, by Senator Lincoln, kidney disease; No. 1033, by Senator 
Mikulski, municipal health services; No. 935, by Senator Lincoln, 
geriatric GME; No. 959, by Senator Lincoln, physical therapy demo; No. 
1038, by Senator Jeffords, critical access hospital; No. 1095, by 
Senator Johnson, therapy management.
  I further ask unanimous consent that these amendments be agreed to en 
bloc and the motion to reconsider be laid upon the table en bloc.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The amendments were agreed to.


                       Vote on Amendment No. 1011

  The PRESIDING OFFICER. Under the previous order, the question is on 
agreeing to the Sessions amendment No. 1011.
  Mr. BAUCUS. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the following 
two votes be 10-minute votes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  Mr. REID. I announce that the Senator from Massachusetts (Mr. Kerry) 
and the Senator from Connecticut (Mr. Lieberman) are necessarily 
absent.
  I further announce that, if present and voting, the Senator from 
Massachusetts (Mr. Kerry) would vote ``nay''.
  The PRESIDING OFFICER (Mr. Cornyn). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 33, nays 65, as follows:

                      [Rollcall Vote No. 256 Leg.]

                                YEAS--33

     Allard
     Allen
     Bennett
     Bunning
     Burns
     Byrd
     Campbell
     Chambliss
     Cornyn
     Craig
     Crapo
     Dole
     Ensign
     Enzi
     Frist
     Graham (SC)
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Kyl
     Lott
     McConnell
     Murkowski
     Nickles
     Santorum
     Sessions
     Shelby
     Stevens
     Sununu
     Talent
     Thomas

                                NAYS--65

     Akaka
     Alexander
     Baucus
     Bayh
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Cantwell
     Carper
     Chafee
     Clinton
     Cochran
     Coleman
     Collins
     Conrad
     Corzine
     Daschle
     Dayton
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Fitzgerald
     Graham (FL)
     Grassley
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lincoln
     Lugar
     McCain
     Mikulski
     Miller
     Murray
     Nelson (FL)
     Nelson (NE)
     Pryor
     Reed
     Reid
     Roberts
     Rockefeller
     Sarbanes
     Schumer
     Smith
     Snowe
     Specter
     Stabenow
     Voinovich
     Warner
     Wyden

                             NOT VOTING--2

     Kerry
     Lieberman
       
  The amendment (No. 1011) was rejected.
  Mr. GRASSLEY. I move to reconsider the vote.
  Mr. GRAHAM of Florida. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                       Amendment 975, as Modified

  The PRESIDING OFFICER. There are now 2 minutes evenly divided prior 
to the next vote.
  Mr. ROCKEFELLER. Mr. President, this next amendment has to do with 
dual eligibility. Never in the history of Medicare have we precluded 
Medicare beneficiaries from being Medicare beneficiaries. In the 
underlying bill, for the very first time, we do.
  The people I refer to are called dual eligibles. Their average income 
is $6,500 a year. They tend to be over 85, single women, and very sick. 
They are on Medicaid. Medicaid, however, is optional according to the 
States. We know the States to be broke. The fastest growing expense 
they face is Medicaid. So they are cutting the benefits. They are 
cutting Medicaid. They will continue to do that. The States have no 
choice but to cut Medicaid. Some will do it because they wish to, all 
will do it because they have to.
  When that possibility is gone, there is no place for these poorest of 
the poor to go. They are then, under the underlying bill, precluded 
from being Medicare beneficiaries. That is wrong. In my budget-neutral 
amendment I attempt to fix it. I hope my colleagues will support the 
amendment.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Two things for my colleagues to consider during the 
consideration of how to vote on this amendment: No. 1 is the money that 
is available to pay for his amendment, an offset, is the very same 
amount of money we, Senator Baucus and I, are using to offset the cost 
of a lot of demonstration projects that colleagues have asked us to do, 
a lot of minor amendments they have asked us to do. If that money is 
not there, there cannot be consideration given. That is not a threat; 
it is just a practical aspect of how the budget law works.
  Secondly, remember, these dual eligibles are being taken care of very 
well

[[Page S8648]]

in our underlying legislation. The point being, they will not be taken 
care of better. It is just it is going to cost the Federal Government 
more.
  I hope you will take those things into consideration and vote down 
this amendment.
  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. 975, as modified. The 
clerk will call the roll.
  Mr. REID. I announce that the Senator from Massachusetts (Mr. Kerry) 
and the Senator from Connecticut (Mr. Lieberman) are necessarily 
absent.
  I further announce that, if present and voting, the Senator from 
Massachusetts (Mr. Kerry) would vote ``yea.''
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 47, nays 51, as follows:

                      [Rollcall Vote No. 257 Leg.]

                                YEAS--47

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carper
     Clinton
     Collins
     Conrad
     Corzine
     Daschle
     Dayton
     DeWine
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham (FL)
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Pryor
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Snowe
     Specter
     Stabenow
     Voinovich
     Wyden

                                NAYS--51

     Alexander
     Allard
     Allen
     Baucus
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Chambliss
     Cochran
     Coleman
     Cornyn
     Craig
     Crapo
     Dole
     Domenici
     Ensign
     Enzi
     Fitzgerald
     Frist
     Graham (SC)
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Stevens
     Sununu
     Talent
     Thomas
     Warner

                             NOT VOTING--2

     Kerry
     Lieberman
       
  The amendment (No. 975), as modified, was rejected.
  Mr. GRASSLEY. Mr. President, I move to reconsider the vote.
  Mr. CRAIG. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 1066

  The PRESIDING OFFICER. There are now 2 minutes equally divided on the 
Bingaman amendment.
  Mr. BINGAMAN. Mr. President, the bill before us has, in my view, a 
significant flaw in it. We are holding out this prescription drug 
benefit. But the bill we are considering here says if you want to take 
advantage of the benefit, you are thereby prohibited from buying any 
supplemental insurance to cover prescription drugs. Today, people are 
able to buy Medigap policies that cover prescription drugs. In the 
future they will not be able to, if this bill becomes law as it is.
  My amendment would merely give people the option of buying a 
prescription drug supplemental policy if they chose to do so. It 
directs that two policies be developed that would accomplish that.
  It is supported by the insurance industry. It is supported by the 
Consumers Union. Seniors would like to have this opportunity to reduce 
their risk of substantial out-of-pocket costs.
  We ought to provide this benefit.
  Mr. GRASSLEY. Mr. President, first of all, let me make very clear 
that we know that Medigap is very important as part of Medicare. We 
leave that untouched as it relates to 1965 model Medicare. In fact, 
many of my Iowa constituents want to keep that. But we as a policy 
matter have made it a very conscious choice to prevent the sale of 
wraparound Medigap plans for the new Part D drug benefit. This policy 
makes sense considering drug plans could be different everywhere else 
in the United States.
  It is impossible to standardize Medigap policies like we did about 15 
years ago so that seniors don't get ripped off. But the Congressional 
Budget Office tells us this new Medigap plan that is before us now will 
increase the cost of our bill. The cost of this amendment is $1.5 
billion over 10 years, according to the Congressional Budget Office. 
That is because of the increased utilization that comes from having 
additional insurance.
  I share the Senator's concern with gaps in coverage. I wish we didn't 
have any.
  But we believe participating drug plans--especially drug plans 
delivered by PPOs--will offer benefits in a comprehensive fashion, 
lessening the need for expensive supplemental policies.
  I urge my colleagues to reject this amendment.
  Mr. BAUCUS. Mr. President, 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 the amendment. The clerk will call the 
roll.
  The legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Massachusetts (Mr. Kerry) 
and the Senator from Connecticut (Mr. Lieberman) are necessarily 
absent.
  I further announce that, if present and voting, the Senator from 
Massachusetts (Mr. Kerry) would vote ``yea.''
  The PRESIDING OFFICER (Mr. Chambliss). Are there any other Senators 
in the Chamber desiring to vote?
  The result was announced--yeas 43, nays 55, as follows:

                      [Rollcall Vote No. 258 Leg.]

                                YEAS--43

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carper
     Clinton
     Collins
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham (FL)
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Mikulski
     Murray
     Nelson (FL)
     Nelson (NE)
     Pryor
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Wyden

                                NAYS--55

     Alexander
     Allard
     Allen
     Baucus
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Chambliss
     Cochran
     Coleman
     Cornyn
     Craig
     Crapo
     DeWine
     Dole
     Domenici
     Ensign
     Enzi
     Fitzgerald
     Frist
     Graham (SC)
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Sununu
     Talent
     Thomas
     Voinovich
     Warner

                             NOT VOTING--2

     Kerry
     Lieberman
       
  The amendment (No. 1066) was rejected.
  Mr. GRASSLEY. Mr. President, I move to reconsider the vote and I move 
to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. FRIST. Mr. President, very briefly, it is almost 6:25, and we 
have just completed our 12th rollcall vote. We still have a fair amount 
of work to do. But in discussion with the managers of the bill and the 
Democratic leader, it is our intent to finish this bill tonight. I 
optimistically think we can finish in 2 or 3 hours, or this bill can go 
until midnight, or 1, or 2, or 3 in the morning.
  Part of the problem we are having now is that people are still coming 
up and submitting amendments, and because we have been working in good 
faith over the last 2 weeks in the amendment process, we have not set 
strict filing deadlines.
  Now that we are in the last several hours of consideration, I want to 
make the case and, in fact, plead with my colleagues that any 
amendments that need to be considered--let us hear about them. Let the 
managers hear about them in the next 15 minutes. That is the only way 
we can get a list to deal with them, and we will have rollcall votes on 
those that are necessary.
  There will be a certain number of those amendments looked at by the 
managers. The ones I encourage you to bring to them for consideration 
to be accepted need to be budget neutral and have bipartisan support, 
and they need to be scored by the CBO. People keep bringing amendments 
forward now. I

[[Page S8649]]

will ask--and then I want the Democratic leader to comment--that 
people, in the next 15 minutes or so, make sure the managers have the 
amendments. That way we can move ahead. We will finish tonight.
  The PRESIDING OFFICER. The Democratic leader is recognized.
  Mr. DASCHLE. Mr. President, I hope we can do as the majority leader 
has suggested. We have had a good debate. I think this has been an 
excellent debate. The managers deserve credit for the way they have 
managed the legislation. We have had 12 rollcall votes today already. 
It is likely that we will have 16 or 17 by the end of the day, if not 
more; we had 9 yesterday. More than 50 amendments have now been 
considered.
  I think it is time that we bring the debate to a close. There will be 
many more opportunities to talk about prescription drugs and health 
care with the array of legislative challenges that we face relating to 
health. I think we have been able to do a good deal, and I hope we can 
get cooperation now on both sides of the aisle. I hope the majority 
leader will hold to the commitment that we finish tonight. That would 
accommodate people's travel schedules tomorrow.
  If we are going to do that--it is now 6:30--over the course of the 
next 4 or 5 hours, we have a lot of work to do even with what we know 
we have to vote on. I hope everybody will cooperate so we can minimize 
the time required to consider amendments. I hope those who may have 
remarks to make will perhaps hold off until after final passage and 
make those remarks after final passage. That would accommodate our time 
as well.
  We will work with the majority leader to see if we can accomplish the 
schedule he has laid out. I hope we can do so well before the 
bewitching hour.
  I yield the floor.
  Mr. FRIST. Mr. President, when we finish this bill tonight, my 
expectation would be that we would not have votes tomorrow. That is 
assuming we are going to finish. I encourage anyone who has an 
amendment that needs to be considered to get it to the managers within 
the next 15 minutes. If we can do that, we can finish tonight and we 
will be able to consider each of those amendments, as the Democratic 
leader said.
  I know some people want to talk for an hour but I ask Senators to 
keep their comments to a few minutes and we can vote throughout the 
night. We will have the opportunity after final passage tonight, or 
through tomorrow, to make statements--for those who wish to continue 
the debate.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. Mr. President, I rise to address this bill. I had hoped to 
do it earlier in the day but, unfortunately, the managers of the bill 
were unable to work the time in. I certainly regret taking time out of 
the schedule, which is obviously crowded. I do think it is important to 
speak up on the issue of this piece of legislation.
  This is the most significant piece of spending legislation, and maybe 
even public policy legislation, outside of an international issue, that 
I expect I will vote on in my tenure in the Senate. Ironically, when I 
ran for this job, after serving as Governor of New Hampshire, one of 
the reasons I sought the job and one of the reasons I wanted to pursue 
a term in the Senate was that I was concerned about entitlement 
spending. In fact, during my first few years, I aggressively pursued 
setting up an entitlement commission to address entitlement spending, 
which I sponsored with Senator Kempthorne, who came in with me that 
year, and Senator Coverdell and Senator Bennett, all of whom came in 
the year I was elected, in a bill to end unfunded mandates, many of 
which were entitlement oriented.
  I tried to lead an effort in passing legislation to address reform of 
the Social Security system. I consider that to be a huge entitlement 
that we confront. My basic reason for seeking entitlement reform and 
responsibility was that I was concerned that it not only is what is 
driving the deficits of our country--which they continue to do--but, 
more importantly, as the demographics shifted in the Nation and we saw 
the baby boom generation, which represents a huge population, moving 
toward retirement, we, as a nation, were going to be placing on our 
children and our children's children an inordinate burden in the area 
of taxes in order to support the older generation--my generation--which 
would be retiring. It is because all the major programs, whether they 
are Social Security or Medicare, are built on the theory that there is 
a pyramid out there, that there will always be more people working and 
a lot more people working than those people who are taking their 
retirement benefits out of the system. That, of course, is the way it 
began.

  Back in 1950, there were 12.5 people working for every person who 
retired under Social Security. Today, we are down to 3.5 people working 
for every 1 person retired on Social Security and under Medicare, and 
that is stressing the system.
  Unfortunately, when we hit the retirement situation for the baby boom 
generation, the largest generation in the history of our Nation, the 
generation born between 1946 and 1955, we go down to two people working 
for every one person retired. We go from a pyramid to basically a 
rectangle, and the result is that we will end up putting an inordinate 
amount of stress on those people who are working to support those folks 
who are retired. So we need to address thoughtfully any entitlement 
expansion, to say nothing of the entitlements that are already on the 
books.
  That is what brings me to the Chamber today to address this 
legislation because I believe very strongly that needy senior citizens 
should have a drug benefit. Clearly, prescription drugs have become the 
new way to treat disease and maintain public health in our Nation. We 
have been able to move from a system where you had to have invasive 
activity in the health care system, where you had to go through 
surgery, to a system where people can, as result of the keen use of our 
scientific community, take a pharmaceutical and actually have a better 
life than if they were to go under the knife, have surgery.
  This is a revolution, and it is a revolution that is exploding and 
growing. Biotech activity, the nanotech activity, is only going to lead 
to more and more and better and better pharmaceuticals coming on the 
market to help people with their health.
  It is absolutely unfair, in my opinion, that people who are in a low-
income situation, especially retired people who are on a fixed low 
income, have to choose between their food and their housing and maybe 
their pharmaceuticals. That is not right in our society, and we can 
certainly afford to have that addressed.
  It was my hope as we brought forward a pharmaceutical drug benefit 
for senior citizens that we would do it in a way that would address 
low-income seniors. Equally important, it is important that a middle-
income senior should not have to spend all their assets for health care 
as a result of pharmaceutical costs. After a certain amount of 
spending, there should be catastrophic coverage that kicks in, 
relieving that person of the full responsibility or a large portion of 
their responsibility for the pharmaceutical cost. That is the type of 
structure at which we should be looking.
  Putting in place this brand new drug benefit, we also have to look at 
the underlying Medicare system which we all know is fundamentally 
broken as we look out into the future. When the baby boom generation 
hits, it simply is not going to work. It is not going to support that 
generation. That is because it is a 1959 design, an automobile built in 
the fifties driving on the highways of the year 2000 which, when it 
gets to 2015, is going to be too old to function effectively. It needs 
to have put in place forces which are going to cause it to be more 
efficient, to be more effective in addressing a person's approach to 
their health care. Those forces have to be basically marketplace 
oriented. They cannot be price-control oriented.

  My hope, my goal, my belief was that we would create a drug benefit 
that would help low-income seniors and, at the same time, give 
catastrophic coverage, and that would, fundamentally, reform the 
Medicare system so that we would end up with a more market-oriented 
system, something that was going to contain costs as we moved into the 
outyears.

[[Page S8650]]

  What did we get? What is before us today? Essentially, what we have 
before us today is a drug benefit that will plant a fiscal disease that 
will afflict our children and our children's children. It is a drug 
benefit that is going to put in place a fiscal disease that will 
afflict our children for the next 75 years. By afflict them, I mean 
that our children and our children's children, under the benefit in 
this bill, are going to have to pay $6 trillion. That is the estimate. 
That may be the high end. It is somewhere between $4.6 trillion and $6 
trillion. When you get into those numbers, it is pretty hard to get 
very definitive.
  That is the burden this drug benefit in this bill puts on our 
children and our children's children to support my generation which is 
going to retire and take advantage of it.
  That is a huge problem because what we are essentially saying to the 
person who is working in a restaurant or working in a garage or working 
on a computer line or working as a sales person, who is young and 
trying to raise a family, is that they are going to have to pay an 
inordinate amount of tax burden to support people who are retired with 
this drug benefit.
  That would not be so bad if the drug benefit was not an income 
transfer from that person working in that garage, working in that 
restaurant, or working on that computer line to somebody who is a great 
deal wealthier than they are potentially. That would not be so bad if 
it was a transfer from that person to people who are low income or 
whose assets are about to be wiped out because of a drug expenditure.
  That is not the way this bill works. The way this bill works is 
essentially to nationalize the entire drug delivery service for senior 
citizens to take all the present programs which presently benefit 
senior citizens for drug benefits--and there are a lot of them; there 
are a lot of seniors in this country today who already have a drug 
benefit; something like 76 percent is the estimate--to take a large 
percentage of those people and move them from their private programs to 
the public programs.
  If you retired from a major corporation or even a smaller corporation 
in this country, it is very likely that in your retirement package, 
depending on how aggressive your union was or how successful your 
company was, you received a drug benefit during your retirement. But 
when this bill passes, the incentive is going to be to take that drug 
benefit which presently exists in the private sector under some sort of 
contractual agreement which you had when you retired and move it out of 
the private sector and throw it on the taxpayers of America.
  Who are those taxpayers going to be? They are going to be our 
children and our children's children, people who are working for a 
living, trying to buy their kids a better education, a better home, 
better food, or even just a nice car or a night out at the movies. 
Their ability to do that is going to be undermined if this bill goes 
forward in its present form because so much will have to flow back to 
benefit people who already have the benefit in the private sector and 
are now going to be migrated over to the public sector.
  Mr. President, $4.5 trillion to $6 trillion is a huge amount of 
money, a huge burden to put on our children. It is hard to put it in 
terms that are realistic and are visible when we are talking those type 
of dollars, but every American child born tonight--and there are a lot 
of kids being born tonight in America--starts out with a $44,000 debt 
they have to pay for Medicare for my retirement, for the retirement of 
everybody in this room, for the retirement of most of the people who 
are watching who are over the age of 45. They start out with a $44,000 
debt.
  When this bill passes, they will have another $12,000 to $15,000 
added to that debt. So before they get through the first night of their 
life, as a result of this legislation they are going to owe $60,000. It 
is not fair. It is not right. We are not doing it the correct way.
  There are ways to do this where the system is not nationalized, where 
all the people who already have a drug benefit are told there is no 
incentive for them to keep it.
  We do not say in the private sector to the people who bought Medigap, 
to the people who have reached contractual agreements in retirement, to 
the people who have retained retirement coverage through the private 
sector, that there is no advantage to them keeping their program or, 
alternatively, the people who are giving them that program saying they 
are not going to give it to them anymore, and move those folks onto the 
public dole, onto the public system. It makes no sense.
  Then there is the issue of the underlying question of Medicare. Not 
only is the drug benefit in this bill fundamentally flawed because it 
migrates huge numbers of people off the private sector and into the 
public sector, but the underlying purpose of the Medicare effort in 
this bill is flawed. If we are going to put in place this huge new 
benefit for seniors, and especially if it is going to be as grand and 
as pervasive, where we are basically saying to all seniors that they 
get a benefit here, no matter what their income is--if that is going to 
be put in place, that ought to at least be coupled with some sort of 
reform of the underlying Medicare system to try to bring under control 
those costs which are driving the outyear liability, which will be the 
tax burden for our children and their children.
  The estimated outyear cost of Medicare that is unfunded is $13.3 
trillion. When the baby-boom generation starts to hit the system in 
2008, that is when it really starts to crank up, by the year 2020, 
2025, when there will be large retirement populations as a result of 
this demographic shift, $13.3 trillion of unfunded liability.
  Unfunded means it is just there. We have to pay it, but nobody has an 
idea of how they are going to do it. There is no trust fund for it. 
There is no money out there to do it. So the only way it is going to be 
done is to raise taxes or to cut the benefit, which is politically 
probably impossible, so to raise taxes on the young people who are 
working.
  There is a third way, however, to do it, and that is to make Medicare 
a more cost-sensitive, more thoughtful, more efficient system for 
delivery of health care. Regrettably, under this bill that does not 
happen. There is a representation that that might happen, something 
called a PPO, which is supposedly going to create an opportunity for 
the private sector to come in and compete with the traditional Medicare 
system. The price control system will have a chance to compete with a 
marketplace system. That is the thematic statement of the bill. 
Unfortunately, it is illusory. It will not happen under the bill. CBO 
says maybe 2 percent of the people will migrate, will move over, to a 
PPO system. The administration says it is 48 percent. Logic tells us it 
is not going to fly, because the bill has been structured to defeat the 
probability a PPO, a marketplace system, will be allowed to work. All 
the little gimmicks in this bill are aimed at essentially undermining 
that.
  Classic was the amendment that we passed earlier, which had been so 
gerrymandered, which was an effort by Senator Kyl. So what are we told? 
Well, even though the bill has these fundamental flaws of having a drug 
benefit that migrates a large number of people out of the private 
sector into the public sector and essentially causes low-income working 
Americans who are young to have to support middle-income Americans who 
are retired and who had a private sector benefit, and even though the 
bill has this illusory marketplace representation, basically no real 
reform of Medicare, we are told we should vote for it because it is 
going to be improved in conference. At least that is what we are being 
told on our side of the aisle. I do not know what is being said on the 
other side of the aisle. Maybe they are not getting that same message. 
We are being told that by the administration.

  The problem is, we are betting on the come. I mean, this is $6 
trillion of unfunded liability we are talking about passing on to our 
kids. It is massive. If this bill were to pass in its present form, or 
anything near to its present form, it would fundamentally extinguish 
the torch which the Republican Party has allegedly--and I thought 
pretty effectively--carried for years which was the torch of spending 
responsibility.
  That is why I came here, as I said when I began my statement. I came 
to try to do something about controlling the rate of growth of spending 
in the Federal Government, especially in the area of entitlements. I 
was told by one of the finest legislators I have ever met

[[Page S8651]]

in my experience in 20 years in Government--a man named Barber 
Conable--one time on the floor of the House when I was mumbling about 
the fact that some bill was coming through that was a little expensive, 
you have to understand, Judd, all Government moves to the left, and it 
is just a question of how many engines are on that train--think of it 
as a train--as it moves to the left, and our job as fiscal 
conservatives is to limit the number of engines that go on that train.
  This bill, if it passes in its present form, is going to be all 
engine, and it is going to undermine our capacity to assure our 
children they have the opportunity to have the type of lifestyle which 
we have, because it is going to put a huge and unfair tax burden on 
them.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. Mr. President, this morning one of the very able 
legislative assistants who has worked on this legislation for almost 7 
years, going back to the time on the Medicare Commission when we first 
started doing Medicare reform, was on the floor working with me on 
amendments in this legislation. She had to temporarily leave because at 
5:47 this afternoon she had a little baby girl. That is a very good 
excuse to not be on the Senate floor. But my legislative director, 
Sarah Walter, is doing fine. It is a baby girl. The name is yet to be 
determined, but I wanted to bring that to the attention of my 
colleagues and all of her colleagues on the professional staff.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Idaho.


                      Amendment No. 1087 Withdrawn

  Mr. CRAIG. Mr. President, this afternoon I will speak to amendment 
1087. That amendment was pulled up last night by the manager of the 
bill, Senator Grassley. I believe that amendment is at the desk.
  The PRESIDING OFFICER. The Senator is correct. The amendment has been 
called up and is pending.
  Mr. CRAIG. Mr. President, it is my intent within a few moments to 
withdraw this amendment, but I thought I should speak to it tonight 
because I am disappointed at this time that we could not get the 
scoring from CBO we felt would produce a revenue-neutral bill, or a 
cost-neutral bill, going into the final hours of this debate.
  This is an amendment that produces in this legislation, and hopefully 
to take up in conference, a consumer-driven health care plan under the 
new MedicareAdvantage program all of us are talking about at this 
moment. The Senator from New Hampshire gave a very impassioned speech 
from the depths of his heart, frustrated that this bill does not 
balance out and provide enough of the incentives in the market that 
will offset and create the kind of competitive forces being designed 
for Medicare with the extension of prescription drugs in it offers.
  For a few moments tonight, I did want to speak about that and explain 
it. As we get into conference with the House, the House has a consumer-
driven health care concept within their legislation that is critical. 
It is something we ought to address.
  First, the amendment before the Senate is designed to dovetail with 
and not disturb the overall MedicareAdvantage competitive dynamic. As a 
complement to MedicareAdvantage, consumer-driven health care plans 
would be subject to the same competitive rules as preferred provider 
organizations.
  Second, I emphasize this amendment is carefully crafted. We thought 
it would ensure budget neutrality. But CBO says tonight, no, and I am 
not going to be too critical of them; we pushed them very hard in the 
last good number of days to quickly analyze and bring forth estimates. 
I think they are simply swamped. We will continue to work with them. We 
believe what we are offering is budget neutral.
  Additionally, the Finance Committee chairman, the majority leader, 
and the White House have expressed the kind of support for these 
concepts in amendments. I appreciate it. As everyone begins to examine 
this structure, they become increasingly enthusiastic that this could 
become a component of the MedicareAdvantage Program.
  For the benefit of my colleagues, let me describe for a moment the 
key features of this amendment. The amendment establishes a new 
category of competition within Medicare Advantage designed to encourage 
participation by consumer-driven health plans. These plans would be 
subject to the same requirements of PPOs in MedicareAdvantage, 
including prescription drug benefits and risk adjustment parameters.
  Consumer-driven health care is one of the fastest growing innovations 
emerging in the employer health insurance market. Already 1.5 million 
Americans are estimated to be in consumer-driven health care in the 
summer of 2002, and that number is now growing very rapidly.
  What is the consumer-driven health care? It harnesses market forces 
in ways similar to medical savings accounts. However, there are some 
differences between medical savings accounts and consumer-driven health 
care plans. For example, enrollees in consumer-driven health care do 
not have to make contributions to the account. In the private sector, 
the employer or in my amendment if it were to pass, Medicare makes the 
contribution to the personal care account. There would be no tax 
consequence for the senior under this amendment. In other words, it 
would not be viewed as income. Some in Congress might be familiar with 
the account because the American Postal Workers Union of the AFL-CIO 
consumer-driven health care plan is now available. It is in that bundle 
of choices that Federal employees have today to choose from. More and 
more employees are signing up for this concept.
  This is what the union Web site states: We believe that people who 
have more control over how their health care dollars are spent are more 
satisfied consumers and the APWU health plan consumer-driven option is 
designed to give that kind of control.
  It is the very thing the Senator from New Hampshire was talking 
about. It is what we ought to be striving for to balance off the 
differences and to create the competitive forces within the 
MedicareAdvantage program.
  Benefits make sense in consumer-driven health care plans. I draw your 
attention to my chart. My amendment is designed to encourage market 
flexibility. The information on this chart is one example of what 
consumer-driven health care plans can provide. Web site education and 
decision support is one example. In other words, you can go to the Web 
site, look at it, make choices and decisions based on the best 
available information. 100-percent preventive care coverage--the 
very kind of thing we want in modern medicine today. Preventive 
benefits keep healthy people healthy instead of making the repairs 
after the human body breaks down.

