[Congressional Record (Bound Edition), Volume 149 (2003), Part 12]
[Senate]
[Pages 16876-16881]
[From the U.S. Government Publishing Office, www.gpo.gov]




            S. 1, THE MEDICARE PRESCRIPTION DRUG BENEFIT ACT

  Mr. ROCKEFELLER. Madam President, as the Medicare prescription drug 
debate draws to a close, I would like to take a few moments to give my 
colleagues my honest assessment of this legislation.
  I join many of my colleagues in recognizing how difficult it has been 
for the managers of this bill to hold to a proposal that fits within a 
$400 billion budget constraint. In that respect, they are to be 
commended for their discipline. But for my part, I believe that 
constraint, combined with the fervent intent by some to move Medicare 
to a private insurance model, has produced a bill that is fatally 
flawed. Seniors will not get the affordable, meaningful prescription 
drug coverage they expect because the majority of Members seem to have 
concluded that we cannot break the $400 billion barrier. I think it is 
a false choice.
  The actual prescription drug benefit in this bill is inadequate to 
meet the needs of more than 40 million Medicare beneficiaries and 
eventually America's seniors are going to figure that out. The fact of 
the matter is that $400 billion is simply not enough to buy an adequate 
benefit. But we already knew that--our debates last year made that 
abundantly clear.
  I believe that insisting on the capped amount of $400 billion for a 
Medicare drug benefit as a precondition of moving a new benefit through 
the legislative process serves as a convenient excuse. It means this 
drug benefit is sure to fail to meet seniors' real drug coverage needs. 
It also means that we will only cover 20-25 percent of seniors' drug 
costs.
  What is worse, the complicated structure of this bill will cause 
seniors to be angry and confused by the benefit--and they will be 
entitled to be. This is not the straightforward guaranteed Medicare 
prescription drug benefit seniors have been repeatedly promised. There 
is no standard premium and there is no uniform benefit. For the first 
time under Medicare there is no universal coverage for all Medicare 
beneficiaries. This bill falls fall short of what seniors expect and 
need.
  Let's take a few minutes to look at how the shortcomings of this bill 
will become apparent to a Medicare beneficiary--a senior or disabled 
person who enrolls in this benefit. For illustrative purposes, let's 
take an 80-year-old West Virginia widow living at 250 percent of the 
poverty level.
  Assume this widow spent her entire career working for the same 
employer. Since her retirement, her employer has provided her with a 
fairly generous drug benefit--$150 deductible, $10 copays, and 
catastrophic coverage. However, once the Senate's proposed drug benefit 
is enacted, she becomes one of the 37 percent of Medicare beneficiaries 
who currently receive good employer-sponsored coverage who lose that 
coverage. That is because the way this bill works her former employers' 
contribution to her drug costs are meaningless because they do not 
count toward her catastrophic limit.
  I want to note here that, during the health care reform debates of 
more than a decade ago, one of the few things that we seemed to agree 
on was that we should not disrupt the health care coverage that 
Americans already rely on. My friends on the other side of the aisle, 
in particular, were quite adamant about that point. Well, this bill 
would not just disrupt the drug coverage for millions of seniors, it 
would completely strip the drug coverage from 4.5 million seniors who 
have employer-sponsored coverage today.
  It will strip their employer-sponsored coverage and leave them with 
an inferior drug benefit which is either less generous or more 
expensive. I offered an amendment to correct this problem, but it 
failed just 2 days ago.
  To return to my example, as a result of having lost her employer-
sponsored coverage, this 80-year-old senior decides she has to enroll 
in the new drug benefit next year--in 2004--only to find out that it 
will not be implemented until 2006. There is a discount drug card, but 
it is not substantially better than the discounts she gets today--and 
it is far worse than the drug benefit she used to receive from her 
former employer.
  This widow spends the next 2 years trying to figure out whether it is 
to her benefit to enroll in this new Medicare prescription drug 
benefit. But she can't really make an informed decision because she has 
no idea what the premium will be or what the benefit will actually look 
like. She decides to enroll in the voluntary benefit having been told 
that if she waits to enroll she will have to pay a very harsh late 
enrollment penalty.
  This particular 80-year-old senior lives in West Virginia, so let's 
assume that no private insurers enter the area to provide a drug 
benefit. That has been my State's experience with the Medicare+Choice 
Program and I have no reason to believe that this proposal will produce 
a different outcome.
  My illustrative senior citizen enrolls in the fallback. Her sister, 
however, lives in northwestern Ohio and has enrolled in a Medicare 
Advantage Plan. For the first time under Medicare, the West Virginia 
widow and her sister in Ohio have a different Medicare benefit and are 
paying a different premium for that benefit. In addition, her sister is 
being offered additional benefits like a catastrophic limit on her 
medical expenditures and disease management. These additional benefits 
are not even being offered to the West Virginia senior because she 
remains in traditional Medicare.
  Now, fast forward 1 year and assume that private insurers decide to 
enter West Virginia. The fallback plan she received through traditional 
Medicare disappears and she is required to enroll in a private 
insurance plan. She cannot see the doctor she was seeing because he is 
not in the private insurer's network. She cannot go to the pharmacy she 
usually visits--the one that is right down the street--because it is 
also outside the network. She can't have the drug she was taking 
because it is not on the insurers' formulary.
  Again, fast forward, this time it is 2 years later. Let's assume that 
the private insurers did not make enough profit to continue to provide 
a drug benefit in West Virginia--then what happens? The now 83-year-old 
widow will have to start the process all over again.
  What is worse is that each senior will face a different calculation 
in determining how this bill will or won't help them. Senior citizens 
with incomes of 135 percent of the poverty level should theoretically 
pay no deductible, 5 percent cost sharing up to $4,500 in total 
spending, 10 percent cost sharing between $4,500-$5,800 and 2.5 percent 
cost sharing above $5,800.
  But this bill has an asset test that will prevent millions of seniors 
from getting the low-income subsidies in this bill. If a senior owns a 
burial plot worth $1,000, a $3,000 Treasury bill, and a vehicle worth 
$6,000--indeed, if a senior owns anything that adds up to over $10,000 
in assets, not including his or her home, the cost sharing they have to 
pay will double.

