[Congressional Record (Bound Edition), Volume 149 (2003), Part 22]
[Senate]
[Pages 30513-30516]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     MEDICARE PRESCRIPTION BENEFITS

  Mr. BAUCUS. Mr. President, I would like to speak a few minutes about 
the upcoming Medicare conference report that will be before this body--
I don't know when--maybe Sunday, Monday, Tuesday. Before I do so, I 
would like to thank and compliment many people who helped bring this 
legislation to this point. For many years, many of us in Congress have 
urged the passage of prescription drug benefits legislation for 
seniors. We have been close to passage many times in the last several 
years.
  I remember last year, for example, about this time when Congress was 
close to adjournment. I called a meeting together in my office for one 
last chance--Senator Kennedy, Senator Snowe, myself, Senator Hatch, and 
other Senators who were vitally concerned about passing prescription 
drug legislation. We worked mightily. We worked very hard. At the very 
end, the talks collapsed. It didn't work, largely for political, 
partisan reasons, I might add, and we were not able to get a bill 
passed.
  Here we are again. We are at the brink. We are on the verge. We are 
very close to getting prescription drug legislation passed. This time I 
very much hope that all of us--as Senators and House Members--put 
partisan differences aside and suspend judgment. That is, we should 
look at the legislation, look at the facts, and not listen to the 
rhetoric from various groups, to see what really makes sense.
  There are a number of people I wish to thank at this time--the 
chairman of the committee, Senator Chuck Grassley, who has worked very 
hard; Senator Breaux, also a member of the committee; Senator Olympia 
Snowe, a member of the committee.
  In addition, Congressman Bill Thomas, chairman of the Ways and Means 
Committee, has worked extremely diligently. The Speaker of the House, 
the majority leader of the House, Tom DeLay; the majority leader of the 
Senate, Bill Frist--there are many people who have worked very hard. I 
thank them very much for their efforts and for their work.
  One person I also wish to thank is Senator Ted Kennedy. Senator 
Kennedy worked very hard to help us pass prescription drug legislation 
in the

[[Page 30514]]

Senate not too many weeks ago. He worked very hard. He worked with me. 
He worked with the minority leader. He worked with the majority leader. 
He worked with various Members of the Senate who were critical to 
passage of the bill.
  I thank Senator Kennedy for his yeoman's work to help pass 
prescription drug benefits legislation in the Senate. He also worked 
very hard to help get a conference report put together. He spent a good 
deal of time with the conferees, with myself, with the Senator from 
South Dakota, Mr. Daschle, the Senator from Tennessee, Mr. Frist, and 
many other people trying to help get prescription drug legislation 
passed. I regret at this point that he and I have a different view of 
this bill. He believes there are certain flaws in this bill. I think 
this is a good bill and should be passed. Nevertheless, Senators should 
know that Senator Ted Kennedy has done a great job in helping move this 
legislation to the point it is today. Without his efforts, this bill 
would be flawed in many areas. He helped make this, in my judgment, 
quite a good bill.
  Why should we pass prescription drug benefits legislation? I suppose 
the main reason is that times have changed so dramatically. In 1965, 
when Medicare was enacted--and it was enacted by a large vote margin--
prescription drugs were not necessary. Most senior citizens were more 
concerned with doctors, office calls, and hospital visits for their 
medical concerns, rather than prescription drugs.
  Look what has happened in the last 38 years since the Medicare Act 
passed. Prescription drugs and generic drugs are so vitally important 
today. They replace procedures. They help prevent the onset of disease. 
Often times, the medications people take tend to prevent, forestall, 
and delay all kinds of maladies. They are really important, much more 
important today and getting more important every day.
  In addition, prescription drugs are becoming more expensive--much 
more expensive--and it is putting seniors in a bind. Many low-income 
seniors are in a real bind.
  I worked at a pharmacy during one of my work days at home. I have 
worked at many different jobs in Montana. I show up at 8 o'clock in the 
morning with a sack lunch. I have worked in sawmills, I have waited 
tables. One day I was working in a pharmacy in Montana. I saw senior 
citizens walk up to the pharmacist in a quiet voice and ask how perhaps 
they could change their medication or what prescription should they cut 
back on because they couldn't afford to pay for them all.
