[Congressional Record (Bound Edition), Volume 148 (2002), Part 10]
[Senate]
[Pages 13695-13720]
[From the U.S. Government Publishing Office, www.gpo.gov]




      GREATER ACCESS TO AFFORDABLE PHARMACEUTICALS ACT--Continued

  Mr. HATCH. Mr. President, today we are discussing the Medicare 
prescription drug bill, which is basically the two bills we will be 
voting on tomorrow.
  I rise this afternoon to take the opportunity to share my thoughts on 
Medicare drug coverage. Today and tomorrow, we will be debating two 
Medicare prescription drug bills--the Medicare Outpatient Prescription 
Drug Act of 2002, introduced by Senators Graham, Miller, Kennedy and 
Corzine, and the 21st Century Medicare Act introduced by the Senate 
tripartisan group which includes Senators Grassley, Jeffords, Breaux, 
Snowe, and myself.
  There is no question that all of us have the same goal in mind--to 
provide beneficiaries with Medicare prescription drug coverage, this 
year. But, unfortunately, we do not agree on how this coverage should 
be provided. Senators Graham and Miller believe it should be provided 
through the Federal Government. On the other hand, the Senate 
tripartisan members believe drug coverage should be provided through 
the private market.
  During the next day and a half, you will hear about the merits of 
both bills. You will also hear criticisms of both bills. While these 
matters certainly need to be debated by the Senate, both of these 
bills, which will impact the lives of millions of Americans, should 
have been considered by the Senate Finance Committee before being 
debated on the Senate floor. I have heard my colleagues on the other 
side of the aisle saying that the Senate Finance Committee has debated 
this issue for the last 5 years and the American people are tired of 
waiting for the Senate Finance Committee to act. I take issue with that 
argument. Actually, we have had 37 years to fix Medicare. We just 
celebrated its 37th birthday. And don't forget what happened when we 
passed a Medicare prescription drug benefit the last time. We repealed 
it the very next year. So we need to proceed with caution and consider 
any prescription drug bill very carefully before passing such a measure 
by the U.S. Senate. We do not want to make the same mistake twice.
  Let me just say that making any changes to the Medicare program is 
not an easy task. I have been in the Senate for over 26 years and I 
find the Medicare program to be one of the most complicated programs in 
the Federal Government. There was a recent quote by former Secretary of 
State Madeleine Albright in the Washington Post, July 20, 2002, where 
she said, ``being Secretary of State is the best job in the world. 
Better than being President, because you don't have to deal with 
Medicare.''
  I think she may have hit the nail right on the head.
  The point I am trying to make is simple. We need to spend quality 
time drafting and debating a Medicare prescription drug benefit. We 
should not be considering such important legislation on the Senate 
floor without the Senate Finance Committee having a mark-up. That is 
just not right and it is downright irresponsible.
  We should have let the Finance Committee do its job. But as I said 
all last week, politics is dictating policy. So here we are, debating 
one of the most

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important issues of the 107th Congress without even a Finance Committee 
hearing on the legislation being considered by the Senate today and 
tomorrow.
  I am extremely disappointed in the way this has been handled by the 
Democratic leadership. I believe that the Finance Committee members 
could have approved a bill out in the Committee. It just wasn't the 
bill that the Democratic leadership wanted to have passed out of 
Committee.
  On that point, I truly believe that we could have reached a consensus 
in the Finance Committee if we had been given a chance. When Senator 
Kennedy and I authored the Children's Health Insurance Program in 1997, 
there were not more different Members of the Congress. But we did it, 
and we got the bill through the Congress and had our CHIP bill signed 
into law in 1997 as part of the Balanced Budget Act.
  In fact, it was the glue that held the first balanced budget act in 
over 40 years. It was the glue that got that CHIP bill signed into law 
as part of that particular act.
  Senator Kennedy and I reached consensus. Where there is a will, there 
is a way.
  The same thing could happen with the Medicare prescription drug 
legislation. But there must be a willingness to get something done this 
year. And I am sensing that there is a lot of political game playing on 
this issue which says to me that there is not a willingness to get 
something signed into law this year.
  Our tripartisan bill has the votes to pass both the Senate Finance 
Committee and the Senate. But we will not be given the opportunity to 
bring our bill before the Senate Finance Committee because, in my 
opinion, the majority leader does not want our bill to pass the Senate 
Finance Committee. Again, that is just a shame that we have to resort 
to such political game playing on an issue so important to our seniors 
and to our country. We finally have a bill that can be approved by the 
Committee and the majority leader refuses to have it go through the 
proper channels. Let me just say that I am extremely disappointed by 
his decision. I, for one, am still willing to do the work to get a 
Medicare prescription drug bill signed into law this year. I only hope 
that the majority leader is willing to work with us.
  We have talked a lot about both bills in the last week and, at this 
time, I would like to talk about the tripartisan Medicare prescription 
bill. It is the only bill with support of both Democrats and 
Republicans being considered in the Senate. It provides Medicare 
beneficiaries three key elements--affordable drug coverage, choice in 
health coverage, and quality health care. All three elements are 
important and all three elements are included in this bill.
  According to CBO, spending on drugs for seniors over the next decade 
will grow at an astronomical rate. CBO says that the only way to 
contain the cost of a drug benefit is to ensure that drugs are 
delivered efficiently. In turn, CBO says that the only way to have 
drugs delivered efficiently is to have true competition.
  True competition, according to CBO, requires two things:
  No. 1. Private plans that assume at least a limited degree of risk--
that is, if they are efficient, they will make money, and if not, they 
will lose money.
  No. 2. That those plans be able to compete by varying the premium 
they charge, and varying the benefits they offer. The tripartisan bill 
allows plans to vary both premiums and benefits.
  CBO says that if all plans offer the same premium and same benefits, 
as under the Democratic leadership bill, that is simply not true 
competition. Accordingly, the CBO score of any such approach will be 
extraordinarily high.
  Some have suggested a dual system, with competitive and non-
competitive plans operating side-by-side. Unfortunately, CBO has made 
it clear that it would give such dual systems the same high score as a 
totally non-competitive system, because all plans would choose to be 
non-competitive. A dual system simply doesn't achieve cost containment 
and is also flawed because it is government run.
  Our tripartisan drug plan is a voluntary and permanent program. It 
does not sunset like the Graham bill. In addition, all Medicare 
beneficiaries may participate--those in traditional Medicare, 
Medicare+Choice or the new enhanced Medicare fee-for-service program.
  The monthly premiums are $24 per month, which is the lowest premium 
amount of any drug plan that has been introduced in the Congress, and 
one that I think would be more acceptable to our people out there 
rather than causing us to run into the difficulties we had when we had 
to repeal the catastrophic bill a number of years ago.
  The deductible will be $250 and the beneficiary coinsurance, except 
for the low-income seniors, is 50 percent once they reach the 
deductible and up to $3450 in drug expenditures. Our drug plans are 
based on actuarial equivalence, which means that we permit Medicare 
drug coverage to respond to consumers' demands. These actuarial 
equivalent plans will meet consumers' needs. The Government will 
determine which plans are actuarially equivalent, and, CBO has 
determined that the five standards that the plans must meet in order to 
be actuarial equivalent reduces a lot of variation between the standard 
benefit.
  The five standards for actuarial equivalence are:
  No. 1, the Medicare benefits administrator must approve any 
actuarially equivalent coverage, and may terminate or disapprove any 
benefit design intended to discourage enrollment of high risk 
individuals.
  No. 2, the actuarial coverage value of the total alternate coverage 
for the entire benefit must be equal to the standard benefit.
  No. 3, the unsubsidized value of alternate coverage must equal the 
unsubsidized value--that is, 35 percent which is subsidized--of the 
standard coverage.
  No. 4, the alternate coverage must be based on actuarially 
representative patterns of utilization to provide payment, with respect 
to costs incurred that are equal to the initial coverage limit under 
the standard benefit.
  No. 5, catastrophic protection must equal the precise dollar amount, 
which is $3,700, the same as the standard benefit package.
  So the arguments that our bill allows plans to raise the deductible 
to $500 or that our premium would be significantly higher than $24 per 
month are just wrong.
  In 2005, when the drug plan is first established, Medicare 
beneficiaries have a 7-month open enrollment period from April 1 
through November 30.
  Every senior would have a choice between two prescription drug plans, 
and that includes rural areas across the country. This is required by 
the legislation, and the Congressional Budget Office agrees that there 
will be two plans in each coverage area. These coverage areas could be 
nationwide but they must be, at minimum, at least the size of a State. 
Before being offered to seniors, the drug plans must be certified by 
the Department of Health and Human Services. Seniors will receive 
information about the available prescription drug plans each year 
before selecting their coverage.
  The drug benefit begins in January 2005. CBO estimates that 93 
percent of Medicare beneficiaries will participate in the Medicare 
prescription drug program, 6 percent will keep their current 
prescription drug coverage and 1 percent will not be eligible because 
they do not participate in Medicare Part A and/or Part B.
  An actuarially sound penalty would be imposed on seniors who decide 
to participate in the drug plan once the enrollment period is over. 
This is almost identical to Senator Bob Graham's late enrollment 
penalty.
  The Government will be covering 75 percent of the value of the 
Medicare drug benefit equaling $340 billion over the next 10 years, 
providing a tremendous incentive for plans to participate. The 
tripartisan bill allows private sources of drug coverage to supplement 
the new Government coverage by providing a strong base benefit--50 
percent drug coverage after a $250 deductible up to $3,450 and price 
discounts on all drug purchases. The result is that 80 percent of 
beneficiaries in 2005 will not have

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drug spending beyond that basic benefit.
  We also include low-income protections in our legislation by 
providing low-income seniors with additional subsidies so they, too, 
can afford to pay for their drugs. The tripartisan group's goal was to 
put an end to people having to choose between buying food and buying 
their medicine by providing additional help to those seniors who need 
it.
  For example, the 10 million beneficiaries with incomes below 135 
percent of poverty will have 80 to 95 percent of their prescription 
drug costs covered by this plan with no monthly premiums. These seniors 
are exempt from the deductible and will pay well under $5 for their 
brand name prescriptions and/or their generic prescriptions. And 
beneficiaries at this income level who reach the catastrophic coverage 
limit will have full protection against all drug costs with no 
coinsurance.
  The 11.7 million lower income beneficiaries with incomes below 150 
percent of the poverty level are also exempt from the $3,450 benefit 
limit. Those beneficiaries between 135 percent and 150 percent of the 
Federal poverty level will also receive a more generous Federal subsidy 
that, on average, lowers their monthly premium to anywhere between zero 
and $24 a month on a sliding scale. This also reduces their annual drug 
expenses by more than half.
  All other Medicare beneficiaries will have access to discounted 
prescriptions after reaching the $3,450 benefit limit, and the 
critically important $3,700 catastrophic benefit, which protects 
seniors from high, out-of-pocket drug costs.
  I now want to take some time to discuss the Medicare coverage 
provisions in the tripartisan legislation.
  Under our bill, we offer two choices for Medicare coverage, 
traditional Medicare and a new, enhanced fee-for-service plan which 
offers benefits similar to those provided in private health insurance. 
Medicare beneficiaries may choose one or the other. If a beneficiary 
wishes to remain in traditional Medicare, he or she may do so. If a 
beneficiary opts for the enhanced fee-for-service plan, then changes 
his or her mind and wants to go back to traditional Medicare, that is 
fine, too. For the first year, beneficiaries may go back to traditional 
Medicare without a penalty. Afterward, an actuarially fair penalty will 
be imposed on them for switching back and forth. This is similar to the 
penalties for late enrollment into the Medicare Part B program under 
current law. But no one is stuck in one coverage plan. Beneficiaries 
may change their minds and switch back to traditional Medicare if they 
are not happy with the enhanced fee-for-service plan.
  Now, I would like to take just a few minutes to discuss the details 
of the new, enhanced fee-for-service option with my colleagues.
  As far as enrollment is concerned, the rules for the enhanced fee-
for-service benefit, Medicare Part E, are modeled on current Medicare 
enrollment policies. Those who are already enrolled in Medicare Part A 
and Part B as of 2005 will stay in traditional Medicare unless they 
decide to enroll in the enhanced fee-for-service option. Those who 
become eligible for Medicare in 2005 or later will automatically be 
enrolled in the enhanced fee-for-service option unless they indicate 
that they want to be enrolled in the traditional Medicare program. All 
beneficiaries will have a 7-month period to make their initial coverage 
decision. This is similar to Medicare Part B.
  In addition, beneficiaries will be given information about the 
coverage options included under the enhanced fee-for-service option. 
This information will compare the benefits under the traditional 
Medicare program to the benefits provided under the enhanced fee-for-
service option. That way, Medicare beneficiaries will be able to make a 
coverage decision that really is best for them.
  Benefits covered under the Medicare enhanced fee-for-service option 
include better hospital inpatient cost-sharing. Instead of the current 
extremely high Medicare Part A hospital deductible, which will be $920 
in the year 2005, and high copayments for long hospital stays, the 
Medicare enhanced fee-for-service option offers a single hospital 
copayment of $400 per admission. This is similar to the benefits 
provided to individuals through private health insurance. In addition, 
it avoids penalizing those who are ill enough to have long hospital 
stays. It is also simpler and more rational than the current system and 
all other plans on the table, including the Graham plan. The enhanced 
fee-for-service option also replaces the current limits on hospital 
coverage with 365 days per year, lifetime coverage.
  I would like to give you an example of how this would work.
  Beneficiaries who are hospitalized have to pay an extraordinarily 
high Part A deductible of $812 in 2002, rising to $920 in 2005. Unlike 
private health plans, Medicare today imposes its Part A cost-sharing 
per spell of illness, not per year. As a result, beneficiaries could be 
exposed to the deductible, copayments and coverage limits repeatedly in 
a single year. I just don't think that is fair to the beneficiary who 
is a victim of frequent hospitalizations within a year.
  Under current law, after the Part A deductible, $812 in 2002 per 
spell of illness, is satisfied, there are copayments for those who have 
long hospital stays. In 2002, $0 for days 1 through 60; $203 per day 
for days 61-90; $406 per day for days 91-150 this specific coverage, 
for days 91 through 150, is available only once per lifetime.
  In other words, Medicare provides no coverage at all for inpatient 
care beyond 150 days per spell of illness. And, for additional 
hospitalizations after the first one per lifetime, inpatient hospital 
coverage ends after the 90th day. Our enhanced fee for service option 
would change that, once and for all. The $400 copayment per hospital 
admission would replace both the Part A per spell of illness deductible 
and the copayments imposed on beneficiaries after being hospitalized 
longer than 60 days.
  As far as preventive benefits are concerned, for those who choose the 
enhanced fee-for-service option, preventive benefits would not be 
subject to any deductibles or coinsurance. Currently, Medicare imposes 
deductibles and coinsurance, usually around 20 percent, on most 
preventive benefits. We in the tripartisan group believe that the 
current Medicare policy on preventive benefits makes beneficiaries 
reluctant to seek out preventive services that may identify health 
problems and prevent more expensive care later.
  Therefore, the enhanced fee-for-service option eliminates all 
copayments and deductibles on Medicare preventive benefits.
  The enhanced fee-for-service option also includes a unified 
deductible of $300 per year for all services. Today, in the current 
Medicare program, the Part A deductible in 2002 is $812 per spell of 
illness. In 2005, it will be much higher, $920 per spell of illness, 
while the Medicare Part B deductible will still be only $100 per year.
  The enhanced fee-for-service option offers seniors a choice: their 
current coverage that emphasizes protection against relatively 
predictable and routine Part B costs, or new coverage that emphasizes 
protection against unpredictable but potentially devastating Part A 
costs in the event of serious illness. Seniors would have a choice, 
which they do not have today.
  Medicare's irrational, two-deductible system is unheard of in private 
insurance. Beneficiaries are used to a single deductible from their 
prior employer-based plans. It is true that in a given year, relatively 
few beneficiaries use Part A hospital services.
  However, the picture changes if one looks across multiple years. A 
recent survey found that 17 percent of beneficiaries were hospitalized 
each year. Over a 6-year period, more than half, 56.4 percent, were 
hospitalized and 36 percent were hospitalized more than once. These 
hospitalizations may result in ruinously high out-of-pocket costs for 
seniors, and the enhanced fee-for-service option offers protection 
against such costs for those who choose this coverage plan.

[[Page 13698]]

  In addition, the enhanced fee-for-service option would protect 
seniors with serious illness. Today, Medicare has no limit on a 
beneficiary's out-of-pocket expenses in a year, creating the potential 
for crippling costs in the event of serious illness. Our tripartisan 
bill would limit beneficiaries' exposure to out-of-pocket costs for 
Medicare-covered services, other than prescription drugs, to $6000 per 
year. Beyond $6000, Medicare would pay 100 percent of any costs 
incurred by the beneficiary.
  In a given year, it is estimated that 2 to 3 percent of Medicare 
beneficiaries may have costs that reach $6000. If beneficiaries want 
peace of mind that would come from such catastrophic protections 
included in the enhanced fee-for-service option, they should have that 
choice.
  Contrary to popular belief, Medicare supplemental policies do not 
offer catastrophic protection. The standardized Medigap plans fill in 
the cost-sharing in the existing Medicare benefit package, but they do 
not offer serious illness protection. Since virtually all employer-
sponsored health plans offer serious illness protection, it is 
something that many beneficiaries have come to expect.
  In addition to those with serious illnesses, this protection would 
also benefit those with severe, chronic conditions, which are 
inadequately covered by Medicare today. All spending by or on behalf of 
the beneficiary, including by third parties, such as Medicaid, 
employers, or Medigap plans would count toward the serious illness 
threshold of $6000. This differs from the drug benefit stop-loss 
because CBO indicated that counting only a beneficiary's own spending 
toward the Part E limit would reduce participation in the enhanced fee 
for service option a concern that CBO did not have about the drug 
benefit in the tripartisan bill.
  As far as home health benefits and skilled nursing facilities are 
concerned, those who choose the enhanced fee for service option would 
have to make home health copayments of $10 per visit, on only the first 
five visits of a 60-day episode. A Medicare beneficiary would only have 
to pay $300 in home health copayments per year. Home health care is one 
of the only Medicare benefits for which there is no beneficiary cost-
sharing. Medicare's average payment per home health care episode is 
$2300, so a maximum total copayment of $50 per episode would cover only 
about 2 percent of the program costs, in contrast to the typical 20 
percent cost-sharing on Medicare Part B benefits.
  Both CBO and Med PAC indicate that even a modest copayment is 
critical to making beneficiaries consider cost when deciding whether or 
not to use home health care. CMS projects a 12 percent growth in home 
health care spending in 2003, even if the 15 percent cut scheduled in 
current law takes place. Beneficiaries with serious enough conditions 
to need more than five visits per episode receive those additional 
visits without additional cost-sharing. Those who cannot afford these 
modest copayments are protected, because current law includes cost-
sharing protections for the low-income beneficiaries, Medicaid eligible 
and QMBs are maintained.
  For skilled nursing facilities, the enhanced fee for service option 
would include a copayment of $60 per day for the first 100 days. Under 
Medicare today, beneficiaries currently pay copayments beginning on day 
21 of a skilled nursing facility stay. Medicare imposes no cost-sharing 
for the early days of a skilled nursing facility stay, days 1 through 
20, and then Medicare imposes very high beneficiary cost-sharing for 
longer stays. In 2005, when our bill goes into effect, those copayments 
will be $115 per day for days 21 through 100.
  As a result, Medicare's current skilled nursing facility cost-sharing 
unfairly penalizes those who are sick enough to need a longer stay, 
while allowing those who aren't as sick to have free days of care, with 
no incentive to consider costs. Influenced by the 20 days of free care, 
then prohibitive cost-sharing policy, the average length of stay in a 
skilled nursing facility is approximately 24 to 26 days, according to 
CMS.
  We believe that since skilled nursing facilities already collect 
copayments beginning on day 21 of the beneficiary's stay, these 
facilities will already have administrative structures for cost sharing 
in place.
  To be honest, I am not enthusiastic about imposing home health or 
skilled nursing facilities copayments on Medicare beneficiaries. But, 
as I said earlier, this legislation required a lot of give and take 
from all of us. If Medicare beneficiaries do not want to make home 
health or skilled nursing facility copayments, they may stay in the 
traditional Medicare program. If they go into the enhanced fee for 
service option and don't like the coverage because they end up having 
to make copayments for home health care or skilled nursing facilities, 
they may switch back to traditional Medicare. It is that simple. We are 
not imposing copayments on anyone who does not want them. The enhanced 
fee for service option is just that a coverage option.
  These are some of the key elements of the new, Medicare enhanced fee 
for service option that our bill will provide to Medicare 
beneficiaries. I hope that my explanation cleared up any questions that 
my colleagues may have had on this component of the tripartisan bill.
  Our tripartisan bill also includes provisions concerning the 
Medicare+Choice program. In 2005, our legislation takes modest steps to 
improve Medicare+Choice plan participation by introducing a competitive 
bidding system under which the plans will compete with each other, but 
not with the government-run, fee-for-service program, for 
beneficiaries. This competitive approach to Medicare+Choice payments, 
based on a bipartisan model supported by the Clinton administration, 
will result in fairer and more accurate payments to plans. Today's 
bureaucratic pricing system sets arbitrary and inaccurate rates that 
discourage plan participation.
  At this point, I would like to take a few minutes to rebut some of 
the arguments my friend and colleague Senator Kennedy made against our 
bill last week on the Senate floor. He obviously has not read our bill 
very carefully. I wish he had taken the time to read the tripartisan 
legislation before making statements that were not completely true on 
the Senate floor about our bill. Now, there is some confusion about our 
bill and I would like to set the record straight, once and for all.
  First, Senator Kennedy criticized our plan's assets test for low-
income beneficiaries. Our tripartisan plan provides additional 
subsidies for low-income seniors which everyone agrees is only fair. I 
believe I am correct in saying that everyone, on both sides of the 
aisle, believes that additional subsides for our low-income seniors is 
completely justified. My good friend is trying to make it appear that 
we are picking and choosing which seniors would be eligible for this 
additional assistance. Nothing is further from the truth.
  I want to be clear that we have done nothing different on this issue 
than what has been the accepted practice and policy for many years when 
it comes to programs that provide assistance to those with lesser 
means. In fact, the tripartisan bill adopted an assets test similar to 
the Medicare bill proposed by President Clinton in 1999.
  Under current law, Medicaid includes an assets test. States have the 
flexibility to waive the assets test at their discretion.
  Our tripartisan proposal ensures that the flexibility found in 
current law is retained in the Medicare drug benefit program. The 
assets test ensures the seniors who need the most assistance are 
provided with the most protection. We want to provide the most generous 
assistance to those who truly need it.
  Also, let me clarify that current law specifically excludes from the 
assets test an individual's home and its land; household goods; 
personal effects, including automobiles; the value of any burial space; 
and other essential property. So I hope this clarifies any questions 
that Senators may have had on the tripartisan proposal's assets test. 
Hopefully, I have made it clear to my

