[Congressional Record (Bound Edition), Volume 149 (2003), Part 23]
[Senate]
[Pages 31780-31814]
[From the U.S. Government Publishing Office, www.gpo.gov]




   MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 
                        2003--CONFERENCE REPORT

  The PRESIDENT pro tempore. Under the previous order, the Senate will 
resume consideration of the conference report to accompany H.R. 1, 
which the clerk will report.
  The legislative clerk read as follows:

       Conference report to accompany H.R. 1, an act to amend 
     title XVIII of the Social Security Act to provide a voluntary 
     prescription drug benefit under the Medicare Program and to 
     strengthen and improve the Medicare Program, and for other 
     purposes.

  The PRESIDENT pro tempore. The Senator from Nevada is recognized.
  Mr. REID. Mr. President, the majority manager is not here. I have 
been designated to be the opposition manager for the half hour that we 
have. In a short time, I will delegate that time to the senior Senator 
from Massachusetts.
  As we begin this half hour on our side and half hour on the other 
side, I extend my appreciation and that of the whole Democratic caucus 
to Senator Kennedy for leading the opposition, literally, to this 
measure. He has had a lot of help. I have sat through days of speeches 
on this matter and I have been impressed with the quality of the 
speeches, really, on both sides. Especially on our side, I have been 
impressed with Senator Kennedy, and I will mention a number of names 
who I thought did such a wonderful job: Senators Bayh, Boxer, Cantwell, 
Clinton, Dayton, Dodd, Harkin, Pryor, Nelson of Florida, and Graham of 
Florida. What a loss it is going to be to this institution and our 
country that this fine man is going to no longer be part of the Senate 
after 1 year.
  I believe there is no one who has a better grasp of this legislation 
than the Senator from Florida. He has done such an outstanding job of 
articulating his views.
  Of course, I add a congratulatory note to Senator Stabenow who has 
worked on this measure long and hard.
  Senator Durbin has always done such a good job of expressing his 
views. He was never any better than on this issue.
  Mr. President, I reserve the last 5 minutes for Senator Daschle. I 
delegate the rest of our time to the senior Senator from Massachusetts.
  The PRESIDENT pro tempore. Under the previous order, the last 5 
minutes is reserved.
  Mr. KENNEDY. Mr. President, on the question of time, we have the last 
5 minutes. That will probably be leader time. The leader, obviously, 
ought to have whatever time he needs.
  Mr. REID. Mr. President, we have 23 minutes on our side; 23 minutes 
on the other side.
  The PRESIDENT pro tempore. The Chair advises the Senator from 
Massachusetts that the final 5 minutes of the first half of the time is 
for the minority leader, and the final 5 minutes of the debate time is 
for the majority leader.
  Mr. KENNEDY. I thank the Chair.
  Mr. President, I bring to the attention of the Members a picturesque 
description of what the reaction is to this proposed legislation. It is 
written in a very explicit article this morning in the Boston Globe. I 
want to share the article with the Members.
  The title is ``In Dorchester, Seniors Weigh Changes Against Their 
Needs.''
  It reads:

       Thomas Lombardi dropped his private health insurance a few 
     years ago when the price rose steeply. Then he switched from 
     Coumadin, a prescription anticoagulant he took for heart 
     disease, to half an aspirin to save about $15 a month. Living 
     on Social Security and a bit of savings, Lombardi, 75, says 
     he frequently has ``to cut corners to stay alive.''
       But over lunch at the Kit Clark Senior Center in 
     Dorchester, he said he doesn't support the $400 billion 
     Medicare drug benefit that is about to become law and provide 
     coverage to millions of seniors like him. Echoing the 
     comments of many others at the center yesterday, he said it's 
     far too complicated and probably won't go far enough to help 
     him because of gaps in the coverage designed to keep down the 
     cost of the new benefit. Besides, many said, it will be two 
     years before the full benefits kick in.
       ``I don't believe it's good for me,'' said Lombardi, who 
     owned a welding business in Dorchester.
       ``This is part of the Bush strategy to . . . destroy 
     programs put in place years ago,'' Said Richard Schultz, who 
     qualifies for Medicare at 60 because he is disabled. ``I 
     understand that it would benefit some low-income people in 
     the short term, but combined

[[Page 31781]]

     with huge tax cuts, this is going to drive the deficit up. 
     Then they're going to decide they don't have the money, and, 
     in the long run, the program will be dissolved''. . . .
       Barbara Burke, who operates the switchboard at the senior 
     center, disparagingly called the new benefit ``a Band-Aid.''
       It's not enough with the high cost of medicines,'' said 
     Burke, who said she's still working at 66 because she won't 
     be able to afford her prescriptions if she retires. The 
     center does not pay health benefits for retirees, she said, 
     and she has chronic lung disease that costs her more than 
     $200 a month for inhalers alone.
       ``People that can't afford to buy medications should get it 
     at a minimum charge,'' she said. . . .
       An Kim Hoang, 67, said she can't afford a copayment of $3 
     for a brand-name drug, which will be required under the new 
     plan for those below the poverty level. Those with incomes 
     from $8,980 to $12,123 will face copayments up to $5 per 
     prescription. Seniors currently getting drug coverage through 
     the MassHealth, the state-federal Medicaid program for the 
     poor, would be shifted to the federal program.

  In fact, that is going to be eliminated in terms of coverage. That is 
part of the 6 million low-income seniors who will pay more.

       Hoang, speaking through a translator, said she borrows from 
     friends to cover the $2 copayment required by Medicaid for 
     each of the eight prescriptions she takes to treat mental 
     illness. ``$1 is OK,'' she said, ``but $2 is too much.''

  This is the real world, Mr. President. This is putting a face and 
name on the 6 million low-income seniors who will pay more.

       ``$1 is OK,'' she said, ``but $2 is too much.''

  That was put in here to save some $12 billion to $15 billion put into 
a slush fund to provide additional benefits to the HMOs.

       Because of the Medicaid copayment, her friend Quy Nguyen, 
     71, said she limits herself to four prescriptions she needs 
     most and tries to get by without several others. She said she 
     envisions that choice becoming more difficult under [this 
     program.]
       Josephine DeSantis said the new benefit would help her 
     immensely, since she struggles to scrape together the $157 
     she spends every three months for drugs to prevent ulcers and 
     dizziness. But at 78, she said, she's upset that the benefit 
     won't start until 2006.
       ``In two years,'' she said, ``I'll probably be dead.''

  There you have it, Mr. President, reaction in a working class 
community in Dorchester. We have the reaction in real life about what 
the low-income seniors pay.
  When we talk and bring out these charts, as we have in the past few 
days, this is the very instance about which we are talking. It did not 
have to be this way. This is just an illustration of the overall 
challenges of this legislation and a reason that it should not pass the 
Senate.
  How much time do I have, Mr. President?
  The PRESIDENT pro tempore. The Senator has 15 minutes remaining.
  Mr. KENNEDY. Mr. President, I yield 7 minutes to the Senator from 
Florida.
  The PRESIDENT pro tempore. The Senator from Florida is recognized.
  Mr. GRAHAM of Florida. I thank the Chair.
  Mr. President, I thank Senator Kennedy. We have had a long and quite 
illuminating debate over the past week on one of the most important 
issues that our Nation faces; that is: Shall we turn a program which 
for 40 years has protected older Americans and disabled Americans 
against illness into a program which promotes wellness?
  In order to do that, we understand that fundamentally we will have to 
make access to prescription drugs affordable, comprehensive, universal, 
and reliable because prescription drugs are now fundamental to a 
preventive health care policy.
  There is much to criticize about this legislation, and I intend to 
vote no. We have heard that at great length in recent days. Let me take 
a slightly different approach. I am assuming that this legislation is 
going to pass. The challenge will then be before us: What do we do 
next?
  Let me suggest three things that we ought to do next. One is that we 
have to look realistically at the cost of this bill. As Senator Ensign 
said during last night's debate, the $400 billion figure is a mirage. 
This bill is going to cost substantially more than $400 billion. The 
Congressional Budget Office is estimating that in the second 10 years, 
it will be over $1 trillion.
  What are the suggestions of how to deal with this reality? One of 
those suggestions is to reduce benefits. Another one is to set some 
type of a formula relating Medicare expenditures to general revenue, 
and then scaling back Medicare expenditures when they break through 
that barrier.
  Of course, one of the things that we ought to have done in terms of 
cost is not start this year by passing a massive tax cut which added 
substantially to the Federal deficit and narrowed the range of 
realistic options that we have today.
  This has been truly an amazing year for the Congress and the 
President. We started the year with a proposal for almost a $1 trillion 
tax cut. We reasserted our commitment to fight and win a war against 
terror in Afghanistan. We started a war in Iraq. We have seen surging 
Federal Government expenditures in the nondefense area, and now on what 
will likely be the last day of the session, we conclude by passing a 
$400 billion unfunded new entitlement.
  My answer to the question of cost, at least a significant part of it, 
lies in the fact that in this bill we are failing to sanction the use 
of the tremendous marketing influence which the Federal Government, 
through the Medicare Program, can have over the cost of prescription 
drugs.
  Just as we did over 10 years ago--and the Presiding Officer's 
colleague, Senator Murkowski, was a prime sponsor of this legislation--
we authorized the VA to negotiate to get the best prices it could for 
American veterans. I think the high priority for 2004 should be to give 
to the administrator of the Medicare Program similar authority.
  Second, I think we need to pass a Patients' Bill of Rights. If we are 
going to be herding millions of older Americans into various forms of 
health management, we have a responsibility to give them some assurance 
as to what the standards of that access to health care will be.
  Third, we have a strange provision in here for the distribution of 
prescription drugs. That is, we use private insurance programs rather 
than traditional Medicare. It would be like having to get a private 
insurance program to get anesthesiology or any of the other services 
that have traditionally been provided through Medicare.
  Then, in order to encourage--I would say more than encourage--mandate 
the maximum number of Americans participating in that program, we say 
there has to be at least one prescription-only insurance provider in 
the region and, second, then a preferred provider organization, 
essentially a variant of an HMO, in the region. It is only if both of 
those fail, there is not one or more drug-only insurance plan or a PPO, 
only under those circumstances will a person be able to consider using 
standard fee-for-service Medicare as the means of getting their 
prescriptions.
  It is ironic that in another part of this bill, which is going to 
create a demonstration project on the totality of Medicare, we line up 
all of the choices side by side, including staying in traditional fee 
for service, which over 85 percent of Americans are electing to do, and 
then choose on an equal basis, as we do in the Federal health insurance 
program. We do not have to wait until all of the other choices have 
been rejected, because they are not being provided, and then drop back 
into a Blue Cross/Blue Shield-type fee for service.
  We ought to do the same thing with prescription drugs. If we are 
going to have what I think is a rather irrational program--
incidentally, the prescription drug-only proposal is not in existence 
in any other area of American health care. A person cannot buy that 
through the Federal health care system. A person cannot buy it through 
their employer system. The reason they cannot buy it is because no 
insurance company is providing it. That ought to tell us something 
about what they think of the management and fiscal implications of 
providing a drug-only prescription plan.
  At least we should not require our oldest citizens to go through a 
so-called fallback process. We should allow older citizens to assess 
all of the

[[Page 31782]]

options at the same time and make the decision they consider to be in 
their best interest.
  As I conclude this long debate, I urge that the agenda of cost, 
patients' rights, and providing the more rational process for elderly 
determinations as to how they will receive their drugs be the starting 
point of the agenda for reform next year.
  The PRESIDENT pro tempore. The Senator's time has expired.
  Who yields time?
  The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I yield myself such time as I might 
consume.
  First, I very much appreciate the passion of the opposition. 
Hopefully, they will look back on this day and come to the conclusion 
that we have not only provided prescription drugs for seniors as the 
first improvement in Medicare in 38 years and the strengthening of 
Medicare that follows it, but that we are also in the process of giving 
baby boomers an alternative Medicare Program, if they would so choose.
  The basis of such legislation is the right to choose for seniors. No 
one is forced to do anything. We will give those baby boomers a program 
that is much closer to the health insurance they have in the places 
from which they retire.
  Regardless, there are two classes of people covered today or not 
covered today with prescription drugs that we are emphasizing. For low-
income people, too often our seniors are choosing between heat and 
prescription drugs, particularly in the cold areas of the country, or 
between food and prescription drugs. This legislation is going to 
lessen the chances that low-income people are going to have to make 
such choices.
  The other group of people are those who have catastrophically high 
prescription drug costs. There is heavy subsidy and help in this bill 
for those two categories of people. Those are significant categories of 
people.
  Also, we are doing something for everybody in this legislation from 
the standpoint that for the first time there will be in place 
mechanisms to dramatically negotiate down the price of drugs. That is 
obviously going to help the people who voluntarily choose to go into 
these plans, but the extent to which that is going to have an impact on 
everybody, old or young, is very important because all I hear from 
opponents of this bill is that we do not do anything to help cut down 
on the costs of drugs.
  We do it through the subsidy. We do it through negotiations. We do it 
through getting generic drugs on the market much sooner than before.
  Also, this bill is about enhancing quality of life, because none of 
us think the quality of life is enhanced by putting people in the 
hospital if they do not need to go to the hospital.
  Remember when Medicare was enacted 38 years ago, the practice of 
medicine was to put everybody into the hospital. Today, the practice of 
medicine--and a lot of the thanks can go to prescription drugs--is to 
keep people out of hospitals and out of operating rooms. So people who 
cannot afford drugs, who go to the doctor very sick, are going to not 
only end up in a place they do not want to go, because people would 
rather not go to hospitals, rather not go to operating rooms. It is 
going to save our programs a lot of money, both private and public 
payment programs, for doctors and hospitals, when we can have people go 
into programs where they can get prescription drugs and keep their 
health up so they do not go to the hospital.
  So we are bringing Medicare and the practice of medicine into the 
21st century. In strengthening and improving Medicare, we are doing 
today exactly what we would be doing if we were writing a Medicare 
Program in the year 2003 as opposed to the year 1965.
  I hope the opponents, in a few years, can look back and say this is 
the day we have done the right thing for seniors, for their economic 
life, for the quality of their life; we have done the right thing for 
our hospitals and our doctors; we have done the right thing for 
America.
  I would like to spend just a little bit of time counteracting the 
arguments that are used against this bill by those who say we are not 
doing enough for low-income people. In fact, this bill is coming back 
from conference doing better for low-income people than when it went 
into conference.
  One of those major changes that were made, not only at the behest of 
the House of Representatives but also at the behest of a lot of people 
in this body, probably more prominent in the Democratic Party than in 
the Republican Party, was to make sure the category of people we call 
dual eligibles--those low-income seniors who are already on Medicare 
but also qualify for Medicaid--is to put all of those into the Medicare 
Program so we didn't have an inequality. Maybe it was not a very big 
inequality but at least there was some inequality from one State to 
another State because of the Federal-State partnership in Medicaid that 
enables the State legislatures in some States to maybe set up a little 
different program--a little more rich, a little less rich--than what 
might be done in another State.
  So dual eligibles are in this bill because of the demands of mostly 
Democrat Senators and people in the House of Representatives. That is 
something I didn't believe should be done, but I supported it because 
that was a necessary compromise. But now I find people who were 
advocating that position complaining about the legislation. So I want 
to tell them how wrong they are or how, if they are right just a little 
bit, they are right in such an insignificant way that it is immaterial 
because that ought to be seen as something that results from something 
they wanted us to do in this legislation.
  This conference report, then, contains a generous drug benefit for 
these dually eligible seniors. There is, first of all, no donut hole 
for low-income Medicare beneficiaries. Let's get this clear. Let me 
make it clear. People on that side of the aisle are complaining about a 
donut hole. But for low-income people there is no donut hole. The bill 
guarantees all 6 million dual eligibles access to prescription drugs.
  Under our conference report, dual eligibles will have better access 
through Medicare, especially since State Medicaid programs are 
increasingly imposing restrictions on patients' access to drugs, and 
that is what brings about greater inequity from State to State. Since 
States are in a budget crunch, forced to do that, some dual eligibles 
might be treated less generously in one State as opposed to another, 
but when they are all under the Federal Medicare Program, that will not 
be the case.
  Further, States have the flexibility to provide coverage for classes 
of drugs, including over-the-counter drugs, that are not now covered by 
the Medicare Program. This bill ensures appeal rights for dual 
eligibles. Under the agreement, dual eligibles will maintain appeals 
rights like those in the Medicaid Program. The dual eligibles are a 
fragile population and I think, because of the conference report as 
opposed to either bill in its original form, they are taken care of 
better in this bill. The conference report recognizes and provides 
generous coverage to these 6 million people.
  I hope we can take the summation of the AARP when they said this bill 
``is a historic breakthrough and [an] important milestone in the 
Nation's commitment to strengthen and expand health security for its 
citizens. . . .'' I hope that will be conceived or considered as a 
toning down of the partisan opposition to this legislation.
  I reserve the remainder of my time just in case some colleagues come 
over. I have more to say, but I will say it later if other colleagues 
don't show up, so I yield the floor.


                                Title XI

  Mr. KENNEDY. Mr. President, I oppose the Medicare bill before the 
Senate, but I want to express my understanding of the refinements of 
the Hatch-Waxman Act found in Title XI of the Medicare bill now before 
the Senate. I was deeply involved in the negotiations of these 
provisions in the conference. The Hatch-Waxman Act, which passed in 
1984, reflects efforts by the

[[Page 31783]]

Congress to promote two policy objectives: to encourage brand-name 
pharmaceutical firms to make the investments necessary to research and 
develop new drug products, and to enable competitors to bring cheaper, 
generic copies of those drugs to market as quickly as possible.
  The Hatch-Waxman Act has worked very well for almost 20 years. It has 
provided the incentives necessary to bring the many medicines to market 
that have so transformed the shape of modern medical practice. And it 
has brought generic drugs to market faster than ever, saving consumers 
billions of dollars.
  As the Federal Trade Commission has shown, however, in recent years 
both brand-name and generic drug companies have exploited certain 
aspects of the Hatch-Waxman Act to delay generic competition. The 
changes to the Hatch-Waxman Act found in Title XI represent refinements 
to the present system that will stop these abuses, will restore the 
original balance the law intended, and will ensure Americans more 
timely access to affordable pharmaceuticals.
  Most significantly, the Hatch-Waxman provisions in this bill limit 
brand-name drug companies to only one 30-month stay of approval of 
generic drugs. This change will stop the multiple, successive 30-month 
stays that the Federal Trade Commission identified as having delayed 
approval of generic versions of several blockbuster drugs and cost 
consumers billions of dollars.
  It also restructures how the 180-day generic exclusivity provisions 
work. The 180-day exclusivity gives a generic company 180 days during 
which it is the only generic competitor to the brand drug. The 
exclusivity is a very valuable incentive for generic companies. The 
exclusivity encourages generic companies to challenge patents that are 
likely invalid or not infringed and, because it goes to the first 
generic applicant to challenge a brand-name drug patent, it encourages 
challenges of those patents as soon as possible. These incentives mean 
that consumers will be able to enjoy the lower prices provided by 
generic companies sooner rather than later.
  The Federal Trade Commission reports that the exclusivity has at 
times been parked through collusive agreements between brand and 
generic companies. Parking the exclusivity has blocked other generic 
companies from getting to market and has cost consumers billions of 
dollars. The Hatch-Waxman provisions in this bill are intended to 
prevent parking of the exclusivity. It does this by providing for 
several situations in which a generic company with the exclusivity 
forfeits the exclusivity, clearing the way for other generic companies 
to bring their products to market.
  The Hatch-Waxman provisions in this bill also make the exclusivity 
available only with respect to the patent or patents challenged on the 
first day generic applicants challenge brand drug patents, which makes 
the exclusivity a product-by-product exclusivity rather than a patent-
by-patent exclusivity, and the exclusivity is available to more than 
one generic applicant, if they all challenge patents on the same day.
  Mr. SCHUMER. Mr. President, will the Senator yield for a question?
  Mr. KENNEDY. Yes, I will yield to my friend from New York.
  Mr. SCHUMER. Thank you, Mr. President. Let my just say, before I ask 
my question, that I want to thank the Senator from Massachusetts, and 
the senior Senator from New Hampshire, for their leadership on this 
issue. The Senator from Massachusetts, as chair of the HELP Committee 
last year, took up the generic drug bill authored by the senior Senator 
from Arizona and myself, saw it through the HELP Committee, and managed 
its passage by the full Senate. This year, the senior Senator from New 
Hampshire approached me to work together to come up with the generic 
drug bill that served as the basis for what is in this bill, and he 
brought it through the HELP Committee, offered it as an amendment to 
the prescription drug bill in the Senate, where it was accepted 94-1, 
and defended it very ably in conference with the House. So, again, I 
would like to thank both distinguished chair and ranking member of the 
HELP Committee for their leadership on this issue.
  Of course, I also want to thank the senior Senator from Arizona, 
without whose leadership over the past several years we would not be 
where we are today on such an important consumer issue.
  As for my question, I understand that a generic applicant that has 
the 180-day exclusivity will forfeit the exclusivity if it has failed 
to market its product 75 days after certain events have happened with 
respect to itself or another generic applicant and with respect to each 
of the patents that gives the generic applicant its generic 
exclusivity. Is that correct?
  Mr. KENNEDY. That is correct.
  Mr. SCHUMER. And am I correct that one of these events is when ``a 
court enters a final decision'' that the patent is invalid or not 
infringed by the drug of the generic applicant?
  Mr. KENNEDY. The Senator is correct.
  Mr. SCHUMER. And am I correct that a final court decision under this 
provision includes the kind of court decision recognized in the Teva v. 
Shalala opinion?
  Mr. KENNEDY. Yes, I very much appreciate your question on this point. 
We do intend that a court decision like the one in the D.C. Circuit's 
1999 decision in Teva v. Shalala--a decision dismissing a declaratory 
judgment action for lack of subject matter jurisdiction because the 
patent owner has represented that the patent is not infringed--will 
count as a court decision under the new ``failure to market'' 
provision. Under the failure to market provision, the conditions for 
forfeiture are intended to be satisfied when a generic company has 
resolved patent disputes on all the patents that earned the first-to-
file its exclusivity. After a court decision such as that at issue in 
Teva v. Shalala, the patent owner is estopped from suing the generic 
applicant in the future and the patent dispute is resolved. So these 
sorts of decisions should be recognized as court decisions under the 
failure to market provision.
  I'd also like to point out the importance of the declaratory judgment 
provisions that are in the Senate bill and are retained in modified 
form by the conferees in the conference report now before the Senate. 
Amendments made by this bill to both the Federal Food, Drug, and 
Cosmetic Act and Title 35 clarify that generic applicants may bring 
declaratory judgment acts to ensure timely resolution of patent 
disputes. These provisions authorize a generic applicant to bring a 
declaratory judgment action to obtain a judicial determination that a 
listed patent is invalid or is not infringed if the applicant is not 
sued within 45 days of having given notice to the patent owner and 
brand-name drug company that it is challenging the patent. This 
clarification of a generic applicants right to bring a declaratory 
judgment action is crucial to ensuring prompt resolution of patent 
issues, which is essential to achieve our goal of speeding generic 
drugs to market.
  It's worth pointing out that the Hatch-Waxman Act has always provided 
that patent owners and brand drug companies can bring patent 
infringement suits against a generic applicant immediately upon 
receiving notice that the generic applicant is challenging a patent. 
The declaratory judgment provisions in Title XI of this bill simply 
level the playing field by making it clear that the generic applicant 
can also seek a prompt resolution of these patent issues by bringing a 
declaratory judgment action if neither the patent owner nor the brand 
drug company brings such a suit within 45 days after receiving notice 
of the patent challenge.
  Mr. McCAIN. Mr. President, will the Senator yield for a question?
  Mr. KENNEDY. Yes, I will yield.
  Mr. McCAIN. Will the Senator please explain for me and our colleagues 
the purpose of the provision in Title XI that amends Title 35 to say 
that courts must hear declaratory judgment actions brought by generic 
applicants?

[[Page 31784]]


  Mr. KENNEDY. Certainly. The provision in Title 35 is intended to 
clarify that Federal district courts are to entertain such suits for 
declaratory judgments so long as there is a ``case or controversy'' 
under Article III of the Constitution. We fully expect that, in almost 
all situations where a generic applicant has challenged a patent and 
not been sued for patent infringement, a claim by the generic applicant 
seeking declaratory judgment on the patent will give rise to a 
justiciable ``case or controversy'' under the Constitution. We believe 
that the only circumstance in which a case or controversy might not 
exist would arise in the rare circumstance in which the patent owner 
and brand drug company have given the generic applicant a covenant not 
to sue, or otherwise formally acknowledge that the generic applicant's 
drug does not infringe.
  The mere fact that neither the patent owner nor the brand drug 
company has brought a patent infringement suit within 45 days against a 
generic applicant does not mean there is no ``case or controversy.'' 
The sole purpose of requiring the passage of 45 days is to provide the 
patent owner and brand-name drug company the first opportunity to begin 
patent litigation. Inaction within the 45-day period proves nothing, as 
there are tactical reasons why a patent owner or brand drug company 
might refrain from bringing suit on a patent within 45 days.
  For example, the brand drug company might have several patents listed 
in the Food and Drug Administration's Orange Book with respect to a 
particular drug. It could be in the company's interest to bring suit 
within 45 days on one patent and to hold the others in reserve. The 
suit on one patent would automatically stay approval of the generic 
application until the lawsuit is resolved or the 30 months elapses. 
Holding the other patents in reserve would introduce uncertainty that 
could discourage generic companies from devoting resources to bring the 
generic drug to market and that would give the brand drug company a 
second opportunity to delay generic competition by suing the generic 
company for infringement of the reserved patents after the resolution 
of the initial infringement suit.
  Or for patents on which no 30-month stay is available, the brand drug 
company could sit back to create uncertainty and similarly delay 
generic entry by delaying resolution of those patents. Or when generic 
applicants are blocked by a first generic applicant's 180-day 
exclusivity, the brand drug company could choose not to sue those other 
generic applicants so as to delay a final court decision that could 
trigger the ``failure to market'' provision and force the first generic 
to market.
  In each of these and in other circumstances, generic applicants must 
be able to seek a resolution of disputes involving all patents listed 
in the Orange Book with respect to the drug immediately upon the 
expiration of the 45-day period. We believe there can be a case or 
controversy sufficient for courts to hear these cases merely because 
the patents at issue have been listed in the FDA Orange Book, and 
because the statutory scheme of the Hatch-Waxman Act relies on early 
resolution of patent disputes. The declaratory judgment provisions in 
this bill are intended to encourage such early resolution of patent 
disputes.
  Mr. McCAIN. Mr. President, will the distinguished Senator yield?
  Mr. KENNEDY. Yes, I will yield.
  Mr. McCAIN. Mr. President, I'd like to ask the Senator if it is the 
intent of this legislation that the declaratory judgment provisions in 
this bill, in particular, the change to Title 35, will be available 
immediately to help generic drug applicants who are now in federal 
court seeking declaratory judgments that listed drug patents are 
invalid or are not infringed by their product?
  Mr. KENNEDY. I agree with the distinguished Senator from Arizona. It 
is clearly our intent that, under these provisions, courts considering 
jurisdictional challenges to declaratory judgment actions brought by 
generic drug companies should apply the standards set forth in this 
bill to such challenges in any case pending (either in the trial court 
or on appeal) at the time of enactment in order to resolve patent 
issues as soon as possible and to clear the way for quicker generic 
entry.
  Mr. McCAIN. I thank the Senator for his answer and for his leadership 
on these issues. His experience and technical expertise have been 
invaluable. I would also like to thank my friend, the senior Senator 
from New York, who has worked with me these many years on this 
legislation. His dedication to American consumers and his commitment to 
restoring fairness to the drug industry must be commended. The senior 
Senator from New Hampshire must also be recognized for leadership on 
this issue in his committee, in the Senate, and in the conference on 
this bill. I would also like to thank the staffs of all three of these 
Senators, who have worked tirelessly on behalf of this issue. I ask 
unanimous consent that a letter from Chairman Muris of the Federal 
Trade Commission about the value of the declaratory judgment provision 
in Title 35 be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                     Federal Trade Commission,

                                 Washington, DC, October 21, 2003.
     Hon. Judd Gregg,
     Hon. Edward M. Kennedy,
     Senate Committee on Health, Education, Labor, and Pensions, 
         Washington, DC.
       Dear Chairman Gregg and Ranking Member Kennedy: In written 
     testimony submitted to the Senate Judiciary Committee on 
     August 1, 2003, for a hearing entitled, ``Examining the 
     Senate and House Versions of the `Greater Access to 
     Affordable Pharmaceuticals Act,''' the Federal Trade 
     Commission commented on both the Senate and House-passed 
     bills that reform the Hatch-Waxman generic drug approval 
     process. The reforms are nearly identical to recommendations 
     contained in the FTC's July 2002 study entitled, ``Generic 
     Drug Entry Prior to Patent Expiration.''
       I understand that one particular provision contained in the 
     Senate-passed version is of particular interest now on the 
     bills proceed through the conference process. Specifically, 
     the Senate bill adds a provision clarifying that if a brand-
     name company fails to bring an infringement action within 45 
     days of receiving notice of an abbreviated new drug 
     application (ANDA) containing a paragraph IV certification, 
     the generic applicant can bring a declaratory judgment action 
     that the patent is invalid or not infringed. Without 
     commenting on the provision's constitutionality, the 
     Commission has stated that ``the Senate provision may help 
     ensure that a federal court has subject matter jurisdiction 
     to resolve the patent issues.''
       While I defer to others as to the constitutionality of the 
     Senate provision, I note that a court's dismissal of a 
     declaratory judgment action for lack of controversy may 
     resolve uncertainty concerning whether a generic product 
     infringes a brand-name company's patent. It also can reduce 
     the incentives for the brand-name company and the first 
     generic applicant to park the 180-day exclusivity. Without 
     the right to seek a declaratory judgment, a subsequent 
     generic applicant that develops a clearly non-infringing 
     product cannot trigger the first generic applicant's 
     exclusivity because the subsequent generic applicant will not 
     be sued for patent infringement by the brand-name company. If 
     the brand-name company and the first generic applicant agree 
     that the generic will not begin commercial marketing, then 
     the 180-day exclusivity becomes an absolute bar to any 
     general entrant. Moreover, speedier resolution of patent 
     infringement suits will redound to the benefit of consumers 
     by resolving any possible uncertainty that prevents a generic 
     applicant from marketing its products. If also will allow for 
     the simultaneous running of the periods for FDA approval and 
     for the resolutions of patent infringement issues.
       For these reasons, I believes the declaratory judgment 
     provision in the Senate-passed bill would be a useful 
     mechanism to reduce uncertainty in the Hatch-Waxman process 
     and potentially could speed access of generic drugs to 
     consumers.
           Sincerely,
                                                 Timothy J. Muris.

