[Congressional Record Volume 149, Number 172 (Sunday, November 23, 2003)]
[Senate]
[Pages S15592-S15606]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 
                        2003--CONFERENCE REPORT

  The PRESIDENT pro tempore. Under the previous order, the Senate will 
resume consideration of the conference report to accompany H.R. 1, 
which the clerk will report.
  The legislative clerk read as follows:

       Conference report to accompany H.R. 1, an act to amend 
     Title XVIII of the Social Security Act to provide for a 
     voluntary prescription drug benefit under the Medicare 
     Program and to strengthen and improve the Medicare Program, 
     and for other purposes.

  The PRESIDING OFFICER. The minority leader is first on the list.
  Mr. DASCHLE. Mr. President, I will certainly not exceed 30 minutes. I 
hope I can speak using less time because we are getting a little bit of 
a late start.
  Let me begin by saying what an important debate this is. This is a 
debate the consequences of which will last for generations. This debate 
in many respects will be every bit as important as the debate on 
Medicare in 1965. One really has to go back to that year, 1965, to 
fully appreciate what we are debating now.
  There was a debate, of course, in that period of our history, in the 
mid-1960s, about whether it was possible for us to address what was a 
national embarrassment at the time. About half of all senior citizens 
in the early 1960s had no health insurance--none. They were left out. 
There were horror stories about what they had to do in order to 
accommodate the health problems they were facing. It was a painful 
chapter. In

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some cases, because seniors had no health insurance, they were not 
living as long, the quality of their lives could not have been worse, 
and they were the poorest of the poor. They often had no income other 
than Social Security, and Social Security took them nowhere in regard 
to paying for the costs of health care.
  Thanks to President Kennedy and then-President Johnson, the 
recommendation was made that we provide a national health insurance 
plan for seniors. Republicans, at that time, argued that it was not the 
role of Government, that it ought to be the private sector that 
provides health insurance. Democrats argued, in response, that given 
the group of people we were talking about, providing health insurance 
for senior citizens in the private sector had about as much profit in 
it as providing insurance for a haircut. You are dealing with the 
sickest, most elderly in our population. So there is not much of a 
profit incentive for insurers; there is not an incentive in terms of 
the demographics and all of the actuarial circumstances. The private 
sector has virtually been loath to insure seniors because of that. It 
is like insuring a haircut. There is an inevitability, if you are a 
senior, to that moment in one's life when illness becomes a serious 
threat. And obviously, that is when the circumstances involving the end 
of life become all the more real.
  Medicare stepped in. Now, over the last 40 years, it has been one of 
the most successful programs in all of American history. Forty years of 
success, 40 years of providing health care with a consistency and a 
confidence we have never had in all of our time in this country.
  My mother has benefits from Medicare. My mother benefits from Social 
Security. I can only imagine what it would be like today if she did not 
have Medicare and Social Security upon which to depend.
  So Republicans, over the last 40 years, have tried to find ways to go 
back to that debate of 1965 and say: We still believe in the private 
sector. We ought to be able to find a way to provide insurance for a 
haircut and incentivize the private sector.
  I will never forget the extraordinary statement made by the Speaker 
of the House, I believe it was in 1994. He addressed that very issue 
all over again when he said: It is still our hope and still our design 
to see Medicare wither on the vine.
  For 40 years they have attempted to bring about an end, if not to 
Medicare itself, certainly to the concept of universal coverage through 
Medicare for all senior citizens.
  That is really the backdrop that today we must recognize as we begin 
the debate on this bill. How is it that those very colleagues who 40 
years ago argued that we really should not have a Government program 
for universal coverage for health care, who just 10 years ago said we 
ought to see Medicare wither on the vine, now in the name of Medicare 
are arguing we need to reform it, we need to improve it? We are not 
improving it with this bill. We are not reforming it with this bill.
  Does Medicare need to be changed? Of course. And providing a 
meaningful prescription drug benefit is probably the single best reform 
we could enact, because medicine itself has changed. But to those who 
say we want Medicare to look more like the private sector, I say you 
don't speak for me with that assertion.

  Medicare has had about a 4 percent administrative cost over 40 years; 
96 percent of the money that goes into Medicare goes to benefits. Do 
you know how that compares with the private sector? I am told the 
average administrative cost in the private sector for insurance plans 
is not 4 percent. It is not even 10 percent. I am told the 
administrative cost for a private sector plan today on the average is 
about 15 percent--almost four times the administrative costs of 
Medicare.
  So if you want to see the Medicare plan become more like a private 
plan, then count on spending almost four times more for administrative 
costs. At most, 85 percent of premiums go to benefits in private sector 
plans.
  How ironic that we find our colleagues saying: We want to make 
Medicare more like the private sector; we want more competition.
  We don't mind competition. But the kind of competition they want 
doesn't make a lot of sense to me. Why would we provide, instead of 96 
percent of the benefits to the beneficiary, only 85 percent, and call 
that progress?
  To make Medicare more ``competitive,'' our colleagues want to give 
more than $14 billion of incentives to the private sector to get them 
to insure a haircut. Their notion is that somehow we can find a way to 
make the private sector more interested in providing meaningful health 
care to seniors, when Medicare is doing it so well already.
  There are a lot of very grave concerns we have about this 
legislation. I brought some charts to the floor to talk about some of 
these concerns. I want to address them, if I can, in the time I have 
allotted to me.
  I think one of the biggest concerns I have is that seniors today are 
very concerned about prices. They are concerned that their drug prices 
go up each and every year.
  I will never forget talking to a woman in Sioux Falls whose name is 
Florence. She told me that, at 73 years old, she must work and she must 
use the supplemental pay she gets from her job--at 73--simply to pay 
for the drugs she needs. Her drug bill is about $400 a month. It goes 
up 10 to 15 percent every year.
  She drives to Canada once every 3 months in order to save $100 a 
month. She figures every 3 months she saves enough to actually buy the 
drugs for a month with that trip to Canada. So, without question, I 
think most seniors are very concerned about what is going to happen to 
the costs of their drugs.
  The answer, with all of the specific analysis done to date about the 
impact of this bill, the best analysis we can provide so far, is that 
up to 25 percent of all beneficiaries are actually going to pay more, 
not less, for the drugs they buy with the passage of this bill--25 
percent. It could be more than that.
  Many Medicaid beneficiaries are going to pay more than what they are 
paying right now.
  And there are many in the private sector who are going to pay more. 
You are going to see several million Medicare beneficiarie who now have 
private coverage actually lose that coverage as a result of the passage 
of this bill. The estimate is now about 2.7 million senior citizens 
will lose their retiree coverage when this legislation is enacted into 
law.
  There are a number of other concerns we have with regard to this 
particular bill, including the coercion of seniors into HMOs and 
increasing their Medicare premiums with the so-called premium support 
concept. Within 7 years, many seniors are going to be forced into a 
pilot project in at least six locations. In those locations at least, 
and maybe others, we are going to see not only increases in Medicare 
premiums, but also seniors coerced into HMOs. These are cases where 
seniors have never even thought about an HMO until now.

  In addition, millions of seniors are going to go without drug 
coverage during part of the year. I will talk more about that later.
  We also are going to keep drug prices high as a result of this 
legislation. There is very little this legislation does to reduce the 
cost of drugs at all, as I said just a moment ago.
  And finally, we squander $6 billion needed for retiree coverage on 
tax shelters for the wealthy and the healthy.
  For all of these reasons--the cost to beneficiaries, the coercion of 
seniors into HMOs, millions of seniors who are going to go part of the 
year without any coverage at all, the fact that drug prices don't come 
down but they go up, and that we squander $6 billion on tax shelters 
for the wealthy in the name of Medicare--it makes a mockery of the 
whole word ``reform.''
  I said earlier that up to 25 percent of all beneficiaries will see 
more costs for drugs. There are two categories in particular. Studies 
have shown that 2.7 million retirees, including about 5,000 South 
Dakotans, will actually lose the coverage they have with the private 
sector when this legislation is enacted. And that 2.7 million number, I 
think, is actually going to be higher. For those millions of Americans 
and those thousands of South Dakotans, that would be the biggest blow 
of all. They have confidence now that they can go to the pharmacy, and 
they can buy their drugs. They do not have to worry about whether or 
not they are covered. They

[[Page S15594]]

had better start worrying because the problems kick in just as soon as 
this legislation is enacted, if it is.
  Up to 6.4 million low-income beneficiaries are going to pay more or 
lose access to drugs they are now provided. I think the 25 percent 
number may be a conservative figure.
  When you take the number of retirees adversely affected, when you 
take the number of low-income beneficiaries who may be worse off under 
this plan, you begin to appreciate the magnitude of the problem this 
bill is going to create for millions of senior citizens today who are 
totally unaware of its negative implications.
  The legislation creates a dilemma. The choice seniors will face is 
higher premiums on one side or an HMO on the other. How is that reform? 
How does that possibly relate to this widely stated goal we all have 
that we simply want to provide a meaningful drug benefit to senior 
citizens? This bill isn't a drug reform plan, this is a Trojan horse 
for the collapse of Medicare.
  We are going to see the loss of Medicare as we know it today if this 
legislation passes. I think this chart describes it pretty well.
  If you want to see increased premiums, support this bill. If you want 
to see seniors forced into an HMO, support this legislation. It leaves 
a question mark for a senior citizen right now: What do I do? How do I 
respond? How can I prepare myself for what is about to come?
  What is about to come regarding drug coverage is described on this 
calendar. This calendar says more than any speech probably can. This 
calendar describes in essence the drug benefit structure. Of all the 
concerns I have, the benefit structure is one of the most troubling to 
me. I want to describe it, but then I want to use this calendar to talk 
about its implementation.
  A senior will start paying $35 a month. We will come back to that 
figure in just a minute. A senior pays that $35 a month 12 months out 
of the year--January through December. Then the senior must pay 100 
percent of all the benefits up to the deductible. That is depicted in 
red. Then the first dollar of protection under this plan for drug 
coverage would kick in, following the $250 deductible. Beneficiaries 
pay all of the $250. The drug coverage kicks in from $250 in spending 
up to $2,250. The Government pays 75 percent of the benefit. After the 
benefit has been paid--75 percent Government, 25 percent senior, up to 
$2,250--the Government says: Wait a minute. We paid all we can pay. You 
are on your own from $2,250 up to $5,100. You are going to pay all the 
costs during that period.

