[Congressional Record (Bound Edition), Volume 148 (2002), Part 9]
[Extensions of Remarks]
[Pages 12225-12226]
[From the U.S. Government Publishing Office, www.gpo.gov]




        MEDICARE MODERNIZATION AND PRESCRIPTION DRUG ACT OF 2002

                                 ______
                                 

                               speech of

                        HON. BENJAMIN A. GILMAN

                              of new york

                    in the house of representatives

                        Thursday, June 27, 2002

  Mr. GILMAN. Mr. Speaker, I rise today in qualified support of H.R. 
4954, the Medicare Modernization and Prescription Drug Act. I urge my 
colleagues to carefully consider this issue before making a final 
decision.
  Mr. Speaker, we are all aware of the explosion in costs for 
prescription drugs in recent years. This phenomenon has in part been 
linked to the rapid proliferation of the number of new drugs that have 
become available in the past decade. We are currently enjoying a period 
of revolutionary advances in the fields of medicine and medical 
technology. Yet at the same time, a significant portion of our elderly 
population is unable to benefit from these new advances, due to the 
high costs that are associated with them. This is ironic, when one 
realizes that senior citizens are the primary group that these new 
advances are targeting.
  One fact that has become increasingly apparent is that Medicare is 
woefully inadequate in meeting the medical needs of today's senior 
citizens. When Medicare was created in 1965, outpatient prescription 
drugs were simply not a major component of health care. For this 
reason, Medicare did not provide coverage for self-administered 
medicine.
  Today's health care environment is vastly different from that of 
1965. The majority of care is now provided in an outpatient setting, 
and dozens of new prescription drugs enter the market every year to 
treat the common ailments of the elderly, including cancer, heart 
disease, arthritis and osteoporosis.
  But while the health care environment has made remarkable progress 
since 1965, Medicare has stood in place. Consequently, along with most 
of my colleagues, I have heard from constituents who are now facing the 
dilemma of paying for these expensive new drugs while living on a fixed 
income. The story of the individual who is forced to choose between 
food and medicine is no exaggeration. It is an all too common 
occurrence across the country. The high cost of prescription drugs has 
become a threat to the retirement security of our Nation's senior 
citizens.
  It is for this reason that I am pleased to learn that both the Ways 
and Means and Energy and Commerce Committees have completed their work 
on a proposal to provide prescription drug coverage for Medicare 
beneficiaries. What concerns me, however, is the process by which this 
measure was brought to the full House for consideration.
  Mr. Speaker, the decision to add prescription drug coverage will 
result in the largest change to the Medicare program since its 
creation. This is not something that should be done lightly or in 
haste, or in response to an arbitrarily imposed political deadline. 
Given that, I have serious reservations about bringing such major 
policy-changing legislation to the floor for final passage less than 
three weeks after it was introduced.
  With that said, I would like to comment on the positive points of the 
bill as well as highlight some of my specific concerns with the 
legislation.
  In my view, any proposal to offer prescription drug coverage under 
Medicare needs to contain the following characteristics: be voluntary, 
have universal eligibility under Medicare, contain stop-loss 
protections to guard against catastrophic expenses, offer choices in 
the type of coverage provided, and remain a good value over time.
  The proposal outlined in H.R. 4954 clearly meets these requirements. 
In fact, it is an improvement over the first attempt by Congress to 
deal with this issue back in 2000. It contains a lower premium, lower 
catastrophic protection threshold, greater savings for the average 
senior, and higher subsidies for low-income individuals and couples.
  H.R. 4954 establishes a comprehensive, permanent prescription drug 
benefit for those eligible under Medicare. Specifically, the measure 
provides $310 billion over ten years for a voluntary plan with the 
following standard benefits: an annual $250 deductible; for the first 
$251-$1,000 spent on prescription drugs, the senior pays 20 percent; 
for the next $1,001-$2,000 spent on prescription drugs, the senior pays 
50 percent; it provides 100 percent coverage for every out of pocket 
dollar spent over $3700; it contains a premium of around $33 per month.
  This measure avoids a one-size-fits-all government imposed solution 
by offering senior citizens a choice in the types of plans in which to 
enroll. In doing this, the government will guarantee that at least two 
plans will be available in every area of the country. Moreover, the 
proposal fully funds all costs for those enrollees below 150% of the 
poverty rate, and partially funds the costs of those up to 175% of the 
poverty rate. Those seniors will be responsible for a $2 copayment on 
generic and preferred drugs, and a $5 copayment on non-preferred drugs.
  Participation in the plan will be purely voluntary. However, to 
encourage healthy seniors to enroll, there is a cumulative penalty for 
those who elect not to opt into the program when they are first 
eligible to do so. An important exception to this, however, are those 
seniors already enrolled in a continuing coverage plan, whether through 
their employer or through an employee retirement plan.
  This is an important component that was not included in the measure 
passed in 2000. Its inclusion should prevent the danger of adverse 
selection, the condition whereby most seniors in good health avoid 
signing up for a plan, leaving the majority of enrollees coming from 
the sickest segment of the population. If

