[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

[[Page S15363]]

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.

[[Page S15365]]

  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

[[Page S15366]]

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.

[[Page S15367]]

  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

[[Page S15368]]

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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