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colleagues that the tripartisan bill adopted a widely accept and common 
practice for determining which lower income seniors are eligible for 
higher subsidy for their prescription drug benefits.
  Another issue raised by my good friend, Senator Kennedy, is the 
design of the tripartisan proposal's prescription drug benefit. He 
wanted to know how our prescription drug benefit design permits 
creation of competitive plans that would provide quality coverage to 
all Medicare beneficiaries.
  Let me explain why we took this approach. First, we believe that 
Medicare beneficiaries deserve a quality drug benefit that meets their 
individual needs. The Graham-Miller proposal does not allow any 
variation in cost-sharing or premiums and is a ``one-size-fits-all'' 
plan which, in my opinion, will fail to address the individual 
prescription drug needs of seniors.
  So, with that in mind, it is important that Medicare beneficiaries 
are provided a quality drug benefit at an affordable price. Our 
tripartisan plan strikes the right balance to give Medicare 
beneficiaries access to prescription drugs they need at the lowest 
possible price. Any plan that wants to offer a Medicare drug benefit 
will be required to receive the approval of HHS according to strict 
standards specified in law. This approval process will be an 
interaction between any prospective plan and the Federal Government to 
ensure that Medicare enrollees receive the best quality coverage 
possible at an affordable price.
  There are five strict standards of actuarial equivalence in our bill 
which the CMS Administrator is required to certify that a plan meets 
before the plan is offered to Medicare beneficiaries. The plans 
themselves will not be determining what is actuarially equivalent; only 
the Federal Government will make that determination. If the Government 
determines that a plan is not equivalent to the standard benefit, its 
proposal will be rejected and it will not be permitted to participate 
in the Medicare drug benefit. End of Story. In fact, CBO has told us 
that our standards of equivalence are strict enough that Medicare Drug 
Plans will have little room to vary premiums or cost-sharing. That 
little room to allow some variation, however, is critical to the 
success of a Medicare prescription drug benefit.
  Under the Graham-Miller bill, Medicare drug plans operating in the 
same area will be forced to charge the same monthly premium and the 
same cost-sharing. While Senator Graham claims that his proposal 
includes competition, I do not understand how Medicare plans will 
compete if they are required to offer identical premiums and identical 
cost-sharing across the country. If drug plans wanted to lower their 
cost-sharing or lower their premium in order to attract Medicare 
enrollees, Congress would have to pass legislation.
  On the other hand, the tripartisan bill ensures that the innovation 
of the private sector is not stifled by a micromanaged, ``one-size-
fits-all'' drug benefit run by the Federal Government.
  Another issue raised by my friend Senator Kennedy is whether or not 
the prescription drug benefit under our proposal guarantees that 
seniors will have access to benefits. Let me assure you that if this 
were not true, I would not be standing here today, speaking in favor of 
this legislation.
  Let me clarify that the tripartisan bill guarantees two Medicare 
prescription drug plans to every Medicare beneficiary. If the 
beneficiary lives in an area where there are Medicare+Choice plans, 
then even more choice will be available as the presence of drug 
coverage under Medicare+Choice does not count as one of the two choices 
that would be guaranteed in law under our plan.
  The Medicare prescription drug plans are not determining their own 
service areas. The Federal Government will make that determination. And 
let me emphasize that the service areas must be--at a minimum--the size 
of a state. The government will be covering 75 percent of the value of 
the Medicare drug benefit equaling $340 billion over the next 10 years.
  The last issue that my good friend from Massachusetts raised is 
whether or not employers will be encouraged to continue to provide 
retiree health benefits with prescription drug coverage. I believe that 
we have worked hard to protect both employers and retirees on this 
issue. The tripartisan bill provides employers the same full subsidy to 
offer drug benefits to their retirees as any other qualified provider 
of prescription drug benefits.
  The Graham-Miller legislation provides a disincentive for employers 
to continue offering retiree health coverage for prescription drugs by 
giving employers only two-thirds of the value of the government drug 
benefit to retain their retiree coverage. So in other words, the 
Graham-Miller plan would encourage employers to end their coverage of 
prescription drugs in order to encourage their retirees to enroll in 
the Government plan and receive the full Government subsidy.
  I do not understand how my friend can make the argument that our plan 
is bad for employers. Currently, employers receive no assistance 
whatsoever in paying for drug costs for their retirees. Employers today 
are paying the full price and taking all of the risk for covering 
retiree prescription drug costs.
  The subsidy policy in the tripartisan proposal will allow employers 
who are offering a drug--benefit at least as generous as the standard 
benefit--to receive the full value of the standard benefit.
  Again, our policy targets dollars where they might do the most good, 
and our employer subsidies recognize the value of employer-sponsored 
retiree drug coverage.
  I would like to take some time to share my thoughts on the Graham-
Miller Medicare outpatient prescription drug amendment which was 
offered at the end of last week.
  As I have said throughout this debate, Senator Graham deserves a lot 
of credit for his hard work and dedication to this issue. His staff, 
too, has worked long and hard on this issue. Senator Graham, like those 
of us in the Senate tripartisan group, has the same goal--to pass 
Medicare prescription drug legislation into law this year.
  I have had a chance to review Senator Graham's amendment over the 
weekend and I would like to raise some issues regarding his new 
legislation. I understand that the Congressional Budget Office has 
scored his legislation as costing close to $600 billion over 10 years. 
While Graham says that any potential saving from the underlying 
legislation should be counted against the cost of his amendment, I 
disagree. We do not know whether or not the underlying bill will be 
approved as proposed, amended or defeated altogether. Therefore, we 
obviously cannot assume any savings from that bill when discussing 
either Medicare prescription drug amendment--the Graham amendment or 
the tripartisan amendment.
  Quite honestly, I am still extremely worried about the expense of the 
Graham-Miller legislation. In fact, I believe that the true 10 year 
cost of the Graham-Miller drug benefit could be closer to $1 trillion.
  Another concern is that this bill is not a permanent program. It 
sunsets after 2010 and, quite frankly, I believe that having a sunset 
in such an important bill just to get a decent score from CBO is 
fiscally irresponsible. The way I read the Graham-Miller bill, it is a 
temporary benefit, which lasts for 6 years. On page 78 and 79 of the 
Graham-Miller amendment, it states that ``no obligations shall be 
incurred . . . and no amounts expended, for expenses incurred for 
providing coverage of covered outpatient drugs after December 31, 
2010.'' That is a mouthful to read. But the translation from 
Government-speak is simple: no funding at all, zero, for the Medicare 
drug benefit after 2010.
  I also read in the Graham-Miller bill that there is an attempt to 
provide prescription drug coverage after the Medicare prescription drug 
program sunsets. On page 79, the amendment states that ``the Secretary 
shall make payments on or after January 1, 2001, for expenses incurred 
to the extent such expenses were incurred for providing coverage of 
covered outpatient drugs prior to such date.''

[[Page 13700]]

  I think what the sponsor of this legislation is attempting to do, 
although I am really not sure, is say if there is additional, left-over 
money from the drug benefit, that money may be used to provide drug 
coverage after December 31, 2010. That language is very confusing to 
me. Like I said the other night, it seems more like window dressing to 
me than an actual extension of the sunset.
  I am interested in Senator Graham's comments on this specific 
provision and the broader issue of why he and his bill cosponsors 
believe that a sunset is necessary in the first place. I just think it 
is plain wrong to give Medicare beneficiaries a Medicare drug benefit 
and then take it away six years later. I cannot believe that the AARP 
would actually tell its members to call their members of Congress to 
express support for this bill. I cannot figure out how a temporary 
Medicare drug benefit helps seniors in the long run.
  Another serious concern I have about the Graham-Miller legislation is 
that the drug benefit is run by the Federal Government. I do not think 
it is a good idea to let the Government set the price for drugs which 
is exactly what will happen if the Graham-Miller bill becomes law. And 
that will be catastrophic, in my opinion.
  The Graham-Miller bill has a one-size-fits-all drug plan that is 
offered to Medicare beneficiaries. That approach will lead us down a 
dangerous path. I have said this more than once but I am going to say 
it again, before you know it, the Federal Government, not the private 
market, will be setting drug prices, mark my words. And I do not 
believe it is a good idea for the federal government to be making 
coverage decisions for seniors--I trust senior citizens to make their 
own decisions about their health coverage. Apparently, the authors of 
the Graham-Miller bill do not agree and that is why they put the 
Government in charge.
  If you do not believe me, read the language on page 41 of the bill. 
It states that if only one drug plan meets all the conditions set by 
the Secretary of Health and Human Services, and the Secretary can set 
any conditions he pleases, then the Secretary can simply decide that 
Medicare beneficiaries will get coverage through that one prescription 
drug plan. Period.
  And while there are laws to protect Medicare beneficiaries, and in 
fact all Americans, against the government doing something that 
arbitrary, the bill waives all of those laws. Let me summarize for my 
colleagues what is included in the Graham-Miller legislation on this 
topic.
  Page 42, line 18 through 21 reads as follows:

       In awarding contracts under this part, the Secretary may 
     waive conflict of interest laws generally applicable to 
     federal acquisitions * * * 

  In other words, not only is there no judicial or administrative 
review of the Secretary's decisions allowed at all, but even the 
Government's conflict of interest laws are waived.
  The other primary difference between the Graham-Miller bill and our 
tripartisan bill is that we include reforms to the Medicare program and 
they do not. Keep in mind our bill is $370 billion in contrast to their 
proposed $600 billion bill. The current Medicare benefit package was 
established in 1965. While the benefits package has been modified 
occasionally, it now differs significantly from the benefits offered to 
those in private health plans.
  We need to give seniors choices concerning their health care 
coverage. It is extremely unfortunate that the Graham-Miller bill does 
not recognize that the Medicare program needs to be improved so seniors 
can have similar benefits offered by private health insurance. There is 
nothing in the Graham-Miller bill to improve the Medicare program. It 
just tacks on a prescription drug program and ignores the larger 
problem--the overall Medicare benefits package which is outdated and 
inefficient. Medicare beneficiaries, in my opinion, deserve better. We 
do not shove the larger issue under the rug in our bill.
  Another serious concern I have about the Graham-Miller legislation is 
that only two brand-name drugs are covered in each therapeutic drug 
class, and, plans are permitted to cover just one drug.
  For all other drugs, ``the beneficiary shall be responsible for the 
negotiated price of the treatment'' which means in plain English, no 
coverage at all.
  Let me give an example.
  Let's say Bob, a Medicare beneficiary in his early 70s, takes Mevacor 
to lower his cholesterol. His new Government prescription drug plan 
only covers Lipitor.
  Bob's wife, Bev, takes Celebrex for her arthritis. Her Government 
drug plan only covers prescription strength Advil.
  What happens to Bob and Bev? They are both out of luck because their 
Government drug plan does not cover the prescription drugs that they 
have been taking for their chronic health conditions.
  Even worse, according to CBO, the Graham bill does not lower drug 
prices for drugs that are not covered. Unless a beneficiary is awfully 
lucky to be on the one or at most two brand name drugs that the 
government plan decides to cover, he or she will get nothing.
  I think of people suffering from depression. There are a number of 
antidepressant drugs, and they all work in just a little bit different 
way. Where Prozac may not work, Zoloft might, or Paxil might work, or 
some other antidepressant drug. Why should they be limited to only two 
drugs when the two they are limited to might not be helpful to them? It 
just does not make sense to me.
  If a Medicare beneficiary believes that he or she needs a specific 
prescription drug, not the one or two drugs that the Government plan 
decides to cover, the beneficiary may be able to get coverage if the 
beneficiary and his or her physician go through a ``medical necessity'' 
certification process. This certification process is then followed by 
an internal and external appeals process--and guess what--all run by 
the Government.
  I simply do not believe that Medicare beneficiaries want the 
Government to make drug coverage decisions for them. Supporters of the 
Graham-Miller legislation say, ``Don't worry, trust the Government, you 
will have choices of drug coverage.'' Tell that to Bob and Bev who will 
not have their prescriptions covered through this Government-run plan 
or to somebody suffering from depressive illness where the two drugs 
that are in the Government plan are not the ones that help them. Or in 
any number of other illustrations where you have a whole variety of 
drugs but you are limited to two. When the Government says ``trust 
us,'' it is time to pay attention.
  In addition, the way I read the Graham-Miller legislation, the 
Secretary of HHS is given the authority not only to decide what 
constitutes therapeutic classes but also the ability to determine when 
such a drug fits into such a class. I do not understand why the 
sponsors of this legislation believe the Secretary of HHS should be 
making such important decisions. In addition, why should the Secretary 
of HHS, instead of physicians and pharmacists, be given authority to 
decide what constitutes preferred and non-preferred classes of drugs 
and, on top of that, determine when a particular brand name drug fits 
into such a class? It does not make any sense.
  Because the Graham-Miller amendment now does not cover non-preferred 
drugs, at all, I am deeply concerned about the impact this could have 
on Medicare beneficiaries with cancer or AIDS or other chronic 
illnesses that require many prescriptions. I have a feeling that people 
with chronic or terminal illnesses will be getting the short end of the 
stick if the Graham-Miller bill is signed into law.
  Furthermore, how are the doctors, who may know that one drug may be 
much more beneficial than another drug, protected? How are the doctors 
protected from medical liability under those circumstances? Already we 
are finding that obstetricians in Nevada can no longer get insurance 
coverage for medical malpractice, and that is going to happen all over 
the country if they do not watch it because litigation is driving these 
costs higher and higher.

[[Page 13701]]

  If a doctor cannot prescribe what is necessary for the patient, that 
doctor is subject to medical liability even though the Government is 
the one dictating what two drugs should be provided. By the way, that 
is under the Graham-Miller bill.
  These issues that I have raised about the Graham-Miller should have 
been debated by the Finance Committee. Who knows, maybe we could have 
come to the same resolution, but I doubt it. We could have come to some 
resolution and it would be better than what is in the Graham-Miller 
bill. Maybe the authors of the tripartisan bill and the Graham-Miller 
bill could have come to the same agreement through the committee markup 
process. Maybe not. Sadly, we will never know because politics, not 
policy, is more important.
  Last Thursday night, I asked what happened to the bipartisan spirit 
that we all talked about at the beginning of the Congress. This 
legislation is not being considered in a bipartisan manner and, in 
fact, the way this entire debate has been handled has really created 
some hard feelings, especially among members of the Senate Finance 
Committee. Why are we on the floor debating a bill that will affect the 
lives of millions of Medicare beneficiaries and millions of future 
beneficiaries without a Finance Committee markup? I do not understand 
why members of the Finance Committee were completely excluded from the 
process other than whatever little they can do on the Senate floor.
  I want to do everything I can to pass a Medicare prescription drug 
bill into law this year. But it appears that election year politics are 
more important than passing a well-thought out prescription drug bill.
  I stand ready to work with my colleagues, like Senator Bob Graham, so 
that we pass an affordable prescription drug benefit for our Medicare 
beneficiaries this year. I think he and Senator Miller are trying to 
the best they can, and I have respect for both of them, but I believe 
their bill falls far short of the tripartisan bill and has a lot less 
chance of bringing us together than the tripartisan bill does. I truly 
believe that we can work something out that will be approved by the 
Senate before we adjourn in the fall. This is an important issue, too 
important to politicize so we should stop playing politics, once and 
for all. Let the Finance Committee do its work so the Senate can pass a 
Medicare prescription drug bill which can be signed into law this year.
  I yield the floor.
  THE PRESIDING OFFICER (Mr. Johnson). The Senator from Hawaii is 
recognized.
  Mr. AKAKA. I thank the Chair.
  (The remarks of Mr. Akaka pertaining to the introduction of S. 2767 
are located in today's Record under ``Statements on Introduced bills 
and Joint Resolutions.'')
  Mr. HATCH. I yield 15 minutes to the Senator from Nevada.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. ENSIGN. Mr. President, I rise today to speak in support of the 
Medicare Prescription Drug Discount and Security Act of 2002, 
coauthored by myself and Senator Hagel with the help of Senator Gramm. 
This legislation provides an overdue and much needed prescription drug 
benefit to the Medicare Program.
  We are going to be voting on two different bills tomorrow; following 
that, we will be taking up our legislation. We bring this legislation 
to the attention of our colleagues. We need to offer a responsible 
solution to make medicine more affordable for those seniors who need it 
the most. This offers immediate help to our Nation's seniors in the 
form of a bill that is voluntary, reliable, and it gives seniors 
options. It complements, rather than replaces, the private prescription 
drug coverage that two-thirds of retirees have now.
  Many seniors like their current prescription drug plans and should 
not be forced to abandon them. The cost of prescription drugs is a 
major concern for many of my constituents, especially those who rely on 
only their Social Security benefits for their total income.
  Let's look at a typical senior. We will call her Mary. Mary has 
worked hard her entire life, makes $55,000 a year, and is about to 
retire in 2004--coincidentally, the same time our program goes into 
effect.
  Mary has never been much of a saver, so she will be relying almost 
solely on her monthly Social Security check to make ends meet. She can 
expect to get about $1,300 per month in benefits. Mary has diabetes and 
has to take six different prescription drugs every day to keep her 
healthy. The total cost of these drugs per month comes to about $475, 
about one-third of her income. Considering her other expenses, such as 
rent, food, and other monthly bills, Mary needs some help paying for 
her prescription drugs. The bottom line is Mary should never have to 
compromise her health by having to choose between buying prescription 
drugs or buying food for her table.
  Our legislation provides immediate, affordable, and permanent help so 
that seniors like Mary never have to make that choice. This legislation 
has two parts:
  First, all seniors would be protected from unlimited out-of-pocket 
drug expenses by instituting caps on their private expenditures. Once 
those caps are reached, the Federal Government would step in and cover 
the rest of the cost, minus a small copayment.
  Second, all non-Medicaid seniors could enroll in a discount drug card 
program that would give them access to privately negotiated discounts 
on prescription drugs.
  Let me now focus on the heart of our plan which protects seniors from 
unlimited out-of-pocket expenses, with the greatest protection going to 
those who need it most. Negotiated discounts on prescription drugs 
would be worked out through the private market, while Medicare would 
pay for drug costs after out-of-pocket expenditure caps have been met. 
This means, to our friend Mary, saving hundreds, possibly thousands, of 
dollars every year on prescription drug costs.
  In this chart, we see how our plan works as far as the various income 
categories are concerned. Mary fits in the category below 200 percent 
of poverty. For an individual who makes less than $17,720 a year, which 
is about 50 percent of the senior population today, we cap their out-
of-pocket expenses at $1,500. After they have paid $1,500 out-of-
pocket, the Government will then pay for the rest of their prescription 
drug expenses.
  Now remember, before they even start paying toward that cap, they 
have the prescription drug discount card. That saves them money, as 
well, on their prescriptions.
  Continuing with the catastrophic coverage, if an individual's income 
is between 200 percent and 400 percent of poverty, they are capped at 
$3,500. If their income is between 400 percent and 600 percent of 
poverty, they are capped at $5,500. For seniors above 600 percent of 
poverty, individuals would be covered after they pay what is equal to 
20 percent of their annual income.
  The Hagel-Ensign plan has no monthly premium. It was said earlier 
that the tripartisan plan has the lowest monthly premium of any of the 
plans out there. Well, our plan has no monthly premium. What we do 
require is a $25 annual fee which is waived for those below 200 percent 
of poverty. Our $25 premium is used strictly for administrative costs.
  Additionally, participants would also pay a small copayment of no 
more than 10% per prescription after they reach their out-of-pocket 
limit. We believe the copayment system is important because it not only 
keeps costs low by forcing pharmaceutical benefit managers to compete 
for business, but more importantly to the consumer, in this case the 
senior buying prescription drugs, back into the accountability loop.
  The second part of our plan, the discount drug card program, works 
according to practical principles. According to a study conducted by 
the Lewin Group, one of the country's most respected health care 
actuaries, this approach would achieve significant discounts from full 
retail price between 30 percent and 39 percent. Here is how it works:

