[Congressional Record (Bound Edition), Volume 148 (2002), Part 11]
[Senate]
[Pages 15404-15406]
[From the U.S. Government Publishing Office, www.gpo.gov]




              GREATER ACCESS TO AFFORDABLE PHARMACEUTICALS

  Mr. GRAHAM. Mr. President, along with my colleague, Senator Gordon 
Smith of Oregon, and a number of other Members of the Senate, earlier 
today I introduced an amendment which will be debated beginning at 9:30 
tomorrow, and voted on at 11 o'clock.
  I would like to use this opportunity to briefly summarize some of the 
elements of that amendment, and then use that as the basis to respond 
to some comments which have been made questioning the desirability and 
appropriateness of passage of this amendment.
  Our amendment has a simple objective. It is to bring Medicare into 
the 21st century by providing for it what virtually every private 
health insurance plan has--coverage of prescription drugs.
  When Medicare was established in 1965, prescription drugs were a 
relatively minor part of a comprehensive health care program. In fact, 
it is surprising to know that in 1965 the average senior American spent 
$65 a year on prescription drugs. That number has increased 35 times to 
over $2,100 as the average amount that senior Americans are spending 
this year on prescription drugs.
  Our objective is to provide a modern Medicare Program by providing a 
critical missing element from the current program.
  In our debate a week ago, there was a great deal of concern about the 
cost of the plan. I introduced a plan which would have met fully the 
standards of universal coverage, comprehensive in terms of drugs 
covered, and affordable to the beneficiary. That plan received 52 
votes, which obviously is a majority of the Senate. Unfortunately, we 
weren't debating under the rules of majority rule. We were debating 
under the rules that said you had to have 60 votes in order to overcome 
procedural hurdles. We fell short of those 60 votes.
  One of the reasons given for not voting for our plan was that it was 
just too expensive; it had to be reined in.
  So we spent the last week reviewing our proposal to see what we could 
do in order to make it more acceptable to our brethren so that we can 
get the 60 votes.
  I want to again recognize and thank my colleague, Senator Gordon 
Smith, for the great contribution he has made in accomplishing this 
task.
  But one of the things we did was to say we are going to develop a 
plan which would cost no more than $400 billion over the next 10 years. 
We received today from the Congressional Budget Office their scoring of 
our plan where they found the plan actually had a cost of $389 billion 
over the next 10 years. We thought that would be a goal--holding the 
cost to under $400 billion that would result in the support of people 
who had not voted for our bill last year, saying: This is a proposition 
for which I can vote. Unfortunately, we didn't get that reaction. But 
we got the reaction that challenged the Congressional Budget Office, 
and whether it had accurately scored our bill.
  That is a little bit like challenging the umpire in a baseball game 
you think is not calling the ball in the strike zone. We decided, just 
like the American and National leagues decided, that we were going to 
have an umpire for our deliberations, including an umpire for our 
deliberations over a whole variety of spending, tax, health care, and 
other proposals that are going to cost the Federal Treasury. The 
Congressional Budget Office is that umpire. They have looked at our 
plan. They have given it a score of $389 billion.
  It is interesting that the same persons who were challenging us and 
who offered a competing plan have not received a Congressional Budget 
Office

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estimate of their cost. We don't know what their plan is going to cost 
when the common standards of evaluation are applied. The one that will 
be before us tomorrow has a Congressional Budget Office estimate of 
$389 billion.
  The second thing we did was we looked at the architecture of the 
bill. We said we would like to have universal coverage, but we don't 
have enough resources to provide meaningful universal coverage.
  So we have two basic choices: One, you can put water in the soup, 
make it thinner, and spread it out over more people or you can say, no, 
we are going to identify those Americans who are most adversely 
affected by the Medicare benefit for prescription drugs. We identify 
those people as being in two groups. One is those older Americans who 
have unlikely high prescription drug bills.
  I mentioned earlier the average senior American is a little more than 
$2,100. We set the standard of $3,300 for catastrophic. That is when 
the cost of prescription drugs becomes beyond what you can expect many 
senior Americans can pay. Remember, the average income for senior 
Americans this year is about $14,000 to $15,000.