  After the beneficiary pays $35 a month, 100 percent up to $250, and 
25 percent up to $2,250, they have to pay the entire cost up to $5,100, 
even though they are still paying a premium, and then they have a 95 
percent benefit that kicks in after that.
  Basically, what this calendar depicts is the drug schedule for 2006 
for beneficiaries with $400 per month in drug spending.
  By the way, the benefit doesn't kick in until 2006. So there are 
premiums that kick in, and the benefit lasts for a period of time, 
during the months of February, March, April, and May. They benefit in 
June somewhat. But for the entire rest of the year they are on their 
own.
  This convoluted benefit structure is scary, as I think of my own 
mother, and I think of all of those who are going to try to figure it 
out: How in the world do I know how much I owe? How much can I count 
on? How much of these benefits are really going to apply to me?
  This period of no benefits is called a coverage gap. Some people call 
it a donut hole. Whatever you want to call it, it is a mistake.
  Think of the myriad of administrative costs involved for every single 
senior citizen who is going to have to try to decide: Are they in the 
25 percent category, the 100 percent category, or are they in the 95 
percent category?
  By the way, if you are a senior citizen with a lower income, you are 
entitled to a different schedule. First, they have to know what their 
income is. They are going to have to turn over their tax records to 
determine what kind of income they have and whether they are eligible 
or not. Once those tax records are determined, they then are presented 
with these different tables that they are going to have to try to 
figure out. Imagine a 90-year-old woman trying to figure out when she 
goes to the pharmacy what the coverage gap is: Do I pay the premium? Do 
I have to pay 100 percent? If I do, how do I pay for it? Am I breaking 
a law if I expect the pharmacy manager to give me the full benefit? How 
do I figure this out?
  This convoluted, confusing, extraordinarily complex schedule is a 
disaster.
  I will make a prediction. I will predict that within 12 months, we 
are going to be back fixing this so-called coverage gap. It is chasm, 
it is not a gap. It is a confusion chasm. It is a disaster. That, if 
nothing else, ought to warrant reconsideration of this legislation.
  But as I say, the coverage gap widens over time. It is not just now. 
The premium, as I said, starts at $35. In 2013, the premium goes up to 
$58. The deductibles start at $250. But guess what? In 2013, the actual 
deductible is going to be almost $500. The coverage gap then goes from 
$2,850 in 2006 all the way up to $5,066 by 2013.
  In other words, senior citizens are going to have to pay $5,000 even 
though they are paying $35, or in this case $58, a month for the 
benefit. Can you imagine a senior citizen coughing up these kinds of 
dollars in just a few short years?
  It is absolutely the most reprehensible expectation for senior 
citizens. They can no more afford $5,000 in 2013 than they can afford 
it today. It is wrong. This, if nothing else, ought to be a reason we 
should send this legislation back to the conference to figure out a 
better way of doing it.
  The bottom line is, when it comes to the coverage gap, seniors are 
going to have to pay $4,000 to be eligible for $5,000 worth of 
benefits. Can you imagine that in the name of reform?
  First of all, we are coercing seniors into an HMO. We are telling 
retirees they may lose their own health benefits. Two to three million 
people are going to lose benefits, and the benefit they are going have 
instead is a $5,000 coverage gap and paying $58 a month in 2013. That, 
perhaps more than anything else, is disconcerting. As I talk to 
seniors, the concern they have the most is, of course, the high cost of 
drugs.
  First of all, our conferees wasted no time in eliminating the 
reimportation of United States-made drugs from Canada. They will point 
to language in the bill, but the bottom line is we will not see any 
change in the current law with regard to reimportation of drugs from 
Canada. There is virtually a prohibition on drugs from Canada. South 
Dakotans, North Dakotans, Montanans, Minnesotans, Michigan residents 
have counted on Canadian relief. That has been a big part of what has 
been their strategy in coping with the high cost of drugs today. That 
is going to be gone. They will not be able to reimport unless they go 
to Canada themselves.
  They also have a prohibition--and this is amazing to me as one of the 
things Medicare has been able to show is it can leverage better prices; 
because of the power of pooling, we can leverage, whether it is 
hospital prices, doctor prices, prescription drug prices--and there is 
actually a prohibition for Medicare in the negotiation of lower drug 
prices on behalf of senior citizens. Drug companies can do it, pharmacy 
benefit managers can do it, but there is a prohibition on the Federal 
Government involving itself in negotiating on behalf of senior citizens 
for lower drug prices today. I have never heard of such a thing. If we 
cannot bring about a better price, if we cannot leverage drug prices 
more effectively through Medicare, who in the world can do it more 
effectively than the Government itself and Medicare specifically?
  The reason prices are going to remain high is, No. 1, there is going 
to be very little competition from those sources where competition is 
already shown to be very effective; No. 2, Medicare itself, the 
Government through Medicare, is actually prohibited from negotiating 
better prices on behalf of seniors. That is an amazing provision of law 
that is inexplicable.
  It goes on. I said earlier one of the concerns I have is this 
provision that allows $6 billion to be squandered for those who are 
healthy, and in many cases wealthy today, money that could actually go 
for retiree coverage. It creates a new health savings account which is 
nothing more, of course, than a tax shelter for those who are wealthy

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and will draw off people who are healthy. Ordinary Americans cannot 
afford it and it undermines the employer-based coverage we already 
have. Six billion dollars is a tremendous pool of resources that could 
have gone to making this program far more cost effective and far more 
accessible for a lot of seniors.
  Instead, even though we did not have it in the Senate bill, even 
though we had bipartisan support for this $6 billion going to those who 
need it the most, in keeping with the trend, in keeping with the 
philosophy of many on the other side, creating this tax shelter for the 
wealthy was a ``must pass'' piece of legislation.
  The bottom line is we lost $6 billion over the next 10 years that 
could have gone a long way to reducing the cost of drugs to everyone 
else.
  How is it that with all these warts, with all these problems, with 
all these deficiencies, with all these concerns, this legislation could 
be before the Senate today? This chart shows it pretty well.
  The Pharmaceutical Manufacturers Association had their agenda as 
well. I must say, they got virtually every single thing they wanted.
  They wanted an administered drug benefit in the private sector that 
diluted the purchasing power of Medicare. They got it.
  They wanted financial incentives for HMOs, another step away from 
Medicare. They got it.
  They wanted a prohibition on Medicare negotiating prices, as I just 
described a minute ago. Guess what. It is there.
  They wanted a meaningless reimportation provision because they did 
not want the competition. Guess what. That is in the bill as well.
  They wanted a watered-down generic access provision. Check that off 
the list.
  They wanted no public scrutiny and secret kickback arrangement 
potential within the contracts they have with the benefit managers and 
the insurers. That is in there, too.
  They wanted a huge windfall profit. They are going to make more money 
in the next 10 years than virtually any other sector within our 
economy. No wonder stock prices are soaring today--because they also 
see the writing on the wall.

  PhRMA had a checklist. PhRMA got their list checked, every single 
item on the list.
  The bottom line is, of course, Medicare beneficiaries lose, PhRMA 
wins, and the bill comes before the Senate with this realization. PhRMA 
got what it wanted. But organizations that represent seniors, 
organizations that represent working families, organizations that 
represent State governments and city governments, organizations of all 
kinds--liberal, conservative, name it--organizations of all kinds have 
come forward to say: Please do not pass this bill. Send it back to the 
drawing board. Recognize the damage you are going to do--not just to 
Medicare; recognize the damage you will do to the confidence and the 
security of senior citizens.
  Now more than 200 organizations have said they oppose this 
legislation and they want the Senate to oppose it as well.
  This legislation would have been killed in the House had they abided 
by the rules. One of the most flagrant demonstrations of abuse of the 
institution and rules I have seen: They took almost over 3 hours the 
other day to bring about the desired vote on the House floor in spite 
of the opposition of all these organizations.
  You have all these organizations on one side. This picture depicts 
pretty well what is happening on the other. A meeting was called on 
November 13 to talk about the benefits of this plan, to convince 
seniors that somehow they are going to be better off. And all these 
empty chairs pretty well depict exactly what happened. Seniors know 
what is going on. They were not going to be part of a sham discussion. 
No one showed up.
  No one ought to vote for this either. This legislation does not 
deserve our support. We can do better. This started out as a debate 
about providing meaningful help to seniors. It has turned into a debate 
to save Medicare.
  We are going to do all we can to live up to the specific talks, to 
live up to the needs, the hopes and dreams of senior citizens today. We 
will do all we can to defeat this bill when those votes are taken.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from California is recognized.
  Mrs. FEINSTEIN. Mr. President, I listened to the distinguished 
Democratic leader and find that I agree with much of what he said. This 
may not be a perfect bill, but clearly there are positive and negative 
features to the bill.
  I worked a year ago, and through an individual's help, was able to 
run the numbers with respect to a prescription drug plan and tried to 
make them come in within $400 billion and found it to be 
extraordinarily difficult. In my view, the most positive feature of 
this bill is that it delivers voluntary prescription drug coverage to 
this Nation's Medicare beneficiaries. I find the low-income benefits of 
this bill to be one of its biggest strengths. It is better than 
anything we ran that came in at $400 billion or below last year.
  These benefits affect about 1.4 million Californians who have limited 
savings and low incomes and who will qualify for prescription drug 
benefits under this bill. Some of these are low-income seniors who do 
not qualify for Medicaid. Because of $3,000 in savings, they are 
ineligible to receive prescription drug coverage through the California 
Medicaid Program. They will now have prescription drug coverage which 
is much better than I had hoped. So 351,000 low-income Californians who 
are not eligible for Medicaid and have no prescription drug benefits 
now will have them under this bill. This was important to me. It is one 
of the strengths of the bill.
  Analysis shows that this bill will increase the percentage of 
Medicare beneficiaries with prescription drug coverage from 79 percent 
to approximately 95 percent.
  To begin with, this bill, as I said, expands the drug coverage to the 
351,000 Californians who are not eligible for Medicaid. The reason it 
does that is because it has a much more relaxed assets test. So where 
the assets tests were so stringent for Medicaid, they are more relaxed 
here; and, therefore, those 351,000 people who found themselves without 
Medicaid coverage will now have coverage under this bill.
  Secondly, the bill provides a 16-percent increase in Medicaid 
disproportionate-share hospital payments in fiscal year 2004. This has 
always been important to me. Every year we have had to fight for it 
because these are the payments that go to our county hospitals. In 
California, the county hospitals receive most of the people who have no 
coverage who are bereft and who are extraordinarily low income. 
California hospitals who qualified to receive Medicaid DSH money lost 
$184 million this year due to cuts enacted in the Balanced Budget Act 
in 1997.
  This bill restores $600 million to California's hospitals over the 
next 10 years. I must tell you, with about 25 hospitals that have 
closed in my State in the last few years, this is a major item for me. 
The DSH money in this bill will go a long way toward protecting 
California's fragile health care safety net, which is dependent on a 
complex combination of local, State, and Federal funding.
  Thirdly, the bill improves payments for indirect medical education in 
fiscal year 2004 and beyond. Teaching hospitals will receive a 6-
percent increase in payments in the second half of fiscal year 2004 and 
will have their payments spelled out in future years so they can begin 
to plan ahead. Now, they do go down in some years. So there will be 
advanced knowledge of that so hospitals can begin to plan for that.
  This is money that reimburses teaching hospitals. My State has some 
of the greatest teaching hospitals in the Nation. This money would 
reimburse those hospitals for costs associated with educating our 
Nation's next generation of physicians. That is important to me. I 
think it is essential funding, and it will allow our major hospitals to 
continue training tomorrow's caregivers.
  Fourthly, the hospitals and physicians in California will benefit 
from this bill. Hospitals will see a full market basket update for 
fiscal year 2004 and have the opportunity to receive a full market 
basket update for the 3 years that follow. With more than 58 percent of 
California's hospitals losing money treating Medicare beneficiaries,

[[Page S15596]]

and all hospitals facing Federal and State unfunded mandates, the full 
market basket update is vital to my hospitals as they struggle to meet 
staffing, seismic, and privacy compliance requirements.
  I have heard overwhelming opposition from doctors in my State to the 
projected 4.5-percent payment cut that physicians and other health care 
providers would have faced in fiscal year 2004. In other words, without 
this bill, doctors in my State--and I do not know about elsewhere--but 
doctors in my State were going to face a projected 4.5-percent payment 
cut.
  This bill prevents that payment cut from happening, and it includes 
an increase in payments for fiscal years 2004 and 2005 of 1.5 percent 
each year. This means that doctors in my State will be paid more for 
their services. It may not sound like a lot, but we have doctors 
leaving California and going to other States because they cannot meet 
the high cost of living in the State of California and practicing 
medicine. So even a small amount helps them stay in business.
  In my State, approximately 33 percent of all Medicare beneficiaries 
get their health care coverage from Medicare+Choice. Now, 
Medicare+Choice has not been a positive experience in every case. I 
think we all know this. This bill, though, strengthens the 
Medicare+Choice Program, renames it Medicare Advantage, and it provides 
payment increases to HMOs. Some find that objectionable. I, frankly, do 
not, because these increased payments to HMOs and preferred provider 
organizations should provide some premium stability throughout the 
State. I intend to watch and see if, in fact, it does happen.
  Now, I have many concerns about this bill. The Democratic leader 
pointed out some of them. This is certainly not a perfect bill. I am 
not on the committee. I did not write the bill. I struggled to have a 
little bit of input into the bill, probably much less than I would have 
liked.