  Seniors couldn't afford to pay it. It was stunning, and it was sad. 
It was a revelation to me. You hear about it, but when you see it, it 
has a real effect. It happens. Many low-income seniors are having a 
very difficult time trying to make ends meet. Sometimes it is a 
tradeoff between buying prescription drugs, buying food, and paying the 
rent. It happens way too frequently, and it is just not right for our 
country, the United States of America, to let this happen.
  This legislation does a good job in remedying this situation. First 
of all, it is $400 billion of prescription drug benefits for seniors 
spread out over 10 years--$400 billion. That is a lot of money, but we 
have a lot of seniors who have great needs.
  Under this legislation, seniors will find they will not have to pay 
all the cost of the drug but, rather, 25 percent, and the rest will be 
picked up by Medicare, the Federal Government, through the mechanism 
that is designed in this bill. They will only pay a quarter. But if you 
are a low-income senior, you are in a much better position under this 
legislation.
  One-third of United States seniors are classified as low-income. A 
full one-third are low-income. Under this bill, low-income citizens 
will find that 90 percent of their benefits are covered--90 percent. 
That means low-income people can get the prescription drugs they need 
and will not have to walk up to that pharmacist and, in a hushed, quiet 
tone, ask what tradeoff, what drugs that person should cut back on 
because he or she cannot afford them.
  If you are a low-income senior--and one-third of Americans are low-
income. In my State, that is about 46,000 seniors who will be affected; 
there are about 46,000 seniors in the State of Montana who are low-
income, out of about 140,000 seniors statewide. The general rule for 
all seniors is 75 percent of your prescription drug costs; if you are 
low-income, 90 percent of your prescription drugs will be paid for.
  This is good legislation. We are here at a time when people in our 
country are asking us, Should we help our seniors or should we not?
  Let me mention a couple additional reasons why I support this bill.
  First of all, it helps rural America. Mr. President, there is an 
extra $25 billion in this bill for rural health care. The $400 billion 
I mentioned earlier all goes to benefits for seniors, either directly 
or indirectly. But $25 billion extra goes for providers and $25 billion 
is for rural America.
  Why is that so important? It is so important because of the cost and 
the strain of the practice of medicine in rural America. We run the 
risk of not having good, adequate health care in rural parts of our 
country. We have all talked to many doctors and nurses who practice in 
rural parts of our country. They talk about the hours. They want to 
serve their patients. Believe me, they want to serve their patients, 
but after a while there comes a time when they are just worn out.
  In rural parts of America, there are often pathologists--or 
pulmonologists or other specialists--who have to be on call all the 
time or on call every second or third day. Why? Because there are fewer 
of them in rural America than in urban America. The costs, believe it 
or not, are also very high in rural America--in many cases higher than 
in cities. There are the transportation costs, the cost of distances, 
the travel costs, for patients, doctors, and suppliers.
  Our State of Montana is a low-income State, unfortunately. Our per 
capita income in Montana is low, but we are in the middle of all the 
States when it comes to cost of living. We are about the bottom when it 
comes to family income, but we are in the middle when it comes to 
costs. It is because we are a rural State, and this is true for rural 
parts of all States.
  This bill finally helps address the unlevel playing field that has 
existed between urban and rural America. Now rural America, finally 
after many years, gets its fair share.
  When I first came to the Senate years ago, I realized just how hard 
it was for rural America to get a square deal, particularly in health 
care. It was stunning. Every year since I have been here, I have been 
working to try to get rural America a square deal compared with urban 
America. I was part of an organization--and I still am--called the 
Rural Medicare Caucus. In fact, I chaired it for a few years. Every 
year I am here, I have--as I know my good friend from Montana, the 
Presiding Officer has--worked to help to make sure that rural parts of 
the country are getting a fair deal. This is not rhetoric. This is 
real. After all of these years, finally rural America gets a fair deal.
