[Congressional Record Volume 150, Number 74 (Tuesday, June 1, 2004)]
[House]
[Pages H3574-H3575]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           DRUG DISCOUNT CARD

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from New York (Mr. Hinchey) is recognized for 5 minutes.
  Mr. HINCHEY. Mr. Speaker, today is the first day that older Americans 
and the disabled can use their brand new prescription drug discount 
cards. Medicare beneficiaries, however, should use caution. Like 
everything else promised by the Bush administration and the Republican 
majority in this House, the prescription drug benefit is not all it was 
cracked up to be. Most seniors will find the benefits they already had 
through a State drug program, a Medigap plan, or coverage from a former 
employer may save them more money than the Medicare discount card.
  Seniors' savings from the Medicare drug card will be negligible. Bush 
administration officials and Republican leaders have said that the 
Medicare drug cards would provide recipients with discounts of up to 25 
percent on prescription drugs, but their friends in the pharmaceutical 
industry have corrected that. They say the savings will be no more than 
17 percent.
  But a more balanced study by the U.S. General Accounting Office 
pegged the savings even lower. The GAO found that the average savings 
produced by the Medicare drug cards was about $5 per prescription. 
GAO's results also reveal that seniors could usually find a better deal 
by shopping around. Why should seniors be asked to pay a $30 premium 
for these cards when they can get better deals by comparison shopping?
  The meager benefits offered by the Medicare drug card were confirmed 
by another study, this one conducted by the minority staff of the House 
Committee on Government Reform, which demonstrated that the drug 
discount cards provide far less benefits to seniors than three simple 
alternatives: purchasing drugs in Canada, allowing the government to 
negotiate bulk purchases for seniors, and ordering through Internet 
pharmacies. The study found that drugs purchased with the Medicare drug 
card are an average of 72 percent more expensive than they would be if 
those same drugs were purchased in Canada. If the Federal Government 
negotiated the purchase of these drugs in bulk for Medicare 
beneficiaries, as it does for the Veterans Administration, prices then 
would be 75 percent less expensive than they would be with this 
Medicare drug card.

[[Page H3575]]

  Seniors can get lower prices right now through Internet pharmacies, 
drugstore.com and costco.com, without signing up for a card and without 
paying an annual membership fee. Seniors could save 74 to 75 percent 
more than they will with the drug discount card without Federal 
Government spending any money at all. We could have legalized the 
reimportation of drugs from Canada, as a clear majority in this House 
voted to do. We could have allowed Medicare to negotiate fair prices 
for its 43 million beneficiaries. But instead, the Republican 
negotiators specifically put language in the bill that prevented that 
from happening, making it illegal.
  Instead of enacting these fiscally responsible proposals that would 
be far more effective at reducing seniors' health care costs, the Bush 
administration and the Republican leadership of this Congress chose 
instead to protect and grow even larger the already enormous profit 
margins of the pharmaceutical industry.
  While drug companies are required to cover at least one drug to treat 
most health conditions, they may not cover the drug that a 
beneficiary's doctor prescribes. It may not be possible to sign up with 
one plan that offers a discount for all of your prescriptions, but you 
can only sign up for one Medicare drug card at a time, and that has to 
last for 12 months. You cannot change for a year. The drug card will 
only be usable at certain pharmacies so seniors must research whether 
the card they are considering is accepted at a pharmacy nearby.
  Some seniors will not have coverage outside of their home towns. 
There are a few national drug card plans, but most are regional. For 
seniors who travel frequently or spend part of the year in a different 
part of the country, the card they pick may not cover their 
prescriptions at all. Different drug cards will offer different prices 
on the same drug. Even with the same drug card plan, prices can vary 
from one pharmacy to another, and the drug card plans can change the 
drugs they cover and their prices, and they can do so every 7 days 
without notifying participants. This makes it nearly impossible for 
seniors to compare which plan gives them the best deal.
  This program is intentionally and unnecessarily complicated in order 
to confuse seniors and reduce the benefits, even the small benefits 
that might be entailed in it. So this plan is too complicated, too 
complex, and far too expensive. There is a much better way of doing it, 
and we should get at it immediately.
  Republicans rigged the system against seniors. The drug card--which 
should never have been necessary in the first place--leaves seniors 
with more uncertainty about their ability to afford medications than 
they have today.
  Seniors shouldn't have to suffer through two years of uncertainty and 
meager benefits, before the real--though still completely inadequate--
Medicare benefit begins.
  The only reason that seniors are waiting two years is money: the GOP 
loaded up the bill with so many hundreds of millions of dollars in 
subsidies to the pharmaceutical industry that they did not leave enough 
money to pay for seniors' benefits.
  President Bush and Republican leaders said money was the reason that 
the drug benefit couldn't start sooner, offer more comprehensive 
benefits and lower out-of-pocket costs for seniors. They said that we 
simply couldn't afford a more generous prescription drug bill than the 
$400 billion they had set aside--after the Bush tax cuts and huge 
increases in defense spending--to pay for Medicare reform.
  The truth is that we're not spending $400 billion for drugs for 
seniors. Republicans gave away 61 percent of that to private 
corporations.
  $339 million of the Medicare reform bill goes to the Administration's 
friends in the pharmaceutical and insurance industries.
  $70 billion goes to private corporations for continuing to provide 
health care coverage to their retirees. These corporations were already 
providing retiree health coverage without any government subsidy. Now 
we'll be paying them to do what they were doing before without 
government support. And, because the subsidy comes with no strings 
attached, corporations can still drop retiree coverage entirely without 
warning.
  $139 billion in overpayments to the pharmaceutical industry. This 
legislation will increase the drug industry's sales volume and profits 
dramatically. Because the bill specifically prohibits Medicare from 
harnessing the buying power of its 43 million beneficiaries to secure 
lower prices, Medicare dollars--and seniors' own out-of-pocket 
expenses--are being used to purchase drugs at inflated prices. Seniors 
who sign up for the drug benefit will be forced to pay higher prices 
than the VA or HMOs pay for the same drugs. Drug company profits--
already the highest of any segment of our economy--are expected to 
increase 37 percent as a result of this bill.
  $130 billion in overpayments to HMOs. Managed care options were added 
to Medicare because they were supposed to cost less per patient than 
traditional Medicare. Under the new law, we'll be paying HMOs as much 
as 25 percent more than health care costs under traditional Medicare. 
Even the GAO has confirmed that HMOs are overpaid, but that didn't stop 
the Republican leadership from increasing their payments again in the 
bill. Because HMOs tend to attract the healthiest seniors, they ought 
to be getting paid less, not more. Like the other corporate subsidies, 
HMO payments come with no strings attached--HMOs can pull in and out of 
communities, stranding seniors, whenever they please.

  Seniors deserve better than this. They deserve a comprehensive and 
affordable drug benefit, one that they can count on for the length of 
their retirement. We could afford to give them one, but the Republican 
majority would rather subsidize private industry than needy seniors.

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