  I am deeply concerned about the number of Californians, though, who 
have lost their retiree health benefits as a result of rising health 
care costs. This is happening right now without a bill. It is projected 
that 10 to 12 percent of retirees who have private health care plans 
are losing their benefits each year. That is happening without this 
bill. The reality is--and I know people do not like to look at this--if 
we do not pass this bill, employers in my State will continue to drop 
coverage for their retirees at this estimated rate of 10 to 12 percent 
a year. Many of these employers who have chosen to retain coverage for 
their retirees have required their retirees to pay higher copayments 
and premiums--not under this bill but today.
  Through direct subsidies and tax provisions, this bill actually 
reduces the number of seniors in California who will lose their retiree 
health coverage from approximately 431,420 in the Medicare bill that 
passed the Senate, that a majority of us voted for, to approximately 
198,000 in this bill. These are California numbers, true. I cannot 
speak to other States. But what I am saying is, because of this bill, 
the number of retirees in California who would lose their retirement 
benefits will drop from 431,420 to 198,000.
  Now, I wish the number were zero, but the point is, the bill makes it 
better, not worse. I think that is a good thing.
  Now, I find it very difficult that this bill does not restore access 
to Medicaid and SCHIP for legal immigrant children and pregnant women 
at the State's option. The Senator from Florida, Mr. Graham, authored 
legislation which I voted for which did do this. I intend to 
introduce--and I hope with him--legislation to restore Medicaid and 
SCHIP benefits to California's legal immigrant children and pregnant 
women next year.
  I find it, frankly, troubling that this bill actually provides $250 
million per year for 4 years to reimburse hospitals for providing 
emergency care services for undocumented immigrants, and California's 
hospitals will receive approximately $72 million a year to reimburse 
them for their care to undocumented immigrants, but we take away the 
coverage for legal immigrants.
  I expressed my concern to Senator Breaux, to Senator Baucus, to 
Senator Frist about this issue. I was told the House would not accept 
this language. I hope next year the Senate will once again pass a bill 
to restore these benefits. This is a big item in California, and I 
deeply believe people who come to this country legally should be 
entitled to these benefits.
  My State spent $3.7 billion in 2002 in uncompensated care, so the 
additional money that California gets for the care of illegal 
immigrants of $72 million a year at least will go some distance in 
covering that deficit.
  In my role as vice chair of the National Dialogue on Cancer and 
cochair of the Senate Cancer Coalition, I have a very serious concern 
about this bill's Medicare reimbursement cuts for cancer care, 
particularly oncology physicians. It is my strong view that every 
suffering cancer patient should be able to have a so-called quarterback 
physician, an oncologist, someone who is with them who can go through 
all of the terrible choices and decisions that have to be made by a 
cancer patient and stay with them through it all.
  I have talked to both Senators Baucus and Breaux and also to Senator 
Frist. They have all said this bill will leave the oncology community 
better off. I don't see that, candidly. In looking at this complicated 
Average Sales Price versus Average Wholesale Price issue, I don't see 
where they will be better off. I want the Record to reflect that I have 
received those assurances. I don't know whether they are true or not, 
but I can promise my colleagues, I intend to follow very closely the 
impact this bill will have on cancer care up and down the State of 
California. My staff and I will be watching the cancer care situation, 
and I am certainly prepared to introduce legislation making technical 
corrections to Medicare reimbursement for cancer care if the bill has 
the impact the oncology community predicts it will.
  It is my understanding that our leadership will appoint an 
independent commission to be headed by my good friend, former Senator 
Connie Mack. The commission will monitor the impact of this bill on 
cancer care throughout the country and will report and make policy 
recommendations to Congress.
  I am also concerned about the impact this bill will have on 50,000 
low-income Californians who are living with HIV/AIDS. We have heard a 
lot from the HIV/AIDS community. My concern is with their access to 
drug treatment therapy under the Medicare prescription drug benefit.
  What happens in AIDS/HIV treatment is that very often a cocktail of 
drugs, three or four different drugs, proves to be the most beneficial. 
The type of drugs varies with the individual, just as any drug would 
with any of us.
  I have shared this belief, and the concern is that the formularies 
would limit an individual to two drugs. I spoke at length with Health 
and Human Services Secretary Tommy Thompson Friday night about it and 
asked him to put in writing exactly what would happen. Directly 
following my remarks, I ask unanimous consent to print in the Record 
his Department's response to my concerns.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mrs. FEINSTEIN. I will read just a couple of key points made by the 
Secretary in response. Let me quote the Secretary:

       The Secretary may only approve a plan for participation in 
     the Part D program if the Secretary does not find that the 
     design of the plan and its benefits, including any formulary 
     and any tiered formulary structure, will substantially 
     discourage enrollment in the plan by certain classes of 
     eligible Medicare beneficiaries. Thus, if a plan limits drugs 
     for a group of patients (such as AIDS patients), it would not 
     be permitted to participate in Part D.

  I also note that upon completion of this bill, Senators Grassley and 
Baucus and I will enter a colloquy into the Record to emphasize this 
point.
  This bill says that if a plan doesn't carry or doesn't treat a drug 
that is needed by a person with AIDS as a preferred drug, a simple note 
from a doctor explaining the medical need for that particular drug 
would get that drug covered at the preferred price. It cannot take more 
than 72 hours for seniors to get a drug under this expedited appeals 
process. This is my understanding based on conversations

[[Page S15597]]

with the Secretary. I am delighted this understanding is now in the 
Congressional Record so that we can all follow it.
  I want to say a word about something that is very controversial in 
the bill that I happen to support and why I support it. That is income 
relating the Medicare Part B premium. Let me tell you why I support it. 
I have a great fear that as I watch entitlement spending grow, and I 
have watched that happen for a decade in the Senate, our children and 
our grandchildren will not have access to Social Security or Medicare. 
Let me tell you why I believe this.

  Since 1993, at my constituent breakfasts we have been using charts to 
illustrate outlays, meaning the money the Federal Government spends 
every year. I believe they are the truest way to judge Federal 
spending. When I began this, in 1993, entitlement spending was $738 
million. About 50 percent of the outlays in a given year were 
entitlement spending. That was welfare, veterans benefits, Social 
Security, Medicare, et cetera. Interest on the debt was 13 percent. So 
63 percent of the outlays in a given year could not be controlled by 
our budget.
  This year, entitlement spending is $1.174 billion. Entitlements have 
risen to 54.4 percent, a 4.4 percent increase. Interest has dropped 
some, to 7.5 percent.
  Now, if we look at the projection--and this is with the $400 billion 
prescription drug plan--if you look at entitlement spending in 2013, 10 
years from now, you see that it is $2.048 billion. So in 10 years it 
has gone from $738 billion to $2.48 billion. That is the problem. 
Entitlements will be 58 percent of the outlays, and interest on the 
debt, 11.6 percent. What does that mean? That means 70 percent of 
everything that is spent by the Federal Government in fiscal year 2013 
cannot be controlled.
  The other two pieces, of course, are defense, projected at about 16.9 
percent, and discretionary spending, dropping from 20 percent this year 
down to 13.6 percent. Discretionary spending is everything else we have 
to do. It is everything in the Justice Department, the Education 
Department, the Park Service. All the rest of the Federal Government in 
10 years will be about 13 percent of what is being spent. That is the 
enormity of the entitlement picture.
  I know it is hard for people to look at this because those people who 
had the dream of Medicare decades ago looked at it as a program that 
everyone who paid in got out the same benefit. But what the income 
relating in this bill talks about is just the Part B Medicare premium, 
the cost of which today is $3,196.80. That is the full cost of the 
Medicare Part B premium in 2004.
  Now, what is Part B? Part B is physician care, other medical 
services; it is outpatient hospital care, ambulatory surgical services, 
X-rays, durable medical equipment, physical occupational and speech 
therapy, clinical diagnostics, lab services, home health care, and 
outpatient mental health service.
  The premium is $3,196.80. The income-relating provisions in this bill 
are very mild, much milder than what Senator Nickles and I presented on 
the Senate floor.
  In this bill, beginning in 2007, individuals with incomes of more 
than $80,000, or couples with incomes of more than $160,000, will have, 
instead of 75 percent of their Medicare Part B premium subsidized, 65 
percent of it will be subsidized by the Federal Government.
  This goes up four tiers so that individuals with incomes of more than 
$200,000 a year, or a couple with an income of more than $400,000 a 
year, will have just 20 percent of their Medicare Part B premium 
subsidized by the Federal Government. Why should hard-working taxpayers 
pay for a millionaire's health care? That is my view.
  I don't see income relating as bringing about the downfall of 
Medicare. I see it as making the program more solvent.
  There is one significant missed opportunity in this bill that 
concerns me deeply, and that is the whole area of the cost of 
prescription drugs. I am particularly concerned about the amount of 
money spent on prescription drug promotion by pharmaceutical companies. 
Perhaps I have reached the age where I remember when there was no 
advertising of prescription drugs. We were just as well off then as 
now, and without huge costs.
  Let me give you some examples. Promotional spending by pharmaceutical 
manufacturers has more than doubled, from $9.2 billion in 1996 to $19.1 
billion in 2001. That is an annual increase of 16 percent.
  Most troubling to me is the rapid spending growth of direct-to-
consumer advertising of prescription drugs, which has increased an 
average of 28 percent.
  Bottom line, Mr. President: I intend to support this bill, and not 
because it is perfect, but because I believe it brings substantial help 
to people who need that help in my State of California.
  I yield the floor.

                               Exhibit 1

    Access to Drugs for Aids Patients Under the Bipartisan Agreement

       Question: Will AIDS patients have access to all drugs 
     within a therapeutic class under the Bipartisan Agreement? 
     Can a PDP limit the number of drugs that are covered within a 
     therapeutic class? Are dual eligibles in a Medicare drug 
     plans losing coverage available to them in Medicaid?
       Answer. In the Bipartisan Agreement there are significant 
     safeguards in the development of plan formularies that will 
     ensure that a wide range of drugs will be available to 
     Medicare beneficiaries.
       Plans have the option to use formularies but they are not 
     required to do so. If a plan uses a formulary, it must 
     include ``drugs'' in each therapeutic category and class 
     under section 1860D-4(b)(3)(C)(i). A formulary must include 
     at least two drugs in each therapeutic category or class 
     unless the category or class only has one drug.
       The Secretary will request the U.S. Pharmacopoeia, a 
     nationally recognized clinically based independent 
     organization, to develop, in consultation with other 
     interested parties, a model guideline list of therapeutic 
     categories and classes. How categories and classes are 
     designed is essential in determining which drugs are included 
     on a plan's formulary. USP is clinically based and will be 
     cognizant of the needs of patients. We expect they will 
     design the categories and classes in a way that will meet the 
     needs of patients.
       In designing formularies, plans must use pharmacy and 
     therapeutic committees that consist of practicing physicians 
     and pharmacists who are independent and free of conflict with 
     respect to the plan, and that have expertise in care of 
     elderly and disabled. The committee has to use scientific 
     evidence and a scientific basis for making its decisions 
     relating to formularies.
       Further, the Secretary may only approve a plan for 
     participation in the Part D program if the Secretary does not 
     find that the design of the plan and its benefits, including 
     any formulary and any tiered formulary structure, will 
     substantially discourage enrollment in the plan by certain 
     classes of eligible Medicare beneficiaries. If a plan 
     complies with the USP guidelines it will be considered to be 
     in compliance with this requirement. Thus, if a plan limited 
     drugs for a group of patients (such as AIDS patients) it 
     would not be permitted to participate in Part D.
       Under the Bipartisan Agreement, the beneficiary protections 
     in the Medicare drug benefit are extremely comprehensive to 
     ensure access to a wide range of drugs and are more 
     comprehensive than the protections now required of state 
     Medicaid programs.
       For example, there are extensive information requirements 
     in Part D so beneficiaries will know what drugs the plan 
     covers before they enroll in the plan.
       The plans must set up a process to respond to beneficiary 
     questions on a timely basis.
       Beneficiaries can also appeal to obtain coverage for a drug 
     that is not on their plan's formulary if the prescribing 
     physician determines that the formulary drug is not as 
     effective for the individual or has adverse effects. As a 
     result, there should be access to all drugs in a category or 
     class when needed.
       Because the Medicare drug benefit will be offered through 
     private plans, plans will have an incentive to offer multiple 
     drugs in a therapeutic class in order to attract Medicare 
     beneficiaries to join their plans.
       Becuase of the optional nature of the Medicaid drug benefit 
     today, states can drop their coverage entirely. According to 
     a recent Office of the Inspector General report, states have 
     identified prescription drugs as the top Medicaid cost driver 
     (FY 2002, Medicaid prescription drug expenditures totaled 
     approximately $29 billion or 12% of the Medicaid budget). 
     From 1997 to 2001, Medicaid expenditures for prescription 
     drugs grew at more than twice the rate of total Medicaid 
     spending.
       Pressures on state budgets have led to Medicaid coverage 
     restrictions for drugs and the use of cost control measures 
     that will not be used in the Part D program.
       Eighteen states contain Medicaid drug costs by limiting the 
     number of prescriptions filled in a specified time period, 
     limiting the maximum daily dosage or limiting the frequency 
     of dispensing a drug. Some states also limit the number of 
     refills.
       Six states have pharmacy lock-in programs, which require 
     beneficiaries to fill their prescriptions in one designated 
     pharmacy.

