[Congressional Record (Bound Edition), Volume 145 (1999), Part 10]
[House]
[Pages 14758-14765]
[From the U.S. Government Publishing Office, www.gpo.gov]



       THE PRESIDENT'S PLAN TO MODERNIZE AND STRENGTHEN MEDICARE

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the gentleman from New Jersey (Mr. Pallone) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. PALLONE. Mr. Speaker, I wanted to start this afternoon by talking 
about the President's plan to modernize and strengthen Medicare for the 
next century which he announced at a press conference that was held at 
the White House yesterday; and let me say, Mr. Speaker, if I can, that 
I strongly welcome this proposal. I think it is a very good proposal 
and specifically with regard to the new prescription drug benefit, the 
effort to eliminate copayments and deductibles for preventive care, the 
fact that it also includes the Medicare buy-in for the near elderly, 
those who just are below the age of 65, and the fact that by using 15 
percent of the projected surplus that Medicare is fully funded for a 
much longer period of time than would be the case under current 
conditions. All these things I think are a strong indication that this 
is a very good proposal which certainly the Democrats support and which 
I am hopeful that the Republicans and the Republican leadership will 
support as well so that we can get a bill out of committee to the floor 
and passed in this Congress.
  Let me just talk a little bit about some of the most important 
aspects of this Medicare proposal in my opinion. I think probably the 
most important aspect is the new voluntary Medicare Part B prescription 
drug benefit that is affordable and is available to all beneficiaries.
  We all know that when you talk about Medicare the biggest gap, if you 
will, that exists in the Medicare program now is the lack of a 
prescription drug benefit. When Medicare was started under President 
Johnson as a Democratic initiative back in the 1960s, over 30 years ago 
now, prescription drugs were not that much a part of the average senior 
citizen's budget. Medicine then was not so much emphasizing preventive 
care, particularly prescription drugs; and, frankly, a lot of the 
prescriptions that we have now had not even been invented. So it was 
not an important issue. It was not included in the Medicare package at 
the time.
  But as time went on over the last 30 years the lack of a prescription 
drug benefit has been a major gap causing senior citizens to expend a 
lot of money out of pocket, in some cases several thousand dollars a 
year. And so the President's response in trying to include a modest 
prescription drug benefit is commendable, it is fully paid for, and I 
think it will go far towards helping senior citizens and the disabled 
under Medicare to deal with this problem.
  I just wanted, if I could, to outline some of the high points of 
this. There is no deductible. And, well, basically the way it applies 
is that you contribute initially $24 a month as the premium that you 
pay for this new Part B; and Medicare, once you participate, pays half 
of your drug costs from the first prescription filled each year up to 
$2,000 a year when the program begins. And eventually that will be 
phased in to be up to $5,000 a year in drug costs. And, of course, the 
premium will go up as well and could, when fully phased in by 2008, be 
as much as $44 per month.
  But what it would mean is that, when the program starts, is that if 
you pay $24 a month and you have as much as $2,000 in prescription drug 
costs for the year, half that will be paid by Medicare. And there is no 
deductible, there is no copay, so to speak, so that starts with the 
first prescription, that half of it is paid for by Medicare.
  The other thing that is important is that this program, if you 
participate in this new Part B benefit, will insure the beneficiaries a 
discount similar to that offered by many employer-sponsored

[[Page 14759]]

plans, which is estimated to be, on average, over 10 percent. So even 
if you go above the $2,000 per year, you are still benefiting in the 
discount, and of course the discount is your floor. So you are going to 
get a discounted price before you are even starting to pay for the 
prescription drugs.
  The cost I mentioned initially is $24 per month beginning in 2002 
when the program is set to begin. I would also point out that for those 
beneficiaries, for those Medicare recipients who are below a certain 
income level, there would be no premium. Beneficiaries with incomes 
below 135 percent of poverty, and that is $11,000 for a single 
individual or $17,000 for a couple, would not pay premiums or cost 
sharing. Those with incomes between 135 and 150 percent of poverty 
would receive premium assistance as well. So in many ways this is 
modeled after the so-called QMB program with Part B of Medicare where, 
if you are below a certain income, you do not pay the premium at all, 
and then there is assistance for those a little bit above that level to 
pay part of the premium.
  Finally, I wanted to mention with regard to the prescription drug 
benefit that it would provide financial incentives for employers to 
retain their retiree health coverage if they provide a prescription 
drug benefit to retirees that was at least equivalent to the new 
Medicare outpatient drug benefit. This would save money for the 
program. So we would encourage those who already provide or have a 
prescription drug benefit as part of their pension or retirement health 
benefits, that would be incentives for employers to keep that benefit.
  Now some may say, ``Well, how many Medicare recipients would actually 
benefit from this prescription drug program and would see fit to opt 
for it because it is voluntary?'' And we estimate, the President 
estimates, that most Medicare beneficiaries will choose the drug option 
because of its attractiveness and affordability. Older and disabled 
Americans rely so heavily on medications that about 31 million 
beneficiaries would benefit from this coverage every year. So there are 
about 31 million, which is the majority of Medicare recipients, who 
would find that if they pay this premium per month, or if they were 
eligible to not have to pay the premium, that they would end up saving 
money and opt for the Part B prescription drug benefit.
  Now let me talk a little more about some of the other major aspects 
of this, the President's Medicare proposal, that I think are worthy of 
note. One of the things that is changing, and I think for the good with 
regard to health care, and that is not only for seniors and the 
disabled, for everyone, is the renewed emphasis on prevention. A few 
years ago, preventive medicine was not really in vogue. Some people did 
it, some people did not, but it was not thought about a great deal. But 
increasingly we know that if people take preventive measures, and 
prescription drugs are really part of that, I mean then they avoid 
hospitalization, they avoid nursing home care, they avoid expensive 
treatment.
  Well, the President, when he unveiled his Medicare expansion and 
modernization proposal yesterday at the White House, said that it would 
include the elimination of all cost sharing for preventive benefits in 
Medicare, and that means basically that there would be no copayments 
and deductibles for preventive services covered by Medicare. And just 
to give you examples, that would include cancer screening, bone mass 
measurements, pelvic exams, prostate cancer screening, diabetes self-
management benefits, mammograms. Anything that is preventive we would 
eliminate the deductible and the co-payment.
  I think that is significant, not maybe as significant as the drug 
benefit, but kind of that goes along with it, because what it means is 
we do not want to discourage people because they have to shell out a 
certain amount of money into not taking preventive measures, and the 
reason makes sense, not only for them individually, but also because it 
saves the government money because, if they do these types of 
screenings, maybe they avoid hospitalization and expensive operations 
that Medicare would have to pay down the road.
  So I think it makes a lot of sense, and let me just mention two other 
things. One is the Medicare buying proposal. This is something that is 
not new. The President proposed it in his State of the Union address, 
but he is reiterating it once again, and it will be part of this 
legislation that is sent up to Congress. And that says that Americans 
between the ages of 62 to 65 would be able to buy into the Medicare 
program for approximately $300 per month if they agree to pay a small 
risk adjustment payment once they become eligible for the traditional 
Medicare at 65. So people in those years would be able to buy into 
Medicare. Displaced workers between 55 and 62 who had involuntarily 
lost their jobs and insurance would buy in at a slightly higher 
premium, about $400 a month, and retirees over age 55 who had been 
promised health care in the retirement years would be provided access 
to COBRA continuation coverage if their old firm reneged on their 
commitment. So, again, we are reiterating this buying proposal for the 
near elderly, very important because so many of those people do not 
have health insurance.
  And last thing, and then I would like to yield to one of my 
colleagues, is that the President reiterated once again that he will 
dedicate 15 percent of this growing surplus over 15 years to Medicare, 
and that will ensure the life of the Medicare trust fund until at least 
2027. So we are extending the life of the Medicare trust fund. It means 
that Medicare remains solvent for almost another 30 years, terribly 
significant.
  So many senior citizens come up to me and say that they are worried 
about, as my colleagues know, whether Medicare is going to be there, 
and of course younger people as well. It is probably more of a problem 
for younger people than it is for senior citizens right now. But this 
proposal which the President put forward would keep Medicare intact and 
fully paid for until the year 2027.
  So I think it is a great idea. I am sure going to see a lot more 
Democrats coming up and saying that they support it, and hopefully we 
will get support from the Republican leadership as well.
  Madam Speaker, I wanted to go into some more details about the 
President's Medicare plan because I think that it is so important. Many 
people, many Members of Congress, I am sure, hear from their 
constituents about the problems that their constituents have because of 
gaps in Medicare, particularly with regard to the prescription drug 
benefit. But the bottom line is that the President's plan is seeking to 
modernize and strengthen Medicare in a lot of different ways, as my 
colleagues know. And if I could just highlight some of the other things 
that were mentioned yesterday by the President when he had the press 
conference at the White House?

