[Congressional Record (Bound Edition), Volume 145 (1999), Part 10]
[Senate]
[Pages 14559-14561]
[From the U.S. Government Publishing Office, www.gpo.gov]



                                MEDICARE

  Mr. GREGG. Mr. President, I want to comment on the President's 
proposal relating to Medicare, and specifically relevant to the drug 
benefit which has been put forward by the President today and by his 
staff.
  I think the American people have to look at this in the context of 
the history of this administration's efforts in the area of health 
care. We know that when this administration came into office, Mrs. 
Clinton was assigned the task of developing a health care proposal. She 
came up with what has become known as ``Hillary Care,'' which was 
essentially a nationalization of the health care system. It was 
intricate bureaucracy that basically was so interwoven and so complex 
that it was totally impossible to recognize.
  It needs to be noted in evaluating the drug component on this recent 
proposal on Medicare, the proposal of the Clinton administration on 
general health care issues as it came forward under Mrs. Clinton's 
plan, known as ``Hillary Care,'' was a dramatic invasion of the health 
care delivery system in this country by the Federal Government. It was 
essentially a nationalization of the system with huge complexities and 
huge intricacies. That was followed by a number of other initiatives 
which were lesser but equally aggressive in their attempts to move to 
the Federal level control over functions of health care in this 
country.
  Then on the issue of Medicare, a commission was set up. The 
commission was to be balanced. In fact, the President had a large 
number of appointments to it, and the Senate and House had a large 
number of appointments to it. It was chaired by a Democratic Member of 
the Senate, Senator Breaux.
  That commission was to resolve this matter. It was to come forward 
with a proposal to address the long-term solvency of Medicare and, 
within that, the drug benefit for senior citizens. The commission did 
great work, yeoman's work. They came up with a proposal. More than a 
majority, a significant majority, of the commission supported the 
proposal which had in it a drug component, and the President walked 
away from the proposal, even though

[[Page 14560]]

the proposal had been supported by a majority of the commission which 
he was instrumental in setting up and to which he appointed the 
chairman, who was Senator Breaux from this body.
  The question of his most recent proposal on Medicare, I believe, has 
to be looked at in that context, and therefore it becomes a question of 
whether or not the proposal put forward by the President, most recently 
today, is a serious proposal or is it a political proposal. If it is a 
serious proposal, why is it not in step with the Breaux commission, and 
if it is a political proposal, what is its purpose?
  Let's look at it quickly. Nobody has had a great deal of time to 
analyze it, but if you look at it quickly, it appears to be a proposal 
that is turning on its head the basic purposes of a drug benefit.
  The Breaux commission suggested that the purpose of a drug benefit 
should be to make sure the beneficiary, the person paying the drug 
costs, was not wiped out by the cost of the drugs. That is a reasonable 
position. Essentially, the Breaux commission concluded that we should 
have some way of saying to a senior citizen who ends up with a huge 
amount of drug costs that if you are hit with a catastrophic drug cost, 
there is going to be some protection for you and some coverage for you.
  This proposal from the President does the opposite. Instead of 
covering a catastrophic drug event where a senior citizen has to buy a 
lot of drugs to maintain their health over a period of a year and, 
thus, runs up huge bills which basically deplete their assets, this 
proposal has first-dollar coverage. The first-dollar coverage stops 
when it gets to $2,000, I believe, of drug expenditures, which means 
that if a senior citizen has a large number of drug expenditures, 
essentially the senior citizen is still going to be wiped out by those 
costs.
  It makes much more sense to approach it the way the Breaux commission 
approaches it and the way most people have looked at the issue, which 
is, you say to a senior citizen or anyone else: Listen, you have to be 
responsible for the cost up to a certain level, and when you get to 
that level which would threaten your economic solvency, at that point 
the Federal Government will come in and assist you in paying the drug 
costs, which would be catastrophic coverage and makes much more sense 
than the proposal which has first-dollar coverage, if you are putting 
forward a plan which has as its purpose the actual correction of the 
present problems occurring in the health care community relative to 
drug costs.
  The proposal the President puts forward makes no sense substantively 
on the issue of paying for drug costs, because it does not benefit 
anybody if they have a catastrophic amount of drug costs. It may make 
sense, however, politically because it says to a senior citizen, we are 
going to cover you for first-dollar coverage of your drug costs, which 
means you can say to all seniors, you no longer have a drug cost for up 
to $2,000, which means a lot of seniors will be covered, but of course 
those seniors who are most at risk, who have lots of drug expenditures, 
who exceed $2,000 in drug expenditures, are thrown out like the baby 
with the bathwater, but at least politically you pick up the vast 
majority of seniors who have lower drug costs.
  One has to look at that benefit and say that is a more politically 
driven benefit structure than a benefit structure directed at the 
problem, which is the huge amount of drug costs on senior citizens and 
the fact it can wipe out their assets.
  One has to look at another issue, which is, we all know a drug 
benefit is very expensive for the Federal Government, and therefore for 
the taxpayers, and when we are talking about taxpayers, we are talking 
about younger taxpayers who are paying to support the senior citizens.
  We have a transfer of income from younger working Americans into 
senior citizens' accounts, and one would expect, therefore, in looking 
at that, we would be saying: Seniors who are doing well--and a large 
number of seniors in our society are, fortunately, because we have been 
able to create an atmosphere where many seniors have a fair amount of 
income, and, as a matter of fact, as a matter disposable income, people 
over age 65 have more disposable income than in their working years 
when they were in their twenties and thirties. For the most part, you 
could say those people are doing really well.
  For example, say, Bill Gates' parents, who probably have a fair 
amount of stock in Microsoft, may be retired. I do not know if his 
parents are retired or not. I am using that as an example. Someone who 
is extremely wealthy who is retired, one would not expect their drug 
benefits to suddenly be subsidized by somebody who is working in a 
restaurant, a gas station, or on a computer assembly line in Nashua, 
NH.
  Yet what the President has put forward is a plan that does just that. 
He put forward a plan where working Americans, Americans who are just 
trying to make ends meet, where both parents are having to work in 
order to take care of household expenditures, who are under tremendous 
financial pressure, are going to have to subsidize the drug benefit of 
all senior citizens, no matter what their income level.
  A high-income senior citizen, somebody who happens to be a member of 
a famous family that has made millions of dollars, or somebody who is 
not even a member of a famous family but happens to have a tremendous 
amount of wealth--Charlton Heston, for example, I suspect he has been 
successful--that person's drug benefit under Medicare will suddenly 
become a subsidized event paid for by a working American.
  Does that make sense? No; that is upside down. Obviously, if you are 
going to have a drug benefit for senior citizens, it should really 
apply to those seniors who need the benefit and who cannot afford it. 
That happened to be the proposal that came out of the Breaux 
commission. They suggested people up to 135 percent, I believe, of 
poverty be allowed to get the drug benefit and have it subsidized and 
people over 135 percent would not have that event occur. Therefore, 
people with higher incomes would not end up being subsidized by working 
Americans who maybe cannot afford to subsidize the drug benefit of 
senior citizens because they have to take care of their own household 
expenditures.
  Yet this proposal from the administration has not taken the tack of 
the Breaux commission which says: Let's take care of those seniors who 
need the assistance, but let the seniors who can afford to pay for 
their own drugs pay for them. They turned it upside down: Let's take 
care of all seniors at the expense of working Americans, maybe even 
Americans who have trouble making ends meet.
  That leads one to the question: Why are they doing this? Is this the 
substantively right thing to do? Is it the politically correct thing to 
do? Yes, it is, because we all know when it comes to senior citizen 
accounts, there is tremendous reticence within the senior citizen 
activist community in this country to have any sort of means testing, 
which is what this amounts to, or affluence testing, which is where it 
would lead to. Yet they allow Americans to subsidize extremely wealthy 
Americans, not only for the drug benefit as proposed by the President 
but, unfortunately, as the President did in part B premiums, they are 
willing to allow that truly inappropriate action to occur for the 
political benefit of it. Once again, what we are seeing is a political 
initiative.
  Then if you look at the proposal in its outline form, you can see it 
is going to create an intricate, complex, bureaucratic structure to 
determine what benefit is covered and is available to be picked up by 
the Federal Government under the drug benefit cost. There is going to 
have to be some sort of extremely complex structure. They turned it 
over to HCFA, which is an agency that has the capacity to develop a 
complex structure, but there will need to be some sort of national 
structure set up in order to account for what is and is not covered 
under the system the President has set up in his proposal.

