[Congressional Record Volume 149, Number 170 (Friday, November 21, 2003)]
[Senate]
[Pages S15362-S15368]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MEDICARE AND PRESCRIPTION DRUGS FOR SENIORS
Mr. DURBIN. Mr. President, let me, if I may, address another issue
which is about to come before us. If you follow boxing and have watched
any big championship fights, you may know that it comes at the end of
the evening. During the course of the day and afternoon and the early
evening hours, there are preliminary fights, and they are interesting,
but they are young
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boxers who are untested. But the excitement builds and the attention of
the audience builds for the prize fight, the heavyweight championship
fight, always the last thing on the card.
Much the same occurs in Washington, DC. We have a lot of preliminary
fights that lead up to the championship. You are here witnessing on the
floor of the Senate today, and in the closing days of this session, the
heavyweight fights.
We just finished one. That was the Energy bill. This was a
controversial issue of some 1,400 pages that had been debated for
years. It came to the Senate floor and just a short time ago was
basically stopped. A filibuster prevailed by a bipartisan rollcall
with, I believe, six Republican Senators and a number of Democratic
Senators. The Energy bill was stopped. It was a heavyweight fight
because those supporting the bill include the biggest energy interests
in America, the big oil companies.
Certainly the President and the Vice President and the Republican
Party, which controls the House and the Senate, were, by and large,
anxious to pass this bill, and we had a confrontation on the floor and
my position prevailed on that. It came as somewhat of a shock to people
who follow this Senate. It is not very often that the favored side in
one of these debates loses. And just a short time ago they did, by two
votes. They needed 60 votes to stop the debate and move the issue to a
vote, and the motion to stop that debate did not prevail; it only
received 58 votes.
Well, the windows are open now, and there is anxious negotiation and
a lot of effort underway to try to find two more votes. And I would
imagine, in the closing days of the session, we may see this issue
surface again. I could express myself in saying I hope it does not, but
it makes no difference what I hope. I am in the minority here, and the
majority will decide whether they have the votes to bring it to
closure.
That is one of the heavyweight fights. But there are two more coming,
two more that will affect virtually every family in America.
One is an omnibus appropriations bill, with five major appropriations
bills lumped into one, that is now in conference, a conference on which
I serve; and debate is underway. The debate is behind closed doors, and
I, frankly, do not know what is happening there. But before we can
leave, we need to pass that bill. It could include a myriad of issues,
issues as far-flung as stem cell research in medicine, issues as
diverse as education, transportation. All of these issues could come
before us in that large bill. That is another heavyweight fight.
But the one I come to address today is one that has received a lot of
attention across America for a long time, and it is likely to receive
even more attention in the closing days of the session, both in the
House and in the Senate.
The issue is the issue of prescription drugs, particularly for
seniors. I do not know of a single Member of the Senate who has not
expressed support for finding some way to help seniors pay for
prescription drugs.
We all know what has happened here. We have more and more and better
and better prescription drugs available across America, and a lot of
people have learned--in my family and yours, too--that if you take the
appropriate medication, with the advice of a good physician, your life
can be healthier and you can be stronger and more independent.
So people try to find the right drugs to keep them healthy and to
move along with the happiness of life, trying to avoid going in for
hospitalization or surgery. Prescription drugs are an important part of
that.
But, sadly, prescription drugs for seniors in America are not covered
by Medicare. So unless you are in a hospital receiving those drugs, you
have to pay for them. For a lot of seniors, it is too expensive. There
are people living on fixed incomes under Social Security or relatively
small pensions. They have a few assets left on Earth, maybe a home they
saved up for all their lives and a car, and they are trying to figure
out how to pay several hundred dollars per month for prescription drugs
they need, and they can't afford it. So, many do not take the drugs,
some take half of what they need, and many find themselves in a
terrible, perilous personal position.
We have come forward and said: We should change Medicare. If Medicare
covers your illness when you go into a hospital, why wouldn't Medicare
cover the drug that would keep you from going into the hospital? That
makes eminent sense not just from a human point of view but from an
economic point of view. It is money well spent to keep people healthy
and to pay for prescription drugs.
So we had this debate, and it went on for years, and we talked about
how to do it, and we did not get much done. But we did finally pass a
bill out of the Senate, a bill which I supported. It was not the
greatest bill. In fact, there were some aspects of it I thought were
pretty bad.
Then it went into a conference between the House and the Senate, and
they started working out differences. Then something unusual occurred.