  There are no more barriers to necessary care, including annual 
physicals, mammograms, and preventive services. All are within this 
kind of health care plan. All are available today offered by the postal 
workers.
  Patient control of personal care accounts for routine health care 
services are also included. Unused funds in these accounts then roll 
over into the next year.
  High deductibles, that is true insurance, to protect against 
financial ruin in an acute health care crisis, in other words, 
catastrophic coverage.
  A limit on annual out-of-pocket spending is an especially important 
feature. Traditional Medicare does not have an out-of-pocket limit and 
drives many seniors into bankruptcy. In other words, it limits 
financial risk when it kicks in at a certain point.
  It includes care coordination, disease management, and provider 
network discounts. Consumer-driven health care gives control of health 
care back to patients. That is why more and more are enrolling in it. 
We know today, many who work in the health care area with our seniors 
know they look at the details of their spending; they look at the 
billing; they know more about their health care and what is being 
charged than most people realize. Patients and their physicians, 
ultimately, with this kind of insurance, join in partnerships to seek 
the finest care at the most reasonable costs.
  Consumer-driven care is especially suited for patients who like to be 
personally involved in their health care decisions. More and more 
Americans who can use the necessary information

[[Page S8652]]

want that kind of personal involvement.
  Consumer-driven care eliminates wasteful Medicare spending, it 
increases patient awareness of health care costs, and encourages 
prudent purchasing of health care services. Any unspent funds in the 
personal care account would be returned to the Medicare trust fund upon 
the death or the disenrollment. That is a key factor. Federal dollars 
go into the trust fund and, if there are dollars remaining, they flow 
back into the trust fund of Medicare upon disenrollment or the death of 
the individual.
  This amendment would be an important addition to the bill. I wish we 
could get it into the bill tonight. But it would be unfair to the 
manager of the bill at this time because it cannot get scored. I would 
not want to drive the cost up of the already-fixed segment of the 
MedicareAdvantage side. Already, it is less competitive than we would 
like it to be. I don't want to add to that disadvantage.
  We believe ultimately that this will be a budget-neutral program. At 
that time, it will be the right thing to offer as part of the dynamics 
that we want to see in a modern health care delivery system and in an 
improved Medicare with a prescription drug program.
  I thank my colleagues for listening. We will return with this when it 
is a final product. It may well make it into the conference between the 
House and the Senate. We will be working with our colleagues in the 
House because they have already provided that kind of a provision 
within the legislation which they are currently debating and voting 
upon.
  With that, I ask unanimous consent to withdraw amendment No. 1086.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 1086) was withdrawn.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. Since Medicare was established in 1965, people are 
living longer and living better. Today Medicare covers more than 40 
million Americans, including 35 million over the age of 65 and nearly 6 
million younger adults with permanent disabilities.
  Congress now has the opportunity to modernize this important Federal 
entity to create a 21st century Medicare Program that offers 
comprehensive coverage for pharmaceutical drugs and improves the 
Medicare delivery system.
  The proposal before the Senate would make available a voluntary 
Medicare prescription drug plan for all seniors. If enacted, Medicare 
beneficiaries have access to a discount card for prescription drug 
purchases starting in 2004. Projected savings from cards for consumers 
would range between 10 to 25 percent. A $600 subsidy would be applied 
to the card, offering additional assistance for low-income 
beneficiaries defined as 160 percent or below the Federal poverty 
level. Effective January 1, 2006, a new optional Medicare prescription 
drug benefit would be established under Medicare Part D.
  This bill has the potential to make a dramatic difference for 
millions of Americans living with lower incomes and chronic health care 
needs. Low-income Medicare beneficiaries, who make up 44 percent of all 
Medicare beneficiaries, would be provided with prescription drug 
coverage with minimal out-of-pocket costs. For these seniors, 
copayments would not exceed 20 percent of the cost of the drugs.
  For medical services, Medicare beneficiaries will have the freedom to 
remain in traditional fee-for-service Medicare for drug coverage, or to 
enroll in Health Maintenance Organizations (HMOs) or Preferred Provider 
Organizations (PPOs), also called MedicareAdvantage, which offers 
beneficiaries a wide choice of health care providers, while also 
coordinating health care effectively, especially for those with 
multiple chronic conditions. MedicareAdvantage health plans would be 
required to offer at least the standard drug benefit, available through 
traditional fee-for-service Medicare.
  The legislation which is pending has been worked on, now, for many 
years. I congratulate the chairman of the committee, Senator Grassley, 
and the ranking member, Senator Baucus, for the outstanding work which 
they have done. This is an extraordinarily complex subject, and it is a 
very complex bill.
  We already know that there are many criticisms directed to this bill 
at various levels. Many would like to see the prescription drug program 
cover all of the costs without deductibles and without copays. There 
has been allocated in our budget plan $400 billion for prescription 
drug coverage. That is, obviously, a very substantial sum of money. 
There are a variety of formulas which could be worked out to utilize 
this funding. The current plan, depending upon levels of income, 
provides a deductible, then a copay, then what is called a donut hole 
where the recipient pays the entire costs of their drug coverage, and 
when it gets to a certain high level, it is catastrophic and there is 
coverage that pays almost all of it.
  As I have reviewed these projections and these analyses, it is hard 
to say where the line ought to be drawn. It is a value judgment as to 
what deductibles ought to be, and for whom, and what the copays ought 
to be and for whom. I am seriously troubled by the so-called donut 
hole. But it is calculated to encourage people to take the medical care 
they really need, and at lower levels of income to have certain copays, 
which it is projected will be affordable. Then, when the costs move 
into the so-called catastrophic range, to have the plan pay for nearly 
all of the medical costs.
  I think passage by the Senate would be a significant step forward. 
The House of Representatives, as usual, has a different plan--as is 
customary, with our bicameral legislative approach. Then the bill can 
be improved in conference.
  The legislative process has the committee turning out a bill, and 
then many amendments, which generally are not known to Members in 
advance of brief debate and then votes. It is in the conference, after 
the bill is analyzed, that another fresh look is taken at the bill to 
produce the best legislative product in the public interest.


                           Amendment No. 983

  I have already offered an amendment relating to end of life 
directives, number 983, which was adopted by unanimous consent.
  Commenting on it very briefly, we find statistically that nearly 30 
percent of Medicare expenditures occur during a person's last year of 
life. We find, beyond the last year of life, a tremendous percentage of 
medical costs occur in the last month, in the last few weeks, in the 
last week, or in the last few days.
  Nobody should decide for anybody else what that person should have by 
way of end-of-life medical care. What care ought to be available is a 
very personal decision.

  The living wills would give an individual an opportunity to make that 
judgment, to make a decision as to how much care he or she wanted near 
the end of his or her life and that is, to repeat, a matter highly 
personalized for the individual.
  But if that decision was made to eliminate some of the very high 
costs at the very end of life, there would obviously be substantial 
savings to our medical system. As long as that comports with the will 
of the individual, that is something which ought to be considered.
  The amendment directs the Secretary of Health and Human Services to 
include in its annual ``Medicare And You'' handbook, to be provided to 
each beneficiary, a section that specifies information on advanced 
directives and details on living wills, durable powers of attorney for 
health care, and directs the Secretary of HHS, in the introductory 
letter to the ``Medicare And You'' handbook, to reference the inclusion 
of advanced directives.


                           Amendment No. 1085

  I have also submitted an amendment which is pending at the desk, 
amendment No. 1085, which has not yet been acted upon but which I will 
call up at an appropriate time.
  This is an amendment which would update the Medicare physician fee 
formula. It is a sense-of-the-Senate resolution. The projections from 
the Medicare payment formula called for a 4.4-percent reduction on 
March 1, which would have been very problematic. The fact is, the 
Center for Medicare and Medicaid Services, CMS, now projects a Medicare 
conversion factor figure of 4.2 percent will be projected for the year 
2004. This reduction threatens to destabilize an important element of 
the

[[Page S8653]]

Medicare Program; namely, physician participation and willingness to 
accept Medicare payments. This instability is a result of the 
sustainable growth rate, a system of annual spending which targets 
physicians' services under Medicare.
  This sense-of-the-Senate amendment would provide that the conferees 
on Medicare reform and prescription drug legislation should include in 
the conference agreement a provision to establish a minimum percentage 
update in physician fees for the next 2 years, and should consider 
adding provisions which would mitigate the swings in payment, such as 
establishing multiyear adjustments to recoup the variance and creating 
tolerance corridors for variations around the updated target trend.


                           Amendment No. 1118

  I have also submitted an amendment designated as amendment No. 1118, 
which provides for a lifestyle modification program demonstration. This 
is projected on the factor that heart disease kills some 500,000 
Americans each year. The costs of coronary disease currently relate to 
an expenditure of some $58 billion annually. There has been a test 
program of the Medicare lifestyle modification program operating in 
some 12 States which has been demonstrated to reduce the need for 
coronary procedures by 88 percent. This program could reduce 
cardiovascular expenditures by as much as $36 billion annually.
  Lifestyle choices such as diet and exercise affect heart disease and 
heart disease outcomes by 50 percent or greater. This program has also 
been applied to men with prostate cancer, who have shown significant 
improvements in prostate cancer markers using a similar approach in 
lifestyle modifications. My amendment expresses the sense of the Senate 
that the Secretary of Health and Human Services should carry out the 
lifestyle modification program demonstration at the national level and 
then provide it on a permanent basis, and include as many Medicare 
beneficiaries as would like to participate in the project on a 
voluntary basis.
  I have submitted one additional amendment, which is No. 1128 and 
which relates to State pharmaceutical assistance programs for the 
elderly and disabled. Currently, 18 States have comprehensive pharmacy 
assistance programs which provide prescription drug coverage for more 
than 1.1 million older and disabled Americans.
  In my own State, Pennsylvania's Pharmaceutical Assistance Contract 
for the Elderly, known as PACE, established in 1984 provides 
prescription drug coverage to 230,000 Medicare beneficiaries, the vast 
majority of whom have incomes below 160 percent of the Federal poverty 
level. This enrollment is comprised largely of 70- and 80-year-old 
widows who have multiple diseases and limited educational background 
who have been enrolled in the PACE program for more than a decade.
  There is a serious concern that if there is not a coordinated 
program, people will not be informed as to how to move from PACE to 
another program. This affects not only Pennsylvania but, as I stated, 
17 other States.
  The pending bill does not provide for coordination of benefits 
between State pharmaceutical programs and private insurers. Without a 
coordination of benefits for State plans to facilitate enrollment in 
private plans, many of these State program beneficiaries will be unable 
to assess the new Medicare drug benefit.
  This amendment provides for coordination of benefits between States 
and private insurance companies and facilitates the enrollment of State 
pharmacy assistance beneficiaries in the private plans. Without this 
amendment, the majority of seniors enrolled in their State pharmacy 
programs will not be able to effectively access private plans.
  I note the presence of other Senators who are seeking recognition. I 
attempted to be brief in my general statement about the bill and also 
in my descriptions of these four amendments, one of which has already 
been adopted.
  I ask unanimous consent that at the conclusion of my remarks, there 
be printed in the Record a summary of the end-of-life directive 
amendment, a summary of the updating of the Medicare physician fee 
formula, a summary of the lifestyle modification program, and a summary 
of the State pharmaceutical assistance programs for the elderly and 
disabled, and also printed in the Record at this point the amendments 
themselves.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

             Summary on the End of Life Directive Amendment

       The purpose of this amendment is to make it easier for 
     individuals to make their own choices regarding their 
     treatment when nearing the end of their life.
       A health care advance directive is a document where a 
     beneficiary gives instructions about their health care if, in 
     the future, that beneficiary cannot speak for him or herself. 
     The beneficiary can give someone they name (``agent'' or 
     ``proxy'') the power to make health care decisions on their 
     behalf. They may also give instructions about the kind of 
     health care they do or do not want.
       In a traditional Living Will, a beneficiary would state 
     their wishes about life-sustaining medical treatments if he 
     or she is terminally ill. In a Health Care Power of Attorney, 
     one appoints someone else to make medical treatment decisions 
     for the beneficiary if they cannot make them on their own.
       Unlike most Living Wills, a Health Care Advance Directive 
     is not limited to cases of terminal illness. If the 
     beneficiary cannot make or communicate decisions because of a 
     temporary or permanent illness or injury, a Health Care 
     Advance Directive helps them keep control over important 
     health care decisions.
       Observers have long noted that individuals incur the 
     majority of health care costs in the last few months of life. 
     Nearly 30 percent of Medicare expenditures occur during a 
     person's last year of life.
       Your amendment directs the Secretary of HHS to include in 
     its annual ``Medicare and You'' handbook, which is provided 
     to each beneficiary, a section that provides information on 
     advanced directives and details on living wills and durable 
     power of attorney for health care; and directs the Secretary 
     of HHS, in the introductory letter to the ``Medicare and 
     You'' handbook, to reference the inclusion of advanced 
     directives information.
                                  ____


 Summary on the Amendment to Update the Medicare Physician Fee Formula

       Earlier this year, Congress passed legislation as part of 
     the Fiscal Year 2003 Omnibus Appropriations bill (H.J. Res. 
     2) that avoided an impending 4.4 percent cut in the Medicare 
     conversion factor. Although this change resulted in a 
     welcomed 1.6 percent increase in the Medicare conversion 
     factor for 2003, the Centers for Medicare and Medicaid 
     Services' (CMS) preliminary Medicare conversion factor figure 
     predicts a 4.2 percent reduction for 2004.
       It is clear that this scheduled 4.2 percent reduction in 
     the physician reimbursement formula threatens to destabilize 
     an important element of the Medicare program, namely 
     physician participation and willingness to accept Medicare 
     patients.
       The primary source of this instability is the sustainable 
     growth rate (SGR), a system of annual spending targets for 
     physicians' services under Medicare.
       The sustainable growh rate (SGR) system has a number of 
     defects that result in unrealistically low spending targets, 
     such as the use of the increase in the gross domestic product 
     (GDP) as a proxy for increases in the volume and intensity of 
     services provided by physicians, no tolerance for variance 
     between growth in Medicare beneficiary health care costs and 
     our Nation's GDP, and a requirement for the immediate 
     recoupment of the difference.
       Both administrative and legislative action are needed to 
     return stability to the Medicare physician payment system.
       In its March 2003 report, the Medicare Payment Advisory 
     Commission (MedPAC) stated that if ``Congress does not change 
     current law, then payments may not be adequate in 2003 and a 
     compensating adjustment in payments would be necessary in 
     2004.''
       With 17 percent of its population eligible for Medicare, 
     the Pennsylvania Medical Society has calculated that 
     Pennsylvania's physicians have already suffered a $128.6 
     million loss, or $4,074 per physician, as a result of the 
     2002 Medicare payment reduction. If not corrected, the flawed 
     formula will cost Pennsylvania physicians another $553 
     million or $17,396 per physician for the period 2003-2005.
       Your amendment expresses the sense of the Senate that the 
     conferees on Medicare reform and prescription drug 
     legislation should include in the conference agreement a 
     provision to establish a minimum percentage update in 
     physician fees for the next 2 years and should consider 
     adding provisions that would mitigate the swings in payment, 
     such as establishing multi-year adjustments to recoup the 
     variance and creating ``tolerance'' corridors for variations 
     around the update target trend.
                                  ____


     Summary of the Amendment on the Lifestyle Modification Program

       Heart disease kills more than 500,000 Americans per year. 
     The number and costs of interventions for the treatment of 
     coronary disease are rising and currently cost the health 
     care system $58 billion annually.

[[Page S8654]]

       The Medicare Lifestyle Modification Program (also known as 
     the Dean Ornish Program for Reversing Heart Disease) has been 
     operating throughout 12 states and has been demonstrated to 
     reduce the need for coronary procedures by 88 percent per 
     year.
       The Medicare Lifestyle Modification Program is less 
     expensive to deliver than interventional cardiac procedures 
     and could reduce cardiovascular expenditures by $36 billion 
     annually.
       Lifestyle choices such as diet and exercise effect heart 
     disease and heart disease outcomes by 50 percent or greater.
       Intensive lifestyle interventions which include teams of 
     nurses, doctors, exercise physiologists, registered 
     dieticians, and behavioral health clinicians have been 
     demonstrated to reduce heart disease risk factors and enhance 
     heart disease outcomes dramatically.
       The National Institutes of Health estimates that 17 million 
     Americans have diabetes and the Centers for Disease Control 
     and Prevention estimates that the number of Americans who 
     have a diagnosis of diabetes increased 61 percent in the last 
     decade and is expected to more than double by 2050.
       Lifestyle modification programs are superior to medication 
     therapy for treating diabetes. Individuals with diabetes are 
     now considered to have coronary disease at the date of 
     diagnosis of their diabetic state.
       The Medicare Lifestyle Modification Program has been an 
     effective lifestyle program for the reversal and treatment of 
     heart disease.
       Men with prostate cancer have shown significant improvement 
     in prostate cancer markers using a similar approach in 
     lifestyle modification. These lifestyle changes are therefore 
     likely to affect other chronic disease states, in addition to 
     heart disease.
       Your amendment expresses the sense of the Senate that the 
     Secretary of Health and Human Services should carry out the 
     Lifestyle Modification Program Demonstration at the national 
     level on a permanent basis and include as many medicare 
     beneficiaries as would like to participate in the project on 
     a voluntary basis.
                                  ____


 Summary of the Amendment on State Pharmaceutical Assistance Programs 
                      for the Elderly and Disabled

       Currently, 18 states have comprehensive pharmacy assistance 
     programs that provide prescription drug coverage to more than 
     1.1 million older and disabled residents.
       The majority of these beneficiaries receive life saving 
     medications to treat high blood pressure, heart disease, 
     arthritis, diabetes, and eye disease.
       Pennsylvania's Pharmaceutical Assistance Contract for the 
     Elderly (PACE), established in 1984, provides prescription 
     drug coverage to 230,000 Medicare beneficiaries, the vast 
     majority of whom have incomes below 160% of the federal 
     poverty level. This enrollment is comprised largely of 70 and 
     80-year-old widows who have multiple disease states, and less 
     than a tenth grade education, and have been enrolled in PACE 
     for more than a decade.
       Currently, the pending bill the Senate does not provide for 
     `coordination of benefits', between state pharmaceutical 
     programs and private insurers. Without a coordination of 
     benefit mandate and a role for the state plans to facilitate 
     enrollment in private plans, many of these state program 
     beneficiaries will not be able to access the new Medicare 
     drug benefit.
       This amendment provides for the coordination of benefits 
     between states and private insurance companies, and 
     facilitates the enrollment of state pharmacy assistance 
     beneficiaries into private plans, without this amendment the 
     majority of the seniors enrolled in their state pharmacy 
     programs will not be able to effectively access private 
     plans.
                                  ____



                           amendment no. 983

(Purpose: To provide medicare beneficiaries with information on advance 
                              directives)

       On page 676, after line 22, insert the following:

     SEC. __. PROVISION OF INFORMATION ON ADVANCE DIRECTIVES.

       Section 1804(c) of the Social Security Act (42 U.S.C. 
     1395b-2(c)) is amended--
       (1) by redesignating paragraphs (1) through (4) as 
     subparagraphs (A) through (D), respectively;
       (2) in the matter preceding subparagraph (A), as so 
     redesignated, by striking ``The notice'' and inserting ``(1) 
     The notice''; and
       (3) by adding at the end the following:
       ``(2)(A) The Secretary shall annually provide each medicare 
     beneficiary with information concerning advance directives. 
     Such information shall be provided by the Secretary as part 
     of the Medicare and You handbook that is provided to each 
     such beneficiary. Such handbook shall include a separate 
     section on advanced directives and specific details on living 
     wills and the durable power of attorney for health care. The 
     Secretary shall ensure that the introductory letter that 
     accompanies such handbook contain a statement concerning the 
     inclusion of such information.
       ``(B) In this section:
       ``(i) The term `advance directive' has the meaning given 
     such term in section 1866(f)(3).
       ``(ii) The term `medicare beneficiary' means an individual 
     who is entitled to, or enrolled for, benefits under part A or 
     enrolled under part B, of this title.''.


                             amendment no.

 (Purpose: To permit existing State pharmaceutical assistance programs 
  to wrap around the coverage provided by Medicare Prescription Drug 
 plans and to facilitate the enrollment of eligible beneficiaries for 
                      prescription drug coverage)

       On page 133, after line 25, insert the following:
       ``(3) Coordination With Existing State Pharmaceutical 
     Assistance Programs.--
       ``(A) In general.--An eligible entity offering a Medicare 
     Prescription Drug plan, or a MedicareAdvantage organization 
     offering a MedicareAdvantage plan (other than an MSA plan or 
     a private fee-for-service plan that does not provide 
     qualified prescription drug coverage), shall enter into an 
     agreement with each existing State pharmaceutical assistance 
     program to coordinate the coverage provided under the plan 
     with the assistance provided under the existing State 
     pharmaceutical assistance program.
       ``(B) Election.--Under the process established under 
     section 1860D-3(a), an eligible beneficiary who resides in a 
     State with an existing State pharmaceutical assistance 
     program and who is eligible to enroll in such program shall 
     elect to enroll in a Medicare Prescription Drug plan or 
     MedicareAdvantage plan through the existing State 
     pharmaceutical assistance program.
       ``(C) Existing state pharmaceutical assistance program 
     defined.--In this paragraph, the term `existing State 
     pharmaceutical assistance program' means a program that has 
     been established pursuant to a waiver under section 1115 or 
     otherwise before January 1, 2004.''


                           amendment no. 1085

    (Purpose: To express the sense of the Senate regarding payment 
         reductions under the Medicare physician fee schedule)

       At the end of title VI, insert the following:

     SEC. __. SENSE OF THE SENATE ON PAYMENT REDUCTIONS UNDER 
                   MEDICARE PHYSICIAN FEE SCHEDULE.

       (a) Findings.--Congress finds that--
       (1) the fees Medicare pays physicians were reduced by 5.4 
     percent across-the-board in 2002;
       (2) recent action by Congress narrowly averted another 
     across-the-board reduction of 4.4 percent for 2003;
       (3) based on current projections, the Centers for Medicare 
     & Medicaid Services (CMS) estimates that, absent legislative 
     or administrative action, fees will be reduced across-the-
     board once again in 2004 by 4.2 percent;
       (4) the prospect of continued payment reductions under the 
     Medicare physician fee schedule for the foreseeable future 
     threatens to destabilize an important element of the program, 
     namely physician participation and willingness to accept 
     Medicare patients;
       (5) the primary source of this instability is the 
     sustainable growth rate (SGR), a system of annual spending 
     targets for physicians' services under Medicare;
       (6) the SGR system has a number of defects that result in 
     unrealistically low spending targets, such as the use of the 
     increase in the gross domestic product (GDP) as a proxy for 
     increases in the volume and intensity of services provided by 
     physicians, no tolerance for variance between growth in 
     Medicare beneficiary health care costs and our Nation's GDP, 
     and a requirement for immediate recoupment of the difference;
       (7) both administrative and legislative action are needed 
     to return stability to the physician payment system;
       (8) using the discretion given to it by Medicare law, CMS 
     has included expenditures for prescription drugs and 
     biologicals administered incident to physicians' services 
     under the annual spending targets without making appropriate 
     adjustments to the targets to reflect price increases in 
     these drugs and biologicals or the growing reliance on such 
     therapies in the treatment of Medicare patients;
       (9) between 1996 and 2002, annual Medicare spending on 
     these drugs grew from $1,800,000,000 to $6,200,000,000, or 
     from $55 per beneficiary to an estimated $187 per 
     beneficiary;
       (10) although physicians are responsible for prescribing 
     these drugs and biologicals, neither the price of the drugs 
     and biologicals, nor the standards of care that encourage 
     their use, are within the control of physicians; and
       (11) SGR target adjustments have not been made for cost 
     increases due to new coverage decisions and new rules and 
     regulations.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) the Center for Medicare & Medicaid Services (CMS) 
     should use its discretion to exclude drugs and biologicals 
     administered incident to physician services from the 
     sustainable growth rate (SGR) system;
       (2) CMS should use its discretion to make SGR target 
     adjustments for new coverage decisions and new rules and 
     regulations; and
       (3) in order to provide ample time for Congress to consider 
     more fundamental changes to the SGR system, the conferees on 
     the Prescription Drug and Medicare Improvement Act of 2003 
     should include in the conference agreement a provision to 
     establish a minimum percentage update in physician fees for 
     the next 2 years and should consider adding provisions that 
     would mitigate the swings in payment, such as establishing 
     multi-year adjustments to recoup the variance and creating 
     ``tolerance'' corridors for variations around the update 
     target trend.

[[Page S8655]]

                             amendment no.

      (Purpose: To express the sense of the Senate regarding the 
establishment of a nationwide permanent lifestyle modification program 
                      for Medicare beneficiaries)

       At the end of title VI, insert the following:

     SEC. __. SENSE OF THE SENATE REGARDING THE ESTABLISHMENT OF A 
                   NATIONWIDE PERMANENT LIFESTYLE MODIFICATION 
                   PROGRAM FOR MEDICARE BENEFICIARIES.

       (a) Findings.--Congress finds that:
       (1) Heart disease kills more than 500,000 Americans per 
     year.
       (2) The number and costs of interventions for the treatment 
     of coronary disease are rising and currently cost the health 
     care system $58,000,000,000 annually.
       (3) The Medicare Lifestyle Modification Program has been 
     operating throughout 12 States and has been demonstrated to 
     reduce the need for coronary procedures by 88 percent per 
     year.
       (4) The Medicare Lifestyle Modification Program is less 
     expensive to deliver than interventional cardiac procedures 
     and could reduce cardiovascular expenditures by 
     $36,000,000,000 annually.
       (5) Lifestyle choices such as diet and exercise affect 
     heart disease and heart disease outcomes by 50 percent or 
     greater.
       (6) Intensive lifestyle interventions which include teams 
     of nurses, doctors, exercise physiologists, registered 
     dietitians, and behavioral health clinicians have been 
     demonstrated to reduce heart disease risk factors and enhance 
     heart disease outcomes dramatically.
       (7) The National Institutes of Health estimates that 
     17,000,000 Americans have diabetes and the Centers for 
     Disease Control and Prevention estimates that the number of 
     Americans who have a diagnosis of diabetes increased 61 
     percent in the last decade and is expected to more than 
     double by 2050.
       (8) Lifestyle modification programs are superior to 
     medication therapy for treating diabetes.
       (9) Individuals with diabetes are now considered to have 
     coronary disease at the date of diagnosis of their diabetic 
     state.
       (10) The Medicare Lifestyle Modification Program has been 
     an effective lifestyle program for the reversal and treatment 
     of heart disease.
       (11) Men with prostate cancer have shown significant 
     improvement in prostate cancer markers using a similar 
     approach in lifestyle modification.
       (12) These lifestyle changes are therefore likely to affect 
     other chronic disease states, in addition to heart disease.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) the Secretary of Health and Human Services should carry 
     out the demonstration project known as the Lifestyle 
     Modification Program Demonstration, as described in the 
     Health Care Financing Administration Memorandum of 
     Understanding entered into on November 13, 2000, on a 
     permanent basis;
       (2) the project should include as many Medicare 
     beneficiaries as would like to participate in the project on 
     a voluntary basis; and
       (3) the project should be conducted on a national basis.

  Mr. SPECTER. I thank the Chair. I yield the floor.
  Mr. REID. Mr. President, I ask unanimous consent that the 
distinguished Senator from West Virginia be recognized to speak on the 
bill for up to 20 minutes and that following his statement, the Senator 
from Florida, Mr. Graham, be recognized for 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from West Virginia.
  Mr. BYRD. Mr. President, I thank the distinguished Democratic whip 
for his thoughtfulness and courtesies.
  Mr. President, just last month we celebrated Older Americans Month, a 
time of reflect on the contribution of older Americans to our society--
to their families, their communities, and their Nation. For many 
seniors, these ``golden years'' are the most valuable time in their 
lives, a time when they may no longer have the day-to-day aggravations 
of work, and can concentrate their time and efforts on something else--
grandchildren, lifelong passions, learning new skills, acquiring 
knowledge, or participating in creative endeavors.
  But that is not the case for many seniors. In too many instances, 
seniors who have worked and saved a lifetime find that today's cost of 
living far exceeds the level they can afford. Despite planning and 
frugality, today's costs simply have exceeded the means of many older 
Americans, and they find that the visions of the secure life they had 
expected post-retirement are now more a nightmare than a dream.
  A big part of the problem is the value that our society places on the 
elderly--it is much too low!
  Age discrimination is all too prevalent in the workplace. Long-held 
stereotypes--that seniors are slow, forgetful, less competent than 
their younger counterparts--limit opportunities for older workers and 
prevent businesses from benefiting from well-honed talents. Those 
stereotypical images are just plain wrong.
  To be 65 today is not like it was to be 65 when I was a young man. 
The idea of pushing senior citizens out of the door to make room for 
younger workers is, itself, antiquated.
  I grew up during the Great Depression when one had to work hard just 
to get a job and then work even harder to keep it. People of my 
generation, the generation Tom Brokaw has referred to as ``The Greatest 
Generation''--I kind of like that term, ``The Greatest Generation,'' 
although I don't quite agree with it.
  Seniors in the workforce can be a positive and inspiring force.
  The reason I don't agree with it is that I think the greatest 
generation was that generation that produced the Constitution of the 
United States and produced this constitutional system of government 
that we have today. We will talk more about that on a later day.
  I grew up during the Great Depression when one had to work hard, as I 
say, just to get a job and then work harder to keep it. People of my 
generation, coming from that experience, developed a work ethic which 
can inspire young people today. Seniors in the workforce can be a 
positive, inspiring force. Moreover, better health care and healthier 
lifestyles have extended lifespans and led to a senior population with 
vigor and vitality.
  But when the health of seniors does decline, this Nation does an 
embarrassingly poor job of dealing with their needs. Child care has 
become a booming business in this Nation. Millions are spent on bigger, 
brighter, better child care centers--lively places, filled with happy 
activities and stimulation. That is as it should be. But when the 
elderly need daily care, too often they are relegated to dim, 
overcrowded centers, places that serve as little more than warehouses 
that provide busy work for the hands, and little to fill the heart and 
soul.
  Inestimable numbers of scam artists focus on the elderly. The offices 
of Attorney Generals across the nation are besieged with complaints 
from seniors who were prey for some con artists and ended up losing 
their life savings. Newspapers carry stories about CEOs of big, once-
profitable companies who are awarded big bonuses, while the pensions of 
loyal retirees are squeezed. When this is how we treat our seniors, 
something is wrong with America.
  Older citizens should rejoice in their long lives, in their collected 
experiences, and in their accomplishments. But in America today, 
magazines showcase images of young, vibrant models. Movies and 
television shows feature youthful actors and actresses. No one wants to 
be ``old'' anymore. It has become a tarnished word.
  Older citizens today are generally not appreciated as either 
experienced ``elders'' or possessors of special wisdom. Older people 
are respected only to the extent that they remain capable of working, 
exercising, and taking care of themselves. In American culture, 
increasing age seems to portend decreasing value as a human being. It 
should be just the opposite.
  How did the American culture develop such blatant disregard and 
disrespect for the elderly? Well, however we got to such a point, we 
are definitely here.
  Senior citizens need to rise up and make their voices heard or else 
they will be forgotten, especially when it comes to policy formation 
that directly affects them, such as Medicare legislation before us 
today. The Senate is in the midst of an important debate on a major 
restructuring of Medicare--a debate that will shape the health care 
choices of millions of our Nation's senior citizen for years to come.
  The Medicare program is in desperate need of renovation to meet the 
needs of today'a older citizens living in a new era with dramatic 
advancements in the delivery of health care. Medicare was designed to 
provide health care benefits to the most vulnerable segments of the 
population, the elderly and the disabled.
  When I voted, way back in 1965, to establish the Medicare program, 
pharmaceutical treatments, then more of footnote in health care, were 
not nearly as commonly available as they are now.

