[Congressional Record (Bound Edition), Volume 149 (2003), Part 23]
[House]
[Pages 32157-32164]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  THE REPUBLICAN MEDICARE LEGISLATION

  The SPEAKER pro tempore (Mr. Renzi). Under the Speaker's announced 
policy of January 7, 2003, the gentleman from New Jersey (Mr. Pallone) 
is recognized for 60 minutes.
  Mr. PALLONE. Mr. Speaker, I would like to take to the floor this 
evening to discuss the Medicare legislation that the President signed 
today. And needless to say, I am very critical of the legislation which 
was essentially and primarily sponsored by the Republican leadership, 
and, obviously, supported by the President of the United States. And I 
know that the President signed the bill with great fanfare today, but 
certainly from the reaction that I have been getting in my district and 
throughout the State, because I was in various locations around the 
State of New Jersey over the last 2 weeks when we had our Thanksgiving 
recess, the reaction amongst New Jerseyans has been overwhelmingly 
against the bill. And I have to say that the concerns that I am hearing 
from senior citizens in New Jersey, and I am sure this is echoed 
throughout the country, are primarily concerned that they have been 
fooled, that the President and the Republican leadership in the 
Congress are telling them that the Medicare bill is going to accomplish 
certain things, particularly with regard to prescription drugs, but the 
reality is that it is very different from what the Republicans are 
saying about the Medicare legislation. And I just wanted to go through 
some of the areas where I think that there is an effort on the part of 
the Republicans to say what this bill will do in a positive way and 
point out that the reality is very different.
  First of all, I would say that the Republican Medicare legislation 
tries to fool the seniors by saying that somehow they are going to get 
a discount. If we talk to seniors and even the public at large, the 
biggest concern they have about prescription drugs is not only that 
they cost too much but that the costs keep rising, actually much more 
than inflation, and the bottom line is the bill does absolutely nothing 
to bring the cost of prescription drugs down. In fact, there is a 
provision in the bill, and I would like to make reference to it, called 
the noninterference clause that was actually the subject of an 
editorial in the Los Angeles Times within the last few days, and 
because of the fact that there is this noninterference clause in the 
bill, the Medicare Administrator, that is the person at the Federal 
level who administers the Medicare program, will not be able to 
negotiate prices and bring down prices, because keep in mind, Mr. 
Speaker, that in many cases if they represent a lot of people, as in 
the case of the Medicare Administrator who will represent about 40 
million seniors in the

[[Page 32158]]

Medicare program, because they represent so many people, they can 
negotiate a lower price for them for particular drugs on a given day or 
a given week or a given year. But what the Republicans put in the bill 
at the request of the pharmaceutical companies is this noninterference 
clause. And if I could read it, it says: ``Noninterference,'' in order 
to promote competition under this part and in carrying out this part, 
the Secretary, that is of Health and Human Services, the Medicare 
Administrator, may not interfere with the negotiations between drug 
manufacturers and pharmacies and PDP sponsors and may not require 
particular formulary or institute a price structure for the 
reimbursement of covered part D drugs.
  So, essentially, what this clause says is that unlike what we do with 
the Veterans Administration or what unlike what we do with the 
military, the Federal Government cannot negotiate, on behalf of all 
these seniors, lower prices. That is wrong. But more than its being 
wrong and not making any sense because of the power of the Medicare 
Administrator to negotiate lower prices, it fools the seniors. It gives 
the impression to the seniors that the Republicans are giving that 
somehow there is some cost containment in this bill and in reality 
there is not any. There is actually a prohibition on any kind of cost 
containment on the bill with regard to prices for prescription drugs.

