[Congressional Record Volume 149, Number 175 (Monday, December 8, 2003)]
[House]
[Pages H12901-H12908]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE REPUBLICAN MEDICARE LEGISLATION
The SPEAKER pro tempore (Mr. Renzi). Under the Speaker's announced
policy of January 7, 2003, the gentleman from New Jersey (Mr. Pallone)
is recognized for 60 minutes.
Mr. PALLONE. Mr. Speaker, I would like to take to the floor this
evening to discuss the Medicare legislation that the President signed
today. And needless to say, I am very critical of the legislation which
was essentially and primarily sponsored by the Republican leadership,
and, obviously, supported by the President of the United States. And I
know that the President signed the bill with great fanfare today, but
certainly from the reaction that I have been getting in my district and
throughout the State, because I was in various locations around the
State of New Jersey over the last 2 weeks when we had our Thanksgiving
recess, the reaction amongst New Jerseyans has been overwhelmingly
against the bill. And I have to say that the concerns that I am hearing
from senior citizens in New Jersey, and I am sure this is echoed
throughout the country, are
[[Page H12902]]
primarily concerned that they have been fooled, that the President and
the Republican leadership in the Congress are telling them that the
Medicare bill is going to accomplish certain things, particularly with
regard to prescription drugs, but the reality is that it is very
different from what the Republicans are saying about the Medicare
legislation. And I just wanted to go through some of the areas where I
think that there is an effort on the part of the Republicans to say
what this bill will do in a positive way and point out that the reality
is very different.
First of all, I would say that the Republican Medicare legislation
tries to fool the seniors by saying that somehow they are going to get
a discount. If we talk to seniors and even the public at large, the
biggest concern they have about prescription drugs is not only that
they cost too much but that the costs keep rising, actually much more
than inflation, and the bottom line is the bill does absolutely nothing
to bring the cost of prescription drugs down. In fact, there is a
provision in the bill, and I would like to make reference to it, called
the noninterference clause that was actually the subject of an
editorial in the Los Angeles Times within the last few days, and
because of the fact that there is this noninterference clause in the
bill, the Medicare Administrator, that is the person at the Federal
level who administers the Medicare program, will not be able to
negotiate prices and bring down prices, because keep in mind, Mr.
Speaker, that in many cases if they represent a lot of people, as in
the case of the Medicare Administrator who will represent about 40
million seniors in the Medicare program, because they represent so many
people, they can negotiate a lower price for them for particular drugs
on a given day or a given week or a given year. But what the
Republicans put in the bill at the request of the pharmaceutical
companies is this noninterference clause. And if I could read it, it
says: ``Noninterference,'' in order to promote competition under this
part and in carrying out this part, the Secretary, that is of Health
and Human Services, the Medicare Administrator, may not interfere with
the negotiations between drug manufacturers and pharmacies and PDP
sponsors and may not require particular formulary or institute a price
structure for the reimbursement of covered part D drugs.
So, essentially, what this clause says is that unlike what we do with
the Veterans Administration or what unlike what we do with the
military, the Federal Government cannot negotiate, on behalf of all
these seniors, lower prices. That is wrong. But more than its being
wrong and not making any sense because of the power of the Medicare
Administrator to negotiate lower prices, it fools the seniors. It gives
the impression to the seniors that the Republicans are giving that
somehow there is some cost containment in this bill and in reality
there is not any. There is actually a prohibition on any kind of cost
containment on the bill with regard to prices for prescription drugs.
{time} 2045
Now, a second way that the Republicans try to fool the seniors is by
saying that Medicare is going broke. I have had so many of my
colleagues on the Republican side get down on the floor here in the
last 6 months and say, well, we have to make changes and reform
Medicare because it is going broke.
In fact, Medicare is not going broke. The only reason why there is
any problem at all with the Medicare trust fund is because the
Republicans have been borrowing from the trust fund in the last 2 years
to pay for their tax cuts. So the trust fund has actually lost money
because we, the Congress, in basically enacting legislation that would
provide for huge tax cuts, primarily for the wealthy or for corporate
interests, has not had the money to implement those tax cuts and has
been borrowing from the Medicare as well as the Social Security trust
funds to pay for those tax cuts.
So, again, another effort to try to fool the seniors, to suggest that
somehow Medicare is going broke, when in fact the only problem with
Medicare stems from Republican fiscal and tax policies.
The third thing that the Republicans try to do is fool the seniors by
saying they are giving seniors a choice. In other words, the theory is
that if you privatize Medicare or if you say that in order to get a
prescription drug plan you have to join an HMO or you have to go to
some kind of drug-only policy essentially outside of traditional
Medicare, that somehow you are given a choice.
The reality is the seniors lose their choice, because the most
important thing that seniors want is a choice of physicians; and if
they have to join an HMO, which is essentially the only way practically
speaking you are going to get a prescription drug benefit under this
bill, you are going to lose your choice of doctors, you might lose your
choice of hospitals, you are certainly going to lose your choice of
certain kinds of medical procedures, because the HMOs simply will not
cover it.
The ultimate irony was this Sunday in the New York Times there was an
article on the front page by Robert Pear that pointed to a little-known
aspect of this Republican Medicare bill where they forbid the issuance
of Medigap supplemental insurance policies once the drug benefit goes
into effect in the year 2006.
Let me tell you, if the Republicans are saying they are going to give
seniors choice, how is there choice when they cannot even choose a
Medigap supplemental insurance policy? It is the opposite of choice.
What the Republicans have done with that provision is not provide the
seniors a choice, but say it is essentially either my way or the
highway. You either choose a prescription drug plan under an HMO, or
you choose a prescription drug plan under a drug-only private insurance
policy. But if you want to stay in traditional Medicare, then not only
do you not get the drug benefit, but you cannot even buy supplemental
coverage to pay for supplementing the holes, if you will, in your
existing Medicare coverage.
What the Republicans are doing is everything possible. They say it is
choice, but really what they are doing is denying you a choice by
making it almost impossible for you to stay within the traditional
Medicare program if you want a prescription drug program, or, maybe
even if you do not, because you cannot buy Medigap supplemental
coverage.
