[Congressional Record (Bound Edition), Volume 149 (2003), Part 21]
[Senate]
[Pages 29026-29028]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   MEDICARE PRESCRIPTION DRUG BENEFIT

  Mr. KENNEDY. Mr. President, I wanted to take a short time this 
afternoon to talk about some of the concerns that I have on the 
recently agreed to proposition on the Medicare prescription drug 
agreement that was reached over the course of the weekend.
  As we are anticipating this measure which is now being examined in 
terms of the Congressional Budget Office estimates and the legislative 
language that is being prepared, I expect that we will be addressing it 
at the end of this week or sometime in the very near future. I want to 
at least bring some focus and attention to some of the provisions in 
the legislation that haven't gotten the focus and attention they 
deserve, which they should have, and which I hope our Members will give 
study.
  There is no truer indication of a nation's priorities than the 
investment it makes, and the legislation the Senate considers today I 
believe squanders a historic opportunity with a disregard for the 
Nation's health, particularly for our seniors. There is a provision in 
this bill dealing with a $12 billion slush fund to lure HMOs into 
Medicare.
  Let's see if I have the reasoning behind this fund right. The 
supporters of the legislation are so concerned that HMOs can provide 
health care to seniors more efficiently than Medicare that they give 
HMOs a $12 billion payoff so they can compete. If they are so 
efficient, why do they need the handout? I guess the sponsors of the 
legislation believe a 9 percent reimbursement bonus for HMOs is not 
enough. In this legislation there is the assurance the HMOs will get a 
9 percent increase over Medicare in reimbursement rates.
  In addition, there is what they call a stabilization fund which is 
effectively a $12 billion slush fund which will also be available to 
subsidize the HMOs.
  That package adds up to a rather extraordinary benefit to the HMOs. 
The bill calls for competition between Medicare and the HMOs. Yet in 
this agreement private plans are going to get paid 109 percent of 
traditional Medicare reimbursements. And, those enrolled in HMOs are 16 
percent healthier. That cumulatively is a 25 percent bonus to the 
private sector to compete with Medicare, without even considering the 
$12 billion slush fund. Our friends on the other side say we want 
competition in this system. Yet they are giving them the 25 percent 
advantage in order to compete with Medicare.
  The bill that passed the Senate was a prescription drug bill that had 
bipartisan support, with 76 Members for it. I was proud to stand here 
and support it. But now we basically have the restructuring of our 
Medicare system. We do it in a way that provides a fundamental risk to 
the Medicare system. That is why I am opposed to this agreement and the 
proposal.
  I have given one illustration of why this proposal that is strongly 
supported by our friends in the House is going to weight this agreement 
so heavily for the HMOs and the PPOs. They talk about a fair playing 
field between the private sector and the Medicare. That is hogwash. In 
the Senate bill we passed a prescription bill. It had real competition 
for all parts of the country with a backup system of Medicare, but not 
in the proposal that comes out of the conference.
  I remind our seniors the 25 percent bonus that is going to the HMOs 
is effectively being paid by our seniors today in the Medicare 
premiums. They are the ones, on the one hand, who are paying into this 
fund; on the other hand, it is the conference report that is 
effectively taking the 25 percent and giving it over to the private 
sector.
  And we wonder why seniors might be somewhat concerned about that 
arrangement. Do Members think the seniors at home will not ask: Why 
aren't we using all that money to either make sure the benefit package 
is a stronger benefit package to help me, to help my family, or to help 
my grandparents? The decision made in the conference was no, we insist 
on ``competition.'' But they are going to take the 25 percent, which 
has been paid in dollar by dollar by dollar by hard-working Americans 
over a lifetime that they thought was going to be put into the Medicare 
system, and we are going to use that to subsidize the private sector. I 
hope we will have a chance for explanations.
  Second, there is a provision included in this conference that was not 
included in the Senate proposal, premium support. I never heard the 
President indicate strong support for it, or those who speak for the 
President. I don't think a great many of our colleagues are able to 
define what premium support is, but they will learn about it soon 
enough if they vote for this legislation. Premium support is a proposal 
that is primarily sponsored by those who are opposed to the Medicare 
system.
  Let's make no bones about it. There are a number of other colleagues 
who are still strongly opposed to Medicare. That is no mystery, no 
secret. This proposal puts forward one of their strongest beliefs--that 
we need to change the Medicare system--I say undermine the Medicare 
system--with premium support. What that means is the averaging of 
various premium bids to determine the Medicare system reimbursement 
rate. The difference between what the Medicare system reimburses and 
what real cost is going to be paid by the individual. The premium 
support proposal does what the insurance companies do best, and that is 
cherry pick the healthiest senior citizens for their plans so they are 
able to make money, and leave those who are sicker and older in the 
Medicare system where the premiums will rise.

