[Congressional Record (Bound Edition), Volume 149 (2003), Part 22]
[Senate]
[Pages 31084-31088]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         ORDER FOR ADJOURNMENT

  Mr. GRASSLEY. Mr. President, we want to make sure there is time this 
evening for Senators Bingaman and Levin to give their remarks. If there 
is no further business to come before the Senate, I ask unanimous 
consent that the Senate stand in adjournment under the previous order, 
following the remarks of Senator Bingaman and Senator Levin.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, I thank the chairman of the committee. I 
appreciate the chance to speak briefly on this bill. It is a very 
important piece of legislation. I congratulate the Senator from Iowa on 
the hard work he has put into this legislation. I do not share his 
conclusion about it at this stage, but I certainly admire the work he 
has put in and admire the good job he does as chairman of the committee 
on which I serve.
  When the 2000 Presidential campaign was underway, I saw one of the 
debates between then-Governor Bush and then-Vice President Gore. Both 
of them in that debate endorsed the enactment of a prescription drug 
benefit for seniors for Medicare beneficiaries. I remember thinking 
when I saw that, this is one good thing that will come out of this 
campaign in the next few years, no matter who wins. But what I had in 
mind as a prescription drug benefit was a very different animal than 
what we have in these 1,100 pages that have been referred to 
repeatedly.
  What I had in mind was a benefit where Medicare beneficiaries would 
be able to sign up for a prescription drug benefit. It would be 
voluntary. They could sign up or not. They could then pay a monthly 
premium. They would get a card. They could take that card, go to the 
pharmacy and get their prescription drugs. They might have to pay a 
copay. They might have to pay some deductible. But it was basically the 
adding of a prescription drug benefit to Medicare. That is what I 
thought both candidates were talking about.
  That is not what we have in these 1,100 pages. Had we decided to 
enact that, it could have been done in a much smaller document.
  I regretfully have to oppose the conference report for H.R. 1 as it 
comes before us tonight and tomorrow.
  I will cite six reasons I have come to that conclusion. The first 
reason is that the bill, in my view, over time, will undermine 
traditional Medicare.
  The second reason is that the bill requires the Government to overpay 
private health plans by tens of billions of dollars.
  The third reason is that the bill actually will harm many senior 
citizens who are intended to benefit.
  Fourth, the bill will increase drug costs rather than reducing them.
  Fifth, the bill will dramatically increase the complexity and 
volatility of the Medicare system for many of our seniors.
  Finally, the sixth point is that the bill will increase the financial 
burden on States and make it more difficult for each of our States to 
maintain the benefits they provide through their Medicaid programs to 
low-income patients.
  Let me start with the problem that I see of this bill undermining 
traditional Medicare. Today, 88 percent of all of those 41 million 
people who are served by Medicare are enrolled in traditional Medicare. 
The major thrust of this bill is not to add a prescription drug benefit 
but instead to do what is euphemistically referred to as ``modernize'' 
Medicare.
  Now, there are definitely some things we should do to modernize 
Medicare. I would agree with that. But as that term is used in this 
discussion, most of the time it is a code word, meaning that we should 
move people--seniors and disabled individuals--out of traditional 
Medicare into the private health care system. That is what is meant by 
a lot of our colleagues when they talk about modernizing Medicare.
  There are two good reasons for moving people out of traditional 
Medicare into the private health care system, as I see it. I could 
certainly favor doing that if we could accomplish these purposes. The 
first, obviously, would be to make the program more efficient and save 
money--save some taxpayer dollars by moving these people out of the 
Government plan into a private plan.
  The second, of course, would be if we could improve services, 
increase the satisfaction of Medicare beneficiaries by moving them into 
the private plan.
  Let me just show this chart. Medicare cost growth: This relates to 
the first of those two points. Medicare has historically controlled 
costs far better than either private health care plans have, or even 
better than the Federal Employees Health Benefits Program, FEHBP. We 
all take great pride in the FEHBP program and talk about how this is a 
great benefit and we should extend it to others.
  Between 1969 and now, Medicare's costs have increased at an annual 
rate of 8.9 percent a year, which stands in contrast to the 11 percent 
growth rate in the private health insurance arena and 10.6 percent 
growth rate in FEHBP. So the ideology of this drive to modernize 
Medicare or move people out of traditional Medicare into the private 
system does not match the evidence. In fact, the recent record is even 
more dramatic. Between 1996 and 2003, Medicare's per capita growth was 
4.2 percent compared to 5.9 percent for private health plans and 5.3 
percent for FEHBP.
  Medicare wins the contest going away. But maybe some are willing to 
pay higher costs, so this chart should make that point. The red line 
shows the increase in costs from 1970 to the end of the century in 
private insurance. The blue line shows the increase in the cost of 
Medicare. They have both gone up, but Medicare has gone up less 
rapidly. We might still be willing to pay more--pay the amount required 
to put people on this red line if, in fact, we had greater patient 
satisfaction by doing so.
  There is a recent study by the Commonwealth Fund, published in Health 
Affairs, and it is reflected on this chart. It is hard to read because 
the colors are too similar. What is reflected is that of those with 
private health insurance, there were 51 percent of those who were 
satisfied, and 62 percent of those in traditional Medicare were 
satisfied with their coverage. That is the case, despite the fact that 
Medicare benefits are less generous and its beneficiaries are more 
elderly and disabled and have higher health needs than individuals in 
the private health care system.