  Mr. BAUCUS. Mr. President, one of the criticisms that some have 
raised about the conference report is the provision that prevents the 
Department of Health and Human Services Secretary from interfering in 
the negotiations between private prescription drug plans, drug 
manufacturers, and pharmacies.
  Mrs. FEINSTEIN. Yes, we have heard this criticism often during the 
debate. And I believe it is important to clarify that this bill will 
ensure that seniors pay less for prescription drugs than they pay 
today.
  Mr. BAUCUS. I also believe it is important that we clarify the 
purpose of the non-interference language. This

[[Page 31785]]

language is not intended to pad the pockets of drug manufactures. It is 
not intended to pad the pockets of the insurance companies.
  Mr. GRASSLEY. The purpose of this bill is to ensure that Medicare 
beneficiaries get the benefit of negotiated discounts that the private 
sector is able to achieve. We want seniors, who today pay the highest 
prices, to have access to discounted prices. And we also don't want to 
see the situation we have today with Part B covered drugs. Isn't it 
true that the Federal Government dramatically overpays for the drugs 
that are currently covered under Medicare today?
  Mr. BAUCUS. Yes, that is true. The HHS Inspector General has been 
urging Congress to end these overpayments for years. The conference 
report addresses these overpayments, while ensuring fair reimbursements 
for oncologists and other affected physicians to ensure that patient 
care remains unaffected. Moreover, I think it is important that members 
of Congress understand the strong consumer protections that are in 
place to ensure that they receive access to an affordable drug plan, 
one that provides access to the prescription drugs that they need.
  Mrs. FEINSTEIN. Isn't it also true that if a plan chooses to use a 
formulary, it must include at least two drugs in each therapeutic 
category or class, unless the category or class only has one drug and 
that the plan must use pharmacy and therapeutic committees that consist 
of practicing physicians and pharmacists to design their formularies?
  Mr. BAUCUS. Yes, this is true. It is also true that the Secretary is 
prevented from approving a drug plan that charges too high of a 
premium. The premium must reasonably and equitably reflect the costs of 
the benefits.
  Mr. GRASSLEY. Isn't this requirement the same standard that applies 
to the Federal Employees Health Benefits Plan?
  Mr. BAUCUS. Yes, the same one. And I think it is also important to 
note that conference report has a requirement for a Government-backed 
fallback plan if fewer than two plans are available. This Government-
backed plan is required to negotiate prices with drug manufacturers. 
And if the fallback plan is unable to negotiate good discounts on its 
own, then the Secretary will be able to intervene as appropriate to 
negotiate to achieve lower prices.
  Mrs. FEINSTEIN. In addition, I also think it is important to note 
that the Congressional Budget Office has estimated that the net price 
increase for prescription drugs under this bill will be 3.5 percent. 
CBO also found that drug plans bearing full statutory risk levels are 
estimated to produce an overall higher cost savings of 20 to 25 percent 
for prescription drugs under this bill, as compared to the 12 to 15 
percent that CBO believes is achieved by private prescription benefit 
managers today. According to CBO, prescription drug prices would be 
cheaper under this bill. I would like my colleagues to know that should 
CBO's estimates of the higher savings by drug plans in this bill prove 
to overestimate prescription drug savings to seniors, I intend to 
introduce legislation that will provide seniors with lower drug prices.
  Mr. GRASSLEY. Yes, CBO estimates that under the conference report 
seniors will be offered average greater savings under the Senate bill. 
The price for prescription drugs will almost certainly be lower than 
the prices seniors who do not have drug coverage pay today.


                      company-owned life insurance

  Mr. CONRAD. Mr. President, I rise to engage the chairman of the 
Finance Committee in a colloquy regarding pending committee action with 
respect to the tax treatment of company-owned life insurance, COLI. Let 
me again express my appreciation for the efforts the chairman made on 
October 1 in securing the committee's unanimous consent to conduct a 
hearing on issues surrounding COLI and to mark up a COLI provision 
shortly thereafter.
  Mr. GRASSLEY. I thank the Senator.
  Mr. CONRAD. I welcomed the opportunity the chairman provided in the 
committee hearing on COLI that occurred on October 23. By the end of 
that hearing, I believe committee members had a solid grasp of the 
legitimate problems that still remain after the numerous legislative 
reforms of COLI over the last 20 years.
  Mr. GRASSLEY. I agree. The hearing was informative and prepared the 
committee to come to an agreement on the reforms that ought to take 
place.
  Mr. CONRAD. Since the hearing, the chairman and I have worked toward 
the development of a COLI proposal that would garner the support of the 
broadest possible consensus in the committee and in the full Senate. I 
believe that last week we were close to an agreement on a proposal that 
responded to every legitimate criticism of COLI heard during the course 
of the October 23 hearing.
  I regret that the crush of Finance Committee legislation on the 
Senate floor in October and November has so far prevented the chairman 
from scheduling a markup. Unfortunately, it is now clear that the 
markup agreed to on October 1 cannot before the end of this session of 
Congress.
  Mr. GRASSLEY. I share this regret. Let me pledge to have this markup 
on a COLI provision at the Finance Committee's first opportunity in 
2004. I look forward to completing the action we began in October.


                       CANCER CARE REIMBURSEMENT

  Mrs. FEINSTEIN. Mr. President, the Medicare conference report, which 
includes a reform of the Part B drug payment system, includes 
significant payment reductions to providers of cancer care. I 
understand that Senator Grassley does not intend for these payment 
reductions to force efficient cancer clinics to close, jeopardizing 
access to care for thousands of cancer patients.
  Mr. GRASSLEY. That is correct, Senator. The Medicare conference 
agreement contains a number of significant reforms, which will save 
billions of dollars in overpayments from Medicare covered drugs, while 
also substantially increasing payments to physicians. I intend to 
preserve continued access to high-quality cancer care.
  Mrs. FEINSTEIN. Many physicians depend on overpayments on Part B 
drugs to make up for inadequate practice expenses. Is it the intent of 
the Senator from Montana that physicians' practice expenses will be 
increased sufficient to ensure access to care?
  Mr. BAUCUS. Yes, that is my intent. And I am committed to monitoring 
this new payment system as it is implemented, in order to ensure access 
to high-quality cancer care.
  Mrs. FEINSTEIN. Is it the intent that if this new payment system does 
not suffice to ensure access to care, that you will revisit the system 
and revise the payment methodology?
  Mr. BAUCUS. That is correct.
  Mrs. FEINSTEIN. Finally, it is my understanding that practice expense 
increases for oncology are expected to be about $500 million in 2004, 
$600 million in 2005, and $560 million in 2006, as shown in the summary 
which I will submit for the Record. Is it your understanding that the 
payment expense increases will allow efficient cancer care providers to 
continue serving cancer patients and not close their doors?
  Mr. GRASSLEY. Yes. I would also note that the Senator from Kansas, 
Mr. Brownback, has some concerns over this issue. He has been a 
forceful advocate for the oncology community. And while I think the 
package for cancer care is a fair one, I understand that he has some 
concerns.
  Mr. BROWNBACK. I thank the chairman, both for his commitment to this 
legislaiton and for keeping my staff and me informed throughout the 
drafting of these provisions. I would note that from the time he first 
spoke on this issue during consideration of the tax bill the chairman 
has expressed his intent to, ``ensure that seniors and their caregivers 
have adequate payment for, and continued access to, important cancer 
therapies.'' I would ask of the chairman, is it his intent that the 
changes to outpatient drug reimbursement in Sections 303 and 304 of 
this bill will not have a significantly adverse impact on access to 
cancer treatment?

[[Page 31786]]


  Mr. GRASSLEY. The Senator from Kansas is correct. My commitment to 
cancer patients has not changed. Indeed, according to estimates from 
the Congressional Budget Office, this bill is expected to actually 
increase net payments to oncologists in 2004. Also, CBO estimates that 
the new Average Sales Price Reimbursement model, when coupled with the 
changes in practice expense reimbursement, will amount to net 
reductions to cancer care of $4.2 billion over the next 10 years.
  Mr. BROWNBACK. I would like to thank my friends for the progress that 
was made in the conference. The bill passed by the Senate several 
months ago contained a net cut of $16 billion as a result of Part B 
drug payment reforms. The reduction in the Conference report before us 
is now $11.4 billion.
  However, I would also note to my friend from Iowa that the Secretary 
of Health and Human Services is given the discretion to reduce 
reimbursements further based on studies preformed by the Inspector 
General of the Department. I would ask my friend if it was the intent 
of the conferees that any future adjustments to the reimbursements be 
based on average of prices available to and paid by a wide range of 
physicians in the marketplace.
  Mr. GRASSLEY. The Senator is correct.
  Mr. BROWNBACK. I thank my friends.
  Mrs. FEINSTEIN. I ask unanimous consent to print the following in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

             Medicare Conference Report Cancer Care Changes

       Payments for Part B drugs are currently based on Average 
     Wholesale Price (AWP). The difference between the AWP and the 
     actual sales price often results in a profit to providers 
     when they administer such drugs. For example, an oncologist 
     may buy a chemotherapy agent, called doxirubicin, for about 
     $10.00, while Medicare's reimbursement for that same dose was 
     approximately $42.00, resulting in a profit to the physician 
     of $32.00. Because beneficiaries must pay 20% co-payments on 
     Medicare covered drugs, beneficiaries are paying $8.40 for a 
     dose of doxirubicin. That is 20% of the $42.00, rather than 
     20% of the $10.00 that the oncologist paid for the drug, 
     which is $2.00. The HHS Inspector General estimated that 
     inflated AWPs caused beneficiaries to pay an extra $175 
     million in coinsurance in 2001.
       The Medicare conference agreement reforms the Part B drug 
     payment system, saving $4.2 billion from the oncology 
     specialty over the 10-year period 2004-2013. This reform is 
     effected mostly by using an Average Sales Price (ASP) system, 
     which accounts for the true costs of these drugs. An 
     additional $7.3 billion is saved by applying these reforms to 
     other physician specialities. Most of these savings occur in 
     the later years of the budget window. Under the Medicare 
     conference agreement, oncologists will recieve an approximate 
     $100 million increase in payments in 2004, net of reductions 
     in reimbursement for Part B drugs.
       Following is an estimated overview of what oncologists will 
     receive in increased practice expense payments, starting in 
     2004.
       2004: Approximately $500 million increase in practice 
     expense (increase to oncology in 2004, net of drug payment 
     reductions, is about $100m).
       2005: ASP+6%; approximately $600 million increase ($200m 
     for Average Sales Price+6%, $400m increase in practice 
     expense).
       2006 and thereafter: ASP+6%; approximate $560 million 
     increase ($200m for Average Sales Price+6%, $360m increase in 
     practice expense).


      FORMULARIES FOR MEDICARE BENEFICIARIES LIVING WITH HIV/AIDS

  Mrs. FEINSTEIN. Mr. President, I am concerned about the impact the 
Medicare conference report will have on low-income Medicare 
beneficiaries who are living with HIV/AIDS. I have heard a lot of 
opposition to this bill from the HIV/AIDS community. My concern is with 
their access to drug treatment therapy under the Medicare prescription 
drug benefit. Is it your understanding that the Medicare conference 
report will not prevent low-income Medicare beneficiaries who are 
living with HIV/AIDS from getting all the drugs they need through 
Medicare Part D?
  Mr. BAUCUS. That is correct, Senator. One of the things I am 
particularly proud about in this bill is the strong beneficiary 
protections that will ensure that all Medicare beneficiaries get access 
to the appropriate medicine they need. You know, Senator Grassley, that 
there are certain diseases and conditions--like AIDS, and epilepsy--
where having access to just the right medicine is especially important.
  Mr. GRASSLEY. I did know that, and I know that certain mental 
illnesses also fall in that category. This bill contains a number of 
protections for people who need exactly the right medicine for them.
  Mrs. FEINSTEIN. Victims of HIV/AIDS are somewhat unique since the 
treatment for HIV/AIDS varies with the individual. To be clear, no low-
income Medicare beneficiaries who have HIV/AIDS will be denied access 
to the drugs they need in Medicare Part D?
  Mr. BAUCUS. Exactly. The bill asks the US Pharmocopeia to develop 
model formularies with therapeutic classes that can't be gamed. Then we 
require drug plans to offer at least two drugs in each therapeutic 
class. And for drugs that treat AIDS, epilepsy, or mental illness, we 
would expect that plans would carry all clinically appropriate drugs.
  Mr. GRASSLEY. I agree. And I am pleased with the backup protections 
in this bill. That if a plan doesn't carry or doesn't treat as 
preferred a drug needed by, say, a person with AIDS, a simple note from 
a doctor explaining the medical need for that particular drug could get 
that drug covered.
  Mrs. FEINSTEIN. Will that apply to all covered drugs required by a 
person with HIV/AIDS and in all cases?
  Mr. BAUCUS. That is correct. These beneficiary protections are 
crucial for these vulnerable Medicare beneficiaries. I would expect 
that the Secretary will take into account their special medication 
needs when he writes regulations on this provision and when he is 
evaluating plan bids. If a plan can't adequately ensure all of the 
proper medication for beneficiaries living with HIV/AIDS, epilepsy, and 
certain mental illnesses, that plan should not be doing business with 
Medicare.
  Mr. GRASSLEY. I agree with my good friend.
  Mrs. FEINSTEIN. I would like to quote from a letter I received from 
Secretary of Health and Human Services Tommy Thompson, the full text of 
which I will include for the Record. Secretary Thompson says, ``I would 
not approve a plan for participation in the Part D program if I found 
that the design of the plan and its benefits, including any formulary 
and any tiered formulary structure, would substantially discourage 
enrollment in the plan by any group of individuals. If a plan, however, 
complies with the USP guidelines then it would be considered to be in 
compliance with this requirement. Thus, if a plan limited drugs for a 
group of patients (individuals living with HIV/AIDS) it would not be 
permitted to participate in Part D.'' Secretary Thompson goes on to 
say, ``Under the Conference Report, the beneficiary protections in the 
Medicare drug benefit are more comprehensive than the protections now 
required of State Medicaid programs. This will ensure access to a wide 
range of drugs. For example, there are extensive information 
requirements so that beneficiaries will know the drugs the plan covers 
before they enroll in the plan. Beneficiaries can also appeal to obtain 
coverage for a drug that is not on their plan's formulary if the 
prescribing physician determines that the formulary drug is not as 
effective for the individual as another drug, or if there are adverse 
effects. As a result, access to all drugs in a category or class will 
be available to a beneficiary when needed.''
  Is this your understanding as well?
  Mr. BAUCUS. Absolutely.
  Mr. GRASSLEY. I agree.
  Mrs. FEINSTEIN. I thank the distinguished Senators from Montana and 
Iowa.
  I ask unanimous consent to print the above-referenced letter in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         Department of Health and Human Services, Office of the 
           Assistant Secretary for Legislation,
                                                   Washington, DC.
     Hon. Dianne Feinstein,
     U.S. Senate,
     Washington, DC.
       Dear Senator Feinstein: Recently, you have expressed 
     concern with the Conference

[[Page 31787]]

     Report over access to drugs for individuals living with HIV/
     AIDS. Your major concern appears to be whether or not 
     individuals living with HIV/AIDS will have access to all 
     drugs within a therapeutic class under the Conference Report 
     and whether or not a Prescription Drug Plan (PDP) could limit 
     the number of drugs that are covered within a therapeutic 
     class. You also expressed concern that dual eligible 
     individuals will lose the coverage that is currently 
     available to them in Medicaid if they enroll in any of the 
     new Medicare drug plans.
       Let me assure you that in the Conference Report there are 
     significant safeguards in place for the development of PDP 
     formularies to ensure a wide range of drugs will be available 
     to Medicare beneficiaries. These plans will have the option 
     to use formularies but they are not required to do so. If a 
     plan uses a formulary, it must include at least two drugs in 
     each therapeutic category or class, unless the category or 
     class only has one drug.
       I will be requesting the U.S. Pharmacopoeia (USP), a 
     nationally recognized clinically based independent 
     organization, to develop, in consultation with other 
     interested parties, a model guideline of therapeutic 
     categories and classes. In designing this model it is 
     essential that categories and classes be established to 
     assure that the most appropriate drugs are included on a 
     plan's formulary. I am confident they will design the 
     categories and classes to meet the needs of patients; USP's 
     work in clinically based and patient oriented.
       Plans will also use pharmacy and therapeutic committees 
     that consist of practicing physicians and pharmacists to 
     design their formularies. The committees will be independent 
     and free of conflict with respect to the plan. They will have 
     expertise in care for the elderly and in individuals with 
     disabilities. The committees will also use both a clinical 
     and scientific basis for making its decisions relating to 
     formularies.
       Further, I would not approve a plan for participation in 
     the Part D program if I found that the design of the plan and 
     its benefits, including any formulary and any tiered 
     formulary structure, would substantially discourage 
     enrollment in the plan by any group of individuals. If a 
     plan, however, complies with the USP guidelines then it would 
     be considered to be in compliance with this requirement. 
     Thus, if a plan limited drugs for a group of patients 
     (individuals living with HIV/AIDS) it would not be permitted 
     to participate in Part D.
       Under the Conference Report, the beneficiary protections in 
     the Medicare drug benefit are more comprehensive than the 
     protections now required of State Medicaid programs. This 
     will ensure access to a wide range of drugs. For example, 
     there are extensive information requirements so that 
     beneficiaries will know the drugs the plan covers before they 
     enroll in the plan. Beneficiaries can also appeal to obtain 
     coverage for a drug that is not on their plan's formulary if 
     the prescribing physician determines that the formulary drug 
     is not as effective for the individual as another drug, or if 
     there are adverse effects. As a result, access to all drugs 
     in a category or class will be available to a beneficiary 
     when needed.
       On the other hand, because of the optional nature of the 
     Medicaid drug benefit today, States can drop their drug 
     benefit entirely, as well as restrict access to their drug 
     plan through preferred drug lists or prior authorization 
     processes. According to the IG, from 1997 to 2001, Medicaid 
     expenditures for prescription drugs grew at more than twice 
     the rate of total Medicaid spending. This has put extreme 
     pressures on state budgets and has led to Medicaid coverage 
     restrictions for drugs and the use of cost control measures 
     that will not be used in the Part D program.
       For example, eighteen States contain Medicaid drug costs by 
     limiting the number of prescriptions filled in a specific 
     time period, limiting the maximum daily dosage or limiting 
     the frequency of dispensing a drug. Some states also limit 
     the number of refills. In addition, six States have pharmacy 
     lock-in programs, which require beneficiaries to fill their 
     prescriptions in one designated pharmacy.
       The new Medicaid benefit will not result in a loss of 
     coverage for dual eligibles. In fact, the Conference Report 
     provides generous coverage to dual eligibles. The Report 
     preserves the universality of Medicare for all eligible 
     beneficiaries including those dually eligible for both 
     Medicare and Medicaid. Unlike Medicaid, the new Medicare Part 
     D benefit will provide a guaranteed benefit to all eligible 
     seniors--a benefit they can count on without fear of loss of 
     benefits when State budgets become tight.
       Dual eligibles, who currently have full Medicaid benefits, 
     will automatically be given generous subsidies and will pay 
     no premium, no deductible and only minimal cost-sharing 
     regardless of their actual income, even though it can be 
     higher than 135 percent of the Federal poverty level in many 
     cases.
       In addition, full dual eligibles with incomes under 100 
     percent of poverty will pay no premiums, no deductibles, and 
     reduced copayments of $1 for generic and other multiple 
     source preferred drugs, and $3 for all other drugs. Note 
     under current Medicaid regulations, States can choose to 
     increase coinsurance to 5%. This is clearly more than what 
     will be permitted for dual eligibles under the new Medicare 
     benefit.
       Finally, dual eligibles residing in nursing homes and other 
     institutions only have a small personal needs allowance. 
     Under Medicare, they will be exempt from copayments 
     altogether.
       I hope that this addresses all of your concerns. I look 
     forward to continuing to work with you on this and other 
     issues related to Medicare and Medicaid. Please call me if 
     you have any further concerns.
           Sincerely,
                                                Tommy G. Thompson.

  Ms. LANDRIEU. Mr. President. I have been listening to the debate over 
the past few days, and I think that a common theme on both sides of the 
aisle has been this is not a perfect bill. There are those on this side 
of the aisle who rightly say that this bill does not go as far as it 
could; that it doesn't focus enough of the assistance on low-income 
seniors and could do more to keep employers from reducing or 
eliminating benefits for their employees. Others have raised concerns 
about the fact that there is a $1,400 ``doughnut hole'' and an overly 
restrictive assets test that will mean less help for too many 
Americans. There are those on the other side of the aisle that have 
rightly said that this bill does not do enough to address the long-term 
solvency issues facing Medicare. They contend that this $400 billion 
expansion, without making additional structural reforms, puts Medicare 
on an unsure footing for the future. It is for these reasons that 
Members on both sides of the aisle have said they will vote against 
this bill.
  Many maxims have been used over the past few days to describe the 
choice before us. Some have said, ``A bird in the hand is worth two in 
the bush.'' Others have said, ``Let us not make the perfect be the 
enemy of the good.'' Still others have said, ``Something is better than 
nothing.'' I have spent the last 25 years in public service, and if 
there is one thing I have learned, it is that a true compromise is one 
from which no one side walks away completely happy. If there is anyone 
who knows that lesson better than I, it is the senior Senator from 
Louisiana, Senator Breaux. I have often said that if there is a deal to 
be had, Senator Breaux will find it. He has an amazing talent for 
bringing two sides together in a way that preserves the key principles 
of both. I think he has succeeded in doing that again here.
  Going into the conference, Democrats insisted that the final bill 
must include the following: meaningful assistance to low income 
beneficiaries; providing Federal assistance to Medicare seniors on 
Medicaid, dual eligibles; strong Government fallbacks; and real 
incentives for employers to retain coverage. The conference agreement 
represents major victories in all four of these key areas.
  First, and perhaps most importantly, beneficiaries with low incomes 
will get immediate assistance in paying for their drugs. The premium, 
deductible and coverage gap would be waived for people earning up to 
$12,123 a year, $16,362 per couple. Those making up to $13,470, $18,180 
per couple will not have to pay a premium or be subject to a coverage 
gap and would only have a $50 deductible. What this means in real terms 
is that one-third of all Medicare beneficiaries, over 200,000 of which 
are from my State, will get immediate assistance to drugs at little to 
no cost to themselves. These are people who today have no help.
  This bill also provides $88 billion in tax incentives to employers to 
encourage retaining existing retiree drug coverage. CBO estimates those 
incentives will greatly diminish the number of employers who will 
reduce or eliminate their coverage because of passage of this bill. It 
ensures that all beneficiaries will have access to drug coverage by 
providing a strong government fallback in the event that private plans 
do not provide adequate coverage in any particular region. Finally, it 
provides meaningful support to Medicare providers so that they can 
continue to care for our Nation's elderly.
  These are major victories. I am, however, disappointed by some of the 
provisions that were ultimately included in this bill, most especially 
the asset test. I understand that the asset test in

[[Page 31788]]

this bill is fashioned after asset tests used to determine a person's 
eligibility for Social Security Income (SSI) and Medicaid. I understand 
that it is, in fact, three times as generous as the asset tests used by 
those programs. Yet, in my view, further restricting eligibility for 
vital Government programs so as to separate out the near poor from the 
poor is a precedent that should be abolished, not furthered. I think 
the American public would be shocked to learn how restrictive these 
asset tests are.
  In this bill, if a senior whose income is less than $12,123 a year 
has more than $6,000 in assets, they will no longer qualify for 
assistance with their premiums or deductibles. The proponents of the 
asset test claim that they are necessary to ensure that a person 
doesn't claim to have an income of $12,123 and at the same time have a 
vacation home in Florida and $50,000 in stocks. But these are not the 
people that these asset tests affect. Who they end up affecting is a 
widow who is living on her husband's $600 a month Social Security 
check, but just so happens to have a $10,000 life insurance policy or 
home full of furniture valued at $3,000. That is just not fair. While I 
am not able to change this policy here, I do intent to work to change 
it later.
  Ten years have passed since this body was first presented with the 
need to reform Medicare. We have long recognized that the ways of 
medicine have changed. Medications and outpatient services have taken 
the place of intrusive surgeries and long-term hospitalization. We know 
that Medicare has not keep pace with those changes nor does it reflect 
the current needs of our seniors. Over the past 10 years, we have 
assembled task forces, engaged in numerous studies, held countless 
hearings and drafted several legislative proposals, but we have never 
gotten to where we are today, at the brink of passing a bill that will 
put us on the path of making reform a reality.
  I think we must act now. In a time of rising deficits, it is unlikely 
we will have $400 billion or the political will to make these 
improvements any time in the near future. The seniors in my State are 
tired of waiting for the perfect bill. If we do not pass this bill this 
year, who knows how much more time will pass before we get to this 
point. It certainly won't be next year. If we had not reduced our 
surpluses by giving out tax cuts, perhaps we could have done more, but 
there is no sense in wondering what could have been. What we need to 
focus on now is what can be.
  One year ago, I was in Louisiana running for re-election and I 
promised the people of Louisiana that while I would be with the 
President some of the time and I would be with the Democratic caucus 
some of the time, no matter what, I would be with the people of 
Louisiana 100 percent of the time. This bill is good for Louisiana. 
Ultimately, that is why I support it.
  In Louisiana, one out of every two seniors has no prescription drug 
coverage. Today, 72-year-old Ethel Cernigliaro of Homer is one of them. 
With only her $727 a month Social Security check to depend on, Mrs. 
Cernigliaro finds a way to pay her utilities, buy groceries and still 
cover the $300 and more she pays each month for prescriptions. At this 
point, Mrs. Cernigliaro doesn't know all of the details of how this 
Medicare reform will help her, but she is certain of one thing: It has 
got to be better than what she has now. ``I've been following it 
closely, and it is certainly encouraging to know someone is trying to 
do something,'' she said. This bill means seniors like Mrs. Cernigliaro 
will no longer be without assistance for the drugs they need to 
maintain their quality of life and health. She and the 200,000 seniors 
like her will, in most cases, pay no more than $5 a prescription for 
their medications. Because of this reform, no senior citizen in our 
State will be without some level of coverage for prescriptions.
  What's more, this bill will deliver $551 million over the next 10 
years in emergency assistance for Louisiana's hospitals, most of which 
are struggling to keep their doors open. It will provide $156 million 
in much needed assistance to Louisiana's doctors. Without this 
assistance, these doctors could no longer afford to care for Medicare 
patients. It will provide $25 billion in help for our Nation's rural 
communities, many of which are in Louisiana. This represents the 
largest, most comprehensive rural package ever passed by Congress. 
Finally, this bill provides for much-needed prevention services, 
including screening for heart disease and diabetes, which could have 
helped to save the lives of the nearly 10,000 Louisiana seniors who 
died of these diseases last year.
  If this bill does not pass, the people of my State will go yet 
another year without these important interventions. I, for one, cannot 
ask them to wait. Since Medicare was first passed into law in 1965, it 
has been amended and modified hundreds of times. This comprehensive 
reform package is not the first, nor will it be the last. I look 
forward to working with my colleagues in the months and years to come 
to ensure that the Medicare program, and this new prescription drug 
benefit, will be all that it promises to be and more.
  Mr. DORGAN. Mr. President, a vote in favor of this legislation, which 
is designed to add a prescription drug benefit to Medicare, is a very 
close call for me. There are some positive elements of this bill, and 
there are also some flaws about which I am very concerned. In weighing 
the good and the bad, however, I have decided to support this bill.
  The final legislation will provide very generous prescription drug 
coverage for about one-third of the lowest income senior citizens and 
disabled Medicare beneficiaries who live in North Dakota. For those 
Medicare beneficiaries whose incomes are below 150 percent of the 
poverty level, they will receive a benefit that will cover nearly 95 
percent of their drug costs.
  However, for senior citizens with incomes above 150 percent of the 
poverty level, this prescription drug benefit will not be very 
attractive at all, in my judgment. There is a $35 per month premium 
that will increase over time, a $250 deductible that will grow to $445 
by 2013, and a period of time when seniors' drug expenditures reach 
$2,250 and seniors will still be paying premiums but have no drug 
coverage at all. Only after spending a total of more than $5,100 would 
Medicare beneficiaries receive catastrophic coverage of 95 percent for 
prescription drugs.
  If this prescription drug benefit was a mandatory program, I would 
vote against it. Because it is optional, I think many senior citizens 
with incomes above 150 percent of poverty will take a look at the 
benefit and decide it is not worth it. The one-third of our senior 
citizens with the lowest incomes will benefit from it.
  In addition to providing generous coverage for the lowest income 
senior citizens, the other feature of this bill that I strongly support 
are the steps it takes to offer some fairness in Medicare's payments 
for rural hospitals, doctors and other health care providers.
  Hospitals and physicians in rural States have found that their 
reimbursement rates under Medicare have put them at a serious 
disadvantage. If these lower reimbursement rates were to continue, the 
quality and access to health care delivered to rural citizens would 
diminish. Rural hospitals have to compete for the same doctors and 
nurses and use the same sophisticated medical equipment as urban 
hospitals, and yet their reimbursement rates have been dramatically 
lower. As a result, many of our North Dakota hospitals are in real 
financial trouble. This legislation begins the process of establishing 
some fairness in those reimbursement rates, and I strongly support 
that.
  But there are also a number of provisions in this bill that I think 
are a mistake. First of all, this bill lacks provisions that would 
begin to contain the rising costs of prescription drugs. That is a 
dramatic failure. For most senior citizens, the problem with 
prescription drugs is the steep rise in the prices of those 
prescription drugs. Unfortunately, the majority party bowed to the 
pressure of the pharmaceutical industry and failed to put any real cost 
containment in this bill. That is a serious mistake.

