[Congressional Record (Bound Edition), Volume 146 (2000), Part 8]
[House]
[Pages 11327-11333]
[From the U.S. Government Publishing Office, www.gpo.gov]



      THE DEMOCRATIC PLAN FOR A MEDICARE PRESCRIPTION DRUG POLICY

  The SPEAKER pro tempore (Mr. Ose). Under the Speaker's announced 
policy of January 6, 1999, the gentleman from Pennsylvania (Mr. 
Pallone) is recognized for 60 minutes as the designee of the minority 
leader.
  Mr. PALLONE. Tonight, Mr. Speaker, once again I would like to talk 
about the need for a Medicare prescription drug policy, and talk a 
little bit about the Democratic plan, the President's plan, in contrast 
with what I consider the lack of plan that the Republican leadership 
appears to have come up with and apparently is attempting to move 
through the House over the next week or two.
  My colleague, the gentleman from Maine (Mr. Allen), has been a leader 
on this issue and introduced legislation more than a year ago to deal 
most specifically with the issue of price discrimination.
  As he has said many times and I will reiterate, there are really two 
aspects to this Medicare prescription drug proposal. One is to provide 
the benefit, and the other is to make sure that the price 
discrimination that we have witnessed so often in the last few years 
does not continue.
  I would like to commend the gentleman for all that he has done to 
address this issue of price discrimination with his legislation, and 
also with his effort to get so many cosponsors to that bill.
  Mr. Speaker, I yield to the gentleman from Maine (Mr. Allen).
  Mr. ALLEN. I thank the gentleman for yielding, Mr. Speaker.
  Here we are again, back in the well of the House, talking about a 
problem that is a matter of immediate concern to seniors and others all 
across the country.
  A little history. I want to talk in a few minutes about the debates 
that are going to come up this week and next week here in the Congress 
over the issue of prescription drugs, but a little history is worth 
recalling.
  It was almost 2 years ago when I released the first study done by the 
Democratic staff of the Committee on Government Reform which shows 
that, on average, seniors pay twice as much for their prescription 
medications as the drug companies' best customers, being big hospitals, 
HMOs, and the Federal government itself buying either for Medicaid or 
through the Veterans Administration.
  That is an astonishing difference, a difference of about 100 percent 
of the most commonly-prescribed prescription drugs.

[[Page 11328]]