                              {time}  1545

  A lot of the Medicare modernization program that he has put forward 
seeks to modernize and strengthen Medicare by making it more 
competitive and efficient.
  I know that those are words that are often thrown out around here and 
people mention that all the time, but I think that it is important to 
kind of stress some of the efforts that the President is putting forth 
that would also make the Medicare program more competitive and 
efficient, if I could at this time.
  One of the things that he stressed was giving traditional Medicare 
new private sector purchasing and quality improvement tools. The 
proposal would make the traditional fee-for-service program more 
competitive through the use of market-oriented purchasing and quality 
improvement tools to improve care and constrain costs. It would provide 
new or broader authority for competitive pricing, incentives for 
beneficiaries to use physicians who provide high quality care at 
reasonable costs and coordinating care for beneficiaries with chronic 
illnesses and other best practice private sector purchasing mechanisms.

[[Page 14760]]

  Essentially, what he is trying to do is to make Medicare more 
competitive, more efficient, by bringing in some private sector tools. 
That is estimated to save about $25 billion over 10 years.
  The second area where this competitiveness comes into play is by 
extending competition to Medicare managed care plans by establishing a 
competitive defined benefit while maintaining a viable traditional 
program. The competitive defined benefit proposal would, for the first 
time, inject true price competition amongst managed care plans in 
Medicare. Plans would be paid for covering Medicare's defined benefits, 
including a new subsidized drug benefit which we mentioned, and would 
compete by offering lower cost and higher quality.
  Price competition would make it easier for beneficiaries to make 
informed choices about their plan options and would, over time, save 
money for both the beneficiaries and the program.
  The competitive defined benefit would do so by providing 
beneficiaries with 75 cents of every dollar of savings that result from 
choosing lower cost plans. Beneficiaries opting to stay in the 
traditional fee-for-service program would be able to do so without an 
increase in premiums. There is a savings from that of $8 billion over 
10 years starting in the year 2003.
  Then there are two more points, if I could, and then I would yield to 
some of my colleagues who I see are joining me on the floor to discuss 
this.
  The third point is that the President's proposal constrains outyear 
program growth but more moderately than the balanced budget amendment 
which we adopted in 1997. To ensure that program growth does not 
significantly increase over most of the Medicare provisions of the 
Balanced Budget Act, which expire in 2003, the proposal includes 
outyear policies that protect against a return to unsustainable growth 
rates but are more modest than those included in the Balanced Budget 
Act of 1997.
  I do not want to keep going into all of the details of this, but I 
think that the President again should be commended for trying to bring 
a more competitive and efficient approach into the Medicare program. 
And that is one of the reasons that we are able to save some money.
  So, in essence, what he is doing here is bringing a significant 
amount of the surplus, 15 percent, into the Medicare program to make 
sure that the program is solvent, to expand the benefits to include the 
drug benefit, but at the same time trying to make the program more 
competitive and efficient and saving money.
  That would be also brought back into the program for these extra 
benefits like prescription drugs, as well as to keep the program 
solvent until the year 2027.
  Obviously this is the type of thing that is very important, and I 
think only helps in the overall effort to strengthen and modernize the 
Medicare program.
  It is interesting because many of us on the Democratic side have been 
talking about the need to include a prescription drug benefit, and our 
effort, and I see my colleague, the gentleman from Maine (Mr. Allen) is 
here, actually goes back to, I think it was sometime in May, around 
Mother's Day, when there was a report put out by the Older Women's 
League, OWL, and I had come to the floor at that time to specifically 
point out how the gaps in the Medicare program have a particularly 
negative impact on older women, which the OWL report highlighted.
  Most of what was discussed was the problem in terms of out-of-pocket 
costs for prescription drugs.
  The other thing that the OWL report pointed out is that many of the 
lowest income senior citizens again are women and those are the very 
women who would benefit most from this prescription drug benefit and 
would not have to pay at all because they fall below the poverty level 
and would not even have to pay the $24 monthly premium.
  So all in all, this is a great program.
  Mr. ALLEN. Mr. Speaker, will the gentleman yield?
  Mr. PALLONE. I yield to the gentleman from Maine, who came down here 
to join me and discuss this.
  Mr. ALLEN. Mr. Speaker, I thank the gentleman from New Jersey (Mr. 
Pallone) for yielding.
  Mr. Speaker, this is a good day. The President's proposal to reform 
Medicare is a giant step forward to preserve, protect and strengthen a 
program that is one of the best things that we do, that the Federal 
Government does, for senior citizens.
  Together, Medicare and Social Security keep 40 to 50 percent of our 
seniors out of poverty and yet these programs both face some 
challenges. In the case of Social Security, the challenge is largely 
demographic, simply more people are growing older. And as the baby boom 
generation retires, there will be extra pressure on the program.
  Medicare has a demographic problem but also a cost problem and a 
quality problem.
  I thought what I would do today is talk a little bit about the 
prescription drug benefit that is contained in the President's proposal 
and then talk a little bit about some other aspects of the proposal 
that I think are very important.