                              {time}  2045

  Now, a second way that the Republicans try to fool the seniors is by 
saying that Medicare is going broke. I have had so many of my 
colleagues on the Republican side get down on the floor here in the 
last 6 months and say, well, we have to make changes and reform 
Medicare because it is going broke.
  In fact, Medicare is not going broke. The only reason why there is 
any problem at all with the Medicare trust fund is because the 
Republicans have been borrowing from the trust fund in the last 2 years 
to pay for their tax cuts. So the trust fund has actually lost money 
because we, the Congress, in basically enacting legislation that would 
provide for huge tax cuts, primarily for the wealthy or for corporate 
interests, has not had the money to implement those tax cuts and has 
been borrowing from the Medicare as well as the Social Security trust 
funds to pay for those tax cuts.
  So, again, another effort to try to fool the seniors, to suggest that 
somehow Medicare is going broke, when in fact the only problem with 
Medicare stems from Republican fiscal and tax policies.
  The third thing that the Republicans try to do is fool the seniors by 
saying they are giving seniors a choice. In other words, the theory is 
that if you privatize Medicare or if you say that in order to get a 
prescription drug plan you have to join an HMO or you have to go to 
some kind of drug-only policy essentially outside of traditional 
Medicare, that somehow you are given a choice.
  The reality is the seniors lose their choice, because the most 
important thing that seniors want is a choice of physicians; and if 
they have to join an HMO, which is essentially the only way practically 
speaking you are going to get a prescription drug benefit under this 
bill, you are going to lose your choice of doctors, you might lose your 
choice of hospitals, you are certainly going to lose your choice of 
certain kinds of medical procedures, because the HMOs simply will not 
cover it.
  The ultimate irony was this Sunday in the New York Times there was an 
article on the front page by Robert Pear that pointed to a little-known 
aspect of this Republican Medicare bill where they forbid the issuance 
of Medigap supplemental insurance policies once the drug benefit goes 
into effect in the year 2006.
  Let me tell you, if the Republicans are saying they are going to give 
seniors choice, how is there choice when they cannot even choose a 
Medigap supplemental insurance policy? It is the opposite of choice. 
What the Republicans have done with that provision is not provide the 
seniors a choice, but say it is essentially either my way or the 
highway. You either choose a prescription drug plan under an HMO, or 
you choose a prescription drug plan under a drug-only private insurance 
policy. But if you want to stay in traditional Medicare, then not only 
do you not get the drug benefit, but you cannot even buy supplemental 
coverage to pay for supplementing the holes, if you will, in your 
existing Medicare coverage.
  What the Republicans are doing is everything possible. They say it is 
choice, but really what they are doing is denying you a choice by 
making it almost impossible for you to stay within the traditional 
Medicare program if you want a prescription drug program, or, maybe 
even if you do not, because you cannot buy Medigap supplemental 
coverage.
  Already some of my colleagues on the Republican side are saying, 
well, that prohibition on Medigap insurance does not take effect until 
2006, and sometime between now and then we will get to that and change 
that. Maybe we will repeal that provision. I think they should repeal 
the whole thing. Frankly, the whole thing that the President signed 
today is bad. It is bad for Medicare and seniors.
  I want to get into a few more areas where I think the President and 
the Republicans are fooling the seniors. They are not giving them 
choice; they are denying them choice. But the other way they try to 
fool the seniors is they say they are getting a benefit, and they 
suggest it is a very generous drug benefit.
  The reality is it is not a meaningful drug benefit, and it is hardly 
generous. It is ultimately going to cost you. If you decide you want to 
join an HMO and lose your choice of physicians because you want this 
benefit, this benefit will, nonetheless, cost you so much out-of-pocket 
compared to what you are going to get back from the Federal Government 
that I would venture to say that probably less than 10 percent of the 
seniors would actually opt for this kind of a benefit, because it is 
such a meaningless benefit.
  Let me give you an idea what I am talking about, because I do not 
want to talk in general terms. I want to give examples of why I say 
even if you wanted this benefit, if you decided to get out of 
traditional Medicare and join an HMO, why you would not want to do 
this.
  Let me give you three examples of a senior with $2,250 in drug costs 
in a year. In other words, if your prescription drugs are going to cost 
you $2,250 in a given year, you are going to pay $420 in premiums, that 
is $35 each month times 12, a $250 deductible and $500 out-of-pocket, 
which is 25 percent of the drug costs that you have to pay when you 
first go beyond your deductible of $251 to $2,250. You are actually 
paying $1,170 for $2,250 in drugs.
  You might say, well, that is not too bad. I am getting less than 50 
percent of my drug costs paid, but maybe it is a good deal. Well, not 
if you have to lose your doctor and join an HMO. But even with all 
that, less than 50 percent of your drug costs are being paid for by the 
Federal Government.
  But most seniors are not in the category where their drug bills are 
$2,250 a year. More seniors have drug expenses that are larger than 
that and fall into the so-called donut hole. This is an area where if 
you have your drug bills above a certain amount, the Federal Government 
pays no part of the cost of your drug bills. I want to give you an 
example of that.
  Let us talk about a senior whose drug costs fall above $2,250, or in 
this donut hole where they have to pay 100 percent of the cost. Say a 
senior has $3,500 in annual drug costs. This does not exceed the $5,100 
catastrophic cap, so they would pay $1,170 for the first $2,250, and, 
as I said before, $1,250, which is 100 percent of the difference 
between $2,250 and $3,500. So if your drug costs were $3,500, you would 
be paying $2,420 for those $3,500 in drug costs, or 70 percent of the 
cost.
  This is because if your drug costs essentially go between $2,000 and 
$5,000 before you get to this catastrophic level, you are paying 100 
percent of the cost. You are actually going to be in a situation where 
you are paying premiums every month to the Federal