[[Page 16877]]

  Our Nation's neediest seniors, those with incomes 74 percent of 
Federal poverty, will not be permitted to enroll in the new Medicare 
prescription drug benefit at all. Even though these low-income seniors 
are Medicare beneficiaries, they will not be eligible for this 
particular Medicare benefit because they are now eligible for Medicaid. 
They will be discriminated against for the very first time under this 
new Medicare benefit.
  Seniors who are forced to remain in Medicaid may well end up seeing 
their drug coverage dramatically cut back. With our Nation's economy 
still fairly stagnant, State budget situations remain dire. In some 
States, dual-eligible Medicare beneficiaries may only have coverage for 
three prescriptions per year, regardless of their medical needs.
  Put simply, the Medicare drug benefit the Senate is about to vote on 
has fatal flaws. The following is a list of 10 fatal flaws that, 
combined, persuade me this bill should not get my vote.
  1. The drug benefit has no national premium. CBO estimates that $35 
will be the national average premium. That number appears nowhere in 
the legislative language. It is a projection, a best guess--and it 
certainly could be higher.
  2. Under this prescription drug plan, the premium will vary in every 
region of the country, perhaps State by State, and there is no limit on 
how high it can be. We defeated an amendment that would have limited 
the variation to no more than 10 percent above the national average, 
but it failed.
  3. Private insurers will actually decide what the premium will be. 
And, this premium will grow each year by the rate of increase in drug 
costs--that is roughly 10-12 percent increases every year. That means 
seniors in 2008 could well be paying $50 a month for their drug premium 
alone--and that is on top of the cost of their deductible and 
copayments.
  4. There is no requirement for private plans to offer a standard 
benefit--private plans are only required to offer an actuarially 
equivalent benefit. That means West Virginians and other rural 
beneficiaries may not have access to the same drug benefit that other 
seniors will have--again, for the very first time under Medicare 
seniors in some States won't get the same benefits as seniors in other 
States. I am not very confident that West Virginia seniors will end up 
with the better benefit--we never do.
  5. The bill currently has a completely unstable fallback. Under this 
proposal, the only time a beneficiary will have the option of receiving 
coverage through Medicare is if there are not at least two bids from 
private insurers to serve a region. There is no guaranteed Medicare 
prescription drug benefit of the kind I believe seniors fully expect. 
Moreover, if private insurers do not enter an area, the fallback moves 
into place for 1 year. The next year, a new bidding process begins, and 
if two plans show up, the Medicare fallback disappears. Private 
insurers can then change or terminate coverage every 2 years. This 
means that seniors, especially seniors in rural areas where preferred 
provider organizations or PPOs and private plans are not likely to come 
to the table, may end up bouncing between a fallback, then a private 
plan, and then back to a fallback. Back and forth, back and forth. All 
the while, this senior will be forced to change doctors and 
pharmacists, their cost sharing will be changing, as may their 
premiums. The Senate prescription drug plan we are considering leaves 
the big HMOs and insurance companies in charge.
  6. There is a significant gap in coverage. That gap is $1,300--
seniors pay their monthly premiums but get no drug benefit in that gap. 
Two amendments to address this problem did not achieve sufficient votes 
for passage. One was an amendment to eliminate this gap. Another one 
would have said that seniors would not have to pay premiums when they 
were not receiving any benefit. The failure of these two strengthening 
amendments means that under this legislation, if a Medicare beneficiary 
has $5,900 in drug spending per year, by October 7 of that year, their 
benefit will run out. That beneficiary will continue to need the drugs 
each day for the rest of the year but her benefit will run out on 
October 7. Fifteen million Medicare beneficiaries will fall into the 
gap.
  7. Low-income seniors who are eligible to receive a drug benefit 
under Medicaid will not be eligible for the Medicare prescription drug 
benefit, as I illustrated in my earlier example. This means that 43,000 
West Virginians will not be eligible for this Medicare prescription 
drug benefit. Millions more across America won't be eligible for this 
Medicare benefit even though they paid their whole lives into the 
Medicare program rightfully expecting that it would cover their health 
care costs.
  8. Again, under this legislation, CBO estimates that 37 percent of 
Medicare beneficiaries who currently receive a drug benefit from their 
employer will lose that coverage because of the way this legislation 
defines out-of-pocket costs.
  9. This proposal requires private insurers to provide beneficiaries 
with a catastrophic limit on expenditures for medical benefits, disease 
management, chronic care services and preventive benefit. But, such 
benefits are not made available to beneficiaries remaining in 
traditional Medicare. Everyone keeps arguing that these private plans 
will provide better, more comprehensive, preventive care. But, the fact 
is that this bill precludes the traditional Medicare from providing 
better, more coordinated care. There is no reason that traditional 
Medicare cannot provide the same level of care as a private plan--at a 
significantly lower administrative cost, I might add--but not if we 
preclude it from doing so.
  10. And if those reasons weren't enough, consider what is headed our 
way in conference: today, the House will include in its prescription 
drug bill new tax shelters for health care, that disproportionately 
help the rich and undermine employer-based health insurance coverage . 
. . the very system that the vast majority of Americans depend on for 
their health care and a voucher system for Medicare beneficiaries 
beginning in the year 2010.
  Under this system, seniors would receive a defined contribution 
payment rather than a defined benefit. In other words, rather than 
defined benefits beginning in 2010, seniors would receive a set premium 
payment--like a voucher--from the Government.
  We need to think about what we are doing here. In my judgment, every 
Member of Congress should think about this benefit from the perspective 
of their beneficiaries. This proposal is a great opportunity for 
seniors to shop for new coverage every few years. If you have the 
utmost faith in private insurers to provide good health coverage to 
elderly Americans and the disabled, then this is the plan for you. This 
plan puts private insurers in the driver's seat by giving them 
flexibility to vary premiums and change or terminate coverage every 2 
years. But, as far as providing long-term security, this proposal 
fails.
  Finally, several Members have come to the floor and claimed that this 
proposal is just a downpayment--that we will be able to revisit the 
benefit over the years and make it more generous. That is simply 
untrue. We have an administration that is intent on large tax cuts, 
that is focused on the minimization of Government and that is committed 
to the privatization of the Medicare Program. Most every amendment 
offered during this debate to improve this benefit has lost. I don't 
know why any senior would believe that we will be able to revisit this 
program and make it better. We should take the time to get it right.
  Mr. LIEBERMAN. Madam President, I want to state my support for the 
Medicare Prescription Drug Bill, S. 1, and my reasons for doing so.
  I believe that by passing this legislation, we begin to answer the 
prayers of many seniors who are struggling to cover the rising costs of 
the prescription drugs they need to live longer and healthier lives. I 
commend the bipartisan Congressional effort to beat back the worst 
pieces of the President's initial proposal--which would have forced 
seniors out of Medicare en masse and paved the road to privatizing the 
system--and forged this more sensible compromise.