  We released that first study on July 2, 1998. In September I 
introduced legislation, September of 1998, that would provide a 
discount to every senior who is on Medicare, to all Medicare 
beneficiaries. The bill would work very simply. It simply would provide 
that pharmacists would be able to buy drugs for Medicare beneficiaries 
at the best price given to the Federal government. It is called the 
Prescription Drug Fairness for Seniors Act, H.R. 664, in this Congress.
  Then, in October of 1998, we did the first of the international 
comparisons. That was a study to show that Mainers pay on average 72 
percent more than Canadians and 102 percent more than Mexicans for the 
same drug in the same quantity from the same manufacturer. Those two 
studies have been replicated in the first place in over 115 districts 
around the country, and in the second case, by dozens.
  I want to thank the gentleman from New Jersey (Mr. Pallone), who has 
done so much to help drive this issue, being here night after night 
after night and organizing the Health Care Task Force as the gentleman 
does.
  It is very clear what Democrats are advocating for. On the one hand, 
we are saying we need a discount. It is very simple, it does not cost 
the Federal government any significant amount of money, it does not 
create any new bureaucracy, but it would yield about a 40 percent 
discount for seniors who are already on Medicare paying out-of-pocket 
for their own prescription drugs.
  Let us remember that over half of all seniors have either no coverage 
at all, 37 percent, or very inadequate coverage from HMOs or through 
MediGap itself, so we are dealing with over half of the senior 
population which does not have adequate coverage for prescription 
drugs.
  Now, 2 years after we began this effort, the Republicans are finally 
coming up this week and next with a plan. It is interesting what that 
plan is, because we have been advocating for the kind of discount I 
described, and also a benefit to make Medicare updated, to make it more 
like what the plans of Aetna, Signa, United, the Blue Cross companies 
provide employees, a health care plan with prescription drug coverage.
  That is what we want for Medicare. Those plans negotiate lower prices 
for their beneficiaries. Medicare beneficiaries should get lower 
prices. But also, a discount is not enough. We have to have the benefit 
under Medicare.
  It all seems very simple, but in Washington not much is very simple. 
What we notice are two things happening this week. On the one hand, the 
Republicans are coming up with a prescription drug plan that relies on 
HMOs and private insurance companies. On this foundation is built a 
plan that, the truth is, will not help America's seniors, because 
instead of updating Medicare, instead of strengthening Medicare, 
instead of providing a Federal prescription drug benefit, what the 
Republican plan does is turn to HMOs. It says that they have been so 
successful in providing benefits for Medicare beneficiaries that we 
should let them provide prescription drug coverage, as well.
  Then it says that the plan provides that there should be room for 
private insurance companies to offer prescription drug coverage, stand-
alone prescription drug coverage. So one of the things we notice is 
this is the plan that the Republicans are rolling out in the House this 
week.
  What we also notice is that, not by coincidence, the pharmaceutical 
industry is running ads suggesting that what this country's seniors 
really need is private insurance. What we can see is the Republicans in 
Congress are working hand in glove with the pharmaceutical industry, 
hand in glove with the HMOs and the private insurance industry.
  Here is the most interesting ad. This ad has appeared as a full-page 
ad in the Washington Post. This is either from Roll Call or the Hill 
magazines here. It is in Congress Daily. Everywhere we go in Washington 
we see this particular ad. I have never seen it in anything less than a 
full page in whatever publication it has been in.
  It is an interesting ad. It says, ``Read label before legislating. 
Private drug insurance lowers prices 30 percent to 39 percent. 
Shouldn't seniors have it?'' Now, I think seniors should get that kind 
of discount. That is exactly the kind of discount that is reflected in 
the Prescription Drug Fairness for Seniors Act. But my bill would 
provide that Medicare would negotiate lower prices for all 39 million 
Medicare beneficiaries. Under that kind of plan, Medicare would have 
real leverage to drive down prices.
  What is interesting about this particular plan, this particular 
advertisement, is that a portion of it reads as follows: ``12 million 
senior Americans now have no prescription drug insurance coverage. As a 
result, most of them pay full price for their medicines. That is 
because they don't have the market clout that comes with a drug 
insurance benefit.''
  Now, it is interesting, until last week the pharmaceutical industry 
was attacking my proposal and others on the grounds that if it provided 
a 20, 30, 40 percent discount to seniors, that they would have to cut 
back on research and development costs.
  Here is an advertisement sponsored by PHARMA, the pharmaceutical 
industry, basically calling for a 30 to 39 discount.
  The question that might arise is, why do they not simply give seniors 
a 30 to 39 percent discount now? They set the prices, they can lower 
them tomorrow. But they do not. This is an industry ad saying, protect 
us from ourselves. We are charging seniors far more than we charge 
insurance companies, big hospitals, and HMOs, and the way to do that is 
to give private insurance to seniors.
  Now, to some extent we might say, well, does that not make sense? But 
the truth is, there is a glitch. There is a problem. The insurance 
industry says, we are not going to provide private insurance for 
prescription drugs. They have said it over and over and over again. 
Yet, the Republicans in this House are bringing forth a plan that 
depends on HMOs and private insurance companies.
  How does this work? What does it mean? Well, the private insurance, 
Chick Kahn, head of the Insurance Association of America, has said, we 
are not going to provide private insurance for prescription drugs 
because it is like ensuring against haircuts. There are so many 
claimants, in other words. They say to people up in Maine, if Maine 
were a low-lying State and 85 percent of the people every year put in a 
claim for flood insurance, we would not be able to buy flood insurance 
in Maine at any price. But 85 percent of seniors in this country take 
some form of prescription drugs.
  So despite the fact that the insurance industry is saying, we will 
not provide prescription drug insurance for seniors, the Republicans in 
this House are bringing up a plan that depends on private insurance for 
seniors. It will not work.
  Why are they doing this? What is the purpose of the plan? The only 
conclusion we can come to is that the Republican plan is not a plan to 
help seniors afford their prescription drugs. What it is is a 
prescription for Republican Congressmen. It is a prescription to help 
them in November by having the appearance of a prescription drug plan 
for seniors but not the reality of a prescription drug plan for 
seniors. It is an illusion.
  That is why it does not matter to the Republican leadership in this 
House whether the plan works or not, whether the insurance industry 
will actually provide insurance or not, or whether the plan will ever 
become law or not. It is designed as political cover. It is designed as 
a prescription drug theme for the fall elections, but not a 
prescription drug plan for seniors.
  It is America's seniors who need the help. It is America's seniors 
who write to me, and I am sure to the gentleman from New Jersey, and 
send us a list of the cost of their prescription drugs. Then they show 
us what they are earning.
  I have had people in my district say, ``Here is the list.'' I can 
remember a couple of women who wrote to me with basically the same 
kinds of numbers.