Already some of my colleagues on the Republican side are saying,
well, that prohibition on Medigap insurance does not take effect until
2006, and sometime between now and then we will get to that and change
that. Maybe we will repeal that provision. I think they should repeal
the whole thing. Frankly, the whole thing that the President signed
today is bad. It is bad for Medicare and seniors.
I want to get into a few more areas where I think the President and
the Republicans are fooling the seniors. They are not giving them
choice; they are denying them choice. But the other way they try to
fool the seniors is they say they are getting a benefit, and they
suggest it is a very generous drug benefit.
The reality is it is not a meaningful drug benefit, and it is hardly
generous. It is ultimately going to cost you. If you decide you want to
join an HMO and lose your choice of physicians because you want this
benefit, this benefit will, nonetheless, cost you so much out-of-pocket
compared to what you are going to get back from the Federal Government
that I would venture to say that probably less than 10 percent of the
seniors would actually opt for this kind of a benefit, because it is
such a meaningless benefit.
Let me give you an idea what I am talking about, because I do not
want to talk in general terms. I want to give examples of why I say
even if you wanted this benefit, if you decided to get out of
traditional Medicare and join an HMO, why you would not want to do
this.
Let me give you three examples of a senior with $2,250 in drug costs
in a year. In other words, if your prescription drugs are going to cost
you $2,250 in a given year, you are going to pay $420 in premiums, that
is $35 each month times 12, a $250 deductible and $500 out-of-pocket,
which is 25 percent of the drug costs that you have to pay when you
first go beyond your deductible of $251 to $2,250. You are actually
paying $1,170 for $2,250 in drugs.
You might say, well, that is not too bad. I am getting less than 50
percent
[[Page H12903]]
of my drug costs paid, but maybe it is a good deal. Well, not if you
have to lose your doctor and join an HMO. But even with all that, less
than 50 percent of your drug costs are being paid for by the Federal
Government.
But most seniors are not in the category where their drug bills are
$2,250 a year. More seniors have drug expenses that are larger than
that and fall into the so-called donut hole. This is an area where if
you have your drug bills above a certain amount, the Federal Government
pays no part of the cost of your drug bills. I want to give you an
example of that.
Let us talk about a senior whose drug costs fall above $2,250, or in
this donut hole where they have to pay 100 percent of the cost. Say a
senior has $3,500 in annual drug costs. This does not exceed the $5,100
catastrophic cap, so they would pay $1,170 for the first $2,250, and,
as I said before, $1,250, which is 100 percent of the difference
between $2,250 and $3,500. So if your drug costs were $3,500, you would
be paying $2,420 for those $3,500 in drug costs, or 70 percent of the
cost.
This is because if your drug costs essentially go between $2,000 and
$5,000 before you get to this catastrophic level, you are paying 100
percent of the cost. You are actually going to be in a situation where
you are paying premiums every month to the Federal Government for this
drug benefit, but getting nothing back, because you are at that point
after 6 or 7 months in the year where you have exceeded the $2,250 in
costs, but you are not up to $5,000, so you are paying premiums and
getting nothing to cover your drugs. You talk about a benefit and you
talk about trying to fool the seniors; it is unbelievable how much
deceit is essentially involved in this legislation.
I just want to get a couple more examples, because I see my colleague
from Ohio is here. Let me give you a couple more examples of how they
try to fool the seniors.
The Republicans say to seniors they will be able to stay in
traditional Medicare if they want the prescription drug benefit. As I
have said, that is really not true, because they have to join an HMO to
get any kind of drug benefit. If they want to buy a drug-only policy,
which might be out there, the premiums for that will probably be so
high it will not even be available.
But the worse aspect of this when they say you can stay in
traditional Medicare is for those seniors who are going to be in these
demonstration programs throughout the country, where they are
essentially going to give you a voucher and say we are going to give
you so much amount of money to pay for your health insurance, but you
have got to go to the private market and try to find someone to give
that voucher to, that set amount of money, to pay for your health
insurance.
This is not even with the prescription drug plan. This is Medicare in
general. The Republican leadership, in the House version of this bill
they wanted to essentially privatize all of Medicare by the year 2010,
but because the other body, the Senate, would not go along with it,
they ended up putting this in certain demonstration programs.
One of these demonstration programs is going to be in the southern
part of New Jersey, not in my district, but in the southern part of the
State. There are about 200,000 seniors in the southern part of New
Jersey that are likely to be in this demonstration program, where they
are going to be given a voucher and told you go out and buy your health
insurance with this set amount of money and you cannot stay in
traditional Medicare.
If you say you want to stay in traditional Medicare, what they are
going to do is say, okay, if you want to stay in traditional Medicare,
you have to pay the difference in cost between that voucher and what it
costs the Federal Government to provide the traditional Medicare, which
could be an extra $500, an extra $1,000, an extra $2,000 per year.
Essentially, seniors are going to be forced out of traditional
Medicare, just the opposite of what the Republicans were saying.
The last thing I want to say, where there is a serious element of
deceit, is the Republicans are trying to fool the seniors by saying
they are going to get a drug benefit immediately after the bill goes
into effect. Practically every Republican who got on the floor the
night we debated this bill made that statement in some form or the
other, and it is simply not the case, because this drug benefit does
not go into effect until the year 2006.
What they are going to do over the next 2 or 3 years before it goes
into effect is give you some kind of discount drug card. In New Jersey,
we see a lot of these because we have a lot of pharmaceutical
companies, and most of them give out a discount drug card. You pay a
certain amount of money, and you get anywhere from a 5 to 10 to 15
percent discount on your drugs. But since there is no cost containment,
it essentially is a ruse, because the drug companies charge whatever
they want for the prescription drugs and give you a 5, 10, or sometimes
maybe a 15 percent discount.
So now the Federal Government, according to the President, over the
next 2 or 3 years before the drug benefit comes into play, is going to
hand out these drug cards to seniors so they can get the slight
discount, which is really no meaningful discount at all.