  Last year, I asked for a study in my district on the cost of 
prescription drugs to the elderly, and that study was done by the 
Democratic staff of the Committee on Government Reform, and they found 
that, on average, seniors are paying twice as much for their 
prescription medications as the drug companies' best customers, and the 
best customers are hospitals, HMOs, and the Federal Government through 
the purchases it makes for veterans or through medicaid.
  As a consequence, I introduced last year and again this year what is 
now H.R. 664, the Prescription Drug Fairness for Seniors Act. Now, this 
legislation would allow pharmacies to buy drugs for Medicare 
beneficiaries at the best price given to the Federal Government. We 
think it would reduce prescription drug prices for seniors by 40 
percent, 40 percent, at virtually no cost to the Federal Government.
  Now, when I introduced this legislation, I thought we would have some 
support on the Republican side of the aisle, because I thought, 
naively, that a bill which provided a substantial discount on 
prescription drugs to seniors, at virtually no cost to the Federal 
Government, with no new bureaucracy, would have broad bipartisan 
support, but that has not happened.
  I am very pleased that in the President's proposal this concept, 
though not the bill, is included. The concept is included in the 
President's proposal by the suggestion that Medicare would contract 
with pharmacy benefit managers and that those pharmacy benefit managers 
would get at least a 10 percent discount from the manufacturers for 
prescription drugs.
  I think we could do better. I think we could be more aggressive, but 
it is really a step in the right direction.
  The President's prescription drug benefit is a modest step, but again 
the right sort of step. What he is proposing is this: For an initial 
premium of $24, rising to $44 by 2009, Medicare beneficiaries could 
sign up for a prescription drug benefit that would pay them initially 
$1,000 maximum toward their prescription drug costs, one half of their 
total costs, covered costs, and that benefit would rise to $2,500 by 
the year 2009.
  So for those seniors who have $2,000 in prescription drug costs right 
now or $5,000 in prescription drug costs by the year 2009, the 
government would basically pay one half of all their costs in return 
for a modest premium. That is a good plan and a real step forward.
  What is interesting is the reaction of the Republicans to these 
various proposals. On the one hand, the Republican reaction to the 
President's plan has been, well, two-thirds of seniors have coverage 
for their prescription drugs; we do not need this plan. But the two-
thirds is not quite right.
  Thirty-seven percent of all seniors have no coverage at all for their 
prescription medications. That percentage in rural areas is 50 percent. 
Fifty percent of seniors in rural areas have no coverage whatsoever.
  Another significant percentage have inadequate coverage. So at the 
very

[[Page 14761]]

least, we are talking about half the seniors on Medicare and we cannot 
just dismiss them out of hand and say because it is only half the 
seniors on Medicare we should therefore forget about them. These 
seniors have very serious problems paying for their food and for their 
medication.
  A couple of stories. I have seniors in my district who have written 
me, women who have written me and said, I do not want my husband to 
know, but I am not taking my prescription medication because my husband 
is sicker than I am, and we cannot both afford our medications.
  It should not be that way in this country, not when all of those 
people are already on a Federal health care plan called Medicare.
  The Republican reaction to our bill, which has virtually no cost to 
the Federal Government, is, oh, dear, it may involve price controls, 
which it does not; pharmaceutical companies may not be as willing to do 
research and development. I do not believe that for a moment.
  They have not signed on to a bill with virtually no cost to the 
Federal Government, and when it comes to the President's plan they say 
it costs too much.
  What is uniform here is a refusal to recognize the seriousness of the 
problem that seniors are having paying for their prescription 
medications and their food and their rent or whatever, an unwillingness 
to come to grips with it. The President's plan comes to grips with this 
problem. He is basically saying, if we were inventing Medicare today, 
no one, no one, would leave out a prescription drug benefit.
  ?????o the question in this time of unprecedented economic growth, 
with budget projections that are better than any this country has seen 
in the last 30 or 40 or 50 years, the question is, cannot we take care 
of our seniors? I really believe that we can.
  There is another piece of the proposal that I wanted to mention. I 
think this is an important piece of the proposal. What the President is 
saying is we need a competitive defined benefit plan. It builds on the 
security and the stability that we have in Medicare today.
  Now, what do I mean by that? Well, today the benefits that people 
have under Medicare remain the same, from year to year to year, unless 
Congress acts to change them. There is stability. There is 
predictability. There is continuity in that benefit structure. But if 
private insurance companies come into Medicare, take over Medicare, 
what we will find is the benefits will start changing; prescription 
drugs that are covered today will not be covered next year; the 
benefits will change; the premiums will change, and we will wind up 
with confusion, with lack of clarity, with instability and with lack of 
predictability. That is not what seniors in this country need.
  Now, what the President is saying to the extent that there are 
managed care companies, HMOs, operating under Medicare, and that is 
about 14 percent of the Medicare market right now, they ought to be 
providing a basic, defined benefit plan which cannot be changed. 
Stability, continuity, predictability, that is the kind of competition 
we need, over price, over quality, but not over variation in benefits.