[[Page S15598]]

       States already have the authority to limit the number of 
     drugs that may be provided in a therapeutic class, and 
     nineteen states are using preferred drug lists in their 
     Medicaid programs. Thus, dual eligible beneficiaries will 
     have the same access in Part D that they have in Medicaid, 
     with expanded beneficiary protections and appeal rights.
       Concerns have been expressed that the Medicare benefit will 
     result in a loss of coverage for dual eligibles. This is not 
     the case for low-income beneficiaries, the Bipartisan 
     Agreement provides generous coverage.
       The Bipartisan Agreement preserves the universality of 
     Medicare for all eligible beneficiaries including those now 
     dually eligible for both Medicare and Medicaid. Unlike 
     Medicaid, the new Medicare Part D benefit will provide a 
     guaranteed benefit to all eligible seniors--a benefit they 
     can count on without fear of loss of benefits when state 
     budgets become tight.
       Dual eligibles, who currently have full Medicaid benefits, 
     will automatically be given generous subsidies and pay no 
     premium, no deductible and minimal cost-sharing regardless of 
     their actual income (which can be higher than 135% of poverty 
     based on states' special income rules).
       In addition, full dual eligibles with incomes under 100% of 
     the Federal Poverty Level (FPL) will pay no premiums, no 
     deductible sand only nominal copayments of $1 for generic and 
     other multiple source preferred drugs and $3 for all other 
     drugs. These copayments will increase only at the rate of 
     inflation, the same rate as the Supplemental Security Income 
     (SSI) payments on which many low-income individuals rely.
       Dual eligible nursing home patients and other 
     institutionalized persons who only have a small personal 
     needs allowances will be exempt from copayments altogether.
       The copayment levels in the Bipartisan Agreement are 
     similar to what dual eligibles now pay in what is an optional 
     Medicaid benefit in their states. In fact, because of the 
     optional nature of the Medicaid drug benefit today, states 
     can drop their coverage entirely. Current regulations permit 
     states to increase coinsurance to 5%, which is more than what 
     will be permitted for dual eligibles under the new Medicare 
     benefit.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
  Mr. KENNEDY. Mr. President, will the Chair please advise me when I 
have 5 minutes remaining?
  The PRESIDING OFFICER. The Chair will do so.
  Mr. KENNEDY. Mr. President, during yesterday and early today, we have 
had characterizations and descriptions of this legislation, which is 
enormously important. We are doing these debates on Saturday and 
Sunday, and it is anticipated that we will have a vote tomorrow, 
Monday, on a bill that will not go into effect until 2006, and other 
provisions will take effect in 2010. I have right here next to me the 
bill, the legislation, which was put on everyone's desk. I am still 
waiting for a Member to come here and indicate that he or she has read 
it, and describe the details of it.
  We are dealing with a matter of enormous importance and consequences, 
as we are dealing with issues of life and death for our seniors in this 
country--the men and women who have brought this Nation out of the 
Great Depression, the ones who fought in World War II, the greatest 
generation. They came back and faced challenging times. We went from a 
12 million, mostly man military, down to an Army of just a couple of 
million, with massive unemployment, and they helped to get the country 
back on a peaceful road. We are talking about a generation that faced 
down the Soviet Union and communism, and they are now in their golden 
years.
  As the great philosophers point out so well, civilization is measured 
by how it treats its elderly people, whether they will be able to live 
in the peace, dignity, and security for their contribution to the 
country. I believe in that. I believe in that very deeply.
  We have to ask ourselves at the end of the day whether this 
legislation before us, which is being rushed through with effectively 2 
or 3 days of debate, is worthy of our senior citizens. I mentioned the 
issue of time again because my good friend, the majority leader--and he 
is my good friend--made reference to the fact that I believe that this 
legislation needed more debate than a Saturday afternoon and evening. I 
watched the debate going on, and the chairman of the Finance Committee 
and the Senator from Alaska talked up until almost 10 o'clock last 
night, and now we are here on Sunday afternoon.
  But I wonder whether it needs more than 2 days debate. I believe it 
does; I do believe so. I believe that particularly after we saw what 
happened in the House of Representatives.
  This legislation makes an enormous difference to the well-being and 
the security of seniors in this country. And we saw the facade that 
took place in the House of Representatives where the vote was called at 
2 or 3 o'clock in the morning, and the vote was kept open beyond the 
traditional time of 15 to 20 minutes, for nearly 3 hours, in order to 
try to effectively coerce Members to support the proposal.
  We are doing that on a measure that is supposed to benefit our senior 
citizens, and a measure that passed the House of Representatives by 
only one vote in a purely partisan proposal. Then, it passed the House 
of Representatives by less than a handful the second time, again, on a 
purely partisan proposal. It seems to me that if the House of 
Representatives had a full opportunity to have an open discussion and 
debate, and then have a reasonable vote and call them as they see them, 
then this process would be worth supporting. We ought to have the same 
here in the Senate. But, on the one hand, when we have a Republican 
leadership, which is effectively jamming this legislation through the 
House of Representatives, and then effectively wants to use the closing 
off of debate and discussion in order to effectively jam it through 
here, the Senate of the United States, we ought to take a moment or two 
to ask why.
  I note the references of my friend, the majority leader, about who 
was really representing the seniors of this country and whether some 
were delaying this legislation. Many of us have been fighting for a 
prescription drug program for years. I will not take the time today to 
discuss the time when it was bottled up in the Republican Finance 
Committee, and how it only emerged on the Senate floor when we had 
Democratic leadership here just over a year ago. It is not worth taking 
up the time because I don't have it.
  But this is a Senator who fought for the Medicare Program, who knows 
the history of the program, and knows how important the Medicare 
Program is. I am also mindful--with all respect to those on the other 
side and in the House of Representatives--that they got 12 votes in 
support of the Medicare. I know that they are untrustworthy of the 
Medicare Program, that they have a disdain for the Medicare Program. 
That is a very important difference. They are obviously entitled to 
their view.
  But what we have seen is the efforts that were made on the floor of 
the Senate earlier this year, where we had a truly bipartisan effort 
for a prescription drug program. In 1964, Medicare was defeated in the 
Senate. It was defeated by 12 or 14 votes. Seven months later, it 
passed by that number. The only intervening aspect was an election. And 
the important aspect of that election is that the seniors understood 
what the stakes were in that election.
  I am saying here on the floor of the Senate that the seniors are 
going to understand, when they know what is in this bill, how much it 
risks their future and the future of the Medicare system, make no 
mistake about it.
  Make no mistake about it, no matter the outcome of this bill in the 
Senate, this issue is going to continue to be debated as we go into 
2004, the 2004 election, 2006, 2008--all the way down the line. This 
issue is not going to go away.
  I was here when the Senate passed catastrophic coverage. I can 
remember the catastrophic Medicare changes which allegedly were 
supposed to be so helpful to the seniors. There was a flood of Senators 
who left this body and rushed down to the television and radio center 
to indicate how they supported it. And I remember how they all crept 
back into this body just a couple of months later to vote to rescind 
that change because they got it wrong, because they rushed it through 
the Senate. And that is just what we are in danger of doing with this 
bill.
  The Medicare system is a tried and tested program. It is a beloved 
program. The reason we have a Medicare system is that the private 
insurance companies failed our elderly people. They continued to fail 
them. Finally, in the late 1950s, we began to have a debate about a 
Medicare system, and when we had the debate in the 1960 campaign and 
1962 campaigns, we finally found we were able to pass Medicare 
legislation in 1965. It took 5 years to pass that program, and we want 
to risk that program in a 2-day debate in

[[Page S15599]]

the Senate when this is a lifeline to so many of our seniors, when we 
are seeing an effort to undermine the Medicare Program. I will get into 
that in one moment.
  We had a chance to do something we failed to do in 1965. We passed 
the Medicare Program that dealt with hospitalization. We passed the 
Medicare Program that dealt with physician fees. But we did not pass a 
Medicare Program that dealt with prescription drugs. Only 3 percent of 
the private sector programs had prescription drugs at that time. Can 
you imagine that we would pass a Medicare Program today without 
prescription drug coverage? Those prescription drugs are as important 
as physician services and hospitals today.
  We are on the verge of the life science century. The breakthroughs we 
are going to see in the next months and years are going to be 
breathtaking, and our seniors ought to be entitled to those programs. 
That is why a prescription drug program is so necessary.
  We passed a good program in a bipartisan way, but that is not the 
proposal that is before the Senate. The bill before us is not that 
proposal. The bill that passed the House of Representatives is not the 
proposal we passed.
  We have a major undermining of the Medicare system. There are those 
who say: You are really overstating this, Senator Kennedy. Where in the 
world are you getting this idea?
  I understand, as others do, that the position of the President of the 
United States earlier in March was that no one who was in Medicare 
would be entitled to a prescription drug program. I want our seniors to 
listen to that. In the spring of this year, this President indicated he 
supported the program for prescription drugs only when it was delivered 
by the HMOs.
  He gave up that position. He said: Oh, no, let's try and see if we 
can figure out something else that may be related to the Medicare 
system. That was his position. That is the position of the majority of 
the people who are supporting this program. Make no mistake about it, 
that is their position. They believe that is what ought to happen: that 
we ought to dismantle the Medicare system, undermine it, privatize it. 
That is what they want to do.
  You say: Why in the world are you saying that? How can you possibly 
say that? Read the paper this past week. The Washington Post, Friday, 
November 21:

       Bid to Change Social Security is Back.

  They are going to get Medicare first. Social Security is next. Here 
it is:

       President Bush's aide reviving long shelved plan on Social 
     Security. A Presidential adviser said [Bush] is intent on 
     being able to say that reworking Social Security ``is part 
     of my mandate.''