[[Page 31085]]

  So the bill seeks to move people out of traditional Medicare into 
private health plans. It does so by dramatically overpaying the private 
health plans.
  Let me move to my second point. Since managed care is not more 
efficient than traditional Medicare, the conference report concludes 
that the way to get people into these private health plans is to spend 
billions of dollars in overpayment to those plans.
  The legislation begins by setting its benchmark for payments to 
private plans at 109 percent of what Medicare fee for service would 
have to spend for those beneficiaries. It does so in other ways as 
well, including giving health plans money that Medicare otherwise would 
pay to a disproportionate share of hospitals, to graduate medical 
education, and the cost of veterans retiree health care.
  It makes no sense to me to subsidize and pay health plan payments 
that Medicare intends, or could have, for safety net hospitals or 
teaching hospitals or veterans retirees. These HMOs do not provide 
unpaid services to the poor. They do not educate our Nation's medical 
students. They do not provide health care to our veterans. Yet the 
conference report provides payment for such services.
  It makes no sense, but it is intended to camouflage the fact that 
private health plans cannot compete with traditional Medicare if they 
merely receive the amount traditional Medicare spends to provide these 
services to beneficiaries. So that is not enough.
  The other thing that is done is that we, in this bill, provide a $10 
billion to $12 billion stabilization fund. That stabilization fund 
essentially is money that the Secretary of Health and Human Services 
has available to add to what private plans are receiving and further 
advantage them over the traditional Medicare system if he or she 
determines that that is necessary in order to keep them providing 
services to this portion of our population.
  Of course, the other issue that I think is extremely important is 
that these private health plans, under the legislation, are fully free 
to engage in practices that allow them to enroll healthy Medicare 
beneficiaries and shift the sicker and the more costly or elderly 
beneficiaries into the Medicare system. They do this by adjusting their 
benefits. They do this by designing their benefit packages and 
marketing them to the healthy segments of the society.
  Some might ask how do they do this. I will give you an example. Some 
private plans impose a higher cost share for services such as 
chemotherapy or renal dialysis than traditional Medicare in order to 
encourage those who have contracted cancer or renal failure to enroll, 
to leave the private plan and to go back into traditional Medicare.
  Proponents of the bill say what they are trying to do by getting 
these private plans involved is to foster competition. Obviously, we 
all favor competition, but I do not see that it is particularly 
competitive for us to provide this kind of very major subsidy.
  When you add together the 109 percent payment to the private plans 
and the risk selection in which they are permitted to engage, private 
plans will be paid an estimated 25 percent more than the cost of 
traditional Medicare for each enrollee, for each beneficiary. This 
amounts to $1,920 more per enrollee in the year 2006.
  A third problem is the bill actually does harm. I mentioned what many 
of my colleagues have already mentioned, and that is the 2.7 million 
retirees who are expected to lose their prescription drug coverage once 
we enact this legislation.
  Also, the Congressional Budget Office analysis says as to low-income 
beneficiaries, there are 3.4 million low-income beneficiaries who will 
benefit from this; there are 6.4 million low-income beneficiaries 
currently enrolled in Medicaid who will be worse off. It is hard for me 
to see how that adds up to a major benefit for a lot of those people 
who are expecting a benefit under this legislation.
  Let me talk a minute about drug costs. What will this bill do for 
drug costs? When I talk with seniors in my State, the No. 1 problem 
they cite to me when it comes to prescription drugs is the enormous 
growth in the cost of those drugs.
  I have concluded, reluctantly, that not only will this legislation 
not bring down drug costs but it will actually cause them to go up. 
Surveys indicate that Medicare beneficiaries cite this as their No. 1 
problem. The Congressional Budget Office has concluded the conference 
report will actually raise the price of drugs by 3.5 percent overall.
  The legislation that is before us, this 1,100 pages, delivers to 
hundreds of private drug companies and HMOs an insurance-administered 
drug benefit that vastly dilutes the purchasing power of Medicare. 
Rather than Medicare purchasing the drugs in bulk to achieve 
significant savings, the medication splits Medicare's purchasing power 
into hundreds of purchasing pools and eliminates the significant 
leverage that Medicare could have in controlled costs.
  This bill expressly prohibits Medicare from negotiating for prices. 
People need to focus on that. Here we are setting up a program where 
Medicare is going to pay for prescription drugs, and we are prohibiting 
Medicare from negotiating as to the price it is going to pay.
  Consumers Union came out with a report last week saying the 
proposal's modest benefits, coupled with an expected high growth of 
prescription drug prices, could result in major disappointments for 
many of these Medicare beneficiaries. Medicare beneficiaries at most 
prescription drug expenditure levels will actually face higher out-of-
pocket costs when they have coverage in 2007--that is one year after 
the bill is implemented--than they do in 2003 when they have no 
coverage.
  That is an incredible finding, in my view. For example, it only 
provides people with a benefit of around $1,000 for the first $5,000 in 
prescription drug spending. When you couple that with weak cost 
containment provisions, the Consumer Union finds that the average out-
of-pocket spending for beneficiaries rises to $2,900 in 2000 compared 
to $2,300 in 2003 for beneficiaries with absolutely no prescription 
drug coverage.
  Let me also move to this final chart to talk about the problem of 
complexity and volatility. I heard some of the majority leader's 
comments earlier this evening. He indicated that one of the great 
advantages of this bill is that it would reduce paperwork. I would love 
to understand that. How we can enact this enormous piece of legislation 
and see it reduce paperwork is a mystery to me.
  This is a chart that was put together by the Medicare Rights Center. 
It tries to set out some depiction of how this is all going to work. I 
can't begin to explain it to you at this point, but I can tell you that 
you can study it for a great length of time and still not understand 
how it is going to work.
  Most people receiving benefits through Medicare choose traditional 
Medicare. They like the stability of traditional Medicare.
  The Washington Post today had a story about the problems 
beneficiaries who have enrolled in Medicare+Choice have encountered: 
the changing benefits that health plans offer on an annual basis; the 
changes in premiums and copayments; the problem of health plans coming 
in and out of the marketplace. We have had that problem in my State of 
New Mexico. Health plans come in, advertise, sign up a lot of people, 
and 6 months or a year later they announce they are not making money 
and they pull out. They send a letter to everybody and say: Sorry, we 
decided not to provide your benefits. Those people come to my office 
and say: What are we going to do?
  This is a volatility in the system that most people on Medicare do 
not appreciate. I see that increasing dramatically under this 
legislation. How in the world we can see less paperwork, how in the 
world we can see less complexity and less volatility as a result of 
this bill escapes me.
  A final point I want to make is the impact on States, expanding on 
this concept of ``do no harm.'' This legislation has potentially major 
negative