[[Page 13702]]

  First of all, the card is completely voluntary, for both seniors and 
drug manufacturers. Drug manufacturers, through pharmacy benefit 
managers, would compete for business on the basis of their discounts 
and services, ultimately offering seniors the lowest price for their 
prescriptions. Seniors could choose from among any number of competing 
drug card plans. If they became dissatisfied with their plan, they 
could enroll in a different plan the following year. The Federal 
Government would not be fixing or negotiating prices for prescription 
drugs. The program simply allows seniors, such as Mary, to receive the 
same kind of privately negotiated discounts on drugs that are available 
to those enrolled in private health insurance plans.
  Our plan also encourages the use of generic drugs whenever possible, 
in a couple of different ways. It requires the drug discount card 
issuer to include incentives in its program to use generic drugs 
whenever possible.
  Mr. President, could you remind me when there is about 3 minutes to 
go?
  The PRESIDING OFFICER. The Chair will do so.
  Mr. ENSIGN. It also requires that each beneficiary who buys a drug 
through the discount card program be made aware of generic drug 
alternatives at the time they purchase the drug.
  It is crucial to make prescription drugs affordable for seniors, 
which our program clearly does. However, it is also important to make 
sure Medicare's prescription drug program is affordable to the American 
taxpayer, which our plan also does.
  According to actuarial analysis, our proposal would cost 
approximately $150 billion over ten years. We are waiting for the final 
score from CBO, but that is where we believe our plan will come in. 
This is markedly less than any of the other plans out there, even the 
tripartisan plan. It is less than half of what the tripartisan plan 
would be.
  We must not only enact a responsible outpatient prescription drug 
program for our seniors, we must also do so without bankrupting the 
overall Medicare system.
  Another reason our program is the best fit for seniors is that it 
takes effect at the earliest date. Our program takes effect on January 
1, 2004, a full year earlier than any of the other plans. Our program 
is also permanent, unlike some of the other proposals which sunset 
after a period of time. So, our plan is an immediate step that can be 
taken to help seniors until comprehensive Medicare reform can be 
enacted.
  I want to now compare our plan to the tripartisan plan and to the 
major Democrat plan that Senators Miller and Graham have proposed. 
These are real life examples.
  James is a 68-year-old, has an income of $16,000 per year, and is 
being treated for diabetes. He is taking these six different 
medications. His total monthly costs for these prescription drugs are 
around $478. His total annual costs are more than $5,700. Under the 
Graham-Miller approach, James would pay $2,940 out of his pocket. Under 
the tripartisan plan, he would pay $2,341.65 per year. Under the Hagel-
Ensign plan, he would pay about $1,923.65 per year.
  As you can see, the Hagel-Ensign proposal would save James over 
$1,000 annually when compared to the Graham-Miller proposal, and over 
$400 annually when compared to the tripartisan proposal.
  Example No. 2: Doris is a 75-year-old, has an income of $17,000 per 
year, and is being treated for diabetes, hypertension, and high 
cholesterol. She takes Lipitor, Glucophage, Insulin, Coumadin, and 
Monopril every day. Her monthly cost is about $300, or about $3,650 per 
year.
  Under the Graham-Miller proposal, her out-of-pocket expenses would be 
$2,220.00; under the tripartisan plan, $2,086.36; and under our plan, 
about $1,714.84.
  The Hagel-Ensign proposal would save Doris over $500 annually when 
compared to the Graham-Miller proposal, and over $300 annually when 
compared to the tripartisan proposal. For those who are the sickest, 
who need the help the most, the Hagel-Ensign plan actually benefits 
them more than any other plan.
  In comparing our plan to others--just to point out what other people 
may point out as a supposed weakness of our plan--for those who pay 
$1,000 or $1,200 per year for drug costs, the other plans will help 
them more, and we readily admit that. But for a majority of the senior 
population who has high drug costs and needs help paying those costs, 
we think our plan works best.
  The PRESIDING OFFICER. The Senator has 3 minutes remaining.
  Mr. ENSIGN. Betty is 66 years old, has an annual income of $15,500, 
and is being treated for breast cancer. She is still receiving low-dose 
radiation therapy and taking the following 6 medications: morphine 
sulfate, Paxil, Dexamethasone, Aciphex, Trimethobenzamide and Nolvadex. 
Her total monthly cost comes to around $670 and annually to about 
$8,000. Once again, to compare the plans with real life examples: under 
the Graham-Miller approach, she will pay $3,180.00 per year; under the 
tripartisan plan, she will pay $2,570.00 per year; under our plan, she 
will pay $2,152.00. So our plan is less, once again, than either of the 
other two major competing plans.
  Under our bill, those who need it the most will get the most help. 
For those moderate- and low-income seniors, our plan will benefit them 
the most, and--we cannot emphasize this enough--our plan is the most 
responsible to the taxpayer. We cannot afford to say to the young 
people in America, you are going to be paying for this huge 
prescription drug program that probably will not be there for you in 
the future, but you have to pay for it anyway. We have to think about 
the next generation, so we must enact a plan that is fiscally 
responsible.
  Our proposal says that we are going to give seniors--those who truly 
need it--the help that they need and ultimately deserve. But to the 
taxpayer, we are also saying we are going to be responsible to you.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. KENNEDY. I yield myself 15 minutes.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, how much time--how much time remains 
between now and 6 o'clock?
  The PRESIDING OFFICER. The majority has 92 minutes, the minority has 
50 minutes.
  Mr. KENNEDY. We have 90 minutes. I thank the Chair.
  Mr. President, tomorrow in the early afternoon the Senate will have 
an opportunity to vote on which vision is the best vision for our 
seniors and for others who need prescription drugs. This will be the 
first opportunity we have had in the Senate to take that vote.
  The absence of a prescription drug benefit from the Medicare Program 
is a glaring failure of the Medicare Program that every family 
understands in America today. It is not the fact that we have not had 
prescription drug programs that have been advanced to the Senate--we 
have. But they have been kept bottled up in the committees over the 
period of recent years.
  I introduced, more than 5 years ago, prescription drug coverage into 
the committee. It was referred to the Committee on Finance, and it 
never saw the light of day.
  We heard last week, and have heard now that somehow the majority 
leader has circumvented the Finance Committee and now we have the 
legislation out here. I applaud his efforts. So should all seniors 
applaud those efforts. We hear now the committee was prepared to move--
but we waited and waited.
  Our friends on the other side of the aisle had control of the Senate 
for 4 of the last 5 years. They controlled the Finance Committee for 4 
of the last 5 years, and we never had an opportunity to have a debate 
on the issue of prescription drugs. Now we do. Now we will have a vote.
  I think it is important for the American people to understand that we 
have been denied that opportunity for the past 5 years. Now we will 
have that opportunity. It is a tribute to leadership of Senator 
Daschle, who understands

[[Page 13703]]

the importance of this issue to families in this country. We are 
enormously grateful to him for his leadership, and we are extremely 
hopeful that we will have a strong vote tomorrow that will reflect what 
is in the best interests of our seniors.
  I was here in 1965 when we actually passed Medicare. We passed 
physicians' services and hospitalization but not prescription drugs. 
Now we all know that if the Medicare Program had been considered on the 
floor of the U.S. Senate, we would have included prescription drugs. It 
is as important as physicians' services and hospitalization. It is 
perhaps even more important in a number of different instances.
  The fact remains that this is going to become even more important 
because we are now in the life sciences century. We are going to see 
extraordinary breakthroughs. We now see the mapping of the human genome 
and progress in so many important areas of research. It is virtually 
unlimited in what we will be able to achieve over a period of years.
  It should be important to find ways of taking the progress being made 
in the labs and getting it to the patients who need it. They need it 
today. And we have a program that will do it.
  I have listened with interest to those who support the Republican 
proposal, as they outlined at least what they consider to be the 
advantages of the Republic proposal and the disadvantages of our 
proposal. I hope in the 50 minutes they have remaining today or in the 
time prior to the vote tomorrow they will cite at least one, two, 
three, or four senior citizen groups that support their program. 
Because there are not any. Do we understand that? There are not any. 
The senior citizen groups that know the importance of prescription 
drugs have gone through these various programs in careful detail for 
those they are representing. And do you know what? They endorse the 
Graham-Miller proposal. They are behind the Graham-Miller proposal. 
They support it completely and wholeheartedly.
  They appreciate the fact that our Republican friends over here are at 
least giving lip service to a prescription drug program. But if we are 
talking about which particular version is best for senior citizens, 
there is no competition. There is no question about it. You never heard 
in the earlier claims this afternoon the senior citizen groups that 
support their program because they are not there. This is one of the 
key reasons this is so important, and--I am hopeful--what this tomorrow 
vote is about.
  I listened to my friend and colleague from Utah talk about premiums. 
On page 26 of the Graham-Miller proposal, our premium is listed at $24; 
for 2005, $25. I searched all weekend to find out where the $24 premium 
was in their bill that they have been talking about for the past few 
days. You can't find it in there. It is an estimate.
  Ours is printed right here. Every senior citizen knows what that 
premium is going to be.
  Theirs is an estimate. They all say: We have one that is $24--lower 
than the Miller program. But that is an estimate of what they are going 
to charge the insurance companies over a period of time. That is the 
difference.
  I want to take just a few minutes to review with our colleagues what 
this program does not do and why the seniors have been so distressed 
about their program.
  Actually, between 2005 and 2012 the seniors in this country are going 
to spend $1.6 trillion on prescription drugs. Their program is $330 or 
$340 billion. It is a lot of money. But if you figure that out, that is 
only about 20 cents on the dollar.
  They are trying to say they are really going to be able to do 
something for the seniors. It just doesn't measure up.
  I want to take a few moments of the Senate's time to go through the 
facts of the program itself. This chart over here is the Republican 
program, and this line is the percent of seniors. The next line is the 
drug costs; beneficiary payments; Medicare benefits; and then the 
percent of costs paid by the senior citizen. That is what we are 
concerned about.
  The fact is, to address the extraordinary escalation of the costs of 
prescription drugs, we have an underlying proposal which will create 
momentum to get a handle on that escalation of prescription drugs--the 
excellent proposal introduced by our colleagues, Senators Schumer and 
McCain. It was reported out of our committee with bipartisan support, 
which we welcome.
  But 18 percent of seniors spend $250; the beneficiary payments will 
be $538. That is what they are going to pay in terms of their premium 
and their deductible in order to sign up for this program. For 18 
percent of our senior citizens, they turn out to be losers, because 100 
percent is going to be paid by senior citizens.
  We take what the premiums are going to be, estimated by the 
Republicans, and also add the deductibles and the copays. You have 
another 18 percent that spend $1,000. Again, you add up the premium, 
deductibles, and copays. It will be $913 and beneficiary payments of 
$87. The senior citizen, 91 percent--some help and assistance.
  Together, 36 percent of all the seniors, and one part of them, are 
going to pay 100 percent. They are not going to get any help, and the 
other group will pay 91 percent of the cost.
  You come down here to the $2,000. This is where you really begin to 
get some help. The seniors are still going to spend 71 percent. If you 
come into the $3,000 to $4,000 range, 23 percent, they are going to be 
spending 67 percent.
  Finally, 7 percent at the very high end. They will still be paying 74 
percent.
  These are the figures that are the expression of the program advanced 
by the Republicans. If you are a senior citizen and are hard-pressed 
today, you will find that your help and assistance in this program is a 
lot of rhetoric and very little action. That is what the result will 
be.
  This is why, perhaps more than any other reason, seniors do not 
support the Republican proposal. And there are features in the 
Republican proposal that we find absolutely extraordinary.
  I have heard a great deal from those on the Republican side talking 
about how this is going to help really the poorest of the poor of the 
seniors. We know the extraordinary average income is maybe $14,000. You 
can mention the handful of people who we read about who are 
billionaires. But the fact is, when you are talking about a group of 
our fellow citizens, the people who fought in the wars and brought us 
through the Depression, you are talking about this group here--
basically, about $14,000 in income.
  What is really in the Republican program are assets tests for the 
very, very poor. We heard from the other side, well, if they really 
fall down to 135 percent of poverty, they are going to have their 
premiums taken care of, and they won't have to worry about anything 
else. Right? Wrong. Wrong. Wrong. They will get them taken care of, if 
they don't have anything more than $4,000 in savings because we have an 
assets test, a pauperization test, for our seniors.
  If they have more than $2,000 in furniture and personal property--
maybe a wedding ring, an heirloom, something that has been passed on--
if it is worth more than $2,000, they are in real trouble. If they have 
burial assets of more than $1,500, it counts against them, and if they 
have a car worth more than $4,500.
  What do we have for $4,500 for our seniors in our part of the world, 
the Northeast, where it is cold in the wintertime; or how about in 
other parts of the country, where it is steaming hot in the summertime? 
Do we want them to risk their car breaking down, as they are trying to 
get their prescription drugs?
  Go down to most of the car lots and find out what you can get for 
$4,500 and how dependable that car would be, whether you would want 
your mother or grandmother riding around in it in the cold of the 
winter or the heat of the summer, wondering if they can get to their 
destination.
  If there are any more of those values, it adds up. And when it hits 
$4,000, they are excluded from the program.
  Think of the demeaning aspects of this for our senior citizens, who 
are

[[Page 13704]]

part of the greatest generation, who fought in World War II and lifted 
this country out of the Depression. They are in their golden years and 
have a few bucks--not very many--and they have to go down and fill out 
that form in order to qualify. It seems to me that is such a demeaning 
requirement.
  I am surprised. I am surprised that our Republican friends have 
included that--saving the few bucks that it would--in their particular 
program. I am deeply surprised.
  Our seniors deserve much better treatment. There are ways of making 
an evaluation as to what the assets are. No one is talking about 
trimming on this. We do not want people to trim--and they should not 
trim--but there are better ways of doing it than this particular way.
  Finally, because of the time, I will mention one other feature that I 
am very perplexed about. I do not understand why they developed this 
kind of program. Their program is going to effectively take 3.5 million 
senior citizens who are now receiving a good drug program through their 
employers and drop them back to this program, which will provide a 
lesser benefit than they are now receiving, by and large, from their 
employers. This aspect of their program is very different from the 
Graham-Miller which would help and assist the small businesses and the 
medium-sized businesses continue to fund a good program.
  I yield myself 3 more minutes.
  The PRESIDING OFFICER. The Senator has that right.
  Mr. KENNEDY. According to the CBO--this isn't our estimate; it is a 
CBO estimate--3.5 million seniors who are getting decent drug coverage 
through employers will be dropped from the list.
  They wonder why the senior groups are not in support of this.
  This is an enormously important debate and discussion that we will 
have. We will have an opportunity to have an expression on the 
proposal. As Senator Graham and Senator Miller have pointed out, we 
have what is called the first-dollar coverage. We do not have the 
doughnut, the loophole, that exists there. It will be within the 
ability of our seniors. It will be dependable. It will be affordable. 
It will be reliable. And it will be built upon existing programs, 
programs which have the confidence of our seniors and on which they can 
rely. It will be a very effective program. It will meet the kind of 
human needs that we believe our seniors need and deserve.
  I reserve the remainder of our time.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, before I yield to Senator Domenici, let me 
say, I do not know where he is getting his figures. But we take care of 
low-income senior citizens. We have 100 percent of subsidy for those 
under 135 percent of poverty or less. For those up to 150 percent, that 
subsidy ranges from 100 percent down to 75 percent. And everybody above 
150 percent has a subsidy of 75 percent.
  On the assets test, they are not quite accurate. I will not go into 
the differences right now. But we will go into them later.
  Mr. KENNEDY. Will the Senator yield on that point?
  Mr. HATCH. No. I yield to the distinguished Senator from New Mexico.
  Mr. KENNEDY. He does not choose to yield--on my time--to explain it?
  Mr. HATCH. I will be happy to.
  First of all, let's take the car benefit of $4,500. If it is 
necessary for medicine or for daily use or for their job, they could 
own a Rolls Royce according to our bill. But the fact of the matter is, 
no car would be taken from them. Now, if it isn't essential for that, 
then it would be limited to $4,500.
  Mr. KENNEDY. We are not talking about taking the car from them. We 
are talking about disqualifying them for all of the funds over $4,500.
  Mr. HATCH. They would not be disqualified.
  Mr. KENNEDY. Excuse me, Senator. Excuse me, Senator. For money over 
the $4,500--up to $4,000--the value of the car and above that, it works 
to disqualify them from the coverage.
  Mr. HATCH. If the car is necessary for daily use, if it is necessary 
for their job or if it is necessary for a medical purpose----
  Mr. KENNEDY. What about personal property?
  Mr. HATCH. For personal property, we have----
  Mr. KENNEDY. I will go back. You yielded the time. I will go back. 
And I hope you have read your book because----
  Mr. HATCH. I have read it. And you are misrepresenting what is in our 
bill.
  Mr. KENNEDY. You included the assets test. And it is just as I 
identified it.
  Mr. GRAMM. Will the Senator yield? Senator Hatch, will you yield?
  Mr. HATCH. Let me----
  Mr. GRAMM. Just 1 minute.
  Mr. HATCH. One minute.
  Mr. GRAMM. I am a little bit perplexed. Senator Kennedy is going on 
and on about the assets test for Medicaid, when he helped write the 
bill.
  I would say, Senator, if you are so unhappy about it, why did you 
write it that way?
  Mr. KENNEDY. Senator, I am trying to get it out.
  Mr. GRAMM. Hold it. I am on my 1 minute.
  Mr. KENNEDY. OK.
  Mr. GRAMM. We are not talking about Medicaid here. The Senator is 
talking about the assets test under Medicaid. I was not here when all 
that happened. It seems to me that it is an interesting point to make, 
but to suggest that has something to do with the Republican plan--it is 
a wonderful speech, and I am sure everybody enjoyed it, but it has 
little to do with the subject we are talking about. It has little to do 
with the Senator's plan. I am not for his plan, but I think to try to 
say that somehow it is responsible for the assets test in Medicaid just 
doesn't make any sense.
  The PRESIDING OFFICER. The Senator has used 1 minute.
  Mr. HATCH. Mr. President, it has everything to do with the Social 
Security Act, which none of us on the floor, except for Senator 
Kennedy, I guess, had anything to do with.
  Now, it is nice to moan and grown about these figures, but he is 
wrong.
  Mr. KENNEDY. Will the Senator yield on my time?
  Mr. HATCH. On your time, I am happy to.
  Mr. KENNEDY. If the Senator would refer to page 71, line 14, and I 
would ask the Senator from Texas to refer to those as well: ``Meets the 
resource requirements described in 1905.'' That is the assets test, 
included in the prescription drug program which we will be voting on 
tomorrow.
  Thankfully, we dropped that from the Graham proposal. It is in the 
Republican proposal, that provision, on page 71, lines 14 and 15.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I can see why some seniors would want a 
trillion-dollar program--no question about it--as long as they think it 
is free. But it isn't going to be free. Neither is their program going 
to be free. We have to face some realities around here. Ours is $370 
billion. That is a lot of money. We do more with ours than they do with 
theirs in their alleged $600 billion price tag. The fact of the matter 
is, that 75 percent of everybody's prescription drug coverage will be 
covered by our bill.
  I yield 10 minutes to the distinguished Senator from New Mexico.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. I thank the Senator. If I can get through sooner, I 
will.
  First, I want to make sure everybody knows what bill I am talking 
about. I hear the word ``Republican.'' I am for a bill that has as 
cosponsors Senator Breaux, who is a Democrat, Senator Jeffords, who is 
an Independent, and Senators Snowe, Hatch, and Grassley, who are 
Republicans. That is the bill I am for, and that is the bill I am going 
to be talking about.
  I rise as a cosponsor of the bill that is being called the 21st 
Century Medicare Act, a bill which will provide our Nation's seniors 
with a much needed prescription benefit. I believe this bill is the 
best hope we have for enacting a prescription drug benefit into law 
this year.