I have to say I was not surprised when I went home over the
Thanksgiving recess over the last 2 weeks, all that I heard at the
senior centers, even on the street, even at the supermarket, were
people coming up to me and being not so much mad as upset in some cases
almost to the point of tears over what this Republican bill is going to
do to their Medicare.
People are saying to me, Are they going to take my Medicare? What are
they going to do to my Medicare? People personalize Medicare. It is so
important to them, and yet all these changes are going to take effect
that are against their interests.
I have editorials that are written in my local papers against this.
These were not editorials I suggested. These were the newspapers and
the local senior groups looking at this Medicare bill and saying how it
was going to be detrimental to them and the future of the Medicare
program.
I see that my colleague, the gentleman from Ohio (Mr. Brown) is here.
He is the ranking Democrat on the Subcommittee on Health; and he has
been outspoken on this issue, particularly in pointing to the conflicts
of interest that exists with the drug companies and the insurance
companies who stand to benefit from the changes that are in this
Republican bill.
I yield to the gentleman.
Mr. BROWN of Ohio. Mr. Speaker, I thank my friend from New Jersey,
who has just been dogged in his pursuit of this issue and trying to
protect Medicare, trying to write a prescription drug benefit inside
Medicare, and not this privatized HMO kind of Medicare inadequate
prescription drug plan that the President signed today.
When you listen to the gentleman from New Jersey (Mr. Pallone), you
just keep asking the question, why is it that all this happened this
way? Why would such a bill pass the Republican House, pass the
Republican Senate, in very close votes, and be signed by the President?
Why would they do this?
The answer is pretty clearly the kind of influence that the drug and
insurance industries have in this body. The word on the street is that
the drug companies, the prescription drug companies, are going to
contribute $100 million towards the President's reelection. It is no
surprise that nothing passes this Chamber, nothing gets through both
Chambers, nothing gets enacted into law and will be signed by the
President unless it has the support of the drug companies.
Let me just talk for a moment about that, and then I want to tell a
couple of stories. The 10 biggest drug companies in this country had
revenue last year of $217 billion, more than the entire GDP, gross
domestic product, of the country of Austria. These 10 companies posted
profits of $37 billion last year. That is more than the Federal
Government spent on the entire VA health care system. It is more than
the entire Housing and Urban Development budget for last year.
The drug companies on this year's Fortune 500 list posted profits of
more than 17 percent, 5.5 times what the rest of the Fortune 500
profits were. The drug industry led all other Fortune 500 industries on
two key profitability indices, return on revenues and return on assets.
Now, I want to get there, even with that, even with the drug
industry's iron lock on this institution, the corruption, the
incredible influence that
[[Page H12904]]
this industry has on this Congress, on Republican leadership, on the
President, on the Vice President, on leadership in the other body, in
the Senate, even with all that, I think it is important to sort of see
how we got here.
At 2:54 in the morning on a Friday in March, this House cut veterans
benefits by three votes. At 2:30 a.m. on a Friday in April, in the
middle of the night, House Republicans slashed education and health
care by five votes. At 1:56 a.m. on a Friday in May, the House passed a
leave-no-millionaire-behind tax cut by a couple of votes. At 2:33 a.m.
on a Friday in June, House Republicans passed a Medicare privatization
and prescription drug bill by one vote. At 12:57 a.m. on a Friday in
July, the House Republicans eviscerated Head Start by one vote. Then
after summer recess, at 12:12 a.m. on a Friday morning, in the wee
hours of Thursday night in October, the House voted $87 billion for
Iraq. Always in the middle of the night, always a contentious bill,
always after the press had passed their deadlines, always after the
American people had turned off the news and gone to bed.
{time} 2100
With that track record, and the gentleman from New Jersey (Mr.
Pallone) has illustrated this, we should not be terribly surprised that
when the House passed legislation that privatizes Medicare, that
dramatically changes the 38 years of Medicare as we know it, that the
House did it at 5:55 on a Saturday morning. The Republican leadership
delivered this 100-page Medicare bill to House Members on Friday
morning at 1:46 a.m. We voted on it 25 hours later.
But, Mr. Speaker, in a lot of ways I do not blame my Republican
colleagues. If I produced that bill, I would not want people to know a
lot about it either, because when Republicans sit down behind closed
doors with the insurance industry and the drug industry and write a
bill to privatize Medicare, of course they do not want the public to
know, because this bill is not a prescription drug bill when we really
look at it. We could have agreed bipartisanly. The gentleman from New
Jersey (Mr. Pallone) and I and our Republican friends could have
written this bill, we could have agreed bipartisanly to deliver a $400
billion prescription drug benefit inside of Medicare, delivered to
people the same way that people get their doctor and hospital and get
their choice: they send the bill to Medicare and it would work. But
this bill is more about Medicare privatization. For that, Republicans
have a long history.
Republicans have never much liked Medicare as a Federal program. Turn
the calendar 38 years back to the beginnings of this most popular
program perhaps in American history. When Congress passed the
legislation creating Medicare in 1965, in the spring of 1965, there
were 140 Republicans in the House of Representatives. Only 13 out of
those 140, less than 1 in 10, fewer than 1 in 10 Republicans in this
House voted to support it. Every leading national Republican voted no.
Future President Gerald Ford, future Presidential nominee Bob Dole,
future legislative leaders Bob Michel, John Rhodes; future Defense
Secretary Donald Rumsfeld, every leading national Republican voted
against the creation of Medicare.
Now, after that passed and they realized the public liked it, there
were no major efforts to try to get rid of it until 1995 when
Republicans had their first chance to do it when Republicans captured
the majority of the House of Representatives. In 1995, Newt Gingrich,
Speaker of the House, immediately during the Contract With America
tried to cut Medicare $270 billion to, what do we think, pay for a tax
cut for the richest people and the most privileged people in the
country. Gingrich in that year, in October of 1995, said, now, we did
not get rid of Medicare in round one, we did not think that is
politically smart. We do not think that is the right way to go through
a transition, but we believe it is going to wither on the vine.