Someone in the House of Representatives decided that this debate was
not about prescription drug benefits for seniors; no; they said this
debate is really about the future of Medicare, the whole program.
It isn't about adding a benefit for seniors to pay for prescription
drugs but how we are going to change Medicare in the future. Republican
leaders in the House said the best way to change Medicare is to change
it as a government insurance program and instead let private insurance
companies, HMOs, offer Medicare coverage in the future.
My experience as a Senator from Illinois and as a Congressman is that
HMOs can break your heart. They cost a lot of money. They deny care,
they limit your choice in terms of doctors and hospitals, and, frankly,
when the going gets rough and they are not making enough money, they
cut and run. Is that what we want to hold out as the future of
Medicare? I don't think so. But a lot of people do.
The Republican majority in the House certainly believes that, and
that is what they have pushed now in this so-called prescription drug
bill. It is no longer a bill about just paying for the prescriptions.
It is now a bill about changing the face and future of Medicare. That,
to me, makes a substantial difference in our mission and what we need
to do.
The bill, as it is currently written, is not a bill which I can
support. I guess the biggest disappointment I have is the fact that we
started off with such a valid goal and such a lofty purpose. We were
going to help our mothers and fathers and grandmothers and grandfathers
pay for their prescription drugs. Now we have gone far afield. There
are many who want to change Medicare.
Let me ask you: If you stepped back in the course of legislation and
wanted to determine whether or not it was good for consumers and
families in America, isn't it fair to say that one of the first
questions you would ask is: Where does the money go? Who ends up
profiting from this bill, and who ends up losing as a result?
Clearly, you want to turn first to the pharmaceutical industry, the
people who sell drugs in America. I will readily concede this is one of
the most important industries in America. We lead the world in
breakthrough drugs and pharmaceuticals. I want to make certain that
these drug companies in my State and others are profitable; that with
their profits they can fund research to find new drugs. I want to make
certain that those drugs are available to Americans. That is something
on which everybody agrees. But sadly, what we find in this bill is that
the pharmaceutical industry is cheering the loudest for the bill to pay
for prescription drugs. That leads us to ask some serious and important
questions.
First, let me show you how profitable drug companies are in America
today. Take a look at the profitability of Fortune 500 drug companies
versus the profitability for all Fortune 500 companies in the year
2002. The red bars indicate the profitability of the drug companies,
the drug industry median, and the yellow bar is all other Fortune 500
companies. You can see profits as a percent of revenue in the first
illustration, 17-percent profit for the drug industry; 3.1 percent for
the rest of the Fortune 500 companies. You can see profits as a percent
of assets, 14 percent. Then when it comes to profits as a percent of
equity, 27.6 percent for the
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pharmaceutical companies; 10.2 percent for the rest of the Fortune 500.
So it is very clear that we are talking about a profitable industry.
Here is another illustration of the same point. This is an indication
from Fortune magazine of the most profitable industries in America,
with 2002 profits as a percentage of revenues. No. 1 on the list is
pharmaceutical companies. Pharmaceutical companies are extremely
profitable in America today. We understand that. We ought to keep it in
mind as we discuss how we are going to pay for prescription drugs for
seniors.
Then I would like to show you what some of the people who are the
CEOs of managed care companies earn. Here we have a chart that shows
the chairman of Aetna, John Rowe, his compensation, exclusive of stock
options, $8.9 million; Anthem, Larry Glasscock, president and CEO, $6.8
million; CIGNA, Edward Hanway, chairman and CEO, $5.9 million--this is
exclusive of stock options which are usually considerably more--
Coventry, Allen Wise, president and CEO, $21.6 million annual
compensation; Health Net, senior vice president, $6 million; Humana,
president and CEO, $1.6 million--that is pretty small in comparison--
then Oxford, Norman Payson, former chairman and CEO, made $76 million;
PacifiCare--you may have seen the ads that show the whale flopping in
the water--Mr. Howard Phanstiel is not a flop when it comes to his
salary, $3 million; Sierra Health, Dr. Marlon, chairman and CEO, $4.7
million; UnitedHealth, Channing Wheeler, chairman and CEO, $9.5
million; WellPoint, Leonard Schaeffer, chairman and CEO, $21.7 million.
The total compensation for these 11 executives at these managed care
companies is $166.3 million. Their average compensation, $15 million.