[[Page 13705]]

  If there are those who do not want a law, because they do not think 
they are going to get what they want this year, that is another story. 
Either of the other two might suffice, but it won't become law.
  This bill has a chance because it is similar yet less funding than 
the House bill, similar in the way it is structured and the like. I 
believe it could get out of conference, and the seniors could have 
something that would be worthwhile.
  It isn't the highest benefit, and certainly, if you are expressing a 
wish, you would like the highest benefit. But I would like to discuss 
with you the fact that the seniors of this country are somewhat worried 
about the young people who are going to be paying the bills for a long 
time. They are somewhat concerned about whether we can afford at this 
particular time the benefit that one party is talking about versus 
another.
  If we pass the bill I am talking about, I believe it will reach 
agreement in conference with the House and we can send it to the 
President. Then finally, after years of talking, our seniors will get a 
prescription drug benefit they need.
  The tripartisan bill provides a generous prescription drug benefit 
that will help all of our seniors with their drug costs. It does so in 
a responsible manner. In the budget resolution I put together with 
other Members of the Senate last year, the only budget resolution 
currently in effect in the Senate--in other words, that is the budget 
resolution that assumes we can afford the things that are enumerated in 
it, Senators Grassley, Snowe, Gordon Smith, and others on that 
committee called the Committee of the Budget--set aside $300 billion 
over a 10-year period for Medicare modernization and a prescription 
drug benefit. This $300 billion was to cover the period from 2002 until 
2011.
  The tripartisan bill is estimated to cost about $370 billion over a 
10-year period from 2003 to 2012.
  We are debating a prescription drug amendment with costs based on the 
Congressional Budget Office current projections. Yet we are enforcing 
points of order from a budget resolution that is based on the 
Congressional Budget Office projections for last year.
  Now, as we are all aware, the budget situation has changed 
dramatically over the past year. As a matter of fact, when we said it 
will be prudent and good for America to spend $300 billion, we were in 
the black. It was one of those years when we actually had money in the 
bank, were applying money to the debt, and it looked as if the American 
economy and our fiscal policy would be sound and strong.
  As I stand here and speak, we have gone from that position to a debt 
in the budget of $165 billion. It will be there for anywhere from 3 to 
5--maximum 8 or 9 years--if we do things right.
  The attacks on our Nation, the war on terror, the economic slowdown 
have all resulted in a reduction of these surplus projections. Yet the 
Senate leadership has been unwilling or unable to produce a budget 
resolution for this year; that is, the Democrats will have us operate, 
including passing a Medicare Program, without a budget.
  We don't know, with an official stamp of approval, what the budget is 
going to look like for the next 8 or 10 years, but here we are passing 
a Medicare Program that in one instance is two and a half times the 
amount we said was fiscally prudent for all Americans, not just the 
seniors, just 2 years ago when we were running a budget that was in the 
black.
  An updated budget resolution could have an update on our spending 
estimates, and we would be debating these prescription drug amendments 
to the current Medicare Program in a more honest and transparent way.
  Last year during the debate on the budget resolution, every Senator 
in this Chamber voted for funding of either $300 billion or $311 
billion over 10 years. Those were the two chances to vote. They voted 
on them, every single one. They said, with a better American fiscal 
policy, they were more concerned about the future than they are now 
with a debt, and they all voted on between 300 and 311. The Democrat 
proposal, I believe, is up around $600 billion.
  I don't believe, had we been voting on a budget instead of saying we 
don't need a budget, let's don't vote on one, had we been voting on 
one, the Senate would have put a budget before us on Medicare that 
would have been far less than $600 billion, if you are required to get 
a majority of the Senators as you would on a budget.
  Here again, it has worked to the American people's disadvantage. By 
not having a budget resolution, we are probably going to overspend or 
we are going to kill the chance to get a Medicare prescription drug 
benefit package out of both Houses and before the President to sign.
  From my standpoint, we can continue to argue and make like we are 
going to give the seniors the best program; that is, the most costly 
one, not the middle of the road one which we can really afford, and 
then we say, of course, the seniors want it. But if you presented to 
the seniors of America all the other problems we have in the next 
decade and asked them which they would want--do you want to say the one 
just for us or do you want to say one that would be good for everybody, 
I believe the triparty one before us will be good for everyone. But 
most importantly, from the practical, not political standpoint, you 
will get a prescription drug benefit program this year, effective next 
year, under the plan that is before you that is called triparty. You 
won't, if you proceed with the idea that the Democrats have the best 
plan and the bipartisan, triparty one should not be considered because 
it doesn't provide as much money.
  I believe the seniors of this country want a plan that will pass, 
that can become law now. I believe they want one that is good for 
America, not just good for them. I believe they want one that is 
fiscally sound.
  We are all worried about the American economy. The man who knows most 
about it says the one thing we ought to be frightened about is spending 
too much money while we are in this rather fragile situation. Yet we 
are here arguing that the plan we ought to vote on is the one that 
spends the most money. It seems to me that the House will stand in the 
way of that program. The President won't have to pass on it, and we 
will get nothing. We will have a vote. Those who are for the Democratic 
plan can go home and say: We voted for the most expensive one, the one 
we think will give the seniors the most. Whether it ever becomes law or 
not, we voted for it. We will put that up on a television screen. We 
voted for it.
  Somebody is going to be asking: What happened to the law? Well, it 
never passed. Why didn't it pass? Because the House wouldn't approve 
it, because many Republicans and some Democrats wouldn't approve it. 
You got nothing.
  That is what I think the end product is going to be--nothing. We 
ought to sit down and think about which plan would be adequate and 
which plan might, in fact, become law this coming year for the seniors.
  Mr. HATCH. Mr. President, I yield 10 minutes to the distinguished 
Senator from Texas.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mr. GRAMM. Mr. President, I thank the Senator for yielding.
  I remind my colleagues that the best chance we have had to give 
prescription drug benefits to seniors occurred on March 16, 1999. We 
had a Bipartisan Commission on Medicare. John Breaux was the chairman 
of that Commission. We had set the Commission up by law. The leadership 
in the House and the Senate appointed members, and President Clinton 
appointed members. We met that day to vote on a plan that would have 
reformed Medicare.
  One of the incentives to induce people to move out of the current 
Medicare system, where there are no incentives to contain cost, where 
Medicare pays for a walker three times as much as the Veterans 
Administration pays--not an agency especially noted for its efficiency, 
was to give them prescription drugs.

[[Page 13706]]

  When the roll was called, the four Clinton appointees--Altman, Tyson, 
Vladeck, and Watson--all voted no. And while we had a majority, 10 of 
17, to make an official recommendation, we had to have 11. On that day, 
March 16, our chance of modernizing Medicare and providing prescription 
drugs died on a straight vote, where every Clinton appointee voted no.
  Then we started a process of bidding. I really believe much of this 
is more about the next election than it is about Medicare and the next 
generation. I want to remind people of this bidding. I say to Senator 
Hatch that the bill he supports would have outbid the Democrats last 
year, but it will not outbid them this year.
  In 1999, Bill Clinton said that if you gave him $168 billion, he 
would provide a Medicare prescription drug program second to none. 
Then, in the year 2000, Senator Robb's bill bid that up to $242 
billion, and last year, the Baucus amendment to the budget called for 
$311 billion. I have quotes that go on for 4 pages, where every member 
of the Democrat leadership says: If you will give us $311 billion, we 
can provide a fine prescription drug benefit. Now, this year, they are 
saying that $370 billion--which we do not have--will not do it and that 
what is being offered by this tripartisan group is chintzy, when, in 
fact, it provides more money than the Democrats were asking for last 
year.
  This year, the Democrat's budget proposal provided $500 billion, and 
the Graham-Kennedy plan--which doesn't start until 2004 and ends 7 
years later to try to hold down costs--costs up to $600 million. If you 
funded it for the whole 10 years, it would almost certainly cost a 
trillion dollars.
  How did this cost explode? Well, it exploded because each year the 
two political parties bid against each other for votes, and the 
Democrats are never outbid. As Senator Kennedy said, groups are for his 
plan because whatever it takes to get them to be for it is what he is 
going to offer. The current offer, on a 10-year basis, is really about 
a trillion dollars. There is only one problem: We don't have any money.
  Let me say this about the plan that has been offered by the 
Democrats. Let me make it clear that this is Graham from Florida, not 
Gramm from Texas. Currently, we are spending about 2 percent of gross 
domestic product on Medicare. Because we have not reformed and 
modernized Medicare and because its costs are exploding, by 2030 that 
number is going to be 4 percent. Under current law, we will have to 
double the payroll tax, from 15 percent of income to 30 percent of 
income in 2030, to pay for Medicare and Social Security.
  The Graham-Kennedy plan, which Senator Kennedy was talking about, 
would raise that to 6 percent of gross domestic product and raise that 
payroll tax to a figure approaching 45 cents out of every dollar earned 
by every working American making a moderate income level. Does anybody 
really believe that people can pay those taxes? I don't think so. But 
when Senator Kennedy is touting endorsements, those are not 
endorsements from people who are going to be paying for the program; 
they are from organized groups that claim to represent people who are 
going to be benefitting from the program.
  The Kennedy bill, when you have it for 10 years, is a trillion 
dollars. We don't have a penny, much less a trillion dollars, in terms 
of funding this new benefit. We are going to have to double the payroll 
tax to pay for the program we have right now. The tripartisan plan is 
superior to that program because the Kennedy plan relies on the same 
inefficient Medicare Program run by a bureaucracy that tries to hold 
down cost with Government regulation. At least the tripartisan plan 
tries to bring in competition and efficiency.
  The problem is, when you fill up this so-called donut in the 
tripartisan plan--where the government provides a benefit up to a 
point, and then there is a gap where you pay $1,850 alone, before you 
get the Government benefit again. When you fill all that up, the 
tripartisan bill costs somewhere between $700 billion and $800 billion 
over a 10-year period. I think, in the end, that is unaffordable.
  I am supporting the Hagel-Ensign bill for two reasons: One, we can 
afford it. It is within the budget we have, which is $300 billion. It 
is the only plan that is going to be offered where a budget point of 
order cannot be raised against it because it spends too much money. On 
the other two plans, a budget point of order can and will be raised.
  There is another point of order because it didn't come through the 
Finance Committee, but that was a decision made by the Democrat 
leadership to not bring it through the Finance Committee.
  The second advantage of the Hagel-Ensign plan is it is efficient. It 
helps the people who need the help most; that is, people with moderate 
incomes and very high drug bills. What the Hagel-Ensign bill basically 
says is, after you spend roughly $100 a month, and you have a moderate 
income, you are going to get Government help in buying your 
pharmaceuticals, and you are going to then pay only a very nominal 
copayment. That is help that people can understand. It doesn't start in 
2005; it starts sooner in 2004 and doesn't end in 2012, it goes on 
forever.
  As your income goes up and you are able to pay more for 
pharmaceuticals, the amount you have to spend before you get Government 
assistance goes up. That is a perfectly rational policy because what is 
a crisis to one family is not a crisis to another.
  Finally, immediately, under the Hagel-Ensign plan, you have a choice 
among companies with which you will contract that will go out and try 
to buy your pharmaceuticals at the lowest possible cost. Estimates have 
been made by outside groups that this, by itself, could cut 
prescription drug costs by as much as 40 percent.
  So under the Hagel-Ensign plan, you have a plan that, A, is within 
budget, costing less than $300 billion; and B, gives a lot of help to 
low or moderate income people who have high drug bills. If you have 
higher income and low drug bills, you don't get any help.
  Senator Kennedy would say: But it doesn't help all Americans. That is 
true, it doesn't; it doesn't help all Americans. It will not help Gates 
or Perot, but they don't need help. It will help people with moderate 
incomes and very high drug bills, and those are the people we need to 
help.
  Is the Chair telling me my time is up?
  The PRESIDING OFFICER (Mr. Kennedy). Regrettably.
  Mr. GRAMM. We are going to be in session next year, and we can build 
on this beginning. I urge my colleagues, if the Kennedy bill does not 
get the budget point of order waived, and if the tripartisan bill 
doesn't get the budget point of order waived, please look at the Hagel-
Ensign bill.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from South Dakota.
  Mr. JOHNSON. Mr. President, I rise in support of the Graham-Miller 
legislation that is on the floor today. I note that Senator Daschle 
deserves great credit. For years, many of us have been trying to bring 
a prescription drug bill to the floor of the Senate, and we have been 
blocked. We would be blocked year after year if Senator Daschle had not 
become majority leader in the Senate this past year. We have an 
opportunity for a bipartisan debate and hopefully the successful 
passage of legislation will at last break the blockade that has been 
imposed against us for so long relative to providing prescription drugs 
under Medicare.
  I believe the contrast is absolutely stark between what we have an 
opportunity to pass in the Graham-Miller legislation versus what our 
friends on the Republican side have been proposing as an alternative.
  I think it profoundly says a great deal when we find out who are the 
supporters of the legislation on our side versus who supports the 
legislation of the other side of the aisle.
  We are talking about an expansion of Medicare. We are not talking on 
our side about some form of privatization of the Medicare Program, some 
form of taxpayer subsidy to the insurance industry in the hopes that 
somehow the insurance industry will come up with stand-alone 
prescription drug policies

[[Page 13707]]

which they will then offer and somehow people will find ways, then, to 
buy those policies.
  We are talking about an actual strengthening of the Medicare system, 
an effort that is supported by AARP, by the National Committee for the 
Preservation of Social Security and Medicare, and by Families USA. 
Senior citizen groups across the board are in support of our 
legislation.
  Who supports the alternative? The pharmaceutical industry. What does 
that tell you? What does that tell you about price control? What does 
that tell you about who is going to benefit by these alternative pieces 
of legislation?
  On our side, we are talking about a Medicare prescription drug 
coverage with a defined benefit. Every American of Medicare eligibility 
age will know precisely what the premium is in a voluntary program. If 
they choose to undertake this program--they certainly do not have to, 
but if they choose to take this program, they will know precisely what 
the premium is, they will know precisely what the benefit is, they will 
know precisely how the program works, and it will not depend on whether 
they live in Sioux Falls, SD, or Los Angeles or New York or anywhere 
else.
  Every American will have the same program, and it will not be 
dependent upon whether the insurance industry happened to decide to 
come into their State or into their community. In my home State of 
South Dakota, the insurance companies increasingly are leaving the 
State and leaving people in very rural areas with too few options. That 
is not where we want to be with prescription drugs.
  Every American deserves to have a strong Medicare Program, and I know 
there are those on the other side who have ideological qualms. They do 
not like the idea of more Government, so they would rather privatize 
Medicare and rather go in the direction of taxpayer subsidies to the 
insurance industry to the applause of the pharmaceutical industry but 
not to the applause of American seniors who want a stronger Medicare 
Program as the underlying basis for prescription drug coverage.
  We talk about whether this would contain prescription drug costs. In 
our underlying bill, we have the generic incentives and promotion which 
will be enormously helpful. We have also passed by a large margin a 
very closely monitored and controlled reimportation provision. Also 
within the underlying Graham-Miller bill under Medicare, there would be 
opportunities to negotiate and use the leverage of that huge population 
base for negotiated prices, keeping in mind that the citizens of no 
other industrialized nation pay anything close to what American 
citizens pay for the cost of prescription drugs.
  If you go to Canada, Mexico, Britain, France, Scandinavia, or 
Germany, it does not matter, you pay less than half what American 
citizens are expected to pay.
  It is long overdue that we have a component in this prescription drug 
bill that not only affords every Medicare-eligible individual a cost-
effective, efficient way of gaining prescription drugs, but it holds 
those costs down and that, in fact, is why the pharmaceutical industry 
has objected so much to what we are trying to do and is so supportive 
of what the other side is trying to do because they know that the 
effective way of cutting costs, which indeed comes from massive 
profiteering that has been going on in recent years, will take place in 
our version. It will not take place in the version coming from the 
other side.
  It always stuns me somewhat, I have to say, that those who talk about 
the cost of these programs and who preach the loudest about fiscal 
responsibility when it comes time to figure out how we can best serve 
the Medicare-eligible citizens of our nation in the most effective and 
efficient way, do not seem to be bothered when it comes time to propose 
follow-on tax cuts, primarily for the billionaires of this society, to 
cost in excess of what we are talking about for a Medicare drug 
coverage program.
  It seems to me we have some priorities we need to sort out in this 
institution. We need to talk about how to effectively make sure that 
every senior gets the drugs they need.
  I talk to many, far too many, people as I go across my State of South 
Dakota--one of the lowest per capita income States in the America--who 
literally are choosing between groceries and prescription drugs. They 
are cutting pills in half and not renewing their prescriptions, and 
then they show up in emergency rooms with an acute illness and the 
taxpayer picks up the cost.
  How much better for the long-term cost, how much better for the 
dignity of these people to keep them healthy in the first place with a 
prescription drug regime that they and their physician have chosen 
which can be secured through Medicare and not at the whim of the 
insurance industry and not to the applause of the pharmaceutical 
industry but to the applause of the senior citizens organizations. How 
much better would it be to follow that road in terms of the reforms we 
need to be doing this week.
  I know this is going to be a difficult debate because of the 
parliamentary rules that may require 60 votes to pass legislation. I do 
not know if we have the 60 votes or not. It is certainly my hope that 
we will because the problems this Nation faces, the problems that my 
senior citizens in South Dakota face are not Republican or Democrat 
problems. They transcend that. They are the problems of our entire 
society in my State and across this Nation. They deserve to be dealt 
with aggressively and effectively, and we have that opportunity with 
the Graham-Miller legislation and the underlying generic legislation 
before the Senate today.
  Mr. President, there will be few more important votes in terms of 
domestic policy that this Senate will take anytime during the 107th 
Congress. It is my hope that politics can be laid aside, that 
ideological qualms about opposition to Medicare and Social Security 
that some have can be set aside, and recognize that Medicare is, 
indeed, the commonsense vehicle for trying to address cost containment 
and access to prescription drugs in a uniform, consistent way across 
this Nation; that opposition can be set aside, and we will, in fact, 
have the bipartisan support this legislation deserves to have and that 
at long last the gridlock, the obstructionism that has gone on for so 
many years can be broken and we can go home to our respective States at 
the conclusion of this debate knowing that we have done the right 
thing; we have done the good thing.
  I have always believed the best politics is good government; that is, 
doing the right thing for people. If this body supports this underlying 
legislation, it will be a cause of great celebration. Everyone can get 
whatever credit they choose to have, but it will be the right thing for 
America and the right thing for our seniors.
  I thank the Chair.
  The PRESIDING OFFICER. Who yields time? The Senator from Utah.
  Mr. HATCH. Mr. President, I have been listening to the comments of 
the distinguished Senator from Massachusetts earlier and the 
distinguished Senator from South Dakota. I mentioned in the early 
debate, on the first day of debating these matters, the book ``The 
System,'' written by Haynes Johnson and David S. Broder. It is a 
failure of the Clinton health care program in part.
  It is very interesting what they say in this book. Neither Haynes 
Johnson nor David Broder would be considered leading conservative 
spokespeople.
  The PRESIDING OFFICER. Is the Senator yielding himself time?
  Mr. HATCH. Yes, I am.
  The PRESIDING OFFICER. Such time as he may consume?
  Mr. HATCH. I am.
  Neither of them would be considered conservative journalists. This is 
what they wrote on page 90 of ``The System,'' which was published in 
1996:

       In the campaign period, Fried recalled, Clinton's political 
     advisers focused mainly on the message that for ``the plain 
     folks, it's greed--greedy hospitals, greedy doctors, greedy 
     insurance companies. It was an us-versus-them issue, which 
     Clinton was extremely good at exploiting.''
       Clinton's political consultants, Carville, Begala, 
     Grunwald, Greenberg, all thought

[[Page 13708]]

     ``there had to be villains.'' Anne Wexler remembered, ``It 
     was a very alarming prospect for those of us looking long 
     term at how to deal with this issue. But at that point, the 
     insurance companies and the pharmaceutical companies became 
     the enemy.