  There it is, my friends, Social Security is next; Medicare now. That 
is why I think we ought to have some debate because, I daresay, I don't 
believe the Members of this body understand what is going to be done 
with the proposals.
  There are three major provisions in this proposal that will 
effectively undermine the Medicare system. The first is the premium 
support proposal. I have listened day after day, week after week, month 
after month: We have to give premium support a try. My answer is: Why? 
Why? We know what it means even before trying it. Committed as they are 
on the other side of the aisle to start off with hundreds of thousands 
or a few million and multiply that to millions and millions of people, 
we understand what the results are going to be before we even try the 
program. They said: Let's try it; let's understand what the outcome is 
going to be.
  Currently, everyone in the United States pays into the Medicare 
system. No matter where you live, you get your range of benefits. You 
get to pay the same premium and you get the same range of benefits all 
over this country. It is uniform. Not under premium support. You are 
going to pay in and you are going to pay more. Even the administration 
has recognized that the minimum you are going to pay is 25 percent 
more. You are going to pay more. So that every elderly person who 
understands premium support, this administration understands you are 
going to pay more at the outset.
  Secondly, you are never going to know what your premium is because it 
is going to depend on where you live. These are not my figures, these 
are the figures of the Medicare actuary. Here it is: Under the premium 
support program--this is the Medicare actuary--the national average 
under current law will be $1,205 by 2013. It is about $700 now. Their 
estimate is $1,205. A year and a half ago they estimated the premium 
support would be $1,771. The Medicare actuary estimated that every 
senior citizen would be paying $500 more in premiums than they would be 
paying under Medicare.
  This year they have gone down to $1,501. They have gone down 
nationwide as starters, and we have to learn something more. That is 
not good enough.
  The difference with premium support is there is no security. It 
depends on where you live. Do you understand that? Your premiums are 
going to be based not on the national standard that we have at the 
present time but on where you live.
  In my State of Massachusetts, under premium support, it will be 
$1,450 in Barnstable, MA, and $1,050 in Hamden, MA; $400 more. The 
difference is 100 miles. In Dade County, FL, it is $2,000 and, in 
Osceola, FL, it is $1,000; $1,000 more.
  Explain that to some senior who lived there all their life, has a 
house and is proud to live there, and they find that their premiums are 
going to be $2,000 and their neighbors in another part of Florida are 
paying $1,000.
  It is very interesting what my friends on the other side say: Senator 
Kennedy, you don't understand what we are going to do in this bill. We 
are only going to let it go up 5 percent a year this year. That is what 
they say this year. Next year in the Budget Committee, or the year 
after, it won't be 5 percent. We will have to recalculate. It will be 
10 percent or 15 percent, or let's have a free enterprise system and 
let it sail off. That is what is going to happen.
  That is what has happened in the Metropolitan Statistical Areas 
(MSAs), and the list goes on: $1,700 in Los Angeles, $775 in Yolo, CA. 
Medicare actuaries--every senior citizen ought to understand that 
premium support is written in this legislation. One can say, well, it 
is written in such a way that we are not going to face it for several 
years. Several years? But it is still there. The only way to repeal it 
is to come back here to the Congress.
  In Yamhill, OR, premiums would be $1,325, but only $675 in Columbia, 
OR. It is double the amount if one lives in a different part of the 
State.
  Why do we have to experiment with premium support? We already know 
what the results are going to be. That is a key element in this 
legislation. It was not in the Senate bill. I did not hear our majority 
leader make much of a case for it. To be honest about it, I do not hear 
the President of the United States make much of a case for it.
  Nonetheless, when one is talking about the House of Representatives, 
they understood what this was all about. They committed to it, alright.
  Now one might say: Well, Senator, what about the health delivery 
system? We are going to have the health delivery system delivered 
through the HMOs. Let us have real competition.
  How many times have I heard this from our Republican friends over 
there: Let us have competition? We are glad to have competition, but do 
not suggest that this bill is competition. It is not. I see the 
chairman of the Finance Committee. He can correct me if I am wrong 
about any of these figures.
  We start off with every HMO getting a 109 percent increase in the 
cost of living over Medicare. Is that competition? Competition? Come 
on. Beyond that, CMS--the governmental agency that administers the 
Medicare program--pays an additional 16 percent in excess of Medicare's 
own costs to private insurance companies because seniors who join 
Medicare HMOs are healthier than seniors in the traditional Medicare 
system.
  So, under this bill, Medicare is going to pay a 25 percent advantage 
or bonus for every senior citizen that goes into an HMO. Our Republican 
friends are talking about competition, the free enterprise system. Is 
there a business man or woman in this country who would not want a deal 
such as this? The tragic part is, who is paying for it? It is our 
seniors who are paying for it.
  And you think Medicare is going to be able to hold on when they are 
effectively getting a $1,936 overpayment per senior? That is what they 
are getting now. This is not competition with

[[Page S15600]]

Medicare. This is a rip-off. This is a scandal. This is a payout. And 
that is what is happening now under our overpayment to the HMOs.
  As a matter of fact, you are overpaying them almost the amount that 
the average person does for the prescription drugs. You could almost 
make a deal and say, do not even bother with the prescription drug 
program. The HMOs are almost paying the whole amount. That is what the 
seniors pay, $2,300. We are paying close to a $2,000 overpayment.
  On the one hand, you have the premium support that is going to 
undermine it. Secondly, you have this program on the overpayment of the 
HMOs. Given the dramatic overpayment on this, we can see what is going 
to happen with the HMOs.
  Look at what is going to happen with the HMOs, according to the 
actuaries. This year, there is $31 billion that went through the HMOs 
in this country. The best estimate, given the arrangement that has been 
made now, will be $181 billion going through the HMOs. You call this 
private competition? Competition with Medicare? This is outrageous. Do 
my colleagues think we are having that debate here on the floor of the 
Senate? Do my colleagues think we have time to change that 109 percent 
down to 102 percent or 104 percent? Absolutely not. We do not have time 
to do that.
  Do my colleagues think we have time to change this with regard to the 
16 percent advantage? Do my colleagues think we have any time to do 
that? Oh, no, let's stamp it. Let's close the books. Let's say to those 
who would like to have that kind of debate and offer amendments, this 
is being delayed for our senior citizens.

  This is absolutely outrageous. We know what is going on. These are 
the payoffs to the HMOs.
  Beyond that, if that is not enough, listen to this: Not only do they 
have the additional 25 percent, which is almost $2,000, there is also a 
$12 billion slush fund. What did the Senator from Massachusetts say? A 
$12 billion slush fund.
  Well, what can they do with the $12 billion? They can give it to the 
HMOs as well. This is running-around money, walking-around money, $12 
billion more. Who pays for that? The seniors pay for that under the 
Medicare system.
  Do we have an opportunity to offer an amendment to strike that? Oh, 
no. Do my colleagues think we have an opportunity to go back to the 
Senate position that said let's take half of that and use it for good 
preventive kinds of medicine for our seniors, such case management 
programs? No, no. That was what we passed in the Senate. Do my 
colleagues think we can go back? No, no. We have to rush this proposal 
in.
  In the meantime, we are telling our seniors all across this country 
that $12 billion is needed to help the HMOs. Tell that to the 10 
million seniors who need Celebrex to deal with arthritis, or the 12 
million to deal with osteoporosis, or the 11 million with treatments 
for diabetes, high cholesterol, thyroid deficiency, and depression. 
These are millions of our fellow citizens who could benefit from that 
$12 billion. Oh, no. We have to give that as a supplement to the HMOs.
  I have listened to those who say: Well, at least our senior citizens 
are going to be better off. Let us just look what is going to happen to 
our senior citizens. We have the 2 to 3 million retirees who are going 
to be dropped. They are certainly not going to be better off. There are 
6 million people worse off. Who are these 6 million? These are the 
Medicaid beneficiaries who, the day this bill goes into effect, are 
going to be worse off. These are the people who are paying the $1 to $3 
copays. The States are paying for it with the Medicaid. Know what? They 
will not be paying anymore. Why? Because this bill prohibits it.
  So one might ask whether they are better off. We start right off with 
9 million beneficiaries who are going to be worse off. People say: 
Well, Senator, what about all of those low-income people we are all 
concerned about in this program? I am going to come back to that.
  Let's take these 6 million people, who are the poorest of the poor, 
who are going to be worse off. Is that really going to make much 
difference, because it is only a couple of bucks a week, $3 to $5 a 
week, maybe $20, $25 a month? But when one is talking about the average 
income for seniors at about $12,000, it adds up. There are studies to 
show what happens to the poor when they do not pay the copays in terms 
of adverse health outcomes.
  The PRESIDING OFFICER (Mr. ALLARD). The Senator from Massachusetts 
has 5 minutes remaining.
  Mr. KENNEDY. Will the Chair tell me when I have 1 minute remaining, 
please.
  This is what happens to those poorest of the poor when they do not 
have the copays--serious adverse events effectively double. The 
emergency rooms effectively double. These findings are demonstrated by 
research studies published in JAMA.
  Of course, the sad fact is it ends up costing hundreds of millions 
and billions of dollars more to pay for in these circumstances. It is 
bad health policy and it is bad economics.

  Finally, we had a good program that passed the Senate. We found our 
friends in the conference knocked out 3 million of the neediest elderly 
people in this country. We provided for up to 160 percent of poverty, 
they made it up to 150 percent of poverty. That is a million people. 
And they reimposed the asset test for those under 150 percent of 
poverty. As a result of reimposing it, that is a total of 2.8 million 
who were included for help and assistance under the Senate bill who 
were wiped out in this conference report. We had a good bill, but that 
is not the one that is before us.
  Finally, the third part of the inclusions in this legislation, what 
they used to call Medical Savings Account, now referred to as Health 
Savings Accounts (HSAs), which have very high deductibles and low 
premiums. Who takes advantage of those programs? The most healthy 
people take advantage of those and the most wealthy people take 
advantage of those.
  What is the problem with that? The problem with that is that if you 
are the working poor, working middle class, if you have some children, 
you can't afford to constantly pay the deductibles. So what happens to 
your premiums? Two studies--one study by the American Academy of 
Actuaries ``Medical Savings Accounts: Cost Implications and Design 
Issues,'' May 1995, and another by the Urban Institute, ``Tax-Preferred 
Medical Savings Accounts and Catastrophic Health Insurance Plans: A 
Numerical Analysis of Winners and Losers,'' April 1996)--indicate that 
premiums will rise at least 60 percent. That is not just talking about 
the elderly people, that is across the country. That is undermining the 
employer-based system.
  We have enough problems in this country with the uninsured. Now we 
have an additional proposal that is going to raise the cost of premiums 
for working families in this country? That has been included. Was that 
in the Senate bill? Absolutely not. But it has been in the House. It 
has been a matter of faith in the House. There you have it: Premium 
support, not a level playing field, a new form of health insurance that 
is going to raise the premiums for workers. What in the world does that 
have to do with the prescription drug program? It has a lot to do with 
ideology. That is what this bill is about, to undermine, to privatize 
Medicare. After they do that, coming right behind it is the Social 
Security Program, make no mistake about it.
  We can do better. We should do better. We ought to take the time to 
do better. There are enough Republicans and Democrats alike in this 
body who have demonstrated over the period of the last year and a half 
that we can get a good bill. There is no reason to be stampeded with a 
bad bill. Why are we being stampeded with a bad bill? We ought to take 
our time, get a good bill, make a difference for our seniors, make a 
difference for our country. That is what I believe.
  I hope we will have the opportunity to take the time so all of our 
Members understand it, and not just these Members but so our seniors, 
whose lives are going to be affected, who are suffering every single 
day and making choices between putting food on the table and paying for 
their prescription drugs, so they understand it. Don't we have enough 
respect for our seniors so we can provide some opportunity for those 
individuals to understand it? Or are we

[[Page S15601]]

going to be rushed into the situation with short debates on Saturday 
and Sunday and then have the gauntlet come down. We saw what happened 
over in the House of Representatives. It took them 3 hours in order to 
galvanize this. I think we should demonstrate in this institution too 
much respect for our seniors to be stampeded into a bad bill.
  The PRESIDING OFFICER. The time of the Senator has expired. The 
Senator from Kentucky is recognized for 30 minutes.
  Mr. REID. If I could offer a unanimous consent request?
  The PRESIDING OFFICER. Does the Senator from Kentucky yield for a 
unanimous consent request?
  Mr. BUNNING. I have a unanimous consent request first to propose. 
Then I will.
  Mr. REID. That is fine.
  Mr. BUNNING. I ask unanimous consent that with the previous order 
standing in place, the 30-minute time limit on each Senator be 
considered controlled time, so that any remaining time may be yielded 
to another Senator, and if not yielded, the time be automatically 
yielded back.