[[Page 16878]]

  But my support is not an enthusiastic endorsement. We cannot ignore 
the substantial weaknesses in this proposal. For one, the bill does not 
take effect until 2006--seniors have waited long enough. More 
specifically, this bill has an enormous gap in coverage--the so-called 
``doughnut hole''--that leaves millions of seniors without the 
assistance they need. Premiums may vary from plan to plan. Some seniors 
may be forced to go round and round in a revolving door, changing plans 
as private plans come and go. And seniors covered under employer-based 
retiree plans would not get the catastrophic benefit they need. 
Unfortunately, Republicans defeated Democratic amendments to remedy 
these shortcomings.
  Nevertheless, the bill represents a dramatic improvement in 
prescription drug coverage for our nation's seniors. It would provide 
comprehensive prescription drug coverage for our lowest income elderly 
with no or minimal premiums. It also guarantees that a drug benefit is 
available to all Medicare beneficiaries by giving them a ``fallback'' 
traditional government plan when there is a lack of private plans in 
their area. Even with the existing gap, 80 percent of Medicare 
beneficiaries will get back more in benefits than they pay in premiums.
  Both problems and advantages to the bill are summarized in more 
detail below.
  All in all, this is a foundation upon which to build in the months 
and years ahead. Senator Kennedy is right. Seniors deserve the basic 
coverage this plan will provide--and an end to the political stalemate 
that has blocked action for the last several years. Thanks to the 
persistent, principled, and passionate advocacy of him and other 
Democrats--and the strength of Republicans who resisted President 
Bush's divisive prescription--that's precisely what they're getting.
  But I do think we can and should do more to improve this plan, and 
there are several specific areas we should focus on as we go forward. 
First, we must fill the doughnut hole I described above. This gap in 
coverage will hurt our seniors at their time of greatest need--
financially and physically. The gap occurs because after a senior's 
drug spending reaches a certain amount, the benefit ends. The benefit 
doesn't start again until there is a significant out of pocket payment, 
at which time catastrophic coverage kicks in. Many of the beneficiaries 
who fall into that gap are likely to be seriously ill and financially 
strapped, and therefore faced with the same awful choice between 
medicines and necessities that too many seniors face today.
  That's not the only problem with this bill. Another is that the drug 
benefits paid by employer-based retiree plans would not count toward 
the catastrophic benefit promised to seniors. Therefore, seniors 
covered under these plans would not gain from this new benefit. In 
fact, these seniors may get less Medicare coverage than other 
beneficiaries. Also, CBO estimates that as many as 37 percent of 
employers may drop their retiree drug coverage, which is the last thing 
we want to happen as a result of this bill.
  In addition, there is no set premium for seniors under this plan. 
Many seniors will enroll in private drug-only plans because that will 
be their only option. The premiums for these plans may vary 
significantly and may be quite high in certain parts of the country. 
This is clearly unfair and will hurt those seniors in locations where 
premiums are high.
  Moreover, the drug coverage approach in the bill relies on uncertain 
and historically unstable private health insurance plans. In fact, 
there will not be a guaranteed ``fallback'' option for coverage in a 
traditional Medicare plan. This fallback will only occur when there are 
less than two private plans in any region. Seniors may be pushed from 
plan to plan as the private plans come and go.
  But on balance, this bill has more strengths than weaknesses, 
starting with the fact that it commits $400 billion to help reduce the 
costs of prescription drugs for America's senior citizens. This is a 
historic breakthrough, and we should not minimize that.