                              {time}  1600

  Private health insurance companies will also act to exclude the 
sickest and the poorest and to cover the healthy and the wealthy. That, 
again, is not what our seniors need. We want the equity of this 
existing Medicare system to continue under any reform proposal.
  What is exciting about the President's proposal is that he has made 
the commitment to preserve the equity in the system, he has made the 
commitment to expand and improve on the benefit structure by adding a 
Medicare benefit, and he has also insured the solvency of Medicare out 
to the year 2027.
  This is a remarkable achievement. We should not let this opportunity 
pass by. We have a chance in this country now to take the two programs 
that mean the most to our seniors, social security and Medicare, and 
use the surplus that we have, set it aside, save it, and take care of 
these two major commitments of the Federal government.
  The message is clear, first things first. We have a commitment to our 
seniors, social security, and Medicare. We have the resources to make 
sure that the government follows through on that commitment, and we 
ought not to let this opportunity pass by. I thank the gentleman very 
much for yielding to me.
  Mr. PALLONE. I just wanted to thank the gentleman from Maine. He has 
been the leader on this whole issue of the high cost of prescription 
drugs. He introduced a bill, I think he gave us the number, but I call 
it the Allen bill, because he is the prime sponsor. I am a cosponsor of 
that bill. I think it is a very important piece of legislation in terms 
of the effort to try to control prices of drugs, which are out of hand, 
particularly for senior citizens.
  I am really glad that the gentleman talked about how the President's 
bill, even though it is different, or the President's proposal, even 
though it is different, tries to get at the costs. One of the things we 
mentioned was this whole discount that would be available, as well as 
the competitiveness.
  The gentleman's proposal as well as this one I think kind of follow 
on each other in an effort to try to achieve the same goal. I just 
wanted to say, I wanted to yield to the gentleman from Texas, but I 
know a lot of people, and I have already heard that from some of the 
Republicans, and I am not saying all of them, because I think we are 
going to actually get some Republican support on this, and hopefully a 
lot of it. But I have heard the same thing, this does not help 
everyone, this only helps 50 percent of the people.
  The President said yesterday, this was a modest proposal. This was 
not a proposal to try to cover everyone, but it is modest and it is 
paid for. That is the main thing.
  He went out of his way in the document that was presented to us 
yesterday and in the discussions we have had since then to show in 
detail how every penny of this thing is paid for. I think that is 
important, because we know that everything is not endless around here 
and we have to pay for things.
  The fact of the matter is something like 31 million seniors would 
benefit from this program, a majority. To me that is a strong 
beginning, and something that we should support. I appreciate what the 
gentleman said.
  I yield to the gentleman from Texas (Mr. Doggett).
  Mr. DOGGETT. Mr. Speaker, if I might address some queries to both 
gentlemen, first, if I understand the legislation of the gentleman from 
Maine, it does not involve any cost to the taxpayer at all. Is that 
correct?
  Mr. ALLEN. I would agree with that, except there might be some small 
administrative cost, but virtually no cost.
  Mr. DOGGETT. There are various ways to deal with this problem, but 
what the gentleman is spotlighting, those least able to pay get charged 
the most. I know one very commonly prescribed medication for those over 
65 having to do with cholesterol, that it is 300 percent more if one is 
a senior paying individually than if one is in some kind of group 
health insurance plan, like many of my folks are there in central 
Texas.
  So, for example, I have here in Washington today a number of teachers 
from our public schools. They have a better arrangement probably now 
through their group and health insurance to get prescriptive drugs than 
they would have as an individual retiree once they are on Medicare, 
because there is no Medicare coverage, and they are going to be charged 
all the market will bear when they are having to bargain for themselves 
individually, is that not correct?
  Mr. ALLEN. The gentleman has it, that is right.
  Mr. DOGGETT. But that is not true for veterans, is it? We also have 
some veterans here today from central Texas. A veteran going through 
the Veterans Administration can avoid that problem to some extent, can 
he not?
  Mr. ALLEN. To some extent. Certainly some veterans get their 
prescription drugs free through the Veterans Administration. It does 
not apply to all veterans, but it does apply to

[[Page 14762]]