  The PRESIDING OFFICER. Is there objection?
  Mr. REID. In layman's terms, what this means is, if there are 
Senators on our side or the other side who want to use the 30 minutes 
in any way they want--10-10-10, 15-15--that is certainly permissible. 
The going back and forth would be unfair otherwise because someone here 
would use 30 minutes and only 10 there.
  So what we are going to do--I think this is totally appropriate. I 
ask the distinguished Senator from Kentucky to allow a modification, 
simply a housekeeping matter over here. The Senator from Michigan, Mr. 
Levin, and the Senator from Florida, Mr. Nelson, are going to switch 
places, and also that Senator Edwards would be listed at the end of our 
list as the final Democratic speaker.
  The PRESIDING OFFICER. Is there objection?
  Mr. BUNNING. I have no objection.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from Kentucky is recognized for 30 minutes.
  Mr. BUNNING. Mr. President, today I rise to talk about the Medicare 
prescription drug bill. First, let me commend the members of the 
conference committee who worked day and night for many months to reach 
this agreement. I know it was not easy, but they have done a good job 
that will finally bring Medicare into the 21st century.
  Second, let me say how disappointed I am that it appears some Members 
may try to filibuster this bill. In fact, it seems as though there are 
Members in this body who want to filibuster just about everything we 
try to do, whether it is stopping judicial nominations, the Energy 
bill, or this Medicare bill. Just a few weeks ago we spent several days 
in continuous debate on judicial nominations. On Friday, the Energy 
bill was blocked. Now it looks as though some are going to try to kill 
this bill. I call that obstructionism.
  I want to show a chart because from the beginning there have been 
charts shown on both sides. These are 358 different groups--358 
different groups that support this bill in its present form. It is 
headed by the American Association of Retired People--the AARP, which 
represents over 35 million seniors.
  Seniors have been pleading for Congress to expand Medicare to include 
drug coverage, and this bill will do just that. It might not be all 
things to all people, and I am sure every Member in here would have 
written a different bill if it was completely up to him or her, but 
that is not the way we work around here and this bill is a very large 
compromise. Even the AARP, as I said before, has endorsed this bill and 
said that, although the bill is imperfect, it is an historic 
breakthrough. I want to repeat that--an historic breakthrough; and that 
we should not let this opportunity pass us by.
  Today, Medicare provides health insurance to about 40 million seniors 
and disabled individuals each year. The number is only expected to grow 
as the baby boomers begin retiring. Medicare provides important medical 
and health and hospital benefits for seniors. However, it is a program 
that is still trying to provide health care as if it were in 1965 
instead of the year 2003.
  When Medicare was created, prescription drugs played a small role, a 
very small role in medical care. Today, as we all know, that is much 
different. In fact, for many seniors and many Americans, prescription 
drugs have replaced expensive surgeries and extended their lives 
significantly. By tying a drug benefit to Medicare, this bill makes 
these lifesaving and life-enhancing drugs more available to millions of 
Americans.
  This has been a very long process, and I kind of chuckle when I hear 
people say we are rushing into this. I can tell you as a member of the 
Finance Committee that we have been working on this bill for almost the 
entire year, working and crafting legislation to make the best drug 
bill possible for all Americans.
  I was supportive of our bill as it moved through the Finance 
Committee and through the full Senate. Today I am supportive of the 
bill before us. It is time to add this benefit to Medicare. Seniors 
have waited too long for their benefit, and I urge my fellow colleagues 
in the Senate to support this bill. Talk is cheap, and it is time to 
act and it is time to act now.
  We have $400 billion allocated for this benefit. It would be a shame 
if we let this opportunity pass us by. It might not come again.
  This legislation provides a much needed prescription drug benefit to 
Medicare beneficiaries. It provides more options to seniors than just 
traditional fee-for-service Medicare, and it provides incentives to 
companies to continue offering medical benefits to their retirees.
  Seniors will be able to receive prescription drug coverage under two 
options: Through the traditional fee-for-service Medicare and also 
through a new Medicare Advantage Program made up of private companies 
offering Medicare benefits.
  Under the fee-for-service Medicare, beneficiaries will be able to 
enroll in Medicare drug plans. The standard drug benefit will require a 
$35 monthly premium and a $250-a-year deductible. Once seniors have met 
the deductible, they will pay 25 percent of the prescription drug cost 
up to $2,250. Once a beneficiary has received an out-of-pocket spending 
limit of $3,600, they will pay 5 percent for their prescription drugs.
  I emphasize this because this is the key to the whole Medicare 
prescription drug benefit.
  Low-income seniors will be provided with assistance paying for their 
drug costs depending on the level of their income. This means that 
seniors with the lowest income--those below 100 percent of poverty--
will not pay a deductible or monthly premium and will pay either $1 or 
$3 per prescription drug up to the catastrophic limit. Once they reach 
the catastrophic limit, these seniors will have 100 percent of their 
drugs paid for.
  These are the seniors who truly struggle to pay for their 
prescriptions. At 100 percent of poverty, a senior's income is $8,900 
per year. Other low-income seniors below 150 percent of poverty will 
receive additional assistance depending upon their level of income. 
Personally, I believe our biggest responsibility is to low-income 
seniors. These are the ones who struggle the most to buy their 
prescriptions, and they deserve a very generous benefit.
  Seniors will also be able to choose to receive their health care 
through a private company. I hope everybody heard that. They will be 
able to choose. This is a voluntary program. You can choose to stay in 
Medicare Part B and have no prescription drugs if you choose to do 
that. You can choose to take Medicare Part B and add a prescription 
drug benefit or you can choose to go into a private company's health 
care program.
  Under Medicare Advantage, seniors will be able to choose whether they 
would like medical coverage from a preferred provider organization, 
known as a PPO, or a health maintenance organization, or HMO, operating 
in their regions.

  These plans will provide beneficiaries with an integrated benefit, 
which means seniors will receive both medical and drug coverage under 
the plan. They would have a single deductible for medical benefits 
currently provided under Medicare Part A and B. They would also be able 
to receive preventive care, disease management, and chronic care under 
these programs.
  These private plans will have much more flexibility in the type and 
scope

[[Page S15602]]

of benefits they provide than traditional Medicare, and will provide 
many seniors with a valuable health care option.
  Please notice--``option, voluntary.'' These are very key to this 
whole program.
  I know some of my colleagues do not like these PPOs and HMOs because 
they say seniors will not be able to go to any doctor they choose. 
Hogwash. No one is going to force the seniors into these private plans, 
and they will be able to pick a plan in which their doctor 
participates.
  Please understand that. We are not going to force any senior away 
from their given doctor. They will be able to choose their own doctor 
and stay with that doctor.
  That is one of the key elements of the bill--giving seniors more 
choices instead of forcing them to use a health care plan created in 
1965, which has changed very little since then. If these care advantage 
plans sound familiar, they should.
  Finally, Medicare will provide seniors with a modern benefit similar 
to what is offered to most employees, including what the Federal 
Government offers to employees.
  One of the biggest concerns with the legislation as it moved through 
the Finance Committee and the full Senate was what would happen to 
retirees who currently have drug coverage from their former employer. 
No one wants this new program to be an excuse for employers to drop 
their retirees' health coverage. That would be counterproductive and 
unfair to those seniors. To encourage companies to continue providing 
these benefits, this agreement sets aside almost $70 billion of our 
$400 billion for subsidies to help companies cover their prescription 
drug costs for their medical-eligible retirees. This is a substantial 
commitment by Congress to make sure companies do not have an excuse to 
drop their coverage.
  The members of the conference committee have worked long and hard for 
many hours and in many meetings over the last year on this compromise. 
We have a real chance to pass this bill, and we shouldn't pass up this 
opportunity.
  If we don't pass this bill now, it will be several years before we 
get another chance, and seniors have waited much too long already.
  Again, I urge my fellow Senators to pass this bill and finally 
fulfill the promise that each and every one of us in the Senate has 
made either on the campaign trail or anywhere that we have spoken to 
senior groups. We have promised this benefit and we can deliver it.

  I urge my fellow Senators, once again, to pass this bill providing 
prescription drug coverage to our seniors. We can talk about it for 2 
or 4 more years or we can do it now.
  I yield whatever time I have to the Senator from Iowa.
  Mr. GRASSLEY. How much time remains?
  The PRESIDING OFFICER (Mr. Bunning). There are 14 minutes 50 seconds 
remaining.
  Mr. GRASSLEY. Mr. President, we have heard in the Senate today and 
last night that the comparative cost adjustment demonstration project, 
which some of the Members refer to as premium support, would end 
Medicare as we know it. I want to be very clear, nothing could be 
further from the truth. I have 10 facts about this demonstration to 
explain why this is not the case. We are talking about the comparative 
cost adjustment.
  Fact No. 1: It sunsets in 6 years. The demonstration will only be in 
existence for 6 years. It will not begin until the year 2010. During 
that time, there will be a 4-year phase-in period. Explicit 
authorization from Congress at the end of 6 years is necessary to 
extend the demonstration and/or expand it to other areas of the 
country. This proposal is significantly modified from the House of 
Representatives' original position. Congress weighs in before this 
becomes something other than a demonstration project and becomes policy 
for the entire country.
  Fact No. 2: Very limited areas of the country will be affected in the 
demonstration. Under the agreement, the Health and Human Services 
Secretary may select no more than six metropolitan statistical areas to 
participate in the demonstration. It is not easy to be put in that list 
of six because in order to be selected, a metropolitan statistical area 
must have at least two local coordinated care plans offering services 
in the area and at least 25 percent of the Medicare beneficiaries must 
be enrolled in these plans. That means the private PPOs we are setting 
up beginning in 2006 must succeed. I hope they succeed. But we do not 
know if they will succeed, and if they do not succeed, at least to the 
tune of 25 percent in two local areas, there will not be one. If that 
does happen, according to the Congressional Budget Office, somewhere 
between 670,000 and 1 million beneficiaries will be included in this 
limited demonstration. It is a demonstration. It is not something that 
could ever, without an act of Congress, encompass all 40 million 
seniors.
  Fact No. 3: Low-income beneficiaries are not affected at all. So if 
they are low-income, below 150 percent of poverty, none of them will 
see their Part B premiums increase.
  Fact No. 4: Premium increases for beneficiaries above 150 percent of 
poverty will be limited to 5 percent. For everyone else, if premiums go 
up, there is a cap of 5 percent. As an example, if the national Part B 
premium was, say, $100 in 2010, the fee-for-service premiums in the 
demonstration areas could not exceed $105 a month. The increase, by the 
way, is not compounded over that 6-year period of time.
  Fact No. 5: Other than the limited impact on the Part B premium 
calculation, the fee-for-service program is unchanged choice. Fee-for-
service benefits, beneficiary cost sharings, payments to hospitals, and 
other health care providers are unaffected by the demonstration. The 
Medicare entitlement to benefits and payments to health care providers 
are unchanged in these same areas.

  Fact No. 6: Beneficiaries are not required to enroll in these private 
plans. The right for a Medicare beneficiary to remain in fee-for-
service programs is maintained in the demonstration areas. The fee-for-
service program will remain affordable for all beneficiaries.
  Fact No. 7: The prescription drug benefit is unaffected. The 
prescription drug benefit and the drug premiums are not changed. The 
demonstration only minimally affects the Part B premium, and that is 
the maximum of 5 percent increase.
  Fact No. 8: Over the demonstration period, enhanced payments to 
private plans are phased out to ensure that their payments to private 
plans are on a level playing field with the fee-for-service program.
  Fact No. 9: The preferred provider organization stabilization fund, 
referred to on the other side by my colleague as a ``slush fund,'' has 
no relationship to this demonstration. So one cannot talk about the 
demonstration and talk about a stabilization fund in the same breath. 
If you do that, you do not know what the bill does; you have not read 
the bill.
  Under the conference agreement, the stabilization fund may only be 
used to provide assistance to the newly regional PPO options. However, 
any enrollment in regional PPOs is not counted toward the 25 percent 
enrollment requirement in the metropolitan statistical areas. The 
extent to which beneficiaries enroll in the new regional PPO opposite 
will have no bearing on whether a metropolitan statistical area becomes 
a candidate for demonstration.
  Last fact, No. 10: Strict quality monitoring is required. The Health 
and Human Services Secretary is required to closely monitor access to 
care and quality and submit a report to Congress upon completion of the 
demonstration to determine if the demonstration has reduced Medicare 
spending and/or increased cost to beneficiaries; second, access to 
physicians and other health care providers has declined; and lastly, 
whether beneficiaries remain satisfied with the program. The evaluation 
would be on the basis of any congressional decision to extend that 
demonstration.
  Premium support, as has been described in the Senate numerous times 
in the last few days by the Senator from Massachusetts and by other 
Senators, is not in this bill. It is not included. This bill 
strengthens and improves fee-for-service Medicare.
  How much time remains?
  The PRESIDING OFFICER. Seven minutes.
  Mr. GRASSLEY. It would be good at the start of the third day of 
debate on

[[Page S15603]]

this bill to remind people of the political situation that has gotten 
us where we are today. That is a very positive political situation.
  Last year, we were beginning to develop a bill in the Senate Finance 
Committee that would have had bipartisan support to get it out of the 
committee. Bipartisan support in the committee is a way to have a 
chance of success in the Senate where there can always be an 
extraordinary minority who can keep a bill from being passed because we 
protect minority interests in this body as no place else in our 
political system. So we must be bipartisan.
  About the time that was going to happen, the majority leader--the 
Senator from South Dakota, last year--decided we needed to talk about 
this in the Senate. But the bill never came out of committee. It was 
brought right to the floor. When bills are brought to the floor, there 
is no chance of developing bipartisanship. We discussed it for 2 or 3 
weeks and no one could get the bipartisan majority it takes to get 
pieces of legislation passed.
  At that time, I surmised, and I think the outcome of the debate last 
year proves it, that the other side wanted more of an issue for the 
election rather than a product. They gambled and they lost because 
Republicans gained control of the Senate in that election and then we 
were right back to square 1 where we went to the Senate Finance 
Committee where there could be, even with a Republican majority, still 
a bipartisan working relationship that was able to report out a bill on 
16-to-5 bipartisan vote. Then we brought that bill to the floor during 
the month of June. And it got through here 76 to 21.