[[Page S8656]]

Today, they are a primary form of medical care and often substitute for 
more costly treatments like hospitalization and surgery.
  Today, 40 million Americans rely on Medicare to help provide for 
their medical needs. With more than one-third of all Medicare 
beneficiaries lacking insurance coverage for the cost of needed 
medications, finding affordable prescription drug coverage is a 
critical issue for our Nation's seniors. Prescription drugs are an 
essential tool for treating and preventing many acute and chronic 
conditions, but Medicare fails to cover them on an outpatient basis. 
Too many seniors and disabled persons in this country, especially those 
living on fixed incomes, are forced to choose each month between paying 
for food and paying for shelter, or buying the essential medicines that 
their doctors have prescribed.

  Our Nation's senior citizens are losing their patience. They are 
losing their dignity. And they are fed up with fast-rising drug costs 
that they cannot afford. Older citizens should not have to travel in 
bus loads to Canada and Mexico just to obtain the medications their 
doctors prescribe. What does it say about this country and its values 
when we fail to take care of our elderly citizens whose lifetime of 
work and sacrifice and dedication and industry helped to endow this 
country with the greatness it now enjoys?
  Mr. President, I fear that the legislation before us today is a 
glaring example of how this Nation shortchanges our senior citizens. We 
are not taking care of our elderly citizens as they wrestle with the 
most serious issue in their lives. We are offering a partial fix to 
assuage senior anger. This bill fails to go far enough to meet the 
needs of our Nation's senior citizens. I am concerned that this measure 
would force Medicare beneficiaries to rely on a private, untried, 
untested, drug-only insurance market for their prescription drug 
coverage, rather than the traditional Medicare program that they know 
and trust. We split drug benefit off from Medicare?
  I am concerned that this administration and some Members of Congress 
plan to phase out the traditional Medicare program as an option for new 
beneficiaries in the future. Some people have asserted that this 
legislation is merely a Trojan horse designed to get rid of Medicare. I 
sincerely hope that this is not the case, but there is something very 
suspicious about this particular horse.
  I am worried that we may be endorsing the slow suicide of one of the 
most popular and effective Government programs in history. I have been 
down this tortured road before during my 50-year tenure in Congress. My 
constituents and others around the Nation are reeling from public 
programs that have been turned over to the so-called free market. 
Utility rates, cable rates, airline rates, you name it, the free market 
has ensured exorbitant prices with diminished service, especially for 
rural areas such as West Virginia. Pensions and retirement security 
have taken a similar beating.
  The Medicare program, for which I voted in 1965, was originally 
created because the private sector did not offer affordable and 
reliable health insurance to the elderly and the disabled. Health care 
has certainly changed in the past 38 years, but what has not changed is 
the fact that the private market does not want to insure people who are 
old or disabled or likely to need care. Mr. President, what is the 
rationale for inventing some new hocus-pocus type of plan that exposes 
senior citizens to the whims of private insurance companies which may 
be more interested in profits than in providing comprehensive drug 
benefits?

  Mr. President, this legislation, as currently designed, does not even 
provide sufficient prescription drug coverage. It would cover less than 
a quarter of Medicare beneficiaries' estimated drug costs over the next 
10 years, and the complicated coverage formula has a large donut hole 
providing zero coverage just when seniors might need it most.
  This legislation also includes copayments, premiums, and deductibles 
that may be unaffordable for man low- and middle-income seniors. The 
$35-per-month premium, the 50-percent copay, the $275 annual 
deductible, and the $5,800 stop-loss amount that we have heard so much 
about are only suggested amounts and certainly not a guarantee. A 
closer look at the fine print of this legislation reveals that private 
insurers could choose to charge senior citizens double or even triple 
these amounts.
  Let's fact it, the kind of prescription drug benefit that we have 
repeatedly promised our Nation's elderly citizens, and that they now 
rightly expect, would cost at least $800 billion over the next decade. 
Yet the administration and congressional Republicans have only 
allocated $400 billion for the next 10 years for a Medicare 
prescription drug benefit. And during this same period, drug costs for 
senior citizens alone, according to the Congressional Budget Office, 
are expected to total almost $2 trillion.
  One of the primary reasons this legislation contains such glaring 
deficiencies in the drug benefits being offered to seniors is not 
difficult to understand--this administration and Congress have chosen 
to make tax cuts a higher priority than prescription drugs for senior 
citizens. Since the Federal Treasury has already been raided, there is 
not enough money to adequately cover prescription drugs. Senior 
citizens ought to be outraged--outraged. Senior citizens ought to be 
outraged. I am a senior citizen, and I represent a State with a lot of 
senior citizens, and I am outraged! I am outraged!
  What is the rationale for waiting until 2006--conveniently right 
after the next election cycle--to implement this legislation? Why wait? 
What are we so afraid of? We had Medicare up and running less than 12 
months after creating it from scratch in 1965. So why can't we do it 
now? Mr. President, it seems that this Congress is trying to pull the 
wool over the eyes of our Nation's senior citizens--hoping to claim 
victory and keep senior citizens in the dark until they become 
painfully aware of the fine print--the fine print--of this legislation 
upon a visit to their local pharmacist in 2006.
  Mr. President, this legislation, as it stands, does not provide the 
real, guaranteed, defined benefit that our senior citizens desperately 
need and does little to address the high cost of prescription drugs. I 
had hoped we could improve this legislation through the amendment 
process, but that does not appear to be the will of this Senate in the 
mad dash--the mad dash--to reach final passage before the recess. We 
should do better for our older citizens. We owe them so much.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM of Florida. Mr. President, this is a sad evening for me. I 
rise to oppose the prescription drug bill that we will be voting on 
shortly. No issue that we have debated over recent years has held so 
much promise, the promise that we could fundamentally reform Medicare 
from a program which today requires you to be sick enough to go to the 
doctor or the hospital in order to get services to one that would have 
its focus on wellness, including the opportunity to participate in a 
voluntary, comprehensive, universal, and affordable plan of 
prescription drugs.
  Prescription drugs are, in today's health care system, a fundamental 
part of maintaining good health. I have spent the better part of the 
last 5 years, as have so many of my colleagues--and in the case of 
Senator Byrd, many more than 5 years--attempting to deliver a 
meaningful drug benefit for our Nation's seniors. I have learned some 
things during this period. Unfortunately, what I have learned convinces 
me that the bill before us tonight is not worthy of America's seniors. 
Because what we are about to deliver is a hollow promise and little 
else.
  Why do I believe this? Why have I come to the conclusion that this 
proposal is not worthy of using all of the years of enthusiasm and 
commitment of America's seniors and many of those such as myself who 
represent a substantial number of those seniors? Why do we feel that 
this path is not acceptable?
  First, there are gaps in the benefit which are too large to overcome. 
I could not go home to Florida or to any other place in America and 
tell people that this legislation is a good deal. This is especially 
the case for those with large out-of-pocket expenses. How do we tell a 
senior who halfway through the first year in which this

[[Page S8657]]

will be available, 2006, their drug costs will double but they will 
continue to pay the monthly premiums?
  That would be analogous to car insurance which says: You will be 
covered in case you have an accident from January to August but if you 
have one from September to December it is out of your pocket. Who would 
buy that automobile coverage?
  The worst thing is that millions of seniors will never realize they 
have bought in to such an inadequate policy until it is too late.
  Second, this bill does not provide a universal drug benefit. Under 
this plan, for instance, if you are a Medicare beneficiary but you are 
also poor, you will not get the prescription drug benefits for 
Medicare. That is right. Seniors at 74 percent or below the poverty 
level would be excluded from the Medicare benefit. They would get their 
prescription drugs through Medicaid. This is a clear effort for the 
Federal Government to unload a substantial part of its prescription 
drug expenses on the States, States which are already struggling with 
serious financial problems.
  It is for that reason that the National Governors Association has 
opposed this design saying:

       It is not good health policy. It is not good precedent.

  The argument is made that this is all we can do. We cannot do better 
because we do not have the resources to do better. This is analogous to 
the child who just has shot his mother and his father and now throws 
himself on the mercy of the court claiming to be an orphan. We have 
made the decision to be in the financial status that we are, and 
the consequence of that decision, as we debated a few weeks ago when we 
adopted the Senate's budget for the year, is that we are going to have 
to have an unnecessarily and unacceptably low level of financial 
support for a meaningful prescription drug benefit.

  Third, this plan will cost many seniors more than they can afford. 
From repeated surveys, seniors have stated that they need a plan with 
no deductible so that coverage starts from the first prescription. And 
they need a premium of no more than $25 a month. Yet the sponsors of 
this bill suggest a $275 deductible and an average premium of $35 per 
month, an average premium which could actually be higher because the 
private insurance companies will determine the level of the premium. 
You can look through the over 600 pages of this bill and not find the 
number $35. That is a hope number but the actual number will be 
determined by the private insurance carriers.
  Fourth, this bill would subject millions of America's seniors to a 
giant experiment, a giant experiment in delivering prescription drugs 
through an untested delivery system, a system which is unheard of in 
the private markets. It is stated that this system will be justified 
because it will be efficient and will use the power of competition to 
suppress cost. If this was such a good system, why don't we provide it 
for all Federal employees so they can get, we as Federal employees can 
get, the benefit of this greater efficiency and cost savings? The 
reason is because insuring drugs only is not an actuarially sustainable 
risk. It has been analogized to buying a fire insurance policy just to 
cover the kitchen. No insurance company is going to sell you a policy 
for the most vulnerable area of your house to actually experience a 
fire.
  That is why no private insurance plan is available today which will 
provide you a prescription-only coverage. That is the equivalent of the 
kitchen in terms of its intensity and potential for explosion of cost 
within health care. Yet we are about to say that some 40 million of the 
most vulnerable and frail Americans are going to be the experiment for 
this ideology.
  I have said it before and I will say it again: There is simply no 
reason to subject our Nation's seniors to this grand experiment, 
particularly when we already know what works. There is no reason to 
pump extra dollars into private insurance plans.
  A few hours ago we adopted an amendment which will pump in $6 billion 
for additional benefits to HMOs. Those $6 billion could have been used 
to reduce the monthly premium, to close part of the gap of coverage. 
But what did we decide to do? We are going to give it to the HMOs so 
the Federal Government will be assuming more of the risk of coverage as 
opposed to these plans whose reason for being is to assume the risk 
and, therefore, have the incentive to provide the most efficient plans.
  We are begging these HMOs to participate in the Medicare Program for 
the sake of a private sector veneer, for the sake of an ideology 
untested. We actually tried a version of this before. Guess what. It 
didn't work. I speak from experience. Medicare HMOs have dumped 
hundreds of thousands of Floridians from their rolls as they have in 
virtually every other State, and more are being dumped each day. But 
this Congress, rather than look to the reality of past experience, has 
determined to embark on this collision course at the expense of seniors 
and at the expense of common sense.
  Fifth, I fear that we will have difficulty in convincing healthier 
seniors to sign up for this prescription drug benefit. As it is with 
virtually all insurance plans, it is critical that there be a mixture 
of those who have the greater likelihood of experiencing the risk with 
those who have the lesser likelihood in order to create an actuarially 
sound balance.
  One-third of our seniors would not break even under this legislation. 
That is, one-third of seniors with drug spending of less than $1,135 
per year would get no benefit should they voluntarily sign up for this 
plan. Therefore, how do we induce them to do so? One of the ways that 
we had induced them in the past was to have a meaningful catastrophic 
care provision, so that seniors who, today, are relatively healthy are 
insuring themselves against the risk that they might have a disease or 
an accident that would put them into much higher prescription drug 
costs.
  Last year we determined that the level necessary to induce a large 
enough number of healthy seniors to participate was $4,000 in an annual 
drug expenditure, and if their previous employer made a contribution, 
that would be counted toward that $4,000. This bill increases the level 
at which a person would be eligible for catastrophic care to $5,800, 
and employer contributions would be excluded. This new level is 
significantly less of an inducement for healthy seniors to participate, 
and the effect is likely to be disappointing levels of participation.
  Mr. President, I ask unanimous consent that a copy of today's front 
page article ``For Struggling Seniors, Medicare Drug Plan's Proof Is in 
the Purse'' from the Washington Post be printed in the Record following 
my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. GRAHAM of Florida. The reporter interviewed active, healthy 
seniors at centers in Cleveland, OH, and they were skeptical of the 
cost of the benefits that would be offered under this bill.
  Sixth, the fact that this bill doesn't take effect until 2006 is 
another brutal hoax on seniors, truly an abusive, shameful, misleading 
ploy.
  The fact is, many of those who most need prescription drug coverage 
today simply will not live long enough to get any benefits under this 
plan. As much as I have wanted to vote for a drug bill, for those 
reasons, I simply cannot vote for the one before us this evening.
  We have lost our focus. The focus should be on the Medicare Program 
in reform and how to help our 40 million seniors and disabled persons. 
Instead, the focus is everywhere else--insurance companies, drug 
companies, and hiding the flaws which ought to be exposed.
  This focus is often presented as the issue of choice. Choice has 
different meanings. For the idealog, choice means a choice among 
delivery systems. But for seniors, choice means doctors, hospitals, 
and, hopefully, prescription drugs. Yes, this gives seniors a choice 
among delivery systems. For instance, if you are one of the 89 percent 
of seniors in a fee-for-service Medicare Program, you will get a choice 
of between two or more prescription drug plans. If that fails, you will 
then drop back into traditional Medicare.
  The Stabenow amendment, which was defeated earlier in the debate, 
would have given seniors at least real choice between a prescription 
drug delivery system and fee-for-service Medicare as the delivery 
system.
  The tragedy is that we know what we ought to be doing. What we ought 
to be doing is building on the strengths of

[[Page S8658]]

our current Medicare system--one of the most popular health care 
programs in this Nation's history. We also ought to be seeing that we 
have a plan that is affordable and comprehensive.
  I think the dye is cast and this bill is likely to pass the Senate. I 
will be hopeful that in conference it will improve but I think there is 
every likelihood to suspect that it will get worse. It will be my 
intention to introduce legislation that will correct the flaws of this 
legislation which, among other things, will provide for a patients' 
bill of rights, so that as we herd more seniors into HMOs, at least 
they will know the standards by which they will be asked to operate 
within that.
  We are beginning to hear the first rumblings of dissent. Today's 
Miami Herald looked at the legislation before the two Houses and this 
is what they had to say:

       House and Senate bills attempting to offer prescription 
     drug cost relief to Medicare seniors can be summed up with 
     the movie title, Dumb and Dumber.
       Both bills promise dubious benefits without providing the 
     security that seniors want and have, with traditional 
     Medicare health coverage.

  I ask unanimous consent that a copy of that editorial be printed in 
the Record after my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 2.)
  Mr. GRAHAM of Florida. Medicare has served our seniors superbly. And 
where it has not, as in the area of prescription drugs, it has been 
because Congress has not allowed it to do so.
  I hope when this bill comes back from conference, it will be better 
but I doubt that will be the case.
  The PRESIDING OFFICER. The Senator has consumed 15 minutes.
  Mr. GRAHAM of Florida. Mr. President, I will vote no today in the 
hopes that soon we will have an opportunity to pass a prescription drug 
bill that will fully meet the needs and expectations of older 
Americans.

                               Exhibit 1

               [From The Washington Post, June 26, 2003]

   For Struggling Seniors, Medicare Drug Plan's Proof Is in the Purse

                           (By Ceci Connolly)

       CLEVELAND--As the Medicare drug package moving through 
     Congress takes on an air of inevitability, Washington 
     politicians are already jostling for credit. But in this 
     working-class city 370 miles from Capitol Hill, prospects for 
     the plan's eventual success may lie deep inside the handbags 
     of women such as Marie A. Urban.
       Stashed in there are her monthly Social Security statement, 
     a half-dozen prescription discount cards and insurance 
     letters rejecting several recent medical claims. The scraps 
     of paper--creased and scribbled on--document a life near the 
     financial edge.
       After working 24 years as the secretary at St. Paul's 
     Shrine, Urban, 72 collects $843.70 a month in Social 
     Security. After housing and Medicare payments, she has $459 
     for utilities, food, car insurance, taxes and medication. 
     ``Some months I have 87 cents to live on,'' she said. With 
     her drug bills this year already exceeding $1,500, she said 
     she probably will try to cobble together the money to buy the 
     prescription coverage that lawmakers plan to offer Medicare 
     recipients.
       ``I don't know,'' she said. ``My finances right now are 
     very tight. I guess I'd have to go with it.''
       In interviews at two senior centers here, Urban and other 
     retirees expressed deeply mixed feelings about the voluntary 
     prescription drug benefit scheduled for votes in Congress as 
     early as today. They exhibited a visceral distrust of 
     Washington, voicing skepticism that elected officials would 
     deliver a package that fits their health needs and budgetary 
     constraints--in time for them to use it. They were 
     disappointed that in most cases, benefits would not begin 
     until a person spent nearly $1,000 a year on prescription 
     drugs. And they were annoyed--but not totally surprised--that 
     the program would not begin until 2006.
       ``They've been kicking this ball around for a while,'' said 
     Carrie Adams, 66. ``If they wanted to solve this, they would. 
     The people with the ball are not relating to the people out 
     here.''
       Ruby Bogus, 83, was a bit more sanguine. ``We just have to 
     live longer, girls,'' she said.
       Both the House and Senate plans would require seniors to 
     pay about $35 in monthly premiums and an annual deductible of 
     $250 to $275 before receiving any subsidy. The Senate plan 
     would cover half of a person's annual drug expenditures 
     between $276 and $4,500. The recipient would pay the next 
     $1,300 in prescription costs. If the person's total drug 
     costs rose above $5,800 in a year, subsidies would resume.
       The House bill would offer retirees an 80 percent subsidy 
     on drug bills between $251 and $2,000 and no coverage for the 
     next $1,500 worth of medications. The ``catastrophic 
     coverage'' would begin when costs reached $3,501.
       Asked whether either plan was attractive, Emily Eckert 
     pulled a tiny notebook from her purse. It listed her daily 
     medications: two pills to control sugar, one for high blood 
     pressure, another to regulate potassium. Using her People's 
     Drug Mart discount card--also tucked in her pocketbook--
     Eckert spends about $100 a month on prescriptions, plus $22 
     for diabetes test strips.
       At 79, she has outlived two husbands, but at a high cost. 
     Caring for her first husband, who had cancer, and the second, 
     who had diabetes, wiped out $7,000 in savings and two life 
     insurance policies valued at $3,000. Eckert has been in 
     bankruptcy and worries about helping her three children, 10 
     grandchildren and 10 great-grandchildren.
       ``If it wasn't for this center, I'd be starving,'' she 
     said, referring to the Senior Citizens Resources facility in 
     the Old Brooklyn neighborhood. She wants to buy the drug 
     coverage proposed for Medicare but isn't certain she will be 
     able to pay the premiums.
       The situations of Marie Urban and Emily Eckert may sound 
     dire, but in many respects they are typical for the millions 
     of senior citizens and disabled people who rely on Medicare 
     for their health care. Not poor enough to qualify for 
     Medicaid, yet not fortunate enough to have substantial 
     savings or a lucrative retirement package, such people have 
     clamored for years for help with the rising cost of 
     medication.
       Assuming the House and Senate pass their spending bills and 
     then resolve their differences, Congress hopes to answer 
     those demands by spending nearly $400 billion on drug 
     coverage over 10 years. The legislation would mark the 
     largest Medicare expansion in the program's 38-year history 
     and could provide a political boost to President Bush and 
     fellow Republicans who campaigned on the promise of 
     alleviating drug costs.
       However, as the conversations in Cleveland illustrated, 
     many older Americans are watching with guarded optimism and 
     could revolt if the final package fails to meet expectations. 
     That would dash Republicans' hopes of taking away an issue 
     that has been mostly associated with Democrats for decades.
       Their elderly residents' fundamental question is whether 
     they would save money under the new plans. The answer isn't 
     easy.
       Urban is torn. Most years she spends about $800 on 
     medicine, so a benefit that does not begin paying off until 
     after $1,000 in out-of-pocket spending looks like a money 
     loser for her. But this year, a mysterious infection and 
     several hospitalizations pushed her drug bills to $1,500, and 
     the federally subsidized insurance would have saved her 
     money. Urban drives 30 minutes to several pharmacies in the 
     Cleveland suburbs to shop for the best deals. She gets 
     agitated thinking about the complex math of the new proposal.
       Howard Bram, 77, also complained about the complexity of a 
     program that will involve choosing a plan, tracking out-of-
     pocket expenses and knowing when the coverage kicks in, 
     lapses and then resumes in severe cases, all according to a 
     sliding scale of benefits.
       ``It's just gonna blow their minds,'' he said. Bram is 
     trying to figure out whether the drug plan would put a 
     significant dent in the cost of the eight medications he 
     takes.
       Carrie Adams and Jean Nagorski are precisely the sort of 
     customer-patients that Medicare will need--comparatively 
     young, healthy and with some retirement income. Yet both 
     women doubt they would buy the Medicare drug coverage because 
     they believe they get a better bargain with the current 
     supplemental insurance plans. Without clients such as Adams 
     and Nagorski, policymakers worry, the new Medicare package 
     will draw the oldest, sickest and poorest patients, leading 
     to skyrocketing costs.
       Despite the plan's limits, Adams predicted many friends 
     will sign up for any program that might lower their drug 
     bills. ``They're gonna jump on this like white on rice,'' she 
     said.
       Zev Harel, 73, agreed.
       ``There are always those who hope for a revolution, but 
     what has worked in the United States is evolution,'' said 
     Harel, a professor at Cleveland State University and board 
     member of the Western Reserve Area Agency on Aging. Many of 
     his friends will be disappointed with the limits of the drug 
     coverage, he said, but he considers it ``a major improvement 
     over the current situation.''
       If analyzed in the context of other types of insurance, the 
     Medicare drug plan is a reasonable approach, Harel said. 
     ``This follows on the principle of purchasing protection.''
       But many others said the fundamental promise of Medicare--a 
     system they supported through payroll taxes throughout their 
     careers--has always been health care for all, and in today's 
     world, that should include prescriptions.
       ``The politicians seem to say it's better than nothing, and 
     we should be grateful,'' Urban grumbled.
       To some retirees here, who chip coupons and follow the 
     news, Washington's Medicare is just the latest example of the 
     doings of out-of-touch elitists.
       Nagorski reached into her purse and retrieved a recent 
     newspaper clipping detailing the personal riches of the 
     United States' elected leaders. The article identified 
     several millionaires, including Sens. Bill Frist (R-Tenn.), 
     Edward M. Kennedy (D-Mass.) and Ohio's senators, Mike DeWine 
     and George V. Voinovich, both Republicans.
       ``Do you really think they care about the average person 
     with what they earn?'' Nagorski asked. ``I don't think any of 
     them are ever going to have to live on $1,100 a month.''

[[Page S8659]]

     
                                  ____
                 [From the Miami Herald, June 26, 2003]

      The Wrong Prescription--Congress Considers Inadequate Bills

       U.S. House and Senate bills attempting to offer 
     prescription-drug cost relief to Medicare seniors can be 
     summed up with a movie title: Dumb and Dumber. Both bills 
     promise dubious benefits without providing the security that 
     seniors want, and have, with traditional Medicare health 
     coverage.
       With election-year politicking started already, the bad 
     news is that a bad bill may actually be enacted after years 
     of waiting. The politicians may easily be miscalculating. 
     Most seniors, who faithfully turn out to vote, want 
     prescription-drug coverage through Medicare--not the private 
     insurers that the GOP-controlled Congress and White House are 
     pushing.
       Further, an increasing number of Americans--32 percent 
     today versus 16 percent in 1999--says that neither the 
     Republican Party nor the Democratic Party is doing a good job 
     on the issue of prescription-drug benefits for the elderly, 
     according to a recent poll by the Kaiser Family Foundation 
     and Harvard School of Public Health. The proposed 
     congressional legislation can only deepen that sense.
       Each bill would cost about $400 billion over 10 years and 
     suffer from complexity and coverage gaps. Under the Senate 
     bill, for instance, a senior would pay the first $275 in drug 
     costs (the deductible), then half of the costs--up to $4,500. 
     They would then get no benefit until the bills total $5,800 
     (an out-of-pocket expense of $3,700), after which 90 percent 
     of the cost would be covered. Have you got that?
       It gets worse. Beyond the deductible and co-payments, 
     seniors would pay a monthly premium--even while getting no 
     benefits when they are in the coverage gap. Although the 
     premium is ``estimated'' at $35 a month, it's actually 
     subject to a drug-cost inflator that, at the moment, is four 
     times higher than inflation. It's also subject to 
     interpretation by private insurers, who presumably would 
     contract with the government to administer this plan--an 
     uncertain assumption.
       The Senate bill also provides for a ``fallback'': if a 
     region doesn't attract two competing private insurers, the 
     government may contract with pharmacy-benefit managers, firms 
     that actually manage the prescription-drug programs of most 
     large health-insurance plans. So why contract with the 
     private insurers in the first place when these pharmacy-
     benefit managers have the expertise to drive down drug costs 
     by leveraging Medicare's enormous volume-buying power?
       That the pharmaceutical companies are trying to strip this 
     fallback provision does indicate who wants the benefits 
     here--and we're not talking about Medicare seniors.
       The House GOP measure, indeed, has no fallback provision--
     which could leave large areas of the country without access 
     to the Medicare drug benefit. It has the same premium problem 
     and a bigger coverage gap. But it would provide more generous 
     benefits: A $250 deductible and 80 percent cost coverage up 
     to $2,000.
       Neither bill offers the drug-price relief, simplicity and 
     security that seniors need. But what do you expect from a 
     Congress and White House that already have spent $1.7 
     trillion on tax cuts since 2001? Seniors, and critical 
     Medicare and Social Security concerns, apparently only matter 
     as talking points for an election year.

  The PRESIDING OFFICER. The Senator from Nevada is recognized.
  Mr. REID. Mr. President, I know the Senator from Arizona is here to 
speak. He will speak for 10 or 15 minutes, is my understanding.
  We are at a point where we have very few amendments left. We have a 
couple that may take a little debate but I think most of them will be 
disposed of with minimal debate. I hope everyone understands we are 
moving this along as quickly as possible. The managers have worked for 
2 weeks on this matter.
  After the Senator from Arizona finishes his statement, we should be 
in a position to have a number of votes lined up for later this 
evening.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.
  Mr. McCAIN. Mr. President, the passage of the Medicare prescription 
drug benefits legislation is a difficult vote for me. It is 
unacceptable that in a country as wealthy as ours seniors across the 
country are struggling to afford the high cost of prescription drugs. I 
have supported adding a prescription drug benefit to Medicare because I 
believe no beneficiary should have to choose between life-sustaining 
prescription medications and other vital necessities. Far too many 
American seniors face those choices every day. Many ration their 
supplies of medication, skip dosages, or cut pills in half.
  In Arizona, busloads of seniors depart from Phoenix and Tucson every 
week, heading south to Mexico to purchase lower cost prescription 
drugs. The story is similar across the northern border, where seniors 
make daily trips to Canadian pharmacies. Throughout the country, an 
increasing number of seniors are looking to online pharmacies, selling 
reduced-priced prescriptions imported from other countries, oftentimes 
with questionable safety.
  That said, I also recognize, as does every other Member of Congress, 
that Medicare is on a fast track toward bankruptcy. The most recent 
Trustee's Report adjusted down the year Medicare will reach financial 
insolvency by 4 years, to 2026. Clearly, it is incumbent upon us to 
include comprehensive reform of the system in any Medicare prescription 
drug package in order to ensure that Medicare is financially sound for 
current beneficiaries as well as future generations.
  Medicine has changed substantially since the creation of the Medicare 
system in 1965. Advances in medical technology and pharmaceuticals have 
led to more prescription-based treatments. The simple fact is, 
Americans now consume more prescriptions than ever before. In 1968, 
soon after the enactment of Medicare, American seniors spent about $65 
a year on a handful of prescription medications. Today, seniors fill an 
average of 22 prescriptions a year, spending an estimated $999.
  The bill before us represents one of the largest enhancements to 
Medicare since its creation, setting up an entirely new bureaucracy and 
establishing a sizable new entitlement program. I believe this bill 
addresses a real problem, the need to help struggling middle and low-
income seniors. However, we must have no illusions. There are dangerous 
complexities and potential unintended consequences associated with this 
bill.
  First, we must be realistic about the cost of this new entitlement 
program. For anyone who believes this bill will cost a maximum of $400 
billion over the next 10 years, I have some oceanfront property in Gila 
Bend, AZ, to sell you.
  Medicare and Social Security, together, represent an enormous 
unfunded liability for our Nation. In a few short years, millions of 
baby boomers will hit retirement age and the system will quickly become 
insolvent.
  The numbers speak for themselves. Medicare currently has an unfunded 
liability of $13.3 trillion. Some have estimated the unfunded liability 
of the package before us in the $6 to $7 trillion range. A scholar at 
the American Enterprise Institute Scholar estimated that if passed, the 
Senate's prescription drug benefit legislation will result in a $12 
trillion unfunded liability. Social Security and Medicare, with a 
prescription drug benefit, will together consume an estimated 21 
percent of income taxes by the year 2020.