  I also support this legislation and strongly advocate for its passage 
because it makes sure that senior citizens, wherever they live in our 
country, get a universal Medicare prescription drug benefit. Now, this 
certainly is true in the first years after this legislation is 
effective, but it is also true in the future. It is also true when 
preferred provider organization plans are designed to come into effect. 
It is also true in the year 2010 when in six regions of the country, 
there may be demonstration projects selected to test a new system 
called premium support.
  In all respects, all seniors in all parts of the country, in all 
years, will have access to the same prescription drug benefit as any 
other senior, in any other part of the country, in any other year. This 
bill does not undermine traditional Medicare fee-for-service. The drug 
benefit is universal and nationwide in all respects. The bill does not 
undermine traditional Medicare--that is, Part A and B--during the years 
in which it is in effect. In a few moments I will return to this and 
will explain in greater detail.

[[Page 30515]]

  This bill also very much helps address an issue that is on the minds 
of a lot of Senators--retiree coverage. When the bill was debated in 
the Senate, the prediction was that companies, States, municipalities, 
and nonprofit organizations might drop their retiree coverage because 
the bill, when passed, would provide government drug benefits to 
seniors. The thinking was why should companies not just go ahead and 
drop their retiree coverage.
  Well, when the Senate took up this legislation, the CBO, which is the 
organization we rely upon for estimates, said that the drop rate might 
be about 37 percent. Since then, they have revised their numbers and 
they have come up with other figures. In short, if one compares apples 
with apples, the conference report that will soon be before this body 
results in a retiree droppage rate that is about 50 percent less than 
the bill that passed this body by a vote of 76 to 21. Maybe it is 45 
percent. Stop and think about that for a moment.
  For Senators who voted for the Senate bill, they can be comforted and 
relieved that retiree droppage rate is estimated by CBO to be about 
half of what it was in the Senate bill.
  Let's focus a little bit on the retiree provisions. Essentially, 
companies receive about $88 billion under this bill for their retiree 
benefits. The net effect is that it will discourage companies from 
dropping--not encourage droppage. We all are very concerned that 
companies across America are beginning to cut back, and have cut back, 
on the number of retirees who have health care benefits or on the 
nature of the benefits. It is happening in America. It is happening in 
America as the world becomes even more competitive with global 
competition and as companies strive to cut down on their costs to 
increase their profit margins. One of the ways they can do so is cut 
back on employee and retiree benefits. This is happening. We know it is 
happening.
  This legislation tends to discourage companies from cutting back. It 
tends to help companies keep coverage. It discourages dropping retiree 
coverage--it does not accelerate it. Again, it is because of the 
additional dollars that are going to companies. The companies still get 
the tax deduction for their health benefit plans. That is unchanged. In 
addition, under this legislation, the payments to the companies for 
retiree coverage are tax free. One could even say perhaps there is a 
little double-dipping because the assistance is tax free. This is a 
tremendous additional financial benefit to companies, to nonprofits, to 
cities, and other plans to encourage them to keep their coverage. It is 
a bonus. It is an incentive. This is another reason passage of this 
legislation is important--because it helps companies keep their retiree 
health plans. As a result, employers will tend less to drop retiree 
coverage. They will probably tend to maintain and increase it.
  There is also a myth about this bill that is there is a coverage gap 
on prescription drug coverage that will leave seniors out in the cold. 
Well, the truth about this so-called donut hole gap is the majority of 
seniors will never reach the spending level where they would not have 
coverage. Even more important, seniors who are low-income get full 
coverage in the benefit gap.
  Of course, we wish we had more money to give a complete benefit to 
everyone without any donut hole, but we do not have an infinite number 
of dollars. We only have $400 billion. It sounds like a lot, and it is 
a lot, but if we are going to give a universal drug benefit to seniors 
that is honest, that makes sense, that does something, not over the top 
but that makes sense for all seniors, it would cost a lot more than 
$400 billion. We have limited ourselves to $400 billion, and at $400 
billion there are going to be some people who will not get quite the 
same benefit as other people, but they will all get the benefit.