  We are as successful as we are because the people made a change in 
the Senate.
  In the Senate, then, we adopted a bipartisan bill, and we were able 
to get through, for the first time on this issue in the history of the 
Senate, prescription drugs for seniors. We were able to match the 
House, where it had passed three times previously. We went to 
conference. We operated in the conference, at least from the Senate 
point of view, on a bipartisan basis, and we were able to produce a 
product where here we are doing the best improvement and the most 
sweeping improvement in Medicare in 38 years. We are able to do that 
because of bipartisanship.
  Now, all of a sudden, people on the other side of the aisle, at this 
last minute, are filibustering. I hope they do not get away with that 
filibuster. But, again, they are trying to be very partisan, as they 
were a year ago. I hope they learned a lesson from a year ago and will 
not try to be partisan on this very important social issue for the 
seniors and the disabled of America, and that they will not repeat the 
mistakes of last year when they wanted an issue instead of a product.
  We have a bipartisan product. I listed last night, in my closing 
remarks, all of the organizations that are supporting this bill. Other 
Senators have put charts up saying how many organizations are 
supporting this bill.
  We have this opportunity. Let's hope partisanship--that is 
demonstrated by the filibuster that was announced yesterday--does not 
keep this bill from passing. Democrats who want to filibuster ought to 
consider that is not the way to go. They should learn from the lesson 
of the past. That lesson is that last year when they wanted an issue 
instead of a product, they got a defeat at the polls.
  I yield the floor.
  The PRESIDING OFFICER (Ms. Murkowski). The Senator from Florida.
  Mr. GRAHAM of Florida. Madam President, since its creation in 1965, 
the Medicare Program has helped millions of our Nation's elderly and 
disabled when they desperately needed it, after they became ill.
  It has been an extremely successful and popular program, and has 
improved the health of countless seniors.
  Now that we are in the 21st century, it is time to reap the full 
benefits of the advances made over the years, and shift the focus of 
the Medicare Program from assistance after illness to one that promotes 
wellness.
  To achieve that, a prescription drug benefit is mandatory. Ninety 
percent of seniors have at least one chronic condition; drugs are often 
the best way to manage those conditions.
  The bill we are considering is frequently divided into two parts--one 
part is the prescription drug benefit, and the other part is Medicare 
reform.
  Let me state what we all ought to know by now: A prescription drug 
benefit is the most fundamental reform that we can make to the Medicare 
Program.
  If we want to truly reform Medicare, we must change the approach of 
the program from one of sickness to one focused on wellness. This 
prevention approach will require access to prescription drugs.
  Modern medicine has been altered fundamentally by prescription drugs, 
notably by improving the quality of people's lives, ending the need for 
surgeries and long recovery periods.
  A side benefit of this change would be that the cost to the Medicare 
Program could be lower by reducing these procedures.
  I have introduced several prescription drug bills over the past few 
years because I believe a reorientation toward wellness is in the best 
interest of our seniors, as well as the Medicare Program.
  However--and this is critical--not just any prescription drug bill 
will do. The bills I have authored have been constructed to provide an 
affordable, comprehensive, reliable prescription drug benefit to our 
seniors and Medicare beneficiaries with disabilities.
  The bill I introduced in 2001, cosponsored by Senators Zell Miller 
and Edward Kennedy, was voted on in July of that year. It received 52 
votes.
  That bill would have made a significant, and positive, difference in 
the lives of the nearly 41 million older Americans and disabled 
citizens who are covered by Medicare--more than 2,770,000 of whom live 
in Florida.
  The conference agreement that we are now considering would also make 
a significant difference in the lives of our seniors. However, that 
difference will not be a positive one.
  I have many grave concerns about this legislation. The drug portion 
of the bill is deeply flawed. It includes an enormous coverage gap. 
When a senior has reached $2,250 in total drug expenses, all drug 
coverage stops. The drug benefit doesn't begin again until total drug 
spending reaches $5,100. That is a gap of $2,850.
  And during all of the months the senior is in that ``gap'', the 
senior is required to keep paying premiums.
  The bill is projected to cause 2.6 million retirees nationwide, and 
over 160,000 in Florida, to lost their retiree prescription drug 
coverage.
  It will cause 6 million low-income seniors nationwide, and over 
360,000 in Florida, to pay more for their drugs, and to face more 
restrictions on the drugs they can get.
  It relies on an untested delivery system which would either herd 
seniors into what we know they don't like, a managed care organization, 
or would turn them into guinea pigs for a never previously utilized 
drug-only insurance plan.
  Millions and millions of seniors who will not have access to drugs 
through the traditional Medicare Program will suffer the fate I have 
just described.
  In addition, the legislation that was supposed to be about adding a 
prescription drug benefit now includes provisions that will privatize 
the Medicare Program beginning in the first year of implementation 
fragmenting the health insurance group by subsidizing health savings 
and increase the costs of comprehensive health insurance for our non-
Medicare citizens.
  I am not alone in my concern about this legislation. In a recent 
survey conducted by Hart Research, of voters aged 55 and older, only 19 
percent said we should pass this bill. Sixty-four percent said we 
should go back to the drawing board. This isn't the Medicare 
prescription drug benefit that they need.
  And although the AARP has taken the inexplicable position of 
supporting this legislation, the national organization may want to 
listen to its members. Only 18 percent of AARP members want Congress to 
pass the bill. Sixty-five percent have instructed us to go back to the 
drawing board.
  The percent of seniors in favor in my State is even lower. I have 
received over 1,000 calls from seniors opposed to this agreement, 
representing about 80 percent of all calls.
  Listen to what some of my constituents are saying about the bill:
  Earl Dangler of Beverly Hills, FL said:


[[Page S15604]]


       This prescription drug benefit is going to cost my wife and 
     I an additional $750 to $1,000 per year whether we use it or 
     not.

  Many of my constituents have expressed outrage at AARP for endorsing 
this conference agreement.
  One constituent said:

       I'm really mad at the AARP and I am going to cancel my 
     subscription that I've had for 20 years.

  Another constituent remarked:

       I've been a member of AARP for many, many years, and I 
     can't believe that they have sold out to the pharmaceutical 
     industry and the insurance companies.

  The real test of the reaction to this legislation is a bit down the 
road--but it will come. The impact of the bill won't be felt until at 
least 18 months after enactment.
  I would predict the vote we cast on this legislation will be 
politically inconsequential for those running in the year 2004. The 
stunning impact will be felt first in the fall of 2005, when Medicare 
beneficiaries get the notice that it is time to enroll in the drug 
benefit.
  What choices would the senior face in 2005 when considering whether 
to enroll in the new, highly touted program?
  Many Medicare beneficiaries will have to consider the following:
  No. 1, sign up for a prescription drug plan, PDP--a private drug-only 
insurance plan with no limits on the premium that may be charged, or 
No. 2, enroll in a managed care plan.
  Given that more than 85 percent of seniors today have rejected 
managed care, I anticipate a ``1980s''catastrophic outrage. But, that 
is not the end of the outrage. In fact, it may be just the beginning.
   As the senior considers his choices, he will soon realize that the 
private plans hold all the cards. They have all the flexibility, all 
the options, and none of the commitments.
   The plan defines the classes, or categories of drugs, then decides 
what drug is in the class or category, and how much the senior will be 
charged for the drug.
  The plan doesn't even have to tell the senior prior to enrolling what 
the charge for the drug will be, and can change which drugs are in each 
category at any point in the year.
   But the senior? The senior has to make an enrollment decision prior 
to the beginning of each calendar year, based on limited and subject-
to-change information, and cannot change plans at any time during the 
year.
   The private insurance plan can make changes during the year, but the 
senior cannot.
   Once enrolled, in the first part of the year 2006, seniors will 
begin to feel the impact of the deck being stacked in favor of the 
private plans. They will discover that the plan can make changes to the 
drugs covered and the price of the drugs at any time.
   They will discover that the drug prices aren't all that low, and 
they will discover that they have to pay the full cost for part or all 
of January as they struggle to meet the $250 deductible.
   At this point, you may be thinking that things are bound to improve 
for the senior. But, hold on, because the summer of 2006 is coming. 
What happens then? That is when, for the first time, seniors--voters--
will experience the infamous ``gap.'' Beginning sometime after Memorial 
Day 2006, many seniors will reach, and fall into, the gap.
   At this point the senior has been going to the drugstore for about 6 
months, each month filling prescriptions for treatment of any number of 
chronic illnesses.
   The senior has met his or her deductible, has never missed a monthly 
premium payment, and dutifully has been paying 25 percent of the cost 
of each prescription.
   But when the drugstore counter is reached in July, the senior finds 
he is now responsible for paying 100 percent of the cost of the 
prescription, and yet still is responsible for paying the monthly 
premium.
   I predict that by Labor Day of 2006, seniors will have made loud and 
clear their opinions about this prescription drug benefit.
   And yet, there is still more ahead. In the year 2010, a vast 
experiment called ``premium support'' will be imposed on millions of 
seniors in several parts of the country, including Florida.
   Seniors in my State, as in others, will be forced to choose between 
enrolling in a health maintenance organization or paying a much higher 
premium to stay in the traditional fee-for-service Medicare Program.
   Although we are beginning to hear the outrage now, it will be 
nothing compared to what we will hear in the summer of 2006.
   The voters have been polled and my constituents have been calling, 
and they all cite many concerns with the bill--many of the same issues 
I mentioned a few moments ago. Each of these issues should be discussed 
in great detail, and I hope we have the time to do so.
   Today, I am going to concentrate on one of the aspects of the bill 
that I find to be the most troubling, and one that is shared by 64 
percent of those polled: the legislation does little to contain drug 
costs. The legislation actually forbids Medicare from negotiating with 
the drug companies to reduce costs.
   It doesn't seem to make much sense. A Medicare prescription drug 
benefit should allow the Medicare Program to do whatever it can to get 
the best possible prices from the drug companies. Why? Because both 
seniors and taxpayers would benefit.
  Under this legislation, the majority of seniors would have to pay 
either 100 percent or 25 percent of the price of the drug--100 percent 
before the deductible is met, and during the time the senior is in the 
enormous ``gap'' in coverage, and 25 percent after the deductible and 
before reaching the ``gap.''
  In 2001, the median income of a Medicare beneficiary was $19,688. 
After covering the cost of housing, food, and transportation, there 
isn't a lot left.
  We need to make sure the prices are as low as possible so that our 
seniors are able to actually purchase the drugs they need to keep them 
well.
  Of course, the taxpayers would also benefit from Medicare serving as 
a tough negotiator. The taxpayer is going to pay the portion not paid 
by the senior.
  Both parties--the seniors and the taxpayers--have an interest in 
keeping drug prices as low as possible. The party that does not share 
that interest is the pharmaceutical industry.
  The interests of that industry can be the only reason for a provision 
included at the top of page 54 of the conference report. The provision 
is designed to appear helpful by being called a ``noninterference'' 
clause.
  What is a ``noninterference'' clause? According to the authors of 
this legislation, it is the following:

       Noninterference.--In order to promote competition under 
     this part and in carrying out this part, the Secretary--
       (1) may not interfere with the negotiations between drug 
     manufacturers and pharmacies and PDP sponsors; and
       (2) may not require a particular formulary or institute a 
     price structure for the reimbursement of covered part D 
     drugs.