[[Page 11329]]

They both said, ``My husband and I take about $650 of prescription 
drugs a month, but our two social security checks only come to $1,350. 
We cannot make do,'' so they do not take the medicines that their 
doctors tell them they have to take.
  I have other women who have written to me and said, I do not want my 
husband to know, but I am not taking my prescription medication because 
he is sicker than I am, and we cannot both afford to take our 
medication. That is wrong in this country. It is absolutely wrong. We 
have the power in this Congress this year to do something about it.
  As the gentleman knows, our task forces on the Democratic side have 
been working away developing plans that are not good politics, just 
good policy, policy that will help America's seniors, a benefit under 
Medicare that will help so people can get payment for their 
prescription drugs; so they are not driven to the hospital because they 
cannot afford to take their medications; so they can pay their rent and 
their food and their electric bills and still get medications that they 
need.
  That is what we are trying to do on this side of the aisle, but on 
the other side of the aisle what we have is private insurance. An 
astonishing ad, this one is. It says, in effect, protect us against 
ourselves. We are charging seniors too much and we know it, and if only 
the private insurers would come in and cover America's seniors, then we 
would reduce our prices to seniors.
  But they know that this will never happen. Here is the pharmaceutical 
industry with its own misrepresentation yet again to the people of the 
country. They are advocating a plan that will never happen because in 
fact the insurance industry will never provide stand-alone prescription 
drug coverage to seniors.
  This ad is a fraud, and the Republican plan is a fraud. It will not 
work. It will not happen. It is a prescription for Republican 
legislators in the fall.
  I think what we need in this country is a recognition that this issue 
will not go away. This problem that seniors face today will not go away 
until it is fixed.

                              {time}  2200

  Every year, prescription drug spending goes up 15 to 18 percent year 
after year after year. So if we think we have got a big problem this 
year, a year from now, it will be 15 to 18 percent larger than it is 
right now. That is what we face in this country.
  I just want to thank the gentleman from New Jersey (Mr. Pallone) 
because this is a battle. We have a raid against the pharmaceutical 
industry and the HMOs. What we need to do, there is no reason, there is 
absolutely no reason to say that the only way we can give seniors 
prescription drug coverage is to pay private insurers to pay HMOs to 
provide that coverage when the insurers say they will not do it anyway.
  I mean, it makes no sense. We need a stronger and better and more 
comprehensive Medicare. We need a plan that will provide continuity and 
predictability and stability and equity. That is what we need.
  All the talk about choice and all the talk about private insurance is 
really a smoke screen. It is not about policy that will work for 
America's seniors. That is what we need to be doing. Seniors need help. 
They need it now. We can give it to them if we handle this issue right 
in the coming weeks.
  I thank the gentleman from New Jersey very much for yielding to me.
  Mr. PALLONE. Mr. Speaker, I want to thank the gentleman from Maine 
(Mr. Allen) for putting really so succinctly the difference, if you 
will, between what the Democrats are proposing and trying to accomplish 
here versus this Republican essentially sham proposal.
  It reminds me so much of the debate over HMO reform, the Patients' 
Bill of Rights. Because as my colleagues know, I guess it was about a 
year ago, maybe 6 months ago, the American people were crying out, we 
all would go to town meetings and hear from all our constituents about 
the need for HMO reform.
  The Democrats came up with the Patients' Bill of Rights, which is a 
very good bill to address the concerns and abuses within the HMO 
system. We heard the Republicans kept stalling and saying they did not 
want to deal with it, they did not want to deal with it. Nothing was 
happening in committee.
  Finally, the pressure got so great that they decided to push a bill 
which essentially accomplished nothing. But beyond the fact that the 
legislation that was being pushed, particularly on the Senate side, was 
so weak and so lacking in any kind of basic protections for those who 
were being abused by the HMOs was the fact that it was very obvious 
that it was not being done because they really wanted to pass the bill, 
it was being done so they could say they were doing something.
  Lo and behold, 6 months have passed, we have had conferences between 
the House and Senate, nothing has happened, and we are getting very 
close to the election without an HMO reform bill.
  I think the same thing is happening here. The gentleman from Maine is 
absolutely right. We keep coming to the floor talking about the need 
for a Medicare prescription drug program. The pressure builds because 
it is a real concern out there. All of a sudden, now we get a statement 
from the Republican leadership saying that they are going to do 
something which is a sham. They may have it in committee this week, 
they may bring it to the floor next week so they can pass something by 
the July 4th recess.
  What does that mean? The Senate will not act. If the Senate acts, 
there will be a conference. The conference will not go. It will never 
get to the President. The politics of this is really disgraceful 
because this issue, just like the HMO reform issue, is something that 
needs to be addressed, and it is not going to be.
  The gentleman talked about the Republicans using this insurance plan. 
It reminds me so much, I read a little bit about what happened in the 
1960s when Medicare was first started. We were getting the same 
arguments then. There were all these people, all these senior citizens 
that had no health insurance.
  It was the majority of seniors that had no health insurance. The 
Republicans then in both the House and the Senate in the 1960s were 
arguing that we should set up some kind of private insurance program 
for the seniors. The Democrats rejected that. The Democrats passed the 
current Medicare program. The President, then Johnson, signed it. We 
have had a very good program. Why not build on the existing program?
  What the President has proposed and what the Democrats in the House 
and the Senate have proposed is basically adding another part to the 
existing Medicare program. We have part A for hospitalization. We have 
part B for one's doctor bills, which is voluntary. One pays so much of 
a premium per month.
  What the Democrats are proposing is that we set up another part C or 
D, whatever we want to call it, where one pays so much a month and one 
gets a prescription drug program. Everybody who is in Medicare is 
eligible for it. It is universal. It is affordable. It is voluntary. It 
is a defined benefit program so one knows that one will get all 
medically necessary drugs.
  It has the effort to address the price discrimination that the 
gentleman from Maine mentioned with the benefit provider so that, 
basically, we have these benefit providers that negotiate a better 
price for the seniors than many of them would get now in the open 
market.
  Why not build on the existing Medicare program and do just that? Why 
go back to this private insurance model which, as the gentleman from 
Maine said, does not work.
  I just wanted to mention one more thing, and I want to yield back to 
the gentleman from Maine because he has been doing such a good job. 
Chip Kahn, who is head of the Health Insurance Association of America, 
made that statement before the Committee on Ways and Means last week 
where he said, This insurance-only program will