[[Page 31086]]

consequences for our States. In the first 3 years of the bill, the 
Congressional Budget Office estimates that the costs, or the unfunded 
liability of the bill to the States in their Medicaid programs, will be 
$1.2 billion.
  We are, in effect, adding $1.2 billion in costs to the Medicaid 
Program at a time when States have been begging for relief from the 
Federal Government due to the growing Medicaid costs that States have 
experienced because of the slow economy and the growing beneficiary 
roles.
  States have had to make rather dramatic cuts in their Medicaid 
programs because of these changes, and this $1.2 billion in additional 
costs to them will result in additional cuts in Medicaid.
  There is a misconception, I believe, about this legislation, and that 
is, people think that because Medicare is taking over the payment for 
dual-eligibles--that is low-income individuals who are eligible for 
Medicaid but also old enough to be eligible for Medicare--since 
Medicare is going to take over that expense, people think this is going 
to save the States money.
  First of all, until the year 2008 under this legislation, States do 
not receive any benefit from the Federal assumption of drug costs for 
dual-eligibles or low-income beneficiaries who currently get their 
prescription drugs from Medicaid. That is 5 years from now before they 
receive any benefit. States expecting to get savings from this bill, in 
the words of the National Conference of State Legislatures, will be 
``deeply disappointed.''
  In addition, this report contains what is called the clawback or the 
reverse block grant. This is a new concept to me, but it is a 
fascinating one. Instead of the Federal Government giving a block grant 
to the States, the Federal Government legislates a requirement on the 
States to give the Federal Government a block grant.
  It is through this clawback or reverse block grant the Federal 
Government demands that States pay the Federal Government for any 
savings the Federal Government estimates the States might gain from the 
new Medicare Program.
  When we take the period between 2004 and 2013, the amount the States 
will have to pay back to the Federal Government is $88.5 billion. Now, 
that is a big number, $88.5 billion. The conference report requires 
States to write checks to the Federal Government in the amount of $5.7 
billion in 2006. This goes up to $14.9 billion in 2013. Over that 7-
year period, that is a 261 percent increase in the amount the States 
have to pay the Federal Government.
  One may ask how they go up that much. It goes up that much because 
the Federal Government has built into this a 15 percent compounded 
inflation rate, and that is being imposed on the States. The States 
have nothing to say about it. If the States want to participate in 
Medicaid, they will pay that amount back to the Federal Government.
  State general revenues, tax revenues, will not go up 15 percent 
annually during those 7 years. So States are rightfully upset by this 
clawback. They rightfully point out that they are being required to now 
pay an inflation rate for something they do not control. The clawback, 
or the reverse block grant, is increasing by 261 percent over 7 years.
  What this is going to do is to put increased pressure on State 
budgets which will result in cuts in Medicaid, cuts in education, cuts 
in transportation. This should not be an acceptable outcome for those 
of us in the Senate. The bill we sent to the conference from the Senate 
loaded a $10 billion burden on the States. Now that it has come back to 
us, it has an $88 billion burden that we are loading on the States as 
part of this legislation.
  I would add one other point about this burden. There is a group of 20 
States that have a cap that is imposed upon them through Medicaid's 
disproportionate share hospital program. That cap says they can receive 
no more than 1 percent of the total Medicaid spending in their State. 
That compares to 8 percent, which is the national average.
  The 20 States I am talking about are called low-DSH States. New 