We are struggling to figure out how people who make $200 or $300 or
maybe $500 a month can survive. And we are dealing with two industries
that are extremely profitable. The obvious question we should ask is:
What is fair? What is fair compensation to the pharmaceutical companies
and managed care companies, but what is fair to the seniors in America?
Therein lies the problem.
This morning's Washington Post, on page A4 in the first section, I
think, is written an article that every Senator should read, and those
who follow this debate on prescription drugs.
It is entitled ``Drugmakers Protect Their Turf.'' It says: ``Medicare
Bill Represents Success for Pharmaceutical Lobby.'' Let me read a
little bit from this article:
No industry in negotiations over the $400 billion Medicare
prescription drug bill headed to the House floor today
outpaced the pharmaceutical lobby in securing a favorable
program design and defeating proposals most likely to cut
into its profits, according to analysts in and out of the
industry.
If the legislation passes as Republican leaders predict, it
will generate millions of new customers who currently lack
drug coverage. At the same time, drug manufacturing lobbyists
overcame efforts to legalize the importation of lower-cost
medicines from Canada and Europe and instead inserted
language that explicitly prohibits the federal government
from negotiating prices on behalf of Medicare recipients.
The pharmaceutical lobby has become the biggest player in Washington,
DC. When I got here, it was the tobacco lobby. I know it because I
fought them--beat them a couple times, too--over the course of my
career. They had more money than friends, and they went out to buy a
few friends, and they did.
Listen to what the pharmaceutical companies have done:
After objecting for years to proposals to add prescription
drug coverage to Medicare, the pharmaceutical lobby recently shifted
position and poured enormous resources into shaping this legislation.
Since the 2000 election cycle, the pharmaceutical industry has
contributed $60 million in political donations and spent $37.7 million
in lobbying in the first 6 months of this year.
Thirty-seven million dollars on Capitol Hill? You will meet these
fine men and women in their beautiful suits and well-shined shoes in
the lobbies right outside this Chamber. The article goes on to say:
The lobbying continued in earnest this week with a
television and print advertising campaign urging passage of
this bill. In one series of witty commercials sponsored by
the industry-backed Alliance to Improve Medicare, elderly
citizens look into the camera and demand: ``When ya gonna get
it done?''
I think I may have a copy of that ad somewhere around here. You have
seen it. The fellow is pointing to Congress saying, ``When ya gonna get
it done.'' That is paid for by the pharmaceutical companies. So if we
are talking about helping seniors pay for prescription drugs and the
pharmaceutical companies can't wait to see this legislation passed,
what does that tell you? It tells you they are not going to have to cut
their prices. It tells you they are going to make more money. It tells
you that ultimately we are not producing a bill which helps consumers
and families and senior Americans. We are creating a profit opportunity
for pharmaceutical companies that already lead the Nation in
profitability.
The pharmaceutical lobby is so strong in this town that they have
been able to deceive the American people into believing that this
prescription drug package is somehow going to cause some sacrifice on
the part of pharmaceutical companies. It will not.
They are the big winners in this, just as the big oil companies and
energy companies would have been the big winners in the last bill. This
is the heavyweight fight, the match you can expect to see in the
closing hours of this session.
Let me tell you, in closing, what the Washington Post says this
morning:
Perhaps the most striking political victory for the
pharmaceutical industry was the decision to reject provisions
that would have allowed Americans to legally import drugs
from Canada and Europe, where medications retail for as much
as 75 percent less than in the United States. Polls show that
an overwhelming majority of Americans support that change,
and the House approved a measure 243-186. But the Bush
administration and the pharmaceutical lobby said the move was
dangerous and would cut into future research and development.
The provision was dropped from the bill's final version.
So why would people want to import drugs? I think we know the answer.
They are cheaper. The same drug made in the United States by an
American company, based on research paid for by the Federal Government
many times--that same drug for sale in Canada is a fraction of the
price. Why? Why is it cheaper in Canada or in Europe, if it comes from
the same American drug company? Because we are not importing drugs from
Canada or Europe; we are importing leadership.
The Canadian Government, and governments around the world, have
decided to stand up to the pharmaceutical companies and tell them there
is a limit to how much money they can charge for their drugs. Our
Government is unwilling to do that. This bill will not do that.
Instead, what seniors have been forced to do--and families, I might
add--is to pay high pharmaceutical drug bills, and some are going to
Canada trying to keep up with the costs. This bill closes that border
for the reimportation of drugs from Canada--meaning that America's
senior citizens will continue paying the highest drug prices in the
world.