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  In addition, this bill includes provisions that have nothing to do 
with adding a prescription drug benefit to the Medicare program but 
that have the potential to do harm. The Health Savings Accounts 
established by this bill are at best a costly tax shelter for the 
wealthy and at worst could drive up costs for the traditional insurance 
market. Likewise, this bill is cluttered up with subsidies to private 
insurers and a phony demonstration program that adds additional costs 
to Medicare and could undermine the Medicare program itself if these 
provisions are not adjusted in the future.
  As I sifted through all of these provisions, I concluded that 
providing nearly total prescription drug coverage for one-third of our 
senior citizens with the lowest incomes is a very important objective 
to achieve. Add to that the improvement in the reimbursement rates to 
strengthen rural hospitals and health care providers, and I believe 
that these two features warranted support for the bill.
  Again, this bill is a close call because I think those who have 
written it have created an optional program that is sufficiently 
unattractive to many senior citizens that they will elect not to sign 
up for this program.
  My hope is that we can lock in the support in this bill for the 
nearly one-third of the senior citizens with the lowest incomes, 
address the reimbursement inequity for rural hospitals and doctors, and 
then come back in future legislation and do what should have been done 
with the rest of this bill.
  That is, we need to add some real cost containment, fix the drug 
benefit so that senior citizens aren't paying premiums while they're 
getting no coverage, and dump the extraneous provisions that have 
nothing to do with adding prescription drug coverage to Medicare.
  In summary, I am not pleased with this choice, but I know that if we 
do not commit the $400 billion that we have now set aside for Medicare 
prescription drug coverage in the coming 10 years, that funding may not 
be available in the future. And I know that we may not get another 
opportunity to fix the reimbursement rates for rural hospitals in the 
near future.
  So I will vote for this bill, but I do so with some real regret 
because this bill could have been so much better.
  Mr. HOLLINGS. Mr. President, I oppose the Medicare Prescription Drug 
and Modernization Act.
  I remind my colleagues that we have a national debt that exceeds $6.9 
trillion. The legislation currently before us is part of a budget 
resolution and economic plan that will cause our debt to double over 
the next 10 years. Make no mistake about it, we will borrow every penny 
to pay this $394.3 billion bill. How ironic--we are going to borrow 
money from Social Security to pay for seniors health care. And what do 
we get in return? Spotty drug coverage for senior citizens, millions of 
Americans who will lose their existing coverage, massive subsidies for 
HMOs, the first step toward the destruction of Medicare as we know it, 
and a larger fiscal noose around the neck of future generations. We can 
do much better and should go back to the drawing board.
  Instead of providing seniors with the stable and affordable benefit 
they deserve, this bill forces seniors to maneuver a complex maze of 
premiums, deductibles and copayments for benefits that contain huge 
gaps in coverage. On top of their premiums, which will vary from region 
to region and plan to plan, seniors will get no help for the first $250 
of their drug costs, pay 25 percent of costs from $251 to $2,250, pay 
all the costs from $2,251 to at least $5,100, and then pay a fifth of 
costs above $5,100. With a breakeven point of $810, many healthier 
Medicare beneficiaries will opt not to participate. Because of the 
$2,850 coverage gap, many of the sickest patients will have to ration 
care for months because even though they continue to pay premiums, they 
receive no government assistance. Furthermore, seniors better not get 
too comfortable with their prescription drug coverage. Nearly 3 million 
of them with retiree coverage, including 39,000 residents of South 
Carolina will lose their coverage. This bill could force those who 
participate in the new Medicare drug benefit to move in between three 
separate plans, with three separate formularies, in 3 years.
  It should come as no surprise that the authors of this convoluted 
mess and Karl Rove have decided to wait until after the 2004 election 
before this new benefit starts up and Medicare beneficiaries see what 
they are in for. Conferees could have taken a number of steps to 
address these deficiencies. Instead, they denied the government the 
ability to negotiate lower drug prices on behalf of all Medicare 
beneficiaries. This will impose a higher cost on both the taxpayers who 
foot this bill and the Medicare beneficiaries who will have to make 
higher copayments. They also created a $12 billion slush fund the 
government can use to entice private plans to participate against 
traditional Medicare and diverted $6.7 billion from the amounts saved 
by companies that will drop retiree coverage to create tax shelters for 
wealthy individuals. These funds could have been more appropriately 
spent providing incentives for companies to continue retiree coverage 
or reducing the size of the ``doughnut.''
  I also believe this bill is the first step toward the dismantling of 
Medicare. The ``premiums support'' demonstration contained in this 
legislation opens the door to the privatization of Medicare. Seniors in 
at least six parts of the country will be forced to either pay higher 
premium to remain in the traditional Medicare system or move into an 
HMO. This is unacceptable. Furthermore, this legislation provides an 
uneven playing field between traditional Medicare and private plans. I 
have always felt that if a private plan can offer a better benefit 
package to a beneficiary at an equal or lower cost, then beneficiaries 
should have the choice of which plan they want to participate in. This 
bill dramatically slants the playing field in favor of private plans. 
In addition to a 9 percent higher payment, private plans will have 
access to a $12 billion fund to further underwrite their costs. These 
actions undermine the traditional Medicare system generations of our 
seniors have come to depend on.
  The flimsy prescription drug benefit and long-term damage done to 
Medicare contained in this legislation does not warrant its high price 
tag. I encourage my colleagues to defeat this bill, take up and pass S. 
1926 to improve reimbursement for doctors, hospitals and rural 
providers, and continue to work toward a meaningful drug benefit.
  Mr. SPECTER. Mr. President, since Medicare was established in 1965, 
people are living longer and living better. Today Medicare covers more 
than 40 million Americans, including 35 million over the age of 65 and 
nearly 6 million younger adults with permanent disabilities.
  Congress now has the opportunity to modernize this important Federal 
entity to create a 21st century Medicare Program that offers 
comprehensive coverage for pharmaceutical drugs and improves the 
Medicare delivery system.
  The Medicare Prescription Drug and Modernization Act would make 
available a voluntary Medicare prescription plan for all seniors. If 
enacted, Medicare beneficiaries would have access to a discount card 
for prescription drug purchases starting in 2004. Projected savings 
from cards for consumers would range between 10 to 25 percent. A $600 
subsidy would be applied to the card, offering additional assistance 
for low-income beneficiaries defined as 160 percent or below the 
Federal poverty level. Effective January 1, 2006, a new optional 
Medicare prescription drug benefit would be established under Medicare 
Part D.
  This bill has the potential to make a dramatic difference for 
millions of Americans living with lower incomes and chronic health care 
needs. Low-income Medicare beneficiaries, who make up 44 percent of all 
Medicare beneficiaries, would be provided with prescription drug 
coverage with minimal out-of-pocket costs. In Pennsylvania, this 
benefit would be further enhanced by including the Prescription 
Assistance Contract for the Elderly, PACE,

[[Page 31790]]

program which will work in coordination with Medicare to provide 
increased cost savings for low-income beneficiaries.
  For Medical services, Medicare beneficiaries will have the freedom to 
remain in traditional fee-for-service Medicare, or enroll in a Health 
Maintenance Organization, HMO, or a Preferred Provider Organization, 
PPO, also called Medicare Advantage, These programs offer beneficiaries 
a wide choice of health care providers, while also coordinating health 
care effectively, especially for those with multiple chronic 
conditions. Medicare Advantage health plans would be required to offer 
at least the standard drug benefit, available through traditional fee-
for-service Medicare.
  We already know that there are many criticisms directed to this bill 
at various levels. Many would like to see the prescription drug program 
cover all of the costs without deductibles and without co-pays. There 
has been allocated in our budget plan $400 billion for prescription 
drug coverage. That is, obviously, a very substantial sum of money. 
There are a variety of formulas which could be worked out to utilize 
this funding. The current plan, depending upon levels of income has 
several levels of coverage from a deductible to almost full coverage 
under a catastrophic illness. One area of concern is the so-called 
``donut hole'' which requires a recipient to pay the entire cost of 
drug coverage.
  As I have reviewed these projections and analyses, it is hard to say 
where the line ought to be drawn. It is a value judgment as to what 
deductibles and what the co-pays ought to be and for whom. Though I am 
seriously troubled by the so-called donut hole, it is calculated to 
encourage people to take the medical care they really need, and be 
affordable for those with lower levels of income. Then, when the costs 
move into the catastrophic illness range, the plan would pay for nearly 
all of the medical costs.
  I am pleased that this bill contains a number of improvements for the 
providers of health care to Medicare beneficiaries. Physicians who are 
scheduled to receive cuts in 2004 and 2005 will receive a 1.5 percent 
increase over that time. Moreover, rural health care providers will 
receive much needed increases in Medicare reimbursement through raises 
to disproportionate share hospitals and standardized amounts, and a 
decrease in the labor share in the Medicare reimbursement formula. 
Hospitals across Pennsylvania will benefit from upgrades to the 
hospital market basket update and increase in the indirect medical 
education. Furthermore, the bill will provide $900 million for 
hospitals in metropolitan statistical areas with high labor costs due 
to their close proximity to urban areas that provide a 
disproportionately high wage. These hospitals may apply for wage index 
reclassification for three years staring in 2004.
  I would not that I do have concerns with this legislation with regard 
to oncological Medicare reimbursement and the premium support 
demonstration project for Medicare Part B coverage. Proposed reductions 
in the average wholesale price for oncological pharmaceuticals may have 
a grave effect on oncologists' ability to provide cancer care to 
Medicare Beneficiaries. Every Medicare beneficiary suffering from 
cancer should have access to oncologists that they desperately need. I 
will pay close attention to the effects that this provision has on the 
quality and availability of cancer care for beneficiaries and 
oncologists' ability to provide that care. Further, the premium support 
demonstration project for Medicare Part B premiums poses a concern. 
Some metropolitan areas may face up to a five percent higher premium 
for fee-for-service care than neighboring areas. While these provisions 
remain troublesome, we cannot let the perfect become the enemy of the 
good with this piece of legislation.
  The Medicare Prescription Drug legislation has been worked on for 
many years. I believe this bill will provide a significant improvement 
to the vital health care seniors so urgently need. I congratulate the 
members of the conference committee including majority leader Frist, 
Senator Grassley, Chairman of the Finance Committee, and the ranking 
member, Senator Baucus, for the outstanding work which they have done 
on an extraordinarily complex bill.
  Mr. LEAHY. Mr. President, seniors need and deserve a stronger 
prescription drug bill than this one.
  The creation of the Medicare program in 1965 was a tremendous 
accomplishment. With Medicare, older Americans would never again have 
to face a terrifying future with no health care coverage. And since 
that time, millions of elderly and disabled citizens have come to know 
and trust the quality health care that Medicare ensures them. But 
Medicare's success is marred by one significant factor: the lack of 
coverage for prescription drugs. When Medicare was created, 
prescription drugs did not hold the pivotal role that they now have in 
health care treatment and maintenance. Medical science has advanced 
since Medicare's charter was enacted, and senior and disabled Americans 
have been waiting a long time for Congress to remedy this gaping hole 
in coverage.
  We need a meaningful prescription drug benefit under Medicare, and 
many of us have been pushing for years to accomplish that. This 
movement has steadily grown, and for 6 years we in this body have been 
debating and working toward this goal. In June of this year the Senate 
passed a bi-partisan prescription drug bill that I supported. I 
supported that bill--even though I thought it was weaker than what we 
need--because it was a solid start. And that is why it gives me grave 
concern to see the direction this conference report has taken.
  We have before us eleven hundred pages--which we have had little more 
than 3 days to examine--that run far afield of the goal of adding a 
prescription drug benefit to Medicare. It concerns me that some of the 
provisions in this bill--provisions which were never a part of the bill 
I supported in June--will do more harm than good. I know that many of 
my colleagues worked long and hard to produce this bill. I respect 
their efforts and their best intentions, but Vermonters and Americans 
need and deserve far better than this. We passed a decent bipartisan 
bill once before this year. I know that we can do better than this 
compromise before us, and that is why I will be voting no. Instead of 
trying to rush through eleven hundred pages so that we can go home for 
Thanksgiving and adjourn for the year, I think that we need to keep 
working on this important issue until we get it right.
  I am concerned that the measure before us moves Medicare down the 
road of privatization and does not adequately protect the access to the 
prescription drug benefit of rural seniors in traditional Medicare. I 
am concerned that fewer low-income seniors will be helped with their 
costs, and it troubles me that the need to bring down the ever-
escalating costs of prescription drugs has not been addressed in this 
bill.
  Under the conference agreement, a significant amount of money--$12 
billion--is set aside in a slush fund for the Secretary of Health and 
Human Services to entice insurance companies into Medicare. The 
conference agreement also includes a proposal to experiment with 
privatization of the Medicare program in at least six areas of the 
country. This troubling provision could impose increased premiums for 
millions of seniors in traditional Medicare, potentially forcing them 
to leave the program that they know and trust. And making this 
experiment even worse, the Federal Government will overpay private 
plans--putting Medicare at an unfair disadvantage--to offer the same 
benefits that traditional Medicare covers for less. Why are all of 
these extra payments necessary? If the private insurance model is so 
effective and efficient, why do we need to pay them more than we pay 
for traditional Medicare? No one can credibly argue that doing this 
makes sense.
  The reason that we needed Medicare in 1965, and the reason that we 
will continue to need Medicare in the future, is because the insurance 
model fails elderly and disabled people. It is

[[Page 31791]]

not all that complicated. As we get older we inevitably get sick and we 
need to take more trips to the doctor and to the hospital to manage and 
maintain our health. This costs money, and the insurance companies know 
that they lose money when the bills have to be paid not occasionally, 
but frequently. Instead of sending billions of dollars to insurance 
companies, it is far better to use those resources to strengthen 
Medicare and to create a stronger and more reliable prescription drug 
benefit run directly by Medicare.
  In the earlier Senate bill, I accepted that we could try this private 
delivery model for the prescription drug benefit because rural seniors 
in traditional Medicare--this is all of the seniors in Vermont, by the 
way, because private plans have chosen not to operate in our rural 
state--would be assured of having a choice of two stand-alone drug 
plans. And if those two plans did not exist in Vermont's region, then 
Vermonters in traditional Medicare would be guaranteed access to a 
standard government fall back plan. Unfortunately, this essential 
protection was weakened in the conference agreement. Instead, 
Vermonters will be considered to have adequate choice--and therefore no 
access to the government fallback plan--if there is only one stand-
alone plan and one managed care plan. What kind of choice is that? The 
choice that Vermonters in traditional Medicare will have under that 
scenario is either to sign up for that one stand-alone plan that 
happens to be offered, or to forgo the new prescription drug benefit 
altogether. That doesn't sound like much of a choice at all.
  I am also concerned about the impact that this bill will have on low-
income Medicare beneficiaries. It is true that the bill provides 
generous subsidies to low-income seniors, but the earlier Senate bill 
covered more people: almost one million Americans who would have had 
access to a subsidy under that bill will not receive help with their 
premiums, deductible, and cost sharing under this bill. Three million 
more Americans will not qualify for help because they have minimal 
savings and other assets. In Vermont, that amounts to about seven 
thousand people who will be worse off under this agreement than under 
the Senate bill. Furthermore, thousands of Vermonters who currently 
have prescription drug coverage under the Medicaid program could end up 
with less generous coverage under this plan.
  The real winner under this agreement is the drug industry. Many 
express concern over the high cost of creating a Medicare prescription 
drug benefit. I would suggest that we could have done something very 
simple to bring down the cost: We could have used Medicare's market 
power to negotiate lower prices for the medicines the program will be 
buying. Instead, this compromise agreement actually prohibits this 
common sense approach to cost containment. Thanks to objections by the 
drug industry, provisions designed to speed low-cost generic drugs to 
market were weakened in the conference agreement. And last, but 
certainly not least, the drug industry prevailed in their efforts to 
block a provision to allow Americans access to lower-priced medicines 
from Canada. This is unacceptable. A majority in the senate voted to 
allow re-importation and the House of Representatives overwhelmingly 
supported a strong re-importation provision. Somehow, the conference 
agreement is weaker than either provision passed in either body. How 
long do we intend to force Americans to continue to pay the highest 
prices in the world for their indispensable medications?
  It is wrong to have hijacked this bill as a locomotive to pull the 
drug industry's baggage. House leaders have taken the industry's side 
over consumers' interests on issue after issue. They have given the 
industry a veto over giving Medicare the market leverage to bring down 
costs. They have done the drug industry's bidding by blocking drug 
reimportation. It is wrong to pad the drug industry's wallets at the 
expense of the seniors of Vermont and the Nation.
  I remain concerned that cuts in payments for cancer drugs and 
services--estimated to be in excess of $11 billion over the 10-year 
budget window--threaten access to cancer care across the nation and 
particularly in rural area. And though the conference agreement does 
reduce the number of retirees likely to lose their employer-based 
coverage as a result of passing this bill from the Senate level, the 
Congressional Budget Office still estimates that close to three million 
retirees will lose their coverage. That number is still far too high 
and could affect thousands of Vermonters.
  Finally, I question why we set aside $6 billion--money that could be 
spent to reduce the troubling gaps in coverage under the prescription 
drug benefit--to create Health Savings Accounts that have nothing to do 
with Medicare and that many analysts predict will boost the costs of 
comprehensive employer-based health insurance across the country.
  I do credit this bill with some good provisions to provide increased 
payments to doctors and hospitals, particularly in rural areas. I fully 
support these provisions, but their inclusion cannot overcome the 
problems in the rest of the bill.
  I hope that I am proven wrong about the impact that this bill will 
have on the Medicare program and on the help, or lack thereof, it will 
provide to Medicare beneficiaries. I think we can do better and that we 
must do better. As seniors learn over the course of the next 2-years 
what kind of coverage they will be getting--as they see how complex the 
system ad the benefits are--I predict that they will agree and that we 
will be returning to the drawing board very soon on prescription drugs.
  Mr. DOMENICI. Mr. President, thank you for recognizing me and letting 
me speak for a couple minutes.
  I wish to thank one individual. We wonder from time to time about a 
bill of this magnitude. We want to be careful when we mention Senators 
we want to thank and are grateful toward. But I don't have any 
reluctance on this one, having been part of the process, having been 
part of our distinguished majority leader's life in the Senate before 
he was majority leader. There is no doubt in my mind when he came to 
the Senate and learned about Medicare, he made a commitment that he was 
going to be part of fixing it.
  I watched this fantastic, talented man devote his energy and his 
enthusiasm, put the best people one can imagine around him, and I 
watched him lead the maneuvering, the activities, and the thinking, and 
I watched him learn the intricacies of this bill.
  I believe if it is done right, history will have a lot of people we 
can thank for the Medicare modernization bill and the prescription drug 
bill for our seniors, but I think there will be one person who will 
stand out, and it will be the distinguished senior Senator from 
Tennessee, the majority leader.
  He has not been here very long. I remember when he arrived. He joined 
the Budget Committee, the committee that I chaired, and he was at the 
very end of the committee because he was the least senior of all 
members. He moved up gradually, and then all of a sudden we all recall 
what happened, and he became majority leader.
  He carried into that majority leadership, on his shoulders, in his 
brain, and in his ability to make commitments, the idea that there has 
to be a way to modernize Medicare and provide prescription drugs.
  I do not want to let this record on this day close without the 
Senator from New Mexico--who knows a little bit about this man, who 
served with him, worked with him, and understands him and is 
appreciative of the great talent he brought to the Senate when he 
joined us--thanking him and recognizing his particular involvement in 
getting this job done.
  It just seems as if we go months and years without any good news, and 
then good news comes in bushels. Today we have a bushel of good news. 
We passed this bill that our seniors have been asking for. It is 
amazing, the AARP supports it, and then the other side of the aisle, 
the Democrats who used to just crave having the AARP on their side, 
because the AARP found a bill that the Democrats don't like--and I

[[Page 31792]]

don't know whether they don't like it because it isn't theirs or it 
isn't good. I would say it is a tossup from what I can tell. Part of 
the Democrats don't think it is good, but part of them don't think it 
is good because it isn't theirs. They chose now even to blame the AARP; 
that there was something nefarious involved in the passage of this 
bill.
  I hope the millions of people in the AARP understand what the 
Democrats are saying. They are truly accusing the AARP of having a 
conflict of interest that would cause them to support legislation that 
is not good for the senior citizens of America. That is it in a 
nutshell. It is an absolutely ludicrous accusation, but it has been 
done. It has been done because they saw the tide, and the tide was 
going in the direction they didn't like but the AARP liked.
  Somehow or another, under the leadership of people such as Bill 
Frist, Republicans started coalescing around it. Because of the ability 
of people such as Chuck Grassley and our leader, Democrats joined in 
and we had some very exciting Democratic support. That is one great big 
basket of news sitting on the floor.
  Mr. JEFFORDS. Mr. President, I have listened closely to the debate 
over providing prescription drugs and improving other benefits under 
the Medicare Program. This debate has not been limited to the last few 
days, as we all well know. This debate has been waged for 38 years.
  Providing Americans with access to prescription drugs at an 
affordable cost has been one of the most vexing issues facing Congress 
in recent years. Many ``solutions'' have been offered to ``fix'' the 
problems of high cost and lack of access, and Congress has explored and 
debated various approaches. Of these approaches, providing a Medicare 
prescription drug benefit is the most important and perhaps the most 
challenging to accomplish.
  For years, progress has been delayed over significant policy 
differences, not the least of which was the question of whether or not 
the Government could even afford to create a new and expensive 
entitlement program. But that question shifted and our debate this week 
wasn't focused on the question of whether the Government should provide 
a prescription drug benefit but rather on the details of how to 
structure a prescription drug benefit.
  Last Congress I had the privilege to work with several of my 
Republican and Democratic colleagues in the Senate to develop a 
Medicare drug benefit program that became a key option in the ``how 
to'' debate. Our proposal, which became known as the tripartisan 
effort, embodied the principles that I believed must be part of a 
Medicare drug program.
  First, the program must make a universal benefit available to all 
Medicare beneficiaries. It would be unfair to use much needed medicines 
as a carrot to lure seniors into managed care programs they don't want. 
We should also avoid providing a benefit only to the poorest of the 
poor and those with catastrophic costs. Virtually all seniors, 
regardless of income, need help to make their medicines either outright 
available or more affordable, and most have indicated a willingness to 
pay their fair share to support the program.
  Second, the program must be comprehensive so that elders would have 
as generous a benefit as possible, from their initial spending to their 
catastrophic costs, and they shouldn't have to forego the best 
medicines for the cheapest ones just in the name of budget savings.
  Third, a Medicare drug benefit must be affordable for both 
beneficiaries and the Government. Seniors should be able to get the 
best medicine available at the best possible price and the Government 
must derive the best cost savings through open competition. We should 
expect to realize as much savings in our pharmaceutical purchase for 
Medicare as foreign governments realize today.
  Finally, for a drug benefit to be truly successful it must be 
sustainable. It will do little good to repeat the catastrophic failure 
of years past by beginning a program that we cannot carry on. That is 
why this must be a shared responsibility of beneficiaries and the 
Government. A program that combines seniors' contributions with a 
Government guarantee will have the best chance of enduring into the 
future.
  Since last year, I have listened to the concerns of my colleagues, 
and I have weighed those concerns seriously. In the last few days of 
debate, I have given great consideration to the points raised by my 
colleagues and good friends in this body. I acknowledge their 
sentiments and I agree that this is not the bill I would have written 
if I had infinite resources to do it. This bill is not perfect. 
However, 38 years is just too long for American seniors to wait.
  Turning this legislation away would have been a missed opportunity to 
provide seniors with the most significant modernization of their 
Medicare benefits since the program's inception in 1965. I believe this 
bill meets these four standards: It is universal, comprehensive, 
affordable, and sustainable. Could it be improved? Certainly. But this 
plan is a good compromise. It offers a respectable and responsible plan 
within the budget limitations we faced. It is a good compromise. I 
support this bill.
  The conference report includes many significant features for the 
citizens of my home State of Vermont. It provides a sustainable, 
universal, and comprehensive prescription drug benefit to all 93,000 
Medicare beneficiaries in Vermont.
  For 40,000 seniors in Vermont with limited savings and incomes below 
$13,470 for individuals and $18,180 for couples, the Federal Government 
will cover most of their drug costs.
  In addition, Medicare, instead of Medicaid, will now assume the 
prescription drug costs of 21,767 Vermont beneficiaries who are 
eligible for both Medicare and Medicaid. According to the Centers for 
Medicare and Medicaid Services, this will save Vermont $76 million over 
8 years on prescription drug coverage for its Medicaid population.
  This bill recognizes the high cost of providing quality care in rural 
settings and finally puts an end to years of unfair reimbursement gaps 
between rural providers and their urban counterparts. Specifically, 
this Medicare package provides $25 billion for rural providers, netting 
$41 million in additional funds for Vermont hospitals over the next 10 
years and $18 million for underreimbursed physicians over the next 2 
years.
  I am also glad Chairman Grassley and Ranking Member Baucus have 
worked with me to address another inequity in the system. Critical 
access hospitals provide care in the some most underserved regions of 
Vermont as is the case throughout rural America. These hospitals are 
small yet serve as critical resources to their communities.
  I am very pleased to see that the conferees retained a provision from 
the Senate measure that will allow critical access hospitals, like the 
Mount Ascutney Hospital in Windsor, VT, to expand access to psychiatric 
and rehabilitative services to the most vulnerable citizens in that 
community.
  This bill contains a provision that will allow us to better 
understand how to provide quality health care, culminating several 
years of work in concert with Dr. Jack Wennberg at Dartmouth to measure 
care by the quality of patient outcomes rather than utilization of 
resources.
  In closing, I especially want to salute the efforts of Senator 
Baucus, Senator Grassley, and Senator Breaux and the other without 
whose hard work and commitment to working through an agreement we would 
not have accomplished passage of this legislation and they deserve our 
accolades. I also thank several of my other colleagues who have 
contributed so much to this debate over the years. I have worked for 
more than 3 years with my good friends, Chairman Grassley and Senators 
Snowe, Breaux and Hatch. In many meetings over many months, we delved 
into the details of what came to be called the tripartisan bill. This 
has been one of the finest experiences of my many years in Congress. I 
am very proud to have been a part of that group and that our efforts 
led the way to our success today.
  A bill such as this is the result of great effort on the part of many 
different people who are not elected to