Mexico is one of those States. I authored legislation to increase that 
1 percent to 3 percent, not to get it up to the national average, which 
would have been 8 percent, but to get it up to 3 percent. That would 
have allowed the disproportionate share hospitals in my State, instead 
of receiving $9 million a year, to receive a total of $45 million a 
year.
  Unfortunately, the conference report cut the amount my State would 
receive from $45 million down to $10 million. Current law is $9 
million. Under this bill, we would go to $10 million instead of going 
from $9 million to $45 million.
  In sharp contrast, Louisiana's share of the Medicaid DSH funding goes 
from $500 million to $600 million next year. This is an unacceptable 
disparity, in my view. Louisiana's $100 million increase is more than 
the $43 million increase that is provided to all of the 20 low-DSH 
States combined. This precludes States such as mine from protecting 
their safety net hospitals and dealing with the fact that the uninsured 
rate in our States has increased by 4 million people over the last 2 
years.
  In conclusion, it is my view that Congress does its worst work under 
the circumstances we are being presented with tonight and tomorrow. It 
is late in the session. There is no time for adequate review of the 
1,100 pages that have been put on each of our desks. We are being 
pushed up against a totally artificial deadline. This is not the end of 
the Congress. It is barely the middle of the Congress. There is no 
reason this bill has to be passed before we leave for Thanksgiving. We 
could either come back after Thanksgiving or we could take it up in 
January.
  I have a letter from the Democratic Governors Association which says: 
We urge you to reject any efforts to vote on this legislation before 
you know its full content and cost impact on your State and the people 
we both serve.
  This is to all Members of the Senate from the Democratic Governors 
Association. They go on to say: Any rush to judgment without the 
necessary information may have both short- and long-term consequences 
that could prove to be irrevocably severe.
  We do not know the consequences of this legislation that we are being 
urged to pass tomorrow. We owe it to senior citizens in this country to 
understand what we are doing. We owe it to the taxpayers of the country 
to buy health care services for seniors without overpaying for those 
health care services. We owe it to the public to do all we can to 
reduce health care costs. Unfortunately, we are doing none of these 
things if we take up this bill and pass it tomorrow.
  I hope Senators will join me in voting not to send this bill to the 
President in its present form.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. LEVIN. Mr. President, first, I commend the Senator from New 
Mexico for his analysis of this bill. I listened to the last part of it 
and I thought it was exactly on point. I particularly would like to 
emphasize his last point, which is that this is not the end of the 
Congress, this is just the end of a session, or nearing the end of a 
session.
  With 4 days' notice of a bill of this complexity--now, I think the 
bill itself is about 700 pages and there are hundreds of pages of 
commentary that go with it, but the idea that we should take up a bill 
of this complexity, when seniors are just having the first opportunity 
after 4 days to try to fathom what is in it, is a terrible mistake.
  The Senator from New Mexico was exactly right in urging that we not 
rush to consider this bill tomorrow and to adopt this bill. It took a 
great deal of effort to create Medicare. It was not until 20 years 
after Harry Truman first proposed the idea of a guaranteed health 
benefit for seniors that President Lyndon Johnson signed the Medicare 
Program into law. It was fitting that Harry Truman was the program's 
first beneficiary. He paid his $3 premium and he enrolled in Medicare 
in 1965.
  We are confronting in this bill a turning away from Medicare's noble 
purpose. That purpose was to create an insurance pool for all seniors, 
where