This is all in the name of a prescription drug benefit for those
seniors. So it is natural that pharmaceutical companies are spending
millions of dollars trying to urge Congress to pass this bill as
quickly as possible. The ads that they run--some are directly from
their own front organizations, but others come through organizations
such as AARP. I know about AARP because once you reach age 50 in
America, they start filling your mailbox with solicitations for
membership. I have been rejecting those for many years. I don't plan on
being a retired person soon. However, the voters will have the last
word on that decision.
Here is their full-page ad calling for Congress to pass the proposed
prescription drug Medicare bill. Honestly, I think if you looked under
the lid, you would find that AARP money to pay for this ad comes
through the pharmaceutical companies that cannot wait to see this bill
passed. It means more money for them. They want to cut off the sources
of drugs coming in from Canada and Europe so they can really charge
seniors the highest prices in America.
Let me give you an illustration of what competition can mean when it
comes to drug prices. If you said to people: Do you want price controls
from the Federal Government, they would say: No, no, no, that is too
much Government.
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But if you say: Would you want your Government to bargain for the
best prices for people who need prescription drugs, most people would
say: Why, sure. And why wouldn't they? You could say to them: Do you
realize we do that now?
The Veterans Administration does that today; it bargains with drug
companies so veterans get cheaper drugs, and the Veterans
Administration pays less. The Indian Health Service does it, and some
community health centers do it. States also do it through the Medicaid
programs. They bargain with them successfully. A lot of people are not
covered in those groups--veterans health care, Indian Health Service,
or Medicaid. They are left totally unprotected, with no bargaining
power.
Look at this chart. These are some fairly common drugs. Xalatan is an
eyedrop. If you buy this at the Federal supply schedule price, it is
$41 for the prescription. If you go to the drugstore to buy it, it is
$101. So we manage, through the Federal Government, to bargain with the
drug companies and bring prices down for some people.
Celebrex, for arthritis, is $108 on the Federal Supply Schedule. That
is what we pay because we bargain down the price. If your grandmother
goes into the drugstore to have that filled, she will pay $173--$65
more.
Lipitor, a very valuable and important drug, is $215, based on what
we have negotiated and bargained. If you pay the full price at the
drugstore, which many American seniors do, it is $446.
Plavix, for stroke, is $257. It is $593 at the drugstore.
The point I am making is this: This bill is designed so that the
Federal Government is prohibited from bargaining and negotiating for
lower prices for seniors across America. That is why the pharmaceutical
companies are so wild to pass it. That is why they want to see this
enacted as soon as possible. It closes down competition. You can no
longer go over the border to buy drugs in Canada or Europe, and you
cannot find the Federal Government standing up for you and bargaining
for seniors to bring down costs.
That is why the pharmaceutical companies are salivating. They cannot
wait. They want to see this thing passed because, frankly, it means
less competition. So who pays the highest prices for prescription drugs
in America today? The people who can afford it the least--senior
citizens on fixed incomes.
Even with the prescription drug benefit in this bill, there is no
cost containment, no effort to keep the prices under control. So no
matter how much money you put into this prescription drug benefit, it
is going to go bankrupt because prescription drugs go up in cost 10 to
15 percent a year, and they will continue to. That inflation is going
to destroy this program, and it is going to destroy seniors, because
this Congress and this President refuse to confront the pharmaceutical
companies.
In Canada, their government stands up for their people and says to
American drug companies: We are not going to let you gouge or take
advantage of our people when it comes to prescription drugs. Our
Government refuses to do that. As a result, we find ourselves in this
predicament. AARP and others are pleading for a prescription drug
benefit that, frankly, has no cost containment built into it.
I came to the floor during this debate and urged colleagues to give
to the Medicare Program the ability to bargain, which is what we give
to the Veterans Administration and other Federal agencies, to let
Medicare go to the drug companies and bargain for the best price for
Medicare recipients across America. I was summarily defeated. The
pharmaceutical lobby prevailed. I think that answered the basic
question as to whether this bill truly will lead to lower drug prices
across America. It will not. It will help some seniors pay for drugs,
but the cost of drug prices will continue to skyrocket, and the
competition from Canada and Europe will disappear. It specifically
prohibits the Federal Government from negotiating on behalf of Medicare
recipients.