  Long after the Members of this Congress and administration have left 
office, our children and our grandchildren, and a future Congress and 
administration, will be struck with the burden of cleaning up the mess 
we have created.
  In the past 2 years, we have passed two large tax cuts. Government 
spending, however, has continued to increase well above the inflation 
use. Much of that spending is unnecessary, and represents a lack of 
fiscal discipline more common in times of federal budget surpluses. Yet 
our current budget deficit and national debt have risen dramatically. 
Security concerns in the post 9/11 era necessitate substantial 
increases in spending on defense and homeland security. We cannot 
sustain this level of fiscal profligacy indefinitely.
  This extraordinary large new entitlement we are debating will impose 
an equally extraordinary burden on taxpayers. The money has to come 
from somewhere, and none of the ``somewheres'' are desirable. The 
reality is, this new benefit will be funded by raiding other 
entitlement trust funds, or by increasing our national debt, or by 
substantially increasing taxes.
  Despite the enormous cost of this bill, this new entitlement will not 
provide the prescription drug coverage many seniors expect to receive. 
Nor does it enact significant reform measures needed to ensure the 
long-term solvency of the Medicare system.
  Those seniors who think this bill will solve their financial problems 
will soon learn that there are substantial limitations to the benefit. 
When it does pass, the new prescription benefit will not be available 
immediately. In fact, it will take several years just to establish the 
new bureaucracy which will administer the prescription benefits.

[[Page S8660]]

  Low-income seniors will benefit from this package, and I am pleased 
that they will. Many other seniors, however, will not receive a 
generous benefit, and might not even get out of the system what they 
will pay in deductible sand premiums. The Congressional Budget Office 
estimates that 37 percent of employers currently providing coverage to 
Medicare eligible seniors, will drop coverage if this bill passes. Last 
week, the Wall Street Journal quoted one analyst who called this bill 
the ``automaker enrichment act,'' because companies such as the 
automakers who currently provide their retired employees with a 
prescription drug benefit are unlikely to continue doing so if the 
Federal Government assumes part of the burden for them.

  I am concerned that we are about to repeat--I emphasize repeat--an 
enormous mistake. I have been around here long enough to remember 
another large Medicare prescription drug entitlement program we enacted 
in 1988, Medicare Catastrophic. The image of seniors outraged by the 
high cost and ineffectiveness of that package should be a cautionary 
tale to all of us.
  Moreover, I am not confident that the Medicare Advantage portion of 
this new scheme, which establishes regional PPO options for seniors, 
will succeed. Many in the insurance industry have expressed skepticism 
and concern that such plans will not be profitable. In the end, the 
Federal Government, which acts as a fallback if no private plans are 
available, might end up covering the majority of the country. Not 
exactly the reform we all had hoped for.
  The American people should be aware that this new benefit has 
substantial cost to seniors, and to current and future generations of 
taxpayers, who will bear the majority of a crushing financial burden. 
There will be unintended consequences of our actions. We can be sure of 
that. Moreover, we should be honest about the cost of this measure--
$400 billion is merely a down payment for what we are creating. Given 
the fiscal realities we face, realities that will become more dire with 
every passing year, Congress and the administration should have 
committed to addressing the acute need for a drug benefit to alleviate 
the impossible choices confronting lower income seniors. And, most 
importantly, begun to seek consensus among responsible Members of both 
parties for the reforms we all know are necessary to save Medicare.
  I recently heard a good assessment of this package: it is ``an effort 
to do too much with too little, and thus doing nothing very well at 
all.''
  There are several good amendments that have been adopted during this 
debate. I am encouraged that a bill Senator Schumer and I worked on for 
the last 4 years, might finally be enacted into law as part of this 
package. Our amendment will increase competition in the pharmaceutical 
industry and ensure that all Americans have access to lower cost 
generic drugs. That amendments, which would not have been possible 
without the leadership of Senator Gregg and the support of Senator 
Kennedy, will reduce the cost to the government of any Medicare 
prescription drug benefit.
  I was happy to cosponsor an important amendment with Senators 
Feinstein, Nickles, Chafee, and Graham, which I believe will add some 
fiscal discipline to the bill and the Medicare program. The amendment 
will add means testing to Medicare Part B--increasing co-payments for 
wealthier seniors.
  I am also pleased that several measures which I have supported and 
cosponsored as separate bills, have been adopted as part of this 
package, including the Immigrant Children's Health Improvement Act, the 
Blind Empowerment Act, and funds to reimburse hospitals for the 
uncompensated cost of caring for undocumented immigrants. Additionally, 
there have been several good amendments that I think will improve 
overall health care in our country. In particular, I believe Senator 
Grassley's amendment which requires agreements between brand and 
generic pharmaceutical companies to be reported to the Federal Trade 
Commission and the Justice Department will shine some much needed light 
on potential collusive agreements.
  Despite these welcome improvements, and recognizing that this 
legislation will address the crisis faced by lower income seniors, the 
costs of this entitlement remain, simply put, beyond the means of this 
country absent real reform of Medicare. Therefore, after much thought, 
I regret that I cannot vote for this legislation. I have reached this 
conclusion, not because I believe our seniors and disabled do not need 
or deserve prescription drug coverage, but because I do not believe our 
country can sustain the cost of this benefit, which will not, despite 
it's staggering expense, provide the assistance many beneficiaries will 
expect.
  As I noted, Congress and the administration should have addressed the 
acute need for assistance of lower income seniors. And before we 
consider extending that assistance to other seniors, we should save 
Medicare first by instituting the reforms we all know are necessary, 
but which we apparently prefer to defer until we have retired from 
public service. I know that those reforms pose a very difficult 
political challenge to us, and that the bipartisanship we have 
commended in the drafting and consideration of the legislation before 
us today would be put to a far more severe test should we genuinely 
attempt to save the Medicare system from insolvency. However, should we 
simply add another huge, new unfunded liability to an already fiscally 
unsound entitlement, imposing a breathtakingly heavy tax burden on our 
children and their children, with devastating consequences for their 
prosperity and the national economy, we will have done the one thing no 
public servant should want to be remembered for, we will have left the 
country worse off than we found it.
  I yield the floor.
  Mr. REID. I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Alexander). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. 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. REID. Mr. President, the Senator from Michigan, Mr. Levin, has 
been extremely patient. He has been waiting for us to get a unanimous 
consent for his amendment. We are very shortly going to get that, but 
prior to that being announced, the Senator from Michigan is going to 
offer amendment No. 1111. He is going to speak for 10 minutes. Senator 
Stabenow will speak for 5 minutes, and Senator Grassley and Senator 
Baucus will speak for up to 10 minutes in opposition, if they need to. 
The leaders will arrange a vote at some time that they have agreed 
upon.
  I ask unanimous consent that that be the case.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Senator from Michigan.


                           Amendment No. 1111

  Mr. LEVIN. Mr. President, the amendment which I will be offering is 
designed to ensure that the CBO estimate of 37 percent of current 
retirees who now get their prescription drug coverage from their former 
employer and who will lose that coverage as a result of this bill will 
at least have the option of a prescription drug coverage under the 
Medicare fallback.
  There are a number of problems which have been identified with this 
bill. Some of them are significant problems which cause many of us, who 
very much favor having a prescription drug benefit available to our 
seniors, great pause before we support this bill. For instance, there 
is a so-called yo-yo effect in this legislation. Some have called it 
the revolving door effect. The problem there is that seniors who are 
offered two private plans in their service area must pick one of those 
private plans. They cannot use the Medicare fallback. There will not be 
a Medicare fallback with a guaranteed premium because if two or more 
private companies offer a prescription drug program, with whatever 
premium they decide upon, then the seniors in that service area must 
pick one of those two private plans.
  What happens then if the senior says, okay, I am going to pick that 
private plan A, and then a couple of years later the private sector 
decides to pull out of that service area? At that point, the senior 
will be offered the Medicare fallback.

  Then what happens if the private insurance folks decide to come back 
into

[[Page S8661]]

that service area? Could the senior keep the Medicare fallback plan? 
No. They are kicked out of that plan even if they want it. They have to 
go into one of the private plans again. Then that can be repeated over 
and over again. Each time private insurance companies decide to pull 
out of an area, the seniors then can get into a Medicare fallback, but 
when private companies come into the service area again, they are 
removed from the Medicare Program and have to go back to one of the 
plans. It is confusing, uncertain, unfair. It is the yo-yo effect, what 
others call the revolving door. It is a real problem with this plan. We 
ought to give much more certainty to that.
  Another problem identified is the so-called donut hole problem. We 
have heard quite a bit about that problem where once a senior is told 
her drug spending reaches $4,500 for a year, she will have to pay 100 
percent of the costs of the prescriptions until the total drug spending 
reaches $5,800. Now, premiums will continue to be paid during that 
period, but the gap in coverage will be there, so from $4,500 to 
$5,800. There is not a 50/50 deal between the plan and the senior; it 
is 100 percent burden of the senior during that period. That is a real 
gap in coverage. That is a gaping hole in coverage. I don't know of any 
other insurance program that is so unfairly structured. That is another 
problem which has been identified. There have been efforts made to 
correct that, without success.
  Another problem identified is that the private insurance plans that 
may come into a service area do not have a cap on the premium; it is an 
unlimited premium. That is a problem which has been identified. The 
effort to put a cap on the premiums has failed.
  But of all the flaws that have been identified, the weaknesses in 
this program, the one that troubles me most and that troubled seniors 
most is the fact that it has been estimated by the CBO and by the 
Health and Human Services folks who operate Medicare that 37 percent of 
current retirees who have a prescription drug program through their 
former employer are going to lose their prescription drug benefit 
following the enactment of the plan before the Senate; that is, a 
situation where we are actually going to see 37 percent of our 
seniors--that is the estimate--who currently have a benefit being worse 
off as a result of what we do.
  There is a debate here as to whether the plan before the Senate is 
going to be good for seniors because of the donut hole or because of 
the fact there is no cap on premiums or because of this yo-yo effect, 
this revolving door effect. Is it a good plan? Is it not a good plan? 
Will seniors who don't have health insurance, a prescription drug 
program now, actually want to opt into this program? That people can 
debate. But, at a minimum, we should do no harm. At a minimum, we 
should not have millions of seniors who will lose an existing 
prescription drug program as a result of our enacting a plan. That is 
the time bomb in the bill before the Senate. We should not leave people 
worse off than they otherwise would be.
  During the markup of this bill, we had some experts who testified. 
One was Tom Scully, Administrator of the Centers for Medicare and 
Medicaid Services at HHS:

       Among employees who have employer-sponsored insurance, our 
     estimate is consistent with 37 percent having their coverage 
     dropped.

  A little later on, page 6 of the transcript of the markup of the 
Finance Committee:

       TOM SCULLY: Thirty-seven percent of those retirees who have 
     employer-sponsored coverage . . . [will lose their coverage].

  Then, a little later on in the markup of the Finance Committee, 
Senator Conrad was going to ask a question of Mr. Holtz-Eakin, our CBO 
Director, about this issue, and the majority leader posed a question.

       Senator FRIST: Senator Conrad, could I--on that last--I'm 
     over here--on this employers dropping it, can I just ask a 
     follow-up question just real quick.
       Senator CONRAD: Yeah. Absolutely.
       Senator FRIST: You said--is it 37 percent of employers are 
     going to drop----
       TOM SCULLY: Yes.

  Colleagues, Senator Frist said something which I hope will 
reverberate in this Chamber.

       Senator FRIST: This has huge implications.

  Then the Director of the CBO said the following:

       Mr. HOLTZ-EAKIN: Thirty-seven percent of employees--of 
     retirees with such employee insurance.

  Then there was a voice, unidentified by the reporter:

       MALE VOICE: As I understand it, this 37 percent is the 
     effect of our legislation.
       Mr. HOLTZ-EAKIN: Correct.

  Colleagues, Senator Frist is correct. This has huge implications. And 
we ought to address it. The least we can do is to direct Health and 
Human Services to make available to designate a Medicare backup plan 
for the 37 percent of our current seniors who have a prescription drug 
program through their previous employer to make available to them the 
Medicare backup program so they at least know there will be a Medicare 
backup for them if they lose their current prescription drug program, 
as is projected by the Congressional Budget Office and by Health and 
Human Services. It seems to me that is the least we can do.
  It still will be harmful because it is very unlikely for most of the 
people that the Medicare backup will be as good as their current 
prescription drug program. It is unlikely. But at least we can say, for 
those people, there will be a Medicare backup plan designated by HHS 
which will have the criteria established by HHS and the premium 
established by HHS. That is the least we can do for those who are going 
to lose their prescription drug benefit that they currently have 
following the enactment of this legislation.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator has 1 minute 15 seconds.
  Mr. LEVIN. I reserve the remainder of my time.
  I ask unanimous consent to call up amendment No. 1111.
  The PRESIDING OFFICER. The amendment is pending.
  Mr. LEVIN. I ask unanimous consent that my colleague from Michigan, 
Senator Stabenow, be listed as a cosponsor of this amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. LEVIN. I ask unanimous consent that the excerpts from the quoted 
testimony be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Senator ROCKEFELLER. Okay. Actual dollars in the plan that 
     are spent on, number one, the drug benefit itself, provider 
     add backs and that's all I can see. I don't need the third 
     one I've written down.
       TOM SCULLY. These are figures that were in the table. We 
     issued it to the Committee. Since this table was put 
     together, there were some modest modifications to the drug 
     benefit. In particular, putting the cap at $4,500.00 instead 
     of $4,725.00. That changes the estimate on the drug benefit 
     from $408 billion to $402 billion over ten years.
       Senator ROCKEFELLER. Four hundred two?
       TOM SCULLY. Four hundred two. Six billion dollars lower. 
     And, the provider add backs are listed on pages 2 and 3--or, 
     pages 1 and 2----
       Senator ROCKEFELLER. Could you give them to me?
       TOM SCULLY. There's a long list of them, and simply adding 
     them up is not that--they interact in many ways.
       Senator ROCKEFELLER. [Unintelligible].
       TOM SCULLY. [Unintelligible].
       Senator ROCKEFELLER. Next one is, percent of employers who 
     drop retiree coverage. And, the number and percent of 
     beneficiaries who will lose retiree coverage under this plan 
     so far.
       TOM SCULLY. We don't have an estimate of the number of 
     employers. But, among employees who have employer-
     sponsored insurance, our estimate is consistent with 37% 
     having their coverage dropped. Of that 37% of those who 
     have such coverage, about 11% of beneficiaries overall.
       MALE VOICE. Could you repeat that? I didn't get the--you 
     might pull the microphone up a little closer to you.
       TOM SCULLY. Thirty seven percent of those employees who 
     have employer-sponsored coverage, it's 11% of beneficiaries 
     overall.
       Senator ROCKEFELLER. And, what percent would drop it?
       TOM SCULLY. We don't know the number of employers who would 
     drop coverage. We know the number of employees who are 
     effected.
       MALE VOICE. I thought you gave an estimate--excuse me--this 
     is Senator Rockefeller's time, and I just want to make sure 
     I----
       TOM SCULLY. Let me repeat so it's----
       MALE VOICE. Just repeat what you said.
       TOM SCULLY. Underlying our estimate are that 37% of 
     employees who have beneficiaries who have employed-sponsored 
     insurance, retirees who have such employer-sponsored 
     coverage, 37% will lose their coverage. And, that is 11% of 
     total beneficiaries.

[[Page S8662]]

       MALE VOICE. Could I also add into this, Senator 
     Rockefeller? What we also need to know is, what percentage of 
     the figure you said might drop--or, case would be dropped 
     even
       Or, they could drop it entirely.
       In those latter two cases, they can use the additional 
     resources to provide other kinds of employee compensation.
       What we've done is examine the literature to the extent 
     that we can find it on employer responses to the shape of 
     compensation packages in shaping our estimate of the number 
     that would drop.
       Senator CONRAD. Okay. Let me go to something that I have 
     found difficult to follow. And, I'd like, if I could, to have 
     the attention of the Chairman.
       Senator FRIST. Senator Conrad, could I--on that last--I'm 
     over here--on this employers dropping it, can I just ask a 
     follow up question just real quick.
       Senator CONRAD. Yeah. Absolutely.
       Senator FRIST. You said--is it 37% of employers are going 
     to drop----
       TOM SCULLY. Yes.
       Senator FRIST. This has huge implications.
       Mr. HOLTZ-EAKIN. Thirty seven percent of employees--of 
     retirees with such employee insurance.
       Senator FRIST. Okay.
       Mr. HOLTZ-EAKIN. And, that's 11% of overall Medicare 
     beneficiaries.
       MALE VOICE. Okay. If we did nothing, how many would be 
     dropped over the next ten years? If you look at these curves, 
     the employees--yours are getting out of the business, 
     anyway--not out of the business, but the curve is going 
     down.
       What would it be ten years from now?
       Mr. HOLTZ-EAKIN. We don't have an estimate of that. We 
     isolated our estimate on the impact of the bill above the 
     baseline. That's a question about the baseline estimate, and 
     I don't have that.
       MALE VOICE. Okay.
       MALE VOICE. It's 37%, just so we're clear with each other. 
     As I understand it, this 37% is the effect of our 
     legislation.
       Mr. HOLTZ-EAKIN. Correct.
       MALE VOICE. I think the question Senator Frist has is, in 
     your baseline you have an assumption that there will be 
     changes, though, correct? Or, don't you?
       Mr. HOLTZ-EAKIN. No, we do not.
       MALE VOICE. And, would you suggest that that's an 
     inaccurate baseline?
       Mr. HOLTZ-EAKIN. In reality----
       MALE VOICE. Its reality is not that. And, I can have a few 
     of my retirees in Pennsylvania give you a call if you have 
     any questions on that subject.
       I mean, I think that's an unfair--I mean, baselines are 
     supposed to be real, but not supposed to be artificial. 
     That's artificial.
       Mr. HOLTZ-EAKIN. The baseline issue that we--that is most 
     important, that we capture is new retirees not having such 
     coverage.
       This is a provision that would induce existing retirees who 
     have such coverage to have their coverage dropped or modified 
     by the their employer.
       MALE VOICE. I understand what this provision does. I just 
     want you--I just want an understanding of what would happen 
     without this being calculated into the baseline.
       MALE VOICE. Senator Santorum, we've looked at the 
     literature and the surveys of the employee benefits 
     consultants of retiree offerings.
       What we understand is mainly happening is that, for current 
     workers who are newly hired, they are--employers are no 
     longer putting as part of their compensation package a 
     guarantee of retiree healthcare.
       As far as we can tell, the base of people who are near 
     retirement or retired are not having their healthcare--
     there's not that much erosion going on.
       MALE VOICE. I'll have the people from Bethlehem Steel and 
     about seven other steel companies in Pennsylvania that I can 
     just think of off the top of my head give you a call, and let 
     you know that their retiree health benefits have been 
     eliminated. I mean, it's happening all over the place.
       Senator Rockefeller, would you like to join into this? I 
     mean--so, I just--I think you need to look at your 
     baseline, please.
       And, then give us an understanding of maybe looking back 
     over the last few years and projecting forward given the 
     trends what--how the baseline would be affected. And, I think 
     that would much--be a much fairer score as to what the impact 
     of this bill would be.
       Senator CONRAD. Mr. Chairman?
       The CHAIRMAN. Senator Conrad.
       Senator CONRAD. Let me just say that I agree entirely with 
     Senator Santorum. We know that people are dropping--employers 
     are dropping their plans.
       And, I understand your answer to this question is the 
     effect of this bill.
       I think one of the things we've got to do--Senator Frist 
     said it well--this has got major implications; 37% having 
     their healthcare plans dropped. That means it's going from 
     being on the company's nickel to being on our nickel; that 
     dramatically increases the cost.
       So, if we can find ways to hold that number down, that's in 
     our interest and we should pursue it.
       Let me go----
       Mr. HOLTZ-EAKIN. If we could, before we----
       Senator CONRAD. Yes, sir.
       Mr. HOLTZ-EAKIN. I understand the policy interest, and * * 
     *.

  The PRESIDING OFFICER. The Senator from Michigan.
  Ms. STABENOW. Mr. President, I am very proud to be joining with my 
colleague on this very critical amendment. Can you imagine, you are 
someone who has worked hard all of your life, you have been fortunate 
enough to have a good-paying job with benefits, you are now retired and 
you are fortunate to have good health benefits and you find yourself in 
a situation that, as a result of an action taken here--and certainly 
there is an effort to move forward and provide people with prescription 
drug coverage--but if those who already have coverage find, as a result 
of an action we take, there is an incentive for their employer to drop 
their coverage, how would you feel about that?
  I know how I would feel about that. This amendment is about making 
sure those who have worked hard all of their lives, who have retired 
and have had the confidence and the security to know that those health 
care benefits, retirement benefits they have worked so hard to have in 
their retirement, would be secure--to make sure if someone is covered 
right now for prescription drugs that he or she not lose the ability to 
continue, at least to know that if their employer changes their 
benefit, they would have immediately the security of the backup 
Medicare prescription drug plan.
  This is very critical in a State such as Michigan where we have 37 
percent of our retirees who have insurance, who right now are fortunate 
enough to have health care insurance and prescription drug coverage.
  While there are positives in this bill so there are those who will 
receive help as a result of being low-income seniors, or those with 
very high prescription drug costs who will receive help under this 
bill, one of the glaring omissions and great concerns that I have 
relates to what Senator Levin was just speaking about, the unfairness 
of saying to a group of people who have been fortunate enough to have 
insurance and prescription drug coverage that, as a result of something 
done by the Congress, they would potentially lose that coverage. That 
makes absolutely no sense.
  What our amendment is saying is if, in fact, their employer would 
have the incentive to change or drop their coverage, they should be 
guaranteed that something else is right there, that Medicare as a 
backup should be there.
  My preference would be that we change the formulas so there is not 
the incentive to drop anyone. That was one of the reasons I strongly 
supported Senator Rockefeller's amendment and other amendments that 
have been on the floor. Because my first choice is we take away any 
incentive for anyone to lose their prescription drug coverage. But 
unfortunately those amendments were not successful. We did not have the 
support to do that here.
  Given that, we are now coming in and saying if, in fact, an employer, 
because of the incentives, makes a determination to drop coverage, that 
at a minimum, out of a sense of decency and fairness, at a minimum that 
retiree needs to know that Medicare prescription drug coverage, through 
Medicare, is available without wading through tons of insurance forms 
or picking through plans or going through all the ups and downs that 
have been described so many times in this Chamber. They need to know, 
after having coverage, having it available, having it dependable, that 
another plan is right there for them. That is the least we can do.
  I hope we will join together in a bipartisan way this evening to 
agree to this very important amendment, and let us send a message to 
those fortunate enough to have health care insurance and prescription 
drug coverage that we remember them, we care about them, and we are 
going to make sure no harm is done to them in the process of putting 
together this prescription drug plan.
  I yield the floor.
  Mr. REID. 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. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page S8663]]

  Mr. REID. Mr. President, this is the greatest and most prosperous 
Nation in history. Nobody has worked harder to make this country great 
than our senior citizens. And few things weigh more heavily on their 
minds than the soaring cost of prescription drugs.

  You would think such a great, prosperous Nation would honor its 
elders, by making sure they get the medicines they need. That is why a 
comprehensive, meaningful and voluntary drug benefit for our senior 
citizens has been among my highest priorities.
  Over the last several weeks, this Senate has worked hard to achieve 
that. In the process, many of us who shared that goal have disagreed 
about how to react it. In the end, we wound up with a bill that is not 
how I would have created a prescription drug benefit. But it is a 
start.
  I am voting for this bill, because I believe some benefit is better 
than none. I am voting for it because of people like Shirley Rosamond 
of Sparks, NV. Shirley, who is 78 years old, raised eight children in 
the Sierra Nevada. She currently spends $400 a month on medicine, and 
has less than $400 left over to live on. This bill would reduce her 
monthly costs to less than $20 in medicine. And it would provide a 
similar level of assistance for tens of thousands of Nevada seniors.
  I am voting for this bill in the hope it will be like the camel's 
nose under the tent--a foot in the door for our senior citizens.
  I'm hoping we will pass this bill today, and then improve it in the 
future. And, yes, there is plenty of room for improvement.
  For example,this bill will do little to help seniors whose income is 
$15,000 a year or more. Even if they spend more than $100 a month on 
prescription drugs. That is why I voted to make the program more 
generous.
  This bill doesn't take effect soon enough. That is why I voted for 
and cosponsored the Lautenberg amendment to move the start date up to 
2004, instead of 2006.
  There are gaps in the coverage this bill provides. That is why I 
voted for Senator Boxers' amendment to close the coverage gap, and 
Senator Graham's amendment to cancel premiums while coverage is 
suspended.
  There were other amendments that were very good but were not agreed 
to. Finally, this plan is just plain confusing--which means it won't 
give our senior citizens the peace of mind they deserve.
  I voted to address all of these issues. I wish we had succeeded, and 
that this bill would provide the kind of coverage our senior citizens 
need. We didn't and it doesn't.
  We have to be honest with our senior citizens, and with the American 
people. This isn't the best we can do for our senior citizens, but it 
is the best we can do tonight.
  I will vote for this bill today, because it provides a start toward 
fulfilling our promise to senior citizens. It a start, and I won't stop 
fighting until we finish the job.
  The PRESIDING OFFICER. The minority leader is recognized.
  Mr. DASCHLE. Mr. President, I know we are waiting for some completion 
on negotiations on an amendment. As I understand it, no one is seeking 
recognition to continue work on other amendments. So I will speak for a 
couple of minutes until somebody is prepared to come to the floor to 
continue our work. I don't want to delay the business of the Senate but 
I want to express myself, as the distinguished Democratic whip has been 
doing with regard to the legislation.
  I, too, intend to support this bill. I am thinking of the old joke 
about a camel being a horse designed by a committee. Oftentimes, I 
think of that as we work our will on legislation. In many respects, 
this is the legislative version of a committee horse, a camel.
  It is not the kind of bill I would write. It is not the kind of bill 
I would cosponsor. It is not the kind of bill I would enthusiastically 
endorse.
  I look at some of the concerns we have about this legislation--
concerns about an unlimited volatility in the premium, uncertainty 
about the benefit package, uncertainty with regard to the deductible, 
uncertainty with regard to the backup, uncertainty with regard to the 
way the provisions can be provided in rural areas. There are many 
issues. Mostly I think there is far greater confusion than there is 
understanding with regard to the benefits themselves as seniors attempt 
to determine whether they will be assisted by this bill.
  The confusion and the uncertainty will be issues that we have to 
address at some later date. But having said that, I must say that the 
rural provisions--the effort made by our two distinguished managers to 
address the rural needs to overcome the inequities that exist today--
alone merit consideration and I would suggest support for this 
legislation. The help for low-income seniors--tens of thousands of 
South Dakotans will get help they are not getting today in part because 
of this bill. The possibility that seniors could access generic drugs 
with far more regularly and successfully, and the possibility that we 
could reimport drugs at a lower price from Canada, all are reasons why 
I think this bill merits our support.
  As I look to the balance and look to all of those things I wish were 
better, my response is that we are going to make them better. It may 
take months, if not years, but we are going to continue to work to make 
this a better bill and a better program.
  There are so many ways that I hope we as Senators--Republican and 
Democrat--can work together to make this a better bill in future years.
  There is a warning and a hope as we complete our debate tonight. The 
warning is that if this legislation comes back from conference in a 
significantly different form we will not be in the same position we are 
tonight. This bill will enjoy broad bipartisan support tonight. But if 
we fail, if we endorse a bill with some of the provisions of the House, 
then I daresay this legislation may still be in trouble.
  My hope is that we can do what I have just suggested--that over the 
course of the next several years we can take a very close look at ways 
to make this legislation better and that we can address what I would 
consider to be serious shortfalls, especially the benefits shutdown 
that exists after a person pays $4,500. We are talking about a sickness 
penalty that, frankly, cannot be sustained. We have to find a way to 
address that serious shortcoming in this legislation. I hope it is done 
sooner rather than later.

  I come to the floor with my gratitude for the work that has been 
done. This is the fifth year we have made an effort to pass meaningful 
prescription drug legislation. We can wait no longer. We simply can't 
allow the perfect to be the enemy of the good. We have to take what we 
can do and move to build upon something that we will do in future years 
to make it more meaningful, make it a better piece of legislation, and 
make it a law that we can be enthusiastic about someday.
  I vote tonight with that expectation and that hope. I am hopeful that 
there will be many on both sides of the aisle who will share that 
perspective and that expectation.
  I yield the floor.
  Mr. FRIST. Mr. President, I ask unanimous consent that at 9:15 
tonight the Senate proceed to a vote in relation to the Levin 
amendment, No. 1111, to be followed by a vote in relation to the Hagel-
Ensign amendment, No. 1026, with no second degrees in order to the 
amendments prior to the votes and with 2 minutes of debate equally 
divided prior to each vote.
  I further ask unanimous consent that prior to the vote Senator Ensign 
be recognized for up to 15 minutes and Senator Hagel, for up to 10 
minutes, and the two managers be given up to 5 minutes each; further, 
that it be in order for the Hagel-Ensign amendment to be modified up to 
the beginning of the stacked votes.
  The PRESIDING OFFICER. Is there objection?
  Mr. DASCHLE. Mr. President, reserving the right to object, I suggest 
that we make them perhaps 10-minute votes as well to expedite our 
votes.
  Mr. FRIST. Mr. President, let us make it 10-minute votes.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Senator from Nevada.