[[Page 31087]]

the risks and financial burdens are shared--not for the profit of 
insurance companies or pharmaceutical companies but for the common 
good. The legislation before us is a fundamental and ill-advised 
restructuring of Medicare under the guise of adding a prescription drug 
benefit to the program.
  Many Members of Congress have worked for years to bring a Medicare 
prescription drug benefit to fruition. While the Senate-passed version 
of this bill had enough flaws to cause me, along with a number of 
colleagues, to vote against it, at least I was hopeful that some of 
these flaws would be corrected in the conference committee. 
Unfortunately, the prescription drug plan before us not only worsens 
the prescription drug program as adopted by the Senate, it has become a 
millstone dragging Medicare down with it.
  The promise of a prescription drug plan is being used to begin the 
unraveling of Medicare. First, there are the dangers for seniors 
created by the prescription drug provisions themselves. The 
Congressional Budget Office estimates that up to 25 percent of 
retirees, with existing prescription drug coverage through a former 
employer, would lose that coverage under this bill's plan. That is 
about 2.7 million senior citizens who currently have good private 
insurance and are paying less now than they would have to under a 
Medicare prescription drug plan. That is 2.7 million retirees who will 
lose benefits, above and beyond the number of retirees who are 
projected to lose their benefits under the current trend of employers 
reducing prescription drug coverage for their retirees. The tax 
subsidies for employers included in this conference report are not 
enough to entice employers to keep their drug coverage for those 2.7 
million retirees.
  Another fundamental flaw with the prescription drug benefit in this 
legislation is the lack of a guaranteed Medicare prescription drug 
plan. In the Senate bill, in the absence of two competing private plans 
offering a senior a prescription drug benefit, Medicare was the 
fallback. This approach was gutted in conference. Here is what the 
conference report provides. If one insurance company in a region offers 
a prescription drug benefit, regardless of how unattractive it is to 
seniors in terms of its premiums and copayments, both of which are left 
up to the insurance company, and if an HMO offers coverage in that 
region as a substitute to Medicare, no matter how unattractive that HMO 
is to seniors, and assuming that HMO also offers a prescription drug 
benefit, the senior will not be offered the fallback Medicare 
prescription drug benefit.
  Let me put that another way. We begin with the fact that private 
insurance companies offering a prescription drug policy under this bill 
could charge whatever premiums and copayments they want. If only one 
private prescription drug plan exists in a region, regardless of how 
unappealing it is, and one HMO offering a prescription drug plan also 
exists in that region, a senior has the choice of purchasing the bad 
prescription drug plan or leaving Medicare to join an HMO that he or 
she does not want to join, in order to get that prescription drug 
benefit. Forcing seniors to make the choice between staying in 
traditional Medicare or leaving Medicare and joining an HMO they 
otherwise would not join in order to get a prescription drug benefit is 
a thinly disguised attempt to unravel and privatize Medicare. That is a 
choice no senior citizen in America should have to make.
  Also troubling is the fact that the private company which offers the 
prescription drug benefit, and the company which offers the managed 
care alternative to Medicare, can be one and the same under the 
provisions of this bill. In addition, the prescription drug benefit in 
the legislation before us has a large gap in the prescription drug 
coverage. Once a senior's total drug spending reaches about $2,500 for 
the year, he or she will have to pay 100 percent of the cost of their 
prescriptions until their total drug spending reaches $3,600. This has 
come to be called the donut hole. This coverage gap will leave many 
seniors to pay the full cost of prescriptions at a time when they most 