  That is what is being done here today.
  The main difference between the two programs is that ours lives 
within at least some budget constraints. It is more than what the 
Democrats would have taken last year, $311 billion. This is $370 
billion. No. 2, we provide some element of private sector competition 
so there will be competition in this matter. That is driving costs 
down. No. 3, we provide there will be a system that will work because 
one can have more than one program instead of a one-size-fits-all 
program. No. 4, we are not going to get to price controls by the 
Federal Government, which would destabilize research and development of 
pharmaceuticals in this country. To hear some people on the other side, 
it is the big bad pharmaceutical companies that are causing these 
problems.
  Actually, I think if we look at our system, both the generic and the 
pioneer companies, the research companies, we have a pretty great 
system that is producing the greatest therapeutic drugs in the world 
today. The reason we do is that we do not have price controls.
  Where is the pharmaceutical system in Canada? Where is it in many 
other parts of the world where they have price controls? They do not 
have it. We do. We have the greatest system in the world.
  I think Haynes Johnson and David Broder are right on: ``When you 
cannot win the debate, start knocking the big companies; speak for 
``the little people,'' as they have said. And this has been the tenor 
of this debate so far.
  I frankly think we ought to talk about living within the budget, 
doing the best we can, having a system that works, that has some 
element of competition in it, that does not set price controls over 
drugs so that it ruins our domestic companies and research and 
development plans, so we can ultimately get drugs into generic form so 
that we can save money. That is what is really involved.
  I yield such time as she may consume to the distinguished Senator 
from Maine, Ms. Snowe.
  The PRESIDING OFFICER. The Senator from Maine.
  Ms. SNOWE. How much time is remaining, Mr. President, on our side?
  The PRESIDING OFFICER. Twenty-two and a half minutes.
  Ms. SNOWE. Mr. President, first, I express my appreciation to the 
Senator from Utah, who has done a yeoman's effort on behalf of this 
legislation, working in this past year to develop what has been known 
as the tripartisan legislation to develop a prescription drug benefit 
program.
  I am pleased we are able to finally begin the debate on this most 
critical issue. It is obviously a significant issue to seniors. I hope 
everybody understands that we, in attempts to draft this tripartisan 
legislation, had hoped to avoid developing a polarizing and 
politicizing of this issue before the Senate. I regret that the regular 
process of the committee has been bypassed because I think in so doing 
there was an obvious attempt to try to avoid building the consensus 
that is essential to passing this kind of legislation.
  Obviously, through the disruption of this process, we are here today, 
and I hope this process does not give anybody the excuse or the 
rationale to vote against a prescription drug bill because I think in 
the final analysis each of us will be accountable for our failure to do 
so in this institution.
  We have a chance--just maybe this is our year--to pass a Medicare 
prescription drug benefit after all. There is only one plan thus far 
that has bipartisan and tripartisan support. Senator Breaux, Senator 
Jeffords, Senator Grassley, Senator Hatch, members of the Finance 
Committee, and I began this effort more than a year ago in an attempt 
to draft a compromise proposal that bridges the differences between two 
sides in this debate, hoping to avoid the kind of scenario that has now 
unfolded on the floor. That is why we undertook this effort to craft 
this tripartisan solution, when partisan differences threaten to 
undermine any possibility of enacting a prescription drug benefit. We 
believed then, as we do now, that as seniors cannot afford to put off 
their illnesses, we cannot put off a solution to this problem. So we 
crossed the political divide to develop an innovative program that 
could become the basis for action.
  As I said, we had hoped we could start that process within the 
committee that could give us the best hope for developing and forging a 
consensus on this issue. We worked closely with the Congressional 
Budget Office for forecasting an accurate estimate of the cost of our 
legislation, working hand in hand with them up until the final days in 
introducing this legislation, to ensure that we had a stable, 
efficient, competitive program that would provide choices to the 
seniors in this country and at the same time give them the maximum 
benefits under any kind of prescription drug benefit that we could 
include as part of the Medicare Program.
  I have personally been working on this issue for the last 4 or 5 
years, imploring Members of this Senate to pass a prescription drug 
benefit. It has been 4 long years. We have made some progress certainly 
in terms of estimating the cost and providing the type of 
appropriations that would be essential to supporting a generous 
prescription drug benefit.
  In 1999, as a member of the Senate Budget Committee, I worked with 
Senator Domenici, Senator Wyden, and Senator Smith of Oregon to include 
a reserve fund. At that time, then-President Clinton provided $28 
billion in his budget. We went further and provided $40 billion to set 
aside for a prescription drug benefit over 5 years. Then we decided 
last year we would go to $300 billion because the prescription drug 
costs go up each and every year, as we well know. So on both sides of 
the political aisle, there was agreement again and the Budget Committee 
set aside $300 billion for a reserve fund. It was also acknowledged 
time and again in floor debate that $300 billion was where we needed to 
be to provide strong coverage for seniors in Medicare for a 
prescription drug benefit.
  So now we are at the stage of $370 billion, the tripartisan proposal, 
and approximately $600 billion in the proposal offered by Senator 
Graham from Florida.
  Everybody recognizes we need to enact a prescription drug program as 
part of Medicare. It is long overdue. Frankly, I do not think there is 
any difficulty in developing the policy, if there is the political will 
to do it. That is the big question--whether we have the desire to enact 
this kind of coverage for seniors in this country.
  We have two competing plans. I hope we can avoid a process that is 
designed to create a political showdown. I hope we are not going to go 
down that path this week, irrespective of the fact we have two votes 
tomorrow, one on each plan. Is that where it is going to end or is that 
where it is going to begin?
  I hope this is not about this election. I hope it is for the 
determination to do what we ought to do, and that is 
to design a program for prescription 
drug benefit coverage. It will not 
happen without bipartisanship and tri-
partisanship. That is what we did through the legislation we introduced 
and have been working on for more than a year.
  I would rather not spend my time talking about process. The process 
becomes important when we bypass the conventional means of 
consideration: Draft and amend legislation in order to create a 
consensus on a bill before it reaches the floor; at least it attempts 
to do what was done on the tax bill last year. No one could have 
predicted what the outcome would be in the committee, let alone on the 
floor, but it was through the amendment process, through debate and 
deliberation that we finally reached a consensus that yielded the 62-38 
vote.
  We are in danger of not completing prescription drugs because of the 
process of cloaking political motives. We are looking at the procedural 
gymnastics that have occurred in this legislation. We could almost 
write the headlines: The Senate fails to muster

[[Page 13709]]

60 votes for a prescription drug plan; issue put off for another year.
  Is that what Members want? I do not want the Senate described in 
those terms. I do not want this issue put off another year. We have 
been putting it off year after year after year. I want to make headway, 
not headlines. That is why it is important people understand what is 
going on. I am the last person who wants to talk about inside the 
beltway gobbledygook, about the process. I am interested in talking 
about the truth and what deserves our attention in terms of policy 
differences, not designing the next political stroke.
  It is a disservice to the more than 40 million Medicare beneficiaries 
that see their prescription drug costs rise every year to the tune of 
17 and 18 percent in annual costs just over the last 4 years. That is 
why we try to work on developing a middle ground approach and analyzing 
what could be the best plan, under the circumstances, to maximize the 
benefit, particularly those in the low-income scale, from all ranges of 
the political spectrum that could offer a comprehensive drug benefit 
that is affordable, comprehensive and available to all seniors, that 
provides the most in terms of benefits to low-income seniors and those 
especially without drug coverage.
  It must be a fully funded, permanent part of Medicare that does not 
threaten the stability or the solvency of the Medicare Program for 
future generations. We offer in our plan the lowest premium of any plan 
introduced, $24 a month. It provides a 75 percent Federal subsidy. That 
is more than Federal employees have under their current health care 
coverage. That yields $340 billion in Federal support over the next 10 
years.
  People suggest the private sector will not be engaged in this process 
when the Federal Government provides an overall 75 percent Federal 
subsidy.
  Seniors above 150 percent will see an annual savings on their 
prescription drugs of more than $1,600, which is a 53 percent savings. 
Those below 135 percent will see 98 percent savings on their 
prescription drugs. Ninety-nine percent of Medicare beneficiaries will 
be covered under our program; 93 percent estimated by CBO will 
participate in this program, and 6 percent will remain with their 
current coverage. That is extraordinary. Eighty percent will not even 
hit our benefit limit of $3,450.
  We eliminate the so-called doughnut, the gap in coverage between the 
$3,450 benefit limit and catastrophic coverage of $3,700; 11.7 million 
beneficiaries with incomes below 150 percent are exempt from the 
benefit limit of $3,450. There are 10 million Medicare beneficiaries 
with incomes under 135 percent who will see 80 to 98 percent of 
prescription drug costs covered by this plan with no monthly premium, 
no deductible, and have average coinsurance of $1 to $2 per 
prescription and will have no cost beyond the catastrophic level. All 
other enrollees above 150 percent of the income level will have access 
to discounted prescription drugs after reaching the $3,450 benefit 
limit.
  Everybody under Medicare will be protected against catastrophic 
costs. The drug benefit will be offered by the private drug plans. They 
accept part of the risk for managing this prescription drug program 
with the Federal Government accepting most of the risk. Seniors will 
have clout. They can vote with their feet. If they do not like the 
plan, they can select another plan. We believe, and CBO agrees, that 
the real competition will hold down drug costs and make this benefit 
more affordable for seniors and taxpayers.
  Creating a new prescription drug benefit is absolutely essential to 
be part of our Medicare Program. AARP said in their testimony before 
the Senate Finance Committee, we need to have a dependable drug plan. 
That is exactly what we are providing. It is permanent and it is fully 
funded. That is a big difference from a plan that is sunsetted. I do 
not know how you explain to seniors in this country that the good news 
is you will have a prescription drug program starting in 2005, but the 
bad news is it expires in 2010. That is exactly the scenario 
established by the Graham-Daschle-Kennedy bill, which simply rides off 
into the sunset. It certainly will not be a happy new year on December 
31, 2010 for any senior citizen who uses prescription drug coverage to 
learn their benefit has disappeared over the horizon--it is gone.
  Is that the kind of stability, certainty, and predictability we want 
to give our seniors when it comes to one of the most vital benefits we 
could provide and need to provide?
  You might wonder why it sunsets under the Graham legislation in 2010. 
That is a very good question. The answer is because they ran out of 
money. They knew if they continued, the sticker shock of their plan and 
the impact of their program, already facing serious financial concerns, 
would cause more than a few to raise strenuous objections because of 
the ultimate impact it could have on the solvency of the Medicare 
Program.
  Seniors have said they have two major priorities. One, they want to 
make sure the program is universal; two, it has the lowest monthly 
premium and at the same time it does not affect the financial stability 
of the future for Medicare.
  That is a question about the choice we have tomorrow. Are we serious 
about providing a prescription drug benefit to seniors that will be 
sunsetted in 2010? That is a significant question that each Member must 
address in casting his or her vote in the Senate with the two competing 
plans. The plan we have offered was consistent with the priorities of 
seniors in this country, indeed the priorities of AARP, the major 
representative of seniors in America, that they wanted a dependable 
prescription drug benefit as part of Medicare. We offer it. It is fully 
funded, and it is part of Medicare in perpetuity.
  There are other problems we have to address when we are looking at 
the Graham proposal. One is the issue of the nonpreferred drugs. In the 
original plan that was offered by Senator Graham, there were the 
preferred drugs and the nonpreferred drugs. In fact, the copayments are 
lower under our plan. For the top 50 preferred drugs, we have lower 
copays under 39.
  To put it the other way around the Graham proposal is higher on all 
but 11 of the top 50 preferred drugs--higher in copayments.
  In the original Graham plan, there were the nonpreferred drugs. 
Again, we were lower in copayments in all categories except 1 out of 
the top 50.
  Now, under the newly revised plan, none of the nonpreferred drugs is 
even covered--none, not one.
  You might ask, what does that mean? That means it won't be available 
for seniors. That means, by virtue of the fact that the nonpreferred 
drugs are not covered under the Graham-Daschle-Kennedy plan, they are 
not going to be available to seniors. They will not have choices in the 
types of plans that include both the preferred and the nonpreferred. It 
means if your doctor prescribes a different brand prescription and it 
is not on the preferred list, you are out of luck because under Senator 
Graham's proposal they will cover generics and only two brand names in 
every therapeutic category.
  So here are a few examples of how the Government's strict limits on 
drug coverage under the Graham-Daschle-Kennedy plan would interfere 
with the drugs your doctor prescribes. The examples are taken from drug 
classes in the ``Physicians Desk Reference'' explicitly described in 
the bill as a model for determining the therapeutic classes in which 
only one or, at most, two drugs will be covered.
  Let's take high cholesterol as an example. If you take Advicor, 
Baycol, Colestid, Lipitor, Mevacor, Pravachol, Tricor, WelChol, Zocor, 
or other drugs to lower cholesterol, and the Government plan says 
Lescol, you get no coverage at all. And even if you take Lescol XL, the 
more convenient extended-release form, then you get no coverage at all.
  What about treatment for arthritis? Well, if you take Bextra, 
Cataflam, Celebrex, Clinoril, Feldene, Lodine, Lodine XL, Relafen, 
Tolectin, Tolectin SR, Trilisate, Vioxx, Voltaren, or Voltaren-SR for 
your arthritis, and the Government plan covers prescription-strength 
Advil, then you get no coverage at all, none.

[[Page 13710]]

  You have high blood pressure? Well, if you take Accupril, Adalat, 
Aldoclor, Aldomet, Altace, Captopril, Cardizem, Cardura, Catapres, 
Corzide, Cozaar, Diovan, Diuril, Hyzaar, Lotensin, Maxzide, Minipress, 
Norvasc, Procardia, Tenormin, Toprol-XL, Univasc, Vasotec, Zebeta, 
Zestril, or any of dozens of other effective medications for high blood 
pressure that work best for you, and the Government plan covers 
Accuretic, then you get no coverage at all.
  So it is far more restrictive than what the private sector offers 
today. Most private sector plans and the Federal employees plan would 
never consider being so restrictive as to provide no coverage at all 
for nonpreferred or off-formulary drugs. Moreover, to restrict covered 
drugs to no more than two in each class of drugs--generally these plans 
do the opposite, by providing some coverage for off-formulary drugs 
through tiered copays or off-formulary incentives.
  What happens if I really need it? What happens if the doctor thinks 
that is the only option, the only drug that is going to be best for 
your treatment? It would require an explicit review and approval from 
the Secretary of Health and Human Services, right here in the plan that 
is offered by Senator Graham, in order for the Government plan to offer 
a lower copayment or to provide coverage on additional drugs. Beyond 
these strict limits, the Secretary must determine that it will not 
result in an increase in expenditures by the Government.
  Since when do we essentially decide we would rather have the 
Secretary of Health and Human Services writing prescriptions for 
American seniors? But that is what this comes down to.
  Mr. HATCH. Will the Senator yield on that point?
  Ms. SNOWE. I am delighted to yield to the Senator from Utah.
  Mr. HATCH. Is the Senator saying that they claim for $600 billion, 
even in a bill that is sunsetted so they can keep the cost that low, 
that all of those drugs indicated on your chart in red letters ``not 
covered'' are drugs they do not cover?
  Ms. SNOWE. That is correct.
  Mr. HATCH. Yet in this $370 billion program that we have devised, all 
of those in yellow are covered?
  Ms. SNOWE. That is correct. In fact, in our copays, on those that are 
covered, the top 50, we are lower or, the converse, in Senator Graham's 
legislation their copays will be higher in 39 out of the 50 categories 
in terms of copayments. Then in the nonpreferred drugs, they are not 
even covered, and they are covered under our legislation because plans 
will be designed to include choices.
  Mr. HATCH. I take it they are spending $600 billion or more--almost 
double what we spend--and not getting nearly the delivery of the drug 
as in the system we would give to the seniors. It seems to me it is 
pretty tough to be for the $600 billion program under those 
circumstances.
  Ms. SNOWE. I would say to the Senator, that is correct. Obviously, 
the Government is going to make the determinations in terms of the 
types of drugs to be used, but the legislation already starts off in a 
very restrictive fashion. As a result, it will deny seniors their 
choices--not to mention that the whole program sunsets in 2010.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Ms. SNOWE. Thank you, Mr. President.
  The PRESIDING OFFICER. The Senator from Washington.
  Mrs. MURRAY. Mr. President, I want to take a moment this afternoon to 
share a part of a letter I received from an 84-year-old gentleman in my 
home State of Washington. He writes to me:

       My income is limited to Social Security and a small amount 
     of interest generated from the proceeds of the sale of my 
     home. That doesn't leave much for anything but the basics. 
     The highest of my monthly bills is for prescription drugs, 
     the cost of which has skyrocketed for the past few years. 
     Because Medicare provides nothing towards the exorbitant cost 
     of these drugs--which are mostly for my heart--I pay upwards 
     of $250 a month out of pocket.
       If Congress does nothing else this coming session, please 
     let it be relief from the expense of the drugs I have to take 
     to survive.

  That is why I rise today in support of Medicare prescription drug 
benefits. This is an issue that Congress has talked about for years. It 
is a major challenge for seniors and the disabled every time they have 
to fill a prescription. And everyone agrees that we need to do 
something about it.
  We have a bill that will address this problem in a responsible way, 
and I am in the Chamber today to help move it forward. I am very proud 
to be a cosponsor of the Graham-Miller-Kennedy bill, the Medicare 
Outpatient Prescription Drug Act of 2002.
  This is not a new issue for me or for the people of my home State of 
Washington. Over the years, I have held many roundtable discussions in 
my home State where I have listened to doctors, seniors, the disabled, 
industry leaders, and health care providers. Like many people in my 
State, I am frustrated that it has taken us this long to finally reach 
this point in this critical debate.
  Unfortunately, as we all know, the attacks of September 11 and the 
problems in our economy have delayed this critical discussion until 
now. During my time in the Senate, I have been very proud to work on 
prescription drug coverage, from helping to draft the MEND Act in the 
106th Congress to working on the Budget Committee over the past 3 years 
to provide funding for prescription drugs.
  In this Congress, I have been very proud to work with my Democratic 
colleagues to help ensure that the Graham-Miller-Kennedy bill meets our 
priorities of providing an affordable, voluntary, comprehensive, 
reliable benefit that is part of Medicare.
  Health care has changed dramatically since Medicare was created, and 
it is time we update the Medicare Program to meet today's needs.
  Decades ago, there was no big prescription drug issue. Back then, it 
was because prescription drugs played much less of a role in our health 
care. Today, prescription drugs are a key part of our health care. They 
help to prevent disease, and they help patients live longer.
  As a result of these changes in health care, seniors now rely on 
prescription drugs more than ever. The average Medicare beneficiary 
fills 19 to 24 prescriptions each year.
  Clearly, prescription drugs are more effective--and coverage is more 
needed--than ever before.
  Unfortunately, it is getting more expensive--and more difficult--for 
seniors to get the medicine they need. Some seniors have drug coverage 
through their employers, but that number is shrinking. As costs rise, 
employers are cutting back on coverage.
  In 1994, 40 percent of firms offered health benefits to their 
retirees. But by 2001, only 23 percent offered health benefits to their 
retirees.
  Of those on Medicare, 38 percent have no drug coverage throughout the 
year. And even those seniors who are lucky enough to have coverage have 
seen increased premiums, deductibles, co-pays and greater restrictions. 
For those on Medicare, out-of-pocket payments for prescriptions--in 
just a two-year period from 2000-2002--have grown from an average of 
$813 to more than $1,000.
  The lack of coverage--and the growing costs--are impacting health 
care today. Right now, an estimated 10-13 million seniors not have any 
prescription drug coverage.
  To meet this need it has become critical that we update the program 
that seniors and the disabled rely on for their medical care. Updating 
Medicare is something we need to do very carefully. Back in 1997--when 
I first joined the Senate's HELP Committee--we faced the challenge of 
reforming and revitalizing the Food and Drug Administration's drug and 
device approval process. There were several competing demands we had to 
balance. On one hand, patients want new drugs and devices approved and 
available as soon as possible. On the other hand, the FDA has a 
responsibility to protect the public's health. We had to balance those 
two competing demands. And I am pleased that in the end--after months 
of debate--we passed a good bill that struck the right balance.