This bill rewards pharmaceutical companies and HMOs--insurance
companies. The pharmaceutical companies are going to gain, the Medicare
purchasing pool is divided to prevent large group purchasing discounts,
and the House language on reimportation was rejected.
There is another element. One of the ways to cut the cost of drugs is
to encourage the use of generics. Once a drug has been discovered, it
is the exclusive right of the drug company to sell it under a patent.
During that period of time, nobody else can make that drug and sell it.
When the patent expires, everybody can make the same drug and they do
it under a generic name.
You may remember Claritin, with all the ads on television that showed
the happy faces skipping through the field of wildflowers saying, ``I
don't sneeze anymore.'' It went off patent and it is now available over
the counter. So they came in with Clarinex--I think that is the name.
So once you see the generic drugs come in, the prices go down for
consumers, and they get the benefit of what was a pretty expensive drug
for a long time.
We tried in the Senate to make sure there were more generic drugs for
sale because it is a good way to keep everybody healthy at a lower
cost. It turns out that the pharmaceutical companies didn't care for
that at all. They want people to pay for the more expensive drugs under
patent. So they ended up weakening the language we had, which would
have allowed generics to come to the market more quickly so seniors
could take advantage of it. Also, this would weaken the ability of
States to negotiate with drug manufacturers.
Some States are way ahead of the Federal Government. Oregon is one,
and my State of Illinois has a plan. The ability of each State to
bargain for the people living in that State is also restricted by this
bill because all drugs are paid for through Medicare--something else
the pharmaceutical companies wanted. They don't want to have to bargain
with anybody. They want to charge top dollar. They don't want any voice
from consumers or Government to reduce their profitability, which is
already at record-breaking levels. They have been successful. They
cannot wait for this bill to pass because they are already profitable,
and this bill will enhance their profits even more.
Under this bill, seniors will receive a benefit that will cover less
than 20 percent of the projected drug costs for seniors over the next
10 years.
A break-even point of $810 is what you have to put in, in payments
and copayments, before you get anything back, which means about 40
percent of seniors will either lose money or gain very little under
this prescription drug plan.
There is also a hole in this plan. It is complicated, but I will try
to explain it, and it has been changing, even this week.
The coverage on this plan, once you make your monthly premium cost
and once you pay your copayment--and then understand that you have to
pay 25 percent of the cost of the drug itself--the coverage goes up to
a certain point and then it stops. If you are still paying for drugs at
that point, you have to go to your pocket to pay out. Then when you
reach the higher level, it kicks back in again. So there is a period
where you are, frankly, not covered.
If you have expensive pharmaceutical costs, you buy into the program,
you make your copayment, and you are paying a percentage for each
prescription you take, at a certain level the Federal help stops. Then
if you keep paying out of pocket without Federal assistance, it kicks
in again for catastrophic coverage. Let me try to describe where it is
today.
The reports in the news have been, frankly, misleading. They have
been reporting the catastrophic cap in the Medicare prescription drug
bill is $3,600. It is not true. It is $5,100. So the gap between $2,250
and $5,100 is $2,850, the total out-of-pocket expenses for which
seniors will be responsible is $3,600.
We have a situation where at $2,250 worth of costs, the seniors are
on their own. It turns out, according to the Congressional Budget
Office, 30 percent of seniors spend between $2,000 and $5,000 per year
on prescriptions. That is 12.6 million people. It basically means even
though prescription drug coverage and this complicated scheme I just
described has been offered, there is an exposure where seniors will
have to pay
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out of pocket, which will be a surprise to many of them, particularly
when they are facing astronomical costs.
I had some examples made to give you some idea of what seniors might
face in my State and others. One involves Mrs. Jones who has arthritis
and takes Celebrex, which costs about $86 a month. Her husband has high
blood pressure and takes Norvasc, which costs $152 per month. Under
this plan, Mrs. Jones would pay at least $865. If her premium is more
than $35 a month, she would pay more. There is no set premium in this
bill. Mr. Jones will pay at least $1,064, for a combined cost of
$1,929. This benefit will only cover a third of the drug costs of Mr.
and Mrs. Jones.
There are other elements we ought to look at here. If you want to get
the most help from this bill, you have to be in the lowest income
categories. That is fair. I think that is the right thing to do. The
people struggling to get by should get the first helping hand from our
Government. They decide they are going to look at certain income levels
as to whether or not you benefit from this prescription drug. Then they
have an asset test which, as I understand it, is $6,000. That means if
you have assets of $6,000 or more, you don't get the most help.