[[Page 31793]]

this body but upon whom we all rely. I would like to recognize the 
staff members who have worked so hard on this bill and deserve much of 
the credit for its successful passage.
  On Senator Grassley's staff: Ted Tottman, Linda Fishman, Colin 
Roskey, Mark Hayes, Jennifer Bell, and Leah Kegler, and on Senator 
Baucus' staff Jeff Forbes, Liz Fowler, Jon Blum, Pat Bousliman, Kate 
Kirschgraber, and Andrea Cohen deserve considerable recognition for 
their tireless efforts. Catherine Finley, Tom Geier, and Carolyn Holmes 
from my friend Senator Snowe's staff; Patricia DeLoatche and Patricia 
Knight of Senator Hatch's office; and most especially Senator Breaux's 
legislative director Sarah Walters and his staff Michelle Easton and 
Paige Jennings deserve enormous credit for this bill.
  On my own staff, I particularly want to recognize the contributions 
of Sherry Kaiman, Eric Silva, and especially Sean Donohue who took up 
the effort on the tripartisan bill and who has continued to see it 
through to today's success. Each and all have worked tirelessly to 
gather the input, analyze the issues, and build a consensus toward 
achieving this final product.
  Ms. SNOWE. Mr. President, today, we stand at the precipice of 
opportunity. Culminating a decade of work, we have before us 
legislation that will forever change the face of Medicare--providing 
every senior in America with a prescription drug benefit under a 
Medicare program that will experience the largest expansion in its 38-
year history.
  We would not have arrived at this day without the exceptional 
commitment made by Finance Chairman Grassley to advance this issue and 
meld the considerable political and policy differences that have marked 
the development of this bill. His efforts were nothing short of 
Herculean from the outset, and guided us through a challenging 
conference. He, as well as Ranking Member Baucus, have remained 
committed to the bipartisan principles that forged the Senate 
legislation, which garnered the support of 16 members of the Finance 
Committee, and a remarkable 76 members of the full Senate.
  I want to recognize the outstanding leadership of the President--who 
in 2001 challenged Congress to enact the Medicare Prescription drug 
benefit . . . propounded a set of principles . . . and has provided 
strong impetus during this ``home stretch'' for Congress to complete 
our work and send to his desk legislation he can sign this year. I know 
firsthand from my conversations with the President that this is a 
cornerstone of his agenda and absent his driving force we wouldn't be 
here today.
  So, too, has the Majority Leader redoubled his longstanding and 
unflagging commitment to enacting into law a bipartisan bill, moving us 
ever closer to that goal. Thanks to the unique confluence of his skills 
. . . his unparalleled knowledge and grasp of the issue . . . and his 
single-mindedness of purpose, more than three quarters of the Senate 
came together to support S. 1, the Senate's prescription drug bill. And 
in bringing us to the eve of final passage of this conference report, 
he has been typically respectful of--and responsive to--all the wide-
ranging concerns and recommendations voiced to him, and I thank him for 
his leadership and for guiding and shaping this process to its ultimate 
and successful conclusion.
  I also want to extend my appreciation to my colleagues Senators 
Hatch, Breaux, and Jeffords, with whom I've worked so closely on a 
prescription drug benefit over the past 3 years--they have been 
stalwarts in this fight and together we developed the template for the 
``tripartisan'' proposal that helped frame the proposal before us. And 
certainly no one has more fiercely championed the cause than another 
colleague I've joined with in this battle in the past--Senator 
Kennedy--who I recognize does not support this conference report, but 
whose early, longstanding involvement and passionate policy advocacy 
unquestionably built momentum for this issue in Congress.
  Finally, I want to thank my good friend and colleague, Ron Wyden, 
with whom I began my ``prescription drug coverage journey'' almost 6 
years ago, when we developed the first bipartisan prescription drug 
coverage bill in the Senate, which established the principles that I 
believed were critical to shaping this bill.
  We reached across the party isle because we recognized that only a 
bipartisan plan could ever ``see the light of day''. And we joined 
forces as members of the Budget Committee to establish in the 2001 
budget a $40 billion, 5-year reserve fund. Well, look how far we've now 
come--from the $370 billion tripartisan plan developed last year, to 
the historic passage of S. 1 in the Senate this past June.
  But I can tell you from my own personal and professional experience 
that Congress' journey along this road has never been easy--although it 
has been infinitely more arduous for America's seniors. The process has 
borne witness to a multiplicity of goals and philosophies across the 
spectrum.
  Some have wanted to add a drug benefit to the existing Medicare 
program to leverage the purchasing power of 40 million seniors, while 
others have sought to use the issue either as a vehicle for the 
wholesale privatization of Medicare, or full-scale, Government 
administered benefits.
  Some have said we are providing too great an incentive for people to 
enroll in private plans, while others argue we are starving those very 
same plans.
  And some have argued the benefits provided in a particular bill are 
inadequate, while others submit that they are, in fact, too generous 
and should be limited to a low-income catastrophic plan.
  Yet, today, we essentially all agree we are well beyond one 
question--the question of need. Therefore, it is imperative we 
acknowledge the reality that, just as the journey thus far has been 
imperiled by the ``slings and arrows'' of those on all sides of this 
issue, it will not become easier with the passage of time--not when 
you're debating the creation of the largest domestic program in nominal 
terms ever.
  Not when you're attempting the largest expansion in the history of 
the third largest Federal domestic spending program.
  And not when significant challenges loom on the horizon such as 
strengthening Social Security and Medicare as 77 million baby-boomers 
begin to retire in 2013--all while we face record-setting Federal 
deficits.
  We did have an optimal window for positive change just 2\1/2\ years 
ago when the Congressional Budget office was projecting surpluses ``as 
far as the eye could see''--about $5.6 trillion through 2011. Now, next 
year's deficit alone is projected at nearly $500 billion. That is how 
quickly the tide can turn. That is how quickly opportunities can be 
lost.
  Just think--a little over a year ago, the Senate was presented with a 
choice between a ``tripartisan'' plan that ensured coverage would be 
available to all seniors . . . was comprehensive, with the maximum 
benefit possible for lower-income seniors . . . and was a permanent 
part of the Medicare program--and the alternative, which was temporary 
and would have ``sunset'' . . . and would have statutorily restricted 
access to drugs. Talk about lost opportunities! Indeed, those who are 
dissatisfied with what we have before us today should fondly recall 
that tripartisan bill, and lament its unfortunate demise.
  So here we are. The conference report before us is the result of an 
attempt to balance the competing viewpoints not only among Members, but 
between the stunningly disparate House and Senate legislation. The 
simple truth is, while I continue to prefer the Senate bill, it is this 
conference report upon which we will vote. And after careful review, I 
have concluded that while it isn't everything it could be, it isn't 
everything it should be. In the end, millions of seniors will benefit 
over the stagnation of the status quo.
  To quote AARP, ``Enactment of this legislation is essential to 
strengthening health security for all Americans. This is an important 
step toward fulfilling a longstanding promise to older and disabled 
Americans and their families. While this legislation is not perfect, it 
will help millions of people,

[[Page 31794]]

especially those with low incomes and high drug costs.''
  Margaret Thatcher once said, ``You may have to fight a battle more 
than once to win it.'' Well, some of us have been fighting this battle 
now for nearly 6 years. The bottom line is, we cannot hold hostage our 
seniors' futures to a political unwillingness to compromise. And this 
bill provides us with our best available opportunity to secure, for the 
first time, a legislative foothold that honors the same basic 
principles I have expounded upon since I first came to this issue--
  That, in keeping with the basic tenets of Medicare, the prescription 
drug benefit must be universal, comprehensive, affordable, voluntary, 
permanent, and provide equal benefits across all plans. And that--like 
the Senate bill and the tripartisan proposal before that--it directs 
the most assistance toward those seniors with the lowest incomes . . . 
includes a reliable Government fallback of last resort . . . and 
continues to ensure seniors access to, and the stability of, the 
traditional Medicare program. In its totality, this conference report 
fulfills all of these principles.
  In evaluating the individual components of the package, Mr. 
President, we should be mindful of how we arrived at this destination. 
As the Senate passed a bill with overwhelming bipartisan support, the 
House passed its bill with the most razor thin margin of just one 
vote--and as we witnessed it passed the conference by a mere five vote 
margin, after an historic three hour vote held open to secure the 
necessary votes.
  And we see the result in the starkest terms, reflected in the nature 
of the benefit designed out of necessity by the conferees. It includes 
aspects modeled after each bill--the deductible was set at the House's 
lower level of $250 and the conferees worked to improve this proposal 
by offering a benefit with an actuarial value higher than the benefit 
from both bills. However, in providing these improvements concessions 
had to be made--in doing so the Senate's $4,500 benefit cap was lowered 
to $2,250. But in the same respect the cost sharing provided under this 
cap was lowered from 50 percent provided for in the Senate bill to 25 
percent. So as you can see, while not perfect this benefit represents 
the art of compromise.
  Recognizing that this bill is not perfect, I find it imperative to 
note I was disappointed to see two provisions that I oppose are 
included in the conference report--means testing of the Part B premium 
and indexing of the Part B deductible. The Senate-passed bill did not 
include language to means test the Part B premium and I successfully 
fought to defeat efforts on the Senate floor to add it. Unfortunately, 
the House bill did contain this concept and the conferees chose to 
include in it the conference report. And while the Senate bill did 
contain language to index the Part B deductible, I opposed this 
provision in the Finance Committee and had hoped it would be removed by 
the conferees.
  But in recognizing the flaws of this proposal, at the same time, the 
conference report will at least get the federal ``foot in the door'' in 
providing a significant level of assistance to the one-out-of-four 
Americans who right now have no coverage whatsoever. Most seniors--for 
a $35 monthly premium--will save 50 percent on their cost of 
prescription drugs. For example, a senior who spends $3,600 will 
realize $1,714 annually in savings.
  And in examining the assistance provided to the lowest income, I am 
relieved to know that the conferees utilized the model set by the 
Senate bill. Most critically, in keeping with the Senate bill, seniors 
with incomes below 150 percent of poverty who qualify for one of the 
low income categories will not experience a gap in coverage--and will 
receive a generous level of assistance. This means that in Maine over 
93,450 beneficiaries, or more than 40 percent of the Medicare 
population, will receive a generous benefit with no gap in coverage.
  And while the Senate bill may have extended this coverage to a 
greater number of seniors, unlike the Senate bill, this proposal 
ensures that all seniors, even the so-called ``dual eligibles''--those 
who qualify for both the Medicare and Medicaid programs--receive a 
Medicare drug benefit. This will ``federalize'' 47,100 beneficiaries in 
Maine and approximately 6 million nationally. This results in a savings 
of $161 million over eight years to the State of Maine. So, while this 
benefit does not achieve all that I would like, it has laid the 
foundation from which we can and must build in the future.
  Yet, not only do seniors deserve a subsidy to help make prescription 
drugs more affordable, they should also have the benefit of choice when 
it comes to the coverage they purchase.
  Because seniors shouldn't be limited in their options for coverage, 
we ensure that all seniors will have a choice of at least two privately 
delivered drug plans. Furthermore, all drug plans are required to offer 
access to two drugs from each therapeutic class and category. Not only 
does this provide seniors with options, it helps ensure they will 
receive the drug their doctor determines is the most appropriate.
  And let us not forget, there was a time when it was proposed that if 
seniors desired prescription drug coverage, they would be obligated to 
enter an HMO. Well, thankfully--and appropriately--this conference 
report shuns the ``one size fits all'' philosophy of placing all 
seniors into managed care and maintains the critical protection of 
choice of ensuring seniors can remain in the Medicare program. Seniors 
absolutely should have the option of staying where they're 
comfortable--without sacrificing guaranteed and equal prescription drug 
benefits.
  Still others on the opposite end of the spectrum have said that the 
privately delivered stand-alone drug coverage option is doomed to 
fail--that this type of plan doesn't exist in nature and insurance 
companies won't participate. However, this conference report includes 
key principles developed in the Senate bill--including risk corridors, 
reinsurance and stabilization accounts--which are intended to build a 
stable, productive model that I believe will attract and keep companies 
in the program.
  Ultimately, however, there is no way to guarantee private companies 
will deliver services in every region of the country. Therefore, as we 
were developing the Senate bill, many of us who represent the 12 rural 
States in which no Medicare+Choice programs operate included a fall 
back of last resort--which I'm pleased to say is sustained in this 
conference report. This key provision will serve to provide security to 
beneficiaries by knowing that no matter where they live, they will be 
assured of coverage even when private plans choose not to participate.
  Throughout this debate, concerns have been voiced that with the 
enactment of a Medicare prescription drug benefit some employers will 
be provoked into reducing coverage that they offer to their former 
employees. Indeed, I have expressed concern about this issue throughout 
my six years of involvement in developing Medicare prescription drug 
legislation. And while I have concluded that we can take steps to 
mitigate the problem of employers ending coverage, I do not believe we 
can eliminate it.
  That is because this bill is not causing employers to cease 
coverage--in fact, from 1999 to 2002--prior to the enactment of a 
Medicare prescription drug benefit--almost 10 percent of employers 
stopped offering retiree coverage. So this bill cannot be held 
responsible for this problem that exists regardless of the enactment of 
this bill. But we most definitely should use this bill as an 
opportunity to help reverse the trend of the last decade and offer 
incentives that will prompt employers to maintain their retiree 
benefits.
  This conference report takes important steps toward alleviating the 
problem. Looking back to the development of the Senate bill, the 
Congressional Budget Office estimated that S. 1 would prompt 37 percent 
of employers to reduce the drug coverage they offer to their former 
employers. In comparison, the conference report includes a combination 
of options--both policy and tax incentives--that CBO, and most 
importantly employers, believe will provide incentives strong enough

[[Page 31795]]

to encourage the maintenance of private sector coverage. It reduces the 
expected drop rate from the Senate bill's 37 percent to 16 percent; 
this means an additional 1.6 million seniors will retain their 
employer-sponsored coverage--seniors who might have lost this coverage 
regardless of the outcome of this bill.
  This proposal also takes vitally important steps to create better 
balance within the Medicare program to ensure that all providers, 
regardless of where they are located, receive adequate and appropriate 
payments. For too long, States like Maine, which ranks number 47 in 
Medicare reimbursement, have been underfunded simply because they are 
rural. This bill, thanks to the leadership and persistence of Chairman 
Grassley, finally brings Medicare payments into equilibrium.
  This proposal provides an additional $25 billion over ten years to 
help States, like Maine, receive more equitable Medicare payments. 
Hospitals in Maine stand to gain an additional $125 million through 
payment improvements for our Disproportionate Share Hospitals (DSH), 
teaching hospitals, critical access hospitals and rural hospitals. 
Further, Maine's rural home health care providers will see increases to 
their reimbursement rates, along with rural ground and air ambulance 
providers to name just a few. And let us not forget our physicians. 
This bill reverses the 4.5 percent reimbursement cut expected for 2004 
and provides an additional increase to payment rates for rural doctors, 
which together total more than $22 million.
  I was especially pleased to have been able to work with the Chairman 
to add, in the Senate Finance Committee, a provision that would ensure 
the continuation of the country's rural health care residency training 
programs. This provision reiterated the Congress' intent to allow 
physicians to volunteer their time as supervisors of residents, and 
allowed programs to use Medicare funding to support these residents 
instead of utilizing funding provided by the community.
  I added this provision in an effort to protect policy that I worked 
to include in the 1997 Balanced Budget Act, which, for the first time, 
allowed residency training programs to place their trainees outside of 
hospitals, most often in rural communities, and receive Medicare 
reimbursement. Unfortunately, the Centers for Medicare and Medicaid 
Services (CMS) recently tried to regulate around that law and prohibit 
programs from utilizing this option by making it so onerous that 
programs instead choose to move the residents back into the hospital 
instead of complying with the agency's new rules.
  While I was able to include the corrective policy in the Senate-
passed Medicare bill, some of the House conferees refused to maintain 
this critical Senate provision. But, working with the Chairman, who 
recognized the importance of this provision to rural States, I was able 
to secure support to provide a one-year moratorium that prohibits CMS 
from taking action against programs that allow physicians who supervise 
residents to volunteer their time. the provision also calls on the 
Secretary of Health and Human Services to perform a review of this 
issue and report to Congress on the impact to rural training programs 
if physicians are not allowed to volunteer their time as a supervisor.
  Though the moratorium is helpful, it does not resolve the issue, and 
I, therefore, will continue to fight on behalf of these vital programs. 
I have introduced as a separate bill, S. 1897, which contains the 
language from the Senate-passed Medicare bill that will in fact protect 
these programs and ensure their continued viability.
  This bill also includes a key provision that corrects an inequity 
that has disadvantaged millions of Medicare beneficiaries who suffer 
from cancer. This bill directs the Secretary to establish a 2 year 
transitional benefit in 2004 and 2005 utilizing at least $200 million 
to allow Medicare to cover all available oral anticancer treatments.
  Currently, Medicare provides coverage of a limited number of oral 
anti-cancer drugs that originally were available in intravenous, IV, 
form. However, since Congress first expanded coverage to this limited 
type of oral anti-cancer treatments, the technology has advanced and 
many of the most innovative and effective drugs do not qualify for 
coverage because they did not evolve from the IV form. By including in 
the conference report authority for CMS to extend coverage to all oral 
cancer treatments, we ensure that in 2004 and 2005, prior to 
implementation of the comprehensive prescription drug benefit, seniors 
will have access to the best treatment options available.
  The conference report before us, includes another noteworthy 
improvement to the Medicare program, one that will help make an 
important tool in the fight against breast cancer more accessible for 
women--diagnostic mammography. This year alone, 211,300 women in the 
U.S. will be diagnosed with invasive breast cancer, and almost 40,000 
will die from the disease. Yet, the FDA reports that the number of 
mammography facilities closing now number over 700 nationwide. These 
closures have led to longer waiting periods for women scheduling annual 
and follow-up mammography visits which could lead to delayed diagnosis 
and delayed treatment. This is not acceptable.
  The bill before us includes provisions closing the gap between the 
Medicare reimbursement and the actual cost of diagnostic mammography by 
removing the reimbursement of diagnostic mammography performed in a 
hospital setting from the Ambulatory Payment Classification and placing 
the procedure in the Medicare Fee Schedule. This would bring the 
hospital technical number closer to the actual cost of the procedure, 
thus reducing the financial disincentive for hospitals to continue 
these services.
  Having been the lead Republican cosponsor of this bill for a number 
of years, I am pleased the conference report before us today seeks to 
turn the tide on these closures as too many imaging facilities can no 
longer afford to offer these procedures due to low Medicare 
reimbursement.
  One million additional women become age-eligible for screening 
mammography each year. This action will help ensure that these women 
will have access to the screening they need to detect and combat this 
disease earlier and, hopefully, with less invasive procedures. This 
inexpensive provision in the Medicare conference report could save 
countless lives, and I am pleased that it will be enacted into law 
along with the rest of this bill.
  Finally--and fortunately--this conference report unquestionably 
represents the end of the House bill's open-ended efforts to move 
Medicare toward a national, privatized system through an untested, 
untried policy known as ``premium support'' that could have led to the 
patchwork delivery of health care that existed prior to the creation of 
Medicare in 1965.
  This approach would have fostered wild fluctuations in premiums for 
the traditional Medicare program. Whereas, incredibly, Medicare now 
provides all seniors the same benefit for the same premium, under this 
proposal premium variations would have occurred not just from State to 
State, but within a State and even within a congressional district!
  And you don't have to take my word for it. According to the Centers 
for Medicare & Medicaid seniors living in Miami, FL, would pay $2,100 a 
year for traditional Medicare, compared to $900 that seniors would pay 
in Osceola for the same benefit. And when you compare this to North 
Carolina, the variation from State to State grows even wider with Rowan 
County, North Carolina paying just $750 for traditional Medicare. So 
let there be no mistake, this House-backed provision was a full frontal 
assault on traditional Medicare. Yet, according to CBO, this proposal 
that supporters touted as the savior of the program ultimately would 
have saved Medicare less than $1 billion.
  I happen to believe that prescription drug legislation should be 
about providing seniors with a drug benefit. And while we certainly can 
consider and incorporate new policies that improve and enhance the 
underlying program. The drug benefit should not be used as

[[Page 31796]]

what someone appropriately described as a ``Trojan Horse'' to open the 
door to the privatization of Medicare.
  I ask unanimous consent that this letter, as well as another letter 
my colleagues and I sent in October, and an editorial from the Bangor 
Daily News be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

      Congress of the United States, Washington, DC, November 
                                                     13, 2003.

     Hon. Bill Frist,
                                     Majority Leader, U.S. Senate,
     Washington, DC.
       Dear Leader Frist: It has come to our attention that 
     leadership is considering the inclusion of a new version of 
     the policy model known as premium support. As you know, this 
     policy places the traditional Medicare program and private 
     plans into direct competition and according to the Centers 
     for Medicare and Medicaid Service (CMS) will lead to dramatic 
     increases in the annual premium for the traditional Medicare 
     program.
       We are extremely concerned about the inclusion of this 
     policy proposal in a Medicare bill. Though some may consider 
     this a demonstration project, we disagree. This appears to be 
     a veiled attempt to institute this policy into law. According 
     to CMS data this proposal could capture up to 10 million 
     seniors, 25 percent of Medicare beneficiaries. Further, it 
     will require them to bear the burden of cost increases 
     associated with the demonstration project.
       This policy also unfairly targets some seniors simply based 
     on their geographic location and mandates their 
     participation. The likely result will be significant 
     increases in traditional Medicare premiums for seniors living 
     in the affected areas and could destabilize the Medicare 
     program for all seniors.
       We understand that leadership and some conferees may be 
     considering possible changes to this latest proposal. We urge 
     you to remove this policy from the bill. We believe there are 
     other possible options that will encourage private plan 
     participation in the Medicare program that do not negatively 
     impact the traditional Medicare program.
       Thank you for your consideration of this vitally important 
     issue.
           Sincerely,
     44 Members of Congress.
                                  ____



                                                   U.S. Senate

                                Washington, DC., October 23, 2003.
     Chairman Charles E. Grassley and Ranking Member Max Baucus,
     Senate Finance Committee, Dirksen Senate Building, 
         Washington, DC.
     Chairman William M. Thomas and Ranking Member Charles B. 
       Rangel,
     House Ways and Means Committee, Longworth House Building, 
         Washington, DC.
     Chairman W.J. (Billy) Tauzin and Ranking Member John D. 
       Dingell,
     House Energy and Commerce Committee, Rayburn House Building, 
         Washington, DC.
       Dear Conferees:
       The Medicare conference has reached a critical junction in 
     its effort to craft a conference agreement to develop a 
     Medicare prescription drug and modernization bill. The time 
     is fast approaching when final agreements must be made if a 
     proposal is to be developed prior to the November 7 target-
     adjournment date. However, many key issues remain unresolved, 
     which will determine whether this bill can garner strong 
     bipartisan support and ultimately become law. As you progress 
     into this critical stage, we urge you to remain committed to 
     the bipartisan principles contained in the legislation 
     developed and passed by the United States Senate.
       First, the Senate bill takes strong steps to provide every 
     senior and disabled American, no matter where they live, with 
     choices in coverage. Notably, this is done in a manner that 
     preserves the traditional Medicare program as a viable 
     option. This balance was achieved by providing all seniors 
     with access to the same level of drug coverage no matter the 
     coverage option chosen. Further, the Senate bill assures this 
     choice will be a fair one that will not disadvantage senior 
     citizens who remain in traditional Medicare. Accordingly, we 
     urge you to remain committed to principles that provide a 
     level playing field between the private sector and Medicare 
     and reject proposals that would unduly raise Medicare 
     premiums or otherwise advantage private plans.
       Second, the Senate bill assures affordable, comprehensive 
     coverage to those with incomes below 160 percent of the 
     federal poverty level or $15,472 for an individual in 2006. 
     Generous and affordable coverage for this population is 
     essential, given that most presently do not have access to a 
     prescription drug benefit. The conference must assure that 
     the generous assistance provided to low income beneficiaries 
     is maintained and reject measures that would reduce the 
     benefits presently accorded Medicaid recipients.
       Third, we urge the conferees to include a mechanism that 
     will ensure that all seniors have access to a prescription 
     drug benefit, no matter where they live. The Senate bill 
     assures that private plans interested in providing this 
     benefit can do so and will be the preferred mechanism of 
     delivery in every geographic locality; however, it is not 
     possible to guarantee their participation. Therefore, it is 
     necessary that the final proposal include a fallback 
     mechanism, as we included in the Senate bill, that will 
     ensure that beneficiaries will have access to the drug 
     benefit in the event that private plans are not available in 
     a region.
       Finally, we caution the conferees against including 
     provisions that will circumvent established congressional 
     procedures or delegate responsibilities for establishing the 
     benefit and cost-sharing requirements to the Secretary of 
     Health and Human Services (HHS). The responsibility for 
     developing and overseeing benefits included in the Medicare 
     program rests with the Congress, and this bill should not 
     violate that principle.
       Enactment this year of a bill that adds a Medicare 
     prescription drug benefit and improves the program is a top 
     priority for each of us. America's seniors have waited too 
     long for comprehensive drug coverage and the addition of 
     market-based options. However, to achieve this goal, we must 
     continue to work together to develop agreements that will 
     receive bipartisan support in each chamber. In 1965, the 
     original Medicare bill garnered this level of support and a 
     change to the program of this magnitude should be no 
     different.
       We remain ready to help you address these and other issues 
     that will impact the final proposal, and hope you will work 
     with us to develop bipartisan proposals that we can support.
           Sincerely,
     Olympia J. Snowe,
     Arlen Specter,
     Mike DeWine,
     Edward M. Kennedy,
     Jeff Bingaman,
     Blanche L. Lincoln,
     James M. Jeffords.
                                  ____


              [From the Bangor Daily News, Nov. 21, 2001]

                           Hobson's Medicare

       Never have so many dollars been put to so little use. The 
     $400 billion Medicare bill before Congress establishes what 
     all sides agree is necessary--a prescription drug benefit--
     but blasts away at much of Medicare's foundation. It is a 
     deal that makes all previously rejected Medicare reform look 
     wise and generous by comparison. It is also the best deal the 
     current Congress is likely to get.
       The difficult calculation is this: Is a badly flawed bill 
     that contains a needed drug benefit worth passing when the 
     alternative is to reject it without the chance to enact 
     improved legislation? The $400 billion has been set aside for 
     funding this legislation; should it fail, the money would 
     disappear and given the extent of the deficit for the next 
     decade or more, would not be available next year; even in the 
     unlikely chance a bill could be passed in an election year, 
     or perhaps after that.
       Much of the debate this week has focused on the plan's 
     intent to establish privatization pilot projects--subsidized 
     private insurers would offer Medicare in six metropolitan 
     areas in competition with traditional Medicare--but other 
     aspects of it are equally important and equally troubling. 
     The means-testing provision in the bill, for instance, raises 
     costs for middle-class seniors; reimbursements for medical 
     residents harm clinic work; those who remain in traditional 
     Medicare for the pilot program will see increases in their 
     costs; states that could negotiate for their Medicaid-
     Medicare clients lose much of their bargaining power while 
     also losing their federal support for the program. The fear 
     remains strong among health care advocates that the entire 
     reform is an attempt to cap the federal contribution to 
     Medicare and shift future costs to seniors. Several of these 
     problems are being debated now--Sen. Olympia Snowe has been 
     in the middle of negotiations all week; imagine the time and 
     argument that would have been saved had she been put on the 
     conference committee. Some of these issues may be resolved 
     but several are likely to remain as the House and Senate 
     vote.
       Some members of Congress do not support the bill for these 
     many reasons; some don't support it because of its cost and 
     relatively small nod toward privatization. But for those who 
     believe a drug benefit is important and will become more 
     important in the coming years, the choice is to vote yes and 
     immediately set about chipping away at some of the worst 
     aspects of the bill. This is a terrible way to build a health 
     care safety net for the nation's seniors, but lamenting the 
     process is not an excuse for allowing this opportunity to 
     pass by without approving the drug benefit.
       At 1,100 pages, the Medicare bill is too long and complex 
     to describe it merely as a sop to industry (though 
     pharmaceutical manufacturers should love it), an ideological 
     document (though its medical-savings accounts are a GOP 
     crowd-pleaser) or a broad expansion of entitlements (though 
     the drug benefit is exactly that). It is fair to say the bill 
     is a poor version of what should have been passed years ago 
     and now that Congress is out of time and out of money, it is 
     about as much as the public can expect.