[[Page 11330]]

not work. The insurance companies will not sell it. It is a sham. He 
also came before our Committee on Commerce and said the same thing.
  One thing that he said that concerns me a little, he said, I was 
pleased to see that the Republicans at least have said that, if their 
private insurance program does not work and they cannot get it sold, 
then they will fall back on some sort of government assistance for the 
people who cannot buy private health insurance. Of course I said, well, 
it is not really clear what they are going to do. What is this fall 
back? Is it Medicare? They have not said.
  I said to Chip Kahn, I said, Well, Chip, does it make sense to have a 
private insurance program with a fall back when we already have an 
existing Medicare program that does work that we can just add a 
prescription drug benefit to it? He said, Well, I am not really in a 
position to comment. Health insurance people do not let me say yes or 
no whether that makes sense. Certainly I agree there is nothing wrong 
with having a Medicare program.
  They already realize that this will not work. That is why the 
gentleman from California (Mr. Thomas) is now starting to talk about 
some sort of fall back. What does one need the fall back for? Do the 
Medicare program the way it has been working for 30 years.
  Mr. ALLEN. Mr. Speaker, will the gentleman yield?
  Mr. PALLONE. I yield to the gentleman from Maine.
  Mr. ALLEN. Mr. Speaker, the gentleman from New Jersey is exactly 
right. It is interesting. The Republican plan, because of its reliance 
on the private sector to deal with the problem of Medicare 
beneficiaries, is incredibly complex. I mean, basically they create a 
whole new bureaucracy to deal with this, and then they expect a variety 
of different private insurance companies and HMOs to pick up and deal 
with this particular problem.
  Well, let us look at what is going on in Medicare right now, in 
Medicare, managed care. Remember, we passed Medicare Plus Choice plan 
in 1997. The thought was, well, the HMOs will come into Medicare, and 
they will save us money because the private sector is always more 
efficient than the public sector. But in truth, the Medicare system, 
when one is in Medicare, there is no money being paid for profit. The 
overhead expenses and administrative expenses are far lower than in any 
private sector health care company.
  Look at what is happening with Medicare managed care right now. What 
we see is, every year, the benefits change. The prescription drug 
benefits, which in some cases were free, free prescription drugs 
essentially for no additional premium when Medicare managed care was 
created. Now the caps keep coming down every year. Now 62 or 70 percent 
of all plans have an annual prescription drug cap of $1,000 or less. 
The premiums go up. The copays go up. The benefits go down.
  But most striking, it is not available in most places. In seven out 
of ten counties in this country, Medicare managed care is not even 
available. It really only works, to the extent it works at all, in 
larger urban areas. Rural America gets left out. Frankly, maybe that is 
a good thing right now.
  But it is only very limited in my home State of Maine. I mean, no 
more than 1,500 people in the State of Maine have Medicare managed care 
plan. Managed care is not working very well with this particular 
population. We know that because, every July 1, the health care plans 
report to HCFA, and, again, last year, they dropped 400,000 people 
because it simply was not cost effective. They could not make a profit 
on those 400,000 Medicare beneficiaries. So they just dropped them from 
the plan.
  July 1 is coming up again. My colleagues are going to see plans all 
across this country, managed care plans, simply dropping their Medicare 
beneficiaries because they are not making money on this.
  So what do the Republicans do? They say we have got a prescription 
drug plan, and it relies on HMOs and private insurance companies. With 
all of the complexity, with all of the inequity, they are saying what 
we really need is more of a system that is not working.
  That is why I keep coming back to the thing that this is bad policy. 
It is terrible policy. At a recent caucus, a Republican pollster made a 
presentation, and that material got out and has been published and so 
on. Now it is very clear that the Republican pollster said for 
Republicans it is more important that people think, that people believe 
you have a plan than the content of the plan. So the appearance of the 