Some of these seniors, I know, have the old family car that may still
be worth $6,000, and they would be disqualified when, frankly, they
have almost no income and very few other assets on Earth.
The asset test is extremely low. Six million poor seniors will be
made worse off by this bill. They previously paid nothing for drugs.
They will now have to pay copays that increase annually.
Three million fewer low-income senior citizens will receive enhanced
benefits than under the original Senate bill because of the strict
assets test. Let me give an example.
If a senior has an income of $12,000 a year but owns a $6,100 savings
bond, burial plot, insurance policy, or car worth $6,000 or more, they
will not have access to low-income assistance. They will have to pay
the full premium, deductible and donut, or the period where the Federal
program does not apply.
That means if they have high drug costs, they could pay more than
$5,000 a year for their medications simply because they own a burial
plot and an insurance policy. That is what the bill says. That,
frankly, is something about which we ought to be concerned.
We have to understand that when it comes to this prescription drug
situation, most seniors are going to be stunned by it. I might add
something else that is interesting. The decision was made by the
Administration and the Republican leaders in Congress that this
prescription drug plan would not go into effect until after the next
election, a very interesting political move.
If this is really supposed to help seniors across America, wouldn't
you think this President and this Congress would want to put it in
place and activate it before the election?
The reason they won't is because it is extraordinarily complicated,
it is unfair to many seniors, and it includes provisions that, frankly,
seniors won't be happy with at all. So they want to put it off until
after the next election, and that is what they have done.
One of the other concerns I have is the role of AARP in this whole
conversation. AARP is an interesting organization. Most of us over the
age of 50 receive a lot of solicitations. A lot of seniors 50 and older
across America have joined. If you look at AARP, it is more than a
feel-good operation to try to help seniors pay for trips overseas and
maybe give them a few discounts.
It turns out it is a major earner of insurance money. Here is a chart
which shows the insurance royalties at AARP over the last several
years--insurance royalties which, frankly, indicate $111 million in
1999 up to $123 million in 2002. The same thing goes for the
investments they have made. We can see that AARP makes a lot of money
from the insurance business.
One of the companies they sell insurance with is UnitedHealth Group.
It turns out, coincidentally, that UnitedHealth Group could be one of
the biggest beneficiaries of the bill that is going to come before us.
So AARP comes to this debate not with clean hands.
AARP is fronting for an insurance company that has the potential for
dramatic profitability from this bill. So when AARP announces they are
for this bill, they ought to be very honest with the seniors about what
that means.
AARP receives millions of dollars from the sale of health insurance
policies. AARP's insurance-related revenues made up a quarter of their
operating revenues last year and one-third of their operating revenue
in 2001.
They receive royalties from AARP insurance policies marketed to their
members by UnitedHealth Group, MetLife, and others.
More than 3 million AARP members have health-related insurance
policies from UnitedHealth Group. Last year, UnitedHealth Group earned
$3.7 billion in premium revenues from their offerings to AARP members.
The royalties AARP earned as a result of lending their name to
insurance products, as I mentioned, went up to $123 million in 2002.
They received so-called access fees from insurance companies of over
$10 million. They received something called a quality control fee of
almost $1 million from insurers.
AARP also earns investment income on premiums received for members
until the premiums are forwarded to UnitedHealth Group and MetLife. In
2002, AARP earned $26.7 million in such investment income.
There is a total of $161.7 million in revenue from insurance just in
2002.
According to Advertising Age magazine, AARP and UnitedHealth Group
hired a direct marketing agency in May to conduct a marketing campaign
for their insurance product that could cost $100 million.
UnitedHealth Group stands to gain significant portions of the new
Medicare Advantage market that would be created by this bill, given
that it is currently participating in a Medicare PPO demonstration
project in eight States.
AARP can make a lucrative business even more lucrative by continuing
its partnership with UnitedHealth Group. Let's take a look at AARP's
advertising.
Last year, AARP earned $76 million on advertising. Their magazine,
formerly called Modern Maturity, and now called AARP, The Magazine, has
the largest circulation of any magazine in the United States, going to
21.5 million households.
The latest issue has three full-page ads for brand-name drugs, and
another for a Pfizer glaucoma kit. It contains four ads for AARP's
various kinds of insurance.
Combine that with the four ads for insurance in the November AARP
Bulletin, and that is a lot of insurance advertising. The September/
October AARP magazine and the October bulletin have a combined 14 ads
for insurance.