need assistance. I know of no other insurance program that is so 
unfairly structured in that way.
  Adding insult to injury, while there is a gaping hole in coverage, 
there is no gap in the requirement to pay premiums. That obligation 
continues, even during the period that benefits are halted.
  One of the most disturbing aspects of this legislation is the fact 
that private insurance companies can use the purchasing power of their 
large number of beneficiaries to negotiate lower prescription drug 
prices, but Medicare is prohibited from doing so. This is one of the 
most unacceptable ways this bill protects private insurance companies 
and prescription drug companies from fair competition from Medicare, 
all at the expense of seniors and American taxpayers.
  Ask veterans how much prescription drugs cost at VA hospitals 
compared to their local pharmacy. Many of the drugs the VA offers are 
as little as half the price. The reason is the VA buys drugs in large 
quantities from drug manufacturers and has leverage in negotiating the 
prices. Instead of buying the 30-day supply of pills for someone on 
Medicare, why not allow Medicare to buy thousands of 30-day supplies at 
once for a fraction of the cost? That makes a lot of sense, but it is 
prohibited under this bill.
  The conferees left out some other real solutions to address the high 
cost of prescription drugs. Both the House- and Senate-passed versions 
included a provision to allow seniors to buy drugs in other countries 
at lower prices, so-called reimportation provision. However, these 
provisions have been stripped from the final bill. Even though the 
House and Senate have voted to allow reimportation with strong 
bipartisan votes, the conferees ignored these votes. More important, 
they ignored the problem of high prescription drug costs. Americans pay 
more for prescription drugs than any people in the world. U.S. 
taxpayers' dollars help to subsidize the research and development of 
many prescription drugs. Yet drug companies then sell them abroad for 
less. Because this bill does not address the high cost of prescription 
drugs, needed medicine will still be inaccessible for millions of our 
citizens.
  Unfortunately, the prescription drug benefit in this bill is what 
Newt Gingrich envisioned for the future of the entire Medicare Program. 
The former House Speaker said that he wanted Medicare to wither on a 
vine. To slowly chip away at the foundation of Medicare until it 
crumbles with a private network of managed care and drug companies 
eventually replacing Medicare is what he envisioned.
  Apparently AARP, which once stood for preserving social insurance for 
America's seniors, agrees with Mr. Gingrich. The AARP executive 
director and CEO wrote the forward to the former Speaker's book 
entitled ``Saving Lives and Saving Money,'' and later commented that 
``Newt's ideas are influencing how we at AARP are thinking about our 
national role and in our advocating for system change.''
  With this bill, the chief cooks of the Republican Party are following 
Newt Gingrich's ``wither on a vine'' recipe for the future of Medicare.
  The six so-called premium support demonstration projects created by 
this bill are the opening act for the privatization of Medicare. 
Proponents argue that Medicare's costs won't come down without a 
private sector competitor. But this bill, while purporting to promote 
competition between Medicare and private insurers, tilts the playing 
field against Medicare. First, there is a $12 billion so-called 
stabilization fund, which is in reality a slush fund. It is a slush 
fund for insurance companies to subsidize their policies. The $12 
billion in slush money is not available to traditional Medicare, only 
to the private insurance companies.
  Second, the claims of the insurance industry that they will and must 
accept every senior who applies are disingenuous. Here is why. Private 
insurers will have the flexibility to alter and change their plans, to 
be able to cherry-pick the healthy senior. For example, if an insurance 
company designed a program with a very low monthly premium but with 
high copayments and