Texas Governor, then Governor George Bush was a strong supporter of
that privatization effort. Majority leader Dick Armey, another Texas
Republican said, Medicare is a program I would have no part of in a
Free World. Bob Dole bragged, I was there fighting the fight against
Medicare. The gentleman from Georgia (Mr. Linder), Committee on Rules
member, a Republican, told me in a meeting in 2002 at the Committee on
Rules, Medicare is a Soviet-style system. It is on and on and on. The
gentleman from California (Mr. Thomas) who, with the drug companies and
the insurance industry, wrote this Medicare privatization bill this
year, said, to those who say that this bill would end Medicare as we
know it, our answer is I certainly hope so.
This bill, as the gentleman from New Jersey (Mr. Pallone) went
through, it jeopardizes employer-sponsored retiree coverage for the 12
million-plus seniors who have this coverage. Understand, as the
gentleman from New Jersey (Mr. Pallone) has said, there are 12 million
seniors today who have pretty good prescription drug coverage as part
of their retirement plans, retirement packages from their employers.
Some, between one-fifth and one-third of those, according to the
Congressional Budget Office, will have their employers yank that
coverage, and they will then be thrown into this privatized Medicare
system.
Now, this bill, in addition to the problems that the gentleman from
New Jersey (Mr. Pallone) mentioned, this bill creates a $12 billion
slush fund for HMOs to encourage them to provide coverage; it increases
drug industry profits by $139 billion, increasing their profits by 40
percent. We could go on and on and on and on. We know, we know about
the profitability of the drug companies; we know about how the drug
companies have, by and large, written this bill.
We know that the drug companies benefit from this bill way more than
everybody else. They have 675 lobbyists in Congress; 675 drug industry
representatives walk the halls of these Chambers. There are 1.3
lobbyists per Member of the House, and they spent $91 million in
lobbying activities. That is just what they disclose; we do not know
what they really spent. They spent $50 million more on everything from
ads to direct mail. They spent nearly a half a billion dollars lobbying
since 1997. They gave $30 million overall for the 2002 election cycle;
about three-quarters of that to Republicans and, as the gentleman from
New Jersey (Mr. Pallone) and I have talked, we hear on the street that
Mr. Bush and Mr. Cheney are going to receive $100 million in campaign
funds from the drug industry.
But let me, before finishing, let me go back to what exactly happened
that Friday night, early Saturday morning when the drug bill passed.
The vote started Friday at about midnight, the vote on the Medicare
privatization bill. The debate started Friday at about midnight. The
rollcall began at 3 a.m. Most of us took our vote cards, our little
plastic cards, put them in the little box and pushed either the green
or the red button. The clock runs out after 15 minutes, but it is
usually kept open for another 2 to 5 minutes. Typically, a vote here is
often about 20 minutes.
But the Republicans were behind the entire evening; the vote was
losing. At 3:30, 4 o'clock in the morning, the vote was 216 to 218. It
was defeated. A majority was voting ``no,'' with only one Member, a
Democrat, not yet voted. At about 4 o'clock the vote had stayed open
for 1 full hour. That is when the assault began. The gentleman from
Illinois (Speaker Hastert), the gentleman from Texas (Majority Leader
DeLay), the gentleman from Missouri (Republican Whip Blunt), the
gentleman from Louisiana (Mr. Tauzin), the chairman of the Committee on
Commerce; the gentleman from California (Mr. Thomas), the chairman of
the Committee on Ways and Means all were walking the floor, surfing for
stray Republicans who were most likely to cave whom they could bully or
whom they could brow beat. They surrounded the gentleman from Ohio (Mr.
Chabot), trying a carrot and then a stick; but he stood his ground and
was defiant. They tried a retiring Republican, the gentleman from
Michigan (Mr. Smith), whose son is running to succeed him. They
promised support if he changed his vote to ``yes'' and threatened his
son's future if he refused. He steadfastly, to his credit, showed his
integrity and stood his ground.
Many of the two dozen Republicans who had voted against the bill had
left the floor hoping to avoid the onslaught
[[Page H12905]]
from the gentleman from Illinois (Speaker Hastert), the gentleman from
Texas (Mr. DeLay), the gentleman from Missouri (Mr. Blunt), and the
committee chairmen. One Republican that I saw was hiding in the
Democratic cloakroom.
By 4:30, the bullying and the brow beating had moved into the
Republican cloakroom, out of sight of the television cameras and of the
public. The Republican leaders by then had waked up President Bush, and
the White House was passing a cell phone from Member to Member in the
cloakroom. At 5:55, 2 hours and 55 minutes after the rollcall began,
literally twice as long as a vote had ever taken in the U.S. House of
Representatives, 2 obscure Western Republicans emerged from the
cloakroom, they walked, ashen and cowed down this aisle, I was sitting
right there, down this aisle to the front of the Chamber, they picked
up a green card to change their votes, they scrawled their names and
district numbers on the cards, and they dispiritedly surrendered the
cards to the Clerk. Quickly the Speaker gaveled the bill. Medicare
privatization had passed.
Now, imagine an election, an election at home when the polls close at
7:30. Everyone has voted. One candidate trails by a few votes, but
election officials, just not liking the outcome, decide to keep the
polls open for 3 more hours. They brow beat; they bully. They threaten,
they offer jobs, they promise goodies for their neighborhood or for
themselves. Finally, lo and behold, the election turns out the way they
want.
The new rules in this House of Representatives, Yogi Bera might put
it tell us, ``It ain't over until the Republicans and the drug
companies win.'' It is sort of Florida all in one night. But the
American people should expect more. They should expect the House of
Representatives conducted in the open. They should expect Members to
honestly, straightforwardly, openly cast their ballots; they should
expect a drug pricing policy and a Medicare bill that can hold up, not
only in the dark of night, but also in the bright light of the morning.
Mr. PALLONE. Mr. Speaker, I want to thank the gentleman. He made some
great statements there; and we will have to develop a few of those, if
the gentleman does not mind.