There is a direct linkage between AARP and the insurance industry and
another industry that stands to profit from this so-called Medicare
prescription drug bill. It is interesting, too, that when the members
of AARP were recently asked in a nationwide poll what they thought of
this prescription drug bill that is pending before Congress, the
results were amazing. A poll that was released 2 days ago showed that
66 percent of AARP members were somewhat or very unfavorable to the
level of prescription drug coverage which I have just described in this
bill. Eighty percent of AARP members do not believe this bill does
enough to encourage employers to maintain current retiree coverage.
Sixty-eight percent of AARP's membership were somewhat or very
unfavorable to the following statement: This provision is designed to
increase the number of seniors receiving their Medicare coverage
through private health plans like HMOs and PPOs by significantly
increasing Government subsidies for these plans.
So I would just ask this: If AARP is spending all of this money on
behalf of their membership to promote a proposal which two-thirds or
more of the members of AARP at this point oppose, what is driving this?
I think it goes back to the earlier explanation. AARP is not acting as
an advocate for seniors. AARP is acting like an insurance company. AARP
has forgotten their mission. They have decided they have a new
responsibility: They have to generate money from insurance companies.
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Frankly, it is a sad situation because for many years AARP was
respected across America for being a nonpartisan voice for seniors.
Sadly, at this point in time they are not. As a result, there are very
few who are standing up to speak for seniors and what they need.
When I take a look at this bill and what it does, it worries me that
what started off as a prescription drug bill to help seniors has become
so complicated that it is almost impossible to explain. It has gaps in
coverage that will leave seniors without any help when they need it the
most and instead is trying to dramatically privatize Medicare as we
know it.
There are forces in Congress, primarily on the Republican side of the
aisle, who want to privatize both Medicare and Social Security. That
has been their goal. As a party, they never supported Medicare. Only a
handful of Republicans voted for its creation. Over the years, they
have made it clear where they stand. There was a time when former
Speaker Gingrich and his assistant Richard Armey, who was a Congressman
from Texas, said their goal was for Medicare to ``wither on the vine.''
That does not sound like a group that really is supportive of the
program. Instead, it sounds like a group that will look for every
opportunity to make sure that Medicare is not as good as it should be.
So ultimately what they are proposing is this: They are going to move
Medicare from the program we know today, a Government-run program with
low overhead and low administrative costs that serves all Americans
universally, to a new model which will bring in HMO insurance companies
to cover senior citizens.
Naturally, they are afraid the free market will not work. So they put
in generous subsidies to these HMOs so that they will lure away seniors
out of Medicare. Here is how this will work: An insurance company wants
to insure the healthiest people it can find. Insurance companies do not
go out and look for sick people. Insurance companies try, if they can,
to exclude from coverage anybody who is going to be expensive.
Understandable. If they reduce their risk and exposure, they increase
their profitability. So these HMO companies, which are being designed
to lure away seniors from Medicare, are going to not only achieve this
by looking for the healthiest seniors, they get an added boost from our
Republican friends, our free market advocates who argue that they need
a subsidy on top of the--billions of dollars in subsidies to these
HMOs.
What is wrong with this picture? If one believes in the free market,
why in the world would they subsidize an HMO company: so they could
take the healthy people out of Medicare? That is exactly what they want
to do. What will happen to Medicare then? There will be fewer people in
Medicare because these Government-subsidized HMOs will be creaming off
and cherry-picking the healthiest people and those left in Medicare are
going to be poorer and sicker.
The net result of that is obvious. At the end of any given year,
there is going to be a more expensive per-claimant Medicare cost. There
will be sicker people left in Medicare.
Those who are opposed to Medicare and behind this idea believe that
will drive down the popularity of Medicare. They will be able to stand
on the Senate floor and the House floor and say: See, we showed you;
Medicare just is not going to work; look how expensive it is for every
senior under Medicare.
So they will have achieved their dream and goal by reducing the
coverage of Medicare and convincing Congress not to stand behind it.
That is the goal of those who took what was a prescription drug bill,
as complicated as it is, and turned it into a bill to privatize
Medicare. That is what we have coming before us in the next few hours,
in the next few days.
I think, frankly, that when one looks at the HMOs across America,
they find that they are doing pretty well. They are pretty profitable,
just like these pharmaceutical companies. The average compensation of a
chief executive of the 11 largest insurance companies currently serving
Medicare was more than $15 million--average compensation, $15 million.