                           Amendment No. 1026

  Mr. ENSIGN. Mr. President, I rise to speak on behalf of the amendment 
on which Senator Hagel and I have been working actually for the last 
several years. This amendment received bipartisan support in the last 
Congress as a

[[Page S8664]]

stand-alone bill. We actually made some improvements to it. We think if 
this amendment is adopted, it will dramatically improve what the 
committee has attempted to do to add a prescription drug benefit to 
Medicare. The only portion of the bill we are modifying in substantial 
form is the prescription drug part of it.
  Let me talk about what our amendment exactly does. It would say to a 
person who is below 200 percent of poverty, they would pay the first 
$1,500 out of pocket. After that, the Government is going to pay for 
the rest of their drug costs, other than a 10-percent copay the person 
would pay.
  However, if a person is up to 160 percent of poverty, we will give 
them, in a pharmaceutical benefit account, $500 per year, which they 
can use to go to a local pharmacy to buy their prescription drugs or 
they can use that money and negotiate the price of their prescription 
drugs through a pharmaceutical benefit manager and mass buy them with 
their drug discount card. If they want to use their local pharmacist, 
they can do that. And this $500, if they did not spend it that year, 
would be rolled over to the next year where it would cover the first 
part of their deductible. So if you are below 160 percent of poverty, 
the most you are going to pay out of pocket is less than $100 per 
month.
  There are several benefits to our plan. First of all, with the 
committee mark, you pay a monthly premium of $35. You also have a 
deductible of $275. With our bill, you have no monthly premiums, you 
have a one-time annual fee of $25, and for low-income people, we waive 
that.
  Our plan is completely voluntary. It also gives the most help to 
lower income seniors and gives progressively less help the more money 
you make.
  So between 200 percent and 400 percent of poverty, $3,500 is your 
out-of-pocket expenses. Above that amount, the Government pays 90 
percent. And from 400 percent to 600 percent of poverty, $5,500 is your 
out-of-pocket expenses. Above that amount, 20 percent is your 
deductible before catastrophic coverage kicks in.
  For all of these people, though, who want to sign up for the plan, 
they get a drug discount card where they will save between 25 to 40 
percent on their prescription drug costs. It is a completely voluntary 
program. And in this program, we have several benefits that we think 
are better than the committee's underlying bill.
  One is, under our bill, States that have already enacted programs 
will be encouraged to keep their programs. Under the committee mark, 
every State that has a program for low-income seniors is going to drop 
those. There is no debate about that. As a matter of fact, the 
Secretary of HHS was before us. The person who oversees Medicare was 
before us. Both of them said there is nothing in this bill that will 
say to the States: Don't drop your plans. And they agreed they will 
probably drop their plans.
  Our bill works with the States that have those programs, States such 
as my State of Nevada, and encourages those programs to be kept.
  A couple of other advantages that our bill has: I want to illustrate 
those with a couple of examples. These are real-life cases. This is a 
fictitious name, of course, to protect this woman's identity, but this 
is a real person. We call her Doris Jones. She is 75 years old. She has 
an income of about $17,000 a year. She is being treated for diabetes, 
hypertension, and high cholesterol. She is taking medications that are 
very typical of what this type of a disease management would require. 
Her out-of-pocket expenses right now are $3,648.

  Let's compare how our amendment, the Hagel-Ensign approach, would 
affect her out-of-pocket expenses versus the bill on the floor if our 
amendment is not accepted.
  Under our bill, she would have $1,700 out-of-pocket expenses a year. 
Under the committee bill that is before us today, she would have $2,383 
a year. So it is a savings of almost $700 under our approach.
  Another person: James is 68 years old. He has an income of about 
$16,000 a year. He is being treated for diabetes, a pretty severe case 
of diabetes, and he has all these different medications--very common 
medications today for a diabetic. His total out-of-pocket expenses 
today are $5,700.
  How does he compare under the two provisions?
  Under the Hagel-Ensign approach, about $1,900 would be his out-of-
pocket expenses for the year; under the bill that is before us today, a 
little over $4,000 in out-of-pocket expenses a year. So the difference 
is almost $2,200 to this senior who is sick. And we certainly would not 
call him a rich person. I would call this person certainly a low- to 
moderate-income senior.
  Now, Betty is another example. These are real-life examples taking 
real medicine, prescribed by real doctors. She is 66 years old. She has 
an income of $15,500. She is being treated for breast cancer and she is 
taking commonly prescribed medications for that. She is on low-dose 
radiation. She pays about $8,000 for her prescription drugs a year.
  What would happen to her under the two different scenarios?
  Under our scenario, she would pay about $2,100 out of pocket. Under 
the bill that is before us today, she would pay $4,300.
  What we have done with our amendment is we have said: Let's help the 
seniors who need it the most. And we put the dollars to them. Under our 
amendment, people who are sick, with low and moderate income, they 
really get help. For people above that, they are treated about the same 
between our amendment and the bill. The out-of-pocket expenses for 
people between 200 and 400 percent of poverty are about the same.
  When you start getting to the wealthier seniors, there is no 
question, the committee bill is more generous. For very low income 
seniors, the committee bill is slightly more generous. But for those 
who are really sick, our amendment is much better.
  Also, there are a couple of other advantages.
  In the future, to control costs, our amendment says: The person 
receiving the medication has something at stake. They are paying out of 
their own pocket for the first dollars, so they are going to shop. They 
are going to go around and see: Do I need generics? First of all, do I 
need the drug? Could I take a generic, which may be less expensive? Are 
there perhaps other alternatives for treatment that may be cheaper and 
just as effective? They will have that conversation with their doctor 
because they have something at stake.
  I would argue that what the committee is doing--and I applaud what 
they are doing, trying in a bipartisan fashion--I believe our amendment 
would strengthen the committee's bill dramatically because it would 
target the dollars, those precious taxpayers' dollars, to the people 
who need it the most. It will also, though, in the future, control 
costs and, therefore, be more responsible to the next generation.
  The committee mark, especially for very low income people, pays 97.5 
percent of their drug costs, maybe a $1 to $2 copay. Well, there is 
going to be a tremendous amount of overutilization in that group.
  Our amendment gives that group help by putting $500 of their first 
costs into an account. They will use that to go shop because if they do 
not use it, it gets rolled over to the next year where it covers more 
of their deductible. So they have something to benefit by if they do 
not use it.
  So I implore our colleagues to look and compare. If you look and 
compare, you will see there truly is a difference.
  Mr. President, I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  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. GRASSLEY. 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. GRASSLEY. I commend Senator Hagel and Senator Ensign because they 
have been working very carefully over the last few years to help move 
this process along. They have had a different approach than I have had. 
I have had what I call a comprehensive, universal, voluntary approach. 
They have

[[Page S8665]]

had one that is more targeted toward low-income people and toward 
catastrophic. We deal with that in our legislation, but we are very 
comprehensive. We are very universal. I don't attack their attempt, but 
it is just not as good as what is before the Senate. S. 1 already 
reflects the influence of their plan by providing a drug discount card 
which will give seniors access to discounted drug prices.
  I would like to point out a few things. The Hagel-Ensign plan has two 
laudable objectives: to protect seniors against catastrophic costs and 
to ensure that low-income seniors are fully protected.
  I am happy to report that S. 1 already meets these goals. S. 1 
provides a generous protection for low-income beneficiaries, very 
generous. It also covers fully 90 percent of beneficiaries' out-of-
pocket costs beyond $3,700. Most seniors don't have catastrophic drug 
costs and thus would not see any benefit from the coverage in the 
Hagel-Ensign plan. S. 1, on the other hand, would provide a significant 
basic benefit to most seniors each year. Passing a drug bill that most 
seniors would see no benefit from is a prescription for disaster. I am 
afraid of that.
  So S. 1 already meets the main goals of the Hagel-Ensign plan, but it 
provides additional value to a much broader group of beneficiaries as 
well, the underlying bill, the one that they amend, the one they would 
decimate.
  Another thing S. 1 does very well is use competition to maximize 
value to the taxpayers. There has been some concern that S. 1 doesn't 
have as much competitive reform as many of us would have preferred. But 
the Hagel-Ensign plan has far less reform and is much more government 
run.
  I would like to explain: First, this amendment would rule out any 
true competition in the delivery of Medicare drug benefits. S. 1 would 
let private drug plans assume a modest amount of financial risk, giving 
them an incentive to drive hard bargains and keep taxpayers' costs 
down. It seems to me that is very significant--the difference between 
the underlying bill and their bill. We are going to drive drug prices 
down more through competition.
  The Hagel-Ensign plan, it is pretty obvious from my point of view, 
allows for no such exemption, specifically mandating that the 
Government--in this case we are talking about the taxpayers--bears all 
the financial risk for delivering the benefit, much as Senator Bob 
Graham's did the last year when we debated this very issue.
  Under this amendment, the benefit would be delivered just like other 
Medicare benefits are today--by contractors that merely pay the claims 
that come in without any effort whatsoever, no effort to contain costs.
  Second, the Hagel amendment doesn't include any of the improvements 
to the Medicare Program that President Bush has proposed and our bill 
includes. It does not include the role for private preferred provider 
organization plans to deliver an improved Medicare benefit package. It 
doesn't make modern innovations such as disease management services or 
rational cost sharing available to beneficiaries who choose them. It 
simply dumps a catastrophic drug benefit on to the 1965 vintage 
Medicare system.

  What the people of this country need is improvement in Medicare, 
strengthening of Medicare, voluntary, universal, comprehensive. The 
Ensign plan wouldn't improve S. 1, but it would make it substantially 
worse.
  I urge my colleagues to defeat the amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. ENSIGN. Mr. President, I want to clear up something. We don't 
touch any of the other Medicare reforms in your bill. The whole thing 
with the PPOs, we touch the prescription drug part of the underlying 
bill.
  You mentioned competition. I practiced veterinary medicine, built, 
owned, and operated two different animal hospitals. Why do I bring that 
up? It is because in veterinary medicine people pay out of their own 
pocket. Veterinarians are in an incredibly competitive field because we 
know that if somebody brings a case to you, they are going to shop 
about half the time based on price. So veterinarians have to be very 
competitive and price sensitive to that, so they work to become more 
efficient, to keep their costs down, because individuals shop.
  In our health care system today, individuals do not shop because we 
have low deductible policies, and a lot of times the doctors waive 
those deductibles. Senator Frist will be able to tell you about that. 
The hospitals waive the deductibles. So the person receiving the care 
is not accountable for the care, and so they don't shop. The doctor 
tells them, go get this service or this drug, and they don't think 
about it. They have modest, low copays, and they don't think about it.
  The cost control, the competition, is established by 40 million 
people on Medicare, 40 million people receiving drugs. If they are 
paying out of their own pocket or low-income people have the $500 in a 
pharmaceutical benefit account, they have something at stake, so they 
go shop.
  They ask the questions: Do I need the drug in the first place? Maybe 
I can get a generic. So they do the shopping. Also, we have 
pharmaceutical benefit managers in the bill. That is what the whole 
drug discount card is about. So those pharmaceutical benefit managers 
help lower the costs as well.
  We have several reforms in this bill that are true reforms, that 
introduce competition to keep the costs down. That is why our bill 
actually scored lower.
  Because of that, we were able to add a couple other things. When 
Senator Hagel arrives, he will modify the amendment. For instance, we 
will allow Medicaid, the dual eligibles that people have been talking 
about today, to give States help in handling those dual eligibles 
through Medicare because our prescription drug cost to the taxpayer was 
less. It is because we have more reform on the prescription drug part 
of it than the underlying bill. It just a difference of philosophy of 
how you do it.
  I come to this based on my experience in the private sector and how 
health care can be delivered by individuals shopping.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. BAUCUS. Mr. President, I suggest the absence of a quorum and ask 
unanimous consent that the time be equally charged.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HAGEL. 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. HAGEL. Mr. President, in the last 2 weeks the Senate has engaged 
in an historic effort to reform and strengthen Medicare. When we opened 
this debate 2 weeks ago, I said that what we would do here debating 
this bill would affect every American and future generations.
  Health care is a defining issue for our Nation and future 
generations. Just a reminder: When Medicare was enacted in 1965, the 
Federal Government's lead actuary at that time projected that the 
hospital program, Medicare Part A, would grow to $9 billion by 1990. In 
fact, the program, in 1990, had then cost the taxpayers $66 billion. So 
we have some sense of how these programs can get out of hand if not 
defined clearly at the front end.
  In addition to the internal problems of the changing realities of 
health care, Medicare is facing a looming external problem. The largest 
generation in American history, the baby boomers, are aging. These 
Americans--over 75 million of them--will be added to the Medicare rolls 
over the next few years. The baby boom generation has changed and 
shaped every market it has ever entered. Medicare will be no exception. 
We have a responsibility to address this demographic pressure now or 
risk the system collapsing under its own weight in the future.
  Senator Ensign and I have come to the floor to offer an amendment to 
substitute only title I of the Finance Committee's bill, providing a 
prescription drug benefit for seniors. We believe any Medicare drug 
benefit must be sustainable for future generations. The benefit must 
deal with the realities that people are living longer and better and 
have higher health care expectations than ever before. We believe we 
can do better with our amendment.

[[Page S8666]]

  Our amendment is a simple amendment. Seniors will be able to 
understand it clearly. Unlike the underlying bill, our amendment 
contains no premiums, no deductibles, and no gaps in coverage. Our 
modified amendment addresses three of the major issues we have tried to 
deal with in constructing this plan. First, it helps low-income 
seniors, those who need it the most. Two, it protects seniors from high 
out-of-pocket expenses, and it eases the burden prescription drug costs 
have placed on the States.
  Our modified amendment would replace the prescription drug benefit in 
the Finance Committee plan with, No. 1, a prescription drug discount 
card for all seniors on Medicare with $30 billion in added funds for 
low-income seniors; No. 2, catastrophic coverage for all seniors; No. 
3, $35 billion in cost-sharing for catastrophic drug costs with the 
States for the lowest income seniors eligible for both Medicare and 
Medicaid.
  We give the Secretary of Health and Human Services the discretion to 
divide $65 billion for seniors and for help with drug costs at the 
State level. With our amendment, the Secretary will provide low-income 
seniors with money on a drug discount card to help defray their drug 
expenses.
  States would also benefit under our amendment, and $35 billion is 
available to help States cover the catastrophic drug expenses for the 
dual eligibles. These are the very poorest of seniors.
  These modifications to the amendment make it stronger by targeting 
aid to those who need it the most. This bill has been scored. We fall 
within the $400 billion budget number that is required.
  This is a commonsense plan that is workable and responsible, and it 
addresses prescription drug concerns in the right way.


                    Amendment No. 1026, As Modified

  Mr. HAGEL. Mr. President, I have a modification at the desk to 
amendment No. 1026. I ask unanimous consent that the amendment be 
modified.
  The PRESIDING OFFICER. The amendment is so modified.
  The amendment (No. 1026), as modified, is as follows:

              TITLE I--MEDICARE PRESCRIPTION DRUG DISCOUNT

     SEC. 101. VOLUNTARY MEDICARE PRESCRIPTION DRUG DISCOUNT AND 
                   SECURITY PROGRAM.

       (a) Establishment of Program.--Title XVIII of the Social 
     Security Act (42 U.S.C. 1395 et seq.) is amended--
       (1) by redesignating part D as part E; and
       (2) by inserting after part C the following new part:

 ``Part D--Voluntary Medicare Prescription Drug Discount and Security 
                                Program


                             ``definitions

       ``Sec. 1860. In this part:
       ``(1) Covered drug.--
       ``(A) In general.--Except as provided in this paragraph, 
     the term `covered drug' means--
       ``(i) a drug that may be dispensed only upon a prescription 
     and that is described in subparagraph (A)(i) or (A)(ii) of 
     section 1927(k)(2); or
       ``(ii) a biological product described in clauses (i) 
     through (iii) of subparagraph (B) of such section or 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.--Such term 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 subparagraph (E) thereof (relating to 
     smoking cessation agents), or under section 1927(d)(3).
       ``(ii) Avoidance of duplicate coverage.--A drug prescribed 
     for an individual that would otherwise be a covered drug 
     under this part shall not be so considered if payment for 
     such drug is available under part A or B for an individual 
     entitled to benefits under part A and enrolled under part B.
       ``(C) Application of formulary restrictions.--A drug 
     prescribed for an individual that would otherwise be a 
     covered drug under this part shall not be so considered under 
     a plan if the plan excludes the drug under a formulary and 
     such exclusion is not successfully appealed under section 
     1860D(a)(4)(B).
       ``(D) Application of general exclusion provisions.--A 
     prescription drug discount card plan or Medicare+Choice plan 
     may exclude from qualified prescription drug coverage any 
     covered drug--
       ``(i) for which payment would not be made if section 
     1862(a) applied to part D; or
       ``(ii) which are not prescribed in accordance with the plan 
     or this part.
     Such exclusions are determinations subject to reconsideration 
     and appeal pursuant to section 1860D(a)(4).
       ``(2) Eligible beneficiary.--The term `eligible 
     beneficiary' means an individual who is--
       ``(A) eligible for benefits under part A or enrolled under 
     part B; and
       ``(B) not eligible for prescription drug coverage under a 
     State plan under the medicaid program under title XIX.
       ``(3) Eligible entity.--The term `eligible entity' means 
     any--
       ``(A) pharmaceutical benefit management company;
       ``(B) wholesale pharmacy delivery system;
       ``(C) retail pharmacy delivery system;
       ``(D) insurer (including any issuer of a medicare 
     supplemental policy under section 1882);
       ``(E) Medicare+Choice organization;
       ``(F) State (in conjunction with a pharmaceutical benefit 
     management company);
       ``(G) employer-sponsored plan;
       ``(H) other entity that the Secretary determines to be 
     appropriate to provide benefits under this part; or
       ``(I) combination of the entities described in 
     subparagraphs (A) through (H).
       ``(4) Poverty line.--The term `poverty line' means the 
     income official poverty line (as defined by the Office of 
     Management and Budget, and revised annually in accordance 
     with section 673(2) of the Omnibus Budget Reconciliation Act 
     of 1981) applicable to a family of the size involved.
       ``(5) Secretary.--The term `Secretary' means the Secretary 
     of Health and Human Services, acting through the 
     Administrator of the Centers for Medicare & Medicaid 
     Services.


                       ``establishment of program

       ``Sec. 1860A. (a) Provision of Benefit.--The Secretary 
     shall establish a Medicare Prescription Drug Discount and 
     Security Program under which the Secretary endorses 
     prescription drug card plans offered by eligible entities in 
     which eligible beneficiaries may voluntarily enroll and 
     receive benefits under this part.
       ``(b) Endorsement of Prescription Drug Discount Card 
     Plans.--
       ``(1) In general.--The Secretary shall endorse a 
     prescription drug card plan offered by an eligible entity 
     with a contract under this part if the eligible entity meets 
     the requirements of this part with respect to that plan.
       ``(2) National plans.--In addition to other types of plans, 
     the Secretary may endorse national prescription drug plans 
     under paragraph (1).
       ``(c) Voluntary Nature of Program.--Nothing in this part 
     shall be construed as requiring an eligible beneficiary to 
     enroll in the program under this part.
       ``(d) Financing.--The costs of providing benefits under 
     this part shall be payable from the Federal Supplementary 
     Medical Insurance Trust Fund established under section 1841.


                              ``enrollment

       ``Sec. 1860B. (a) Enrollment Under Part D.--
       ``(1) Establishment of process.--
       ``(A) In general.--The Secretary shall establish a process 
     through which an eligible beneficiary (including an eligible 
     beneficiary enrolled in a Medicare+Choice plan offered by a 
     Medicare+Choice organization) may make an election to enroll 
     under this part. Except as otherwise provided in this 
     subsection, such process shall be similar to the process for 
     enrollment under part B under section 1837.
       ``(B) Requirement of enrollment.--An eligible beneficiary 
     must enroll under this part in order to be eligible to 
     receive the benefits under this part.
       ``(2) Enrollment periods.--
       ``(A) In general.--Except as provided in this paragraph, an 
     eligible beneficiary may not enroll in the program under this 
     part during any period after the beneficiary's initial 
     enrollment period under part B (as determined under section 
     1837).
       ``(B) Special enrollment period.--In the case of eligible 
     beneficiaries that have recently lost eligibility for 
     prescription drug coverage under a State plan under the 
     medicaid program under title XIX, the Secretary shall 
     establish a special enrollment period in which such 
     beneficiaries may enroll under this part.
       ``(C) Open enrollment period in 2005 for current 
     beneficiaries.--The Secretary shall establish a period, which 
     shall begin on the date on which the Secretary first begins 
     to accept elections for enrollment under this part, during 
     which any eligible beneficiary may--
       ``(i) enroll under this part; or
       ``(ii) enroll or reenroll under this part after having 
     previously declined or terminated such enrollment.
       ``(3) Period of coverage.--
       ``(A) In general.--Except as provided in subparagraph (B) 
     and subject to subparagraph (C), an eligible beneficiary's 
     coverage under the program under this part shall be effective 
     for the period provided under section 1838, as if that 
     section applied to the program under this part.
       ``(B) Enrollment during open and special enrollment.--
     Subject to subparagraph (C), an eligible beneficiary who 
     enrolls under the program under this part under subparagraph 
     (B) or (C) of paragraph (2) shall be entitled to the benefits 
     under this part beginning on the first day of the month 
     following the month in which such enrollment occurs.
       ``(4) Part d coverage terminated by termination of coverage 
     under parts a and b or eligibility for medical assistance.--

[[Page S8667]]

       ``(A) In general.--In addition to the causes of termination 
     specified in section 1838, the Secretary shall terminate an 
     individual's coverage under this part if the individual is--
       ``(i) no longer enrolled in part A or B; or
       ``(ii) eligible for prescription drug coverage under a 
     State plan under the medicaid program under title XIX.
       ``(B) Effective date.--The termination described in 
     subparagraph (A) shall be effective on the effective date 
     of--
       ``(i) the termination of coverage under part A or (if 
     later) under part B; or
       ``(ii) the coverage under title XIX.
       ``(b) Enrollment With Eligible Entity.--
       ``(1) Process.--The Secretary shall establish a process 
     through which an eligible beneficiary who is enrolled under 
     this part shall make an annual election to enroll in a 
     prescription drug card plan offered by an eligible entity 
     that has been awarded a contract under this part and serves 
     the geographic area in which the beneficiary resides.
       ``(2) Election periods.--
       ``(A) In general.--Except as provided in this paragraph, 
     the election periods under this subsection shall be the same 
     as the coverage election periods under the Medicare+Choice 
     program under section 1851(e), including--
       ``(i) annual coordinated election periods; and
       ``(ii) special election periods.
     In applying the last sentence of section 1851(e)(4) (relating 
     to discontinuance of a Medicare+Choice election during the 
     first year of eligibility) under this subparagraph, in the 
     case of an election described in such section in which the 
     individual had elected or is provided qualified prescription 
     drug coverage at the time of such first enrollment, the 
     individual shall be permitted to enroll in a prescription 
     drug card plan under this part at the time of the election of 
     coverage under the original fee-for-service plan.
       ``(B) Initial election periods.--
       ``(i) Individuals currently covered.--In the case of an 
     individual who is entitled to benefits under part A or 
     enrolled under part B as of November 1, 2005, there shall be 
     an initial election period of 6 months beginning on that 
     date.
       ``(ii) Individual covered in future.--In the case of an 
     individual who is first entitled to benefits under part A or 
     enrolled under part B after such date, there shall be an 
     initial election period which is the same as the initial 
     enrollment period under section 1837(d).
       ``(C) Additional special election periods.--The 
     Administrator shall establish special election periods--
       ``(i) in cases of individuals who have and involuntarily 
     lose prescription drug coverage described in paragraph (3);
       ``(ii) in cases described in section 1837(h) (relating to 
     errors in enrollment), in the same manner as such section 
     applies to part B; and
       ``(iii) in the case of an individual who meets such 
     exceptional conditions (including conditions provided under 
     section 1851(e)(4)(D)) as the Secretary may provide.
       ``(D) Enrollment with one plan only.--The rules established 
     under subparagraph (B) shall ensure that an eligible 
     beneficiary may only enroll in 1 prescription drug card plan 
     offered by an eligible entity per year.
       ``(3) Medicare+choice enrollees.--An eligible beneficiary 
     who is enrolled under this part and enrolled in a 
     Medicare+Choice plan offered by a Medicare+Choice 
     organization must enroll in a prescription drug discount card 
     plan offered by an eligible entity in order to receive 
     benefits under this part. The beneficiary may elect to 
     receive such benefits through the Medicare+Choice 
     organization in which the beneficiary is enrolled if the 
     organization has been awarded a contract under this part.
       ``(4) Continuous prescription drug coverage.--An individual 
     is considered for purposes of this part to be maintaining 
     continuous prescription drug coverage on and after the date 
     the individual first qualifies to elect prescription drug 
     coverage under this part if the individual establishes that 
     as of such date the individual is covered under any of the 
     following prescription drug coverage and before the date that 
     is the last day of the 63-day period that begins on the date 
     of termination of the particular prescription drug coverage 
     involved (regardless of whether the individual subsequently 
     obtains any of the following prescription drug coverage):
       ``(A) Coverage under prescription drug card plan or 
     medicare+choice plan.--Prescription drug coverage under a 
     prescription drug card plan under this part or under a 
     Medicare+Choice plan.
       ``(B) Medicaid prescription drug coverage.--Prescription 
     drug coverage under a medicaid plan under title XIX, 
     including through the Program of All-inclusive Care for the 
     Elderly (PACE) under section 1934, through a social health 
     maintenance organization (referred to in section 4104(c) of 
     the Balanced Budget Act of 1997), or through a 
     Medicare+Choice project that demonstrates the application of 
     capitation payment rates for frail elderly medicare 
     beneficiaries through the use of a interdisciplinary team and 
     through the provision of primary care services to such 
     beneficiaries by means of such a team at the nursing facility 
     involved.
       ``(C) Prescription drug coverage under group health plan.--
     Any prescription drug coverage under a group health plan, 
     including a health benefits plan under the Federal Employees 
     Health Benefit Plan under chapter 89 of title 5, United 
     States Code, and a qualified retiree prescription drug plan 
     (as defined by the Secretary), but only if (subject to 
     subparagraph (E)(ii)) the coverage provides benefits at least 
     equivalent to the benefits under a prescription drug card 
     plan under this part.
       ``(D) Prescription drug coverage under certain medigap 
     policies.--Coverage under a medicare supplemental policy 
     under section 1882 that provides benefits for prescription 
     drugs (whether or not such coverage conforms to the standards 
     for packages of benefits under section 1882(p)(1)) and if 
     (subject to subparagraph (E)(ii)) the coverage provides 
     benefits at least equivalent to the benefits under a 
     prescription drug card plan under this part.
       ``(E) State pharmaceutical assistance program.--Coverage of 
     prescription drugs under a State pharmaceutical assistance 
     program, but only if (subject to subparagraph (E)(ii)) the 
     coverage provides benefits at least equivalent to the 
     benefits under a prescription drug card plan under this part.
       ``(F) Veterans' coverage of prescription drugs.--Coverage 
     of prescription drugs for veterans under chapter 17 of title 
     38, United States Code, but only if (subject to subparagraph 
     (E)(ii)) the coverage provides benefits at least equivalent 
     to the benefits under a prescription drug card plan under 
     this part.
     For purposes of carrying out this paragraph, the 
     certifications of the type described in sections 2701(e) of 
     the Public Health Service Act and in section 9801(e) of the 
     Internal Revenue Code of 1986 shall also include a statement 
     for the period of coverage of whether the individual involved 
     had prescription drug coverage described in this paragraph.
       ``(5) Competition.--Each eligible entity with a contract 
     under this part shall compete for the enrollment of 
     beneficiaries in a prescription drug card plan offered by the 
     entity on the basis of discounts, formularies, pharmacy 
     networks, and other services provided for under the contract.


    ``providing enrollment and coverage information to beneficiaries

       ``Sec. 1860C. (a) Activities.--The Secretary shall provide 
     for activities under this part to broadly disseminate 
     information to eligible beneficiaries (and prospective 
     eligible beneficiaries) regarding enrollment under this part 
     and the prescription drug card plans offered by eligible 
     entities with a contract under this part.
       ``(b) Special Rule for First Enrollment Under the 
     Program.--To the extent practicable, the activities described 
     in subsection (a) shall ensure that eligible beneficiaries 
     are provided with such information at least 60 days prior to 
     the first enrollment period described in section 1860B(c).


                         ``enrollee protections

       ``Sec. 1860D. (a) Requirements for All Eligible Entities.--
     Each eligible entity shall meet the following requirements:
       ``(1) Guaranteed issuance and nondiscrimination.--
       ``(A) Guaranteed issuance.--
       ``(i) In general.--An eligible beneficiary who is eligible 
     to enroll in a prescription drug card plan offered by an 
     eligible entity under section 1860B(b) for prescription drug 
     coverage under this part at a time during which elections are 
     accepted under this part with respect to the coverage shall 
     not be denied enrollment based on any health status-related 
     factor (described in section 2702(a)(1) of the Public Health 
     Service Act) or any other factor.
       ``(ii) Medicare+choice limitations permitted.--The 
     provisions of paragraphs (2) and (3) (other than subparagraph 
     (C)(i), relating to default enrollment) of section 1851(g) 
     (relating to priority and limitation on termination of 
     election) shall apply to eligible entities under this 
     subsection.
       ``(B) Nondiscrimination.--An eligible entity offering 
     prescription drug coverage under this part shall not 
     establish a service area in a manner that would discriminate 
     based on health or economic status of potential enrollees.
       ``(2) Disclosure of information.--
       ``(A) Information.--
       ``(i) General information.--Each eligible entity with a 
     contract under this part to provide a prescription drug card 
     plan shall disclose, in a clear, accurate, and standardized 
     form to each eligible beneficiary enrolled in a prescription 
     drug discount card program offered by such entity under this 
     part at the time of enrollment and at least annually 
     thereafter, the information described in section 1852(c)(1) 
     relating to such prescription drug coverage.
       ``(ii) Specific information.--In addition to the 
     information described in clause (i), each eligible entity 
     with a contract under this part shall disclose the following:

       ``(I) How enrollees will have access to covered drugs, 
     including access to such drugs through pharmacy networks.
       ``(II) How any formulary used by the eligible entity 
     functions.
       ``(III) Information on grievance and appeals procedures.
       ``(IV) Information on enrollment fees and prices charged to 
     the enrollee for covered drugs.
       ``(V) Any other information that the Secretary determines 
     is necessary to promote informed choices by eligible 
     beneficiaries among eligible entities.