plan is more important than the content of the plan. That is bad.
  Basically, if we get the policy right, we will be doing the right 
thing. That is why, if we are going to make changes to Medicare, if we 
are going to deal with the Medicare population, if we are going to deal 
with the biggest problems that Medicare beneficiaries have today, which 
is the inability to pay for their prescription drugs, then we need to 
do it through Medicare. Medicare is reliable. It is universal. It is 
equitable. It is simple. It is cost effective.
  I find the cost of providing a benefit would be significant. But 
there is not anybody in this Chamber who says it is too expensive who 
does not support a tax cut that is much larger than the annual cost of 
providing a prescription drug benefit under Medicare.
  We can do this. We can do this this year. But we cannot do it with 
sham proposals, with private insurance companies who say we are not 
going to provide the insurance.
  Let us get to a real proposal. Let us get the Democratic benefit and 
the Democratic discount on the floor for a debate. Then I think we can 
do the right thing for America's seniors.
  Mr. PALLONE. Mr. Speaker, I agree with the gentleman from Maine (Mr. 
Allen). I guess I just worry that the public does get confused because 
the Republican leadership proposal is designed to confuse them. I mean, 
one of the things that I know of, they try to give the impression 
somehow that if one does not go along with their proposal, and one has 
an HMO, and one would like the HMO or one has an existing pension plan 
that provides for prescription drugs, that somehow that is going to 
change.
  One of the things that I have made clear is that the Democratic 
proposal is a Medicare benefit, but it is voluntary. We have actually 
built into the President's proposal, the Democratic proposal, the idea 
that about 50 percent of the costs for an HMO or 50 percent of the 
costs if somebody has a drug benefit now through their pension or 
whatever would be paid for.
  We would not discourage people from leaving their HMO if they like it 
and they have a drug benefit or leaving their other private plan that 
they might have through an employer that they like, because we are 
going to build in that about 50 percent of the cost of that drug plan 
in both of these cases would be paid for by the government through this 
Medicare program.
  But what we are saying is that for those people who do not feel that 
they have a good program either because they have nothing or because 
they do not have a good program that they will be guaranteed a benefit 
if they do opt to pay for their premium per month just like they do 
with part B.
  It just seems to me it makes a lot more sense to say on the one hand 
everybody is covered who wants it. If one does not want it, one does 
not have to opt for it. Everybody has got a specific benefit that they 
know is guaranteed. Then if one wants to opt out, one can. But not to 
build, as the gentleman, says, this bureaucracy which is very similar 
to the existing HMOs.
  Mr. Speaker, I want to thank the gentleman from Maine (Mr. Allen) for 
joining me this evening. We are going to continue the battle on this.
  Mr. Speaker, I wanted to go into a little detail about what the 
Democratic proposal is, which is essentially the President's plan. In 
describing what the Democrat proposal is, I am relying on the testimony 
that was made before the Committee on Commerce, of which I am a member, 
last week by Nancy-Ann DeParle, who is the administrator of the Health 
Care Financing Administration, which administers Medicare and would 
also continue to administer

[[Page 11331]]

the prescription drug proposal under the President's plan which, as I 
said, is essentially the Democrats' plan.
  I want to outline this because I do not want to just talk about why 
the Republican proposal is bad, I want to explain what the Democratic 
proposal is and why it is a good plan.
  Basically, under the President's plan, it is voluntary. It is 
affordable. It is competitive. It has a quality drug benefit that would 
be available to all beneficiaries. The President's plan dedicates over 
half of the on-budget surplus to Medicare and also extends the life of 
the Medicare trust fund to at least 2030.
  So what we are doing is we are using the budget surplus that has been 
generated with the good economy to pay for this Medicare prescription 
drug program.
  Most important, the coverage is available to all beneficiaries under 
the President's plan.