  One of the most encouraging parts of this bill is that it provides 
comprehensive coverage for low income seniors up to 160 percent of 
poverty with no or minimal premiums and cost sharing--40 percent of all 
Medicare beneficiaries. There is no ``doughnut hole'' for this group. 
Although I wish that there were better coverage for the remaining 60 
percent of beneficiaries, there is at least strong, reliable coverage 
for the lowest income group.
  Another positive aspect of the current bill is that all Medicare 
beneficiaries are provided a ``fallback'' traditional government plan 
when there are not two private plans in their area. This means that all 
Medicare beneficiaries are guaranteed that a drug benefit is available. 
I co-sponsored Senator Stabenow's amendment to guarantee this fallback 
without regard to the presence or absence of private plans to increase 
the stability of coverage and decrease the risk of needing to move from 
plan to plan. That amendment failed.
  There were other important amendments that I did not have the 
opportunity to vote on. I would like to note my position on them for 
the record.
  Stabenow Amendment No. 931 to Bill S. 1: I was a co-sponsor of this 
amendment that would have ensured the availability of the traditional 
Medicare plan in all areas. Bill S. 1 guarantees a ``fallback'' plan 
only when there are not two private plans in any region. This amendment 
would have guaranteed the availability of a Medicare-administered drug 
benefit for all Medicare beneficiaries in all regions and this 
``fallback'' would not be dependent on the presence or absence of 
private insurers. This would have avoided the revolving door of drug 
insurance we may face with the enactment of the underlying bill. As 
discussed, seniors could be forced to change insurers and drug 
formularies from year to year. This amendment would have provided 
stability, by allowing seniors access to the federal fallback plan at 
all times. It is important that seniors don't just have drug coverage, 
but have coverage they can trust. For this reason, I was a co-sponsor 
of this amendment and would have voted for it.
  Daschle Amendment No. 939 to Bill S. 1: This amendment would have 
ensured that an affordable plan would have been available to all 
Medicare beneficiaries by limiting the variations in the amount 
beneficiaries have to pay in premiums to only 10 percent above the 
national average, no matter where they live. Currently, premiums for 
Medicare HMO plans with drug coverage vary from $99/month in 
Connecticut to $16/month in Florida. Similarly, the premiums in 
Medicare PPO plans vary from $166/month in New York to $39/month in 
Alabama. This amendment would have limited these types of inequities. 
For this reason, I would have voted for this amendment.
  Gregg Amendment No. 945 to Bill S. 1: This bipartisan amendment 
attempts to help ensure that Americans have access to generic drugs in 
a timely fashion. This amendment speeds the market entry of generic 
drugs by eliminating some patent extension practices used by brand name 
manufacturers. I voted for similar generic drug legislation in the last 
Congress, which passed the Senate. I would have voted for this 
amendment.
  Dayton Amendment No. 957 to Bill S. 1: This amendment would require 
that Members of Congress receive prescription reimbursements at the 
same level as Medicare beneficiaries. I believe that it is appropriate 
and fair for us to be subject to the same problems to which our 
constituents will be subject. For these reasons, I would have voted for 
this amendment.
  Dodd Amendment No. 969 to Bill S. 1: This amendment would have 
allowed an ongoing open enrollment period for two years so that 
beneficiaries could enroll and disenroll in Medicare Prescription Drug 
Plans and Medicare Advantage plans during 2006 and 2007. Medicare 
beneficiaries would have been able to choose which plan they wanted as 
they gathered more information about each plan during the first two 
years of this benefit. For this reason, I was a co-sponsor of this 
amendment and would have voted in favor.