First of all, I wanted to talk a little bit more about what happened
that night because, as the gentleman knows, this afternoon, our
Democratic leader, the gentlewoman from California (Ms. Pelosi),
offered a privileged motion which of course was defeated by the
Republicans, and she paid much attention in her privileged motion to
what happened that night and how it was very wrong and undemocratic,
and I think that the gentleman's analogy about keeping the polls open
back at home when we are voting in a congressional or Presidential
election is a very good analogy.
But if I could just point to the case again with the gentleman from
Michigan (Mr. Smith), a lot of commentary has been written about that
over the last 2 or 3 days, and I wanted to specifically mention a
column by Robert Novak which was in the Chicago Sun Times recently. And
he mentions what happened with the gentleman from Michigan (Mr. Smith),
and I just wanted to point to that and then I wanted to point out the
whole legality of it, because there is a serious question about whether
what the Republican leadership did to the gentleman from Michigan (Mr.
Smith) was legal.
In Novak's column he said that Smith, a self-term-limited
Congressman, is leaving Congress; and his lawyer son, Brad, is one of
five Republicans seeking to replace him from a GOP district in
Michigan's southern tier. On the House floor, Nick Smith was told
business interests would give his son $100,000 in return for his
father's vote. He of course declined, and then fellow Republican House
Members told him they would make sure that Brad Smith, his son, never
came to Congress. After Congressman Nick Smith voted ``no'' and the
bill passed, Duke Cunningham of California, another Republican
Congressman and other Republicans taunted Smith that his son was dead
meat.
I mean, needless to say, it is outrageous that this would even occur,
and certainly no one is suggesting that it did not occur. I have not
heard anybody suggest that what Novak said is not true; I mean, it
obviously is true.
But just earlier this week, there was a watchdog group called the
Campaign Legal Center that on December 3 urged the U.S. Department of
Justice to investigate whether Members of the U.S. House attempted to
bribe a Member of Congress into voting in favor of the recently passed
bill. They referenced the gentleman from Michigan (Mr. Smith), and the
group urged the House Committee on Ethics to investigate the matter.
They sent a letter to the Justice Department, and they referenced a
section under title XVIII, section 201 of the U.S. Code where it says,
``A person commits bribery who directly or indirectly, corruptly gives,
offers, or promises anything of value to any public official or person
who has been selected to be a public official or offers or promises any
public official or any person who has been selected to be a public
official to give anything of value to any other person or entity with
intent to influence any official act such as a vote.''
Now, I am sure courts can interpret this thing however they want, but
it seems to me on its face that what happened that night that my
colleague from Ohio talked about was bribery, and it is going to be
very interesting to see. Of course, we have to kind of assume that the
Justice Department is going to be a little biased, because it is
Republican appointed, but I do not see how they can get away from the
fact that the facts and the circumstances in that case were, in fact,
bribery.
The thing that really bothers me, I say to the gentleman from Ohio,
he talked about the Republican responses when our leader, the
gentlewoman from California (Ms. Pelosi), brought this privileged
motion up today, I listened carefully to the debate back in my office,
and I was amazed to see how some of my Republican colleagues responded.
Essentially, if my colleagues listened to what many of them were
saying, it was the ends justify the means. They were saying that this
vote was so important and the issue of Medicare's future and the
prescription drug benefit were so important, that that justified, in
some cases they said, leaving the board open as long as it took until
they could get the votes to pass the bill.
Well, that is the most undemocratic thing I ever heard of.
Essentially it means that if I believe that something should pass, and
I am in the majority, I am just going to keep the board open until I
get my way. That is it. It is the end justifies the means.
Mr. BROWN of Ohio. Mr. Speaker, that is exactly right. It is also, if
we look at the context of all of this, the context is the huge,
enormous influence that the drug industry has on this body. I mean, the
drug industry has a strangle hold on the Republican leadership, pure
and simple. They give millions of dollars to Republicans, as we have
said before, we are hearing as much as $100 million to President Bush's
reelection. Nothing in this Chamber, nothing happens without the drug
industry saying it is okay. The drug industry puts millions of dollars
in campaigns. They hire so many lobbyists, 670-some I believe at last
count, well over 600. They run all kinds of television ads and radio
ads under the name of something else. They basically launder their
money through the United Senior Association, through other groups,
these disease advocacy groups that are not really legitimate, with
millions of dollars and hide who they are, the drug industry, and try
to communicate with the public that way. I mean, they are so powerful
and so strong, but at least we ought to keep them off the House Floor.
But in that sense, in the wee hours of the morning on Saturday, that
Saturday morning, that late Friday night, while Secretary of Health and
Human Services Tommy Thompson was on the floor, which is unusual, I do
not ever recall seeing a cabinet member on the floor like that, but
that is not a violation of the rules and it is not unethical, either.
But we could see the influence of the drug industry on the floor of the
House of Representatives.
{time} 2115
One could almost see these Members of Congress who have depended on
drug company money, who are addicted to drug company money, one could
see the kind of way that they were pushing
[[Page H12906]]
their fellow Republican Members, the Members whom they lead. So it is
not a very long jump from there to what they tried to do apparently
with the gentleman from Michigan (Mr. Smith) who showed a lot of guts
and integrity, as I might add.
And so when there is that much money at stake, the drug industry is
slated to increase its profits already for 21 years straight, the most
profitable industry in America, when the drug industry already so
profitable, increased its profits $140 billion over the next 8 years,
40 percent increase in profits for the most profitable industry in
America, not to mention the insurance industry and its impact here.
With that kind of money at stake it does not come as a surprise to me
that Republican leadership would play that kind of hard ball, do it in
the middle of the night, or who knows what.
We do not know what was said to Member after Member after Member to
pass this bill. That is not a prescription drug bill; it is a bill that
turns the Federal Treasury over to the drug companies and the insurance
companies and privatizes Medicare in the bargain. So it is pretty clear
to more and more Members of this body and to more and more members of
the public that the corruption in this body when it comes to drug
money, the corruption is just unbelievable. It has increased every year
since I have been here. It is getting to the point that it is almost as
if Members have signed their vote card over to the pharmaceutical drug
industry lobbying association.