[[Page 32159]]

Government for this drug benefit, but getting nothing back, because you 
are at that point after 6 or 7 months in the year where you have 
exceeded the $2,250 in costs, but you are not up to $5,000, so you are 
paying premiums and getting nothing to cover your drugs. You talk about 
a benefit and you talk about trying to fool the seniors; it is 
unbelievable how much deceit is essentially involved in this 
legislation.
  I just want to get a couple more examples, because I see my colleague 
from Ohio is here. Let me give you a couple more examples of how they 
try to fool the seniors.
  The Republicans say to seniors they will be able to stay in 
traditional Medicare if they want the prescription drug benefit. As I 
have said, that is really not true, because they have to join an HMO to 
get any kind of drug benefit. If they want to buy a drug-only policy, 
which might be out there, the premiums for that will probably be so 
high it will not even be available.
  But the worse aspect of this when they say you can stay in 
traditional Medicare is for those seniors who are going to be in these 
demonstration programs throughout the country, where they are 
essentially going to give you a voucher and say we are going to give 
you so much amount of money to pay for your health insurance, but you 
have got to go to the private market and try to find someone to give 
that voucher to, that set amount of money, to pay for your health 
insurance.
  This is not even with the prescription drug plan. This is Medicare in 
general. The Republican leadership, in the House version of this bill 
they wanted to essentially privatize all of Medicare by the year 2010, 
but because the other body, the Senate, would not go along with it, 
they ended up putting this in certain demonstration programs.
  One of these demonstration programs is going to be in the southern 
part of New Jersey, not in my district, but in the southern part of the 
State. There are about 200,000 seniors in the southern part of New 
Jersey that are likely to be in this demonstration program, where they 
are going to be given a voucher and told you go out and buy your health 
insurance with this set amount of money and you cannot stay in 
traditional Medicare.
  If you say you want to stay in traditional Medicare, what they are 
going to do is say, okay, if you want to stay in traditional Medicare, 
you have to pay the difference in cost between that voucher and what it 
costs the Federal Government to provide the traditional Medicare, which 
could be an extra $500, an extra $1,000, an extra $2,000 per year. 
Essentially, seniors are going to be forced out of traditional 
Medicare, just the opposite of what the Republicans were saying.
  The last thing I want to say, where there is a serious element of 
deceit, is the Republicans are trying to fool the seniors by saying 
they are going to get a drug benefit immediately after the bill goes 
into effect. Practically every Republican who got on the floor the 
night we debated this bill made that statement in some form or the 
other, and it is simply not the case, because this drug benefit does 
not go into effect until the year 2006.
  What they are going to do over the next 2 or 3 years before it goes 
into effect is give you some kind of discount drug card. In New Jersey, 
we see a lot of these because we have a lot of pharmaceutical 
companies, and most of them give out a discount drug card. You pay a 
certain amount of money, and you get anywhere from a 5 to 10 to 15 
percent discount on your drugs. But since there is no cost containment, 
it essentially is a ruse, because the drug companies charge whatever 
they want for the prescription drugs and give you a 5, 10, or sometimes 