[[Page 16879]]

  Dodd Amendment No. 970 to Bill S. 1: This amendment would have 
provided 50 percent cost sharing through the ``donut hole'' for seniors 
between 160 percent and 250 percent of poverty. Beneficiaries who have 
an income of only $15,000/year (or $20,000/year for a couple) are just 
over the 160 percent cut-off. This amendment would have helped these 
beneficiaries who have reached the initial coverage gap and before 
these beneficiaries have reached the annual out-of pocket limit. I am 
greatly concerned that the bill voted out of the Finance Committee will 
hurt these beneficiaries. For these reasons, I would have voted for 
this amendment.
  Harkin Amendment No. 991 to Bill S. 1: I was a co-sponsor of this 
amendment to have a demonstration project through the Medicaid program 
to encourage community-based services for individuals with 
disabilities. I believe that it is important that we treat disabled and 
challenged individuals in their communities to try and decrease the 
institutionalization of this population. We need demonstration projects 
to establish cost effectiveness and quality. For these reasons, I co-
sponsored this amendment and would have voted for it.
  Dodd Amendment No. 998 to Bill S. 1: This amendment would have 
increased the amount of the direct subsidy to employers who provide 
retiree prescription coverage. It would have encouraged retiree benefit 
plans to continue to exist as an alternative to Medicare. I am deeply 
concerned that the bill voted out of the Finance Committee will hurt 
seniors who currently have employer prescription drug coverage. Seniors 
who have worked hard all of their lives and earned drug insurance from 
their former employers should not lose this coverage and this bill 
could, according to CBO estimates, eliminate over a third of these 
benefits. For these reasons, I would have voted for this amendment. 
This provision needs to be corrected.
  Clinton Amendment No. 1000 to Bill S. 1: I was proud to cosponsor 
Senator Clinton's amendment to ensure that seniors get the information 
that they need to make informed choices about which medication they 
should take for a given medical condition. Often, there is more than 
one medication that is available for treatment. This measure would have 
supported research to determine which of these drugs is most effective 
and would have ensured that this information would be made available to 
patients and their physicians. I believe that it is important to 
support these studies as a means of improving the quality of 
prescribing practices and make certain that patients get the best 
possible care. For these reasons, I co-sponsored this amendment and 
would have voted for it.
  Boxer Amendment No. 1001 to Bill S. 1: This amendment would have 
filled the coverage gap or ``doughnut'' for beneficiaries who are ill 
and who have drug expenditures that exceed $4500. Bill S. 1 contains a 
provision that after Medicare beneficiaries' drug expenditures reach 
$4500, there is no more coverage until the total drug expenditures 
reach at least $5813 (unless beneficiaries qualify for low-income 
protections). No other private or public health insurance policy has 
this kind of coverage gap. In addition, S. 1 requires that during this 
coverage gap, Medicare beneficiaries would be required to pay their 
monthly premium. This is unfair. This amendment would have ensured that 
Medicare beneficiaries continue to receive the same drug coverage even 
after drug costs reach $4500 and before they reach $5800. They are 
paying their premiums and should continue to receive benefits. For 
these reasons, I would have voted in favor of this amendment.
  Sessions Amendment No. 1011 to Bill S. 1: I support the Senate's vote 
to defeat Senator Sessions' amendment. The Senate Finance committee 
included provisions in S. 1 to extend Medicaid and S-CHIP coverage to 
legal immigrants. These benefits would aid tax-paying residents who 
have come to this country for a better future. It is only right that 
hard working newcomers who play by the rules receive our help when 