[[Page 13711]]

  I mention that example to remind us that there are several competing 
demands when it comes to prescription drugs for seniors.
  The first consideration is affordability. We can have the best 
prescription drugs in the world, but if seniors can't afford them, they 
are of little use. So affordability is key. But price is not the only 
consideration.
  A second concern is safety and effectiveness.
  We have worked hard over the years to make sure that our drug supply 
is safe. It is one of the FDA's most important responsibilities. I am 
proud of the way generic drugs have lowered the cost and improved 
access for so many Americans. But I also recognize that, if the drug 
isn't safe, or if it's not the medicine a patient needs, the cost 
savings are meaningless.
  Another concern is innovation. Here in the United States, we have 
access to the most innovative, cutting-edge medicines. We don't want 
artificial limits on drug distribution that would delay innovations.
  Finally, I believe that a prescription drug benefit must be a 
seamless part of Medicare. Just like care from a doctor or a hospital 
visit, prescription drugs are one of the key ways we provide health 
care today, and it should be treated like that under Medicare.
  With all those considerations in mind, I am proud to support the 
Graham-Miller-Kennedy bill. It is the only plan that strikes the right 
balance. It is the only plan that delivers on the promise of a real 
prescription drug benefit for everyone on Medicare. It provides a 
comprehensive, affordable, and reliable prescription drug benefit. It 
provides coverage for every prescription without any deductible or 
coverage gap. It offers predictable, affordable co-payments, and it 
protects seniors from catastrophic expenses.
  Second, it's affordable. It has a fixed monthly premium of just $25. 
It covers all drug expenses after a senior has spent $4,000 in out-of-
pocket expenses. And because there is no deductible, it will help 
seniors with their very first prescription.
  I am also proud that this bill goes to great lengths to help those 
with low incomes. For example, there is no premium or cost-sharing for 
beneficiaries with incomes below 135 percent of poverty. For those 
between 135-150 percent of poverty, there are reduced premiums. That 
will make a difference for the 168,000 Washington seniors who are below 
150 percent of poverty.
  Finally, this drug benefit is reliable. It will give seniors the 
security that comes from knowing that they can get the medicine they 
need. Seniors will know they are getting the same coverage--for the 
same price--no matter how sick they are, and no matter where they live.
  The Graham-Miller-Kennedy bill is comprehensive, affordable and 
reliable. The other bills would leave a lot of Washington State seniors 
behind. Low-income seniors would in fact do far worse under the House 
and Senate Republican bills.
  The Senate Republican bill has a $250 deductible. Our bill has no 
deductible. Under the Senate Republican bill, there is a big ``benefit 
hole'' for seniors who spend--out of their own pocket--between $3,451 
to $5,300 on prescription drugs.
  In Washington State, 212,000 people will fall into that benefit 
hole--paying premiums and high drug costs--without receiving any 
benefits. Under the House Republican plan, that benefit hole affects 
even more people--340,000 in Washington state alone.
  There are many other problems with the House and Senate Republican 
bills--from the very limited stop-loss to the asset tests. And both 
these plans rely on private insurance companies to provide the benefit. 
If private insurance companies are not willing to participate, there is 
no coverage.
  Those of us in Washington state have seen the private insurance 
market shrink in recent years, so that does not give us a lot of 
confidence in trusting the private sector to solve the problem.
  Before I close, I want to mention that we have other parts of 
Medicare we need to fix. Over the past few months, I have worked with a 
number of my colleagues to address the regional inequities in Medicare. 
Even though all seniors pay the same rate into the Medicare system, 
their access to health care depends on where they live. If they live in 
Washington state, they have fare less access to healthcare. That is 
because Washington state ranks 42nd in the Nation in Medicare 
reimbursements per beneficiary. I have been working with leaders in my 
state on the issue, and I'm continuing to raise the ideas and the 
MediFair proposal with my colleagues here in the Senate.
  I am proud that the Graham-Miller-Kennedy bill does not base benefits 
on the same flawed formula that has created regional inequities in 
Medicare reimbursements. I hope we can move forward on both issues--
addressing the fairness sin Medicare payments and providing 
prescription drugs.
  Today, we have the opportunity to help the more than 700,000 people 
in Washington state whoa re enrolled in Medicare. We know that 
prescription drugs are more effective--and more important for good 
health care--than ever before. But seniors don't have access to them 
because of rising costs and shrinking coverage.
  The Graham-Miller-Kennedy bill will provide a prescription drug 
benefit that's part of Medicare and that is comprehensive, affordable 
and reliable. I urge my colleagues to help us pass this critical 
legislation.
  The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
  Mr. REED. Mr. President, I rise this afternoon to join my colleagues 
and the growing chorus requesting that the Senate move expeditiously to 
pass a universal, voluntary, and affordable prescription benefit plan 
under Medicare.
  I am a proud cosponsor of the Graham-Miller-Kennedy proposal, which I 
think is the right approach to provide a voluntary, universal, and 
affordable prescription drug benefit for our seniors.
  In 1964, Congress took the bold step to enact a health insurance 
program that guaranteed coverage for all seniors and disabled persons 
in the country. That boldness has been justified over the last decade 
because it has improved materially the health of seniors, and, indeed, 
this development has improved their economic standing as well. But it 
is time for their Congress to bring that Medicare Program into the 21st 
century.
  Back in 1964, the key elements of health care for seniors and for all 
Americans was access to hospitals and access to doctors. Medicare 
provided for both.
  Today, there is a third critical element. That element is 
pharmaceutical benefits. Thus, we must bring the Medicare Program that 
has served us so well over these last several decades into this new 
century by providing a prescription drug benefit for our seniors.
  Today, Medicare beneficiaries account for 14 percent of the 
population, but they account for 43 percent of the Nation's spending on 
prescription drugs.
  You can see that the population most affected by the use of 
pharmaceuticals and the rising costs of pharmaceuticals is seniors. 
Another reason why we have to move quickly and expeditiously to provide 
assistance under the Medicare Program.
  Today, the Medicare Program covers approximately 39 million 
Americans, about 170,000 of my fellow Rhode Islanders. It is a program 
that is integral to the health and economic security of our seniors and 
to all of our families. For this system to go forward, it has to be 
strengthened by pharmaceutical benefits.
  I would like to talk briefly about some of the trends we have seen 
with respect to prescription drug benefits, to highlight the strengths 
of the Graham-Miller-Kennedy proposal, and to contrast this proposal 
with competing proposals: the House version and the tripartite package 
that is before us in the Senate.
  Before I do that, I want to commend majority leader Daschle for 
bringing this matter to the floor. This is an issue which every senior 
and every family in this country is acutely aware of and who have 
called for our attention to it for many, many years.

[[Page 13712]]

  This is not something new. There was at least rhetorical consensus in 
the last election when both sides claimed they were for the inclusion 
of a prescription drug benefit under Medicare. We have reached the 
point where words have led to action on this floor. I thank the 
majority leader for forging that action as we debate this issue today.
  I think it is also appropriate that this legislation has been brought 
together with another bill, the Schumer-McCain legislation that was 
modified in the HELP Committee by Senators Collins and Edwards, which 
provides benefits, we hope, to the entire population of this country 
when they purchase pharmaceuticals, because it will hasten the 
introduction of generic drugs into the marketplace while preserving the 
integrity of our intellectual property system.
  These two bills together--a prescription drug benefit for seniors 
from the Medicare system, and strengthening and speeding access to 
generic drugs in the country--I think are appropriate responses to the 
legitimate, persistent, and long-standing demands of the American 
public.
  Last year--if we look at the spending on pharmaceuticals--out-of-
pocket spending on prescription drugs was estimated to be $848 a year 
among Medicare beneficiaries. Nine percent of them, however, spent more 
than $2,500 a year. This is an extraordinary amount of money for people 
who are living on fixed incomes. You do not have to talk to too many 
seniors before you hear their legitimate complaints, that they often 
have to choose between buying their prescriptions or paying their rent.
  Today, we had an event in Providence, RI, where we had seniors and 
physicians talk about that issue. A physician who joined us was very 
eloquent on this subject, pointing out that often his patients will 
tell him the choice they face is either filling their prescriptions or 
paying the telephone bill that month. That is a choice many seniors 
have to make. Frankly, many of them will choose to have the telephone--
for an emergency, for a lifeline, for communication with their 
families--and they will forgo the prescriptions.
  The doctor spoke of one case--one among many--where he was treating 
an elderly person, a woman, for high blood pressure, and she could not 
afford the full range of drugs he prescribed. So he tried to make do 
with whatever was in his supply cabinet: the samples he got from 
pharmaceutical companies. This caused, of course, a situation where 
they were frequently changing prescriptions; and even then she could 
not fill all the prescriptions because of her economic circumstances.
  The high blood pressure was treated on an ad hoc basis. Sometimes she 
could take her medicine because she could afford it; sometimes she 
could not. And what happened? The lady suffered a devastating stroke. 
Ironically, today that doctor can prescribe and ensure she gets the 
full complement of pharmaceuticals because she is disabled and her 
health care is paid for through the Medicaid Program as a disabled 
citizen. That is not right, and it does not make any sense. If that 
woman had been covered by the provisions of the Graham-Miller-Kennedy 
bill, she could have purchased those medicines that would have, 
hopefully, prevented her stroke.
  That is just one example, but we see it time and time again. Seniors 
are under tremendous financial and economic strain, as prescription 
drug costs go up and up and up.
  I spoke to another senior this morning: 70 years old, still working, 
and working primarily to pay for her prescriptions. She said she went 
back to a druggist the other day and was told her drug cost over $100. 
She cannot afford it.
  These are the realities that seniors face throughout the country. The 
bill Senators Graham, Miller and their colleagues have proposed--and 
one I proudly support--will address those concerns. They will provide a 
prescription drug benefit that is voluntary, a benefit that will 
require a $25 monthly premium, and no deductible. It will require the 
senior to pay $10 for generic prescriptions, $40 for a preferred brand 
name prescription, and $60 for a nonpreferred brand name prescription--
simple, direct, well defined, the essence of what I believe we should 
do to help seniors.
  The bill sets forth a clearly defined framework for what a Medicare 
recipient would expect to receive in benefits. The assistance is there 
from the very first prescription. There is no deductible. There are no 
gaps or limits in coverage. There is a catastrophic cap on out-of-
pocket expenditures above $4,000. And there are additional subsidies 
for individuals with incomes below 150 percent of poverty--simple, 
direct, well defined, the essence of what we should do.
  It is a program that will not be administered at the discretion of 
private health insurance. It will be a Medicare program, available to 
every American, no matter where they live, something I think should be 
inherent in any drug proposal we make here on the floor of the Senate.
  In contrast, the House bill and other Senate proposals do not provide 
reliable drug coverage as part of Medicare's defined benefit package. 
These alternative bills have no defined benefit, no guaranteed 
premiums, no standard copayments or cost-sharing. And because the plans 
rely on private insurance companies and HMOs, the actual benefit a 
person receives could vary, depending on where that person lives.
  As we have experienced with the Medigap and the Medicare HMO market, 
private insurers are not capable, often, of providing stable, 
predictable coverage that older Americans and the disabled need and 
deserve. I hear regularly from constituents who are confused and upset 
by the constant changes in premiums, copayments, and benefits under 
these plans. And I suspect the same confusion will result if these 
pharmaceutical plans are administered exclusively by private insurers.
  So I believe we should move forward, very deliberately and very 
quickly, to adopt the version proposed by my colleague from Florida, 
Senator Graham.
  Again, in contrast to the Graham bill, the House-passed bill would 
require a monthly premium of $34, but the first $250 in drug costs must 
be assumed entirely by the beneficiary. You would be paying a premium, 
and yet you would be getting nothing for the first $250 in costs.
  For the next level, from $251 to $1,000, you would only pay 20 
percent. But then, if you went over $1,000, you, the beneficiary, would 
have to pay 50 percent of the cost. And what, to me, is the most 
astounding aspect of this House proposal is, once a patient spends up 
above $2,000, they would have to pay the entire cost of their 
prescriptions until $4,800. Just at the point where these 
pharmaceutical costs were accumulating, a beneficiary would have to pay 
all of the costs and still the premium.
  This bill and its counterpart, the tripartisan bill in the Senate, I 
think, are not sufficient to meet the task before us. I urge my 
colleagues--all of my colleagues--to support strenuously the Graham-
Miller-Kennedy bill and provide seniors and the disabled with a real 
pharmaceutical benefit.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Massachusetts.
  Mr. KENNEDY. Madam President, I will ask that we have a brief quorum 
call and that the time not be charged to either side. I suggest the 
absence of a quorum.
  The PRESIDING OFFICER (Mrs. Murray). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. LOTT. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. LOTT. Madam President, if I could inquire about the parliamentary 
situation or the time situation, how much time is left on this side of 
the aisle on this debate?
  The PRESIDING OFFICER. No time remains on that side.
  Mr. LOTT. How much time on the other side?
  The PRESIDING OFFICER. Forty-two minutes.

[[Page 13713]]


  Mr. LOTT. Madam President, I yield myself time that I might need 
under leader time. But for the information of the Senators who are 
here, I don't believe it will exceed more than about 10 minutes or so.
  The PRESIDING OFFICER. The Senator has that right.
  Mr. LOTT. Madam President, I know there has already been a good 
debate on this very important issue today. I do sincerely hope that we 
can produce a result that will provide prescription drug coverage for 
our low-income elderly, sick people who need this help. Certainly, from 
personal experience, I know of low-income elderly who need the help. My 
concern, though, is we do it in such a way that the costs are not so 
extreme that they wind up causing serious problems with our Medicare 
funds. In short, we don't want to blow a hole in the Medicare fund and 
cause all kinds of problems as a result of our good intentions. That is 
my first concern with the Graham-Kennedy proposal.
  I know it has been difficult to get a cost analysis. I am still not 
quite sure exactly what the cost has been estimated on this proposal, 
although I understand it is in the range of $600 billion over a 10-year 
period. I understand the plan perhaps may be defined as only covering 8 
years, which doesn't begin until 2004, so it is pretty hard to match 
apples and apples. But over a 10-year period, I think it would probably 
wind up being at least $600 billion.
  The cost factor is something we have to be aware of in all these 
different plans.
  The other thing that bothers me is the universal coverage aspects. 
Regardless of income, you are going to get subsidized prescription 
drugs if you are, I guess, in a certain age category. That is my 
understanding. That is one of the fundamental differences. I have 
always said we should target sick low-income elderly or certainly, low-
income elderly. But even using those three words produces a different 
number of people. We would have to think about that very carefully.
  But the idea that we would be providing subsidized prescription drugs 
to people who have income in retirement of $50,000, $60,000, I guess 
any amount, is a major concern I have.
  I am also disturbed about new revelations that I have discovered in 
the Graham-Kennedy amendment over the weekend. We had an earlier 
version that has been changed. Everybody is entitled to do that up 
until the time the different proposals were offered. But there are some 
critical changes that have been made, I presume, to reduce, at least to 
some degree, the cost estimates on this proposal. There are some 
details embedded in this plan that will have critical repercussions on 
the lives and health of 40 million seniors if the amendment were ever 
to become law.
  There are two critical differences that I want to point out today 
between the Graham-Kennedy amendment and Senator Graham's original 
bill, S. 2625. When you look at what those two apparently small changes 
actually mean in the operation of the prescription drug benefit, I 
believe you will want to oppose the Graham amendment in its current 
form.
  In the first change, which is on page 30 of the amendment, it has to 
do with copayments for brand name drugs that are not on the health 
plan's approved list. First, it would help if we review the original 
language in the Graham bill and what it had to say about the 
copayments. The original Graham bill said if you used a generic drug, 
you would face a copayment of $10 per prescription; that is, if you use 
a generic drug.
  If you use a brand name drug that was part of the so-called 
formulary--I will call it the approved list--you would face a copayment 
of $40 per prescription. And if you used, under diagnosis by a doctor, 
a brand name drug that was not part of your plan's formulary or 
approved list, you would face a copayment of $60 per prescription. So 
we had copayments for prescriptions of $10, $40, and $60.
  The current language, which has been changed in the Graham-Kennedy 
amendment, changes the last part. It changes the copayment for the 
brand name drug, which is not part of your health plan's approved list. 
The amendment now says that your prescription drug plan will not cover 
any brand name drug that is not on your health plan's approved list. In 
that case, you have to pay the full price of the drug. Here is the key 
language on page 30 of the amendment. We have it blown up here so 
Members can see it, even though they don't have it available to them to 
read out of the bill:
  Beneficiary responsible for negotiated price of nonformulary drugs: 
In the case of a covered outpatient drug that is dispensed to an 
eligible beneficiary and that is not included in the formulary 
established by the eligible entity for the plan, the beneficiary shall 
be responsible for negotiated price for the drug.
  Now, you got it right. The new plan does not cover brand name drugs, 
unless they are on your drug plan's approved list. You, the Medicare 
recipient, would have to pay for the drug out of your own pocket. Well, 
you might say that should not be too big a problem. But let's get into 
it a little deeper and you will see what is a further change in the 
bill and how the two of them tie together and cause problems.
  The other shoe drops on pages 61 and 62 of the Graham-Kennedy 
amendment. Let's look at the legislative language in this case:
  The eligible entity (health plan) shall include at least one, but not 
more than 2, brand name covered outpatient drugs for each therapeutic 
class as a preferred brand name drug in the formulary [or the approved 
list].
  That means that under the current plan in the Democrat proposal, your 
health plan cannot include more than two name brand drugs for 
arthritis. Your plan cannot include more than two brand name broad 
antibiotic drugs, or not more than two brand name narcotic pain 
killers, or antiseizure drugs, or diabetic drugs, or hypertension 
drugs. In any case, it is no more than two.
  So look at what happens when you combine what you see on page 30 with 
what you see on page 62. If you need a name brand drug and if that 
brand name drug is not on the list of two on your approved list, then 
you are out of luck. Your new wonder drug plan here from the Democrats 
doesn't cover that drug. You would have to pay the full cost out of 
your pocket. So here is what that would lead to. Suppose you use an 
antihistamine every day and your health plan chooses to cover Allegra 
or Zyrtec, but not Claritin because it is limited to only two brand 
name antihistamine drugs. If you prefer Claritin because it clears up 
your symptoms better--just today, I was talking to an elderly person 
who was having problems, and I asked that person what they were taking 
because it obviously wasn't working. They told me it was one of the two 
that I mentioned here. I suggested maybe he try a Claritin D, since it 
seems to work better for me; certain drugs may work differently on 
different people, and doctors prescribe different brand name drugs. If 
the one you need the most is Claritin, which is not on the list, but 
these other two are--and you also have the Claritin reditabs--then you 
would have to pay $68 more per prescription to get the drug that has 
been prescribed to you, which is your choice, or the one you need.
  Now, that, of course, is a concern if you are in that category. It 
gets even worse if you look at other examples. For instance, 
antiarthritics. Suppose you need Celebrex but your health plan, limited 
to only two drugs, chooses Vioxx or Enbrel. As many seniors with 
arthritis know, arthritis drugs are very particular. What works for one 
senior citizen doesn't necessarily work for another. The Graham 
amendment limits your health plan to two of these four drugs. So if you 
need Celebrex, you could be out of luck, and you would then have to pay 
about $90 per prescription out of your pocket in order to get this 
particular arthritis drug.
  And then it can go into other areas, too; for instance, 
antidepressants. Under the Graham amendment, only two antidepressants 
would be covered. If you needed one not on the list, you would have to 
pay the cost out of your