Mr. PALLONE. Mr. Speaker, I wanted to point out another example of
what you are talking about too. It has also come to light over the
Thanksgiving recess, and this is the people within the Department that
were drafting the legislation, as you know, the Federal Government
official who runs Medicare and was very much involved in drafting the
legislation to put this bill in place, Tom Scully, announced during the
break, during the Thanksgiving recess that he was leaving the Medicare
program to go into the private sector. And there were serious questions
about his whole involvement in this because basically he had been
looking for a job in the private industry for something like 6 months.
There is an article that was in the December 3 New York Times where
it said that Mr. Scully, this is the Medicare administrator, had made
no secret of the fact that he had been looking for jobs outside the
government for more than 6 months even as he spent hundreds of hours in
closed sessions with House and Senate negotiators working out countless
details of the legislation.
Now, again, there are so many conflicts of interest with this
administration, it is just unbelievable. This guy, who I do not know
him that well, but I understand he is a fairly nice guy, but the idea
that 6 months ago he was looking for a job, a job essentially with some
of the same law firms that were negotiating on behalf of the drug
companies in order to get a favorable bill, the ethics law actually
says, and I will read it because it is in the same article in The New
York Times, ``The ethics rules issued by the Department of Health and
Human Services say that employees who have begun seeking jobs in the
private sector must immediately recuse themselves from any official
matter that involves the prospective employer.''
Now, this covers legislative initiatives and proposed rules. Now,
apparently, what Mr. Scully is saying is that he got a waiver from the
Department so he would be allowed to work on matters of general
applicability like the Medicare reform bill while he talked to
potential employers. We have no information about how this waiver was
garnished. The waiver has never been made public. The bottom line is
the guy is negotiating this bill basically looking for a job with some
of the same lobbying firms that are representing the drug companies.
And as soon as the bill is passed, within a few days he announces that
he is leaving to go join those same law firms. What possible
justification?
Mr. Speaker, I yield to the gentleman from Ohio.
Mr. BROWN of Ohio. Mr. Speaker, I saw that article. I like Tom
Scully. He came to our committee and he spoke. He is a reasonable,
decent guy. I do not accuse him of anything untoward. I do wonder about
a system, though, where he announced several months ago he was leaving
the Department and going into the private sector. And he intimated, he
may have said more specifically, that he would be out doing Medicare-
type work, but he stays in the Department during the 6 months he is
negotiating with various law firms and Wall Street firms, I believe,
his future job and then the Medicare prescription drug bill is in the
conference committee and he is in these meetings. Somebody gave him a
waiver. I do not quite know what a waiver means.
Mr. PALLONE. They will not tell us specifically what it is.
Mr. BROWN of Ohio. It is okay to be in a conflict of interest but
because our administration is so pro-drug company, we give you the
waiver? I wish he would answer some questions about what the waiver is
all about, because I do not think the people at home understand what
the waiver process is. I do not think I understand the waiver process.
Mr. PALLONE. The waiver has not been made public.
Mr. BROWN of Ohio. How a Department gives a waiver to one guy to do
this and not that. I think Mr. Scully is a man of integrity, but I do
not think the system is quite right that would allow somebody to look
for a job, run this Medicare system that has 40 million beneficiaries,
that has got about, I think, about $300 billion roughly running through
that system. He runs it. The last 6 months he said he is leaving. He is
talking about companies that have a major interest in Medicare while
looking for a job, and then he is helping to write the Medicare bill
that will affect those companies in the agency he runs. I do not know
what the waiver is all about. I hope he comes and tells us sometime.
Mr. PALLONE. I do not think we are going to find out, to be honest,
specifically because he is leaving. But the thing that is most amazing
about it is that the time period from when he decided to leave and then
he actually left was the very time period when he was negotiating the
bill.
Mr. BROWN of Ohio. This goes back to earlier comments that the
gentleman from New Jersey (Mr. Pallone) made just about the
unseemliness, the conflicts of interest, the huge numbers of dollars
that are at stake in this bill. $400 billion in taxpayer dollars is
going to be distributed in the next 10 years, $400 billion. Not to
mention the amount of out-of-pocket seniors will have, which is a huge
amount of money, for their drug cost. So that $400 billion, we are
going to see the drug industry is going to make $140 billion more; the
insurance industry gets a $20 billion incentive pay, if you will, to
write drug insurance. Employers are getting subsidized, so not as many
of them, some still will, but not as many employers drop the coverage
of their retirees who they have collectively bargained with in many
cases.
So there is so much money on the table. The way that the
administration has done this has been so untoward, the way that from
the minute the bill really was introduced, was written behind closed
doors by the drug and insurance industry, to they are not allowing
amendments, to speak of, on the House floor, to the conference
committee closed out to Democrats who represent in the Senate more than
half the population and in the House represent 48 percent of the
population; and then all of these kinds of secret deals in the bill
with the drug companies and the insurance companies winking and nodding
every step of the way.
I think this bill symbolizes the corruption, the sort of pinnacle of
the corruption that we have seen in this House of Representatives. We
are awash with corporate money, awash with all the kinds of cutting
deals and conflicts of interest and billions and billions and billions
of dollars available to raid the Federal Treasury. While we cannot
probably get this bill repealed in the next year, I think we are going
to see this Medicare issue is going to really show what the political
parties stand for, what are we going to see in the election next year,
where on the one hand Democrats want to see a prescription drug benefit
go directly to seniors, Republicans want to run it through the drug
industry and insurance industry, enriching their corporate friends and
then a little bit of it trickles down to seniors. And thrown into the
bargain is a privatized Medicare system.
[[Page H12907]]
Mr. PALLONE. Mr. Speaker, I wanted to comment, I know the gentleman
raised so many good points, and I know we cannot go through them all
tonight, but I wanted to talk a little bit about what I call the
insurance scam too. We focused a lot of attention on the drug companies
and how they are benefiting, but I think we have to talk a little bit
also about the insurance companies that you mentioned.