  Second, we said the next group we would like to help is the neediest, 
those who have the lowest income; and, therefore, the cost of 
prescription drugs takes a disproportionate amount of their meager 
income.
  We also said, however, there should be some benefits that all of 
America's seniors can secure. For that group of Americans, we are going 
to provide the opportunity for a modest $25 a year enrollment fee to 
get a card, which will entitle them to get the benefits of pharmacy 
benefit managers, who will negotiate with the pharmaceutical companies 
to get discounted prices, which will then be made available to the 
Medicare beneficiaries.
  In order to assure that those PBMs will be part of this and that all 
the seniors will get even beyond what can be negotiated, we are going 
to provide a 5-percent supplemental reduction of the cost.
  For example, if a senior had the standard cost of $100 for a 
particular prescription, PBMs are estimated to be able to negotiate 
between a 15 and a 25-percent discount, so assume they can get 20 
percent; that would reduce the cost of the drugs to 80 percent. Then 
the Federal Government would pick up 5 percent of that cost, or $4, so 
that the senior, instead of paying $100, would be paying $76. That is 
not an insignificant benefit.
  That same senior would also have an insurance policy against 
catastrophic losses at $3,300. The peace of mind, the reduction of the 
fear of what the consequences would be if a healthy senior has a heart 
attack or develops some other serious chronic disease, where suddenly 
their prescription drug costs are escalating, this will give them that 
peace of mind.
  There was another objection raised to that format that I just 
outlined, and that is, for the first time in the history of Medicare, 
we are going to be making a differential; we are going to be 
recognizing these Americans who have the lowest income among the 40 
million seniors and give them some special benefits to help them, 
because they are the neediest of our seniors, to be able to meet the 
cost of their prescription drugs. I plead guilty. We are doing that.
  We are saying that the poorest of America's seniors, which we define 
as those who are at or below 200 percent of poverty, will get 
prescription drugs from the time they enroll in this program, with only 
a modest copayment of $2 for generic drugs and $5 for brand name drugs.
  It is said this is the first time we have ever split the Medicare 
population and provided such special treatment for a class; in this 
case, a class defined because of the level of their need. That is not 
true. In fact, we have a number of examples in Medicare today where we 
are providing different benefits based on income. Just to mention two 
of those, we have a program called SLiMBies and QMBies.
  SLiMBies are for those Americans who have an income between 100 
percent and 120 percent of poverty. For those, there is a payment of 
the Part B premiums, which today are running approximately $50 a month. 
The Federal Government picks up the cost of those payments for 
Americans between 100 and 120 percent of poverty. For those who are at 
or below 100 percent of poverty, we not only pay for their premiums, we 
also pay for their deductibles and their coinsurance.
  So America, a compassionate society, has had a history of recognizing 
the special circumstances of the neediest of our elderly. We will 
extend that policy by the amendment which we will vote on tomorrow.
  We will have, as the delivery system for this drug benefit, Medicare 
as we have known it, Medicare as it has served the interests of senior 
Americans for 37 years.
  There are some who say that is an out-of-date system; it is an 
antiquated process, that we need to get private insurance to deliver 
prescription drug benefits.
  That was an intriguing idea, so I began to ask: What is our 
experience with private insurance delivering a prescription drug 
benefit? In fact, I had the conversation with a number of 
pharmaceutical company executives who have been a primary advocate of 
this plan, private insurance delivering prescription drug benefits. I 
asked: How do you, and how do your employees, get their prescription 
drugs? They said: Well, we have a contract with an insurance company 
that provides for the health care coverage of our employees, including 
myself and they, in turn, contract with a pharmacy benefit manager to 
administer the drug component of our health care program.
  I said: No. Do you have, for the drug component of health care for 
your employees, a separate program with a separate private insurance 
policy?
  They said: No, we don't have such a program. In fact, I don't think 
one exists.
  You know what. They are right. One does not exist. Nobody is offering 
a prescription drug-only private insurance policy, which is what some 
would say should be the method by which we deliver prescription drugs 
to 40 million older Americans.