[[Page 13714]]

own pocket. It could be--in the case of Prozac--$110 to get the 
particular drug that you might need.
  Madam President, that is the plan we have before us. One thing that 
bothers me about it, too, is who decides exactly what two would be on 
this approved list? Is it going to be a board? What would be the 
criteria in deciding what two drugs would be on the list? This is a 
solution that I think causes a real problem. Some people say just take 
a generic. Substitute in a different brand name drug, they will argue. 
But sometimes you just cannot do it. Many times, drugs have specific 
effects on different people. So I think this is a major flaw that has 
been created by limiting or dropping out the $60 copayment per 
prescription, and then coming up with the two-drug limit.
  I was going over this information this afternoon and I wanted 
Senators to know about this change. I know that everybody is trying to 
work toward the right end result and with good intentions. But I do 
think that what is happening is you have limited choices and you 
guarantee that many seniors who need these specific drugs--Prozac is as 
good an example as you are going to find, where you would have to come 
up with a significant cost--$110--for the drugs.
  Before you vote tomorrow afternoon, I urge my colleagues to look at 
the changes that have been made. I presume they were made because of 
the cost impact. But you need to also look at what the medical impact 
is--the result of the decision that has been made. I urge my colleagues 
to vote against it on this basis, as well as on many others.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. KENNEDY. Madam President, I yield 30 minutes to the Senator from 
Florida, and I think I still have 12 minutes or so remaining?
  The PRESIDING OFFICER. The Senator is correct.
  The Senator from Florida is recognized.
  Mr. GRAHAM. Madam President, I hope the minority leader might be able 
to stay on the floor so he would not run the risk of being unable to 
sleep tonight, as he tosses and turns, concerned about the fact that we 
have provided, as almost every private health care plan does provide, 
for a specific formulary as to what will get the benefit of the 
preferred $40 deductibles.
  At an appropriate time in my remarks, I am going to go into this in 
more detail, and I will also direct the Senator's attention to other 
language in the pages from which he was quoting, which indicates that 
we are sensitive to exactly the concerns he has expressed; we have, in 
fact, provided a means by which other drugs that are found to be 
clinically necessary would be added to the list of those which could be 
secured at the $40 copayment level.
  I think the Senator from Mississippi will find many of the remarks I 
am about to make to be informative, insightful, possibly requiring a 
reassessment of position and hopefully tomorrow at 2:30 p.m. to see him 
march proudly to the front of the Chamber and cast a vote in favor of 
the Graham-Miller-Kennedy bill. We would be honored to have that vote 
and would even keep the list of potential cosponsors open for his 
possible signature.
  One of our colleagues has specifically asked that I request unanimous 
consent that he be added as a cosponsor: Senator Akaka. I make such a 
request on his behalf.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAHAM. I thank the Chair.
  Last Thursday, the 18th of July, Senators Kennedy, Miller, Corzine, 
and I offered this amendment to provide affordable, comprehensive, and 
reliable prescription drug coverage for the 39 million older Americans 
and disabled citizens who are currently covered by Medicare.
  I have an interest in all Americans who will benefit by the adoption 
of this proposal. I have a particular interest in the 2,750,000 of 
these Americans who call their home Florida.
  I do not wish to repeat the remarks I made last Thursday, so let me 
just recap some of the principles that we think are important and 
should be the touchstone in evaluating any plan that is proposed for 
prescription drugs.
  We believe these principles include: a modernization of the Medicare 
Program; providing beneficiaries with real benefit; giving to the 
beneficiaries real choices; using a delivery system that seniors can 
rely upon and is affordable for the beneficiaries; and a program which 
is fiscally prudent.
  I also outlined last Thursday our specific proposal and indicated how 
it complied with those principles of a prescription drug program for 
Medicare.
  What does our proposal provide? We guarantee a universal benefit to 
all seniors, no matter where they live; that if they determine it is in 
their interest to voluntarily elect to participate in the prescription 
drug plan, they would pay $25 per month for that participation. Having 
done so, assistance would begin with the very first prescription. There 
is no deductible. They would pay a predictable copayment. For the year 
2005, the first year that this program would be operational, the 
seniors would never pay more than $10 for a generic drug and $40 for a 
medically necessary brand-name drug.
  Medicare beneficiaries can also rest easy knowing that they would 
never pay more than $4,000 in a year for their prescriptions. Seniors 
with incomes below $13,290 for an individual and for couples below 
$17,910 annual, if that is your income, then you would receive 
additional assistance, including the waiver of copayments for those who 
are below 135 percent of poverty.
  We would also be able to guarantee that this benefit would be 
available to all seniors because we use a system to deliver the drug 
benefit that is as tried and true as the 37-year-old Medicare Program 
itself. It is the same system that you and I and all Members of the 
U.S. Congress use to receive their prescription drugs through the 
Federal Employees Health Benefits Program.
  We rely on pharmacy benefit managers, or PBMs, to deliver and manage 
our drug benefit. PBMs are private commercial companies that negotiate 
with the pharmaceutical companies to get discounted prices. These 
companies are currently providing drug benefits through public and 
private employer plans in every zip code in America, and they would 
work as well for our seniors as they do for Federal employees, private 
sector employees, and Members of Congress.
  What I wish to do this afternoon is focus first on what I think are 
some of the key concerns raised by the Republican plan and then respond 
to some of the questions which have been raised, such as the questions 
raised by the Senator from Maine, who is in the Chamber now, and the 
Senator from Mississippi.
  These key problems raised about the Republican plan include its 
reliance on a yet-to-be-created delivery system, the gaps in coverage, 
and their test of beneficiaries' assets, which will make it difficult, 
if not impossible, for many of our low-income seniors to get the drugs 
they need because even though they will qualify for special assistance 
based on their income, they will be rejected because they have too many 
assets.
  Let me discuss each of these principal flaws in some detail.
  Our Republican colleagues have criticized our proposal for being an 
integral part of the Medicare Program. Instead, they would use the 
prescription drug benefit to begin privatizing the Medicare Program; 
they would give the important task of delivering prescription drugs to 
private drug HMOs.
  I have grave doubts about the private insurance model for 
prescription drugs for the very basic reason that it has never been 
done this way. There is no place we can turn to say: How has a private 
insurance subsidized plan for only prescription drugs worked? If there 
is such a plan, if there is someplace that we can turn to inform our 
judgment on this, I would ask for the name of the company, its address, 
and its telephone number so we might call and ask some of the questions 
that concern us about how such a plan would work.
  I am afraid we will find there is no name, there is no address, and 
there is

[[Page 13715]]

no telephone number. Private insurance plans have had every opportunity 
to offer drug-only insurance plans, and yet not one has stepped forward 
to do so.
  Private insurers simply have no interest in providing drug-only 
benefits. Why are they not interested in drug-only benefits? Let me use 
an analogy to the private insurance market as it relates to casualty 
insurance.
  Most of us who own a home have insurance on that home to cover risks, 
such as fire or windstorm damage. You can call State Farm and ask 
whether it would offer a kitchen-only casualty insurance policy, or 
would it offer a policy that would only cover that back room which is 
next door to an old and frail tree that might blow over in a storm and 
fall on the rear of the house. The answer to that is obviously no. 
State Farm and any other casualty insurance company would consider 
insuring your whole house, but they are not going to insure a specific 
room and particularly a room that is probably more vulnerable than 
other parts of the house.
  This is exactly what is being asked of insurance companies as it 
relates to offering a prescription drug-only plan. Prescription drugs 
happen to be the fastest growing segment of total health care costs in 
America. When Medicare was established in 1965, the average older 
American spent $65 on prescription drugs. I am not talking about $65 a 
week or $65 a month. I am saying $65 a year was the average amount that 
seniors spent on prescription drugs.
  That number has increased by a factor of 35 in the history of 
Medicare, the fastest growing segment of health care in America. That 
is why insurance companies have been unwilling to offer a prescription 
drug-only private insurance policy.
  This is what we are going to require as the model for delivery under 
the Republican proposal.
  About a year ago, I invited a group of chief executive officers of 
pharmaceutical companies to come into my office to talk about the 
various plans and specifically the method of distributing prescription 
drugs. I asked these executives a fairly simple question: How do your 
employees get their prescription drugs? Do they get them through a 
drug-only private insurance plan? Do you rely on drug HMOs for your 
employees, for you and your family to get these drug benefits?
  The answer from each of the CEOs was the same. No.
  Why not, I asked.
  The answer was: No such plan exists.
  So I asked this question: Why do we want to impose this untried 
system on our Nation's seniors? Why should they be the guinea pigs in 
some vast theoretical laboratory experiment of a plan that has never 
been tried?
  I am particularly concerned about how the Republican HMO drug plan 
will work in rural areas of which, in my State, in the State of the 
Presiding Officer, in virtually every State, is a significant amount of 
our population. We have to look no further than the Medicare+Choice 
system--these are the full Medicare HMOs--to see how rural areas would 
likely fair.
  According to the Congressional Research Service, 94 percent of 
Medicare beneficiaries in rural areas have no access to Medicare HMOs. 
Why is this the case? In significant part, it is because rural 
beneficiaries on the whole tend to be older and sicker than other 
senior Americans. Therefore, it is more difficult for a private 
insurance plan to spread its risk. Most of the beneficiaries served in 
rural areas are considered high-risk beneficiaries. A likely result of 
the prescription drug model that relies on drug HMOs is that seniors in 
rural areas will pay higher premiums than beneficiaries in urban areas, 
if they are able to get any coverage at all.
  In addition to questioning whether a drug benefit would actually be 
available if we rely on drug HMOs as proposed by our Republican 
colleagues, I have great doubts about the affordability of any benefit 
that is offered. Why is that? Because the drug HMOs get all the choices 
when it comes to the benefit they would offer.
  We cannot tell our seniors what the Republican prescription drug 
benefit is. No place in their bill does it tell us what premium the 
seniors will be charged. It does not say what the deductibles and 
coinsurance levels will be. They are only ``suggestions.''
  My Republican colleagues talk about providing choices. What they do 
not tell us is they give all the choices to the private insurance 
companies. Under the Republican plan, our seniors will pay different 
premiums depending on where they live. Under the Republican plan, the 
drug HMOs determine what the premiums will be, not the Medicare 
Program.
  If it is not troubling enough that the insurance industry would be 
making these choices about what the premium is, what the deductible is, 
what the cost sharing will be, consider this: The Republican plan would 
spend precious resources to lure private insurers into the market. 
Instead of using these resources, Federal dollars, Federal taxpayer 
dollars, to ensure an affordable drug benefit for all seniors, they 
would use them to induce private drug HMOs to participate in the 
system.
  My concerns about the Republican plan are not based on speculation 
but on lessons learned in Nevada, which began offering seniors a drug 
benefit. The Nevada plan, while it has significant differences, is the 
closest example we have to the Republican plan that will be voted on 
tomorrow. We know from Nevada's experience that what seniors want is an 
affordable drug benefit, not a requirement that they analyze multiple 
and confusing plans with different premiums, deductibles, and cost 
sharing.
  Let me give this piece of history: When the State of Nevada 
originally offered seniors a multiple choice plan of drug benefits, how 
many seniors in Nevada signed up for the plan? The answer is 124. That 
was the total number of seniors in a relatively large State in our 
Nation who wanted to sign up for this multiple benefit plan. When the 
program was restructured and seniors were given one defined benefit 
plan, when they knew what they were going to get, how many people 
enrolled? Over 6,000.
  We also know from Nevada's experience that private insurers will not 
participate in the Republican model unless there are high profits to be 
made, dollars that could have been used to make the benefit more 
comprehensive or more affordable. In order to get a private insurer to 
participate, the State of Nevada had to pay the plan $106.54 per member 
per month, even though the member's actual drug cost averaged only 
$37.64 per month. That is a difference of nearly $69 per member per 
month, $69 that could have been used to offer a better benefit, cover 
more seniors, give an earlier catastrophic benefit.
  Even after adjusting for administrative and other costs, the State 
calculated that the private plan had a profit of $1 million over a 6-
month period to serve a mere 3,000 beneficiaries.
  My Republican colleagues would repeat this mistake but on a massive 
scale. Rather than assuring that the money is spent on a drug benefit 
and is used to maximize drug coverage for seniors, the Republican bill 
would allow the money to be siphoned off to induce insurance companies 
to participate when they have indicated by their past behavior they do 
not want to participate.
  I also have grave doubts that seniors would get the drugs they need 
if they were to adopt the Republican proposal. Under their approach, 
the fewer drugs used by seniors, the higher the profits for private 
insurers.
  We hear a lot about the idea of transferring risk, insurance risk, to 
the private insurance companies, and because they will be responsible 
for this risk, therefore they will be more aggressive in containing 
costs. I find it a little disingenuous that this plan, which is 
supported by almost all the major pharmaceutical companies, has as one 
of its recommendations to be adopted that it is going to be more 
effective in containing costs.
  We have all heard the argument of the fox in the chicken coup. I 
think we have an example of that with the pharmaceutical company saying 
they support the plan with the principal benefit being its capacity to 
reduce pharmaceutical costs.

[[Page 13716]]

  Private insurance companies, in my judgment, have exactly the 
opposite goal. They are likely to want to restrict the drugs that the 
senior wants and needs because that is the way they can maximize their 
own profits. We need to listen to what our seniors have to say about 
privatizing Medicare before we go down this path.
  In 2001, a senior lady from Cincinnati, speaking before one of our 
major senior groups, said the problem with privatizing Medicare is 
these insurance companies will make the rules and you will live by the 
rules. You will not have any representative if you go to an insurance 
company and tell them you do not like the way they are doing something. 
Do you think they are really going to care?
  It is not just the delivery model, however, which worries me. It is 
also the benefit design in the Republican plan. In fact, the phrase 
``truth in advertising'' should apply. If we are going to pass the 
Republican bill, we better be prepared to tell the truth. We better be 
prepared to tell seniors that they will face an enormous gap in the 
benefit, a gap which some people have referred to as the doughnut hole.
  This is Freda and Coleman Moss of Tampa, Florida. Freda is 80 years 
old. Coleman is 84. Freda has had serious health problems. She spends, 
on average, $7,800 on prescription drugs every year. Under the 
Republican plan, from about mid-June until the end of September, 
roughly a third of the year, she will be getting no help at all. The 
reason is that the Republican plan has this gaping gap in coverage. 
During that period when she is getting no benefits at all, however, her 
monthly premiums are not suspended; she continues to write that check 
out every month for monthly premiums. But while she is in the gap, the 
doughnut hole, she will get no benefit. How could this be?
  The Republicans insist the doughnut hole is so small, they would like 
to call it a bagel hole. Let's call it what it is: It is a gimmick. It 
is a gimmick which helps to lower the cost of their bill at the expense 
of seniors getting the drugs they need.
  It is important to understand what is really going on in the gap. 
They say this little bagel hole of a gap is only between $3,450 and 
$3,700, or $250. Is that really the size of the gap?
  Madam President, we will now talk a little arithmetic. If anyone 
would like to settle back and relax, this is a good time. Let's look at 
how the Republican plan works.
  Beneficiaries have to reach a point where the total spending--the 
spending of you, as the beneficiary, the Federal Government, and any 
other source--reaches a level of $3,450. Once you reach that point, you 
receive no assistance for your prescription drugs until you spend, out 
of your own pocket, $3,700.
  How does the math work? To get to the $3,450 level, the out-of-pocket 
expenditures by the beneficiary will be, first, a $250 deductible. You 
have to pay that before you get any assistance. Then, between $250 and 
$3,450, you pay half and the Federal Government pays half. You pay 
$1,600 and the Federal Government also pays $1,600. By the time the 
combined expenditures reach $3,450, you pay $1,850 out of your pocket--
the deductible plus the $1,600.
  In order to get out of this doughnut hole, you have to have total 
expenditures out of your pocket of $3,700 or an additional $1,850 
beyond the $1,600 you already paid. So you will have to pay a total of 
$3,700 before you escape what is not a bagel hole, what is not even a 
doughnut hole, what is really a Grand Canyon of a gap. That is 
devastating.
  Let us consider the case of Freda. After spending $250 for the 
deductible, she would pay 50 percent for each prescription drug 
prescription until the total drug cost was $3,450. Freda would spend 
$1,600 in addition to the deductible, for a total of $1,850 from her 
own pocket. Freda already spent a lot of money. But guess what is 
coming. While she is in the gap, she pays 100 percent for every 
prescription to get her from a total of $1,850 that she has already 
spent to the $3,700 she needs to get to cross the Grand Canyon and 
remove herself from the gap. That means she will have to spend $1,850.
  During this period of time, she is paying for all of her prescription 
drug costs, paying her monthly premiums. The gap is confusing. But one 
thing is certain: It is no small amount. Most years, Freda would pay 50 
percent of her prescription until about June 15. This is out of the 
$7,800 which is her average annual prescription drug cost. Then for 3 
months--assuming she could, in fact, afford to pay 100 percent for the 
drugs she needs and would not have to cut down on prescription drugs in 
order to afford food, rent, and the other necessities of life--she 
would be paying that next $1,850 out of her pocket. It is a big 
assumption that she will be able to do that.
  Freda and Coleman Moss have a monthly income of $1,038. Freda would 
have to spend 65 percent of the total income she and her husband share 
during these 3 months she is in the gap in order to pay for 
prescription drugs alone. It is not hard to imagine Freda would not be 
able to get the drugs she needed during the time she was in the gap.
  This gap is bad medicine for Freda Moss. It is bad medicine for 
America's seniors. The gap is a gimmick that lowers the cost of the 
Republican plan at Freda Moss's expense. I am not going to inflict this 
gap on Freda Moss, on Coleman Moss, or any of the other 816,000 
Floridians who would fall every year into this benefit gap.
  To my colleagues on the other side of the aisle, I say, let's be 
truthful about what we are doing to our seniors. If you think it is too 
expensive to offer the plan you are offering, be honest. Raise the 
monthly premiums. Increase the $250 deductible. Increase the percentage 
of coinsurance that the senior has to pay. But do not hide it in the 
middle of the benefit program to tell Freda Moss: From June 15 until 
the end of September, you have to pay 100 percent of your prescription 
drug costs. The fact is, she cannot afford to pay 100 percent of her 
prescription drug costs.
  The third key fault in the Republican plan is the assets test.
  I ask Senator Kennedy for an additional 10 minutes.
  Mr. KENNEDY. We will do 20 minutes evenly divided.
  Mr. GRAHAM. Senator Kennedy has talked extensively about the assets 
test, so I mention it briefly.
  It is a mirage to tell low-income seniors they are going to get 
access to the benefits of reduced or, in some cases, no copayments 
because of their limited income when we then impose, for the first time 
in the history of Medicare, an assets test that says if you own 
something as basic as a $1,500 burial fund, so she might be buried next 
to your loving spouse, that makes you ineligible to get any of the low-
income benefits.
  It has been estimated that one-third of the 11 million seniors who 
would otherwise qualify for some special assistance because of their 
low income would be denied that assistance because they would not 
comply with the assets test.
  I will briefly touch on some of the criticisms the Republicans have 
made about our plan: First, the plan is too costly; that we cannot in 
our rich society afford to provide to our older citizens what is now a 
fundamental part of a comprehensive health care program. I do not 
believe that is the America we live in today.
  The Republicans have thrown around some numbers as to what our bill 
will cost. Let me say that we have a CBO number, a Congressional Budget 
Office number, which they do not have in their plan. It is that, 
assuming that the underlying generic drug bill is passed, which will 
encourage generic drug use, our plan for the first 8 years will cost 
$407 billion and for the full 10 years will cost $576 billion. Is this 
a cheap proposal? The answer is: No. A cheap proposal means meager 
benefits, less than universal coverage, less than comprehensive 
coverage. That will not do for America's seniors.
  But rather than looking at the cost of our drug proposal in 
isolation, let's put it in context. What are we currently paying? What 
percentage of the cost are we paying for all the other health care 
benefits that seniors receive through Medicare? The answer is 
approximately 77 percent. That is what

[[Page 13717]]

we are paying for doctor care, hospitalization, all the things that 
Medicare covers. If we were to cover 77 percent of prescription drugs, 
this plan would not be costing $594 billion over the next 10 years. It 
would cost more than $1 trillion over the next 10 years.
  We also maybe should look at ourselves. We are all participants in 
the Federal Employees Health Benefits Plan. If we were to give seniors 
the same benefits that we get as Members of the Senate, with an average 
income that is 10 times what the average income of senior Americans is 
today, this plan would cost $750 billion. We are talking about, over 10 
years, $596 billion.
  The reality is that the benefits of prescription drugs do not come 
cheap. The cost of prescription drugs is the fastest growing component 
of every health care plan, the private sector, the public sector, and 
it will be a significant part of any decent Medicare prescription drug 
benefit. That is what the debate that we had last week was all about.
  Are we going to pass generic drug, patent reform, reimportation, 
State group purchasing--all of which are designed to give to all 
Americans, including senior Americans, greater access and affordability 
to a very expensive part of our national budget today, prescription 
drugs? The reality is the plan that our Republican colleagues have 
offered will cover less than 25 percent of seniors' drug costs. That is 
based on the latest estimate that their plan will cost, in the range 
for prescription drugs, of $330 billion to $340 billion. And the total 
drug expenditures by seniors over the next 10 years will be $1.3 
trillion.
  Our plan would provide almost twice the amount of coverage as the 
Republican proposal. It would provide $594 billion of the $1.3 trillion 
that seniors are going to spend on prescription drugs in the next 10 
years.
  In my opinion, as costly as this is, it is not an extravagant 
benefit. It is far less than the 77 percent that we are covering for 
other medical services, and it will provide critical assistance to our 
seniors.
  It has been argued that seniors would pay more in copayments. The 
reality is seniors prefer to have their drugs acquired through a known 
amount per prescription, rather than through the unknown of a 
percentage of an unknown actual amount.
  If seniors go to the doctor and get a prescription, they are unlikely 
to know what that prescription is going to cost. But they do know if it 
is a generic drug it is going to cost them $10, and if it is a brand 
drug it will cost them $40. They like that degree of reliability and 
security.
  It has been said that this is a Government-run price control system. 
This is not a new argument. It is not an argument about prescription 
drugs through Medicare. This goes to the heart of whether America 
should have a Medicare Program at all. This debate was ongoing before 
Medicare was adopted. It was an argument which kept Medicare from being 
adopted for many years. And it has been an argument that has continued 
since Medicare was established in 1965. We should not forget that 
Republicans voted against the creation of the Medicare Program in 1965, 
and they have made their thoughts about Medicare very clear since then.
  Just listen to some quotes by prominent Republican leaders. In 1995, 
then-majority leader of the Senate, Senator Bob Dole, said:

       I was there fighting the fight, voting against Medicare in 
     1965 because we knew it wouldn't work.