some. There are some benefits for veterans, that is true.
  Mr. DOGGETT. How is it that the Veterans Administration is able to 
get these prescription drugs at a more reasonable price than an 
individual veteran not covered, or someone who is on Medicare and not 
covered can get them?
  Mr. ALLEN. If the gentleman will yield again, basically this is a 
question of market power. The best prices are given by the 
manufacturers, the pharmaceutical manufacturers, to hospitals, HMOs, or 
the Federal government, all of which have some negotiating power.
  What my legislation does and what the President's proposal does, to 
an extent, is basically say, for those people who are already under a 
Federal health care plan, namely, Medicare, they ought to get a similar 
discount. That is all that we are saying with the legislation that I 
have introduced.
  Mr. DOGGETT. So to all those major interest groups that are opposing 
the gentleman's legislation and saying we are going to have cost 
controls and we are going to threaten research and all these various 
straw men that they raise to oppose doing something for seniors who 
have to pay the most when they have the ability to pay the least, the 
gentleman is saying, really, he is going to let the market work, but he 
is going to bring a little equity in the bargaining power to the 
marketplace.
  Then I would ask the gentleman, and I appreciate very much the 
gentleman's leadership on this measure, I would ask the gentleman from 
New Jersey about why it is, at a time when Congress has recessed early, 
before people have left work in Austin, Texas, and in much of the 
country, I think Congress recessed today again just after doing very, 
very little and nothing very meaningful for the American people. We 
were not here on Monday. There is some debate whether we will be here 
on Friday.
  Why is it that there can be an issue as important as providing 
prescription drugs for those who are over 65 and addressing the 
concerns through a Patients' Bill of Rights of those of all ages who 
rely on managed care, why is it that the Congress is not out here 
having a full debate, where Republicans and Democrats are debating 
about what the best way is to solve this problem?
  Mr. PALLONE. I think the answer is very simple. That is that the 
Republican leadership in the case of the Patients' Bill of Rights, the 
HMO reform, simply does not want to bring up the bill because they do 
not want it to pass. They know if the Patients' Bill of Rights, the HMO 
reform, comes up and it is considered, it will pass, so they exercise 
their leadership by not bringing it up.
  I think the reason they do it is very simple: They are beholden to 
the insurance companies. They are beholden to the HMOs. They spend, the 
HMOs spend millions of dollars on advertising and influencing 
congressional races. They do not want this legislation brought to the 
floor because they know it will pass.
  Mr. DOGGETT. At least in terms of the time available here, there is 
no reason why we could not have already considered the Patients' Bill 
of Rights. And as far as prescription drugs, whether it is the approach 
the gentleman from Maine (Mr. Allen) has taken, the approach that the 
President has recently indicated he supported, or any number of other 
avenues, there are other pieces of legislation introduced, the reason 
that those are not getting considered here on the floor has nothing to 
do with the Congress not having time to consider them, does it?
  Mr. PALLONE. I do not think anybody can make the argument that we do 
not have the time. As the gentleman very well pointed out, we did not 
meet Monday, we met yesterday very briefly, today we adjourned at 2:30.
  Mr. DOGGETT. We will have a recess next week. I doubt most people 
will know we are in recess. The Congress has done so little so far this 
year, they probably won't miss anything other than the rhetoric next 
week, certainly no meaningful action.
  Mr. PALLONE. The gentleman did not mention, but I could add, it took 
almost 2 weeks in the other body, the Senate, for the Democrats to 
insist that the Patients' Bill of Rights be brought up. They almost had 
to filibuster in order to make sure that the bill was brought up.
  I understand that when we come back after the recess that there is an 
agreement to bring up the Patients' Bill of Rights in the Senate, but 
there were two weeks wasted because the Republican leadership would not 
bring it up. It remains to be seen whether they actually do when we 
come back.
  Mr. DOGGETT. I know next week during the recess here in Washington I 
am going to be meeting with seniors in Austin at a pharmacy to do very 
much the kind of presentation I know the gentleman has already done in 
New Jersey, to point out for a neighborhood pharmacy in Austin, Texas, 
the difference in the charges that seniors without prescription drug 
coverage get charged and that everybody else gets charged. It is a 
cruel disparity.
  I have one letter after another here that I expect I will have an 
opportunity to explore with the gentleman at another time as we try to 
draw attention to the failure of the Republican leadership to deal with 
this issue; of people saying that they have to make some really 
critical lifetime choices, and sometimes it is a matter of choosing 
food, of choosing groceries, or choosing prescriptive drugs.
  I think the American people should be appalled at the failure of this 
Congress to come to grips with these issues. It is not a lack of time, 
it is a lack of leadership and a lack of interest in these kinds of 
pressing problems that the American people face. I thank the gentleman 
for his leadership on this.
  Mr. PALLONE. I appreciate the gentleman bringing this up.
  When the President unveiled his plan yesterday, and we were there, 
that was the reason he cited why he was dealing with this prescription 
drug benefit, because he said that when he was first elected he was 
hearing a chorus from different senior groups about how they had to 
decide between whether they were going to eat and have proper 
nourishment as opposed to paying for their prescription drugs.
  He vowed that he was going to make sure that something was done about 
it so people did not have to make that choice.
  Mr. Speaker, I yield to the gentlewoman from Florida (Ms. Brown).
  Ms. BROWN of Florida. Mr. Speaker, I want to thank the gentleman for 
his leadership on this issue.
  Coming from Florida, where we have over 3 million senior citizens, 
this is a real crucial issue for us. I can tell the gentleman that no 
matter where I go in Florida, the major issue is Medicare and what is 
going to happen to the program. Really, it is not social security, it 
is not education, this is what on their minds, because of the cuts that 
exist in the program from the balanced budget amendment.
  Can the gentleman tell me a little bit about the President's proposal 
in restoring some of those cuts in home health care?
  Mr. PALLONE. I know that concerns have come up with home health care, 
with some of the outpatient services, and also with teaching hospitals 
that have been concerned about the limitations on the amount of money 
that they have available with research.
  What the President said, and I do not have the details in front of 
me, was that because of the infusion of funds from the 15 percent of 
the surplus, which is a growing amount now that would be dedicated to 
the Medicare program, and because of the cost savings that he was 
putting in place with the new efficiency and competitive proposals that 
I mentioned previously, and others, that more money would be available 
to address some of these problems.
  Yesterday he did not specifically mention which ones would receive a 
certain amount of money, but a lot of things the gentlewoman mentioned, 
including the home health care.
  Ms. BROWN of Florida. Nursing homes.
  Mr. PALLONE. They were mentioned. My understanding is that because of 
the savings, as well as the

[[Page 14763]]

money that is going to be made available in the surplus, because of the 
surplus, some of those concerns can be addressed.
  Ms. BROWN of Florida. A couple of those things that he did mention, 
which is very exciting for people in Florida, and one that the 
gentleman has been talking about, the prescription drugs, which is so 
crucial for the people of Florida, I cannot tell the the gentleman how 
many times that I go home and this subject comes up about the cost of 
medicine.
  People join the HMOs for various reasons. Basically, their 
prescriptions eat it up in a couple of months, and then they are left 
having to pay this astronomical cost of medicine. So I am very excited 
about this portion of the President's proposal.
  Another proposal that is very exciting is that when this program 
started in 1965, a lot of the things that we have done in medicine were 
not available, so the prescreening portion, that people can go in and 
be screened for cancer, diabetes, and other things without any cost, 
that preventative part, and not be penalized, that preventative part I 
think is so crucial.
  Mr. PALLONE. I agree. I have to be honest, for the 12 years that I 
have been in Congress, I guess it is 11 years, the thing that always 
bothered me the most was how we did not provide any incentives for 
preventative care.
  Forgetting the health aspects, which of course we do not want to 
forget, that is the most important thing, but just looking at it from a 
financial perspective, every one of the things that the gentlewoman 
mentioned, if that manages to catch something before it gets worse it 
is going to save us so much money, because down the road we would have 
to pay for the operation, the hospital care, the nursing home care, 
astronomical costs that can be saved because somebody does some kind of 
preventative screening or testing.
  So what the President proposed makes sense. Why penalize people or 
discourage them from having those kinds of preventative measures? I 
totally agree. I think that was one of the best aspects.
  Ms. BROWN of Florida. One of the things that I have decided to do, 
Mr. Speaker, to highlight the program, is in my town meetings I am 
going to bring in seniors in Jacksonville, I am going to have a coffee 
with them, to discuss the proposal; in Orlando I am going to bring them 
in during a luncheon. Because I think it is important that they not 
only talk with me and get the details of the proposal, but they call 
the other representatives in the area.
  I think it is very important, particularly for Florida, with the 
number of elderly population that we have, and growing, that we get 
some relief. I think this is a way that we can go in Florida. I am 
hoping that all Members of the Florida delegation will support this 
proposal. Of course, the people can decide whether or not they think 
this is important.
  Mr. PALLONE. I agree. One of the things, one of the reasons I think 
it is so important that we have these kinds of outreach programs, is my 
own experience in my district.
  My district runs from very wealthy to very poor. A lot of the seniors 
who are below a certain income and eligible for what we call the QMBY 
program, where their Part B benefit was paid and they did not even have 
to put out a premium, were not even aware that that was true. They did 
not know that they were eligible to not have to pay the premium for the 
Part B doctor's bills. The same is going to be true with this program.