[[Page 14561]]

  One gets the feeling we are looking again at the use of the Federal 
bureaucracy as the agency to manage the day-to-day activities of health 
care. We know from experience that does not work too well.
  This proposal the President has put forward is, on its face, upside 
down on core basic issues of better health care, whether it happens to 
be the premium, whether it happens to be the means testing, or whether 
it happens to be the bureaucracy.
  I think the thing that I find most dangerous about this proposal, and 
the thing I am most concerned about, is the effect on lifestyle of 
American seniors because it puts us on an extraordinarily slippery 
slope, in its present structure, which will most likely lead to a 
diminution of the effort of the American entrepreneurial culture to 
produce better drugs for seniors.
  A great number of American citizens today benefit dramatically from 
the fact that we have the most vibrant, innovative drug research and 
development industry in the world. We have an industry which is second 
to none in producing products that make people's lives better.
  But it is an extremely expensive undertaking. It takes 12 years and 
hundreds of millions of dollars to bring a drug to the market. The only 
way that these entrepreneurs can undertake that initiative is if they 
are able to go out in the marketplace and get the capital necessary to 
take that type of risk to produce those drugs.
  When you start having the Federal bureaucracy manage who can and who 
cannot buy a drug and what drug has to be bought and what drug cannot 
be bought, as will inevitably be, I suspect, the outcome of this 
initiative, as it moves into its second- and third-generation event--
and was the intention, by the way, of the Hillary health care plan, so 
we know that we can suspect that is in the back of somebody's mind 
around here--then your ultimate outcome will be to have a chilling 
effect, a dramatic dampening effect on the innovative minds of America, 
on the scientists of America who are producing the new drugs which make 
people's lives better because those scientists and those innovators are 
not going to be able to get funds through the capital markets to 
underwrite their undertakings.
  Why? Because if you are a capital investor, as Mr. Greenspan has so 
often told us, the capital markets are the most efficient markets in 
the world. Money flows for capital where it gets the return that makes 
the most sense for those dollars. People are not going to invest in 
drug research and development if they are not going to get adequate 
return. They are not going to get adequate return on it if you have a 
Federal bureaucracy taking over the control of the pricing mechanisms 
or the appropriate drugs to be purchased--both of which are potential 
outcomes of any plan put forward by this administration because that, 
as we have already seen, is a goal that is in the back of the mind of 
this administration. So although it is not a stated risk, it is, in my 
opinion, a clear undercurrent of risk as we step into this area of drug 
benefit for senior citizens.
  The ultimate conclusion of this, of course, is that I think the 
President's proposal is political, not substantive. If the President 
wanted to substantively pursue a drug proposal, a drug benefit for 
senior citizens that would work, that had been well vetted and well 
thought out intelligently, he would have adopted the proposal of his 
own commission, the Breaux Commission. That was rejected in order to 
take the path of the political initiative. I think we should be very 
suspicious before we step on to that path as a Congress.
  Mr. President, I appreciate the courtesy of the Chair and yield the 
floor.

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