The former chairman of Oxford Health Plan--and I mentioned it earlier--
was paid $76 million in 2002. According to Weiss Ratings, an insurance
rating agency, profits for 519 health insurance companies they
evaluated jumped 77 percent from 2001 to 2002.
UnitedHealth Group reported a 35 percent increase. That is the group
that is joined at the hip with AARP, and both of them are widely
applauding this new idea to move seniors out of Medicare into these
HMOs, to privatize Medicare and raise the premiums seniors would have
to pay under Medicare. So when we look at this alliance, we can
understand why we have now come to the heavyweight division of the
prize fights at the close of the congressional session. That is exactly
what we are facing.
We have a situation where two of the largest lobbies in this town,
two of the biggest special interest groups, two of the best financed
industries in America, pharmaceutical companies and HMO insurance
companies, are anxious to see us pass a bill which means more
profitability for them. Sadly, it will be at the expense of the same
people we were really trying to help in the first place.
When it is all said and done, the seniors will not get a helping
hand. Drug costs are going to go up. The program they are proposing is
so complicated, it is impossible to explain, so it is understandable,
and ultimately Medicare as we know it, a program which has served
America well for over 40 years, is going to be phased out and
privatized and HMOs will take over.
Some people believe--and I believe they think it passionately--that
the free market is the answer to everything. I would say to them, take
a look at what the free market is doing to health insurance in America
today. The free market is at work. The free market is in the process of
doing what we expect it to do, increasing profitability. Ask anybody in
America about health insurance costs or ask any group why they are
going on strike in America. Nine times out of 10 they will say it is
because of health insurance coverage: The company we worked for will
not pay for the coverage; there is less coverage, and, frankly, we had
to go on strike.
It is the No. 1 reason for work stoppages and strikes across America.
It is the biggest problem in my State when it comes to business
complaints. Health insurance companies are using the free market
exactly as they are supposed to. They are reducing their exposure and
risk, and they are increasing the cost to the people who need help. As
a result, we are finding fewer Americans with worse coverage, and those
who have it have worse coverage every single year.
The Republicans believe that that is what we should do to Medicare:
We ought to let the same HMO companies that are fleecing businesses and
families across America get their grimy hands on Medicare recipients.
Let them, with a Government subsidy, lure away the healthiest Medicare
recipients and leave the sickest behind. Now, that is good for the
companies. It is not good for Medicare, it is not good for seniors, and
I believe it is not good for America.
We are in a situation where we have an important decision to make.
Some people have said to me: How can you possibly go back to your State
and explain that you voted against a prescription drug benefit for
seniors? Well, I think those people do not understand the seniors I
represent and most seniors across America. These are people wise with
years. These are people who have heard a lot of political promises.
These are folks who are skeptical when politicians say: I am going to
give you the Sun and the Moon. They ask hard questions.
When the seniors across America ask hard questions about this
prescription drug benefit, they are going to be sorely disappointed.
Two-thirds of seniors already say what they have heard is not enough.
They do not want any part of it. That tells me that they are tuned in
and following this debate. They want something that is basic,
universal, and fair, something that does not come to them at the cost
of things they value such as Medicare and Social Security.
Unfortunately, this program, which has been designed behind closed
doors and is now being unveiled one corner at a time, is not going to
meet the needs of seniors across America.
In the next few days, I am sure you will hear from my colleagues who
are
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going to come and will explain in detail why this is a bad idea. I
think we started off with the right goal, to help seniors pay for
prescription drugs. Today, with this bill, we will have failed in
meeting that goal. That is why I oppose it.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. BYRD. Mr. President, I ask unanimous consent the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BYRD. Mr. President, I am under the impression that there will be
a session of the Senate either tomorrow or on Monday or on Tuesday or
on any number of those days. I am also under the impression that the
Senate is rapidly, hopefully, approaching a sine die date for
adjournment.
Being confronted with those expectations, I want to make a speech
about Thanksgiving. I don't want it to appear in today's Record,
necessarily, but I would ask for it to appear in the Record of the last
day's session prior to Thanksgiving, whatever day that is.
I make such a unanimous consent request, that my speech not appear in
today's Record but that it appear in the Record of the last day of the
session prior to Thanksgiving.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The remarks of Mr. Byrd are printed in a future edition of the
Record.)
Mr. BYRD. Mr. President, I yield the floor. 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. COCHRAN. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Burns). Without objection, it is so
ordered.
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