                              {time}  1615

  Once we put this into place, this new part D, if they are below a 
certain level, I think I mentioned $11,000 for a single or $17,000 for 
a couple, they would not even have to pay the premium. So for the group 
of people that are in that category, this is a Godsend in my opinion. 
So it is important to get out there and, as the gentlewoman from 
Florida (Ms. Brown) says, and talk to people about it. Because a lot of 
people are not even aware of the benefits that are there for them now, 
let alone once we pass this new benefit.
  Ms. BROWN of Florida. Madam Speaker, I think, in the richest country 
in the world, it is ludicrous that seniors have to decide whether or 
not they are going to pay their rent, buy their medicine or buy food. I 
think we need to commend the President for coming forward with this 
recommendation.
  Mr. PALLONE. Absolutely.
  Ms. BROWN of Florida. So I will do all I can to inform the public so 
that they will call Members of Congress. A lot of people think that we 
are working because we are meeting 5 days a week. But it is not the 
quantity, it is the quality of what we are doing. If we are not dealing 
with the issues that is important to them, then we might as well be 
home doing constituent case work.
  Mr. PALLONE. Exactly. Madam Speaker, if the gentlewoman would bear 
with me, I mentioned earlier OWL, which I think stands for Older 
Women's League. They put out this report around Mother's Day this year 
that we were talking about on the floor at the time to try to get some 
of the changes that the President has now proposed. There were just 
three examples. They gave some real life examples that were mentioned 
at that time. If I could just briefly mention them, because I think 
they really illustrate why this is so important.
  This is a woman from Montgomery, Alabama, Clusta, I do not know if I 
am pronouncing it right, C-L-U-S-T-A, I guess is her first name. She is 
77, widow of 15 years, lives alone. Social Security is her sole source 
of income. Her Medicare Part A hospital coverage is supplemented by 
Blue Cross/Blue Shield. She pays her Medicare Part B premium as part of 
the specified low income Medicare beneficiaries. So that means that she 
does not get it all free, but she gets some assistance. So she does not 
pay the whole thing.
  But she goes on to talk about how valuable Medicare is, but she says 
it is not enough. She spends as much as $3,000 a year on her health, 
most of which goes for medicine. She takes 15 different medications, 
some twice a day. Of course, she lives in subsidized housing.
  In order to be in that slim B category, she is probably making maybe, 
I do not know, $12,000, $13,000 a year. She is spending $3,000 of that 
on prescription drugs. I mean, it is ridiculous. My colleagues can see 
how this would benefit her.
  There is this other woman, Joan, from southern Connecticut. She is 
67, retired social worker, and I am going to skip a lot of this stuff. 
But she has an illness which she explains as too many infection 
fighting T cells that attack her internal organs and her nerve cells. 
She goes on to describe her illness, but she has a supplemental 
insurance policy which covers 80 percent of her medication. Otherwise, 
prescription drugs would cost her $3,500 annually. But this policy, 
which is a Medigap policy, is said to expire, and she is now looking to 
replace it.
  Now, again, I think the gentleman from Maine (Mr. Allen) was pointing 
out that there has been some suggestion, well, a lot of seniors get 
prescription drugs because they have Medigap, supplemental insurance 
that they pay, so what is the big deal? Well, the big deal is that, in 
many cases, they cannot afford to buy Medigap because it is getting 
more and more expensive. A lot of people cannot get the coverage.
  In this woman's case, she knows it is going to expire. She obviously 
cannot continue it. I mean, she would benefit in a major way, $3,500 a 
year in prescription drug benefits. It is unbelievable.
  Then I just want to mention one more, and this is a woman, Rhoda, 
from suburban Minnesota. She is 70. Her late husband and her both 
suffered from chronic disease. She is a breast cancer survivor. She 
talks about the value of Medicare.
  She said that her and her husband spend closes to $300 a month on 
prescription drugs. They take three prescription medications apiece 
everyday, and her husband took two insulin shots each day as well. The 
couple pay out of pocket for various things.
  I mean, again, I do not want to get into all the details, but there 
are just

[[Page 14764]]