[[Page 12226]]

this were to occur, the premiums and deductibles would have to be far 
higher than presently outlined.
  Moreover, by covering part or all of the costs of those with incomes 
up to 175% of the poverty level, the measure further reduces the danger 
from adverse selection. In the final analysis, the legislation strives 
to ensure that there would be an adequate base of healthy seniors to 
offset the portion in greatest need of the benefit.
  As I noted, I do have some reservations about certain aspects of this 
bill. My chief concern is that this legislation does not adequately 
address the matter of those drug companies which are raising the prices 
on their products annually at rates three to ten times the rate of 
inflation.
  While it is true that this measure exempts the new plan from the 
Medicaid ``best prices requirement,'' whereby any savings achieved 
through this plan would need to be extended to Medicaid as well, I am 
unsure whether this in itself is enough to deter the drug companies 
from trying to take advantage of the perceived windfall that they might 
see in the Federal Government assuming a large portion of the costs of 
drugs used by senior citizens.
  We also need to be cognizant of the viability of private insurers 
underwriting plans in areas where it is not profitable for them to do 
so. Recent experience with Medicare + Choice plans in my district have 
borne out this concern. In such cases, the government would step in as 
the ``insurer of last resort,'' assuming a share of the risk as well as 
subsidizing the cost of offering service in a rural area. My chief 
concern with this is that it has the potential to become a costly 
venture for the government, where the private insurers deliberately 
hold out in order to secure a greater level of government funding.
  In spite of these reservations, I firmly believe that this 
legislation is an important first step in providing a benefit to our 
senior citizens which is long overdue. The prescription drugs situation 
will not change on its own in the future. The pharmaceutical companies 
have demonstrated scant interest in holding the levels of their annual 
price increases in line with inflation. Rather, while we will continue 
to see a flood of new revolutionary products hitting the market, this 
will be accompanied by price increases that put these products out of 
reach of their intended audience.
  I am not calling for price controls. I believe in the free market, 
and in market capitalism. However, since the last time the House 
visited this issue, the drug companies have ignored the invisible hand 
in favor of the cash cow. Drug marketers, like any other entrepreneur, 
have the right to make a profit, but they are not entitled to do so on 
the back of the American taxpayer. If the government is going to 
subsidize a portion of the drug costs borne by seniors, the 
manufacturers need to be placed on notice that this will not be an 
opportunity for them to raid the Federal treasury in order to pad their 
bottom line.
  This bill is the first step towards meeting a long overdue need. For 
that reason, despite my stated reservations, I intend to give it my 
support. It is my hope that my concerns will be addressed in a future 
House-Senate conference on this issue.
  Finally, this legislation provides $40 billion in badly needed 
adjustments and improvements to the Medicare Part B system. These 
include, but are not limited to: repeal of the 15% reimbursement cut 
for home health care providers, which was scheduled to go into effect 
in October 2002, increased payments to sole community hospitals, which 
serve rural areas, increased Medicare payment adjustment rates for 
physicians, reduced paperwork burdens for all providers, and 
stabilization for the Medicare + Choice system, which has bled out 
recently.
  Mr. Speaker, this issue is too serious for party politics, and, as I 
stated at the outset, I urge my colleagues to give it their careful and 
thoughtful consideration. Our seniors and Medicare health care 
providers have waited long enough for relief. It is past time for the 
Congress to act.

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