       ``(B) Disclosure upon request of general coverage, 
     utilization, and grievance information.--Upon request of an 
     eligible beneficiary, the eligible entity shall provide the

[[Page S8668]]

     information described in paragraph (3) to such beneficiary.
       ``(C) Response to beneficiary questions.--Each eligible 
     entity offering a prescription drug discount card plan under 
     this part shall have a mechanism for providing specific 
     information to enrollees upon request. The entity shall make 
     available, through an Internet website and, upon request, in 
     writing, information on specific changes in its formulary.
       ``(3) Grievance mechanism, coverage determinations, and 
     reconsiderations.--
       ``(A) In general.--With respect to the benefit under this 
     part, each eligible entity offering a prescription drug 
     discount card plan shall provide meaningful procedures for 
     hearing and resolving grievances between the organization 
     (including any entity or individual through which the 
     eligible entity provides covered benefits) and enrollees with 
     prescription drug card plans of the eligible entity under 
     this part in accordance with section 1852(f).
       ``(B) Application of coverage determination and 
     reconsideration provisions.--Each eligible entity shall meet 
     the requirements of paragraphs (1) through (3) of section 
     1852(g) with respect to covered benefits under the 
     prescription drug card plan it offers under this part in the 
     same manner as such requirements apply to a Medicare+Choice 
     organization with respect to benefits it offers under a 
     Medicare+Choice plan under part C.
       ``(C) Request for review of tiered formulary 
     determinations.--In the case of a prescription drug card plan 
     offered by an eligible entity that provides for tiered cost-
     sharing for drugs included within a formulary and provides 
     lower cost-sharing for preferred drugs included within the 
     formulary, an individual who is enrolled in the plan may 
     request coverage of a nonpreferred drug under the terms 
     applicable for preferred drugs if the prescribing physician 
     determines that the preferred drug for treatment of the same 
     condition is not as effective for the individual or has 
     adverse effects for the individual.
       ``(4) Appeals.--
       ``(A) In general.--Subject to subparagraph (B), each 
     eligible entity offering a prescription drug card plan shall 
     meet the requirements of paragraphs (4) and (5) of section 
     1852(g) with respect to drugs not included on any formulary 
     in the same manner as such requirements apply to a 
     Medicare+Choice organization with respect to benefits it 
     offers under a Medicare+Choice plan under part C.
       ``(B) Formulary determinations.--An individual who is 
     enrolled in a prescription drug card plan offered by an 
     eligible entity may appeal to obtain coverage under this part 
     for a covered drug that is not on a formulary of the eligible 
     entity if the prescribing physician determines that the 
     formulary drug for treatment of the same condition is not as 
     effective for the individual or has adverse effects for the 
     individual.
       ``(5) Confidentiality and accuracy of enrollee records.--
     Each eligible entity offering a prescription drug discount 
     card plan shall meet the requirements of the Health Insurance 
     Portability and Accountability Act of 1996.
       ``(b) Eligible Entities Offering a Discount Card Program.--
     If an eligible entity offers a discount card program under 
     this part, in addition to the requirements under subsection 
     (a), the entity shall meet the following requirements:
       ``(1) Access to covered benefits.--
       ``(A) Assuring pharmacy access.--
       ``(i) In general.--The eligible entity offering the 
     prescription drug discount card plan shall secure the 
     participation in its network of a sufficient number of 
     pharmacies that dispense (other than by mail order) drugs 
     directly to patients to ensure convenient access (as 
     determined by the Secretary and including adequate emergency 
     access) for enrolled beneficiaries, in accordance with 
     standards established under section 1860D(a)(3) that ensure 
     such convenient access.
       ``(ii) Use of point-of-service system.--Each eligible 
     entity offering a prescription drug discount card plan shall 
     establish an optional point-of-service method of operation 
     under which--

       ``(I) the plan provides access to any or all pharmacies 
     that are not participating pharmacies in its network; and
       ``(II) discounts under the plan may not be available.

     The additional copayments so charged shall not be counted as 
     out-of-pocket expenses for purposes of section 1860F(b).
       ``(B) Use of standardized technology.--
       ``(i) In general.--Each eligible entity offering a 
     prescription drug discount card plan shall issue (and 
     reissue, as appropriate) such a card (or other technology) 
     that may be used by an enrolled beneficiary to assure access 
     to negotiated prices under section 1860F(a) for the purchase 
     of prescription drugs for which coverage is not otherwise 
     provided under the prescription drug discount card plan.
       ``(ii) Standards.--The Secretary shall provide for the 
     development of national standards relating to a standardized 
     format for the card or other technology referred to in clause 
     (i). Such standards shall be compatible with standards 
     established under part C of title XI.
       ``(C) Requirements on development and application of 
     formularies.--If an eligible entity that offers a 
     prescription drug discount card plan uses a formulary, the 
     following requirements must be met:
       ``(i) Pharmacy and therapeutic (p&t) committee.--The 
     eligible entity must establish a pharmacy and therapeutic 
     committee that develops and reviews the formulary. Such 
     committee shall include at least 1 physician and at least 1 
     pharmacist both with expertise in the care of elderly or 
     disabled persons and a majority of its members shall consist 
     of individuals who are a physician or a practicing pharmacist 
     (or both).
       ``(ii) Formulary development.--In developing and reviewing 
     the formulary, the committee shall base clinical decisions on 
     the strength of scientific evidence and standards of 
     practice, including assessing peer-reviewed medical 
     literature, such as randomized clinical trials, 
     pharmacoeconomic studies, outcomes research data, and such 
     other information as the committee determines to be 
     appropriate.
       ``(iii) Inclusion of drugs in all therapeutic categories.--
     The formulary must include drugs within each therapeutic 
     category and class of covered drugs (although not necessarily 
     for all drugs within such categories and classes).
       ``(iv) Provider education.--The committee shall establish 
     policies and procedures to educate and inform health care 
     providers concerning the formulary.
       ``(v) Notice before removing drugs from formulary.--Any 
     removal of a drug from a formulary shall take effect only 
     after appropriate notice is made available to beneficiaries 
     and physicians.
       ``(vi) Grievances and appeals relating to application of 
     formularies.--For provisions relating to grievances and 
     appeals of coverage, see paragraphs (3) and (4) of section 
     1860D(a).
       ``(2) Cost and utilization management; quality assurance; 
     medication therapy management program.--
       ``(A) In general.--Each eligible entity offering a 
     prescription drug discount card plan shall have in place with 
     respect to covered drugs--
       ``(i) an effective cost and drug utilization management 
     program, including medically appropriate incentives to use 
     generic drugs and therapeutic interchange, when appropriate;
       ``(ii) quality assurance measures and systems to reduce 
     medical errors and adverse drug interactions, including a 
     medication therapy management program described in 
     subparagraph (B); and
       ``(iii) a program to control fraud, abuse, and waste.
     Nothing in this section shall be construed as impairing an 
     eligible entity from applying cost management tools 
     (including differential payments) under all methods of 
     operation.
       ``(B) Medication therapy management program.--
       ``(i) In general.--A medication therapy management program 
     described in this paragraph is a program of drug therapy 
     management and medication administration that is designed to 
     ensure, with respect to beneficiaries with chronic diseases 
     (such as diabetes, asthma, hypertension, and congestive heart 
     failure) or multiple prescriptions, that covered drugs under 
     the prescription drug discount card plan are appropriately 
     used to achieve therapeutic goals and reduce the risk of 
     adverse events, including adverse drug interactions.
       ``(ii) Elements.--Such program may include--

       ``(I) enhanced beneficiary understanding of such 
     appropriate use through beneficiary education, counseling, 
     and other appropriate means;
       ``(II) increased beneficiary adherence with prescription 
     medication regimens through medication refill reminders, 
     special packaging, and other appropriate means; and
       ``(III) detection of patterns of overuse and underuse of 
     prescription drugs.

       ``(iii) Development of program in cooperation with licensed 
     pharmacists.--The program shall be developed in cooperation 
     with licensed pharmacists and physicians.
       ``(iv) Considerations in pharmacy fees.--Each eligible 
     entity offering a prescription drug discount card plan shall 
     take into account, in establishing fees for pharmacists and 
     others providing services under the medication therapy 
     management program, the resources and time used in 
     implementing the program.
       ``(C) Treatment of accreditation.--Section 1852(e)(4) 
     (relating to treatment of accreditation) shall apply to 
     prescription drug discount card plans under this part with 
     respect to the following requirements, in the same manner as 
     they apply to Medicare+Choice plans under part C with respect 
     to the requirements described in a clause of section 
     1852(e)(4)(B):
       ``(i) Paragraph (1) (including quality assurance), 
     including any medication therapy management program under 
     paragraph (2).
       ``(ii) Subsection (c)(1) (relating to access to covered 
     benefits).
       ``(iii) Subsection (g) (relating to confidentiality and 
     accuracy of enrollee records).
       ``(D) Public disclosure of pharmaceutical prices for 
     equivalent drugs.--Each eligible entity offering a 
     prescription drug discount card plan shall provide that each 
     pharmacy or other dispenser that arranges for the dispensing 
     of a covered drug shall inform the beneficiary at the time of 
     purchase of the drug of any differential between the price of 
     the prescribed drug to the enrollee and the price of the 
     lowest cost drug covered under the plan that is 
     therapeutically equivalent and bioequivalent.


                        ``annual enrollment fee

       ``Sec. 1860E. (a) Amount.--

[[Page S8669]]

       ``(1) In general.--Except as provided in subsection (c), 
     enrollment under the program under this part is conditioned 
     upon payment of an annual enrollment fee of $25.
       ``(2) Annual percentage increase.--
       ``(A) In general.--In the case of any calendar year 
     beginning after 2006, the dollar amount in paragraph (1) 
     shall be increased by an amount equal to--
       ``(i) such dollar amount; multiplied by
       ``(ii) the inflation adjustment.
       ``(B) Inflation adjustment.--For purposes of subparagraph 
     (A)(ii), the inflation adjustment for any calendar year is 
     the percentage (if any) by which--
       ``(i) the average per capita aggregate expenditures for 
     covered drugs in the United States for medicare 
     beneficiaries, as determined by the Secretary for the 12-
     month period ending in July of the previous year; exceeds
       ``(ii) such aggregate expenditures for the 12-month period 
     ending with July 2005.
       ``(C) Rounding.--If any increase determined under clause 
     (ii) is not a multiple of $1, such increase shall be rounded 
     to the nearest multiple of $1.
       ``(b) Collection of Annual Enrollment Fee.--
       ``(1) In general.--Unless the eligible beneficiary makes an 
     election under paragraph (2), the annual enrollment fee 
     described in subsection (a) shall be collected and credited 
     to the Federal Supplementary Medical Insurance Trust Fund in 
     the same manner as the monthly premium determined under 
     section 1839 is collected and credited to such Trust Fund 
     under section 1840.
       ``(2) Direct payment.--An eligible beneficiary may elect to 
     pay the annual enrollment fee directly or in any other manner 
     approved by the Secretary. The Secretary shall establish 
     procedures for making such an election.
       ``(c) Waiver.--The Secretary shall waive the enrollment fee 
     described in subsection (a) in the case of an eligible 
     beneficiary whose income is below 200 percent of the poverty 
     line.


                      ``benefits under the program

       ``Sec. 1860F. (a) Access to Negotiated Prices.--
       ``(1) Negotiated prices.--
       ``(A) In general.--Subject to subparagraph (B), each 
     prescription drug card plan offering a discount card program 
     by an eligible entity with a contract under this part shall 
     provide each eligible beneficiary enrolled in such plan with 
     access to negotiated prices (including applicable discounts) 
     for such prescription drugs as the eligible entity determines 
     appropriate. Such discounts may include discounts for 
     nonformulary drugs. If such a beneficiary becomes eligible 
     for the catastrophic benefit under subsection (b), the 
     negotiated prices (including applicable discounts) shall 
     continue to be available to the beneficiary for those 
     prescription drugs for which payment may not be made under 
     section 1860H(b). For purposes of this subparagraph, the term 
     `prescription drugs' is not limited to covered drugs, but 
     does not include any over-the-counter drug that is not a 
     covered drug.
       ``(B) Limitations.--
       ``(i) Formulary restrictions.--Insofar as an eligible 
     entity with a contract under this part uses a formulary, the 
     negotiated prices (including applicable discounts) for 
     nonformulary drugs may differ.
       ``(ii) Avoidance of duplicate coverage.--The negotiated 
     prices (including applicable discounts) for prescription 
     drugs shall not be available for any drug prescribed for an 
     eligible beneficiary if payment for the drug is available 
     under part A or B (but such negotiated prices shall be 
     available if payment under part A or B is not available 
     because the beneficiary has not met the deductible or has 
     exhausted benefits under part A or B).
       ``(2) Discount card.--The Secretary shall develop a uniform 
     standard card format to be issued by each eligible entity 
     offering a prescription drug discount card plan that shall be 
     used by an enrolled beneficiary to ensure the access of such 
     beneficiary to negotiated prices under paragraph (1).
       ``(3) Ensuring discounts in all areas.--The Secretary shall 
     develop procedures that ensure that each eligible beneficiary 
     that resides in an area where no prescription drug discount 
     card plans are available is provided with access to 
     negotiated prices for prescription drugs (including 
     applicable discounts).
       ``(b) Catastrophic Benefit.--
       ``(1) Ten percent cost-sharing.--Subject to any formulary 
     used by the prescription drug discount card program in which 
     the eligible beneficiary is enrolled, the catastrophic 
     benefit shall provide benefits with cost-sharing that is 
     equal to 10 percent of the negotiated price (taking into 
     account any applicable discounts) of each drug dispensed to 
     such beneficiary after the beneficiary has incurred costs (as 
     described in paragraph (3)) for covered drugs in a year equal 
     to the applicable annual out-of-pocket limit specified in 
     paragraph (2).
       ``(2) Annual out-of-pocket limits.--For purposes of this 
     part, the annual out-of-pocket limits specified in this 
     paragraph are as follows:
       ``(A) Beneficiaries with annual incomes below 200 percent 
     of the poverty line.--In the case of an eligible beneficiary 
     whose income (as determined under section 1860I) is below 200 
     percent of the poverty line, the annual out-of-pocket limit 
     is equal to $1,500.
       ``(B) Beneficiaries with annual incomes between 200 and 400 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     200 percent, but does not exceed 400 percent, of the poverty 
     line, the annual out-of-pocket limit is equal to $3,500.
       ``(C) Beneficiaries with annual incomes between 400 and 600 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     400 percent, but does not exceed 600 percent, of the poverty 
     line, the annual out-of-pocket limit is equal to $5,500.
       ``(D) Beneficiaries with annual incomes that exceed 600 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     600 percent of the poverty line, the annual out-of-pocket 
     limit is an amount equal to 20 percent of that beneficiary's 
     income for that year (rounded to the nearest multiple of $1).
       ``(3) Application.--In applying paragraph (2), incurred 
     costs shall only include those expenses for covered drugs 
     that are incurred by the eligible beneficiary using a card 
     approved by the Secretary under this part that are paid by 
     that beneficiary and for which the beneficiary is not 
     reimbursed (through insurance or otherwise) by another 
     person.
       ``(4) Annual percentage increase.--
       ``(A) In general.--In the case of any calendar year after 
     2006, the dollar amounts in subparagraphs (A), (B), and (C) 
     of paragraph (2) shall be increased by an amount equal to--
       ``(i) such dollar amount; multiplied by
       ``(ii) the inflation adjustment determined under section 
     1860E(a)(2)(B) for such calendar year.
       ``(B) Rounding.--If any increase determined under 
     subparagraph (A) is not a multiple of $1, such increase shall 
     be rounded to the nearest multiple of $1.
       ``(5) Eligible entity not at financial risk for 
     catastrophic benefit.--
       ``(A) In general.--The Secretary, and not the eligible 
     entity, shall be at financial risk for the provision of the 
     catastrophic benefit under this subsection.
       ``(B) Provisions relating to payments to eligible 
     entities.--For provisions relating to payments to eligible 
     entities for administering the catastrophic benefit under 
     this subsection, see section 1860H.
       ``(6) Ensuring catastrophic benefit in all areas.--The 
     Secretary shall develop procedures for the provision of the 
     catastrophic benefit under this subsection to each eligible 
     beneficiary that resides in an area where there are no 
     prescription drug discount card plans offered that have been 
     awarded a contract under this part.


   ``requirements for entities to provide prescription drug coverage

       ``Sec. 1860G. (a) Establishment of Bidding Process.--The 
     Secretary shall establish a process under which the Secretary 
     accepts bids from eligible entities and awards contracts to 
     the entities to provide the benefits under this part to 
     eligible beneficiaries in an area.
       ``(b) Submission of Bids.--Each eligible entity desiring to 
     enter into a contract under this part shall submit a bid to 
     the Secretary at such time, in such manner, and accompanied 
     by such information as the Secretary may require.
       ``(c) Administrative Fee Bid.--
       ``(1) Submission.--For the bid described in subsection (b), 
     each entity shall submit to the Secretary information 
     regarding administration of the discount card and 
     catastrophic benefit under this part.
       ``(2) Bid submission requirements.--
       ``(A) Administrative fee bid submission.--In submitting 
     bids, the entities shall include separate costs for 
     administering the discount card component, if applicable, and 
     the catastrophic benefit. The entity shall submit the 
     administrative fee bid in a form and manner specified by the 
     Secretary, and shall include a statement of projected 
     enrollment and a separate statement of the projected 
     administrative costs for at least the following functions:
       ``(i) Enrollment, including income eligibility 
     determination.
       ``(ii) Claims processing.
       ``(iii) Quality assurance, including drug utilization 
     review.
       ``(iv) Beneficiary and pharmacy customer service.
       ``(v) Coordination of benefits.
       ``(vi) Fraud and abuse prevention.
       ``(B) Negotiated administrative fee bid amounts.--The 
     Secretary has the authority to negotiate regarding the bid 
     amounts submitted. The Secretary may reject a bid if the 
     Secretary determines it is not supported by the 
     administrative cost information provided in the bid as 
     specified in subparagraph (A).
       ``(C) Payment to plans based on administrative fee bid 
     amounts.--The Secretary shall use the bid amounts to 
     calculate a benchmark amount consisting of the enrollment-
     weighted average of all bids for each function and each class 
     of entity. The class of entity is either a regional or 
     national entity, or such other classes as the Secretary may 
     determine to be appropriate. The functions are the discount 
     card and catastrophic components. If an eligible entity's 
     combined bid for both functions is above the combined 
     benchmark within the entity's class for the functions, the 
     eligible entity shall collect additional necessary revenue 
     through 1 or both of the following:
       ``(i) Additional fees charged to the beneficiary, not to 
     exceed $25 annually.
       ``(ii) Use of rebate amounts from drug manufacturers to 
     defray administrative costs.

[[Page S8670]]

       ``(d) Awarding of Contracts.--
       ``(1) In general.--The Secretary shall, consistent with the 
     requirements of this part and the goal of containing medicare 
     program costs, award at least 2 contracts in each area, 
     unless only 1 bidding entity meets the terms and conditions 
     specified by the Secretary under paragraph (2).
       ``(2) Terms and conditions.--The Secretary shall not award 
     a contract to an eligible entity under this section unless 
     the Secretary finds that the eligible entity is in compliance 
     with such terms and conditions as the Secretary shall 
     specify.
       ``(3) Requirements for eligible entities providing discount 
     card program.--Except as provided in subsection (e), in 
     determining which of the eligible entities that submitted 
     bids that meet the terms and conditions specified by the 
     Secretary under paragraph (2) to award a contract, the 
     Secretary shall consider whether the bid submitted by the 
     entity meets at least the following requirements:
       ``(A) Level of savings to medicare beneficiaries.--The 
     program passes on to medicare beneficiaries who enroll in the 
     program discounts on prescription drugs, including discounts 
     negotiated with manufacturers.
       ``(B) Prohibition on application only to mail order.--The 
     program applies to drugs that are available other than solely 
     through mail order and provides convenient access to retail 
     pharmacies.
       ``(C) Level of beneficiary services.--The program provides 
     pharmaceutical support services, such as education and 
     services to prevent adverse drug interactions.
       ``(D) Adequacy of information.--The program makes available 
     to medicare beneficiaries through the Internet and otherwise 
     information, including information on enrollment fees, prices 
     charged to beneficiaries, and services offered under the 
     program, that the Secretary identifies as being necessary to 
     provide for informed choice by beneficiaries among endorsed 
     programs.
       ``(E) Extent of demonstrated experience.--The entity 
     operating the program has demonstrated experience and 
     expertise in operating such a program or a similar program.
       ``(F) Extent of quality assurance.--The entity has in place 
     adequate procedures for assuring quality service under the 
     program.
       ``(G) Operation of assistance program.--The entity meets 
     such requirements relating to solvency, compliance with 
     financial reporting requirements, audit compliance, and 
     contractual guarantees as specified by the Secretary.
       ``(H) Privacy compliance.--The entity implements policies 
     and procedures to safeguard the use and disclosure of program 
     beneficiaries' individually identifiable health information 
     in a manner consistent with the Federal regulations 
     (concerning the privacy of individually identifiable health 
     information) promulgated under section 264(c) of the Health 
     Insurance Portability and Accountability Act of 1996.
       ``(I) Additional beneficiary protections.--The program 
     meets such additional requirements as the Secretary 
     identifies to protect and promote the interest of medicare 
     beneficiaries, including requirements that ensure that 
     beneficiaries are not charged more than the lower of the 
     negotiated retail price or the usual and customary price.
     The prices negotiated by a prescription drug discount card 
     program endorsed under this section shall (notwithstanding 
     any other provision of law) not be taken into account for the 
     purposes of establishing the best price under section 
     1927(c)(1)(C).
       ``(4) Beneficiary access to savings and rebates.--The 
     Secretary shall require eligible entities offering a discount 
     card program to pass on savings and rebates negotiated with 
     manufacturers to eligible beneficiaries enrolled with the 
     entity.
       ``(5) Negotiated agreements with employer-sponsored 
     plans.--Notwithstanding any other provision of this part, the 
     Secretary may negotiate agreements with employer-sponsored 
     plans under which eligible beneficiaries are provided with a 
     benefit for prescription drug coverage that is more generous 
     than the benefit that would otherwise have been available 
     under this part if such an agreement results in cost savings 
     to the Federal Government.
       ``(e) Requirements for Other Eligible Entities.--An 
     eligible entity that is licensed under State law to provide 
     the health insurance benefits under this section shall be 
     required to meet the requirements of subsection (d)(3). If an 
     eligible entity offers a national plan, such entity shall not 
     be required to meet the requirements of subsection (d)(3), 
     but shall meet the requirements of Employee Retirement Income 
     Security Act of 1974 that apply with respect to such plan.


  ``payments to eligible entities for administering the catastrophic 
                                benefit

       ``Sec. 1860H. (a) In General.--The Secretary may establish 
     procedures for making payments to an eligible entity under a 
     contract entered into under this part for--
       ``(1) the costs of providing covered drugs to beneficiaries 
     eligible for the benefit under this part in accordance with 
     subsection (b) minus the amount of any cost-sharing collected 
     by the eligible entity under section 1860F(b); and
       ``(2) costs incurred by the entity in administering the 
     catastrophic benefit in accordance with section 1860G.
       ``(b) Payment for Covered Drugs.--
       ``(1) In general.--Except as provided in subsection (c) and 
     subject to paragraph (2), the Secretary may only pay an 
     eligible entity for covered drugs furnished by the eligible 
     entity to an eligible beneficiary enrolled with such entity 
     under this part that is eligible for the catastrophic benefit 
     under section 1860F(b).
       ``(2) Limitations.--
       ``(A) Formulary restrictions.--Insofar as an eligible 
     entity with a contract under this part uses a formulary, the 
     Secretary may not make any payment for a covered drug that is 
     not included in such formulary, except to the extent provided 
     under section 1860D(a)(4)(B).
       ``(B) Negotiated prices.--The Secretary may not pay an 
     amount for a covered drug furnished to an eligible 
     beneficiary that exceeds the negotiated price (including 
     applicable discounts) that the beneficiary would have been 
     responsible for under section 1860F(a) or the price 
     negotiated for insurance coverage under the Medicare+Choice 
     program under part C, a medicare supplemental policy, 
     employer-sponsored coverage, or a State plan.
       ``(C) Cost-sharing limitations.--An eligible entity may not 
     charge an individual enrolled with such entity who is 
     eligible for the catastrophic benefit under this part any 
     copayment, tiered copayment, coinsurance, or other cost-
     sharing that exceeds 10 percent of the cost of the drug that 
     is dispensed to the individual.
       ``(3) Payment in competitive areas.--In a geographic area 
     in which 2 or more eligible entities offer a plan under this 
     part, the Secretary may negotiate an agreement with the 
     entity to reimburse the entity for costs incurred in 
     providing the benefit under this part on a capitated basis.
       ``(c) Secondary Payer Provisions.--The provisions of 
     section 1862(b) shall apply to the benefits provided under 
     this part.


                    ``determination of income levels

       ``Sec. 1860I. (a) Determination of Income Levels.--
       ``(1) In general.--The Secretary shall establish procedures 
     under which each eligible entity awarded a contract under 
     this part determines the income levels of eligible 
     beneficiaries enrolled in a prescription drug card plan 
     offered by that entity at least annually for purposes of 
     sections 1860E(c) and 1860F(b).
       ``(2) Procedures.--The procedures established under 
     paragraph (1) shall require each eligible beneficiary to 
     submit such information as the eligible entity requires to 
     make the determination described in paragraph (1).
       ``(b) Enforcement of Income Determinations.--The Secretary 
     shall--
       ``(1) establish procedures that ensure that eligible 
     beneficiaries comply with sections 1860E(c) and 1860F(b); and
       ``(2) require, if the Secretary determines that payments 
     were made under this part to which an eligible beneficiary 
     was not entitled, the repayment of any excess payments with 
     interest and a penalty.
       ``(c) Quality Control System.--
       ``(1) Establishment.--The Secretary shall establish a 
     quality control system to monitor income determinations made 
     by eligible entities under this section and to produce 
     appropriate and comprehensive measures of error rates.
       ``(2) Periodic audits.--The Inspector General of the 
     Department of Health and Human Services shall conduct 
     periodic audits to ensure that the system established under 
     paragraph (1) is functioning appropriately.


                            ``appropriations

       ``Sec. 1860J. There are authorized to be appropriated from 
     time to time, out of any moneys in the Treasury not otherwise 
     appropriated, to the Federal Supplementary Medical Insurance 
     Trust Fund established under section 1841, an amount equal to 
     the amount by which the benefits and administrative costs of 
     providing the benefits under this part exceed the enrollment 
     fees collected under section 1860E.


      ``medicare competition and prescription drug advisory board

       ``Sec. 1860K. (a) Establishment of Board.--There is 
     established a Medicare Prescription Drug Advisory Board (in 
     this section referred to as the `Board').
       ``(b) Advice on Policies; Reports.--
       ``(1) Advice on policies.--The Board shall advise the 
     Secretary on policies relating to the Voluntary Medicare 
     Prescription Drug Discount and Security Program under this 
     part.
       ``(2) Reports.--
       ``(A) In general.--With respect to matters of the 
     administration of the program under this part, the Board 
     shall submit to Congress and to the Secretary such reports as 
     the Board determines appropriate. Each such report may 
     contain such recommendations as the Board determines 
     appropriate for legislative or administrative changes to 
     improve the administration of the program under this part. 
     Each such report shall be published in the Federal Register.
       ``(B) Maintaining independence of board.--The Board shall 
     directly submit to Congress reports required under 
     subparagraph (A). No officer or agency of the United States 
     may require the Board to submit to any officer or agency of 
     the United States for approval, comments, or review, prior to 
     the submission to Congress of such reports.
       ``(c) Structure and Membership of the Board.--
       ``(1) Membership.--The Board shall be composed of 7 members 
     who shall be appointed as follows:
       ``(A) Presidential appointments.--

[[Page S8671]]

       ``(i) In general.--Three members shall be appointed by the 
     President, by and with the advice and consent of the Senate.
       ``(ii) Limitation.--Not more than 2 such members may be 
     from the same political party.
       ``(B) Senatorial appointments.--Two members (each member 
     from a different political party) shall be appointed by the 
     President pro tempore of the Senate with the advice of the 
     Chairman and the Ranking Minority Member of the Committee on 
     Finance of the Senate.
       ``(C) Congressional appointments.--Two members (each member 
     from a different political party) shall be appointed by the 
     Speaker of the House of Representatives, with the advice of 
     the Chairman and the Ranking Minority Member of the Committee 
     on Ways and Means of the House of Representatives.
       ``(2) Qualifications.--The members shall be chosen on the 
     basis of their integrity, impartiality, and good judgment, 
     and shall be individuals who are, by reason of their 
     education, experience, and attainments, exceptionally 
     qualified to perform the duties of members of the Board.
       ``(3) Composition.--Of the members appointed under 
     paragraph (1)--
       ``(A) at least 1 shall represent the pharmaceutical 
     industry;
       ``(B) at least 1 shall represent physicians;
       ``(C) at least 1 shall represent medicare beneficiaries;
       ``(D) at least 1 shall represent practicing pharmacists; 
     and
       ``(E) at least 1 shall represent eligible entities.
       ``(d) Terms of Appointment.--
       ``(1) In general.--Subject to paragraph (2), each member of 
     the Board shall serve for a term of 6 years.
       ``(2) Continuance in office and staggered terms.--
       ``(A) Continuance in office.--A member appointed to a term 
     of office after the commencement of such term may serve under 
     such appointment only for the remainder of such term.
       ``(B) Staggered terms.--The terms of service of the members 
     initially appointed under this section shall begin on January 
     1, 2006, and expire as follows:
       ``(i) Presidential appointments.--The terms of service of 
     the members initially appointed by the President shall expire 
     as designated by the President at the time of nomination, 1 
     each at the end of--

       ``(I) 2 years;
       ``(II) 4 years; and
       ``(III) 6 years.