  Ms. SNOWE. In a letter that 43 colleagues sent, we expressed our 
strong opposition to this ideological venture. It is rewarding to note 
that significant changes were made that transformed the full-scale 
national premium support proposal into a limited bona-fide

[[Page 31797]]

demonstration project, as seen in this chart.
  Where once efforts centered on the wholesale national privatization 
of Medicare under a proposal that offered seniors zero protections from 
premium fluctuations, conferees shifted to crafting a bona-fide 
demonstration project.
  Notably, this proposal exempts seniors from the demonstration who 
have incomes below 150 percent of poverty.
  This bill includes a sunset that ends the demonstration project after 
six years, limits premium increases to 5 percent annually; and because 
the demonstration is phased in over 4 years, the actual impact to 
premiums is significantly less than 5 percent. In fact, the true cap on 
premiums during the first 4 years of the 6 year demo is only one-
quarter of the five percent increase.
  Further, under the initial proposal the premium increases would have 
compounded annually, which could have resulted in a net increase in the 
traditional Medicare premiums of over 30 percent during the 6 year 
project. But we worked with the conferees and even this component was 
removed so that the increases are not compounded.
  Finally, we were able to secure support to include selection criteria 
that identifies qualifying MSAs. Sites must have at least 25 percent 
private plan participation and seniors living within the MSA must have 
access to at least two local private plans. Further, the demo must 
include--one of the largest MSAs--one with low population density--one 
multi-State MSA--and all must be from different parts of the country. 
Under this criteria, Maine will not qualify as a demonstration site.
  According to CBO this criteria serves to limit the scope of the 
project to between 650,000 and 1 million seniors, as opposed to the 
proposal we addressed in our letter, which would have captured 10 
million seniors.
  Looking back it is remarkable how far this provision has come. Where 
discussion back in October once focused on the House-passed provisions 
that created a national premium support program, we now are considering 
a limited, bona-fide demonstration project that is a legitimate avenue 
for exploring new ideas to ensure the future of Medicare.
  Looking back on the development of the Senate bill, many notions 
existed about how best to encourage private plans to participate in 
Medicare. But as we discovered, expectations about the impact and 
results produced by these proposals often were in conflict. With one 
proposal, while CMS predicted 43 percent of seniors would participate 
in private plans, CBO estimated only two percent. Yet at a later point, 
in considering a measure to establish a payment system for the 
MedicareAdvantage program, CBO estimated it would cost hundreds of 
billions of dollars, while CMS predicted it would save Medicare money.
  Clearly, it is imperative that we first test proposals before sending 
Medicare down a path of change. To do otherwise would be to potentially 
imperil the very health care system seniors have come to reply upon.
  So I am pleased that in the final analysis the premium support 
proposal that once threatened to unravel the very thread of Medicare 
has been reduced to a limited, focused, true demonstration project, 
which starts in 2010; is limited to 6 years; is limited to 6 MSAs that 
according to CBO captures only 1 million seniors; limits premium 
increases to 5 percent per year without a compounding affect; 
terminates the financial incentives offered to private plans under the 
MedicareAdvantage program; and protects seniors whose incomes are below 
150 percent of poverty by holding them entirely harmless.
  There is one place where this conference report fails to hold seniors 
harmless, and that is in the skyrocketing costs of prescription drugs 
which are increasing at a rate seven times higher than the rate of 
inflation and grew 16 percent between 1999 and 2002.
  One effective means to reduce the cost of prescription drugs is 
through importation. Regrettably, this conference report perpetuates 
the status quo by insisting on maintaining the safety certification 
requirements that have to date made it impossible for either the former 
or current Secretary of Health and Human Services to certify the 
integrity of imported drugs. Yet one in eight American households 
already use imported prescription drugs, and according to William 
Hubbard, senior associate commissioner at the FDA, in his testimony 
before the House Government Reform Committee in June, there is ``no 
evidence that any American has died from taking a legal drug from 
another country.''
  The FDA has a critical role to play in the Secretary's ability to 
certify the safety of imported drugs--and they're not fulfilling that 
responsibility. Rather than expending the resources to develop the 
tools necessary to improve safety, and thus open access to this 
medications, the FDA is instead directing their efforts to threaten 
consumers. This is astounding because we know we have the ability to 
improve safety. For a few pennies, anti-counterfeiting packaging can be 
used. We use it on a twenty dollar bill--a lifesaving prescription 
deserves no less. Further, drug manufacturers were mandated back in 
1992 to track their products using a ``pedigree'', something which has 
yet to be enforced.
  I challenged the FDA to commit itself to improve packaging and 
require better tracking to protect consumers, and maintain high 
confidence in the products of our pharmaceutical industry. The public 
cannot be held hostage to the seemingly never-ending increase in the 
cost of prescription drugs, and this a fight that will continue to be 
waged in the halls of Congress, our citizens deserve no less.
  So taken in its totality, while I am disappointed with aspects of 
this legislation, passage of this legislation will be looked upon as a 
transformational moment in the history of the Medicare program, because 
now there will be no going back.
  There will be no returning to the days when Medicare lived in the 
dark ages, oblivious to the fact that remarkable drugs were available 
to save lives, prevent disease, and halt the progression of disease.
  There will be no returning to the days when many needed to be 
convinced that prescription drug coverage was even a topic worthy of 
serious debate in the United States Congress.
  There will be no returning to the days when a quarter of our Nation's 
seniors struggled without any assistance whatsoever in paying for the 
prescription drugs that can be the difference between a decent quality 
of life--and life itself.
  With this bill, we will finally pass the point of no return--and 
thankfully so. This bill--while far from perfect--is the new baseline, 
the new benchmark which future progress will be measured--and attained. 
To paraphrase Winston Churchill, in viewing this legislation, it is not 
the end. It is not even the beginning of the end. But it is, perhaps, 
the end of the beginning.
  For all of these reasons, I will support this conference report, and 
I encourage my colleagues to do likewise.
  Mr. McCAIN. Less than 5 months ago, I stood before the Senate and 
spoke at length of my concerns that such a package would be detrimental 
to the future solvency of our Nation, and leave future generations with 
a reckless and unjust financial burden. Since that time, members 
engaged in conference committee negotiations produced a voluminous 
package which represents the single largest expansion of Medicare since 
its creation, offering enormous profits and protections for a few of 
the country's most powerful interest groups, paid for with the borrowed 
money of American taxpayers for generations and generations to come.
  Everyone here is well aware that Medicare faces enormous long-term 
fiscal challenges. In recent years, the program's financial state has 
worsened. The most recent Trustee's Report hastened the year Medicare 
will reach financial insolvency by four years to 2026. Adding a 
prescription drug benefit to an already failing Medicare, is like 
putting a band-aid on a patient that needs surgery.

[[Page 31798]]

  Earlier today I mentioned several statistics which I believe are 
worth repeating. Today, our Nation has an accumulated deficit of $7 
trillion--which translates into $24,000 for every man, woman and child 
in the United States. Making our bad financial condition worse, the 
Federal Government is estimated to run a deficit of $480 billion in 
fiscal year 2004.
  Passing this bill continues our reckless spending. Although this 
package is estimated to cost just under $400 billion over 10 years, I 
guarantee you, $400 billion is merely a down payment. I don't believe 
there is one person here who honestly believes that $400 billion is the 
maximum we will pay in the next 10 years.
  Additionally, this new package will substantially increase existing 
unfunded liabilities. The Office of Management and Budget estimates the 
current unfunded liabilities of Medicare and Social Security at $18 
trillion. This new benefit will add an estimated $7 trillion in 
additional unfunded liabilities.
  By 2020, Social Security and Medicare, with a prescription drug 
benefit, will consume an estimated 21 percent of income taxes for every 
working American. Adding a new unfunded entitlement to a system that is 
already financially insolvent, is so grossly irresponsible that it 
ought to outrage every fiscal conservative.
  The American people deserve some straight talk. Passing this package, 
without implementing the necessary reforms to ensure that the Medicare 
system is solvent over the long-term, will simply expedite its failure. 
Clearly, it should be incumbent upon us to include comprehensive, free 
market reforms, into any Medicare prescription drug package in order to 
ensure that Medicare is financially sound for current beneficiaries as 
well as future generations. Unfortunately, this conference report 
represents a missed opportunity.
  Medicine has changed substantially since the creation of the Medicare 
system in 1965. Advances in medical technology and pharmaceuticals have 
lead to more prescription-based treatments, and Americans now consume 
more prescriptions than ever before. In 1968, soon after the enactment 
of Medicare, American seniors spent about $65 a year on a handful of 
prescription medications. Today seniors fill an average of 22 
prescriptions a year, spending an estimated $999.
  The conference report before us represents one of the largest 
enhancements to Medicare since its creation--setting up an entirely new 
bureaucracy and establishing a sizable new entitlement program. I 
believe this bill attempts to addresses a real problem, but falls 
perilously short. We must have no illusions. There are dangers, 
complexities, and potential unintended consequences associated with 
this bill.
  This legislation is without a doubt an enormous fiscal and social 
train wreck. Long after this Congress and this administration have left 
office our children and our grandchildren, and a future Congress and 
administration, will be left here to clean up the mess we have created 
with this bill.
  I believe we have an obligation to future generations to start 
exorcizing some fiscal restraint. While our national debt rapidly 
mounts, we continue to increase the financial burden our grandchildren 
will have to bare, without reigning in costs. Unfortunately, this 
problem is exacerbated by our inability to put a stop to our excessive 
and wasteful spending, particularly egregious porkbarrel projects which 
Congress has become addicted to.
  We are on a shopping spree with borrowed money. The extraordinarily 
large new entitlement package before us substantially increases the 
already enormous burden of current and future taxpayers. We have to 
stop living in denial, eventually the money has to come from somewhere 
and none of the options are desirable. The reality is, this new benefit 
will be funded by raiding other entitlement trust funds, through 
increasing our national debt, reducing benefits or through increased 
taxes. An expansion such as this is simply not sustainable.
  For the enormous cost of this bill, the most alarming fact is that it 
won't even provide adequate prescription drug coverage or enact many of 
the significant measures needed to reform the Medicare system and 
ensure its long-term financial solvency. To save this system, we must 
enact true free market reforms and bring Medicare into the 21st 
century. Some provisions in this bill, including means testing Part B 
and expansion of health savings accounts, are a good start toward long-
term reform. Unfortunately, these minor reforms do not outweigh the 
burden of the new unfunded drug benefit.
  With future generations of American taxpayers funding the purchase of 
prescription drugs under Medicare, we have an obligation to ensure some 
amount of cost containment against the skyrocketing cost of 
prescription drugs. Unfortunately, however, this package explicitly 
prohibits Medicare from using its new purchasing power to negotiate 
lower prices with manufacturers. The Veterans' Administration, VA, and 
State Medicaid Programs use market share to negotiate substantial 
discounts. Taxpayers should be able to expect Medicare, as a large 
purchaser of prescription drugs, to be able to derive some discount 
from its new market share. Instead, taxpayers will provide an estimated 
$9 billion a year in increased profits to the pharmaceutical industry.
  Prescription drug importation is another lost opportunity for cost 
containment. American consumers pay some of the highest prices in the 
developed world for prescription drugs, and as a result, millions of 
our citizens travel across our borders each year to purchase their 
prescriptions. In Arizona, bus loads of seniors depart from Phoenix and 
Tucson every week, heading south to Mexico to purchase lower cost 
prescription drugs. The story is similar across the northern border 
where seniors make daily trips to Canadian pharmacies.
  Throughout the country an increasing number of seniors are looking to 
online pharmacies selling reduced-priced prescriptions imported from 
other countries, oftentimes with questionable safety. In all, Americans 
spend hundreds of millions of dollars on imported pharmaceuticals not 
because they don't want to buy American, but because they simply can't 
afford to. Although the conference report does contain language on drug 
importation, it has been successfully weakened to the point of 
guaranteeing that implementation will never take place.
  The only provision contained in this package that has any potential 
to help rein in the cost of prescription drugs is a negotiated version 
of a bill Senator Schumer and I have championed for the last several 
Congresses. Regrettably, it is weakened from its original form. But, 
this language still represents a partial victory for consumers. It 
closes loopholes in current law that have allowed brand name drug 
companies to unfairly delay generic market entry, empowering generic 
firms to challenge patents and obtain certainty before risking market 
entry.
  Given the difficult budgetary realities in which we live, this 
package should have been targeted to the most needy. Today, 
approximately 75 percent of seniors have some form of prescription drug 
coverage, but the package before us is a universal benefit, not one 
that targets those poor seniors who we all know make difficult 
decisions between life sustaining medicines and other basic needs. One 
of the ludicrous facts is that this new plan will spend an estimated 
$100 billion to cover the people who already have coverage. Goldman 
Sachs analysts estimate that this bill shifts a total of $30 billion a 
year in U.S. health care spending to the Federal Government.
  Despite our differences of opinion over this legislation, virtually 
everyone involved agrees that in this country, there exists a serious 
crisis for lower and middle income seniors and the disabled. I believe 
it is an outrage that in a country as wealthy as ours, seniors across 
the country are struggling to afford the high cost of prescription 
drugs.
  Here is some straight talk to America's seniors: For those of you who 
think this bill will solve your financial problems I am here to tell 
you, there

[[Page 31799]]

are substantial limitations to the proposed legislation. This new 
prescription benefit will not be available immediately. In fact, it 
will take several years just to establish the new bureaucracy which 
will administer the prescription benefits.
  Once this program is in place, an estimated 20 percent of seniors who 
are currently covered by former employers--2.7 million individuals--
will lose that coverage. Over the summer, the Wall Street Journal 
quoted one analyst who called this bill the ``automaker enrichment 
act,'' because companies will see huge reductions in unfunded 
liabilities and annual drug spending. It is unconscionable that our 
grandchildren will be shouldering the burden of legacy costs of big 
business.
  Despite the enormous sums of money we are spending on this package, 
far too many seniors will find themselves with a benefit that is 
mediocre, at best. And far too many others will find themselves worse 
off than they are today. Many other seniors, might not even get out of 
the system what they will pay in deductibles and premiums.
  I am concerned that we are about to repeat an enormous mistake. I 
have been around long enough to remember another large Medicare 
prescription drug entitlement program we enacted in 1988, Medicare 
catastrophic. The image of seniors angered by the high cost and 
ineffectiveness of that package attacking Rostenkowski's car, should be 
a cautionary tale to all of us.
  The American people must be aware that this new package has 
substantial cost to seniors, to taxpayers and to the future generations 
who will bare the majority of the financial burden. We must be 
realistic, there will be unintended consequences of our actions. 
Moreover, we must be honest about the cost of this measure--$400 
billion is merely a down payment for what we are creating. If we as a 
body decide to support this bill, we must also commit to fiscal 
responsibility.
  Despite my concern for the overall package, several provisions will 
provide good fixes to the existing program and a better quality of life 
to many Americans. Several provisions benefitting our Nation's 
hospitals, will provide much needed assistance to hospitals in my 
State, particularly teaching hospitals, those in rural areas and those 
which suffer from the crippling burden of uncompensated care of 
undocumented immigrants.
  I am, however, disappointed that the Immigrant Children's Health 
Improvement Act was dropped from the conference report. This bill would 
have reversed a 1996 law that prohibited States from extending State 
Medicaid and SCHIP Programs to legal immigrants.
  The Wall Street Journal has called this bill ``an awfully high price 
to pay for expanded Health savings Accounts,'' but I would call it 
legislative malpractice.
  After much thought and careful deliberation, I regret that I cannot 
vote for this conference report. I have reached this conclusion, not 
because I believe our seniors and disabled do not need or deserve 
prescription drug coverage, but because I do not believe our country 
can sustain the cost of this package and because I fear that our 
actions will not provide adequate assistance to most beneficiaries.
  Mrs. CLINTON. Mr. President, this is a sad day for seniors and a sad 
day for America. I have long fought for a prescription drug benefit, 
and I am truly disappointed that this bill fails to adequately address 
this need. Seniors deserve a comprehensive, reliable prescription drug 
plan. This is no such bill. It is a weak benefit meant to cover the 
true intentions of its authors--privatizing Medicare. In short, the 
bill Republicans are passing today is a wolf in sheep's clothing.
  This bill, over time, will bring about the unraveling of the Medicare 
system, breaking a promise we made to our seniors. It does all this 
under the cloak of a prescription drug benefit that is far too small 
and far too weak to justify the negative side effects.
  To illustrate how this bill begins the demise of Medicare and sets 
our Nation back in its effort to care for seniors, we need only to look 
at the years before Medicare, when the private market failed to 
adequately serve the elderly. This sicker, costlier population was an 
unprofitable group for private insurers to cover. It was impossible to 
take care of this pool and still keep premiums affordable. Before we 
passed Medicare in 1965, 44 percent of seniors were uninsured. Now 1 
percent of seniors are uninsured--a lower rate than any other age 
group. Medicare does this by being able to spread the per-person costs 
across a large number of people to pool the risk.
  This bill, however, fragments the risk pool and allows private plans 
to ``cherry-pick'' the healthiest seniors. Left behind will be a group 
of Medicare applicants that are far more expensive per person. This 
will create a two-tiered system and start an insurance cost death 
spiral that will unravel Medicare's financing. Medicare is a promise we 
made as a nation to guarantee seniors the health care they need in 
their golden years. This bill betrays that promise. And it does so 
under the false pretense of a prescription drug benefit. While 
promising negligible prescription drug coverage, this bill immediately 
puts benefits at risk for millions of seniors, including retirees, 
members of state prescription plans and those who are dual-eligible for 
Medicare and Medicaid--the poorest and the sickest. I voted against 
this bill for these reasons, and because these flaws will particularly 
harm New Yorkers.
  This bill contains little to prevent employers from dropping retiree 
coverage. That will disproportionately affect New York, which has a 
higher percentage of seniors with retiree health than other States. In 
New York State, 36.5 percent of Medicare beneficiaries have retiree 
coverage compared to a national average rate of 31.8 percent. Over 
200,000 Medicare beneficiaries in New York will lose their retiree 
health benefits under this bill.
  This bill will also reduce drug coverage for the lowest-income and 
sickest Medicare beneficiaries--those dually eligible for Medicare and 
Medicaid. In a cost-savings provision, this bill will ban Medicaid from 
filling in the gaps in coverage by prohibiting Medicaid dollars from 
covering prescription drugs not covered by the new Medicare drug plan. 
This could hurt 6 million nursing home residents, people with 
disabilities, and truly indigent seniors nationwide, and over 400,000 
in New York alone.
  This bill also fails to protect seniors who hope to stay in state 
prescription drug plans, like New York's EPIC. Unless corrected, this 
bill will force EPIC to comply with private drug plans preferred drug 
list, hampering EPIC's ability to ``wrap around'' Medicare and 
supplement the drug coverage. The state legislature will be forced to 
change the law and the design of EPIC to continue to program.
  Retirees, dual-eligible and state plan participants are not the only 
losers in this bill. The premium support provision will also hurt 
seniors in various regions selected for this experiment. These seniors 
will incur a surcharge in their Medicare premiums others will not have 
to pay. The seniors who want to stay in traditional Medicare but fall 
in a metropolitan area chosen for the premium support ``demonstration'' 
will have a 5 percent surcharge over their counterparts in other 
States. In the future that surcharge could spike to 88 percent if the 
``demonstration'' is expanded to a full-premium support privatization 
effort. New York seniors in Rochester and Buffalo are at risk of being 
treated in that discriminatory manner. New York State also has two 
other Metropolitan Statistical Areas--Albany-Schenectady-Troy, and Glen 
Falls--that face the possibility of being chosen and whose seniors are 
therefore at risk of having to pay more in Medicare part B premiums 
than other seniors in the U.S.
  The bill also hurts seniors and individuals with disabilities by 
raising every Medicare beneficiary's deductible for physician services 
immediately, before seniors and people with disabilities even receive 
any benefits. Yet it fails to deal with the rising price of 
prescription drugs. It guts re-importation, weakens the generic 
provisions, and goes through the most unimaginable contortions to 
undermine government bargaining power, or any other checks on 
skyrocketing prescription drug prices. At the same time it

[[Page 31800]]

places a 45 percent general revenue trigger on overall Medicare 
spending. This puts existing non-drug benefits in jeopardy by placing 
an arbitrary lid on spending and allowing drug-related spending to grow 
uncontrollably. That means other Medicare benefits will get squeezed 
into tighter and tighter fiscal constraints. If they can't fit those 
constraints, this bill forces those existing benefits onto the chopping 
block year after year.
  I and many of my colleagues have expressed concerns, not just with 
aspects of this bill, but with the appalling process with which it was 
thrust upon us. As complex and confusing as this bill is, the senate 
discussed it for less than a week now. We have not been given ample 
time to understand this bill, and our constituents have not been given 
adequate time to discern how it will affect their lives.
  Fortunately, there are some provisions included that I support. I am 
very glad to see that this bill stops the damaging cuts to physician 
payments and provides a small increase to physicians instead. I am 
pleased that the bill includes between $300 and $400 million for rural 
and small community hospitals and health providers in New York, while 
also providing additional funds for public and other hospitals who 
serve a disproportionate number of uninsured or Medicaid patients. And 
while I would have liked to see all teaching hospital cuts averted, I 
am pleased that at least some improvements were made for graduate 
medical education, since New York State trains many of the graduate 
physicians in the nation. This bill also includes a version of Senator 
Schumer's proposal, which provides greater market competition for 
generic drugs. And finally, this bill contains a proposal that I 
offered as an amendment on the Senate floor--the comparative 
effectiveness research provision. This will assure that we spend money 
on drugs that are most effective, not just the ones that are most 
advertised.
  These positive provisions, however, should have been attached to a 
good bill. They are not enough to justify undermining the promise of 
Medicare. I believe New York deserves a better bipartisan alternative 
than the one that passed today, and I will continue fighting this year, 
as well as in years to come, to correct the deficiencies I've described 
today so that Congress might deliver on the long-awaited promise of a 
simple, affordable, comprehensive prescription drug benefit for all 
seniors.
  Like so many other pieces of legislation we have witnessed in the 
past two and a half years, this bill is designed to please special 
interest and not the public. It will be a benefit to drug 
manufacturers. And it will be an benefit to private insurance 
providers. They are the big winners here, and that's not right.
  We need a bill that will benefit seniors. They deserve a benefit that 
is comprehensive, wide-ranging, and reliable. Today's bill is mainly a 
bill to privatization of Medicare. And it's not only seniors who will 
be harmed. All Americans, young and old, will deal with the financial 
and medical consequences of this bill for years to come. This is a bad 
bill for seniors and a bad bill for America.
  Mr. JOHNSON. Mr. President I rise today, conflicted about the 
conference report now before this body. Shortly, my colleagues and I 
will be faced with making a very important decision regarding whether 
or not we think this Medicare conference report is good enough for 
America's seniors. This is not a simple task as there are so many 
moving parts, each with its own implications.
  The Senate bill, which I supported was not perfect. While it had its 
flaws, it represented a bipartisan effort and a first step towards 
providing the kind of prescription drug coverage seniors need. With the 
conclusion of that vote, I remain cautiously optimistic that conferees 
would be able to deal with some of the inherent problems in that bill. 
I was hopeful that conferees would find a way to eliminate or come very 
close to eliminating the employer-sponsored retiree coverage drop 
problem. I was hopeful that conferees could maintain the level playing 
field between traditional Medicare and private plans. And I was 
optimistic that progress could be made on reducing the high cost of 
prescription drugs that Americans pay compared to the rest of the 
world.
  I was hopeful and confident, but I must unfortunately report today 
that those feelings are now all but entirely lost. I am discouraged 
that my colleagues on the other side of the aisle abandoned the 
bipartisan spirit of the conference committee. Senator Daschle, who has 
always been a strong leader on this important health care access issue, 
as well as many other Democratic members, had been completely shut out 
of the conference committee. This is a very unfortunate circumstance, 
and the result today is obvious.
  It is obvious because now we are faced with a conference report that 
does not represent a fair balance between the strong Senate bill and 
the bill passed by a 1-vote majority in the House. Rather, today we 
have a conference report that moves to privatize Medicare, actually 
prohibits the government from negotiating lower drug prices, and puts 
rural and chronically ill seniors at risk of suffering higher premiums 
than their urban and healthier counterparts. All of these things weigh 
on my mind as I think about this very important vote.
  And I am especially frustrated that the majority has intentionally 
held the rural provider package hostage. This package should have been 
passed with the tax bill, but President Bush made a convenient promise 
to our Republican friends to address this issue in the context of the 
Medicare prescription drug bill and they have now created the illusion 
that a no vote for this bill equates to a lack of support of rural 
provider payment equity. Well, this is simply not true. Many of my 
colleagues on the Rural Health Caucus have worked tirelessly over many 
years to achieve payment equity for our providers. I would like to 
thank all members of our caucus, and especially Senator Harkin for his 
hard work on this issue. I have long supported these important 
provisions, which were all contained in the better Senate-passed 
bipartisan bill.
  And while I am pleased that the Senate bill's rural provider package 
has made it into the conference report, I am very concerned about the 
actual drug benefit. While the conference report appears to do a pretty 
good job of addressing the prescription drug needs of many low-income 
beneficiaries, most seniors, especially those above 150 percent of 
poverty will be expecting much more than what they will receive under 
the program. This will be a shocking wake up call for many around the 
country when the plan finally reaches them in 2006.
  Not only will seniors across the country experience varied premium 
rates and benefits, but many seniors will not break even under the 
plan, spending more in premiums, copayments and deductibles than the 
value of the drugs they need in a given year. In South Dakota, about 
16.6 percent of the Medicare population will fit in this category. This 
is not what seniors are expecting and they should know this right 
away--up front.
  Additionally, many beneficiaries will hit the coverage gap and remain 
there for a long period of time in any given year. In my home State, 
approximately 24.4 percent of seniors will hit the coverage gap of 
$2,250 but never reach the catastrophic level of $5,100, meaning they 
wind up paying 100 percent of their drug costs or $2,850 while 
continuing to pay a monthly premium to their PPO or drug-only plan. I 
know that South Dakotans will be saying to me in the fall of 2006 that 
rather than pay for a deal like that, they might as well just take a 
bus trip up to Canada to get their drugs for a much cheaper deal.
  In addition to these less than ideal benefits, I am angered that this 
bill does almost nothing to constrain the rising cost of prescription 
drugs. I am pleased that provisions have been included to speed access 
to lower priced generics, however beyond that, it is blatantly obvious 
that many have gone to great lengths to establish roadblocks against 
real price reform. The conference report disallows the Secretary any 
real authority to negotiate

[[Page 31801]]

for lower priced drugs for the 41 million seniors that will be eligible 
for this program. This is the real tragedy in this conference report of 
which people across America must be made aware.
  Disturbing are the estimates that the pharmaceutical industry will 
experience windfall profits of at least $139 billion dollars over eight 
years as a result of this new program. Our friends on the other side of 
the aisle talk of ``free market'' and ``fiscal discipline'' but went 
far beyond turning the other cheek when they struck the Senate's 
reimportation provisions that disallowed drug manufacturers to restrain 
their exports to other countries. This is not free market colleagues 
and such excess will eventually threaten the viability of the Medicare 
Part D prescription drug benefit.
  I am also concerned that while conferees have provided some dollars 
in the final report to address the loss of employer-sponsored retiree 
drug coverage, we have only partly addressed this problem. I was 
pleased to see that conferees allotted funds to address this issue in 
part. And while the conference report reduced the drop rate by about 14 
percent, 23 percent of seniors will still lose the generous retiree 
coverage they now enjoy. Additional dollars were available in the 
budget to further reduce this number. Unfortunately, conference 
leadership chose to spending billions on health savings accounts, which 
have nothing to do with Medicare or the prescription drug benefit, and 
only serve to help healthier and wealthier Americans save money on the 
costs of their health care. I find this very disappointing and, 
frankly, unacceptable.
  There are countless others in my State and across the country that 
are left out under the so called ``agreement'' before us. In South 
Dakota, 14.1 percent of Medicare beneficiaries are also eligible for 
Medicaid. These ``dual eligibles'' were protected under the Senate bill 
by maintaining their generous Medicaid coverage. Under the final 
version, those individuals will suffer higher copayments and will run 
the risk of losing access to important life-saving medications if a 
particular drug is not covered on their new Medicare drug formulary. 
Additionally, in my State thousands fewer seniors will not qualify for 
the low-income protections because the conference report reduced the 
poverty threshold from 160 percent as was in the Senate bill to 140 
percent, as well as instituted a strict assets test for low-income 
benefits.
  Of most concern to seniors in rural South Dakota will be the 
proposal's heavy reliance on managed care. In my home State, currently 
there are no beneficiaries enrolled in the Medicare+Choice program. If 
we take lessons from that fact, one that is mirrored in many rural 
states, we must conclude that the managed care options in this 
conference report are not likely to have much success in those areas.
  The Senate bill did contain a strong fallback provision which would 
have provided real choices to rural seniors. Under the bill I 
supported, if two ``prescription drug only plans'' of PDP's were not 
available in a given region, seniors would have the choice to select a 
government-run fallback option. It is my understanding that under the 
conference report that guaranteed fallback trigger is restricted 
because only one PDP and one managed care plan are required to prevent 
the fallback from being made available.
  This scenario means that a senior in South Dakota has to choose 
between two bad options: be forced into a managed care plan and lose 
the choice of their doctor to achieve affordable drug prices, or join 
the only PDP plan in the region that enjoys a captive market which 
allows them to charge whatever premium they desire. The managed care 
plans under this conference report will be able to achieve lower prices 
for seniors because they will enjoy over $12 billion in slush fund 
money from a so called ``stabilization fund'' that is included in the 
conference report language. These are not options or choices nor do 
they represent a level playing field for traditional Medicare, and I 
fear they will hurt rural America and represent the first steps in a 
scheme being pushed by this Administration to fully privatize the 
Medicare program.
  With a budget allocation of $400 billion this year for a new Medicare 
drug benefit, Congress had a great opportunity to reach a long awaited 
goal. The bill I supported in the Senate was the start in the right 
direction towards meeting that goal and I am so disappointed that what 
is before us today has taken far too many steps in the wrong direction. 
Colleagues, seniors deserve better than this and I deeply regret I 
cannot support this conference report.
  Mr. KYL. Mr. President, today I discuss the energy conference report, 
and begin by commending the Chairman of the Senate Energy and Natural 
Resources Committee for his tireless work to pull together such a 
comprehensive measure. The energy conference report attempts to improve 
our Nation's energy supply and reliability, and for that it should be 
praised. Unfortunately, it also contains numerous provisions that will 
distort competitive markets for energy through subsidies, tax breaks, 
special projects, mandates and, last but not least, outlandish amounts 
of Federal spending.
  Mr. President, I have been particularly interested in the provisions 
in the electricity title that are designed to restructure our 
electricity markets. Some of my colleagues have been tempted to move 
immediately to completely unregulated electricity markets; others 
favored imposing a more stringent regulatory regime as a result of 
problems in California.
  Representing Arizona, I was well aware of the problems stemming from 
the California energy crisis, but cannot agree with those who say the 
solution is to return to a command-and-control regulatory structure. I 
continue to believe that the most efficient way to allocate resources 
is through competitive markets. The chairman has done an admirable job 
of trying to encourage competitive markets while making sure that 
consumers continue to pay the lowest possible price for energy 
resources.
  There are several provisions in this bill that hit the right balance 
for our electricity policy. The legislation repeals the Public Utility 
Holding Company Act of 1935. As we all know, our energy markets have 
evolved significantly since the era of the Great Depression. State 
regulators are smarter, more well-equipped, and able to protect 
consumers from the ills that gave rise to the Public Utility Holding 
Company Act of 1935 nearly 70 years ago.
  I am also pleased that the conference report has found the right 
balance with respect to delineating the jurisdictional reach of the 
Federal Energy Regulatory Commission, FERC. As a Senator from the West, 
I've been frustrated by FERC's effort to impose a mandatory 
``Government knows best'' one-size-fits all standard electric market 
design, or SMD, on all regions of the Nation. This proposal has drawn 
severe criticism from the West and other regions of the country, as 
being unworkable and potentially disruptive to the functioning of our 
vital electricity infrastructure, all to the detriment of consumers. 
This criticism comes from a broad spectrum including State regulators, 
industry representatives and consumer groups, all of whom express 
concerns about the inflexibility of the SMD requirements, the untested 
nature of many of them in regions without a history of RTO operations, 
and the potential cost burdens on electricity consumers.
  Normally, one would have expected an agency like FERC to respond to 
such comments at a minimum by delaying its SMD proposal, or proposing a 
more measured approach, both in scope and mandatory application. 
Instead, FERC has indicated it will proceed with the fundamentals of 
SMD. As a result, Congress has been forced to take the unprecedented 
step of mandating a pause in SMD, through 2006, to enable those 
involved in this critical industry to assess how to proceed. It is 
unfortunate that Congress must, in effect, admonish a Federal agency in 
this way; but we have an obligation to see that an agency Congress 
created proceeds in the deliberate and thoughtful manner that the issue 
demands.
  I hope that FERC follows both the spirit and the letter of this law. 
The