  I might add that if we looked at each State, the number of seniors 
who have coverage for prescription drugs varies. In some States it is 
very high. In some States it is low. Compare that with the passage of 
this bill, every State gets about 96.6 percent. That is virtually 100-
percent coverage. That is a big improvement.
  Let's take the State of Delaware, for example. I know the Senators 
from Delaware know their State a lot better than I. Today, about 27 
percent of seniors in Delaware have no drug coverage. Only 3.4 percent 
will be without coverage once this bill is enacted. Let me restate this 
positively; 27 percent of seniors in Delaware today do not have drug 
coverage. When this bill passes, virtually every Delawarean will have 
drug coverage.
  The same is true of the State of California. Now about 21 percent of 
California's seniors and disabled live without prescription drug 
benefits. This bill will reduce this number to 5 percent. Again, most 
seniors, in California and in every other State, would benefit as a 
consequence of this legislation.
  I would like to address some concerns others have raised regarding 
this bill. The concerns are that this legislation undermines 
traditional fee-for-service Medicare--that this is the beginning of 
undermining Medicare, the camel's nose under the tent. This is the 
charge.
  What are the facts? The bottom line: Fee-for-service Medicare, 
traditional fee-for-service Medicare as we know it today, is held 
harmless under this bill. This is the bottom line. So if you are a 
senior in the United States of America you can decide that you want to 
keep traditional Medicare and that you do not want to join a private 
plan--any of the plans that may or may not exist in the future. That 
is, it is voluntary. A senior can either join or not join. It depends 
on what he or she wants to do. It is an honest choice because fee-for-
service traditional Medicare remain what it is today. It is held 
harmless. That is, the deductible doesn't change, the copay doesn't 
change, the benefits don't change. What exists today is what exists 
under this legislation. I hope Senators listen to that. I hope staffs 
of Senators listen to that. I hope the others who are listening, who 
are concerned about the bill, listen to that.
  Let me explain this in greater detail. The bill finally provides a 
prescription drug benefit for senior citizens. We have had this 
opportunity many times in the past. We now have the chance to seize 
this opportunity. The bill also makes some changes in the general 
Medicare structure in terms of setting up some health care plans in the 
future, assuming the plans actually take shape, form, and come into 
existence. They don't exist today. I am referring to regional PPOs; 
that is, regional preferred provider organizations. They don't exist 
today. There are other managed care companies called HMOs in many 
cities. They exist in the cities primarily because they can cherry-pick 
counties. They can pick the counties in which they want to provide 
service, and if they do not want to pick one county because it is less 
profitable, they do not have to. If they want to serve another county 
because it is more profitable for them, they do. This is the way HMOs 
operate today. This is the system today.
  This legislation says, beginning in the year 2006, our country will 
be divided up into various regions. Insurance companies will be allowed 
to offer Medicare services, including drugs, in any of the regions. The 
question remains, What about traditional fee-for-service? What happens 
to traditional fee-for-service in an area where a company sets up a 
plan? What if one wants to remain in traditional Medicare? The answer 
is, fee-for-service is held harmless. There is no change in fee-for-
service.
  If regional PPOs serve a region, it has to serve the entire region. 
It can't choose this part of this State and that part of that State. It 
has to serve the entire region--people in the cities, people in the 
rural parts of that region. Everybody has to get the same deal.
  The senior living in one of these regions has a choice. The senior 
can stay in traditional fee-for-service Medicare or can join the plan. 
But fee-for-service Medicare is held harmless. There is no change to 
traditional Medicare.
  Obviously, this does not undermine traditional Medicare as we know 
it. This bill builds up and strengthens Medicare. There are additional 
dollars here for hospitals, for doctors, for providers who will provide 
traditional

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Medicare. So this bill does not in any way undermine traditional fee 
for service. In fact, Medicare is held harmless under this legislation.
  Some people say: That's OK, Max, we understand that, but what we are 
really concerned about is the so-called premium support demonstration 
areas. Their argument is, in those areas, traditional fee-for-service 
is undermined. Private plans will pull away seniors, and it will be 
unfair to seniors who remain in Medicare. It is the beginning of the 
demise of traditional fee-for-service Medicare, they argue.