                              {time}  2215

  And I say that because I believe that the Medicare program has 
worked, and it makes sense to put this prescription drug plan under the 
rubric of the existing Medicare program. The advantage of doing that is 
that everyone, regardless of income or health status, gets the same 
basic package of benefits. All workers pay taxes to support the 
Medicare program; and, therefore, all beneficiaries should have access 
to this new drug benefit, just like they have for everything else in 
the Medicare program.
  Now, a universal benefit helps ensure that enrollment is not 
dominated by those with high drug costs, the so-called problem adverse 
selection, which would make the benefit unaffordable and unsustainable. 
One of the criticisms of the leadership plan is that what may happen is 
that only people with high drug costs would opt into it. What we want 
to do is create an insurance pool, just like with Medicare in general, 
that everybody is involved with. Because it is only when we have a 
large insurance pool with people of all categories of use for drug 
benefits that we can be successful.
  And, again, under the President's plan it is strictly voluntary. If a 
beneficiary has what they think is better coverage under an HMO or some 
kind of pension plan or something through their employer, they do not 
have to opt into it. As I said, what we are really going to do is to 
make sure that those plans get extra money, up to 50 percent of the 
cost of what it cost them for a drug benefit, the existing HMO would 
get or the existing employer benefit plan would get, in order for the 
individual to continue to use that plan if they do not want to opt into 
the Medicare plan.
  Now, for beneficiaries who choose to participate under the 
President's plan, the Democratic plan, Medicare will pay half of the 
monthly premium, with beneficiaries paying an estimated $26 per month 
for the base benefit in 2003. As the program is phased in from 2003 on, 
it becomes more generous; and, of course, the premium goes up 
accordingly. The premiums would be collected just like the Medicare 
part B program as a deduction from Social Security checks for most 
beneficiaries who choose to participate.
  Low-income beneficiaries would receive special assistance so that if 
they are below a certain income, just like now for part B, for those 
seniors in part B now, which pays for their doctor bills, if they are 
below a certain income, they get part of the premium paid for. If they 
are at a very low income, the complete premium is paid for. We would do 
the same thing with this prescription drug plan using the same 
criteria. The income basically that would be used for those criteria 
would be the same.
  Under the President's plan, Medicare would pay half the cost of each 
prescription with no deductible. The benefit will cover up to $2,000 of 
prescription drugs when coverage begins in 2003 and increase to $5,000 
by 2009, with 50 percent beneficiary coinsurance. After that, that 
would be adjusted for inflation. But most important, also, we have a 
catastrophic benefit. So that basically above a certain amount, I 
believe it is $3,000 out of pocket, all the costs would be paid for by 
Medicare and by the Government.
  The price discrimination issue that my colleague, the gentleman from 
Maine (Mr. Allen), mentioned is addressed in the President's plan 
through competitive regional contracts to provide the service. In other 
words, basically in each region of the country we would ask people to 
apply or compete to be the benefit provider; to be the entity that 
would go out and negotiate a price for the drugs and provide the 
medicine or prescription drug benefits for the individual. And 
basically that would be reviewed by HCFA on some kind of yearly or 
biannual basis. If it was not working out so that prices remained too 
high, then they could drop those benefit providers that were not 
performing.
  I think that is important. Because, again, if we do not have some way 
to address the price discrimination issue, then I do not think that 
this program would work. And, again, there is nothing in the Republican 
proposal to address the issue of price discrimination or provide this 
kind of fair price that has been proposed in the President's program.
  I want to talk, again, about those people who are in HMOs. We are not 
saying that individuals in HMOs cannot continue in those HMOs and get a 
drug benefit. In fact, what is going to happen is that this Medicare 
program is going to provide money to the HMO for that drug benefit. 
Under the President's plan, essentially we strengthen and stabilize the 
Medicare+Choice HMO program.
  Today, most Medicare+Choice, or HMOs, offer prescription drug 
coverage using the excess from payments intended to cover basic 
Medicare benefits. They are only getting the amount of money that the 
Federal Government assumes would pay for basic Medicare benefits 
without the drug benefit. But under the President's proposal, those HMO 
plans in all markets will be paid explicitly for providing a drug 
benefit in addition to the payments that they receive for current 
Medicare benefits.
  So they will no longer have to rely on the rate in a given area to 
determine whether they can offer a benefit or how generous it can be. 
And that is where we get into the problem where some of the HMOs drop 
the drug benefit or start charging more for the drug benefit. They will 
not have to do that because there will not be the regional variations. 
They will be getting money directly from Medicare, directly from the 
Federal Government, to pay for half the cost of the drug benefit. And 
that also will be true for any kind of employer plan that someone might 
have that they receive through their employer that they want to keep as 
well.
  I think that the concern that I have, if I contrast the Democratic 
plan, which I think is really a Medicare benefit that is available to 
all, that ends price discrimination, that has a defined benefit, if I 
contrast that with the Republican plan, the basic problem with the 
Republican plan is that it is imaginary. It is not going to work. It is 
just political cover. It is empty promises. My colleague talked about 
that before. And it is not an entitlement to anything.
  The one thing that really disturbs me is if we set up a system, as 
the Republican leadership has proposed, where this is basically a 
private insurance plan, we get away from the basic universality of 
Medicare that we have had for a long time. If we start breaking up 
Medicare and suggesting that one part of it, in this case the 
prescription drug plan, can be outside of the Medicare drug program, I 
think it undermines the whole Medicare program and the whole ideology 
of the Medicare program.
  I have been concerned because I think that is the goal of some of my 
Republican colleagues. They do not really like Medicare. They do not 
like the fact that Medicare was set up as a government program. They 
would rather have all of Medicare, perhaps, to be some kind of a 
private insurance program, and the prescription drug benefit becomes 
sort of the first way to accomplish that.
  The other problem with the Republican plan is that since it does not 
have