[[Page 31802]]

Senate will be watching to make sure that FERC does not move forward on 
SMD by changing its name to WMP, or using a different legal basis, such 
as just and reasonable rates, rather than discrimination. Change your 
agenda, FERC. Don't waste our time by forcing us to save the electrical 
industry from your zeal to regulate, whether with a standards of 
conduct rulemaking, a supply margin assessment test, or a yet to be 
designed mistake.
  For example, the standards of conduct rule, as proposed during the 
SMD development period, represents a direct attack on the internal 
organization of vertically integrated utilities. Before the proposed 
rule is finalized, it must be amended to eliminate elements that 
parallel the SMD proposal. The assertion of jurisdiction over retail 
sales of vertically integrated utilities is clearly within the scope of 
SMD.
  We understand that FERC has and will continue to have matters before 
it that may also involve issues raised in the SMD NOPR. We have 
proposed savings provisions in the bill that are intended to permit 
FERC to resolve those issues when they arise. However, the savings 
provisions do not detract from the clear mandate that FERC not act 
prior to the end of 2006 on SMD or any rule or order of general 
application within the scope of the proposed SMD rulemaking.
  I have often expressed my concern with what some industry officials 
have termed a jurisdictional reach by the Federal Energy Regulatory 
Commission into the delivery of power to retail customers. The service 
obligation amendment that I worked on with the chairman has been 
included in this package, and I believe it provides a commonsense way 
to promote competitive markets while preserving the reliability that 
retail electric consumers expect and deserve. In its actions governing 
access to transmission systems, FERC has not adequately ensured that 
the native load customers, for whom the system was constructed, can 
rely on the system to keep the lights on. The bill adds a new section 
217 to the Federal Power Act to ensure that native load customers' 
rights to the system, including load growth, are protected.
  It is also worth noting that the conference report expands 
jurisdiction over those stakeholders in electric markets that were 
previously unregulated by the FERC. The FERC-lite provision that 
addresses the Federal Energy Regulatory Commission's efforts to provide 
open access over all transmission facilities in the U.S. again, in my 
mind, strikes the right balance. It requires FERC to ensure that 
transmission owners--whether they are municipal utilities, power 
marketing administrations, or electric cooperatives--deliver power at 
terms that are not discriminatory or preferential. However, this 
provision is limited and does not give FERC the ability to begin 
regulating the rate-setting activities of these organizations. If FERC 
finds fault with the transmission rates of such an organization, the 
bill provides that FERC will remand the rates to the local rate-setting 
body for reconsideration. FERC-lite does not confer further authority 
to FERC over public power systems. FERC cannot order structural or 
organizational changes in an unregulated transmitting utility to comply 
with this section. For example, if an integrated utility providing a 
bundled retail service operates transmission distribution and retail 
sales out of a single operational office, the commission cannot require 
functional separation of transmission operations from retail sales 
operations.
  I would also like to mention the new refund authority provision in 
the bill. I understand that the purpose of the new section 206(e) of 
the Federal Power Act is to permit FERC to order refunds where a 
governmental entity voluntarily enters the wholesale market and acts 
egregiously. Section 206(e) gives FERC authority to order refunds where 
a governmental entity voluntarily enters a FERC-regulated market, makes 
short-term wholesale sales and violates FERC's substantive rules of 
general applicability governing other sellers into that market. Section 
206(e) provides a means to correct market abuse; it is not meant to be 
a back door to full FERC jurisdiction over governmental entities.
  The chairman should also be commended for what is not in this bill. I 
note that there are some who wanted to include a renewable portfolio 
standard. I commend the chairman and the Chairman of the Budget 
Committee for convincing fellow conferees that a renewable portfolio 
standard would be costly and yield few benefits. I am also pleased that 
the chairman saw the wisdom of not including a climate-change 
provision.
  Gratifying, as well, is that the conference report has not pursued a 
command-and-control approach with respect to regional transmission 
organizations, or RTOs. I believe the best approach, which is captured 
in this conference report, is for FERC to provide incentives to 
encourage membership in RTOs and independent system operators. As 
lawmakers, we need to be sensitive to the policy changes we propose and 
how the laws we draft will affect Wall Street and the markets, and we 
must make sure we promote the investments that are needed. This is a 
prime example of how the conference report has sought to advance 
policies to which the investment community can respond favorably.
  Related to the need to give clear signals to the investment 
community, I believe that the participant-funding provisions have 
placed FERC in the appropriate role of providing incentives to invest 
in transmission infrastructure. As a member of the Energy Committee, I 
have heard countless hours of testimony on the Nation's transmission 
grid being woefully underfunded, and the urgent need for significant 
upgrades to meet energy demands in the future. The provision on 
participant funding address this need and gives FERC the appropriate 
instructions to adapt methodologies for particular regions.
  As I have said, some important provisions of this conference 
agreement have much to recommend them. Still, I find the bill's many 
tax subsidies--most in the form of tax credits--to be irresponsible, 
unnecessary, and inefficient. There are just too many of them to permit 
me, in good conscience, to vote for this bill.
  My overarching concern has to do with the use of tax credits by the 
government. The Federal Government uses tax credits to induce 
individuals or businesses to engage in favored activities. This can 
distort the market and cause individuals or businesses to undertake 
unproductive economic activity that they might not have done absent the 
inducement. Tax credits are really appropriations that are run through 
the Internal Revenue Code, the Code, and are a way to give Federal 
subsidies, disguised as tax cuts, to favored constituencies. It is 
something we should do sparingly--very sparingly. While tax credits can 
be effective in encouraging activities we consider laudable for one 
reason or another, I believe that, as stewards of the taxpayers' money, 
we must only support those credits that provide broad benefit to all 
taxpayers and that are worth the revenue they will cost the Federal 
Treasury.
  I do not believe that any of the tax credits in the conference 
agreement meet these tests. Let me highlight three particular 
provisions. The conference agreement extends and expands the credit 
provided in section 45 of the Code. This credit is available on a per-
kilowatt-hour basis for energy produced from wind, solar, closed-loop 
biomass, open-loop biomass, geothermal, small irrigation, and municipal 
solid waste. I believe that the credit for wind energy should have 
sunset several years ago. Wind energy has been provided this credit 
since 1992 and if it is not competitive after a decade of taxpayer 
subsidies, it will never be competitive. In 2001, the wind industry was 
in fact touting its great success and competitiveness with other forms 
of energy, but here we are extending the wind credit for 3 more years. 
All of the credits I just mentioned, except wind and closed-loop 
biomass, are eligible for the credit for the first time in this bill. I 
wager that we will still be paying for the ``temporary'' advantage 
being given to these new energy forms a decade from now.

[[Page 31803]]

  Let me point out that it's good that the conference agreement calls 
for a study of the section 45 credits. If we are going to spend more 
than $3 billion on these credits, we should at least know whether they 
are having a positive effect and whether these forms of energy will 
ever be able to survive without a taxpayer subsidy. A 2002 Cato 
Institute study suggests that section 45 is not worth the expense; some 
economists estimate that the cost is double the benefit.
  Another of the credits provided in the agreement is the tax credit 
for biodiesel fuel. In addition to questions I have about the need for 
this credit, I have heard concerns from companies located in Arizona 
that this credit might have unintended results, including affecting 
market prices for tallow and glycerin, which are byproducts of 
biodiesel production. I strongly encourage the Finance Committee staff 
to closely monitor whether and how the biodiesel credit affects the 
market prices for these products.
  Finally, the conference agreement provides tax credits for the 
purchase of a new qualified fuel cell, hybrid, or alternative fuel 
motor vehicles. I have grave concerns about this provision and I refer 
my colleagues to Arizona's disastrous experience with its alternative 
fuel vehicle tax incentives. The program could have cost Arizona half a 
billion dollars--11 percent of the State's budget--if it had not been 
repealed. When proposed, the cost of the program was projected to be 
only between $3 million and $10 million--less than 10 percent of its 
true cost. The Joint Committee on Taxation estimates that the provision 
in this conference agreement will cost $2.23 billion over 10 years. 
While I appreciate that the Finance Committee incorporated several 
changes to reflect lessons learned from Arizona's experience, I 
seriously doubt we can be confident about the revenue estimate for 
these provisions of the conference agreement. That's why I am 
particularly disturbed that it deletes a requirement that was in the 
Senate bill for a study of the credits. Such a study could have given 
Congress important information about how much the credits are costing, 
how effective they are at encouraging the purchase of alternative fuel 
vehicles, and how long the credits will be needed.
  Beyond the issue of tax credits, I would also like to say a word or 
two about the tax provisions that were included in this legislation 
that I believe have merit. These generally have to do with assigning 
more realistic depreciation recovery periods to various energy-related 
investments. For example, the agreement assigns a 7-year life to 
natural gas gathering pipelines and a 15-year life to natural gas 
distribution lines. I strongly believe that the Code requires a great 
many investments to be depreciated over too long a time period, so I am 
pleased the agreement begins addressing this problem.
  Next, I want to discuss an issue that I had hoped would be addressed 
in the conference report that will accompany the agreement, but that 
was not included. I had hoped that one aspect of the transmission issue 
would be addressed in the conference with some simple report language. 
That issue has to do with the electricity supplied in the evolving 
marketplace by publicly owned utilities. Unfortunately, the conference 
report does not address this issue and I raise it now as something I 
hope the Treasury Department will address.
  A significant goal of this bill is to foster open access to the 
greatest extent possible. However, in recognition of the limitations 
imposed by section 141 of the Code, the electricity title provides that 
States and municipalities may not be ordered to provide transmission 
services in a manner which would result in any bonds ceasing to be 
treated as obligations the interest on which is excluded from gross 
income.
  As my colleagues may know, the applicable Treasury regulations are 
flexible in applying section 141 where transmission facilities are 
operated by an independent transmission operator, ITO, approved by 
FERC. The Treasury regulations, however, are significantly less 
flexible for other open access transmission where the facilities are 
not operated by an ITO. In addition, the conferees are aware that final 
regulations relating to the allocation of private business use to 
facilities and portions thereof financed with funds other than tax-
exempt bond proceeds prior to allocating such private business use to 
tax-exempt bond proceeeds--the ``Equity First'' rules--have not been 
issued, although an advance notice of proposed rulemaking has been 
issued.
  Accordingly, in recognition of the purposes of the act, I would ask 
the Treasury Department to strongly consider: (1) Amending the 
regulations or providing other general guidance relating to the use of 
transmission for open access to provide the same degree of broad 
flexibility whether or not the facilities are operated by an ITO, and 
(2) issuing proposed and final regulations relating to Equity First for 
output facilities as expeditiously as possible, taking into account the 
public comments submitted.
  Fleixible guidance on both these points would greatly assist the 
Nation's publicly owned utilities in contributing to the reliability in 
the electricity grid that this bill seeks to implement.
  Now for ethanol. The ethanol provisions of the conference report are 
truly remarkable. They mandate that Americans use 5 billion gallons of 
ethanol annually by 2012. We use 1.7 billion gallons now. For what 
purpose, I ask, does Congress so egregiously manipulate the national 
market for vehicle fuel? No proof exists that the ethanol mandate will 
make our air cleaner. In fact, in Arizona, the State Department of 
Environmental Quality has found that more ethanol use will degrade air 
quality, which will probably force areas in Arizona out of attainment 
with the Clean Air Act. Arizonans will suffer. Furthermore, according 
to the Energy Information Administration, this mandate--costing between 
$6.7 and $8 billion a year--will force Americans to pay more for 
gasoline. Nor is an ethanol mandate needed to keep the ethanol industry 
alive. That industry already receives a hefty amount of Federal 
largesse. CRS estimates that the ethanol and corn industries have 
gotten more than $29 billion in subsidies since 1996. Yet, this bill 
not only mandates that we more than double our ethanol use, but 
provides even more subsidies for the industry--as much as $26 billion 
over the next 5 years.
  Professor David Pimentel, of the College of Agriculture and Life 
Sciences at Cornell, has studied ethanol. He is a true expert on the 
``corn-to-car'' fuel process. His verdict, in a recent study: ``Abusing 
our precious croplands to grow corn for an energy-inefficient process 
that yields low-grade automobile fuel amounts to unsustainable, 
subsidized food burning.'' It isn't efficient. The fuel is low-grade. 
And what is more, Congress, by going in for ``unsustainable, subsidized 
food burning,'' will impede the natural innovation in clean fuels that 
would occur with a competitive market, free of the Government's 
manipulation. These ethanol provisions, alone, dictate that I vote 
against the bill.
  So, in conclusion, while this bill includes several meritorious 
provisions, especially those negotiated by Chairman Domenici, I must 
vote against it because of the $24 billion in tax subsidies and the 
bill's irresponsible manipulation of the energy markets through an 
ethanol mandate.
  Mr. CONRAD. Mr. President, I support the Medicare conference report 
that is before us.
  This was not an easy decision, because the conference report is far 
from perfect, but I believe it is the right decision for three reasons.
  First, most basically, the bill provides $400 billion to add a 
voluntary prescription drug benefit in Medicare. Prescription drugs are 
an integral part of modern medicine. Yet they are not covered by 
Medicare today. No other health insurance program in this country today 
fails to cover prescription drugs. It is long past time to add drug 
coverage to Medicare.
  The bill before us creates a voluntary prescription drug benefit in 
the Medicare program starting in 2006. Here's how it would work. Those 
beneficiaries

[[Page 31804]]

who choose to sign up for this benefit will pay a premium estimated to 
average $35/month starting in 2006. Beneficiaries would then have to 
meet a deductible of $250 in out-of-pocket spending on prescription 
drugs. Above $250, Medicare will pay 75 percent of the next $2000 in 
drug costs. Then, the benefit cuts off. Medicare will pay nothing until 
the beneficiary has paid an additional $2850 out-of-pocket. Beyond this 
gap in coverage, Medicare will then pay 95 percent of all additional 
drug costs.
  Obviously, this is not a perfect drug benefit. It is not the drug 
benefit I would have designed. And it is going to fall short of many 
seniors' expectations. The simple reality is that one cannot produce a 
comprehensive drug benefit that looks like the private health insurance 
coverage most Americans are used to for just $400 billion.
  But the $400 billion in drug benefits provided by the conference 
report will mean a significant improvement in health coverage for 
millions of seniors across the country. It will provide a meaningful--
if imperfect--benefit to seniors who currently have no coverage, and it 
will offer more comprehensive coverage and catastrophic protection to 
seniors who currently rely on medigap plans. This is a step forward. If 
we do not pass the bill before us today, seniors could be forced to 
wait years before we get another opportunity to update the Medicare 
Program. In my view, we need to take this opportunity to lock in a 
prescription drug benefit now. We can come back later to fill in the 
gaps in coverage and fix the other troubling provisions of this bill.
  Second, the bill provides a very generous benefit for low income 
seniors--those with incomes below 150 percent of the Federal poverty 
level, or about $13,470 for singles and $18,180 for couples. Seniors in 
this category--about 40 percent of the seniors in my State-- will not 
face a gap in coverage. They will get the vast majority of their drugs 
covered, with minimal out-of-pocket costs. In addition, they will get a 
$600 annual credit toward their drug costs in 2004 and 2005 before the 
main drug benefit takes effect. These low income seniors by definition 
are the ones who most need help paying prescription drug costs.
  In particular, all seniors with incomes below the Federal poverty 
level--about $8,980 in annual income for singles and $12,120 for 
couples--will pay no premium. They will pay no deductible. They will 
have no gap in coverage. They will pay just $1 for generic 
prescriptions and $3 for brand-name drugs.
  Those with incomes up to 135 percent of the poverty level and less 
than $6,000 in countable assets will also pay no premium. They will pay 
no deductible. They will have no gap in coverage. And they will pay 
only $2 for generic drugs and $5 for most brand-name medications.
  Those seniors with incomes above these thresholds, but still below 
150 percent of the poverty level, will pay a sliding scale premium 
based on income. They will pay a $50 deductible. And they will pay 15 
percent coinsurance on all their medications, until their drug costs 
reach $3600. After that, they will pay only 5 percent coinsurance. 
Seniors who qualify for any of these low income benefits will get an 
extremely generous drug plan. In my view, this benefit alone is a very 
significant achievement.
  Third, the bill includes a whole host of rural provider provisions 
that I authored or coauthored. Currently, rural areas face huge payment 
disparities. For example, Mercy Hospital in Devils Lake, ND, gets paid 
just half as much as Our Lady of Mercy Hospital in New York City for 
treating exactly the same patient with exactly the same illness. Yet 
hospitals in North Dakota don't pay half as much for equipment as their 
urban counterparts. And rural hospitals have much smaller patient loads 
over which to spread their costs. As a result, rural hospitals are on 
the brink of financial failure. These hospitals are critical economic 
anchors in their communities. Other rural health care providers, from 
clinics to home health to ambulance services, face similar payment 
inequities. This bill will go a long way to eliminating some of the 
Medicare funding inequities that have hurt rural health care. It will 
help make sure rural Medicare beneficiaries continue to have adequate 
access to health care.
  Specifically, this bill will close the gap in standardized payment 
rates, which will ensure rural hospitals' base payments are equal to 
those of urban providers. The legislation also takes important steps to 
address inequities in the wage index system, which is intended to 
account for labor costs. And it provides a new, low-volume adjustment 
payments for facilities serving the smallest communities in the state. 
In addition, the Medicare bill includes important provisions to improve 
the Critical Access Hospital Program. Today, about 28 hospitals in my 
state have this designation. This bill will place them on sounder 
financial footing.
  Along with the provisions to assist North Dakota hospitals, the 
Medicare bill will also address payment inequities experienced by our 
physicians and will ensure they do not face payment cuts in the coming 
years. There are also new adjustments for home health care providers 
and ambulance services. I hope these provisions will make a real 
difference in their ability to continue providing quality care across 
our state. In total, this part of the bill is a very significant 
victory for rural America.
  For these three reasons, I have concluded that we should pass this 
bill, but we should not oversell it either. As I noted at the outset, 
this bill is--in many respects--very disappointing. Quite simply, it 
could and should have been a much better bill.
  Democrats in the last Congress put together a prescription drug bill 
that I was proud to sponsor. It provided a good drug benefit to all 
seniors. It did not have any gaps in coverage, where seniors would 
continue to pay monthly premiums but get no assistance from Medicare 
with their drug benefits. It did not rely on creating a whole new type 
of insurance plan to meet the drug needs of seniors. Instead, it used 
the delivery mechanism that the private sector uses to provide drug 
coverage. It was a bill that would have provided much more 
comprehensive prescription drug coverage to seniors at a reasonable 
price. Compared to what we have before us today, it was simple and 
easily understandable for seniors. It did not have a complex scheme of 
differing copayments, coverage gaps, and premiums. But that bill was 
blocked by Republicans.
  This year, the leadership on the other side appears to have put 
ideology and special interests ahead of the interests of seniors in 
crafting many of the details of this drug bill. As a result, seniors 
will be facing an untested delivery model that may not provide the 
advertised benefits at the advertised prices. The simple fact is that 
there is no such thing as a private, drug-only insurance plan in the 
commercial insurance market anywhere in this country. They just do not 
exist. By contrast, we have a proven, successful delivery model in the 
traditional Medicare program. It works just fine in providing medical 
and hospital coverage to seniors today. Yet, in drafting this bill, the 
authors insisted that the plan rely on untested private, drug-only 
insurance plans. However, it is possible that no such plans will 
materialize. Or they may be highly unstable--entering a region one 
year, just to turn around and leave the next year if they are not 
making a profit.
  In my view, it is a serious mistake to set up a system that could 
force seniors to change drug plans every year. Under this approach, 
each year seniors could face a different premium, different coinsurance 
charges, and different lists of covered drugs. I think seniors will be 
very surprised to learn that they will not have the same benefit from 
year to year. During consideration of the Senate version of this bill, 
I fought to correct this plan. My amendment would have allowed seniors 
to stay in a government-sponsored back-up plan if they liked it. But 
that effort was rejected by those who insist--in a triumph of hope over 
experience--that private drug-only plans will work even though they do 
not exist today.

[[Page 31805]]

  In the conference, the option was further scaled back to make it even 
less likely that seniors can choose a stable, government sponsored 
backup. The Senate bill required that seniors be given the option of 
enrolling in the so-called fallback plan if they did not have at least 
two private drug-only plans to choose from. But the conference report 
will not give seniors the fallback option if there is just one private 
drug only plan available, so long as there is also a managed care 
Preferred Provider Organization plan in the region. I fear that this 
will give seniors an unpalatable choice if they want access to drug 
benefits. Either they will have to join a PPO that restricts their 
access to health care providers of their choice, or they will have to 
join the one private drug-only plan even if it charges excessive 
premiums.
  That brings me to another area that I think will be a surprise to 
seniors: the variation in premiums. The authors of this bill like to 
talk about how the premiums will be $35 a month. But what they don't 
tell seniors is that $35 a month is just an estimate. Individual drug 
plans will have premiums that can vary substantially. If the drug 
plan's projected cost for delivering the benefit is only slightly 
higher than the national average--a real concern in many areas--the 
premium would be substantially higher than $35 a month. I think seniors 
will be very surprised to learn that their premiums may actually be as 
much as $45 or $50 a month instead of the $35 that has been advertised. 
These differences will be compounded because monthly premiums will 
increase each year in line with the increase in prescription drug 
costs.
  The thing about this bill that might be the biggest surprise for 
seniors will be the coverage gap, sometimes called the donut hole. The 
authors of the bill understandably don't want to advertise this gap in 
coverage. Many seniors probably don't even know that it exists. But 
when they hit this gap in coverage, they are going to be mighty 
surprised. The will discover that Medicare isn't covering one penny of 
their drug costs even though their monthly part D premium keeps coming 
out of their Social Security checks. And they're going to be doubly 
surprised when they find out that the gap isn't a little more than 
$1000 wide, but is closer to $3000.
  The authors of the bill like to talk about a coverage gap from $2250 
in drug costs to $3600 in drug costs. When you read the fine print, you 
learn that the real gap is from $2250 to $5100. That's because the 
$2250 counts all drug costs, by both Medicare and the beneficiary. But 
the $3600 counts only spending by the beneficiary. When total spending 
hits $2250, the beneficiary has paid $750--the $250 deductible and 25 
percent coinsurance on the amount from $250 to $2250. So Medicare won't 
pay another dime until the beneficiary has paid an additional $2850 
out-of-pocket.
  Some who are watching might ask, Who in their right mind would design 
a drug benefit that starts, then stops, then starts again, the way this 
one does? Why does the benefit have this gap in coverage? The answer is 
simple: money. It would cost tens of billion of dollars to close this 
gap. The folks on the other side of the aisle made tax cuts for the 
wealthy a higher priority than a prescription drug benefit for middle 
income seniors. As a result, they didn't have enough money left over to 
provide a drug benefit without this gap in coverage. By most estimates, 
about one third of all seniors will reach a point at some time during 
the year when Medicare just stops paying any part of their drug bills. 
They will keep paying premiums, but Medicare will not pay another dime 
until and unless they reach the catastrophic spending threshold.
  Finally, I am concerned about the effect of this contorted benefit 
structure on retiree drug coverage. Millions of seniors currently have 
retiree health coverage that provides more generous prescription drug 
coverage than this bill will provide. When the Senate passed its bill 
last June, the Congressional Budget Office estimated that one third of 
those with retiree drug coverage would lose that coverage because 
spending by an employer plan does not count toward reaching the 
catastrophic coverage threshold. In other words, if you have employer 
coverage, no drug spending by your employer plan counts toward the 
$3600 you have to spend out of your own pocket before the catastrophic 
coverage kicks in. This provision creates a clear incentive for 
employers to cut back or drop coverage so that a beneficiary will more 
quickly reach the catastrophic coverage threshold and Medicare--not the 
employer--will pay the remaining costs.
  When this bill passed the Senate, I said it was not a Cadillac drug 
plan. It wasn't even a Chevy drug plan. Instead, it was a bare bones 
plan. To stretch that analogy, in conference, some of the bones got 
fractured, leaving the plan even weaker, and some of those bones were 
replaced with untested artificial substitutes that may not work the way 
they have been advertised.
  The conferees did not just widen the coverage gap and decrease the 
stability of the fallback drug plans that will be important in many 
rural and other areas of the country. They also loaded down those weak 
old bones with a new, heavy load: This bill now is carrying a number of 
provisions that, in my view, will harm the Medicare program and our 
health care system.
  For example, the bill requires demonstration projects to privatize 
the Medicare program, taking the first steps in turning it from a 
defined benefit entitlement to a voucher program. I am pleased that 
this demonstration has been limited to just six areas. I am hopeful 
that even these few demonstrations may not get off the ground. I, 
nonetheless, strongly oppose this effort. This policy will allow 
private plans to cherry-pick younger, healthier beneficiaries, leaving 
older, sicker beneficiaries to face higher premiums in the traditional 
Medicare program. This is terrible health policy, and I hope we will 
succeed in reversing it in the future.
  The bill also contain a $10.5 billion ``stabilization fund'' that 
allows the Secretary of HHS to make additional payments to managed care 
plans. This slush fund will just add to the substantial overpayment of 
managed care plans that already exists in the Medicare plan. To me, it 
makes no sense to talk about managed care saving money for Medicare 
when it costs Medicare more to move people into managed care. Why 
should we pay managed care billions and billions of dollars more than 
we would pay in traditional Medicare to provide the same benefit? That 
money could have been put to far better use in other ways, either by 
improving the drug benefit or by devoting money to chronic care disease 
management in traditional Medicare.
  The fact is that about 5 percent of Medicare beneficiaries account 
for roughly 50 percent of total Medicare spending. These beneficiaries 
often have a number of conditions, but they don't get coordinated care 
because they see different doctors for different problems. This can 
result in adverse drug interactions, the failure to treat underlying 
causes rather than symptoms, and higher spending than necessary. Yet 
Medicare does nothing today to coordinate care in the traditional 
Medicare program that serves nearly 90 percent of all beneficiaries. 
Spending a little money up front in this bill could produce significant 
cost savings over time for the Medicare program. I hope we will be able 
to find money to expand the chronic care demonstrations in the bill.
  The bill also expands health savings accounts that are both bad tax 
policy and bad health policy. These accounts will allow both untaxed 
contributions and untaxed withdrawals, a terrible precedent. If it is 
copied for other tax-preferred savings accounts, this policy could have 
devastating consequences for the future of our tax base. Moreover, like 
the privatization voucher program, health savings accounts fragment the 
health insurance market, undermining the fundamental principle of 
spreading risk that allows insurance markets to work. Health savings 
accounts will pull wealthier, healthier workers out of the insurance 
pool, giving upper income taxpayers significant tax savings. Those who 
remain in traditional insurance plans--average workers who would gain 
little in tax benefits from the HSAs and those with