  Former Republican Speaker Newt Gingrich, speaking on Medicare in 
1995, said:

       Now we didn't get rid of it in round 1 because we don't 
     think that it's politically smart and we don't think that's 
     the right way to go through a transition. But we believe it 
     is going to wither on the vine because we think people are 
     voluntarily going to leave it.

  Republican House majority leader Dick Army said Medicare was ``a 
program I would have no part of in a free world.''
  He deeply resents the fact that ``when I am 65 I must enroll in 
Medicare.''
  Somebody should tell him that Part B of Medicare, as well as this 
drug benefit, are voluntary. If he chooses not to enroll, that is his 
election.
  I have news for my Republican colleagues. The Medicare program, as it 
is administered, has worked. Let me tell you a few of the successes.
  Since its creation, Medicare has provided health care coverage for 
more than 93 million elderly and disabled. Medicare has made a dramatic 
difference in the number of seniors with health insurance. In 1964, the 
year before Medicare, half the seniors were uninsured.
  Today, 97 percent of seniors have health insurance. Medicare has 
lifted countless seniors out of poverty, has expanded access to high-
quality care for minority seniors, has improved the quality of life for 
seniors by providing access to procedures such as cataract surgery, hip 
replacement, cardiac bypass surgery, and organ transplant.
  We have the Medicare Program in part to thank for increasing the 
average life expectancy available to Americans. A 65-year-old woman who 
is entering Medicare today will live 20 percent longer than her 
counterpart who became 65 in 1960.
  It is Medicaid, making the miracles of modern medicine accessible and 
affordable, not private insurance, that made these advances possible. 
It wasn't private insurance plans that stepped to the plate in 1965 to 
provide health insurance coverage for seniors. In fact, they didn't 
want to cover seniors. That was why Medicare was established.
  I wish I had time to go into more detail on some of the reactions of 
seniors toward these plans and why virtually every major senior group 
has supported our plan. I wish I had greater opportunity to respond 
specifically to the concerns of the Senator from Mississippi, and hope 
I will have such an opportunity before we vote. But let me just 
conclude.
  This debate is not about programs. This is not about charts. This 
plan is about human beings, our parents and our grandparents. It is 
about working Americans who are paying the cost for their elderly 
family members' prescription.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. GRAHAM. Mr. President, I appreciate your indulgence and my 
colleagues' indulgence. I hope tomorrow we will grasp the rare 
opportunity we have to give greater security and comfort to our senior 
citizens by their knowledge that they will now have affordable and 
accessible opportunities to experience the miracles that prescription 
drugs make available, and that they will be there for them in a 
reliable manner, in a manner with which they are familiar--tried, 
tested, and assured.
  The PRESIDING OFFICER (Mr. Dayton). The Senator from Massachusetts is 
recognized.
  Mr. KENNEDY. Mr. President, I believe I have 12 minutes remaining. I 
welcome the opportunity to inquire of my friend and colleague. I have a 
question or two about the legislation and some of the points that were 
raised earlier this evening.
  I believe all of us who have listened to the Senator from Florida 
commend him for a superb presentation. I particularly welcome the final 
comments he made with regard to what this debate is really all about: 
It is about real people. It is about a great generation. It is about 
seniors who have made a difference in building this Nation, who fought 
in the wars, who fought in World War II, who brought us out of the 
Depression, and who really made this country great. The Senator brought 
us back to that element. I certainly welcome it.
  All of us will be voting tomorrow, and hopefully we will keep that in 
mind.
  We heard earlier in the debate and the discussion that the proposal 
of the Senators from Florida and Georgia misleads the seniors of this 
country because it is going to sunset in several years. Therefore, we 
are misleading our seniors by promising them one thing today that after 
a period of years, by 2010, will not be available to them.

[[Page 13718]]

  I am wondering if the Senator would agree with me that if we had an 
authorization on Medicare back in 1965--say it was 6 or 7 years, and we 
came back to debate that--we certainly would have gotten a prescription 
drug benefit for seniors in this country much earlier than we are now 
able to, if we hopefully can get this passed. Does the Senator not 
agree with me that we would have assured some action? Will the Senator 
not agree with me that in 7 or 8 years we will have the opportunity to 
find out what needs to be done with this program to make it fairer and 
more effective for the seniors, and that this would be a welcome 
opportunity to do so?
  We should embrace this concept rather than retreat from it. I would 
be interested in the Senator's reaction.
  Mr. GRAHAM. Mr. President, one of the enigmas about Medicare and why 
it has fallen so far behind other major health care plans, such as the 
one that the Senator and the Senator from Maine and I participate in, 
along with Federal employees--one of the reasons is the system was 
established in 1965 and has not been forced to defend itself by making 
those changes which are required to continue to be a modern health care 
system.
  It is not only the absence of prescription drugs but the whole array 
of preventive measures. You would be shocked and appalled to know that, 
for instance, illnesses such as prostate and various forms of cancer 
for females, as well as colon cancer, have only in the last few years 
been added to the list of preventive services available through 
Medicare, and that a long, long list of items continue to be uncovered.
  If we had had a requirement that forced us to periodically look at 
this program as we, for instance, are now looking at Welfare to Work, 
which in 1996 said after 6 years it had to be reexamined and 
reauthorized--we are going to do so, and I think it will be a better 
program because it wasn't on autopilot. It had some real thoughtful 
considerations, analyses and improvements.
  Mr. KENNEDY. I couldn't agree with the Senator more.
  Let me get to the issue of cost of the program. I have listened with 
great interest to the debate from the other side about their $24 
monthly premium. Yet, I have great difficulty in reviewing their 
proposal and finding where that $24 is even mentioned. Of course, it is 
not mentioned, because it is an estimate, as they indicated. But the 
premium is written right into the law on page 26 of the Senator's bill. 
Then on page 28, the cost of generics, $10, is listed and then the cost 
for the preferred, $40, is listed. It is written right into that bill.
  Has the Senator, in his examination of the alternative, seen any 
statement or indication of that kind of precision reflected in the 
Republican bill?
  Mr. GRAHAM. The answer is no. It is because they start from a 
fundamentally different position. Our bill is what would be described 
as a ``defined benefit.'' You know what you are going to get, and you 
can rely on it.
  The Republican bill is a defined contribution. The Federal Government 
will subsidize private insurance companies, if some can be found that 
would be willing to provide a prescription drug-only benefit. 
Therefore, it is going to be up to the insurance companies to say what 
the monthly premium and the deductible will be.
  This is a chart which talks about what the costs would be for some of 
the major brand-name drugs. We can tell you with precision what they 
will be under our plan. A whole period of question marks are under the 
Republican plan because the insurance company can say we may cover 50 
percent of the cost, or we may only cover 40 percent of the cost, or we 
may only cover 25 percent of the cost. It is up to the insurance plan.
  Mr. KENNEDY. So they have no idea today. It will be left up to the 
insurance companies. They will make that decision.
  This is an estimate--and a favorable estimate--that they are making 
on this side; whereas under the Graham proposal, it is explicit.
  I would like to move on to another area that was talked about by the 
Senator from Mississippi and others regarding the formulary issue.
  Let me see if I understand what is in the Graham proposal. In the 
Graham proposal, it says that all generics included in the therapeutic 
class must be on the formulary, and at least one brand-name drug but no 
more than two in the therapeutic class must be in the formulary. It is 
designed, obviously, to obtain the deepest discounts. That is obvious. 
But if you need a drug that is not in the therapeutic class, you can 
still get it at a formulary price, as I read on page 29 of the Graham 
bill.
  I thought the Senator from Mississippi missed this element. It says: 
The eligible entity shall treat a nonformulary drug as a preferred 
brand-name drug, if such nonformulary drug is determined to be 
medically necessary. The cost of that drug would then be $40. If it is 
medically necessary under the Graham proposal, seniors will be able to 
get it.
  This is what was missing from the debate and discussion with our 
friend from Mississippi earlier.
  Mr. GRAHAM. There are two rates. One is what I would call the retail 
rate, and the second is the wholesale rate. Insofar as the overall 
expenditures for individuals, if it is determined that individual 
requires a specific drug, which is not on the formulary, and it is 
medically necessary for that individual, then that particular drug will 
be treated as a preferred drug. Therefore, the maximum amount of 
copayment would be $40.
  But, on the wholesale level, if you would turn to page 62 of our 
legislation, it says that at least one but no more than two brand-name 
drugs shall be included for each therapeutic class unless--this is line 
2 through 4--the Secretary of the Department of Health and Human 
Services determines that such limitation is clinically inappropriate 
for a given therapeutic class.
  If the Secretary of HHS determines that, let us say in the area of 
antidepressants, there needs to be more than two in order to be 
clinically appropriate, he or she has the authority to order that there 
will be whatever number of drugs within that therapeutic class are 
required.
  Let me point out, as the Senator already knows, that because of the 
defined contribution nature of the Republican plan, there is no 
assurance that even two drugs in any therapeutic class will be offered 
under their plan. As I understand it, the insurance companies, rather 
than the Department of Health and Human Services, will determine what 
the therapeutic classes will be.
  So one insurance company may say, we will use a very broad definition 
of therapeutic class, another may use a narrower definition, and, 
therefore, affect the number of drugs that are realistically available.
  Mr. KENNEDY. Does the Senator agree with me that there is no 
requirement for a generic formulary in their proposal whatsoever?
  Mr. GRAHAM. Again, it is a leap of faith as to what you are going to 
have, whereas ours is a defined benefit.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. KENNEDY. We had additional time.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. KENNEDY. Both times? I had 22 minutes.
  The PRESIDING OFFICER. The Senator is correct.
  Mr. KENNEDY. May I have 2 more minutes, just on this point. I ask 
unanimous consent for that, and the same additional time for the other 
side.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KENNEDY. Just so we understand this, on page 37 of the 
tripartisan bill, in the formulary determinations, they say:
  An individual who is enrolled in a Medicare Prescription Drug plan 
offered by an eligible entity may appeal to obtain coverage for a 
covered drug that is not on a formulary of the eligible entity if the 
prescribing physician determines that the formulary drug for treatment 
of the same condition is not as effective for the individual or has 
adverse effects for the individual.

[[Page 13719]]

  But there is no price limit on this, as I understand it. There is no 
price mentioned in here, in contrast to the Senator's provisions that 
have been included in his legislation.
  His legislation provides what is medically necessary and then goes on 
to indicate what the costs will be, to ensure that they are reasonable. 
In the other bill, seniors may have the ability to get what is 
medically necessary, but there is no indication about what the cost 
would be, as I understand it.
  Mr. GRAHAM. That is true, I say to the Senator. What you have just 
said contributes to a recent poll, done by the Kaiser Family Foundation 
in May of this year, which asked Americans: Which kind of plan did they 
want?
  For Republicans in America, 58 percent said they wanted a defined 
benefit plan; only 33 percent wanted the Republican plan as is offered 
today. Among Democrats, 71 percent wanted a defined benefit and 23 
percent preferred the Republican plan. Among Independents, 72 percent--
even more than Democrats--wanted to have a defined benefit plan 
delivered by Medicare as a means by which they would get their 
prescription drug benefit.
  Mr. KENNEDY. I thank the Senator.
  That is why I agree with the Senator.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. KENNEDY. That is why we have such strong support from seniors and 
why it is justified.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. KENNEDY. I thank my friend and colleague from Maine.
  Mr. President, I ask that she be entitled to whatever additional time 
she needs.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Maine.
  Ms. SNOWE. Mr. President, I just want to make several comments in 
response to some of the issues we have discussed today regarding the 
two competing plans.
  What is most important about this debate is that we have the ability 
to discuss the programmatic differences in policies that each of our 
approaches have taken with respect to delivering this prescription drug 
benefit plan.
  First and foremost, I should say that the plan we are offering is a 
tripartisan plan. It was crafted by Senators Breaux, Jeffords, Hatch, 
Grassley, and myself as members of the Senate Finance Committee, 
primarily designed to overcome many of the partisan differences that 
might exist on this issue and, hopefully, to bridge the gap so that we 
have the opportunity to pass a prescription drug benefit this year.
  I heard mention the issue about a doughnut that exists in our bill; 
that is, the gap between the benefit limit of $3,450 and $3,700.
  First of all, 80 percent of those seniors who would be participating 
in this program--80 percent of the Medicare beneficiaries--would not 
even reach the benefit limit of $3,450.
  In fact, I recall back in 1999, President Clinton proposed a drug 
benefit that provided for an initial benefit of $2,000. We are at 
$3,450. He had a much greater gap in coverage between that initial 
coverage of $2,000 and a catastrophic benefit, which was about a $3,000 
gap. We are talking about $3,450, and a catastrophic benefit threshold 
of $3,700. But what could be a greater gap than having this most 
critical benefit to seniors sunset in the year 2010? In 2010 it 
expires. According to the legislation: No obligation shall be incurred, 
no amounts shall be appropriated, no amounts expended for expenses 
incurred for providing coverage of covered outpatient drugs after 
December 31, 2010.
  The legislation goes on to say, provided, of course, the actual 
spending does not incur, so there is leftover you can use for a 
prescription drug benefit or the program itself results in lower 
expenditures. Nevertheless, it would require, in order to extend that 
most important benefit of prescription drug coverage, additional action 
by the Congress, obviously, to provide for the funding of that program. 
So it expires.
  The second gap in coverage provided in this legislation offered by 
Senator Graham is the fact there is a major omission of coverage for 
brand-name prescription drugs. There are more than 2,400 that exist. 
The Senator's legislation is limiting to, at most, two brand-name drugs 
in each therapeutic class.
  So it is going to be very limiting at best because it will deny a 
senior the ability to have access to an alternative medication if it is 
not called for under this legislation. It either has to be generic or 
one of the two prescribed brand names.
  As I mentioned earlier, there are many alternatives in a brand name 
category. Whether it is for arthritis or cholesterol or blood pressure, 
there are many options.
  I heard it suggested, if it is defined as medically necessary, then 
it goes through a major process. It has to go through the Secretary of 
Health and Human Services. There has to be an internal/external appeals 
process, so there will be a review process underway.
  I can imagine there would be quite a lineup if there were a number of 
views that would be required of the Secretary to make exceptions to 
this legislation.
  So there will be a whole process that would be required in order to 
allow somebody to take a prescribed medication that has not already 
been stipulated under law, according to this legislation. That is very 
explicit in this particular proposal. I think we want to provide 
coverage similar to what Members of Congress and Federal employees 
currently enjoy: options, choices, competition, variation.
  Frankly, the preference of variation is important because it then 
allows a plan, for example, to use innovation, providing for a certain 
type of drug or all generics, providing lower premiums than what we 
stipulate into law.
  In our proposal we do have a standard benefit package described.
  But what we also say is, we allow flexibility to design plans that 
can offer even a lower deductible than $250, even a lower premium than 
$24 a month. We want to vest that type of flexibility into the design 
of a plan that could provide the maximum amount of benefits to those 
seniors who need this type of coverage. There is no such thing as a 
one-size-fits-all.
  The point is, in the proposal we have crafted, there is a standard 
benefit. In fact, the Congressional Budget Office has indicated that 
our standards of equivalence are strict enough that the Medicare drug 
plans will have very little room to vary from premiums of cost sharing. 
But they have the flexibility to design an even lower benefit in terms 
of deductibles or premiums. And don't we want to allow seniors to have 
the benefit of that reduced price? That is a result of competition.
  That is why the Congressional Budget Office has indicated that prices 
for prescription drugs could actually increase under the Graham 
proposal, upwards of as much as 8 percent, if not higher, because there 
is no competition. As a result, there is no drive, no incentive to 
allowing for lower cost, because there are no competing plans. In a 
sense, the Government is delivering the plan through a pharmacy benefit 
manager, so restrictive that it does not allow for competing prices, 
and there is no incentive for keeping the prices of prescription drugs 
down. That is a major difference between our two plans. We want to 
offer the most choices, the most comprehensive, because we have 
preferred and nonpreferred drugs, lower copays in most all of the 
categories.
  We have the lowest premium per month. We have the maximum amount of 
benefits to low-income seniors. We cover the donor for under 150 
percent of the poverty level or below for seniors. We provide 
catastrophic at $3,700 a month. It is a permanent, fully funded part of 
the Medicare Program.
  I hope Members of the Senate will consider very carefully the policy 
and programmatic differences that do exist between our two plans. They 
are very distinct.
  I know it has been suggested that our system is untried. That is not 
true. We benefit from a system that is comparable to what we have 
designed in the tripartisan proposal, and it offers the maximum choices 
to our seniors.

[[Page 13720]]

We think it is important to create as a permanent part of the Medicare 
Program.
  To provide for any limitation of that type is doing a disservice to 
our seniors. It is giving them a false hope to say that your benefit 
expires in 7 years, unless, of course, future Congresses decide to make 
a change. So we are predicating their future, their health care, on 
whether or not a future Congress might decide to extend that program. I 
really don't think that is the type of precedent we want to take. We 
have never created a temporary benefit under the Medicare Program--
never. We have never created a temporary benefit, and we should not 
start now.
  I know there has been some question about the assets test included in 
the tripartisan proposal. First of all, this assets test was not 
something that was newly created. It is included in the Medicaid 
Program. Yes, this assets test is used for some Medicare beneficiaries, 
the dual eligibles, the qualified Medicare beneficiaries, QMBs, and 
specified low-income Medicare beneficiaries. So an assets test was 
included in our legislation that is the equivalent of the assets test 
in the Medicaid Program that was supported by this Senate back in 1987 
and 1986 with overwhelming support. So this is not unprecedented. It is 
not unusual. It includes the same type of waivers that are included in 
the current Medicaid Program.
  I welcome the debate that has developed between the two competing 
proposals regarding prescription drugs. It is my sincere hope that we 
will have the ability to work through our differences beyond the 
threshold of tomorrow, the 60 votes. I hope, again, that this system 
and this process are not designed for failure, that neither side gets 
the 60 votes and, therefore, we move on to other issues and we defer 
this to another year. It has happened far too often.
  This benefit is long overdue for our Nation's seniors. We negotiated 
this compromise in good faith, in the hopes that we could have worked 
through with our colleague from Florida, who I know has worked very 
hard, who is very genuine in his interest in developing a prescription 
drug benefit for Medicare beneficiaries--I would have hoped we could 
have worked through the process in committee, but that was not to be. 
So we are at a point now of whether we can reconcile our differences to 
move beyond the 60 votes and be able to work through the various 
amendments and reach a conclusion.
  The seniors of this country deserve that. I honestly don't understand 
why we can't at this point in time agree to pass a prescription drug 
benefit program for Medicare beneficiaries. Our compromise wasn't 
designed to be an all or nothing or lines drawn in the sand. It was 
really an attempt in good faith, in the spirit of consensus building 
and compromise, because you can't do it without the other side of the 
aisle; there is no way you can possibly do it. That is why we started 
more than a year ago to develop this tripartisan proposal with the hope 
that we could have made this a reality for our Nation's seniors.
  I urge my colleagues to give very serious consideration to what we 
have provided in this particular proposal for our seniors. Hopefully, 
we can come together and pass this legislation that is such an urgent 
need for the more than 44 million Medicare beneficiaries.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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