needed. Senator Sessions' amendment would have eliminated these 
provisions. For these reasons, I would have voted to oppose the 
Sessions amendment.
  I attempted to cast as many votes as possible during the Senate 
Medicare debate. I did not miss any votes for which my vote would have 
changed the outcome, including the vote for Senator Harkin's amendment. 
Although I missed this vote and the count was 50-48 in favor of a 
motion to table the amendment, even if both I and another Senate 
absentee had cast our votes, Vice President Cheney would have cast the 
deciding vote. Most of the amendments passed or failed by wide margins, 
as did the final bill.
  In conclusion, Mr. President, I want to reiterate that on balance I 
view this bill as real progress, despite its flaws. But I also want to 
make clear that I will oppose any effort to tip that balance against 
senior citizens in conference. I am troubled by provisions in the House 
bill that would undermine traditional Medicare and force seniors into 
private plans. And I will not support any effort to include these 
provisions or ones like them into the conference report and make the 
bill weaker instead of stronger.
  Mr. CORZINE. Madam President, I rise today to discuss the Grassley-
Baucus Medicare prescription drug legislation approved by the Senate 
late last night.
  I supported this legislation, though I did so reluctantly. On 
balance, I believe the proposal represents a modest step forward toward 
the goal of a guaranteed prescription drug benefit under Medicare. It 
is a first step.
  From a New Jersey perspective, I am particularly pleased that the 
managers agreed to my request to include a provision that will protect 
the ability of nearly 250,000 New Jersey seniors to continue to receive 
benefits through our State's 27-year-old pharmaceutical benefit 
program, known as the PAAD program. This program, which enjoys 
bipartisan support, is uniformly believed to have served our State 
exceedingly well. Similar long standing programs exist in other States, 
as well.
  Unfortunately, the bill adopted by the Senate also has many 
shortcomings. I am hopeful that many of those problems will be 
addressed before the final version of the legislation is sent to the 
President. The Senate bill is the minimum first step I can support, 
however. And I will oppose the final conference report if it drops my 
provision protecting the ability of States to administer long standing 
prescription drug programs.
  As I have traveled New Jersey I've heard from my constituents about 
their struggle to deal with rising drug prices. Many New Jerseyans fear 
that the cost of prescription drugs will bankrupt them in their last 
years. They worry about the burden those costs can impose on their 
families. And around our country, too many seniors are forced to choose 
between paying rent and buying their prescription drugs. That's a 
choice that no American should have to face.
  I believe strongly that seniors who have worked hard all their lives, 
paid taxes and contributed to Medicare should have access to the 
medicines they need to maintain independent, productive lives. Modern 
medicine largely is based on pharmaceutical treatment. Providing a 
prescription drug benefit is the right thing to do for our seniors and 
their families. But it also serves broader public goals.
  After all, we all pay the price if we fail to provide a guaranteed 
prescription drug benefit. That failure increases the number of 
hospital admissions and surgical procedures. It also increases costly 
institutionalization in nursing homes, and deprives seniors of the 
ability to live independently in their communities.
  My own State of New Jersey recognized the value of a prescription 
drug benefit in 1975 when it created the PAAD program, which serves 
low- and middle-income seniors. New Jersey's PAAD program is considered 
the Nation's most generous State administered prescription drug program 
for the elderly. Together, PAAD and Senior Gold, a more recent program 
with broader eligibility added under a Republican governor, provide 
comprehensive prescription drug coverage to