[[Page 31806]]

significant medical costs--will then face higher premiums. This is the 
first step toward creating a two-tiered health system in this country. 
I oppose this policy. The money spent on these tax giveaways could have 
been far better spent to help ensure that existing retiree health 
coverage is not eroded.
  Finally, the bill fails completely to impose any restraint on the 
costs of prescription drugs. One of the chief complaints I hear from 
North Dakota seniors is that drugs cost far too much. I had hoped that 
Medicare--which has been more successful in holding down health care 
cost increases than the private sector--could use its enormous market 
clout to negotiate lower costs for prescription drugs. Unfortunately, 
the bill does not do that. In fact, the bill contains language that 
specifically prohibits Medicare from using its market clout to 
negotiate with pharmaceutical companies.
  In addition, the conference failed to include a strong provision on 
drug reimportation that was passed by the House of Representatives. As 
a result, Americans will not be able to access lower cost medications 
from other countries. Reimportation will not serve as a brake on rising 
drug costs in this country. As a result, the Congressional Budget 
Office tells us the bill will accelerate increases in the costs of 
prescription drugs.
  These are serious flaws. I wish many of the provisions were far, far 
better. I wish other provisions had never been included. But at the end 
of the day, we are faced with the question: Is this bill, with all its 
flaws, better than doing nothing?
  For me, the answer is yes. For millions of seniors who do not have 
access to any kind of prescription drug coverage at any price, this 
will give them a new option to have a portion of their drug costs 
covered. Millions of low income seniors will be significantly better 
off, with a new generous drug benefit that they do not now have. Rural 
health care facilities that are now on the brink of closure because 
they are underpaid for their services will get a new life from the 
rural Medicare reimbursement provisions in the bill.
  Even with these significant victories, if I thought this bill 
fundamentally threatened the existing Medicare program, I could not 
support it. I know that there are some who sincerely believe that the 
privatization demonstrations will fundamentally undermine the program. 
Although I share their view that these demonstrations are bad policy--
perhaps even terrible policy--I do not believe that six demonstration 
projects affecting less than 5 percent of all Medicare beneficiaries 
will destroy Medicare.
  Although this bill is far from perfect, I have concluded that we 
should pass it. On balance, this bill is a step in the right direction. 
We do not know when we will have another, better bill that can pass the 
Congress and be signed into law. In my view, it would not be fair to 
those seniors--including tens of thousand of North Dakota seniors--who 
have no access to drug coverage of any kind at any price to deny them 
this first step in the uncertain hope that we might be able to do 
better at some point in the future. Rather, we must take the $400 
billion opportunity that is on the table today and start providing 
prescription drug coverage to America's seniors. Then we can and we 
will go to work to improve the prescription drug benefit provided by 
this bill.
  Mr. BIDEN. Mr. President, I voted against this bill today because I 
would never do anything that risks the future of Medicare, and I fear 
this bill takes the first steps toward the breakup of the traditional 
Medicare Program. In addition, this administration's misplaced 
priorities put enormous tax cuts first and left us little room to 
provide the comprehensive and fair drug benefit that seniors deserve. 
We should have done this right and provided a better drug benefit 
without jeopardizing the Medicare Program that has given seniors health 
security for 38 years.
  My vote today was one of the more difficult decisions I have faced in 
my Senate career. For starters, let me note that not all of this bill 
is bad. Some people will get help with their drug costs. We in Delaware 
are fortunate to already benefit from unique programs that have long 
helped low-income seniors with their prescription drug costs, and this 
bill should build upon that foundation. It also offers some coverage to 
many middle class seniors and disabled citizens. All in all, these 
aspects of this bill are not enormously different from those in the 
Senate-passed bill that I voted for earlier this year.
  This bill also includes sorely needed payment adjustments for 
hospitals, doctors, and other health care providers, which will ensure 
that Medicare patients get quality care and continued access to 
important medical services.
  On the downside, however, this legislation still has a large gap in 
coverage--forced by budget constraints--in which the Government 
provides no subsidy for prescription drugs. I know that many people 
will find this gap confusing, disappointing, and burdensome. I am also 
very concerned that this bill does not sufficiently protect millions of 
retirees who currently receive good health care benefits from their 
former employers.
  If we had done this the right way, we would have held back on some of 
the excessive tax cuts pushed through over the last three years and 
allocated more of our resources to meeting our obligation to provide a 
complete prescription drug benefit. Instead, the administration's 
misplaced priorities tied our hands.
  If this legislation were just limited to the prescription drug 
benefit and the provider payment modifications, it would probably have 
my vote as being about as good as could be done under the current 
budget circumstances. But I have very serious concerns about other 
provisions tacked onto this bill that will take the Medicare Program 
and the health care benefits for 40 million Americans into uncharted 
and hazardous waters. This bill takes the first step toward monumental 
changes in the very foundation of how Medicare operates, beginning a 
push toward the breakup of the entire program.
  The strength of the Medicare system has been its broad coverage, its 
simplicity, and the open choices patients enjoy. This bill sets in 
motion a new system that could tear down each of these advantages.
  On balance I cannot support this legislation. To me, the negative 
features have such damaging potential that they overwhelm the benefits. 
Had the negotiations on this bill been done in the open, with the full 
participation of both parties, I think we could have crafted a better 
bill. I cannot vote for a bill that sets us on the path toward 
undermining the traditional Medicare Program that has worked so well 
for decades.
  Mr. BREAUX. Mr. President, today we passed historic Medicare 
legislation. Getting here was not easy. Behind the scenes, for months 
and even years, staff has worked incredibly hard to help produce this 
complex and comprehensive bill.
  In particular, I would like to thank Senator Baucus' Finance 
Committee staff who put in countless hours and remained dedicated to 
this legislation during long and difficult late-night and weekend 
sessions. Dr. Elizabeth Fowler lead the Finance health team. Dr. 
Fowler's expertise, even-handedness, and professionalism were critical 
in getting us to where we are today. Other professional staff, 
including Jon Blum, Pat Bousliman, Andrea Cohen, Bill Dauster and 
Daniel Stein, all served the entire U.S. Senate and served us well. The 
Minority Staff Director, Jeff Forbes, was also instrumental in seeing 
this legislation through until the end. We were able to achieve many 
Democratic priorities in this bill because of their hard work and 
dedication.
  I would also like to thank Senator Grassley's staff on the Senate 
Finance Committee for the critical role they played in passing this 
historic legislation. Linda Fishman, Ted Totman, Colin Roskey, Jennifer 
Bell, Mark Hayes and Leah Kegler worked tirelessly for many months to 
get a bill drafted, through the Senate Finance Committee, passed on the 
Senate floor and out of tough conference negotiations with the House. 
The majority

[[Page 31807]]

staff director of the Senate Finance Committee, Kolan Davis, also 
played an integral role in getting this conference report passed.
  Our Nation's senior citizens owe the whole Senate Finance Committee 
team a debt of gratitude for making this Medicare legislation possible. 
I yield the floor.
  Mr. SARBANES. Mr. President, I cannot support the Medicare 
prescription drug conference report before us. I share in the 
disappointment of the many seniors, advocacy groups, providers, and 
colleagues in Congress who have fought so long to provide Medicare 
beneficiaries with prescription drug coverage. Drug coverage should be 
an integral part of any meaningful health care insurance and it is 
certain that if Medicare were created today, no one would imagine 
excluding drug coverage. Unfortunately, the bill before us now has 
wasted an opportunity to give Medicare beneficiaries the affordable and 
comprehensive coverage they deserve. The conference report provides 
inadequate coverage while at the same time undermining Medicare, a 
program that has served our seniors for over 37 years.
  Under this bill, Medicare beneficiaries will pay an estimated premium 
of $35 per month although that premium level is not guaranteed and it 
could be higher. After meeting a $250 annual deductible, 75 percent of 
a beneficiary's drug costs are covered up to $2,250. A beneficiary 
receives no coverage for drug costs between $2,251 and $3,600, though 
they are still required to continue paying monthly premiums during this 
coverage gap. Once drug costs exceed $3,600, the drug plan would cover 
95 percent of a Medicare beneficiary's drug expenses. This drug benefit 
is insufficient and much less than many retirees receive through 
existing coverage.
  Those opposed to offering a more substantial prescription drug 
benefit claimed there are insufficient resources to pay for it. This 
argument comes from the very people who have pushed through the 
Congress tax-cut programs that tilt heavily in favor of the wealthy. 
Over the last several years, the administration has squandered a 
surplus and left the Nation facing a deficit already approaching half a 
trillion dollars. These valuable resources could have been used to 
provide our Nation's seniors the real drug coverage they deserve.
  During consideration of the Senate bill, we missed an opportunity to 
provide Medicare beneficiaries with a substantial, reliable and 
straightforward prescription drug benefit. I cosponsored and voted for 
an amendment offered by my colleague from Illinois, Senator Durbin. His 
alternative would have provided a Medicare-delivered drug benefit that 
would have allowed the Medicare program to employ negotiating 
strategies used by the Veterans Administration--VA--and other 
government entities to bring down drug prices. Senator Durbin's plan 
would have begun as soon as practicable, unlike this legislation that 
leaves beneficiaries waiting until 2006 for the drug benefit to begin.
  Under Senator Durbin's plan, seniors would have not paid a 
deductible, would have paid 30 percent of costs, and would have no 
coverage gap. Once drug costs reach $5,000, 90 percent of their costs 
would be covered. In addition, employer contributions would count 
toward out-of-pocket limits so there would be much less risk of 
employers dropping retiree coverage. This was the proposal we should be 
acting on today.
  As I emphasized during debate on the conference report, this bill 
contains a number of provisions that would undermine Medicare. For the 
first time in history, Medicare beneficiaries will pay more for their 
Part B premiums based on their income, thereby eroding the universal 
nature of the program. Medicare enjoys widespread support since 
everyone pays the same monthly premium for the same service, thereby 
giving us a social insurance program in which everyone has an equal 
stake.
  The bill before us does not deal effectively with the rising costs of 
drugs. This legislation does not allow the Federal government to bring 
its weight to bear to lower drug costs. Medicare is not allowed to 
bargain on behalf of the millions of beneficiaries who would receive 
drug benefits. We know that drugs purchased through the VA program cost 
substantially less than those purchased at retail value. Furthermore, 
under this bill drug reimportation is completely at the discretion of 
the Administration. This is the same Administration that has repeatedly 
expressed its opposition against drug reimportation even if safeguards 
can be taken to ensure the safety of the reimported drugs.
  This bill has the serious potential to cause a number of retirees to 
lose existing employer-sponsored prescription drug coverage. CBO 
estimates that 2.7 million retirees would lose existing coverage. This 
is an unacceptable consequence of legislation that is supposed to make 
life better for seniors. This serious deficiency has prompted many 
constituents to call my office to express concern about this bill.
  Congress began this debate focused on the best way to provide 
Medicare beneficiaries drug coverage and efforts to keep those drugs 
affordable. We now have legislation before us in which the drug benefit 
appears to be an afterthought. I think a deeply troubling aspect of the 
bill is that it takes steps toward privatizing Medicare. This 
legislation relies on private plans to deliver the drug benefit; 
seniors could be forced to shift from plan-to-plan, year-to-year as 
they did when Medicare+Choice HMOs pulled out of the Medicare program a 
few years ago. In my own State of Maryland, insurance companies left 
the Medicare program, abandoning more than 100,000 seniors.
  In addition, the bill includes a six-year premium-support 
``demonstration project,'' which would be established in six 
metropolitan areas. Medicare recipients in these areas would choose 
between traditional Medicare and private health plans; if the cost of 
the selected form of coverage exceeded a benchmark level set for the 
area, the individual pays increased premiums to cover the difference. 
This bill also contains $12 billion in subsidies for private plans. 
This funding gives private plans an unfair advantage by enabling them 
to provide benefits that traditional Medicare does not cover. If 
private plans were more efficient than Medicare, they would not need 
this money to compete. This $12 billion should have been used to 
improve the drug benefit for all Medicare beneficiaries, not to 
underwrite the private plans.
  The inclusion of tax savings accounts to pay out-of-pocket medical 
expenses further underscores how far the focus of the bill has strayed 
from providing Medicare beneficiaries prescription drug coverage. The 
bill makes health savings accounts that are currently a limited 
demonstration project universally available. These accounts could be 
used with high-deductible health policies giving healthy, affluent 
workers a strong incentive to opt out of comprehensive health insurance 
plans in favor of the new accounts. If large numbers of these workers 
opt out of comprehensive plans, the pool of people left in 
comprehensive plans would be older and sicker, causing premiums for 
comprehensive insurance to rise significantly.
  I have long been a strong supporter of providing older Americans and 
disabled individuals who rely on Medicare an affordable, comprehensive, 
reliable and voluntary prescription drug benefit. However, I want to 
ensure we do so in a way that does not worsen the situation in which 
many seniors find themselves as they face rapidly rising drug costs. As 
we consider proposals to expand our Nation's major health entitlement 
programs, it is appropriate to follow a guiding principle in the 
practice of medicine--do no harm. Our seniors deserve a drug benefit 
that is a real improvement, not a complex experiment that may cause 
more trouble than it's worth. We must not enact a law intended to help 
that might eventually harm millions. The American people deserve 
better.
  The PRESIDENT pro tempore. The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, I ask unanimous consent to use the 5 
minutes reserved for the leader. That has been cleared on both sides.

[[Page 31808]]

  The PRESIDENT pro tempore. Without objection, it is so ordered.
  Mr. KENNEDY. I yield 7 minutes to the Senator from Connecticut. How 
much time remains on each side?
  The PRESIDENT pro tempore. There remain 11 minutes 41 seconds on the 
majority side, 12 minutes 40 second for the minority. The source is the 
minority leader's time.
  Mr. KENNEDY. So we have 12 minutes. I yield 7 minutes to the Senator 
from Connecticut.
  The PRESIDENT pro tempore. Yes, 11 minutes 41 second plus the 5 
minutes.
  Mr. DODD. Mr. President, in the limited time we have I would like to 
go back over and reiterate some points. In the very first instance, 
looking at the Medicare portion of this bill, right off the bat there 
are almost 9 million seniors who are going to be disadvantaged by this 
legislation. Almost one-quarter of the 41 million seniors who benefit 
from Medicare are going to be disadvantaged by this bill. There are 2.7 
million seniors, according to the Congressional Budget Office, who are 
going to lose health benefits currently offered by their former 
employer. In my State, that is 40,000 people right off the bat. Those 
are CBO numbers; those are not mine, not made up by the minority.
  Second, 6.4 million low-income seniors will have to pay more for the 
drugs they need. In my State, that is 74,000 people. The combined 
numbers are 9 million people, before anything else happens, who are 
going to be disadvantaged. This is a fact. If you are on Medicare and 
Medicaid you currently don't have to have a copay when it comes to 
prescription drugs. Now, under this bill, you will. It may not seem 
like a lot to people, but if you are making $13,470 or less than that, 
believe me, even a slight increase in these drug costs can be very 
harmful. That is just a fact.
  Let me say to my friend from Iowa, I have respect for him and I 
admire his tenacity and his tremendous effort on behalf of this bill. I 
say to my friend, $13,470 is not a lot of money for Americans, and if 
you make $13,471, you are going to pay $420 in premiums, a $250 
deductible, and you have to pay 25 percent of the cost of your 
prescription drugs. If you make $13,471, that is what you are going to 
be burdened with. I appreciate the fact that the very low income get 
some help, but I do not know anyone in this country who thinks $13,471 
is a lot of money. But if you hit that number, then you are going to 
pay those kinds of costs, and that is going to be tremendously 
burdensome to many people.
  Second, of course, if you look at chart 2 quickly here, you will see 
that this bill creates an unlevel playing field. We are told about free 
competition and choice. But the fact is, under this bill private plans 
get a 9 percent higher reimbursement than the Medicare plan, and they 
get $12 billion. If you have two competitors trying to appeal to a 
consumer and one side gets a 9 percent increase in reimbursement rates, 
plus $12 billion to help them get into the market, I don't know how you 
call that a level playing field. That is not level at all, in my view.
  If we examine the so-called premium support demonstration programs, 
seniors effected by this experiment are going to be put in situations 
where they have less choice. If you end up being pushed into a private 
plan--and you can be under this bill--then your ability to choose your 
own doctor is gone. Talk about choice, there is no more fundamental 
choice to most Americans than the right to choose the physician who 
will take care of you, particularly for a senior. But under this 
legislation, if you are pushed into those plans, you lose the right to 
make that choice, the opportunity to choose your own doctor.
  I hardly consider that a step forward or an improvement in the 
Medicare system. It is a major setback.
  With regard to prescription drug costs, this issue has been made very 
clear by the Senator from Florida. I commend him for it. We are not 
saying in this legislation that you can go out, as the VA does, and 
consolidate your membership and then negotiate for prices. As the 
Senator from Florida pointed out, in the case of a couple that has been 
married for many years, the price of a drug for the husband, who is a 
veteran who served in Korea and World War II, is going to be 
substantially less than the price of the same drug for his wife, who 
wasn't a veteran. How can you explain that to a couple? Why can we not 
do with Medicare what we do with the VA? It is a logical choice. This 
bill prohibits that from happening.
  I don't understand, for the life of me, why we are endorsing a 
proposal that doesn't allow the collective buying power of 41 million 
Americans to go out and lower the cost of prescription drugs. Yet this 
legislation would prohibit us from doing that.
  When you look at those issues in this proposal, again I say to my 
friends who have crafted the prescription drug benefit, there are 
certainly stated advantages of moving forward with something here. But 
as the lead editorial in my State newspaper pointed out the other day, 
we can do a lot better with this legislation. It says:

       They deserve better than scrambled eggs that Congress, 
     AARP, and other special interests want to dish out in the 
     guise of ``reform.''
       The centerpiece of this faux reform is prescription drug 
     coverage. Here is the math: A beneficiary who has 
     prescription drug bills totaling $2,250 a year would have to 
     pay premiums of $420, a deductible of $250 and 25 percent of 
     the cost of medicine.

  For someone in that category, that adds up to $1,252 out of pocket in 
their bills. Once the beneficiary's drugs reach $2,250, then they will 
have to pay the entire bill up to $3,600. Again, I realize you can't 
take care of everyone here, but that is a tremendous disadvantage.
  I ask unanimous consent that the editorial from the Hartford Courant 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                       Medicare Reform: Try Again

       It's not perfect, but it's a start. That's the gist of the 
     multimillion-dollar marketing campaign launched by AARP in 
     support of the Medicare bill that passed the House by a 220 
     to 215 vote early Saturday. The organization that purports to 
     represent Americans who are at least 50 years old pledges to 
     fix the bill's flaws in future years.
       Beware of such promises. Americans are not looking for a 
     perfect system. They yearn for improvements in Medicare that 
     they can comprehend. They know that Rome wasn't built in a 
     day and prescription drug coverage won't be guaranteed 
     overnight.
       But Medicare beneficiaries have waited for at least a 
     decade for such coverage. They deserve better than the 
     scrambled egg that Congress, AARP and other special interests 
     want to dish out in the guise of ``reform.''
       Is it any wonder why shares of health care businesses, 
     particularly drug companies, skyrocketed on Wall Street after 
     the congressional conferees announced the details of the 
     agreement? Lawmakers listened to lobbyists far more 
     attentively than they listened to Medicare beneficiaries.
       The centerpiece of this faux reform is prescription drug 
     coverage. Here is the math: A beneficiary who has 
     prescription drug bills totaling $2,250 a year would have to 
     pay premiums of $420, a deductible of $250 and 25 percent of 
     the cost of the medicine. That adds up to paying $1,252 out 
     of pocket.
       Once a beneficiary's drug bills reach $2,250, the 
     beneficiary would have to foot the entire drug bill up to 
     $3,600. Only after drug costs exceed this amount would the 
     prescription plan pay 95 percent of the bills.
       This package contains little to cheer about. Some 
     provisions deserve jeers. The elderly who had hoped to buy 
     less expensive prescription drugs from Canada and Mexico are 
     out of luck. Those who have paid Medicare payroll taxes would 
     have their benefits linked--for the first time in Medicare's 
     history--to their retirement income. For those who earn more 
     than $80,000 a year, the premiums for Medicare Part B 
     (doctors' bills and other costs not covered by basic 
     Medicare) would increase substantially. So much for relying 
     on government to honor its pledge to treat everyone equally 
     under Part B.
       Why is AARP aiding and abetting GOP lawmakers in selling 
     such reform under false pretenses? The organization is a big-
     business operation, with revenue of $608 million last year 
     from its insurance-related operations.
       ``It's almost unimaginable that--AARP--wouldn't stand to 
     gain'' as a result of this legislation, said David 
     Himmelstein of Harvard Medical School. Alan Simpson, a former 
     GOP senator, hit the bull's-eye when he noted, ``If there was 
     a sublime definition of conflict of interest, it would be 
     AARP from morning to night.''

[[Page 31809]]

       AARP's members should make themselves heard as they did in 
     1988, when the organization successfully lobbied for a flawed 
     catastrophic insurance benefit. The ensuing uproar by elderly 
     people forced Congress to repeal the legislation.
       On the subject of lobbying, why is AARP still designated as 
     a tax-exempt nonpartisan organization? It shouldn't be.

  Mr. DODD. Mr. President, I urge our colleagues to reject this bill 
and come back in January and rework it. Forty-one million Americans 
deserve a lot better than this bill is going to give them.
  The PRESIDENT pro tempore. The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, how much time do we have remaining?
  The PRESIDENT pro tempore. There are 7 minutes remaining.
  Mr. KENNEDY. I yield 1 minute to the Senator from Illinois.
  The PRESIDENT pro tempore. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I thank the Senator from Massachusetts.
  America's parents and grandparents are the losers today, and special 
interest groups are the winners. America's senior citizens deserve 
better. This bill does nothing to reduce drug prices, and it starts our 
Nation down the road toward privatizing Medicare and endangering 
America's lifeline program that has been a bright beacon for seniors 
across our country for more than four decades. The pharmaceutical 
companies and the HMOs will give thanks for this turkey, but America's 
seniors will get stuffed.
  I am going to vote no on this. I hope my colleagues will join me.
  I yield the floor.
  The PRESIDENT pro tempore. Who yields time?
  Mr. KENNEDY. Mr. President, how much time remains?
  The PRESIDENT pro tempore. The Senator's side has 7 minutes 1 second. 
The other side has 11 minutes 41 seconds.
  Mr. KENNEDY. I withhold our time.
  The PRESIDENT pro tempore. Who yields time?
  The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I yield myself such time as I consume 
and I invite proponents of the legislation to come over so I can yield 
some time to them.
  One of the issues that has been bad-mouthed by the other side, the 
opponents of this legislation, is that we have not done enough to help 
retiree coverage; in other words, the problem they would suppose is 
that a lot of corporations will be dumping their plans on the 
Government.
  First of all, Congress can't pass a law telling any corporation X, Y, 
or Z that they can't do that. If they decide it is in their interest, 
they are going to do it. The point is they have been doing it for years 
and years.
  I had a chart up here 2 days ago that showed how we have gone down 
from about 89 percent to 60 percent over the last 10 years of the 
corporations that had retiree health plans. What we are doing is 
putting in place a program so that if a corporation does that, there is 
at least something for people who have zilch when it comes to 
prescription drugs.
  One of the things we have done to encourage corporations not to do 
that is we have put $89 billion in this bill to protect retiree health 
coverage. This funding makes it more likely--not less likely--that 
employers will continue their retiree benefits. We do that for two 
reasons. Obviously, it is better for people to keep what they have. So 
there is an incentive for that. That will help keep a good drug 
benefit. Second, if this is dumped on the Medicare Program, it is going 
to be much more costly than to keep it in the corporation plan. We did 
it for those two reasons.
  The opponents of this bill have been saying retirees are going to be 
dropped--that they will be left without coverage because of this bill. 
It is easy to make very clear that these retirees will not be left 
without drug coverage. That is, obviously, because one of the 
motivations behind this 3-year effort to get prescription drugs in 
Medicare is to take care of or at least offer a plan to people who 
don't have anything. That is about 35 percent of the people today. It 
is better for those who do not have as good a plan as we are putting on 
the books. These retirees will still be better off than they are today 
because today, when their employers drop their coverage, they are left 
with nothing--no coverage at all.
  Because of this bill, these retirees will be getting drug coverage 
from Medicare, and their former employer will likely pay the monthly 
premium for that.
  This is a bipartisan bill. This bill addresses the problem we saw as 
a very serious problem. According to the Congressional Budget Office, 
we have addressed it in a very responsible way and by reducing very 
much the possibility that these corporate retirees will be dumped onto 
this plan.
  This bipartisan bill protects retirees' benefits. That has been our 
goal, and we have accomplished it. The time has come strengthen and 
improve Medicare with this historic bipartisan agreement. It is the 
culmination of years of work by Republicans and Democrats who have come 
together to get this done.
  As the AARP has made clear when providing its strong endorsement, 
this bill ``helps millions of older Americans and their families,'' and 
is ``an important milestone in the nation's commitment to strengthen 
and expand health security for its citizens. . . .''
  This bill offers an affordable, universal prescription drug benefit 
that will cover about half the cost of prescriptions for the average 
senior.
  It offers generous coverage for 14 million lower income seniors. It 
expands coverage for lower income seniors far beyond what is offered 
today. They will have access to drug coverage with lower or no 
premiums, no coverage cap, and coverage of 85 percent to 95 percent of 
the cost of prescription drugs.
  And the new Medicare drug benefit is voluntary--no one is forced to 
enroll in this benefit. Seniors can stay in traditional Medicare just 
like they have today and have full access to prescription drugs.
  There is also a guaranteed government fallback. It is a guarantee 
that seniors will be able to get prescription drug coverage.
  This bill also invests $89 billion to protect retiree health 
coverage. This funding makes it more likely, not less likely, that 
employers will continue their retiree benefits.
  This bill also creates new coverage choices for beneficiaries in a 
newly revitalized Medicare Advantage program. And this is voluntary 
too--no one will be forced to join an HMO.
  The bill lowers drug costs by speeding the delivery of new generic 
drugs to the marketplace, lowering costs for all Americans, not just 
those on Medicare.
  The bipartisan bill includes long overdue improvements to Medicare's 
complex regulations.
  It also revitalizes the rural health care safety net with the biggest 
package of rural payment improvements Congress has ever seen.
  I urge my colleagues to put the interests of our seniors first and 
give them more choices and better benefits by voting for this historic 
bipartisan prescription drug bill.
  We cannot let this opportunity pass.
  Mr. President, it has been a long and arduous process to get us to 
where we are today. This is a process that didn't start this year, or 
even last year, but many years ago, on the foundation of what we then 
called the ``tripartisan bill.'' Through many years of discussions and 
negotiations in the Finance Committee, we have taken the foundation of 
that first bill and crafted comprehensive Medicare policy that will 
vastly improve the health and overall well being of our nation's 
seniors.
  Our critics will say it is not enough or that it lacks one provision 
or another. My response is that no other Finance Committee membership 
and no other Congress has been able to produce a bill of this 
magnitude. We have worked tirelessly in the Finance Committee and with 
our colleagues in the House to try to make this bill as perfect as 
possible.
  The reality is the Medicare program itself is not perfect.
  And I challenge those in opposition to this bill, to show me perfect 
legislation. It is impossible because we're adding layers on a system 
that has been in place for nearly 40 years. But

[[Page 31810]]

everyone involved in this process has worked their hearts out to make 
this bill the best bill that it can be. It has been a sacrifice for all 
involved. Missed dinners with family, missed weekends with the kids, 
little sleep, and intense emotions and intellectual energy--to make 
this bill what it is.
  We've all given 150 percent to get this bill done. And I will admit 
we did not reach ``perfection'', but we reached excellence. And 
America's seniors will benefit from the commitment that was made by all 
of us involved. We did it for them. And it will make a positive 
difference in their lives. To me, that is the closest thing to 
perfection that we could achieve.
  Let me close by thanking my colleagues on the committee, in the 
Senate, the House, CMS, HHS and the White House. Dedicated individuals 
across the Congress and the Executive Branch have worked tirelessly, 
night and day, to make this happen, and they deserve our thanks for 
their true commitment to this bill and their commitment to this 
country.
  For my part, I want to thank my own current Finance Committee staff: 
Ted Totman, my Deputy Staff Director who shepherded staff and members 
through this arduous process; Linda Fishman, my Health Policy Director 
who led the committee's consideration of this bill and who captained a 
team of talented analysts, including Colin Roskey, whose daughter, 
Rose, was born while negotiations played out in the Finance Committee 
in March; Mark Hayes, who balanced multiple titles of this legislation 
while attending law school at night; Jennifer Bell, whose dedication to 
the needs of rural Americans played an instrumental role in the success 
of our rural healthcare package; Leah Kegler, who managed many of the 
complex low income and Medicaid policies in the bill; Alicia Ziemiecki, 
who provided crucial assistance and support to all on this staff and to 
individual Committee members throughout the year; and Mollie Zito, who 
joined the staff just this year and immediately made important 
contributions to the overall effort.
  Still other former members of my Finance Committee staff who are not 
with me on the floor today have been instrumental in the development of 
this legislation. They include: Monica Tencate, Tom Walsh, Rebecca 
Reisinger, Hope Cooper, and Jeannie Haggerty, each of whom helped to 
shape the original Tripartisan proposal, whose imprint on this 
legislation is unmistakable. Each of these individuals contributed 
creatively, analytically and energetically to the successful completion 
of this legislation.
  Beyond the health staff of the Finance Committee, I want to recognize 
other committee staff who played important roles in resolving the many 
interwoven, complex tax, health and trade policies within this 
legislation. Mark Prater and Diann Howland helped navigate many of the 
health savings account and employer-related issues in the bill. Steven 
Schaefer and Everett Eissenstadt along with Rita Lari of my Judiciary 
Committee staff helped conferees reach consensus on difficult pricing, 
importation and generic drug policies. Steve Robinson assisted in 
budgetary matters, and Dean Zerbe and Emilia DiSanto provided good 
counsel on matters relating to Medicare program integrity. Jill Kozeny, 
Jill Gerber, Beth Levine and Dustin Vande Hoef provided cogent and 
concise outreach and explanation to the media. Leah Shimp, Cory Crowley 
and Mary Gross kept in close touch with Iowans on the legislation. And 
Kolan Davis, my Chief Counsel on the committee, provided important 
oversight and advice throughout the process.
  Beyond my own staff, I want to recognize Senator Baucus's staff, with 
whom I have enjoyed an excellent working relationship over the last few 
years and with whom my own staff has worked especially closely: Jeff 
Forbes, Russ Sullivan, Judy Miller, Bill Dauster, Liz Fowler, Jonathan 
Blum, Pat Bousliman, Andrea Cohen, Mike Mongan, Kate Kirchgraber and 
Dan Stein. Senator Baucus's team have shown a sincere commitment to 
balanced, fair bipartisan legislation and have been consummate 
professionals throughout.
  The staff to my Senate colleagues on the conference are also 
deserving our thanks. Each contributed to a collegial working 
environment under enormous time and political pressures: Pattie 
DeLoatche, Mark Carlson, and Bruce Artim with Senator Hatch; Stacey 
Hughes, Hazen Marshall and Bini Zomer with Senator Nickles; Don 
Dempsey, Diane Major, Elizabeth Maier and Lisa Wolski with Senator Kyl; 
Dean Rosen, Elizabeth Scanlon, Craig Burton and Eric Ueland with 
Senator Frist; and Sarah Walter, Michele Easton and Paige Jennings with 
Senator Breaux.
  Finally, all of us were extremely well served by the hard work of our 
Congressional support agencies, including the able work of our Senate 
Legislative Counsels who toiled longer into the night than most: Ruth 
Ernst, John Goetcheus and Jim Scott. Technical and analytical support 
was provided by experts at the Congressional Research Service, 
including Richard Price, Jim Hahn, Chris Peterson, Hinda Chakind, 
Jennifer O'Sullivan and Jennifer Boulanger and many others who assisted 
in the completion of the Conference Report. At the Congressional Budget 
Office, Doug Holtz-Eakin, Steve Lieberman, Tom Bradley, Chris 
Topileski, Phil Ellis, Rachel Schmidt, Jeannie De Sa, Eric Rollins, 
Shinobu Suzuki and many others played crucial roles in developing cost 
estimates for policies large and small in this conference agreement.
  Each of these dedicated individuals is deserving of our thanks for 
their commitment to improving Medicare and making affordable access to 
prescription drugs a reality for America's seniors.
  If the other side says it is OK, I would like to yield 3 minutes to 
the Senator from Texas.
  The PRESIDING OFFICER (Mr. Chambliss). The Senator from Texas is 
recognized for 3 minutes.
  Mrs. HUTCHISON. Mr. President, I have been here for 10 years now. 
There are many in the Chamber who have been here longer than I. But I 
know one thing. Anytime we do something that is very major and very 
complicated, it is easy to pick it apart. It is easy in 30 seconds to 
say why you are not going to vote for something that has so many 
facets. That is much more politically feasible and it is much easier. 
It is harder to vote yes on something that isn't perfect.
  How can you ever expect a bill this complicated to suit every person 
in this body perfectly? Of course, you can't. That is why we have 100 
Senators from 50 States. It is why we go back and forth and compromise. 
Yes, there is compromise in this bill. But let me tell you in a few 
minutes why I am voting yes.
  I am voting yes because senior citizens do not have benefits for 
prescription drugs. We must start. No one would say this is perfect. 
Who could expect a perfect bill that is this comprehensive? This is the 
bill. Of course, you don't agree with every word in it. But are we 
going to throw it away and not even start? I hope not. Those who have 
been around here longer than I know that we will come back and we will 
adjust where adjustment is necessary, as we do in every major piece of 
legislation that is far-reaching.
  I am voting for this bill because for the first time everyone in our 
country will have the chance to put aside money in a health savings 
account to build up for their copays and for their premiums on health 
care insurance. It will be a tax-free buildup, and it will be tax free 
when you take it out for your health care needs.
  I am voting for this bill because it increases the reimbursement for 
our people who give medical services. Our rural hospitals are dying all 
over our country and they will have a better reimbursement rate, 
something Senator Kennedy and I worked on very hard. This is not what I 
wanted in totality, but we are going to increase the teaching hospital 
reimbursement because the teaching hospitals are the ones that treat 
our poor. Our teaching hospitals are where our up-and-coming physicians 
and nurses learn how to treat patients. We are increasing the