  Let me get this straight. A provision that prohibits the Secretary of 
HHS from negotiating with drug manufacturers to lower the price of 
drugs--a provision that prohibits the Secretary from using the 
purchasing power of 41 million Medicare beneficiaries to lower the 
price of drugs--and thus lower costs to seniors and taxpayers alike--is 
``noninterference''?
  I put my money on this being a form of ``interference'' that senior 
wouldn't mind. Saying this provision is about not interfering, and 
about promoting competition, is akin to the fox putting on the San 
Diego chicken costume and heading into the chicken coop to ``protect'' 
the chickens.
  This may sound like dry stuff. But it has very real life 
implications. Take the case of Patricia Kittredge, a 71-year-old woman 
who lives in Tamarac, FL.
  She takes 6 different prescription drugs to stay healthy, which add 
up to $409 a month, or approximately $4,908 annually. Fortunately, her 
former employer picks up the majority of these costs so that she pays 
$65 a month, or $781 annually.
  A former credit analysis for a major employer in South Florida, Mrs. 
Kittredge has good retiree health coverage. Yet she is far from 
wealthy. She makes about $18,000 a year when you combine her pension 
and Social Security income.
  Because the conference bill does not allow the Medicare Program to 
negotiate on her behalf--should Ms. Kittredge find herself among the 4 
million Americans who will lose their retiree coverage--her out-of-
pocket costs, including her premium, will explode to $3,830.

[[Page S15605]]

  That is nearly 5 times what she currently spends, nearly 5 times what 
she now pays, and nearly $4,000 in out-of-pocket drug costs on an 
income of $18,000 a year. What kind of benefit is that?
  But don't take my word for it, this is what Patricia Kittredge has to 
say:

       That would really hurt me. The handwriting is on the wall. 
     The companies that have retiree coverage will be walking away 
     from it to save money and won't feel bad about it at all.

  Were Medicare able to use its bargaining power to negotiate with the 
drug manufacturers, our seniors would likely see drug prices more in 
line with the VA drug prices. Mrs. Kittredge's drug costs under the 
proposed plan would decrease dramatically.
  Yet the conference bill strictly forbids Medicare from using its 
bargaining power to negotiate lower drug prices for seniors.
  How good are these VA prices? Let's compare the VA prices of Mrs. 
Kittredge's drugs to their retail prices.
  Diazepam, which Mrs. Kittredge takes to help her sleep, costs the VA 
$0.84 for one hundred 5 milligram tablets, while the same pills cost 
$16.70 at the drug store.
  In addition, a month's supply of pravachol which she takes to 
regulate her cholesterol, costs the VA $19.80 at 40 mg per pill for the 
clinical equivalent, while the drug store charges $116.75 for the same 
amount.
  Mrs. Kittredge would face similarly high prices for her other 
prescriptions: a 20 mg dosage of accupril, a drug to treat her high 
blood pressure, costs the VA $7.69 for 30 pills goes for $32.00 at the 
drug store.
  Diltiazem, which Mrs. Kittredge also takes for her blood pressure, 
costs $69.20 at the drug store but only $32 through the VA.
  Metrocream, which she takes for a skin disorder, costs $69.99 at the 
drug store compared to $25.13 through the VA.
  If the Medicare bill we are now considering actively negotiated on 
Mrs. Kittredge's behalf, she would likely pay prices more in line with 
the prices available to veterans. Her total bill would be $2,188 rather 
than the $3,830 as she will pay under the conference agreement.
  Mrs. Kittredge's example is not unusual. Look at the price 
differentials between the VA price and the average retail price of some 
common drugs.
  How is the VA able to secure such good prices for veterans?
  In 1992, concerned about the prices veterans were paying for drugs, 
Congress passed the ``Veterans Health Care Act''--a Rockefeller, 
Simpson, Murkowski, Cranston amendment--by voice vote.
  It is interesting that an issue that was and is so controversial 
could be passed by voice vote. We are only asking that Medicare not be 
prohibited from negotiating prices for seniors.
  This legislation gave the VA the authority it needed to secure better 
drug prices for our veterans. What was the result of that legislation? 
In the first 5 years alone, the VA saved more than $1 billion.
  VA's savings have continued to grow exponentially, as both the cost 
of pharmaceuticals and the number of veterans seeking prescription 
drugs have grown. The savings represent valuable Federal dollars that 
have been used to provide quality health care to our Nation's veterans.
  In addition, the savings on pharmaceuticals have allowed VA to 
provide a long-term care benefit, including nursing home care, adult 
day care.
  What are the implications of allowing Medicare to negotiate prices? 
In 1998, the Inspector General, IG, of HHS, studied 34 drugs currently 
covered by the Medicare program.
  The IG found that Medicare and its beneficiaries could save more than 
$1 billion a year if the allowed amounts for just these 34 drugs were 
equal to the prices obtained by VA.
  If the Medicare program were able to achieve similar savings on the 
outpatient drugs covered in this legislation, Congress would be able to 
provide a much richer prescription drug benefit for the same $400 
billion we are proposing to spend now, reduce the costs to taxpayers, 
or both.
  In terms of the drug benefit: we could give seniors a lower 
deductible and fill in the gap; we could remove the gimmicky definition 
of what counts toward reaching the catastrophic limit so that employers 
wouldn't drop their retiree drug coverage; we could remove the assets 
test; We could allow the Medicare Program to pay to the cost-sharing of 
our low-income seniors.
  What would allowing Medicare to use its purchasing power do to the 
pharmaceutical industry?
  Some would have us believe that only the proposal we are discussing 
today would allow the industry to thrive and continue to develop life-
savings drugs.
  But in June 1999, reaching to the prospect of a Medicare prescription 
drug benefit, Merrill Lynch advised investors that

     volume increases could overwhelm negative pricing impact. It 
     is important to remember that a reduction in prescription 
     drug prices, both with or without associated prescription 
     benefit coverage, is likely to be associated with price 
     elasticity and increased utilization.

  The proposal before us fractures the Medicare market. One of the 
great strengths of the Medicare Program has been its universality. 
Seniors from Anchorage to Key West knew they would get the same 
benefits for the same premium.
  The proposal before us also uses scarce Federal dollars in an attempt 
to force private insurers into a line of business they have repeatedly 
said they do not want to enter.
  Instead, we should be using the purchasing power of the nearly 41 
million Medicare beneficiaries waiting for a drug benefit to drive down 
prices--for their benefit, and for the taxpayers benefit.
  I ask unanimous consent to print an editorial at the conclusion of my 
remarks.
  The PRESIDENT OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. GRAHAM. I'd like to quote from the November 21st Miami Herald, 
which editorialized as follows:

       The problem: Instead of using the free market to drive down 
     the costs of prescription drugs, the bill would protect 
     pharmaceutical companies from competition and pay more than 
     $100 billion in incentives to employers and insurers in an 
     attempt to make its flawed logic work. The bill also 
     threatens to cap future Medicare spending.
       True, the measure promises prescription-drug coverage for 
     low-income seniors not already covered by Medicaid and would 
     benefit seniors with extremely high prescription costs. But 
     its coverage for middle-class seniors is modest at best.
       That's just not enough benefit for a 10-year price tag of 
     $400 billion that will add to the skyrocketing Federal 
     deficit, especially when it doesn't even contain the cost of 
     prescription drugs.
       A better, more logical approach would be to harness the 
     buying power of the 40 million Medicare seniors to drive down 
     drug costs. But this bill actually would prohibit the 
     government from doing so. Instead it would dissect the 
     country into 10 regions and pay incentives to companies--$12 
     billion to private insurers and $1.6 billion to HMOs--so 
     they'll offer prescription-drug coverage.

  For the Record, I'd like to make one correction in the otherwise 
excellent editorial. Under the latest version of the bill, between 10 
and 50 regions would be allowed--further dissecting the country.
  The last drug benefit endorsed by the AARP was the Medicare 
Catastrophic Coverage Act. We all know how seniors felt about that drug 
benefit, and it was quickly repealed.
  If we adopt the proposal before us, we will be turning a deaf ear to 
history, and to the seniors across the country today who are already 
telling us--through AARP card burnings, through the messages they are 
writing on the AARP ``message board'', and through the hundreds and 
hundreds of calls from seniors we've been receiving over the last 
week--that we need to get back to work.
  This drug ``benefit'' is actually no such thing. It leaves millions 
of seniors worse off.
  Along with many others, I have worked to provide an affordable, 
comprehensive, reliable prescription drug benefit for our seniors and 
citizens with disabilities for the last several years.
  It is therefore with great regret that I have no choice but to vote 
against a conference report that does not provide the benefit seniors 
need, and have been promised.
  If the proposal is adopted--and I sincerely hope it is not--it will 
not be the last chapter. Seniors won't stand for it.
  I predict voters will put Congress on the hook in 2006, and we will 
spend many, many years attempting to fix

[[Page S15606]]

this deeply flawed legislation--or will repeal it outright as we did 
with the catastrophic legislation.
  Or we could have the worst of both worlds.
  We could repeal the prescription drug benefit because the benefits 
are too meager, its subsidies of health maintenance organizations are 
too great, and its delivery system too confusing and disrespectful.
  And what would be the price of repealing the drug benefit?
  We would leave the privatization of Medicare in place and destroy one 
of the Federal Governments most effective, efficient and popular 
programs: traditional fee-for-service Medicare.
  In the event the legislation before us does become law, I plan to use 
my last year in Congress working to fix it. Our seniors need better 
from us.

                               Exhibit 1

                 [From the Miami Herald, Nov. 21, 2003]

                  When Half a Loaf Isn't Nearly Enough


       our opinion: reject the flawed medicare prescription bill

       With its $7 million ad campaign to win support for the 
     Medicare prescription-drug bill, AARP says that the 
     legislation ``isn't perfect. But millions of Americans can't 
     afford to wait for perfect.'' We agree with AARP's assessment 
     of the bill but not its conclusion.
       The proposed bill is badly flawed. It delivers too few 
     benefits to seniors at too big a cost. Americans don't need 
     perfect, but for $400 billion they deserve a bill that helps 
     more people and drives down the high costs of prescription 
     drugs. The proposed bill does little of either. Congress 
     should reject it and try again.
       The problem: Instead of using the free market to drive down 
     the costs of prescription drugs, the bill would protect 
     pharmaceutical companies from competition and pay more than 
     $100 billion in incentives to employers and insurers in an 
     attempt to make its flawed logic work. The bill also 
     threatens to cap future Medicare spending.
       True, the measure promises prescription-drug coverage for 
     low-income seniors not already covered by Medicaid and would 
     benefit seniors with extremely high prescription costs. But 
     its coverage for middle-class seniors is modest at best. 
     That's just not enough for a 10-year price tag of $400 
     billion that will add to the skyrocketing federal deficit, 
     especially when it doesn't even contain the cost of 
     prescription drugs.

                         Don't repeat the past

       A better, more logical approach would be to harness the 
     buying power of the 40 million Medicare seniors to drive down 
     drug costs. But this bill actually would prohibit the 
     government from doing so. Instead it would dissect the 
     country into 10 regions and pay incentives to companies--$12 
     billion to private insurers and $1.6 billion to HMOs--so 
     they'll offer prescription-drug coverage.
       We've tried such incentives before with HMOs, and 
     experience shows that they didn't work. Half of the Medicare 
     Plus Choice plans provided by HMOs have folded, even though 
     taxpayers still pay more to subsidize a senior in a Medicare 
     HMO than a senior in traditional Medicare.
       The compromise measure also guts provisions that would have 
     allowed seniors to legally buy prescription-drugs from 
     Canada, another concession to pharmaceutical companies, some 
     of which now are retaliating against Canadian wholesalers who 
     sell to Americans.

                           The doughnut hole

       The standard coverage that the bill offers would only 
     benefit a senior who spends more than $835 a year, or some 
     $70 a month, on drugs. Then there's the ``hole in the 
     doughnut'' coverage gap in which the government's 75-percent 
     subsidy stops after $2,200 in out-of-pocket cash has been 
     spent. If out-of-pocket spending reaches $3,600, the subsidy 
     kicks in again, this time at 95 percent of drug cost. 
     Deductibles and co-payments are complicated enough without 
     trying to explain the ``hole in the doughnut'' to elderly 
     recipients.
       AARP and other supporters say that even a flawed benefit is 
     better than nothing. They reason that once passed, bad 
     provisions could be changed before they go into effect. But 
     why fix later what should be fixed now?
       Seniors deserve affordable prescription-drug coverage. 
     Congress should scrap this flawed approach and come up with a 
     plan that delivers that coverage while driving costs down.

  The PRESIDING OFFICER. The Senator from South Dakota.
  Mr. JOHNSON. Madam President, I ask unanimous consent to speak for 5 
minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________