  I would analogize it to putting those 40 million older Americans on 
the Wright brothers first flight at Kitty Hawk. Do you want to really 
experiment with such a significant part of the health care of older 
Americans when nobody in any other sector, public or private, is using 
such a plan? I don't think that is a very prudent or conservative idea.
  Why are there no insurance companies that are providing a drug-only 
prescription benefit? The answer is: Because they say it is not an 
insurable risk. It would be the same answer that you would get if you 
were to ask: I own a house, and I want to buy fire insurance, but I 
only want to buy the fire insurance to cover the kitchen, or I have a 
rear bedroom which is next to an old and creeky tree that might fall 
over and crush the roof in a wind storm, so I only want to cover that 
back room.
  The insurance company would turn you down. They would say: We are not 
going to insure a specific room within your house; we will insure your 
whole house and take the total risk, but we won't let you parcel it out 
piece by piece.
  That is the same answer as to why no private insurance company today 
is providing a prescription drug-only benefit. They will insure your 
whole body. They will insure all of the health care that you might 
require. But they will not break it down into individual fragmented 
pieces, such as a prescription drug-only insurance policy.
  There are some other concerns, such as if you were to go to a private 
insurance policy, you would run very strong possibilities that there 
would be big sections of the country that would not be covered because 
they have populations that are peculiarly expensive. One of those which 
we are already seeing in the whole body of insurance called 
Medicare+Choice--an HMO that insures not just prescription drugs but 
all of your health care needs--is almost nonexistent in rural America.
  Why are they not in rural America? It is not because there are not 
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and hospitals and other facilities that can treat people in rural 
America. It is because the population of seniors in rural America is 
actuarially expensive and, therefore, an unattractive population to 
insure and treat.
  According to a 1998 report by the Kaiser Family Foundation, rural 
beneficiaries are 20 percent more likely to be in fair or poor health 
than their urban cousins. Rural seniors are 20 percent more likely to 
be under 150 percent of the Federal poverty level than their urban 
cousins.
  A study that was done in June of this year by the National Economic 
Council said that rural beneficiaries are 50 percent less likely to 
have drug coverage compared to their urban counterparts, which probably 
means they are less healthy because they have not had equal access to 
drugs. They use 10 percent more prescriptions than urban seniors, and 
nearly 60 percent of rural beneficiaries reported not being able to 
purchase drugs because of their cost.
  We know from our experience with Medicare+Choice that HMOs will not 
accept the risk of covering this urban population. What leads us to 
believe they are not similarly going to be left behind with this effort 
to have prescription drug only insurance policies? I think the answer 
is, unfortunately, they will be left behind.
  This last issue is not really a debate about drug coverage. It is a 
debate, rather, about Medicare itself. Shall Medicare continue to be a 
universal program that is administered through the Federal Government 
or shall it be a program whose administration will be privatized? That 
is the debate.
  We know there are people in this Chamber and particularly the 
predecessors who were here in the 1960s who thought that Medicare would 
fail, that it was not a sustainable system. I say quite to the 
contrary, Medicare has delivered on its promise of substantially 
increasing the health and welfare of older Americans.
  That brings me to my concluding observation which is that today is a 
fortuitous day to be having this debate because it happens to be the 
anniversary of Medicare. On July 30, 1965, then-President Lyndon 
Johnson went to Independence, MO, the home of President Harry Truman, a 
man who had spent much of his political career advocating for the needs 
of senior Americans and particularly access to affordable health care. 
So it was fitting and proper that President Johnson signed the bill at 
their home and then gave the first two Medicare cards to President 
Harry Truman and his wife Bess. That is the tradition we have had, a 
great tradition of service, respectful and compassionate, to America's 
seniors.
  We would honor that tradition if tomorrow we adopt the amendment 
which will for the first time in its history expand a prescription drug 
benefit for the beneficiaries of Medicare. It is a step which will not 
only honor those who 37 years ago championed this program, but it will 
also honor those who are served by it today, our grandparents, our 
parents, our family, and friends who look to Medicare as the means of 
securing their health care. Those are the people for whom we will be 
voting tomorrow.
  I hope my colleagues will grasp this opportunity to see that we bring 
Medicare into the 21st century.

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