[[Page 11332]]

a defined benefit, we are never going to know exactly what kind of 
benefit one gets. In other words, we say in the Democratic plan that if 
the medicine, the prescription drug, is medically necessary, if the 
doctor feels, and he is going to write a prescription that this drug is 
medically necessary, then the individual gets it. That is the 
definition of the benefit. But we do not have that under the Republican 
plan. We do not necessarily know what kind of drugs are going to be 
covered. And it is going to depend upon the whims of the private 
insurance market whether or not they can offer certain drugs or cover 
certain things at a given time.
  Seniors need to have a certain amount of certainty. I think one of 
the biggest problems that exists now when HMOs change their drug 
benefit plans or they simply drop seniors altogether is that I get a 
call saying what happened, I thought I had a certain HMO, I thought I 
had a certain drug benefit plan and all of a sudden I do not. We need 
certainty, and that is essentially what the Democrats are proposing.
  There was a very interesting article, I thought a really enlightening 
article, in The New York Times, Mr. Speaker, just yesterday, Sunday. It 
was on the front page. It was by Robert Pear, and it was entitled 
``Party Differences on Drug Benefits Continue to Grow.'' And it talked 
about this whole Medicare debate in terms of what the Republican 
leadership proposes as opposed to what the President and the Democrats 
are proposing.
  I do not like to read, but I just thought that there were certain 
parts of this article that really sort of explained the differences 
between what the Democrats proposed and what the Republicans proposed, 
and why I feel that the Democratic plan really is a good plan that will 
work whereas the Republican plan simply will not work and it is just 
something they are putting forward. I would just like to read certain 
sections of this article, if I could, because it does draw such 
contrasts between the Democrats and the Republicans on the issue.
  It says, about halfway down the front page in the article from 
yesterday's New York Times, ``Democrats want more uniformity in 
premiums and benefits. They say the Republicans' free-market approach 
will confuse beneficiaries and encourage insurers to seek out healthy 
customers with relatively low drug costs, a practice known as 
cherrypicking.''
  This is the whole idea of breaking the insurance pool. The reason why 
Medicare works is because so many people, almost everyone, most 
seniors, are involved with it. So it creates this huge insurance pool 
that does not depend on whether a person is sick or how much health 
care or hospitalization is needed. Well, we break that system by 
allowing insurance companies, through private insurance, to cherrypick 
those who use the least amount of drugs; and all of a sudden, we do not 
have a workable plan.
  Well, the article says that, ``The Republican proposal assumes that 
insurers can be induced to offer drug coverage subsidized by the 
government just as health maintenance organizations have been induced 
to sign contracts with the government to care for 6.2 million Medicare 
beneficiaries. But when asked if insurers would be interested in 
offering drug coverage under Mr. Thomas','' the Republicans', ``bill, 
Charles Kahn,'' this is Chip Kahn, ``President of the Health Insurance 
Association of America, said: No, I don't think so. They would not sell 
insurance exclusively for drug costs. The government may find some 
private entities to administer drug benefits, but the government would 
have to accept all or nearly all of the financial risk.''
  Well, this again goes back to what my colleague from Maine was saying 
before. Who is going to offer a benefit or an insurance policy that has 
a benefit that almost all seniors need? The whole basic idea of 
insurance is risk. And if we have a situation where they have to insure 
and probably pay out money to almost every senior, they are not going 
to sell the policy.
  ``President Clinton,'' again from the New York Times, ``would offer 
the same drug benefits to all 39 million people on Medicare. House 
Republicans, by contrast, would describe a model insurance policy, 
known as standard coverage. Insurers could offer alternative policies 
with different premiums and benefits.''
  That is the problem. Rather than having that defined benefit under 
the Democratic plan, we have under the Republican proposal a standard 
coverage that does not mean anything because the insurance companies do 
not have to provide the benefits that are under the standard coverage. 
They can vary as they see fit.
  Again, in this New York Times article from yesterday, ``Nancy-Ann Min 
DeParle, administrator of the Health Care Financing Administration, 
which runs Medicare, said elderly people could be refused if they had a 
large number of choices.'' And she is talking about the Republican 
plan. ``It's difficult for seniors to navigate among plans,'' Ms. 
DeParle said. ``Moreover,'' Ms. DeParle asked, ``do seniors want and 
need all these choices? If you let plans design all sorts of benefit 
packages, that promotes choice, but it also promotes cherrypicking of 
the healthiest seniors. That's why we need defined benefits. Seniors 
want to know what's covered. It must be predictable.''
  The Republicans keep talking about choice, but look at the example 
with the HMOs and how much confusion that has caused now in Medicare, 
where so many of them are dropping the plans or changing their plans 
and the seniors call us up and complain to us. Well, I frankly feel 
that if we have a defined benefit plan under Medicare that is certainly 
preferable. If someone wants to use an HMO, they can, but at least 
provide a guaranteed benefit.
  ``Democrats fear,'' again in the New York Times, ``that the market 
for drug insurance would be filled with turmoil as insurers went in and 
out from year to year. In the last two years, dozens of HMOs have 
pulled out of Medicare or curtailed their participation, disrupting 
insurance arrangements for more than 700,000 elderly people, and more 
health plans are expected to withdraw this year. Democrats say drug 
benefits should be fully integrated into Medicare, like coverage of 
hospital care and doctors' services. The bill,'' this is the Republican 
bill now, ``says Medicare officials must ensure that every beneficiary 
has a choice of at least two plans providing prescription drug 
coverage. One could be an HMO; at least one must be a traditional 
insurer. But Democrats say even if benefits have two options, both may 
be high priced plans. Under the House Republican proposal, Medicare 
officials could offer financial incentives to get insurers to enter 
markets in which no drug plans were available.''
  Now, that is fine. In other words, just like HMOs, the Republican 
plan would say, and this is what the gentleman from California (Mr. 
Thomas) has said, well, if we cannot find any insurance companies to 
provide this prescription drug coverage, then we will just give them 
more money and then they will do it. Well, that is all very nice, but, 
again I am going back to this New York Times article, ``Chris Jennings, 
the health policy coordinator at the White House, said the availability 
of these incentives would encourage insurers to hold out for more 
money. It would encourage insurers to hold Medicare hostage, Mr. 
Jennings said. The policy says that if insurers don't participate in 
the marketplace, we'll give them more money.''
  Now, do my colleagues think an insurer will decide to participate in 
the market at the beginning, when they get less money, or will they 
hold out a little longer and then they might get more?