[[Page 16880]]

nearly 250,000 low-income seniors and disabled people in New Jersey, 
without deductibles or premiums.
  It is absolutely essential that seniors who currently receive higher 
quality benefits under state drug programs than they would under the 
Medicare drug benefit continue to receive the state benefits. Their 
position should not be diminished by Federal edict. For example, 
seniors in the New Jersey PAAD program pay only $5 for their 
prescriptions. They do not pay premiums or deductibles. By contrast, 
seniors who enroll in this Medicare benefit would pay a substantial 
premium averaging $35 per month, along with a $275 deductible, and a 50 
percent copay. It is unthinkable that we would force these seniors to 
disenroll in their more generous state program to receive less coverage 
under Medicare--particularly those seniors with low and moderate 
incomes.
  I have been making this point to my colleagues on the Finance 
Committee for a long time, and I am very pleased that a provision to 
protect my State's seniors has now been included in the bill. I want to 
thank Senators Grassley and Baucus for their tremendous assistance in 
addressing this issue. The bill before us not only allows New Jersey to 
continue to administer the PAAD program, but it contains language I 
sought to ensure that state payments on behalf of a beneficiary count 
toward the beneficiary's out of pocket costs, helping that beneficiary 
reach catastrophic coverage sooner. This will save the state of New 
Jersey an estimated $105 million annually.
  I particularly want to thank Liz Fowler and Andrea Cohen of Senator 
Baucus's staff for all of their efforts on these issues. They have 
devoted many hours to these issues and done great work, and I want them 
to know that I appreciate their assistance.
  I would note that giving states the money we would otherwise give 
private plans to administer benefits would allow states to expand their 
programs. Rough estimates indicate that the Medicare subsidy for those 
seniors currently enrolled in New Jersey's PAAD program is at least 
$300 million. With this new Federal money, the State of New Jersey 
could expand this successful program to higher income seniors, 
eliminating gaps and strengthening the program in many ways. This is a 
win-win for everybody. And, I want to note that the provision is budget 
neutral: it won't cost the taxpayers one penny. I will work hard with 
my colleagues in the New Jersey delegation to ensure that this 
provision will be retained in conference.
  In addition to preserving state pharmaceutical assistance programs, 
we must also work to make this drug benefit better for all Americans. 
While I plan to support the underlying bill in order to push the 
legislative process forward, let me be clear: this is not the Medicare 
prescription drug proposal I would have preferred and it is not the 
proposal I have advocated with my constituents for the last few years.
  The bill before us would require seniors to pay hefty premiums--
premiums that will vary by region, and are likely to be especially 
burdensome in my State of New Jersey. The bill also won't pay a penny 
in benefits until seniors pay $275, on top of those premiums. And, even 
after paying that $275 deductible, the program still will pay only 50 
percent of the cost of drugs.
  I'm also concerned that the proposal contains what is called a 
``doughnut hole''--a gap in coverage that will leave seniors with high 
drug costs paying premiums but not getting coverage for some time. 
While the Federal Government would pay 50 percent of a beneficiary's 
drug costs up to $4,500, a beneficiary with drug costs that exceed that 
level would have to pay all of their drug costs between $4,500 and 
$5,800. Those Medicare beneficiaries who require drugs that exceed 
$4,500 are usually the sickest and most vulnerable seniors. And it is 
wrong to force them to bear these costs on their own, especially 
considering that they will be paying premiums at the same time. Some 
have called this the sickness tax.
  In addition, the bill fails to provide equal benefits for low-income 
Medicare beneficiaries who also qualify for Medicaid, the so-called 
``dual eligibles.'' These seniors will not be guaranteed the same 
benefit, and the burden on states will be increased.
  When you add up all the limitations and all the costs that will be 
imposed on seniors, you end up with a benefit that's a far cry from the 
comprehensive coverage provided under the traditional Medicare program. 
In fact, most seniors actually will pay into this program more than 
they receive. That's not what most seniors were expecting. It's not 
what many of us have been promising. And, as more older Americans 
appreciate what this bill is really about, more are getting angry about 
it, and understandably so.
  Compounding matters, even the limited benefit provided in this bill 
will not go into effect until 2006. There is no good excuse for that. I 
was pleased to cosponsor an amendment offered by my distinguished 
colleague from New Jersey, Senator Lautenberg, to make the benefit 
effective in July of next year. That would have given the 
Administration as long as it took to get the entire Medicare program 
underway back in the 1960's. Unfortunately, the amendment was defeated.
  Another concern of mine is that the bill before us could serve to 
weaken private insurance coverage, and actually might encourage 
employers to eliminate prescription drug coverage to their retirees. 
The Congressional Budget Office has estimated that the Grassley-Baucus 
bill could lead to a 37 percent reduction in employer-sponsored retiree 
drug benefits. This is largely because under the Grassley-Baucus plan, 
retirees with employer sponsored prescription drug coverage would not 
qualify for catastrophic coverage if their employer plan paid for their 
drug costs.
  This is a major disincentive for employers to offer their retirees 
prescription drug benefits. Today, approximately 12 million seniors 
have some form of prescription drug coverage through their former 
employers. By and large, these employer-based drug benefits are more 
generous than those provided for in this bill. And it is imperative 
that the final version of this legislation ensure that all prescription 
drug costs paid by an employer help the beneficiary achieve 
catastrophic coverage. Without this critical provision, seniors 
enrolled in retiree health plans may never trigger their Medicare 
catastrophic drug coverage.
  Today I have noted several problems with the substance of this bill, 
and many of them are quite serious. There are many others. At the same 
time, it is important to remember that, for all its problems, the bill 
provides $400 billion to create a critical new public program for our 
Nation's seniors. It's a start. And for many seniors, especially those 
with very low incomes, it will be of tremendous help.
  Given that, I hope my colleagues will join me in approving the 
legislation before us and sending it to conference. And then I hope the 
conferees will listen more closely to the concerns of America's seniors 
and improve it. If those concerns are heard, and the conferees respond, 
we could soon witness an historic achievement that makes a huge 
difference in the lives of millions of America's seniors.
  Mrs. CLINTON. Madam President, I have long championed a prescription 
drug benefit that would provide real prescription drug coverage for 
seniors and individuals with disabilities. Last year and again during 
this debate, I voted for proposals that provided a comprehensive, 
reliable benefit without gaps in coverage that force seniors to pay 
premiums even while they get no benefits in return.
  S. 1, the Grassley-Baucus bill that passed, however, contains serious 
shortcomings, including these large benefit gaps. So I must reluctantly 
oppose this legislation unless it is improved.
  I am particularly concerned that it poses a strong danger to 
significant numbers of New Yorkers. It leaves 37 percent of seniors who 
rely on their retiree drug coverage at risk of losing their employer 
coverage because of incentives in the bill for employers to drop 
coverage. It also leaves out 300,000