  That is not true. It is nonsense. Look at the facts. Look at what is 
in the legislation.
  Let me just remind Senators that this legislation is now available 
for Senators to look at. Thank goodness, because when they look at it, 
they are going to see what is and is not included. I just ask Senators 
to trust me long enough to suspend judgment on it so they can go look 
at the legislation and make up their own minds. That is what the 
Senators are supposed to do--make up their own minds. I am urging 
Senators to suspend judgment for a little while, listen to what I am 
saying, because I think when they do look at the legislation, they will 
see that what I am saying is true. But you do not have to take it on my 
account. Just please do not make up your minds until you read what is 
actually in the legislation. You will see, even in the supposed premium 
support demos, and there might be up to six cities in the country, that 
fee-for-service Medicare is held harmless. There is no change in fee-
for-service in any respect, deductibles and on--except for one. That 
one possible change is the Part B premium.
  However, this legislation ensures that seniors who happen to live in 
one of the six demonstration areas can keep the same fee-for-service 
Medicare. If it happens that your Part B premium goes up as a result of 
the demonstration--it may or may not go up--but if it does, the 
legislation says there can be no more than a 5 percent increase on your 
Part B premium. This is the only possible way a senior citizen could be 
adversely affected in these demonstration projects.
  Another point regarding these demonstrations. I have heard various 
figures that the demos are going to affect 10 million fee-for-service 
beneficiaries. We have all heard the 10 million figure. It is what some 
Senators suggest.
  It is not true; it is untrue.
  How many seniors might possibly be affected? Let's get an unbiased, 
objective opinion.
  We asked the CBO, the Congressional Budget Office: Mr. CBO, what is 
the answer? How many seniors may potentially be in an area where they 
would be faced with a choice, stay in fee-for-service Medicare or join 
one of these premium support organizations? How many could be adversely 
affected? The answer is not 10 million. CBO says: We think it is 
between 670,000 and 1 million. 10 million is the figure of scare 
rhetoric. The actual facts are 670,000 to 1 million.
  There are many other instances where there is a lot of rhetoric 
floating around. But if you look at the facts, if you read the 
legislation that is now available, you will find it is really good 
legislation and all these worries and exaggerated claims about the bill 
are just not true.
  I have a couple of additional points regarding premium support. It is 
a time-limited demonstration. It exists only for 6 years, starting in 
2010. It would take an act of Congress to change it, an act to expand 
it. It cannot be extended or expanded by the Secretary or anybody else.
  Fact No. 2, the demonstration will only affect limited areas of the 
country--up to six areas of the country only.
  Fact No. 3, low-income beneficiaries are totally protected in any of 
these areas where premium support might occur.
  Facts No. 4 and No. 5. There is no requirement for beneficiaries to 
enroll in the private plans. None. There is no inducement to enroll in 
any of these plans unless the plan happens to be a lot better than 
traditional fee-for-service Medicare which this bill strengthens.
  How does this bill undermine traditional fee-for-service Medicare? 
How?
  The fact is, it doesn't.
  I will close by saying this is a good bill. It provides prescription 
drug benefits for seniors. Seniors need and deserve this help. It 
provides $400 billion of help. We are not going to have this 
opportunity again. It is true that this bill is not perfect. But I 
think on the whole it is a very good. This bill is much closer to the 
Senate bill than it is to the House bill. It is about one-quarter away 
from the Senate bill. It is about three-quarters away from the House 
bill. Seventy-six Senators voted for the Senate bill. I think that the 
76 Senators who voted for the Senate bill will find that in many 
respects, this bill is better than the Senate bill they supported. 
Additionally, when my colleagues look at the facts of this bill, they 
are going to find that this is pretty good legislation. It is something 
we should pass.
  I hope people will look at the actual language and look at the facts 
and will support this bill.
  The PRESIDING OFFICER (Mr. Cornyn). The Senator from Idaho.
  Mr. CRAIG. Mr. President, I will be brief. My colleague from Oregon 
and I wish to mention only briefly the health bill which was passed.

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