[[Page 31811]]

reimbursement. Senator Kennedy and I worked very hard on that.
  It is not everything we wanted but we can come back and we will make 
it even better. There will be millions of dollars going into our 
teaching hospitals and every State in our country has a teaching 
hospital.
  The reimbursement to physicians is going to increase. How many 
physicians have said, I am not taking Medicare patients anymore; I 
cannot afford it. We want physicians to take our Medicare patients. We 
also want a freedom to choose, which our Medicare patients do not now 
have and which we will have in the future.
  That is why I am voting for this bill. It is the harder vote. I urge 
my colleagues to step up to the plate and help us start.
  Mr. KENNEDY. How much time is on the other side?
  The PRESIDING OFFICER. The majority has 3 minutes 16 seconds and the 
minority has 6 minutes 3 seconds.
  Mr. KENNEDY. Mr. President, I yield myself 5 minutes.
  Mr. President, my friend from Iowa talked about what is happening to 
the retiree programs. This is the most recent study. Firms offering 
retiree health benefits dropped 40 percent in the last 8 years. With 
this legislation, it will go right down through the cellar, make no 
mistake. We brought that out in this debate.
  My friend from Connecticut has talked about what will happen in his 
State, about the retirees. It happens in Connecticut, it happens in 
Massachusetts, it is happening in every State of this country, the 
losing of retirees. The low-income elderly and disabled will pay more. 
Thousands are going to fail the assets test. That is what is happening 
in the bill.
  In my early years of service in the Senate I was privileged to 
participate in the final stages of the long debate that culminated in 
the enactment of Medicare.
  Today, Medicare is so much a part of the essential fabric of our 
society that it is hard to remember the harsh reality the elderly faced 
before its enactment. Too often, their lives were blighted by the fear 
of a costly illness that would swallow the savings of a lifetime and 
leave them impoverished. Too often, their lack of access to affordable 
medical care made a mockery of the dignified and secure retirement that 
should be the birthright of every American. Private health insurance 
had failed the elderly, and Medicare was the response.
  Today, Medicare and Social Security are the most beloved and 
successful government programs ever enacted. They form the cornerstone 
of our nation's retirement system. But they are also under assault from 
a heartless right-wing ideology that ignores the lessons of the past.
  This ideology views health care as just another commodity. It sees 
Medicare as another potential profit center for HMOs and insurance 
companies, not as solemn commitment between government and its 
citizens. It says senior citizens should be subject to the sink or swim 
economics of the marketplace--and if they sink, it is their failure, 
not our society's.
  The legislation we are debating today started as an important down 
payment on the comprehensive prescription drug coverage the elderly 
have long needed to complement the coverage of hospital and physician 
care that Medicare provides. That was the essence of the bipartisan 
bill that passed the Senate by an overwhelming majority. But that 
bipartisan bill is not the one we are debating today.
  Instead, the legislation before the Senate is a partisan document 
that embodies this administration's right-wing ideology and its desire 
to fuel the profits of the wealthy and powerful who support it. It 
cynically uses the elderly's need for prescription drugs as a Trojan 
horse to reshape Medicare. The Republican majority has hijacked this 
conference.
  Their program draws its essential inspiration from the President's 
original program to limit prescription drug benefits to senior citizens 
who join an HMO. That plan was too crude and obvious to withstand 
public scrutiny, so the House of Representatives--and now this 
conference committee--has crafted a more subtle but no less destructive 
approach. That is why this legislation had to be rammed through the 
House of Representatives in the dead of night, with the support of only 
one party, and only after the rules of the House were bent and broken. 
That is why this legislation is being rammed through the Senate after 
only 3 days of debate, and only after the Senate waived its own rules 
in a very close and narrow vote.
  This bill is a cold, calculated program to unravel Medicare, to 
privatize it, to voucherize it and to force senior citizens into the 
unloving arms of HMOs. It is the first step in the Administration's 
campaign to reshape America to fit its right-wing ideology. And the 
White House has already announced that if they are successful in 
enacting this first step, the privatization of Social Security will be 
the next step. Today, big HMOs, insurance companies, and pharmaceutical 
companies are the winners. Tomorrow, when Social Security is 
privatized, it will be the big banks and brokerage houses. And, in both 
cases, senior citizens and their families will be the losers.
  The bill uses a triple threat to unravel Medicare.
  It creates a new program called premium support. They call it a 
demonstration, but it is really a vast social experiment using millions 
of senior citizens as guinea pigs. It is designed to raise Medicare 
premiums, so that seniors will be forced to join HMOs to get affordable 
care. They call it competition, but it's not competition, it's 
coercion.
  It raises Medicare payments to HMOs so that Medicare can't compete--a 
25 percent overpayment. They use the elderly's own Medicare money to 
undermine the Medicare program they depend on.
  It creates a $12 billion slush fund for private insurance plans to 
make Medicare even more competitive.
  The assault on Medicare is the worst aspect of this bill, but that's 
not the end of the dishonor roll of this bill.
  Three million retirees with good coverage through a former employer 
will lose it as the result of this legislation.
  Six million of the poorest of the poor elderly and disabled people 
will face higher costs for the drugs they need and less access to 
medical care the day this legislation is effective.
  The government will be prohibited from bargaining to obtain 
reasonable drug prices for senior citizens.
  The bill imposes a cruel and demeaning assets test that disqualifies 
millions of the lowest income elderly from the special help they need.
  The bill provides $6 billion in tax subsidies for health savings 
accounts, a program that has nothing to do with Medicare but everything 
to do with benefiting the healthy and wealthy while driving up 
insurance premiums for other Americans.
  Rejecting this misbegotten legislation is not a rejection of our 
senior citizens' needs for prescription drugs. It is an affirmation of 
their need for Medicare and of their right to choose the doctors and 
hospitals they trust. If this legislation is rejected today, the 
pending business before the Senate will be the good, bipartisan 
prescription drug program we passed in July. Let us make the vote 
today, a new start to do the right thing rather than a conclusion to do 
the wrong thing.
  In its own way, this is as historic as the debate that enacted 
Medicare. Medicare is the heart and soul of our society's commitment to 
compassion and fairness. Today, the Senate will decide whether that 
commitment will be abandoned for other values--the values that are 
measured in the cold coins of profit and power rather than on the 
scales of humanity and justice.
  The Senate should reject this mistaken choice. It should stand with 
the elderly and their families, not with HMOs and insurance companies 
and pharmaceutical industries. It should reject this legislation.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. I yield the remainder of my time to the Senator from 
Utah.
  The PRESIDING OFFICER. The Senator from Utah is recognized for 3 
minutes.

[[Page 31812]]


  Mr. HATCH. I have been listening to the rather remarkable remarks 
from the other side, that this legislation has been rammed through the 
Congress, that it is partisan, when it is bipartisan. It has taken us 
15 years to get here. It could take another 15 years if we do not 
support this bill right now.
  We have been working on Medicare prescription drug legislation for 15 
solid years. We have worked day in day out, hours, weeks, and months in 
order to get to this point. It is bipartisan. It was bipartisan in the 
House; when it passes today it will be bipartisan in the Senate.
  The opponents of this bill keep saying that seniors will be worse off 
if this Medicare bill becomes law. Give me a break. We are going to put 
$400 billion out there for senior citizens so they will have a Medicare 
drug benefit. We are giving seniors a choice in coverage. Medicare 
beneficiaries may stay in traditional Medicare or they may choose to 
participate in one of the new Medicare Advantage plans.
  We are improving health care for rural communities, something our 
friends on the other side have ignored for years. The fact is, it is 
time to realize that we are going to have to pass this legislation 
because it is the right thing to do and it will be a bipartisan vote.
  We are devoting close to a quarter of this bill's funding to retiree 
health coverage. CBO told us that 37 percent of retirees could have 
lost their coverage if S. 1, the bill approved by the Senate earlier 
this year, had become law. This bill reduces that number to under 20 
percent. I don't know how anyone can say this bill is going to be 
harmful to retirees when we are devoting $89 billion towards retaining 
retiree health coverage.
  We also are improving access to less expensive, generic drugs by 
improving Hatch-Waxman.
  The real reason our colleagues do not like this bill is that it is 
not an $800 billion bill. Our bill is $400 billion which provides for 
some private sector competitive models. The reason our opponents do not 
like our legislation is because they do not believe in the private 
sector.
  With regard to their argument that some of the big companies are 
going to benefit from this legislation, of course they will benefit. 
The argument I find most amusing is the claim this bill will lead to 
increased drug company profits.
  The reason the bill is so desperately needed is because beneficiaries 
with low incomes are unable to afford their prescriptions today. They 
have to choose between food, rent, and taking their medicines. When 
this prescription drug benefit goes into effect, low-income 
beneficiaries will finally be able to get their prescriptions filled. 
This legislation includes generous subsidies so the low-income will be 
able to receive their prescription drugs without worrying about how to 
pay for them.
  Of course, this is going to lead to increased drug sales. Surely this 
is no surprise to anyone. Any prescription drug bill that works is 
going to lead to increased drug sales. Where are the medicines supposed 
to come from, except from the manufacturers of those medicines? Every 
single Medicare prescription drug bill introduced by these naysayers 
also would have increased drug sales, and they know it.
  This bipartisan conference report has the same basic drug benefit 
structure that passed the Senate by a vote of 76 to 21--the same one--
and we are hearing these arguments here today? My distinguished friend 
from Massachusetts voted for that bill, and the legislation before us 
has the same drug benefit structure contained in S. 1 earlier this 
year.
  The Congressional Budget Office has concluded that the competitive 
approach of this bipartisan drug benefit will be better at controlling 
drug costs than other proposals.
  To suggest that no one support a Medicare drug benefit because it 
will lead to increased drug sales turns logic on its head.
  If this were our basic principle, then we should not have food 
stamps, because that would lead to increased profits of grocery stores 
and farmers. What about housing subsidies? This might lead to profits 
by construction companies, utility companies and increased sales of 
lumber, bricks and nails! So, this is just an absurd issue and it is 
easy to see why.
  I am here to tell you that this bill will strengthen and improve the 
Medicare program. The spending in this bipartisan prescription drug 
bill goes toward more improved health benefits for America's seniors 
and the disabled. This is a good bill and I urge my colleagues to 
support it.
  The PRESIDING OFFICER. The time has expired.
  The minority leader.
  Mr. DASCHLE. Mr. President, I will use my leader time because I know 
we are out of the allotted time.
  I'm told that when Medicare was passed 38 years ago, the House and 
Senate galleries were filled with senior citizens who felt a great deal 
of hope, optimism and excitement about what that bill meant for them 
and for future Americans.
  I don't see any senior citizens in the galleries today. And I think 
that is a real reflection on what this bill really means.
  Why are there no senior citizens in the galleries for this vote? Why 
isn't there the hope and excitement and enthusiasm and optimism that we 
saw so vividly 38 years ago?
  Mr. President, I think we all know the reason: because there is no 
excitement. There is no enthusiasm. There is no optimism. There is no 
real confidence that what we are doing today will help the vast 
majority of senior citizens. They are not optimistic. They are watching 
with dismay at the vote we are about to take.
  I'll tell you what rooms are filled--not the galleries but the 
lobbies. The drug companies and the insurance companies are out there 
in droves. The highly paid representatives of these companies couldn't 
be happier about this bill. Their job is done for now.
  I heard a report on the radio this morning that the final vote was 
going to be taken early today. Well, that report was wrong, Mr. 
President. This is not the final vote on prescription drugs for seniors 
or on Medicare. This is only the beginning, not the end. We will see 
many, many more votes.
  I predict that we will be back within the next 12 months. Seniors 
will demand that we correct the many deficiencies in this bill, and 
they will not rest until we do.
  This may be the end of this debate. But I predict that a longer 
debate will begin tomorrow as senior citizens start to fully understand 
the magnitude of the problems this legislation creates for them.
  This bill is deeply flawed. There is a poll in this morning's South 
Dakota Rapid City Journal. The poll simply asked the question, Do you 
think the legislation the Senate is about to pass is adequate? Mr. 
President, 64.5 percent of those who responded said no, it is not 
adequate. Those of us who have been working on this legislation should 
not be surprised.
  Senior citizens with private coverage already know they could lose 
those benefits as early as tomorrow as the result of this bill. Seniors 
on Medicaid already know that they are going to have to pay more for 
drugs, and may even be refused some of the drugs they need. Seniors in 
South Dakota already know they may be coerced into an HMO they disdain 
and out of a Medicare plan they now count on.
  Seniors already know they are about to be subjected to a scheme for 
benefits they cannot even understand, much less afford.
  Taxpayers already know they are going to be giving huge handouts to 
insurance companies, drug companies, and special interests, even though 
our country is faced with deficits unlike we have ever known.
  Many Senators know this is lousy legislation, that we may spend the 
rest of our careers repairing the flaws of this disappointing bill.
  We are going to be called upon to vote today.
  My father admonished me many years ago never to put my signature on 
something I was not proud of. Mr. President, I am not proud of this 
legislation. I cannot put my signature on this bill. And I do not think 
anyone else should, either.

[[Page 31813]]

  I yield the floor.
  The PRESIDING OFFICER. Under the previous order, the majority leader 
is recognized for 5 minutes.
  Mr. FRIST. Mr. President, today is an extraordinary day for 40 
million seniors. For too long, our medical and health care advances 
have raced ahead, especially in the last 10 to 15 years, but Medicare, 
as a health security program for seniors, has stood still.
  But today that will change. And it will change today with 
overwhelming support. On this chart are 358 organizations who support 
this change, such as the Seniors Coalition, the AARP, the American 
Medical Association, the American Hospital Association, the Family 
Physicians, the American College of Cardiology, the National Alliance 
for the Mentally Ill, the Rural Hospital Association, the Sickle Cell 
Foundation, the Society of Thoracic Surgeons--and the list goes on and 
on.
  It has been a long time coming, but it is finally here. With a 
bipartisan majority, the U.S. Senate will enact prescription drug 
coverage for the first time under Medicare.
  Forty million seniors and individuals with disabilities will finally 
have the prescription drug coverage they need and the Medicare choices 
they deserve.
  They will finally be able to take full advantage of the tremendous 
medical advances that have been made in the almost 40 years since 
Medicare was enacted.
  I do not think it can be overstated that today marks a truly historic 
advance for America.
  As a physician, I have written hundreds of prescriptions that I knew 
would go unfilled because patients simply would not be able to afford 
them. With this bill, that will change.
  As a U.S. Senator, I have watched a decades-old Medicare program 
operate without flexibility, without comprehensive care, without 
coordinated care, without preventive care, without disease management 
and catastrophic protection against out-of-pocket medical costs.
  By expanding opportunities for private sector innovation, this 
Medicare bill offers the possibility of genuine reform that can 
dramatically improve and strengthen quality of care for our seniors and 
for those baby boomers who will be seniors in the not too distant 
future.
  At the same time, it preserves traditional Medicare. It strengthens 
and improves traditional Medicare, and it preserves traditional 
Medicare for those who wish to choose it.
  It combines the best of the public and the private sectors. It 
improves Medicare for today's seniors and helps, most importantly, lay 
the foundation for a strong and modern program for seniors today, but 
also tomorrow's seniors.
  The legislation provides all seniors with access to more affordable 
prescription drugs and targets more substantial assistance to lower 
income seniors and those with high catastrophic drug costs.
  It also dramatically expands health coverage choices for seniors, and 
improves coordinated care, improves disease management, adds prevention 
to Medicare, and adds catastrophic coverage both under the traditional 
Medicare fee-for-service program and under Medicare private health 
plans.
  While it does expand those choices and those opportunities to choose, 
choices that seniors simply do not have today, it also ensures that 
those seniors can keep exactly what they have. They do not have to 
choose that new drug plan. They do not have to choose that new type of 
health care plan that we might have in the U.S. Senate or that Federal 
employees have.
  They don't have that option today, but they can choose that or they 
can keep exactly what they have today. All of the options in this 
legislation, including prescription drug coverage, are voluntary. 
Beyond increasing competition, we will also take steps to control 
health care costs both within the Medicare Program and within the 
broader health care system. For the first time, we will ask those 
seniors who can afford to do so to pay a higher portion of their 
Medicare costs. We will increase and index the Medicare Part B 
deductible for the first time in over a decade. We will make health 
savings accounts available to all Americans so that they have greater 
control over their own health care choices and so they can plan and 
save, tax free, for future health care needs.
  We will make other responsible changes such as speeding generic drugs 
to the marketplace so that seniors will have access to these lower cost 
prescription drugs.
  Indeed, today is an extraordinary day. Today is a fateful day. Today 
is a red letter day for seniors.
  In conclusion, today's historic action is only possible because of 
the hard work of many dedicated Members of the Senate and the House of 
Representatives, and the administration.
  I would like to take a moment to thank those whose commitment was 
critical to this effort. First and foremost, President Bush deserves 
credit for his bold leadership and commitment to improving the health 
of America's seniors and individuals with disabilities.
  Tommy Thompson, the Secretary of Health and Human Services, and Tom 
Scully, the Administrator of the Centers for Medicare and Medicaid 
Services, spent hundreds of hours working on this legislation.
  In the Senate, Finance Committee Chairman Charles Grassley and 
Ranking Member Max Baucus put partisanship aside and worked tirelessly 
from beginning to end to deliver on our promise to America's seniors. 
Senator John Breaux also deserves credit. He and I have worked together 
for the better part of 6 years on legislation to improve Medicare. 
Today, we have finally reached that goal.
  All members of the conference committee showed a degree of dedication 
and resolve seldom seen in either Chamber, especially Senators Orrin 
Hatch, Don Nickles and Jon Kyl. We would not have reached this point 
without building on the strong foundation laid by Members who worked so 
hard on this issue during the past several years, especially Senators 
Snowe, Jeffords, Gregg, Hagel, Ensign and Wyden. Senators Bunning, 
Thomas, Smith, Lott, and Santorum also made major contributions to this 
legislation through their work on the Senate Finance Committee.
  Members of this body who voted against final passage, but nonetheless 
worked to improve this legislation at every step of the way and help 
pave the way to final passage also deserve great respect and 
appreciation.
  The House Leadership, especially Speaker Dennis Hastert and Leader 
Tom DeLay, also deserves special recognition, as does the Chairman of 
the Conference, Chairman Bill Thomas, and the Chairman of the House 
Energy and Commerce Committee, Chairman Billy Tauzin. We would not be 
here without them.
  Finally, I want to thank my hard working and dedicated staff: Dean 
Rosen, Elizabeth Scanlon, Rohit Kumar, and Craig Burton. They have put 
in thousands of hours and poured over thousands of details.
  To everyone who has worked so hard and given so much to this effort, 
I thank you. America thanks you. And, most of all, America's seniors 
thank you.
  I ask unanimous consent that a long list of staff who made major 
contributions to this legislation be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Passage of a Medicare prescription drug benefit would not 
     be possible without the hard work and dedication of the White 
     House staff and the staff at the Department of Health and 
     Human Services. House and Senate staff, as well as House and 
     Senate Legislative Counsels, the Congressional Budget Office 
     and the Congressional Research Service deserve our thanks. At 
     this time, I would like take a moment to recognize the many 
     individuals who have played a central role in this 
     legislation.
       We could not do our work without the assistance of our 
     exceptional staffs who have sacrificed time with loved ones 
     in the pursuit of a Medicare prescription drug benefit. I 
     would like to thank them all.
       On my staff, Dean Rosen, Elizabeth Scanlon, Craig Burton, 
     Rohit Kumar, Eric Ueland, Lee Rawls, Bob Stevenson, Nick 
     Smith, Amy Call, Bill Hoagland, Bill Wichterman, Allison 
     Winnike, Jennifer Romans, Dr. Susan Goelzer, and Tina Thomas 
     deserve recognition.

[[Page 31814]]

       Senate Finance Committee Majority Staff, Linda Fishman, 
     Mark Hayes, Leah Kegler, Jennifer Bell, Colin Roskey, Ted 
     Totman, Mark Prater, Dianne Howland and Alicia Ziemecki 
     tirelessly worked on this legislation. On the Senate Finance 
     Committee Minority Staff, Liz Fowler, Jonathan Blum, Pat 
     Bousilman, Andy Cohen, Dan Stein, and Jeff Forbes made 
     important contributions to this effort.
       House Leadership staff, Darren Wilcox, Brett Shogren, Joe 
     Trauger, Shalla Ross, Andrew Shore, John DeStefano and Sam 
     Geduldig made the way for House passage of the Conference 
     Report. House Ways and Means Majority staff members, John 
     McManus, Madeline Smith, Joel White, Deb Williams, John 
     Kelliher, and Shahira Knight were invaluable to reaching a 
     bipartisan agreement. House Ways and Means staff, Patrick 
     Morrisey, Kathleen Weldon, Chuck Clapton, Pat Ronan, Jeremy 
     Allen, Bill O'Brien, Eugenia Edwards, Dan Brouilliette and 
     Jim Barnette also deserve recognition.
       Additionally, Senator Breaux's staff, Sarah Walter, 
     Michelle Easton and Paige Jennings; Senator Nickles' staff, 
     Stacey Hughes and Hazen Marshall; Senator Hatch's staff, 
     Pattie DeLoatch, Bruce Artim, Patricia Knight, Chris Campbell 
     and Dr. Mark Carlson; and Senator Kyl's staff, Don Dempsey, 
     Diane Major, Lisa Wolski and Elizabeth Maier have all been 
     dedicated to this effort. As have Health Education, Labor and 
     Pensions Committee staff Vince Ventimiglia, Steve Irizarry, 
     Kim Monk and Senate Leadership staff Sarah Berk, Mike Solon, 
     Kyle Simmons, Laura Pemberton, Amy Swonger, Malloy McDaniel, 
     Brian Lewis, and Scott Raab.
       The work of Members and staff would have been moot without 
     the support of the House and Senate Legislative Counsels, the 
     Congressional Budget Office and the Congressional Research 
     Service. Those deserving recognition include Legislative 
     Counsels, Edward Grossman, John Goetchus, Pierre Poisson, 
     James Scott, and Ruth Ernst; staff of the Congressional 
     Budget Office, Doug Holtz-Eakin, Steve Lieberman, Tom 
     Bradley, Bob Sunshine, David Auerbach, James Baumgardner, 
     Anna Cook, Sandra Christensen, Philip Ellis, Carol Frost, 
     Samuel Kina, Lyle Nelson, Robert Nguyen, Rachel Schmidt, 
     Daniel Wilmoth, Shawn Bishop, Niall Brennan, Julia 
     Christensen, Jeanne De Sa, Brianne Hutchinson, Margaret 
     Nowak, Eric Rollins, Shinobu Suzuki, Christopher Topoleski, 
     and Robert Murphy; and Congressional Research Service staff, 
     Richard Price, Jennifer O'Sullivan, Sibyl Tilson, Hinda 
     Chaikind, James Hahn, Paulette Morgan, Chris Peterson and 
     Susan Thaul.
       Finally, we could not have done this without the leadership 
     of President George W. Bush, Secretary Tommy Thompson, 
     Centers for Medicare and Medicaid Services Administrator Tom 
     Scully and Food and Drug Administration Commissioner Mark 
     McClellan. White House staff deserve recognition including 
     Matt Kirk, Keith Hennesy, Doug Badger, Jim Capretta, David 
     Hobbs, Ziad Ojakli, Amy Jensen and Mike Meece. Department of 
     Health and Human Services staff deserving credit include 
     Jennifer Young, Rob Foreman, Amit Sachdev, Dan Troy, Fred 
     Ansell, Elizabeth Dickinson, Michelle Mital, Megan Hauck, Ann 
     Marie-Lynch, Dan Durham, Andrew Cosgrove, Jim Mathews, 
     Michael Reilly, Rob Stewart, Jim Hart, Susan Levy-Bogasky, 
     Gerry Nicholson, Lynn Nonnemaker, Peter Urbanowicz, Donald 
     Kosin, Robert Jaye, Leslie Norwalk, Don Johnson, Susan 
     McNally, Sharman Stephens, John McCoy, David Kreiss, Ira 
     Burney--a technical guru we could not have done without, 
     Richard Foster, Dennis Smith, Charlene Brown,m Sally Burner, 
     Nancy DeLew, Sue Rohan, Mary Ellen Stahlman, Gary Bailey, Tom 
     Hutchinson, Robert Donnelly, Tom Grisson, Liz Richter, Tom 
     Gustafson, Marty Corry, Teresa Houser, Tim Trysla, Teresa 
     Decaro, Greg Savord and Crystal Kuntz.
       To all of those I have acknowledged here, I extend my 
     gratitude and the gratitude of the entire United States 
     Senate. You have helped to seize a historic moment, 
     strengthen the Medicare program and improve the lives of 
     millions. Thank you.

  The PRESIDING OFFICER. Under the previous order, the hour of 9:15 
having arrived, the Senate will proceed to vote on passage of the 
conference report to accompany H.R. 1.
  Mr. FRIST. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the conference report. The clerk will 
call the roll.
  The legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Massachusetts (Mr. Kerry) 
and the Senator from Connecticut (Mr. Lieberman) are necessarily 
absent.
  I further announce that, if present and voting, the Senator from 
Massachusetts (Mr. Kerry) would vote ``nay.''
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 54, nays 44, as follows:

                      [Rollcall Vote No. 459 Leg.]

                                YEAS--54

     Alexander
     Allard
     Allen
     Baucus
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Carper
     Chambliss
     Cochran
     Coleman
     Collins
     Conrad
     Cornyn
     Craig
     Crapo
     DeWine
     Dole
     Domenici
     Dorgan
     Enzi
     Feinstein
     Fitzgerald
     Frist
     Grassley
     Hatch
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Landrieu
     Lincoln
     Lugar
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Talent
     Thomas
     Voinovich
     Warner
     Wyden

                                NAYS--44

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Chafee
     Clinton
     Corzine
     Daschle
     Dayton
     Dodd
     Durbin
     Edwards
     Ensign
     Feingold
     Graham (FL)
     Graham (SC)
     Gregg
     Hagel
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kohl
     Lautenberg
     Leahy
     Levin
     Lott
     McCain
     Mikulski
     Murray
     Nelson (FL)
     Nickles
     Pryor
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Sununu

                             NOT VOTING--2

     Kerry
     Lieberman
       
  The conference report was agreed to.
  Mr. FRIST. Mr. President, I move to reconsider the vote.
  Mr. BOND. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The majority leader.
  Mr. FRIST. Mr. President, this is an extraordinary day for seniors 
and indeed all Americans. The legislation that we just passed is 
consequential. It is far reaching for every American. It touches all of 
us in material ways, in meaningful ways. It is epical in the sense that 
it modernizes Medicare to provide 21st century care for our seniors, 
with preventive care, with disease management, and especially with 
prescription drugs. This bill is notable in its 54-to-44 vote in being 
a bipartisan bill.
  For the information of our colleagues, we will have no more rollcall 
votes. We currently remain in discussion on the appropriations bills. 
The bill will not be filed until later today in the House of 
Representatives. I will be in discussion with the Democratic leadership 
as to what appropriate time we will be addressing those appropriations 
bills. There will be no more rollcall votes today. I wish everybody a 
very happy, enjoyable, and especially safe Thanksgiving.

                          ____________________