I wanted to say in my State the pharmaceutical companies have a huge
presence and they spend a lot of money on electing candidates. But he
was very proud of the fact that within a couple days after this
Medicare bill surfaced, that the largest newspaper in my State, the
Star Ledger, issued an editorial which was entitled ``Reject Medicare
Legislation.'' And the largest newspaper in my district issued another
editorial calling the Medicare plan bad medicine. But I wanted to
highlight the Star Ledger article. Again, this is the largest newspaper
in the State, which probably has percentage-wise the largest presence
of pharmaceutical companies. And they wrote this scathing editorial.
They focused attention somewhat on the drug companies but even focused
more attention on the insurance companies. I wanted to read just the
first couple of paragraphs because I think it says it all about how the
insurance companies benefited. It is the editorial from November 18. It
says, ``Reject Medicare Legislation. If profit making insurance
companies are so much better and cheaper than the Federal Medicare
program, why do we have to give them $12 billion to help improve it?
That subsidy is built into the Medicare compromise plan heading for
Congress and is but one of several excellent reasons the plan should be
rejected. After handing the industry a $12 billion gift from the
taxpayers, the bill sets up a fixed competition between Medicare and
private managed care. They would go head to head in a half dozen
communities. Once the games begin, private companies could sign up
younger, healthier, cheaper-to-treat seniors and reject the rest. It
does not take a genus to predict the result. If Medicare, which must
take all comers is left with sicker, more expensive seniors, Medicare
will fail. That will give conservatives a chance to settle one of the
most successful public programs of all times and replace it with
private companies. If we end up with a dead Medicare program and
taxpayer subsidized private profits, where is the victory? The
insurance industry already can sign up seniors under another Medicare
option, that is managed care, but it has never attracted more than a
small percentage of Medicare recipients. Year by year it has reduced
benefits and dropped hundreds of thousands of policyholders. The
companies say the Medicare population costs too much to treat and that
government payments are stingy.''
I am reading this, but I wanted to explain it a little. We have had
such an experience in New Jersey. We have had something like, I think
the figure is 800,000 seniors that joined HMOs, managed care over the
last 5 or 10 years who were eventually dropped. And the reason they
were dropped, obviously, was because the insurance companies initially
took the seniors and then found because of the cost that the seniors
incurred in health insurance that they could not make a profit. So they
dropped them.
Now, what happened then is that the HMOs came before the Congress,
they came before our committee, they said we cannot make enough money
with the managed care HMO system the way it is. You do not pay us
enough money for Medicare to cover for these seniors, so why do you not
give us a windfall. That is exactly what is in the bill. They got a $12
billion basic windfall to manage care so they could theoretically now
sign up seniors and provide seniors with not only the HMO but the
prescription drug coverage.
But there is nothing in the bill, just like there was nothing in the
previous legislation with Medicare+Choice that says that they have to
take whatever senior comes along. So essentially what this Star Ledger
article is saying, they are now going to cherry-pick. They realized
after being in the Medicare program for a number of years that they
could not make a profit because they took all these seniors who were
sick and driving up health costs. So now they are going to get this
huge $12 billion subsidy, and they will be able to cherry-pick and
essentially take whatever seniors they want and offer a health care
plan with this big subsidy and leave the traditional Medicare with the
sicker people that drives up the cost.
Mr. BROWN of Ohio. Then they are going to come back in 10 years and
say, see, Medicare does not work. Of course it does not work when the
insurance company insures you when you are healthy and then taxpayers
and Medicare get you when you are old and sick. Of course it is going
to work that way.
That is the irony of all this. I hear my friends on the other side of
the aisle over and over tell us that seniors, that the private sector
can do it better, that government is this huge bureaucracy, that
Medicare is inefficient and bloated, that nimble, quick-on-its-feet
Medicare, the private insurance system can do it better. So, okay, if
that is the case, why, then, does Medicare have lower administrative
costs, why does Medicare have lower marketing costs, lower salaries and
all that? But if you accept that they can let them compete, so why are
we giving the Medicare HMOs $20 billion and say, yeah, of course one
can compete if we give you $20 extra billion, but if the playing field
were really level it is clear that the public system wins.
That is why 38 years ago in the end Medicare was created. Because in
1965 when President Johnson and Democratic majorities in both Houses,
because, as we said, almost no Republicans in either House voted for
this bill to create Medicare, in those days half of America's seniors
did not have insurance. Why? Because the private insurance market did
not find seniors attractive. They did not find seniors attractive
because they are older, they are sicker, and they are poorer.
{time} 2130
So, maybe somebody 65 could get private insurance, somebody that
walked every day, someone in really good shape, but someone 73 or 74
who was diabetic, who had heart problems, who was arthritic, who was
not really able to take care of himself or herself, no one will insure
that person. No one will under the Republican privatized Medicare
program.
The whole point is a government plan with a universal coverage pool
that everybody is in so when you are 65 and healthy you are
subsidizing, because your health care expenses are not too high, you
are subsidizing somebody who is 85 and not as healthy. And then when
you get to be 85, some other 65-year-old subsidizes you. That is what
the universality of the insurance pool is all about.
The Republicans want to fracture the universality of the insurance
pool. They want to skim off for their insurance industry contributors
and all the corruption around this place that comes from that. They
want to skim off the most healthy seniors, and they want to insure them
at great profit and let the government and taxpayers pick up everybody
that is sick and more expensive. It is pretty simple what their plan
is.
Mr. PALLONE. The gentleman described it so well.
The amazing thing is when we were in our committee and we were
marking up the bill, I remember asking questions about, well, what
about the fact that you do not have a set premium? In other words, you
can charge whatever you want for this, for the health insurance or for
the prescription drug benefit. And what if the HMO's do not want to
cover the sicker seniors or certain seniors. And the answer I got back
from some of my Republican colleagues is, well, if this does not work,
giving them this $12 billion windfall, they can come back in another 2
or 3 years and we will give them more money.
It is incredible how they totally violate the idea of competition
and, as the gentleman says, a level playing field, and are willing to
give the HMOs or the private insurance companies more and more money if
they are not willing to cover the seniors. Where does it end? There is
no end to it.