[[Page 29027]]

  I will demonstrate with this chart. This is the Medicare actuarial 
estimates of the disparity of the premium support, what the premium 
would be under the proposed legislation. The national average of the 
current law is $1,200. Several years ago, the estimate under the 
premium support was $1,771. The new average this year is $1,501. How do 
we know what the true estimates will be? Premium support is untested, 
untried, unworkable. We are playing roulette with premium costs for our 
senior citizens. This is a social experiment that uses our seniors as 
guinea pigs. That is what premium support is.
  Look at the difference, say, if you are in Florida. The agreement 
reached said by the year 2010 the Secretary will be able to designate 
six metropolitan statistical areas that qualify. Currently, half the 
States have those areas. With the kind of subsidies we are providing in 
this legislation, by the year 2010, I doubt whether there is any State 
that will not have the opportunity to qualify. I hope our colleagues 
listen carefully to that because this diversity in premiums is going to 
come to your State and you are going to have to explain why a senior in 
one county, who pays same taxes, worked just as hard all his life, and 
who deserves Medicare, has to pay twice as much as his neighbor in the 
next county over in premiums for medicare.
  Medicare is a universal system that guarantees everyone will be 
treated equally, according to their medical needs. This legislation 
turns that proposition on its head and makes your medicare benefits 
dependent on where you live and what will help private insurance 
companies the most.
  This is the House Budget Committee, the Medicare actuarial data. The 
difference if we have premium support in Florida, what the premiums 
would be 1 year in Dade County and another year in Osceola, Fl: Double 
the premium for the Medicare patients living in Dade; half that for 
those in Osceola. Now that is in Florida.
  Take premium support in California. If you live in Los Angeles, 
$1,700; in Yolo, CA, $775.
  It is just based on where you live. You have lived there all your 
life. You have your home. You have paid your taxes. You have brought up 
your children, and you have retired, and you find you are going to pay 
$1,700 for your premium; and someone in Yolo County, CA, is going to 
pay $775. Why? Because of this new concept of premium support.
  It will happen in every State. For New York City, the Medicare 
actuaries' estimate that in Queens, seniors would pay $2,000, but only 
$975 in Erie, NY, because that is the estimate of what the premiums 
will be with competition in New York.
  Try to explain that to your seniors who have lived their life, who 
have served this country, brought the Nation out of the Depression, 
fought in the wars, are living back home, and find out their premiums 
have increased 100 percent or 200 percent or 300 percent.
  This is not just what I am saying about premium support, these are 
the Medicare actuaries. This information comes to us from testimony 
given before the Finance Committee.
  Here we have figures from my home State of Massachusetts: $1,450 in 
Barnstable, $1,000 in Hampden, MA. So, $400 more if you live down in 
Barnstable County, in Cape Cod, than the center part of the State.
  So if you support this proposal, and you support the premium support, 
then you are going to have to explain to your constituents and to your 
elderly people that if they live in one community, they may be paying 
double what their neighbors are paying in another community.
  What this proposal puts forward has never been tried. It has never 
been tested. And it is mandated--mandated--in this compromise from the 
House of Representatives. It is mandated in this bill.
  You will hear the other side saying: Senator Kennedy has not got it 
quite right. You will hear them say: We put a restriction in there, 
they can only go up 5 percent this year. Five percent this year, 10 
percent the next year, 50 percent the year after.
  Let's get real. Look at the direction in which we are going. This 
proposal has heavy subsidies for the HMOs and a roll of the dice on the 
premiums for our senior citizens. And that is not even the beginning.
  Currently, of our 40 million seniors, there are 6 million who have 
Medicare but also who have what they call Medicaid to those who are 
very poor, we are talking about 100 percent of poverty or below. Those 
beneficiaries have to pay copayments for medical care. Most of the 
States pick up those copayments. That is what is existing today.
  Do you think that is going to continue under this bill? No. No, no. 
No, no, that does not continue under this proposal. That is actually 
prohibited under this legislation.
  There will be 6 million of our seniors who are getting help and 
assistance from their States today who will be prohibited from getting 
it under this proposal. Why? This all saves the money--probably $9 to 
$12 billion--to use for other purposes.
  If you come from a State with large numbers of very poor, and where 
the State is paying that $1, $3, $5, in terms of the prescription 
drugs, it does not sound like a lot of money. But if seniors need that 
drug two or three times a week, it piles up every week, it piles up 
every month, and it piles up every year.
  Why does the conference bill do that? Why in the world did they do 
that? It was not in the Senate bill. It was in the House bill, and it 
was accepted in the conference.
  Now we come back to those who are the very needy and the very poor, 
and we see many of our elderly who are excluded from this program with 
what we call an asset test.
  The asset test is basically the following: If you own a car that is 
worth more than $4,500, you have a wedding ring worth $2,300, you have 
$6,200 in savings, and you have a burial plot that is worth more than 
$1,500, all that is considered in terms of your assets to exclude you 
from being eligible for benefits targeted to the poorest of the poor.
  The Senate bill said that low-income people could get the assistance 
they needed without going through a cruel and demeaning assets test.
  Senators from New Mexico, Mr. Bingaman and Mr. Domenici offered an 
amendment, which passed by 67 votes, to reaffirmed the Senate's desire 
not to penalize people because they managed to save a small amount of 
money during their working lives. I was proud of the Senate, of 
Republicans and Democrats alike, for recognizing that if we were going 
to pass a prescription drug bill, it ought to be targeted on the 
neediest of the needy. But the bill put forward by this conference went 
in the opposite direction and restored that cruel and demeaning assets 
test.
  We had a good bill. We did not provide these large subsidies to the 
PPOs and the HMOs. We did not have premium support program that so 
threatens, undermines and endangers Medicare. No, no, we did not have 
those. Ours was basically a prescription drug program focused on the 
neediest seniors built on private sector delivery with a backup in 
terms of the Medicare system. That was the compromise.
  But not here. The conference needed more money to pay for what they 
call health savings account, the medical savings account, which they 
have put in this particular conference report, at the cost of anywhere 
from $6 to $7 billion, draining our national deficit even more and adds 
to the total cost of the legislation.
  Health savings accounts are designed for the healthiest and 
wealthiest people in our society leaving the sickest and poorest of the 
workers in this country in the private sector where their premiums 
could be increased by 20 to 30 to 40 percent. As the debate unfolds, we 
will be presenting further estimates on this. It was best estimated, 
from the Urban Institute, at 60 percent increases.
  This conference report gives us a whole new kind of a system. We have 
the heavy subsidizing of private plans with 25 percent more being paid 
for by seniors. We have the experimental system where you are going to 
have those enormous swings in premiums all over