so many people out there that are in this category. That is why we need 
this program.
  I yield to the gentlewoman from Florida (Ms. Brown).
  Ms. BROWN of Florida. Madam Speaker, I just want to add one thing. 
With all of the advances in medicine, some of the most beneficiary 
advancements include our ability to detect diseases before they become 
life threatening. Under the President's plan, these types of screening 
would also be covered.
  We all know that one ounce of prevention is worth a pound of cure. 
This is a perfect example of how we can use medicine advanced to make 
smart and cost effective changes in the way we deliver health care.
  I really want to commend the President for coming forth with this 
recommendation, and I am hoping that we in the Congress will look very 
seriously at his proposal, and that the community will get involved, 
and that different groups that support elderly get involved so that we 
can pass a bill.
  Mr. PALLONE. Madam Speaker, I have to say I know that we have been 
very disappointed with the Republican leadership on a number of health 
care initiatives, most importantly the Patients' Bill of Rights that 
they refuse to bring up, so that now we have got to actually sign this 
discharge petition and try to get it to the floor.
  So far, there has not been a lot of criticism of the President's 
proposal on Medicare. I am hopeful, I am sort of crossing my fingers 
here and hoping that, at some point, we will see an expression of 
support for this.
  Ms. BROWN of Florida. Madam Speaker, I am certainly hoping that 
everybody from Florida will take a real close look at this proposal 
because I do not think it should be a Democratic or a Republican 
proposal. I think this proposal should be one that benefits the people, 
particularly the people of Florida. I am just hoping that my colleagues 
will come to the table and let us work together for the good of the 
people of Florida and also the good of the people throughout the 
country. I think we can do this in a very bipartisan way.
  Mr. PALLONE. I hope so. Madam Speaker, again, I just keep pointing 
out that the only reason that we start to agitate as Democrats is 
because we cannot get some of these good proposals brought forward. 
That is certainly true with the Patients' Bill of Rights. But, 
hopefully, it does not have to be the case with this Medicare proposal.
  I know that, initially, there was Republican resistance to the idea 
of taking 15 percent of the surplus and using it for Medicare. I hope 
that they will go along with that. I hope that they will go along with 
the prescription drug proposal and some of these other very significant 
changes in Medicare that the President has proposed.
  Ms. BROWN of Florida. Madam Speaker, I once again want to thank the 
gentleman from New Jersey (Mr. Pallone) for his leadership on this 
matter. The people in Florida owe him a great deal of gratitude for 
bringing this issue before the public.
  Mr. PALLONE. Madam Speaker, I yield to the gentleman from New York 
(Mr. Serrano).
  Mr. SERRANO. Madam Speaker, I want to thank the gentleman from New 
Jersey (Mr. Pallone) again for leading us always on these very 
important issues.
  I was listening to the comments in my office. It dawned on me that I 
represent one of the youngest, if not the youngest, district in the 
Nation. Traditionally, a lot of the discussions in my district are 
about young people, and, therefore, day care and education and schools; 
and a lot of times, unfortunately, not enough is discussed about the 
issue of senior citizens.
  Yet, it dawned on me also, as I was listening, like the rest of 
America, my district is aging. We are not becoming the younger district 
that we were. All of a sudden, this becomes a very serious issue.
  I just wanted to come down and take just a few minutes to say that I 
think the President has put before us an excellent plan, and there is 
no reason why we should not respond to it.
  But my biggest concern continues to be the same concern I had when I 
came down last week and joined the gentleman for the discussion on 
HMOs, managed care. The whole issue of how can we as the greatest 
Nation on earth continue to dodge, to duck the issue of providing the 
best, which we are capable of, medical care, the most affordable, which 
we are not doing but we are capable of, and the most universal medical 
care.
  If we had bad medical services in general, if we had bad medicine and 
we had bad doctors, then maybe the plan would be to keep a lot of 
people away from it and not make it available to everybody. But that is 
not our case.
  So what the gentleman from New Jersey is doing here today, and what I 
want to join him, is to plea with the American people to join us in 
alerting Members of Congress to the fact that this time here we are 
dealing with yet another issue in the whole area of providing medical 
services.
  At times, we deal with the millions of young people and Americans who 
are not covered by medical insurance. At other times, we deal with the 
whole issue of the people who are not getting the proper services. Here 
we are talking about people that are covered but who run the risk of 
having this kind of coverage either end someday or not be handled 
properly or not be of the quality that it should be.
  We have before us a proposal that I think makes a major step to 
address that issue. We have an opportunity to deal with it in a 
bipartisan fashion.
  Madam Speaker, I just wanted to take these few minutes to join the 
gentleman from New Jersey, to thank him again for bringing us together 
and to tell him to count on me and his colleagues to continue to put 
this message forward, that this is about saying what a society stands 
for.
  If a society cannot take care of its children, and we have spoken 
about that, cannot take care of its elderly, then it really did not 
accomplish what it set out to do. This is an opportunity, and we can do 
it.
  Mr. PALLONE. We will continue and bring this up on a regular basis.
  Madam Speaker, I yield to the gentleman from Washington (Mr. Baird).


             Provisions For Landslide And Mud Slide Victims

  Mr. BAIRD. Madam Speaker, I rise today to inform my colleagues about 
a rather unique, but important natural disaster that has occurred in my 
district. Since actually well before I was sworn in, a very slow moving 
but powerful landslide has destroyed more than 130 homes in the city of 
Kelso, Washington.
  The nature of landslides is such that they are not well covered by 
coverage normally available through FEMA and HUD and other disaster 
relief mechanisms available through the government. The result is that 
these people have lost virtually everything they own. Fortunately, we 
have lost no lives. But 130 people have seen their dreams destroyed by 
this landslide.
  I have exhausted and worked very hard with my staff and the agencies 
to provide whatever help we can provide. Yet, still uncompensated and 
uninsured damages remain, and we have looked for ways that we might be 
able to help them.
  Therefore, we have devised some targeted tax measures that would 
assist folks in this particular type of situation. It would provide 
targeted tax relief to homeowners located in State or federally 
declared disaster areas who have lost their homes due to disasters for 
which insurance is not readily available.
  Let me underscore that. One can buy insurance for a great many 
natural disasters, but landslide and mud slides, it is very difficult 
to find insurance, and it is very expensive if one can find it.
  Let me underscore also that normal FEMA coverage does not help in 
situations like this. The homeowners in this particular district have 
done everything they can. They have done it right. They have played by 
the rules. They are two income families. Yet, they have lost 
everything.
  So this is what our bill would do. It would clarify the law to ensure 
that any mortgage forgiveness provided to

[[Page 14765]]

homeowners would not be taxable as income. What would happen there is, 
should a lender decide to forgive interest or forgive a mortgage, under 
current law, that forgiveness could be considered a gift, and the poor 
taxpayers who now have their home buried under mud would have to pay 
taxes on a home which has been completely obliterated. It will not be a 
common thing, but if people are kind enough to step forward and forgive 
mortgage in those cases, it would be important.
  Additionally, this legislation would establish a tax credit to help 
those taxpayers who required to continue paying mortgage payments on 
the destroyed home as they also pay rent or additional mortgage 
payments for a new residence.
  Put ourselves in the position of these homeowners. Again, they have 
played by the rules. Through no fault of their own, their primary home 
has been destroyed. They are still having to pay mortgage on that home 
while they rent another residence for their family. This proposal would 
provide some tax relief in that circumstance.
  There is a third thing this would do. If one should try to claim a 
casualty loss for one's destroyed home, under current law, the 
calculation on that loss is on the basis of the home. As we know, the 
basis is its initial value when one purchased it, not the current 
value. So what we would do is adjust the way that calculation is 
developed so that one could deduct, take a casualty loss based on the 
current value of the home, the most recently assessed value.
  These are common sense measures. They are fair measures. They would 
help good hard working constituents who played by the rules and, 
through no fault of their own, have lost virtually everything they own. 
It would have minimal impact on the Treasury because it deals with the 
very small and specific instance in which our existing laws have not 
been able and our existing agencies have not been able to help these 
folks.
  Finally, Madam Speaker, and there are some cases where homeowners are 
fortunate enough to sell their home in these disasters, and this 
legislation would allow the homeowners to deduct the full value of the 
loss.