       ``(ii) Senatorial appointments.--The terms of service of 
     members initially appointed by the President pro tempore of 
     the Senate shall expire as designated by the President pro 
     tempore of the Senate at the time of nomination, 1 each at 
     the end of--

       ``(I) 3 years; and
       ``(II) 6 years.

       ``(iii) Congressional appointments.--The terms of service 
     of members initially appointed by the Speaker of the House of 
     Representatives shall expire as designated by the Speaker of 
     the House of Representatives at the time of nomination, 1 
     each at the end of--

       ``(I) 4 years; and
       ``(II) 5 years.

       ``(C) Reappointments.--Any person appointed as a member of 
     the Board may not serve for more than 8 years.
       ``(D) Vacancies.--Any member appointed to fill a vacancy 
     occurring before the expiration of the term for which the 
     member's predecessor was appointed shall be appointed only 
     for the remainder of that term. A member may serve after the 
     expiration of that member's term until a successor has taken 
     office. A vacancy in the Board shall be filled in the manner 
     in which the original appointment was made.
       ``(e) Chairperson.--A member of the Board shall be 
     designated by the President to serve as Chairperson for a 
     term of 4 years or, if the remainder of such member's term is 
     less than 4 years, for such remainder.
       ``(f) Expenses and Per Diem.--Members of the Board shall 
     serve without compensation, except that, while serving on 
     business of the Board away from their homes or regular places 
     of business, members may be allowed travel expenses, 
     including per diem in lieu of subsistence, as authorized by 
     section 5703 of title 5, United States Code, for persons in 
     the Government employed intermittently.
       ``(g) Meetings.--
       ``(1) In general.--The Board shall meet at the call of the 
     Chairperson (in consultation with the other members of the 
     Board) not less than 4 times each year to consider a specific 
     agenda of issues, as determined by the Chairperson in 
     consultation with the other members of the Board.
       ``(2) Quorum.--Four members of the Board (not more than 3 
     of whom may be of the same political party) shall constitute 
     a quorum for purposes of conducting business.
       ``(h) Federal Advisory Committee Act.--The Board shall be 
     exempt from the provisions of the Federal Advisory Committee 
     Act (5 U.S.C. App.).
       ``(i) Personnel.--
       ``(1) Staff director.--The Board shall, without regard to 
     the provisions of title 5, United States Code, relating to 
     the competitive service, appoint a Staff Director who shall 
     be paid at a rate equivalent to a rate established for the 
     Senior Executive Service under section 5382 of title 5, 
     United States Code.
       ``(2) Staff.--
       ``(A) In general.--The Board may employ, without regard to 
     chapter 31 of title 5, United States Code, such officers and 
     employees as are necessary to administer the activities to be 
     carried out by the Board.
       ``(B) Flexibility with respect to civil service laws.--
       ``(i) In general.--The staff of the Board shall be 
     appointed without regard to the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service, and, subject to clause (ii), shall be paid without 
     regard to the provisions of chapters 51 and 53 of such title 
     (relating to classification and schedule pay rates).
       ``(ii) Maximum rate.--In no case may the rate of 
     compensation determined under clause (i) exceed the rate of 
     basic pay payable for level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code.
       ``(j) Authorization of Appropriations.--There are 
     authorized to be appropriated, out of the Federal 
     Supplemental Medical Insurance Trust Fund established under 
     section 1841, and the general fund of the Treasury, such sums 
     as are necessary to carry out the purposes of this 
     section.''.
       (b) Conforming References to Previous Part D.--
       (1) In general.--Any reference in law (in effect before the 
     date of enactment of this Act) to part D of title XVIII of 
     the Social Security Act is deemed a reference to part E of 
     such title (as in effect after such date).
       (2) Secretarial submission of legislative proposal.--Not 
     later than 6 months after the date of enactment of this 
     section, the Secretary of Health and Human Services shall 
     submit to the appropriate committees of Congress a 
     legislative proposal providing for such technical and 
     conforming amendments in the law as are required by the 
     provisions of this section.
       (c) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     take effect on the date of enactment of this Act.
       (2) Implementation.--Notwithstanding any provision of part 
     D of title XVIII of the Social Security Act (as added by 
     subsection (a)), the Secretary of Health and Human Services 
     shall implement the Voluntary Medicare Prescription Drug 
     Discount and Security Program established under such part in 
     a manner such that--
       (A) benefits under such part for eligible beneficiaries (as 
     defined in section 1860 of such Act, as added by such 
     subsection) with annual incomes below 200 percent of the 
     poverty line (as defined in such section) are available to 
     such beneficiaries not later than the date that is 6 months 
     after the date of enactment of this Act; and
       (B) benefits under such part for other eligible 
     beneficiaries are available to such beneficiaries not later 
     than the date that is 1 year after the date of enactment of 
     this Act.

     SEC. 102. ADMINISTRATION OF VOLUNTARY MEDICARE PRESCRIPTION 
                   DRUG DISCOUNT AND SECURITY PROGRAM.

       (a) Establishment of Center for Medicare Prescription 
     Drugs.--There is established, within the Centers for Medicare 
     & Medicaid Services of the Department of Health and Human 
     Services, a Center for Medicare Prescription Drugs. Such 
     Center shall be separate from the Center for Beneficiary 
     Choices, the Center for Medicare Management, and the Center 
     for Medicaid and State Operations.
       (b) Duties.--It shall be the duty of the Center for 
     Medicare Prescription Drugs to administer the Voluntary 
     Medicare Prescription Drug Discount and Security Program 
     established under part D of title XVIII of the Social 
     Security Act (as added by section 101).
       (c) Director.--
       (1) Appointment.--There shall be in the Center for Medicare 
     Prescription Drugs a Director of Medicare Prescription Drugs, 
     who shall be appointed by the President, by and with the 
     advice and consent of the Senate.
       (2) Responsibilities.--The Director shall be responsible 
     for the exercise of all powers and the discharge of all 
     duties of the Center for Medicare Prescription Drugs and 
     shall have authority and control over all personnel and 
     activities thereof.
       (d) Personnel.--The Director of the Center for Medicare 
     Prescription Drugs may appoint and terminate such personnel 
     as may be necessary to enable the Center for Medicare 
     Prescription Drugs to perform its duties.

     SEC. 103. EXCLUSION OF PART D COSTS FROM DETERMINATION OF 
                   PART B MONTHLY PREMIUM.

       Section 1839(g) of the Social Security Act (42 U.S.C. 
     1395r(g)) is amended--
       (1) by striking ``attributable to the application of 
     section'' and inserting ``attributable to--
       ``(1) the application of section'';
       (2) by striking the period and inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(2) the Voluntary Medicare Prescription Drug Discount and 
     Security Program under part D.''.

     SEC. 104. MEDIGAP REVISIONS.

       Section 1882 of the Social Security Act (42 U.S.C. 1395ss) 
     is amended by adding at the end the following new subsection:
       ``(v) Modernization of Medicare Supplemental Policies.--
       ``(1) Promulgation of model regulation.--
       ``(A) NAIC model regulation.--If, within 9 months after the 
     date of enactment of the Prescription Drug and Medicare 
     Improvement Act of 2003, the National Association of

[[Page S8672]]

     Insurance Commissioners (in this subsection referred to as 
     the `NAIC') changes the 1991 NAIC Model Regulation (described 
     in subsection (p)) to revise the benefit package classified 
     as `J' under the standards established by subsection (p)(2) 
     (including the benefit package classified as `J' with a high 
     deductible feature, as described in subsection (p)(11)) so 
     that--
       ``(i) the coverage for prescription drugs available under 
     such benefit package is replaced with coverage for 
     prescription drugs that complements but does not duplicate 
     the benefits for prescription drugs that beneficiaries are 
     otherwise entitled to under this title;
       ``(ii) a uniform format is used in the policy with respect 
     to such revised benefits; and
       ``(iii) such revised standards meet any additional 
     requirements imposed by the Prescription Drug and Medicare 
     Improvement Act of 2003;
     subsection (g)(2)(A) shall be applied in each State, 
     effective for policies issued to policy holders on and after 
     January 1, 2006, as if the reference to the Model Regulation 
     adopted on June 6, 1979, were a reference to the 1991 NAIC 
     Model Regulation as changed under this subparagraph (such 
     changed regulation referred to in this section as the `2006 
     NAIC Model Regulation').
       ``(B) Regulation by the secretary.--If the NAIC does not 
     make the changes in the 1991 NAIC Model Regulation within the 
     9-month period specified in subparagraph (A), the Secretary 
     shall promulgate, not later than 9 months after the end of 
     such period, a regulation and subsection (g)(2)(A) shall be 
     applied in each State, effective for policies issued to 
     policy holders on and after January 1, 2006, as if the 
     reference to the Model Regulation adopted on June 6, 1979, 
     were a reference to the 1991 NAIC Model Regulation as changed 
     by the Secretary under this subparagraph (such changed 
     regulation referred to in this section as the `2006 Federal 
     Regulation').
       ``(C) Consultation with working group.--In promulgating 
     standards under this paragraph, the NAIC or Secretary shall 
     consult with a working group similar to the working group 
     described in subsection (p)(1)(D).
       ``(D) Modification of standards if medicare benefits 
     change.--If benefits under part D of this title are changed 
     and the Secretary determines, in consultation with the NAIC, 
     that changes in the 2006 NAIC Model Regulation or 2006 
     Federal Regulation are needed to reflect such changes, the 
     preceding provisions of this paragraph shall apply to the 
     modification of standards previously established in the same 
     manner as they applied to the original establishment of such 
     standards.
       ``(2) Construction of benefits in other medicare 
     supplemental policies.--Nothing in the benefit packages 
     classified as `A' through `I' under the standards established 
     by subsection (p)(2) (including the benefit package 
     classified as `F' with a high deductible feature, as 
     described in subsection (p)(11)) shall be construed as 
     providing coverage for benefits for which payment may be made 
     under part D.
       ``(3) Application of provisions and conforming 
     references.--
       ``(A) Application of provisions.--The provisions of 
     paragraphs (4) through (10) of subsection (p) shall apply 
     under this section, except that--
       ``(i) any reference to the model regulation applicable 
     under that subsection shall be deemed to be a reference to 
     the applicable 2006 NAIC Model Regulation or 2006 Federal 
     Regulation; and
       ``(ii) any reference to a date under such paragraphs of 
     subsection (p) shall be deemed to be a reference to the 
     appropriate date under this subsection.
       ``(B) Other references.--Any reference to a provision of 
     subsection (p) or a date applicable under such subsection 
     shall also be considered to be a reference to the appropriate 
     provision or date under this subsection.''.

     SEC. _. PARTIAL FEDERAL ASSUMPTION OF MEDICAID RESPONSIBILITY 
                   FOR CATASTROPHIC COST-SHARING SUBSIDIES FOR 
                   DUALLY ELIGIBLE INDIVIDUALS.

       (1) In general.--Section 1903(a)(1) (42 U.S.C. 1396b(a)(1): 
     is amended by inserting before the semicolon the following: 
     ``, reduced by the amount computed under section 1935(d)(1) 
     for the State and the quarter''.
       (2) Amount described.--Section 1935, as inserted by 
     subsection (a)(2), is amended by adding at the end the 
     following new subsection:
       ``(d) Federal Assumption of Medicaid Prescription Drug 
     Costs for Dually-Eligible Beneficiaries.--
       ``(1) In general.--For purposes of section 1903(a)(1), for 
     a State that is one of the 50 States or the District of 
     Columbia for a calendar quarter in a year (beginning with 
     2005) the amount computed under this subsection is equal to 
     the product of the following:
       ``(A) Medicare benefits for medicaid eligibles.--The total 
     amount of payments made in the quarter because of the 
     operation of section 1845 that are attributable to 
     individuals who are residents of the State and are eligible 
     for medical assistance with respect to prescription drugs 
     under this title.
       ``(B) State matching rate.--A proportion computed by 
     subtracting from 100 percent the Federal medical assistance 
     percentage (as defined in section 1905(b)) applicable to the 
     State and the quarter.
       ``(C) Phase-out proportion.--The phase-out proportion (as 
     defined in paragraph (2)) for the quarter.
       ``(2) Phase-out proportion.--For purposes of paragraph 
     (1)(C), the `phase-out proportion' for a calendar quarter 
     in--
       ``(A) 2005 is 90 percent;
       ``(B) a subsequent year before 2014, is the phase-out 
     proportion for calendar quarters in the previous year 
     decreased by 10 percentage points; or
       ``(C) a year after 2013 is 0 percent.''.
       (3) Medicaid providing wrap-around benefits.--Section 1935, 
     as so inserted and amended, is further amended by adding at 
     the end the following new subsection:
       ``(e) Medicaid as Secondary Payor.--In the case of an 
     individual who is entitled to benefits under part B of title 
     XVIII and is eligible for medical assistance with respect to 
     prescribed drugs under this title, medical assistance shall 
     continue to be provided under this title for prescribed drugs 
     to the extent payment is not made under such part B, without 
     regard to section 1902(n)(2).''.
       (4) Limitation and caps.--The Secretary will implement the 
     above section to the extent possible within a total federal 
     authorization of $35,000,000,000.

     SEC. _. ADDITION OF DOLLAR AMOUNT TO PRESCRIPTION DRUG 
                   DISCOUNT CARDS; EFFECTIVE DATE.

       (a) Addition of Dollar Amounts to Prescription Drug 
     Discount Cards.--Section 1860F (as added by section 101) is 
     amended by adding at the end the following:
       ``(c) Provision of Dollar Amounts on Cards.--
       ``(1) Amount of annual assistance.--
       ``(A) In general.--Subject to the succeeding provisions of 
     this subsection, each eligible entity with a contract under 
     this section shall provide coverage for the applicable amount 
     of expenses for prescription drugs incurred during each 
     calendar year by an eligible beneficiary enrolled in a 
     prescription drug discount card plan offered by such entity.
       ``(B) Applicable amount defined.--For purposes of 
     subparagraph (A), the term `applicable amount' means the 
     total amount that the Secretary determines will not cause 
     expenditures under this part to exceed the total amount that 
     would have been expended under this title if this part had 
     not been enacted by more than $30,000,000,000 during the 
     period beginning on January 1, 2005, and ending on September 
     30, 2010.
       ``(2) Reduction for late enrollment.--For each month during 
     a calendar quarter in which an eligible beneficiary is not 
     enrolled in a prescription drug discount card plan offered by 
     an eligible entity with a contract under this part, the 
     amount of assistance available under paragraph (1) shall be 
     reduced by $50.
       ``(3) Crediting of unused benefits toward future years.--
       ``(A) In general.--The dollar amount of coverage described 
     in paragraph (1) shall be increased by any amount of coverage 
     described in such subparagraph that was not used during the 
     previous calendar year.
       ``(B) Refund of excess amounts.--The Administrator shall 
     refund to the eligible beneficiary the amount (if any) by 
     which the dollar amount of coverage described in subparagraph 
     (A) exceeds the catastrophic limit described in subsection 
     (b).
       ``(4) Waiver to ensure provision of benefit.--The 
     Administrator may waive such requirements of this part as may 
     be necessary to ensure that each eligible beneficiary has 
     access to the assistance described in subparagraph (A).
       ``(5) Application of formulary restrictions.--A drug 
     prescribed for an eligible beneficiary that would otherwise 
     be a covered drug under this section shall not be so 
     considered under a prescription drug discount card plan if 
     the program excludes the drug under a formulary and such 
     exclusion is not successfully resolved under the grievance or 
     appeals processes provided for under this part.
       ``(6) Payments to plans.--The Administrator shall reimburse 
     each eligible entity for any costs incurred under this 
     subsection.''.
       (b) Effective Date.--Part D is amended by adding at the end 
     the following new section:


                            ``effective date

       ``Sec. 1860L. Nothwithstanding any other provision of this 
     part, the Voluntary Medicare Prescription Drug Discount and 
     Security Program under this part shall apply only during the 
     period beginning on January 1, 2005 and ending on December 
     31, 2010.''.

  Mr. HAGEL. Mr. President, I now ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. HAGEL. I thank the Chair and yield the floor.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Nevada is recognized.
  Mr. ENSIGN. Mr. President, the prescription drug bill, Medicare 
reform bill combination that we have before us today, as we all know, 
is a freight train coming through this place and there is no stopping 
it.
  What is very unfortunate is that we have a very legitimate amendment 
on

[[Page S8673]]

the floor today that is getting 20, 30 minutes' worth of debate. I put 
up some examples on the chart here of how this amendment we are 
offering is superior. I have tried to be objective, to say that above 
200 percent of poverty, between 200 and 400 percent of poverty they are 
pretty equal plans. For the very low income, our amendment is slightly 
less generous, but it keeps the low-income people with something at 
stake so they will shop. We have heard nothing about that from the 
other side. There has been no debate, in other words. It is because 
there is an agreement to defeat any substantive amendment. It is 
unfortunate.
  This is probably the most important vote, as far as an entitlement 
program, that any of us in our careers will ever take, and this bill is 
being rushed through so that we can get a ``bill'' to conference, where 
all of the improvements are going to be made.
  We have an amendment before us that I believe should be debated. If 
you disagree, fine, but let's debate it and vote on it up or down. But 
I don't think this kind of a process is healthy for the Senate.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized.
  Mr. BREAUX. Mr. President, I yield myself whatever time we have in 
opposition to the amendment.
  The PRESIDING OFFICER. Of whose time?
  Mr. BREAUX. Off of the chairman, Senator Grassley's time.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. BREAUX. Mr. President, I start off by commending the authors of 
the amendment for a real serious effort to try to improve the bill. But 
I rise in opposition because there is not any segment of the senior 
population that you could not isolate and target and say we can make, 
for this particular group, a better deal than they have in this bill. 
That is not the purpose of this legislation.
  The purpose of Medicare is that it is universal. It is not a welfare 
bill. It is not just for low-income individuals. It is for every 
American citizen who has reached the age of 65, or older, and qualifies 
for the program. That is one of the greatest features of the Medicare 
Program--that everyone is essentially treated equal.
  So it is easy, if you want to isolate a low-income group and say we 
are going to give them a better deal. But when you are looking at the 
entire population of almost 40 million Americans with whom we have to 
deal, that, indeed, is the real challenge, and that is why the content 
of this bill is far superior than to narrowly isolate only low-income 
people and say we can do a better deal for them. Of course, but you are 
not going to be able to do that in keeping with the general theme of 
what Medicare is all about and taking care of all Medicare seniors with 
the best possible deal.
  I think that is what the goal of this Congress should be, and that is 
why what we have in the provisions here to give them prescription 
drugs, which would be within the Medicare Program, that people can 
voluntarily continue to accept the traditional Medicare or, if they 
would like, move into an expanded Medicare Advantage and get all of the 
benefits through a private, competitively delivered system.
  What we have is the beginning of a program that can be improved upon 
and will be. But we have essentially an insurance-type program, similar 
to what we have as Federal employees, which can be improved upon. But 
it is for everybody. We, too, give special attention to lower income 
individuals, and maybe they can do it better, but it is going to have 
to come from somewhere else, and the somewhere else is the vast number 
of other seniors who would have some of their benefits diluted and 
reduced in order to make this a little better than what is in this 
bill.
  The goal is to try to create a universal program across the board, 
and one that is fair to everyone. I think that is what is in the bill 
as it now stands.
  Mr. GREGG. Will the Senator yield for a question?
  Mr. BREAUX. Yes, I am happy to yield.
  Mr. GREGG. Would the Senator agree that there wasn't, in the original 
program set up as an insurance program, which you would pay into during 
your working life under the Part A part of the insurance program, with 
the concept that when you retired, you would have paid for your health 
insurance. That is why everyone is covered under it. But is it not also 
true that under this drug benefit as proposed, nobody will have paid 
into the Medicare insurance plan for the purposes of this drug program? 
This drug program will be a new entitlement, and therefore it is 
reasonable that since it is going to be borne not by the people who 
worked for it but by the people who are working--it is going to be 
borne by them rather than the recipients--then it should be set up in a 
different structure along the lines that are proposed, which is you 
benefit the low income and you benefit people who have a catastrophic 
event rather than have a program that puts the benefit out to everyone 
and forces 37 percent of the population off private insurance plans and 
on to a public plan.

  Mr. BREAUX. I am not sure whose time this is on. I will respond to 
the Senator's question. We have a health delivery system supervised by 
the Federal Government, and the beneficiaries are going to contribute 
to it. Those benefiting from it are going to have an average premium of 
$35 a month, a $275 deductible, and 50 percent copayment.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. BREAUX. I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Parliamentary inquiry: Will the Chair inform the Senate 
as to the time allowable on this amendment?
  The PRESIDING OFFICER. The Senator from Nebraska has 4 minutes 30 
seconds remaining. No time remains in opposition.
  Mr. BAUCUS. I wonder if I can get consent to speak for 1 minute on 
this amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, two points: One, this amendment is totally 
new. We have not seen the language. We have been asking for the 
language for days. It has been filed in various forms. This is new 
language. The Senate has no idea what is in this amendment. We saw it 
for the first time maybe 15, 20, 30 minutes ago. It is impossible to 
know what this amendment does.
  Point No. 2, essentially what we can tell by a cursory glance at the 
amendment is the amendment enters a whole new concept in Medicare that 
has not been done before, and that is means testing. It means tests 
those at the catastrophic levels.
  I do not think we want to begin to go down that road tonight. It 
makes more sense to stay with the underlying bill which essentially 
gives a 44-percent rate to those beneficiaries with lower income.
  The problem is it does not help, as our bill does, up to 
catastrophic, and then catastrophic is means tested. That is not the 
right thing to do, certainly at this hour after looking at it 30 
minutes ago.
  The PRESIDING OFFICER. The Senator's time has expired.
  The Senator from Nevada.
  Mr. ENSIGN. Mr. President, I ask unanimous consent for whatever time 
I consume from Senator Hagel's time to respond.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HAGEL. Mr. President, I understand I have 4 minutes 20 seconds.
  The PRESIDING OFFICER. That is correct.
  Mr. HAGEL. I yield to my colleague whatever time he requires from my 
time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ENSIGN. Mr. President, means testing and universal have been 
mentioned. The Senator from New Hampshire mentioned that this is a 
brand new benefit, and that is why we are only talking about the 
prescription drug part--a brand new benefit for which young people in 
America are going to be paying for years and years. It seems to make 
sense that we try to control those costs.
  Yes, our bill means tests. So does the underlying bill. To sit up 
here and say their bill does not means test is completely disingenuous. 
They have several levels in the low-income areas they means test. They 
are just means testing in a different area. If you

[[Page S8674]]

means test one, why is calling our bill means testing when their bill 
means tests as well? How can they say our bill means tests and theirs 
does not? That is disingenuous.
  It is critical that we have this debate. There was a complaint that 
they just saw this amendment tonight. Part of the reason is that we are 
trying to rush this bill through what is supposed to be the most 
deliberative body in the world, and we have this false deadline that we 
must get this bill passed before the July break. I submit, this 
deserves more debate. The debate cannot happen when it goes to 
conference because most of the Senate is cut out then and there is no 
debate when it comes back here.
  With all due respect, I think we have a superior portion of the 
prescription drug plan, and I hope our colleagues vote for this plan.
  I reserve the remainder of our time.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. HAGEL. Mr. President, how much time is remaining?
  The PRESIDING OFFICER. Two and a half minutes.
  Mr. HAGEL. Mr. President, in addition to what my colleague from 
Nevada has said in response to the distinguished Senator from Montana, 
there is nothing new about this bill except two features.
  This bill, the Hagel-Ensign bill, last year received more bipartisan 
votes on the floor of this Senate than any other bill. There is nothing 
new in this bill except two features. One is the $30 billion for low-
income seniors' additional coverage, and the other is the $35 billion 
in cost sharing for catastrophic drug costs with Medicare and Medicaid 
to dual eligibles. That is what is new in the bill.
  To say this is new and we have just sprung this on the Senate is a 
bit disingenuous. This bill has been around for almost 4 years in its 
current form.
  I yield the floor.
  The PRESIDING OFFICER. Does the Senator yield back his time?
  Mr. HAGEL. Mr. President, I yield back all of my time.


                           Amendment No. 1111

  The PRESIDING OFFICER. There are 2 minutes evenly divided on the 
Levin amendment No. 1111. Who yields time on the Levin amendment No. 
1111?
  Mr. BAUCUS. It is my understanding the sponsor, Senator Levin, is in 
the Chamber.
  Mr. LEVIN. I have already spoken on the amendment.
  The PRESIDING OFFICER (Mr. Ensign). All time is yielded back.
  The question is on agreeing to amendment No. 1111.
  Mr. BAUCUS. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second. The clerk will call the 
roll.
  The legislative clerk called the roll.
  Mr. McCONNELL. I announce that the Senator from New Mexico (Mr. 
Domenici) and the Senator from Oklahoma (Mr. Inhofe) are necessarily 
absent.
  Mr. REID. I announce that the Senator from Massachusetts (Mr. Kerry) 
and the Senator from Connecticut (Mr. Lieberman) are necessarily 
absent.
  I further announce that, if present and voting, the Senator from 
Massachusetts (Mr. Kerry) would vote ``yea.''
  The PRESIDING OFFICER (Mr. Gregg). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 42, nays 54, as follows:

                      [Rollcall Vote No. 259 Leg.]

                                YEAS--42

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham (FL)
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Nelson (NE)
     Pryor
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Wyden

                                NAYS--54

     Alexander
     Allard
     Allen
     Baucus
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Carper
     Chafee
     Chambliss
     Cochran
     Coleman
     Collins
     Cornyn
     Craig
     Crapo
     DeWine
     Dole
     Ensign
     Enzi
     Fitzgerald
     Frist
     Graham (SC)
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Jeffords
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Sununu
     Talent
     Thomas
     Voinovich
     Warner

                             NOT VOTING--4

     Domenici
     Inhofe
     Kerry
     Lieberman
  The amendment (No. 1111) was rejected.
  Mr. LOTT. Mr. President, I move to reconsider the vote and I move to 
lay that motion on the table.
  The motion to lay on the table was agreed to.


                    Amendment No. 1026, As Modified

  The PRESIDING OFFICER. Before we can go to the next amendment, we 
will have to have order in the Senate.
  There are 2 minutes equally divided. Who seeks recognition? The 
Senator from Nevada.
  Mr. ENSIGN. Mr. President, I will use 30 seconds and Senator Hagel 
will use 30 seconds on this side.
  The Hagel-Ensign amendment corrects several problems in the bill. Let 
me go over those real briefly.
  We have no monthly premiums. We do not make middle-class taxpayers 
pay for prescription drugs for wealthy seniors. We preserve the State 
and the private plans that are already out there, which the underlying 
bill does not do. We give most of our help to low- and moderate-income 
seniors but we still control costs in our bill.
  I encourage a ``yes'' vote on this amendment.
  Mr. HAGEL. Mr. President, to summarize our amendment is simple: It 
helps those who need it most. It helps the States provide a discount 
drug card. It is affordable, with no monthly premiums, no deductibles, 
catastrophic coverage, and accountable market-based tools. It is a 
complete, affordable, discount drug plan that the next generation of 
this country can support. We can be proud of what we are doing for our 
seniors.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, the major fatal problem with this 
amendment is it dispenses with the underlying principle of the 
underlying bill. That is universality. We are, in the legislation 
before us, providing for universal benefits.
  This amendment violates that principle by saying no, not across the 
board for Americans but, rather, it introduces a whole new means 
testing provision for catastrophic. I just think it fatally violates 
the spirit of the legislation we are about to pass.
  The PRESIDING OFFICER. All time has expired. The question is on 
agreeing the amendment No. 1026, as modified. The clerk will call the 
roll.
  The assistant legislative clerk called the roll.
  Mr. McCONNELL. I announce that the Senator from New Mexico (Mr. 
Domenici) and the Senator from Oklahoma (Mr. Inhofe) are necessarily 
absent.
  Mr. REID. I announce that the Senator from Massachusetts (Mr. Kerry) 
and the Senator from Connecticut (Mr. Lieberman) are necessarily 
absent.
  I further announce that, if present and voting, the Senator from 
Massachusetts (Mr. Kerry) would vote ``nay''.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 21, nays 75, as follows:

                      [Rollcall Vote No. 260 Leg.]