[[Page 29028]]

the country without any predictability, and it is untested and untried. 
We have the cutting back of 3 million of the neediest people because of 
the reimposition of the asset test. We have the introduction of the 
health savings account which is going to skew the health delivery 
system for millions of workers and the young people in this country.
  Many people are going to bail out of their traditional system, and 
leave their coworkers, who may have greater kinds of health threats, to 
pay a very enhanced premium and also enhance the premium of the 
companies themselves.
  What are we talking about with this legislation? Let's add it up. Of 
the about 10 to 12 million American workers who now have retiree 
accounts, under this proposal, the best estimate is that 2 to 3 million 
of those who are covered today will lose that, according to CBO.
  We heard the estimate--this was a real good one--that up to 30 
percent of those who were getting coverage were going to lose it. And 
then some of our Republican friends said that is too much, that is too 
many, so let's expand the base, which they did. Let's include all the 
Federal employees. Let's include other groups in there to lower the 
percentage. Now they come out and say: I know it was 33 percent before; 
now it is only 12 or 14 percent.
  The total numbers are the same. You are going to lose the 3 million.
  This is what we have: 6 million Medicaid beneficiaries who now have 
wraparound coverage; they are going to be paying more. You have 2 to 3 
million retirees who lose their coverage. They are going to be hurt by 
this legislation.
  We have 6 million people in the untested, untried premium support 
demonstration. Add that up, 15 million of the elderly and disabled are 
going to be impacted or affected by this program. At the same time we 
are talking about billions of dollars in the slush fund for the PPOs. 
We are talking about the health savings accounts, which are billions of 
dollars, that the taxpayers are going to end up paying. Then we have 
the asset test which is going to exclude many of our seniors.
  This legislation has been altered and changed. It was a prescription 
drug program when it passed the Senate with strong bipartisan support. 
Now it is a Medicare Program. At the heart of this program are the 
kinds of instruments that can undermine Medicare and threaten our 
seniors now and in the years to come. It doesn't deserve to pass.
  I 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. BOND. 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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