                              {time}  2230

  ``That's the most inefficient, ridiculous incentive mechanism one 
could imagine.''
  That is, essentially, what we are getting now with the HMOs. HMOs 
that are pulling out of the Medicare senior market are coming back to 
Congress and saying, okay, we will stay in the markets if you give us 
more money, if you give us a higher reimbursement rate. Insurance 
companies that theoretically are going to tap into the drug

[[Page 11333]]

benefit programmed under the Republican plan, they will do the same 
thing, they will say, well, we cannot offer the plan now. Give us more 
money. And then they will hold out until they get more money. And even 
then there is no guarantee that we are going to get a good benefit 
plan.
  I do not want to keep talking all night, Mr. Speaker, because I know 
that we are going to be dealing with this issue again and again. And I 
certainly plan to come again on other nights in special orders with my 
colleagues on the Democratic side to keep making the point that what we 
really need here is a Medicare benefit, a Medicare prescription drug 
benefit, that is voluntary; that provides universal coverage to 
everyone who wants to opt for it; that is designed to give all 
beneficiaries meaningful defined coverage; that has a catastrophic 
protection so that, if over a certain amount, the Government pays for 
all benefits; that has access to medically necessary drugs and, 
basically, defines what is medically necessary by the physician, not by 
the insurance company; and that, basically, says that if you are low 
income, we will pay for your premium, just like we do for part B for 
your doctors bills; and, finally, that is administered in a way that 
has purchasing mechanisms so that we can keep the price fair and not 
provide for the price discrimination that exists right now under 
current law for so many people.
  That is what we will push for regardless of what the Republicans come 
up with. And certainly, we are more than willing, as Democrats, to work 
with the Republicans to fashion a plan that will work. But, so far, 
what we are hearing from the other side of the aisle is a sham, is not 
something that is designed to provide a meaningful benefit, and that 
ultimately will not pass here, not pass the Senate, not land on the 
President's desk in time for the end of this Congress. And that is what 
I do not want to see.
  The Democrats want to see something that will pass and be signed by 
the President and become law so that Medicare beneficiaries can take 
advantage of it and that it not just be a political issue for this 
November election.

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