[[Page 16881]]

of New York's nursing home residents who rely on Medicaid and another 
230,000 low-income New Yorkers who also rely on Medicaid because 
Medicare beneficiaries who are also eligible for Medicaid are excluded 
from receiving the prescription drug benefit that passed last night. 
These New Yorkers could actually find themselves worse off than they 
are today if their employers or Medicaid programs drop or reduce 
coverage.
  The provisions excluding those beneficiaries who are dually eligible 
for Medicare and Medicaid also harms New York State's finances. New 
York State has effectively been subsidizing the Federal Government for 
years in the absence of a Federal provision for prescription drug 
benefits, by paying for the drug costs of these Medicare beneficiaries. 
But by failing to include dually eligible Medicare beneficiaries in the 
Medicare prescription drug benefit, this bill continues to leave New 
York, which is in a precarious State budget situation, to subsidize the 
Federal Government's lack of adequate investment.
  Finally, the bill includes a Grassley-Baucus amendment that starting 
in 2009 will allow for government subsidization of private plans at 
levels much higher than the government funding for beneficiaries in 
traditional Medicare, and would then allow the private plans to offer 
benefits not available to the 90 percent of seniors in traditional 
Medicare, which I believe begins to subordinate the goal of health care 
for seniors to the goal of privatizing Medicare.
  While I am pleased that New York's State drug program, EPIC, will 
still be available under a provision that Senators Corzine, Lautenberg, 
Schumer and I worked hard to include, the other measures I supported to 
make sure seniors with other sources of coverage were not harmed by 
this proposal were unfortunately left out of the bill.
  For their sake, for the sake of New York's fiscal situation, as well 
as for the sake of other New York seniors who will be confronted with 
an unnecessarily complex maze of bureaucracy to navigate in order to 
access benefits, I felt obliged to oppose the bill. There were some 
important provisions in the bill, including Senator Schumer's amendment 
that provides greater market competition for generic drugs so that 
seniors will have a cheaper alternative and don't have to rely on 
higher priced name-brand drugs.
  These positive provisions were not enough, however, for me to vote 
for the bill unless it is substantially improved. While I believe New 
York deserves a better bipartisan alternative than the one that passed 
the Senate yesterday, I hope that those in conference will fight 
against changes that make the bill even worse for New York, and I will 
continue fighting this year, as well as in years to come, to correct 
these deficiencies and actually to deliver on the long-awaited promise 
of a simple, affordable, comprehensive prescription drug benefit for 
all seniors.
  I request that this statement and a separate document, Governor 
Pataki's letter dated June 12, 2003, be submitted for the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:


                                            State of New York,

                                                    June 12, 2003.
       Dear New York Congressional Delegation Members: 
     Prescription drug costs continue to strain the budgets of the 
     nation's senior citizens. I applaud your efforts this year to 
     address this important issue. As you begin consideration of 
     legislation to provide prescription drug coverage to all 
     senior citizens, please consider two issues vitally important 
     to New York State.
       First, New York taxpayers continue to support a significant 
     cost for prescription drug coverage for its dual eligible 
     population. The dual eligibles are elderly and disabled 
     individuals who qualify for both the Medicare and Medicaid 
     programs. Medicaid is required to provide medical services 
     not covered by Medicare--including prescription drugs.
       More than 600,000 New Yorkers are considered dual eligibles 
     and each year New York's Medicaid program spends nearly $1.5 
     billion on prescription drugs for the dual eligible 
     population alone. We have always believed that these costs 
     should be borne by the federal government and strongly 
     support efforts to federalize prescription drug costs for the 
     dual eligible population.
       In addition, New York administers the nation's largest 
     prescription program for seniors, EPIC. Today, more than 
     300,000 seniors are enjoying the significant benefits EPIC 
     offers and savings thousands of dollars each on vitally 
     important medicines. Costs for this program exceed $600 
     million annually in State only dollars. Currently eighteen 
     states have programs similar to New York's to provide 
     prescription drug benefits to senior citizens.
       Any federal program created this year to provide 
     prescription drug coverage should recognize state efforts and 
     allow seniors to choose their benefit plan (in New York, that 
     choice would be between EPIC and the federal plan) while 
     providing a direct Medicare subsidy to the state program for 
     individuals that choose that option.
       The Federal government has accepted responsibility of 
     providing health care to senior citizens and I strongly urge 
     an expansion to include prescription drug coverage. I applaud 
     President Bush for his leadership on this issue and our 
     Congressional delegation for its commitment to our seniors.
       Your efforts on this important legislation could 
     dramatically improve the health of a segment of our 
     population that has given so much to New York's and America's 
     safety and prosperity. We urge you to work with us to ensure 
     that our seniors get the prescription drug coverage they 
     deserve, and that the federal government assumes its rightful 
     role in supporting services for our dual-eligible population.
           Very truly yours,
                                                 George E. Pataki,
     Governor.

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