[[Page 31088]]

high deductibles, this would be an incentive for a healthy senior to 
enroll, someone who could risk having to pay high copayments and 
deductibles because he or she has relatively infrequent medical 
treatment. Less healthy seniors, whose frequent medical treatments make 
it difficult or impossible for them to pay high copayments and high 
deductibles, would be left for the Medicare program to cover. This is 
privatization plus. It simply cannibalizes Medicare. Subsidizing 
insurance companies and allowing them to cherry-pick the beneficiary 
population means that insurance companies will be profiting mightily, 
while leaving the U.S. taxpayer to pick up the tab of insuring the less 
profitable population.
  How did we arrive at this ill-conceived legislation? Democrats were 
all but shut out of the conference committee which wrote this bill. 
Only two Democrats were allowed to participate in the conference 
negotiations. This massive shift in Medicare's approach and purpose was 
delivered publicly to us about 4 days ago. In this bill's 700 pages are 
provisions to dismantle Medicare as we know it, replacing it with a 
network of private insurers and drug companies whose goal is making a 
profit.
  There is a fundamental difference between private industry and 
government: Private companies fail if they do not make money, while 
government fails if we do not help citizens--especially those that 
cannot help themselves.
  I have heard from many of my constituents in the State of Michigan 
who need help in getting affordable prescription drugs. Let me read you 
a few excerpts from letters that I have received on this issue. One 
constituent writes:

       I am writing for your support for the Medicare Program. 
     Please provide a Medicare drug benefit that is comprehensive, 
     affordable and secure. Do not undermine Medicare as a defined 
     benefit program through privatizing it.

  Another constituent writes:

       We do not want a drug bill that eliminates or reduces our 
     current prescription plan that we now have . . . When I 
     retired . . . this plan was part of my benefit package and we 
     felt that it is their obligation to continue it, and the cost 
     of our drugs should not be passed on to the tax payers.

  I get hundreds of messages a week like that from constituents with 
concerns over the privatizing of Medicare and the possible loss of 
existing prescription drug benefits. It is estimated that this bill, if 
it becomes law, would cause 138,000 seniors in Michigan currently 
receiving prescription drug benefits to lose some or all of those 
benefits. And 90,000 seniors in my State who are Medicaid beneficiaries 
with a current prescription drug coverage will be worse off if this 
bill becomes law than they are under current law.
  A fundamental restructuring of Medicare of this magnitude demands 
careful and thoughtful deliberation. The conference report contains a 
large amount of new material not included in either the House-passed or 
Senate-passed bills. Hastily acting on this legislation is 
fundamentally unfair to millions of seniors who want and deserve to be 
treated fairly. I predict that when seniors become familiar with this 
bill's details, there will be a crescendo of opposition.
  The siren song you hear now principally from our Republican 
colleagues is that competition is necessary to drive the cost of health 
care down. The reality of this bill is not competition but government 
subsidies for insurance companies while allowing them to carve out the 
most profitable segment in the business--caring for the healthiest--
leaving the seniors with greatest need as the responsibility of the 
Federal government. Privatizing the most profitable part with a subsidy 
is not competition; it is a huge gift to private companies at the 
expense of the U.S. Treasury.
  Supporters of this legislation say they are harnessing the power of 
the marketplace to drive down prices. The reality is just the opposite. 
They are hobbling the Medicare program in the prescription drug program 
by letting the private provider use its purchasing power to drive down 
its drug prices, but not letting Medicare do the same; and in the 
dismantling of Medicare, by pushing people out of Medicare into private 
HMOs in order to obtain a prescription drug benefit.
  The bill before us will begin undoing 37 years of progress in 
Medicare. It is an ill-advised assault on the one program that 
guarantees medical care to our most vulnerable population, our senior 
citizens. An historic opportunity is being squandered if we adopt this 
bill. Our Nation's seniors deserve better. I yield the floor.

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