                                YEAS--21

     Allard
     Brownback
     Burns
     Chambliss
     Crapo
     Dole
     Ensign
     Graham (SC)
     Gregg
     Hagel
     Hutchison
     Lott
     Lugar
     McCain
     McConnell
     Reid
     Roberts
     Santorum
     Sessions
     Sununu
     Talent

                                NAYS--75

     Akaka
     Alexander
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Bunning
     Byrd
     Campbell
     Cantwell
     Carper
     Chafee
     Clinton
     Cochran
     Coleman
     Collins
     Conrad
     Cornyn
     Corzine
     Craig
     Daschle
     Dayton
     DeWine
     Dodd
     Dorgan
     Durbin
     Edwards
     Enzi
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Graham (FL)
     Grassley
     Harkin
     Hatch
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kohl
     Kyl

[[Page S8675]]


     Landrieu
     Lautenberg
     Leahy
     Levin
     Lincoln
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Nickles
     Pryor
     Reed
     Rockefeller
     Sarbanes
     Schumer
     Shelby
     Smith
     Snowe
     Specter
     Stabenow
     Stevens
     Thomas
     Voinovich
     Warner
     Wyden

                             NOT VOTING--4

     Domenici
     Inhofe
     Kerry
     Lieberman
  The amendment (No. 1026), as modified, was rejected.
  The PRESIDING OFFICER. The majority leader.
  Mr. FRIST. Mr. President, for the information of Senators, we have 
made tremendous progress today, and we are on the final leg. In 
conversations with the managers, it appears we will have one more 
series of stacked votes tonight and that will include final passage. 
That series will be it. The bill will be done.
  We need somewhere between 45 minutes and an hour--hopefully 45 
minutes, and hopefully people can yield back their time--before we can 
begin those votes. I think that is all we can say at this juncture, 
working in good faith. There are a lot of details. We are waiting for 
some of the final wording to come through in terms of the managers' 
package. Once we have that, we will be able to proceed with the voting.
  I don't know how many amendments it will be. It could be two 
amendments; it could be four amendments; it could be one amendment or 
passage. But it is going to be probably two or four amendments 
beginning in about 45 minutes to an hour.
  Mr. BYRD. Will the leader yield?
  Mr. FRIST. Yes.
  Mr. BYRD. On the preceding rollcall vote, 28 minutes were required. 
On this rollcall vote, 22 or 23 minutes were required. So we have over 
50 minutes on two rollcall votes. Now, time is worth a little something 
around here to many of us who don't have much time left. I wonder if we 
can't do better than that.
  I think the Senate ought to treat itself better than that. Senators 
owe to it other Senators to not just lag and cause rollcall votes to 
last so long. Twenty-eight minutes on a rollcall vote? Why can't we go 
over to tomorrow? We are going to be here anyhow. Why can't we go over? 
Here it is 15 minutes after 10. Do I have the floor, Mr. President?
  The PRESIDING OFFICER. The majority leader has the floor.
  Mr. BYRD. Very well.
  Mr. FRIST. Mr. President, we can do better, and I think we ought to 
do our best to try to do maybe 10 minutes on the last series. It is 
late at night. We have all been working about 12, 13 hours nonstop. It 
is an important bill. We set out this morning to finish tonight. People 
are here. They are ready to finish it. It is late. After talking to the 
managers and the leadership on both sides, there is a general consensus 
that we ought to push ahead, get this bill done for the American 
people.
  We can do it. Things have gone very well. We have had adequate time 
for debate and amendment. The distinguished Senator from West Virginia 
told me from day one: My advice to you as the majority leader is to 
make sure you give time for debate and amendment. He did forget to tell 
me that it is sometimes hard dealing back and forth as you are waiting 
for language to come, as you are trying to get the order for amendments 
in these last hours on a very complex bill, a bill that is as big as 
any bill we have passed this year and as complex, and it has taken a 
little bit more time.
  I would have liked to have finished at 9 o'clock tonight. I think at 
this juncture, if we proceed over the next 45 minutes--let's do those 
rollcall votes in 10 minutes--we will be out of here. People will be 
able to leave tomorrow or stay and come to the floor and talk. I think 
that is the general sense of where we should go.
  Mr. BYRD. Mr. President, will the Senator yield?
  Mr. FRIST. The Senator is happy to yield to the Senator from West 
Virginia.
  Mr. BYRD. Mr. President, we are falling into this way of doing 
things. Three-day work weeks. I will tell you, Mr. Leader, one night I 
am going to get the floor and Senators will be planning on finishing 
and going home the next day. They won't get to do that. I have seen 
this happening over and over and over more recently. Three-day work 
weeks, and we don't come in on Friday and work and vote.
  If the Senator will continue to yield, just briefly?
  Mr. FRIST. If the Senator will yield for a couple more minutes 
because we do have people who want to get on to the business. I 
certainly do yield for a few more minutes.
  Mr. BYRD. Mr. President, I don't want to overtax the leader at this 
point or overtax other Senators. Just suffice it to say, we had better 
get out of this habit of just having 3-day workweeks, staying here 
until 10, 11, 12 on Thursday night so that people can go out on Friday. 
I started this thing of having a week at home every 4 weeks, but we 
worked the 5 days. We worked 5 days in each of the 3 weeks in between, 
and we started voting early on Mondays and we voted a full day on 
Friday. I know things have changed. I am not majority leader. I don't 
mean to be a problem to the majority leader. But this is getting to be 
a problem with some of us.
  Mr. FRIST. Mr. President, let me just reply and say: Last Friday, you 
and I were on the floor at 3 in the afternoon. Just because we are not 
voting doesn't mean we are not working. Some of us do have constituents 
we go back to and spend time with. Some of us are working on bills and 
reading. Just because we are not voting does not mean we are not 
working.
  Mr. BYRD. I understand that.
  Mr. FRIST. Again, I suggest that we go back so we can work and debate 
and get these two or four amendments finished. I would be happy to talk 
to the Senator. I understand he wants us to be efficient and work 5 
days a week. I would like to work 6 days a week.
  Mr. BYRD. I have a wife at home and she needs me there. I ought to be 
there. I have stopped early on two occasions lately just to go be with 
her and let the Senate run its course. There is going to come a time 
when this Senator is going to keep the Senate in session a while. He 
can still do it.
  I say this in the very best of spirit to the leader--and he is doing 
the best he can--there comes a time when some of us have duties 
elsewhere and we would like to keep our rollcall records clean. Soon I 
will have cast 17,000 rollcall votes. So I have been here for my share 
of the votes. I am getting a little bit fed up staying around here. 
This last rollcall vote was 23 minutes and the one before that was 28 
minutes. There is a lot of hooping and hollering. What do the American 
people think of us? It is time we went home if we don't work.
  I hope, Mr. Leader, that those of you who are so good at working out 
these things can get people to have voice votes or maybe cut down the 
time on their amendments.
  Mr. FRIST. Mr. President, I suggest that, since we have our 
colleagues here and ready to work, we go back to work now. I think the 
Senator made his point. I am listening and I will heed that advice and 
counsel. I suggest we go back to work so we can get home tonight to our 
families as well.
  I yield the floor.
  The PRESIDING OFFICER. Who seeks recognition? The Senator from 
Oklahoma is recognized.
  Mr. NICKLES. Mr. President, I believe we are in the process of trying 
to wrap up debate on a few amendments. I believe momentarily Senator 
Feinstein and Senator Chafee and I will be discussing our amendment. I 
will make my comments very brief. I know Senator Feinstein wishes to 
speak on it. I hope we can conclude debate. I think there will only be 
two more amendments. I urge colleagues to make their comments brief and 
let's vote and finish action on this bill. I will defer my comments on 
the amendment because I believe the Senator from California is ready to 
speak.
  The PRESIDING OFFICER. The Senator from California is recognized.


                    Amendment No. 1060, As Modified

  Mrs. FEINSTEIN. Mr. President, I call up amendment No. 1060, as 
modified.
  The PRESIDING OFFICER. Without objection, the amendment, as modified, 
is now the pending business.
  The amendment (No. 1060), as modified, is as follows:
       At the end of title IV, insert:

                       Subtitle D--Part B Premium

     SEC. __. INCOME-RELATED INCREASE IN MEDICARE PART B PREMIUM.

       (a) In General.--Section 1839 (42 U.S.C. 1395r) is amended 
     by adding at the end the following:

[[Page S8676]]

       ``(h) Increase in Premium for High-Income Beneficiaries.--
       ``(1) Amount of increase.--
       ``(A) In general.--Except as provided in paragraph (4), if 
     the modified adjusted gross income of an individual for a 
     taxable year ending with or within a calendar year (as 
     initially determined by the Secretary in accordance with 
     paragraph (2)) exceeds the threshold amount, the amount of 
     the premium under subsection (a) for the individual for the 
     calendar year shall, in lieu of the amount otherwise 
     determined under subsection (a), be equal to the applicable 
     percentage of an amount equal to 200 percent of the monthly 
     actuarial rate for enrollees age 65 and over as determined 
     under subsection (a)(1) for the calendar year.
       ``(B) Applicable percentage.--The term `applicable 
     percentage' means the percentage determined in accordance 
     with the following tables:
       ``(i) Individuals not filing joint returns.--

``If the modified adjusted gross income exceeds the threshold amount 
  by:                                     The applicable percentage is:
Not more than $50,000........................................50 percent
More than $50,000 but not more than $100,000.................75 percent
More than $100,000.........................................100 percent.
       ``(ii) Individuals filing joint returns.--

``If the modified adjusted gross income exceeds the threshold amount 
  by:                                     The applicable percentage is:
Not more than $100,000.......................................50 percent
More than $100,000 but not more than $200,000................75 percent
More than $200,000.........................................100 percent.
       ``(C) Definition of threshold amount.--For purposes of this 
     subsection, the term `threshold amount' means--
       ``(i) except as provided in clause (ii), $100,000; and
       ``(ii) $200,000 in the case of a taxpayer filing a joint 
     return.
       ``(D) Inflation adjustment for threshold amount.--
       ``(i) In general.--In the case of any calendar year 
     beginning after 2006, the dollar amount in clause (i) of 
     subparagraph (C) shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the percentage (if any) by which the average of the 
     Consumer Price Index for all urban consumers (United States 
     city average) for the 12-month period ending with June of the 
     preceding calendar year exceeds such average for the 12-month 
     period ending with June 2005.

       ``(ii) Joint returns.--The dollar amount described in 
     clause (ii) of subparagraph (C) for any calendar year after 
     2006 shall be increased to an amount equal to twice the 
     amount in effect under clause (i) of subparagraph (C) (after 
     application of this subparagraph).
       ``(iii) Rounding.--If any dollar amount after being 
     increased under clause (i) is not a multiple of $1,000, such 
     dollar amount shall be rounded to the nearest multiple of 
     $1,000.
       ``(E) Definition of modified adjusted gross income.--For 
     purposes of this subsection, the term `modified adjusted 
     gross income' means adjusted gross income (as defined in 
     section 62 of the Internal Revenue Code of 1986)--
       ``(i) determined without regard to sections 135, 911, 931, 
     and 933 of such Code; and
       ``(ii) increased by the amount of interest received or 
     accrued by the taxpayer during the taxable year which is 
     exempt from tax under such Code.
       ``(F) Joint return.--For purposes of this subsection, the 
     term `joint return' has the meaning given such term by 
     section 7701(a)(38) of the Internal Revenue Code of 1986.
       ``(2) Determination of modified adjusted gross income.--The 
     Secretary shall make an initial determination of the amount 
     of an individual's modified adjusted gross income for a 
     taxable year ending with or within a calendar year for 
     purposes of this subsection as follows:
       ``(A) Notice.--Not later than September 1 of the year 
     preceding the year, the Secretary shall provide notice to 
     each individual whom the Secretary finds (on the basis of the 
     individual's actual modified adjusted gross income for the 
     most recent taxable year for which such information is 
     available or other information provided to the Secretary by 
     the Secretary of the Treasury) will be subject to an increase 
     under this subsection that the individual will be subject to 
     such an increase, and shall include in such notice the 
     Secretary's estimate of the individual's modified adjusted 
     gross income for the year. In providing such notice, the 
     Secretary shall use the most recent poverty line available as 
     of the date the notice is sent.
       ``(B) Calculation based on information provided by 
     beneficiary.--If, during the 60-day period beginning on the 
     date notice is provided to an individual under subparagraph 
     (A), the individual provides the Secretary with appropriate 
     information (as determined by the Secretary) on the 
     individual's anticipated modified adjusted gross income for 
     the year, the amount initially determined by the Secretary 
     under this paragraph with respect to the individual shall be 
     based on the information provided by the individual.
       ``(C) Calculation based on notice amount if no information 
     is provided by the beneficiary or if the secretary determines 
     that the provided information in not appropriate.--The amount 
     initially determined by the Secretary under this paragraph 
     with respect to an individual shall be the amount included in 
     the notice provided to the individual under subparagraph (A) 
     if--
       ``(i) the individual does not provide the Secretary with 
     information under subparagraph (B); or
       ``(ii) the Secretary determines that the information 
     provided by the individual to the Secretary under such 
     subparagraph in not appropriate.
       ``(3) Adjustments.--
       ``(A) In general.--If the Secretary determines (on the 
     basis of final information provided by the Secretary of the 
     Treasury) that the amount of an individual's actual modified 
     adjusted gross income for a taxable year ending with or 
     within a calendar year is less than or greater than the 
     amount initially determined by the Secretary under paragraph 
     (2), the Secretary shall increase or decrease the amount of 
     the individual's monthly premium under this part (as the case 
     may be) for months during the following calendar year by an 
     amount equal to \1/12\ of the difference between--
       ``(i) the total amount of all monthly premiums paid by the 
     individual under this part during the previous calendar year; 
     and
       ``(ii) the total amount of all such premiums which would 
     have been paid by the individual during the previous calendar 
     year if the amount of the individual's modified adjusted 
     gross income initially determined under paragraph (2) were 
     equal to the actual amount of the individual's modified 
     adjusted gross income determined under this paragraph.
       ``(B) Interest.--
       ``(i) Increase.--In the case of an individual for whom the 
     amount initially determined by the Secretary under paragraph 
     (2) is based on information provided by the individual under 
     subparagraph (B) of such paragraph, if the Secretary 
     determines under subparagraph (A) that the amount of the 
     individual's actual modified adjusted gross income for a 
     taxable year is greater than the amount initially determined 
     under paragraph (2), the Secretary shall increase the amount 
     otherwise determined for the year under subparagraph (A) by 
     an amount of interest equal to the sum of the amounts 
     determined under clause (ii) for each of the months described 
     in such clause.
       ``(ii) Computation.--Interest shall be computed for any 
     month in an amount determined by applying the underpayment 
     rate established under section 6621 of the Internal Revenue 
     Code of 1986 (compounded daily) to any portion of the 
     difference between the amount initially determined under 
     paragraph (2) and the amount determined under subparagraph 
     (A) for the period beginning on the first day of the month 
     beginning after the individual provided information to the 
     Secretary under subparagraph (B) of paragraph (2) and ending 
     30 days before the first month for which the individual's 
     monthly premium is increased under this paragraph.
       ``(iii) Exception.--Interest shall not be imposed under 
     this subparagraph if the amount of the individual's modified 
     adjusted gross income provided by the individual under 
     subparagraph (B) of paragraph (2) was not less than the 
     individual's modified adjusted gross income determined on the 
     basis of information shown on the return of tax imposed by 
     chapter 1 of the Internal Revenue Code of 1986 for the 
     taxable year involved.
       ``(C) Steps to recover amounts due from previously enrolled 
     beneficiaries.--In the case of an individual who is not 
     enrolled under this part for any calendar year for which the 
     individual's monthly premium under this part for months 
     during the year would be increased pursuant to subparagraph 
     (A) if the individual were enrolled under this part for the 
     year, the Secretary may take such steps as the Secretary 
     considers appropriate to recover from the individual the 
     total amount by which the individual's monthly premium under 
     this part for months during the year would have been 
     increased under subparagraph (A) if the individual were 
     enrolled under this part for the year.
       ``(D) Deceased beneficiary.--In the case of a deceased 
     individual for whom the amount of the monthly premium under 
     this part for months in a year would have been decreased 
     pursuant to subparagraph (A) if the individual were not 
     deceased, the Secretary shall make a payment to the 
     individual's surviving spouse (or, in the case of an 
     individual who does not have a surviving spouse, to the 
     individual's estate) in an amount equal to the difference 
     between--
       ``(i) the total amount by which the individual's premium 
     would have been decreased for all months during the year 
     pursuant to subparagraph (A); and
       ``(ii) the amount (if any) by which the individual's 
     premium was decreased for months during the year pursuant to 
     subparagraph (A).
       ``(4) Waiver by secretary.--The Secretary may waive the 
     imposition of all or part of the increase of the premium or 
     all or part of any interest due under this subsection for any 
     period if the Secretary determines that a gross injustice 
     would otherwise result without such waiver.
       ``(5) Transfer to part b trust fund.--
       ``(A) In general.--The Secretary shall transfer amounts 
     received pursuant to this subsection to the Federal 
     Supplementary Medical Insurance Trust Fund.

[[Page S8677]]

       ``(B) Disregard.--In applying section 1844(a), amounts 
     attributable to subparagraph (A) shall not be counted in 
     determining the dollar amount of the premium per enrollee 
     under paragraph (1)(A) or (1)(B) thereof.''
       (b) Conforming Amendments.--(1) Section 1839 (42 U.S.C. 
     1395r) is amended--
       (A) in subsection (a)(2), by inserting ``or section 
     subsection (h)'' after ``subsections (b) and (e)'';
       (B) in subsection (a)(3) of section 1839(a), by inserting 
     ``or subsection (h)'' after ``subsection (e)'';
       (C) in subsection (b), inserting ``(and as increased under 
     subsection (h))'' after ``subsection (a) or (e)''; and
       (D) in subsection (f), by striking ``if an individual'' and 
     inserting the following: ``if an individual (other than an 
     individual subject to an increase in the monthly premium 
     under this section pursuant to subsection (h))''.
       (2) Section 1840(c) (42 U.S.C. 1395r(c)) is amended by 
     inserting ``or an individual determines that the estimate of 
     modified adjusted gross income used in determining whether 
     the individual is subject to an increase in the monthly 
     premium under section 1839 pursuant to subsection (h) of such 
     section (or in determining the amount of such increase) is 
     too low and results in a portion of the premium not being 
     deducted,'' before ``he may''.
       (c) Reporting Requirements for Secretary of the Treasury.--
       (1) In general.--Subsection (l) of section 6103 of the 
     Internal Revenue Code of 1986 (relating to confidentiality 
     and disclosure of returns and return information) is amended 
     by adding at the end the following new paragraph:
       ``(19) Disclosure of return information to carry out 
     income-related reduction in medicare part b premium.--
       ``(A) In general.--The Secretary may, upon written request 
     from the Secretary of Health and Human Services, disclose to 
     officers and employees of the Centers for Medicare & Medicaid 
     Services return information with respect to a taxpayer who is 
     required to pay a monthly premium under section 1839 of the 
     Social Security Act. Such return information shall be limited 
     to--
       ``(i) taxpayer identity information with respect to such 
     taxpayer,
       ``(ii) the filing status of such taxpayer,
       ``(iii) the adjusted gross income of such taxpayer,
       ``(iv) the amounts excluded from such taxpayer's gross 
     income under sections 135 and 911,
       ``(v) the interest received or accrued during the taxable 
     year which is exempt from the tax imposed by chapter 1 to the 
     extent such information is available, and
       ``(vi) the amounts excluded from such taxpayer's gross 
     income by sections 931 and 933 to the extent such information 
     is available.
       ``(B) Restriction on use of disclosed information.--Return 
     information disclosed under subparagraph (A) may be used by 
     officers and employees of the Centers for Medicare & Medicaid 
     Services only for the purposes of, and to the extent 
     necessary in, establishing the appropriate monthly premium 
     under section 1839 of the Social Security Act.''
       (2) Conforming amendments.--
       (A) Paragraph (3)(A) of section 6103(p) of such Code is 
     amended by striking ``or (18)'' each place it appears and 
     inserting ``(18), or (19)''.
       (B) Paragraph (4) of section 6103(p) of such Code is 
     amended by striking ``or (16)'' and inserting ``(16), or 
     (19)''.
       (d) Effective Date.--
       (1) In general.--The amendments made by subsections (a) and 
     (b) shall apply to the monthly premium under section 1839 of 
     the Social Security Act for months beginning with January 
     2006.
       (2) Information for prior years.--The Secretary of Health 
     and Human Services may request information under section 
     6013(l)(19) of the Social Security Act (as added by 
     subsection (c)) for taxable years beginning after December 
     31, 2002.

  Mrs. FEINSTEIN. Mr. President, this amendment is presented on behalf 
of myself, Senators Nickles, Chafee, Lindsey Graham, Alexander, and 
McCain.
  This amendment provides that Medicare beneficiaries with an annual 
adjusted gross income of over $200,000, or above, pay the full cost of 
the Medicare Part B premium. The amendment uses a sliding scale to ramp 
up the beneficiary's share of the Part B premium.
  The amendment we are offering would hold Medicare beneficiaries with 
annual adjusted gross incomes between $100,000 and $150,000 a year 
responsible for 50 percent of the cost of the premium. In 2003, this 
amounts to $116.40 a month, or $1,396 annually, rather than $58.20 
monthly, or $698 annually, which is what the beneficiary pays today for 
the benefit.
  Medicare beneficiaries with incomes between $150,000 a year and 
$200,000 a year--that is $300,000 to $400,000 for a couple--would be 
responsible for 75 percent of the total cost of the Part B premium. In 
2003, this amounts to $174 or $2,095 annually.
  Medicare beneficiaries with annual incomes above $200,000--that is 
$400,000 for couples--would be responsible for 100 percent of the total 
cost of the premium. In 2003, this amounts to $232.80 a month, or 
$2,793 annually. Now, for a beneficiary with an annual income of 
$200,000, this amounts to less than 1.4 percent of their annual income. 
For the vast majority of Medicare beneficiaries, some 37 million of the 
38 million beneficiaries, Part B premiums would remain the same as they 
are today.
  According to the Census Bureau, about 98 percent of all Medicare 
beneficiaries have annual incomes below $100,000. So the amendment we 
are proposing will affect about 2 percent of the most affluent and well 
off Medicare beneficiaries.
  Let me be clear. This amendment does not deprive any Medicare 
beneficiary of any benefit. What this amendment says is that if you can 
afford to pay the price for the Medicare Part B premium, you should. 
Those Medicare beneficiaries who have annual incomes below $100,000 a 
year will still be able to receive a 75-percent Government subsidy for 
their premium.
  Now, I strongly believe the time has come to begin to income-relate 
some of these benefits. The Federal Government should not be 
subsidizing the Part B premiums of those beneficiaries who can afford 
to pay for the cost of the premiums themselves.
  Much has changed since the creation of Medicare in 1965. People are 
living longer, due in large part to improved diagnostic tools and 
treatment. There is no way Congress could have predicted the number of 
people who would come to rely on Medicare or the rate at which medical 
expenses would grow. When Medicare was established in 1965, the Part B 
premium was set at a level to cover about 50 percent of program costs. 
With medical inflation, the dollar amount of the premium has declined 
to cover only 25 percent of program costs.
  The Omnibus Budget Reconciliation Act of 1993 established the 
Medicare Part B premium to equal 25 percent of the program cost from 
1996 to 1998. The Balanced Budget Act of 1997 permanently established 
the Part B premium at 25 percent. The bill to balance the budget in 
1997 that passed out of the Senate Finance Committee included a 
provision to income relate the Medicare Part B premium. So this is 
nothing new.
  The provision included in 1997 would have had beneficiaries with 
incomes over $50,000 for an individual and $75,000 for a couple paying 
a greater share of the premium. This provision was stripped out during 
conference.
  Well, we were in a different financial situation when Congress made 
the decision to set the beneficiary's share of the Part B premium at 25 
percent in 1997. At that time, we had only a $22 billion deficit. The 
next year the budget was in surplus to the tune of $69 billion.
  With a Federal budget deficit of over $400 billion in the year 2003 
and an increase in the Federal debt of $5.3 trillion, for a total of 
$12 trillion in debt expected by 2013, I believe that now is the time 
to rethink the premium structure of Medicare Part B.
  As the baby boomers age, there will be an increasing reliance on and 
demand for the Medicare Program.
  The number of people age 65 and older will more than double over the 
coming decades, rising from 37 million today to 70 million in 2030 and 
82 million in 2050. Over the next 75 years, the Medicare program will 
cost 71 percent more than that provided under current law in order to 
meet its needs.
  It is predicted the Medicare hospital trust fund will be insolvent by 
2030. The CBO projects Medicare spending will nearly quadruple by 2075 
in order to meet the growing need for the program, with budget outlays 
of $277 billion in 2003. This means spending for the program could 
reach $1.1 trillion by 2075.
  With the legislation currently before the Senate, Congress is 
proposing some major changes to the Medicare Program. I am in full 
support of adding a drug benefit, but Congress should also rethink the 
financing mechanisms of the program, and this bill is short in that 
direction. High-income beneficiaries can afford to pay a larger share 
of Medicare's costs, at least of

[[Page S8678]]

the premium. They can afford to pay for the benefits they receive.
  In light of the fact the Federal Government has just provided tax 
cuts in the range of $1,841 for people with incomes between $77,000 and 
$154,000 and up to $30,000 for people with incomes above $374,000, it 
seems to me people with annual incomes above $200,000 can afford to pay 
$2,793, which is the annual premium for Medicare Part B this year.
  We should focus funding so that 98 percent of Medicare beneficiaries 
who have an annual adjusted gross income of less than $100,000 can 
continue to access benefits. I think it is reasonable to ask those who 
can afford it to pay a greater share of the premium. We are still 
waiting for an official cost savings score from CBO, but I believe this 
amendment could save billions of dollars.
  Once again, Mr. President, this amendment affects less than 2 percent 
and only those with incomes of more than $200,000 a year adjusted gross 
income would pay the full premium of about $2,900 a year. We think this 
is a reasonable proposal. It is scaled up. It impacts no one below 
$100,000 adjusted gross income a year, and at the maximum for people of 
over $200,000 a year in adjusted gross income, the premium would be 
just $2,900.
  The income limits would be indexed to medical inflation and, 
according to current population survey data from 2002, only 2 percent, 
or about 1 million people of the 38 million Medicare beneficiaries, 
have incomes of over $100,000 a year. This would protect the tax 
subsidy for people who need it by encouraging those who have the 
dollars simply to pay either a greater share of the premium cost or the 
full premium cost.
  I thank the Chair. I yield the floor.
  The PRESIDING OFFICER (Mr. Ensign). The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, I join with Senator Feinstein, Senator 
Nickles, and others in presenting this amendment this evening. I 
believe this income-related Part B premium for only the wealthiest of 
seniors, a little over 1 percent of the entire Medicare population, is 
necessary to sustain the long-term solvency of the Medicare Program.
  I wish to make just three points on this issue. First, as Senator 
Feinstein has said, previous Congresses have worked on this issue. In 
1997, the Senate voted 70 to 30 to do exactly what we are doing here, 
and most of those Senators are still here today.
  Second, many of these seniors can afford this added premium. Most 
seniors, it is safe to say, who are making over $100,000 a year have 
already paid off their mortgages. They have paid off their loans. They 
have educated their children. They can afford these higher premiums 
which would go from only $1,400 a year to $2,800 a year, at the most, 
depending on the income they make. So seniors who are making $100,000 
at the most will pay only $1,400 a year, and those making $200,000 will 
pay $2,800 a year. I do not think that is too much to ask to help keep 
this program solvent.

  Finally, if we do not do this today, some other Congress is going to 
do it. In 1997, the National Bipartisan Commission on the Future of 
Medicare was created to resolve the long-term insolvency facing the 
system. That was in 1997 and it was known as the Breaux-Frist 
Commission. They did not report their work to Congress. They fell short 
of the votes necessary to report their work to Congress.
  However, it is interesting to note that one of the reasons they 
failed to get the votes to report to Congress was the President at the 
time, President Clinton, called for putting aside 15 percent of budget 
surpluses the next 15 years to pay down the debt and to shore up 
Medicare. Fifteen years of budget surpluses--when will we see those 
again?--to shore up Medicare. Because the Breaux-Frist plan did not 
include that, they did not get the votes necessary.
  Mr. President, now is the time to adopt this amendment. If we do not 
adopt it, future Congresses will have to wrestle with this dilemma.
  I thank the Chair.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, for the information of our colleagues, I 
am going to make a couple comments on this amendment. There may be an 
amendment by the Senator from Pennsylvania that will require a vote on 
or in relation to Senator Corzine's amendment. I think we are close to 
finishing. I hope we can. I just make those comments.
  I compliment Senator Feinstein and also Senator Chafee, Senator 
Alexander, Senator McCain, and others for supporting this amendment. 
Senator Chafee mentioned we passed the income-related Part B premium 
several years ago with 70 votes. I believe the majority of people, a 
strong majority--looking at the people who voted for it--are still 
here. I hope we vote for it again.
  Medicare has some big problems long term. The bill before us has a 
lot of new subsidies but does not have a lot of reform to make it 
affordable for future generations.
  Part B right now is subsidized by general revenues 3 to 1 Federal 
Government and individuals. The amendment before us on Part B says if 
individuals have income above $100,000, they should pay at least 50 
percent. If they have income above $200,000, they should pay it all. 
For couples, that would be $400,000. A couple could make $400,000 
before they pay all their Part B premium.
  Surely we can do that. Why should we ask our kids and/or our 
grandkids, who might have incomes of $20,000 or $30,000, to be 
subsidizing individuals to that degree?
  I compliment my colleagues for this amendment. I will read from the 
annual report of the board of trustees of the HI trust fund. It says:

       Similarly, SMI general revenues in the year 2002 were 
     equivalent to about 7.8 percent of personal and corporate 
     Federal income tax collected in that year. If such tax is to 
     remain at the current level relative to the national economy, 
     then SMI--

  That is Part B--

     general revenue financing in 2077 would represent roughly 32 
     percent of total income taxes.
  That is almost one-third of total income taxes. That is not 
affordable. That is not sustainable. So I think the amendment we have 
before us by Senator Feinstein and Senator Chafee and others is a small 
step in the right direction to try to make this system more affordable 
for future generations.
  I compliment my colleagues for this amendment. I urge our colleagues 
to support this small step toward reform.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. 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. 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.

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