We saw with MediCare+Choice a few years ago, every year they would
come back and ask for more and more money. And now they have this
windfall, who knows where it will end.
I know our time is almost up. I want to develop one more point that
the gentleman raised before we close tonight
[[Page H12908]]
because I think it is important. The gentleman talked about the fact
that if the Democrats or if, on a bipartisan basis, we had been allowed
to develop a bill that kept traditional Medicare and just added a
prescription drug benefit, which is what most of my seniors, and I
think most seniors expected. I mean, if you talk to the seniors about
what they expected with a prescription drug benefit, they figured we
were just going to have the traditional Medicare, and we were going to
add the benefit.
I think it is important before we close that we point out that, as
Democrats, we developed and offered an alternative as a substitute on
the floor of the House, exactly that. Basically, what the Democratic
Party in the House and what our leadership proposed and what both the
gentleman from Ohio (Mr. Brown) and I supported, was simply adding a
prescription drug benefit to traditional Medicare. And we used the Part
B, which now pays for seniors' doctors bills, as an example.
Under the current Part B, you pay a premium of about $55 a month. You
have a $100 deductible. Eighty percent of the costs of your doctor
bills are paid for by the Federal Government. Twenty percent by you;
that is your copay up to a certain amount catastrophic limit where 100
percent of the cost is paid for by the Federal Government.
That is exactly what the Democrats offered as an alternative. We said
that for a $25 premium you would have a $100 deductible for your first
$100 in drug costs. Eighty percent of your drug bills would be paid for
by the Federal Government. Twenty percent copay. And at a certain
level, I forget what it was, $3,000 maybe $3,500 catastrophic level,
100 percent of the cost would be paid for by the Federal government.
And we had a provision in the bill that specifically said that the
Secretary of Health and Human Services, the Medicare Administrator,
would negotiate price reductions.
I know some of the Republicans said that would have been a very
expensive bill. The bottom line is whatever costs to the Federal
Government probably would have been outweighed by negotiated prices,
that would have brought the cost down considerably. So there was
clearly an alternative out there that would have simply done what most
seniors expected and simply added a prescription drug benefit to
traditional Medicare.
Mr. BROWN of Ohio. That is a very interesting point. I think seniors
in my district and seniors all over the country, because I was hearing
this from colleague after colleague, people were wondering why it was
so complicated? Why was it so difficult? Why can Congress just not pass
a drug benefit?
People understand how Medicare works. You go to a physician. The bill
is sent to Medicare to be paid. You go to a hospital. The bill is sent
to Medicare to be paid. There is a copay and a deductible. People
understand that. They understand the premium. It is very simple
insurance. It is full choice of doctor, full choice of hospital, and
why not do the same with a prescription? Then you get the prescription.
It is paid for by Medicare. You have full choice of your prescription.
Instead, the Republicans had to make it a lot more complicated. Why?
Because they wanted to get their privatization agenda enacted. That
means using the insurance companies. It means playing ball with the
drug industry. It means a lot of that money, that $400 billion that
should go directly to cover prescription drugs, and very little
overhead, the 2 percent overhead that Medicare has been able to keep
their overhead at 2 percent. Instead of that, the Republicans are
seeing all kinds of money wasted through the insurance and the drug
companies.
Frankly, it just kind of amazes me because seniors do think it could
be simple. The other part of that $400, as the gentleman pointed out,
that $400 billion would go a lot further under the Democratic plan
because we would do cost controls. We would do various kinds of
constraints on costs.
The Canadians, as we have heard many times in this Chamber, the price
of drugs in Canada is one-half, one-third, one-fourth of what it is in
the United States. Tamoxifen, a breast cancer drug, is one-eighth the
cost in France than it is in the United States.
If we could have restrained costs, controlled costs, brought prices
down, whatever you want to call it, if we had done that and put this
bill into Medicare, put this whole plan into Medicare, a lot less
complicated, we could have done it months ago, years ago, we could have
done it; and seniors would have a better plan. They would understand
what it is about. They would not have all of these questions, but the
drug industry and the insurance industry probably would not be so
happy, and I guess that is in the end why this body did what it did.
Mr. PALLONE. Mr. Speaker, the last thing I wanted to mention, because
I know we only have a few minutes, was the reimportation. I know that
many of us saw the reimportation from Canada or other countries as sort
of a last-minute effort to try to have some kind of cost controls put
into effect. We would rather have cost containment here rather than
have to import drugs from Canada or other countries. But the bottom
line is that both Houses, both the House and the Senate had passed a
provision that would have provided for an essentially legalized drug
reimportation, at least from Canada, if not from some of the other
countries in Western Europe that were comparable to the United States.
Even though the conference between the House and the Senate had those
provisions in both Houses, they ended up essentially eliminating it in
the bill. Also, today in the omnibus bill, the appropriations bill that
we came back to vote on today, I am sure the gentleman noticed that
that was stripped out of that as well.
So every effort has been made by the Republican leadership and by the
Republican President to do everything possible to make sure that there
are no cost controls whatsoever. And I still see, and I go back to what
I said in the beginning, Mr. Speaker, I still see my colleagues on the
Republican side coming down here and saying there is some kind of cost
control or savings that the seniors are going to get from this bill.
That is simply untrue. Everything has been taken out. The
reimportation language from Canada, specific language that says that
you cannot negotiate price. Every effort was made to guarantee that
there would be no fiddling whatsoever with the drug companies's ability
to simply raise prices as they see fit. That is what we are left to.
It is really sad to think that we have come to that. I know the
President signed the bill today, and it is over with in that respect;
but, hopefully, and I already see it happening, you will get a
groundswell from America's seniors throughout the country over the next
few months or the next few years that are going to demand that this
bill be repealed or significantly altered. I am convinced that is going
to happen.
It is sad to think that there was this huge missed opportunity when
we could have actually passed a good prescription drug benefit and done
something to help America's seniors, rather than this cruel hoax that
has been foisted upon them today.
Mr. Speaker, I want to thank the gentleman from Ohio (Mr. Brown) for
all he has done on this issue over the last few years.
____________________