                              {time}  1630

  There are some complexities to it which we could share in 
accompanying written testimony, but my main point is to share the 
following points:
  We have homeowners who have, again, lost everything they owned, who 
were not able to buy insurance and for whom FEMA and the other disaster 
mechanisms have not been able to help. This is a targeted, specific and 
quite inexpensive proposal to just help those folks in federally- or 
State-declared disaster areas who have lost virtually everything try to 
get a little bit back through the structure of the tax codes.
  I thank the gentleman very much for yielding, and I hope the Congress 
will consider this favorably.
  Madam Speaker, I rise today to inform my colleagues about a natural 
disaster situation in my district that warrants significant relief, and 
to introduce legislation that will provide some badly needed assistance 
to the victims of these disasters.
  Since even before I was sworn in as a member of this body, I have 
been working with a group of constituents from the City of Kelso, in my 
Southwest Washington district, to provide assistance to their disaster-
torn community. This city has literally been torn apart by slow-moving 
landslides that resulted from heavy rainfalls. In fact, during the last 
14 months, more than one hundred homes have been destroyed by those 
landslides, and the remainder of the homes may suffer the same fate in 
the next 5 to 10 years.
  These constituents and their families have struggled to rebuild their 
lives after their homes or their businesses tumbled down the hill under 
tons of mud and debris, and I have done everything in my power to 
ensure that the federal government does everything that we possibly can 
to help them to that.
  Our Nation has experienced several very powerful natural disasters in 
the past few years. What differentiates these disasters in my district 
from many others is the fact that insurance was not readily available 
for this type of disaster--in fact, most homeowners policies 
specifically exclude mudslides as a covered peril--and now many of 
these folks have lost nearly everything they own.
  Therefore, Madam Speaker, I have devised some targeted tax measures 
that would assist folks in this type of situation.
  My legislation would provide targeted tax relief to homeowners 
located in state or federally-declared disaster areas, which have lost 
their homes due to disasters for which insurance is not readily 
available. I can't emphasize enough--many of these folks have lost 
everything. In most cases, any assistance received from FEMA or state 
agencies might compensate for 15 to 20 cents on the dollar for their 
losses, but will only be a small step in helping these homeowners get 
back on their feet.
  These homeowners need a fair chance to get back on their feet, 
without continuing to shoulder the burden of heavy debt for a destroyed 
residence. So this bill combines a number of changes to the tax code to 
help give them such an opportunity.
  First, the bill clarifies the law to ensure that any mortgage 
forgiveness provided to these homeowners would not be taxable as 
income. Madam Speaker, I have heard from some financial planners in my 
district that in some cases, they have advised their clients not to 
seek forgiveness of their mortgage debt from their lenders for this 
very purpose; and I know for a fact that there are some local lenders 
who would generously provide such relief for some borrowers if, in 
fact, such forgiveness was sought by the homeowner. The Federal 
Government simply should not be taxing the generosity of these lenders 
who may provide relief of a disaster-victim's heartache. To me, this is 
common sense and should be expressly defined by the tax code.
  Additionally, the legislation would establish a tax credit to help 
those taxpayers who are required to continue paying mortgage payments 
on that destroyed home as they pay rent or additional mortgage payments 
on a new residence. These are some of the most devasted homeowners that 
I have encountered. Not only have they lost nearly everything they own, 
but now they face years of carrying this heavy burden of debt in 
addition to the regular expenses of purchasing a new home and 
rebuilding their lives.
  So I have developed a tax credit that would permit these taxpayers to 
reduce their taxes by the amount of the mortgage payments on that 
destroyed home in the years following a disaster. As I stated before, 
this provision would apply to those disasters for which insurance is 
not readily available, and only to those mortgage payments made after 
the qualifying disaster. I simply believe that this is the most direct 
method of helping our constituents who carry this enormous burden.
  Third, the bill would adjust the computation of the casualty loss 
deduction by allowing taxpayers to deduct the fair market value of a 
home, instead of only the basis in the home as permitted under current 
law. Again, this applies only to taxpayers facing this extreme set of 
circumstances and would not apply to taxpayers who elect to take the 
credit which I discussed previously. But more importantly, this is a 
fair measure. Taxpayers who may have lived in a particular home for 20 
or 30 years, who may have nearly all of their savings tied up in that 
home, deserve to get an adjusted deduction that accounts for the 
modern-day value of that home.
  Finally, Madam Speaker, in those cases where the homeowner is 
fortunate enough to sell a home located in such a devasted area, which 
may or may not have been irreparably damaged but may be severely 
devalued, this legislation allows taxpayers to deduct the full value of 
that loss. Current law limits taxpayers to a capital loss deduction of 
$3,000, with the ability to carry over any balance to future years. 
Section 5 of this measure would eliminate the $3,000 limit under these 
narrow circumstances, so that taxpayers would be able to immediately 
deduct the full value of a loss taken on the sale of their property 
which, in many areas heavily impacted by natural disasters, may have 
depreciated extensively. As under current law, any balance of the 
capital loss beyond taxable income would be carried over to future 
years. In my opinion, there's no reason for applying this limitation to 
capital losses to natural disaster situations and, for that reason, I 
am proposing that we lift the cap in only these cases.
  Madam Speaker, I realize that the situation in Kelso may be unusual, 
but as such, the impact of this measure on the federal government 
should be limited. It's impact, however, in helping to rebuild the 
lives of our disaster victims would be enormous.
  This is clearly the right thing to do to help our neighbors get back 
on their feet. As we wrestle with the option for spending projected 
budget surpluses in the foreseeable future, I ask my colleagues to 
consider the plight of our nation's disaster victims and to support 
these


efforts to expeditiously enact the measures that I am proposing today.

                          ____________________