maybe a 15 percent discount.
  So now the Federal Government, according to the President, over the 
next 2 or 3 years before the drug benefit comes into play, is going to 
hand out these drug cards to seniors so they can get the slight 
discount, which is really no meaningful discount at all.
  I have to say I was not surprised when I went home over the 
Thanksgiving recess over the last 2 weeks, all that I heard at the 
senior centers, even on the street, even at the supermarket, were 
people coming up to me and being not so much mad as upset in some cases 
almost to the point of tears over what this Republican bill is going to 
do to their Medicare.
  People are saying to me, Are they going to take my Medicare? What are 
they going to do to my Medicare? People personalize Medicare. It is so 
important to them, and yet all these changes are going to take effect 
that are against their interests.
  I have editorials that are written in my local papers against this. 
These were not editorials I suggested. These were the newspapers and 
the local senior groups looking at this Medicare bill and saying how it 
was going to be detrimental to them and the future of the Medicare 
program.
  I see that my colleague, the gentleman from Ohio (Mr. Brown) is here. 
He is the ranking Democrat on the Subcommittee on Health; and he has 
been outspoken on this issue, particularly in pointing to the conflicts 
of interest that exists with the drug companies and the insurance 
companies who stand to benefit from the changes that are in this 
Republican bill.
  I yield to the gentleman.
  Mr. BROWN of Ohio. Mr. Speaker, I thank my friend from New Jersey, 
who has just been dogged in his pursuit of this issue and trying to 
protect Medicare, trying to write a prescription drug benefit inside 
Medicare, and not this privatized HMO kind of Medicare inadequate 
prescription drug plan that the President signed today.
  When you listen to the gentleman from New Jersey (Mr. Pallone), you 
just keep asking the question, why is it that all this happened this 
way? Why would such a bill pass the Republican House, pass the 
Republican Senate, in very close votes, and be signed by the President? 
Why would they do this?
  The answer is pretty clearly the kind of influence that the drug and 
insurance industries have in this body. The word on the street is that 
the drug companies, the prescription drug companies, are going to 
contribute $100 million towards the President's reelection. It is no 
surprise that nothing passes this Chamber, nothing gets through both 
Chambers, nothing gets enacted into law and will be signed by the 
President unless it has the support of the drug companies.
  Let me just talk for a moment about that, and then I want to tell a 
couple of stories. The 10 biggest drug companies in this country had 
revenue last year of $217 billion, more than the entire GDP, gross 
domestic product, of the country of Austria. These 10 companies posted 
profits of $37 billion last year. That is more than the Federal 
Government spent on the entire VA health care system. It is more than 
the entire Housing and Urban Development budget for last year.
  The drug companies on this year's Fortune 500 list posted profits of 
more than 17 percent, 5.5 times what the rest of the Fortune 500 
profits were. The drug industry led all other Fortune 500 industries on 
two key profitability indices, return on revenues and return on assets.
  Now, I want to get there, even with that, even with the drug 
industry's iron lock on this institution, the corruption, the 
incredible influence that this industry has on this Congress, on 
Republican leadership, on the President, on the Vice President, on 
leadership in the other body, in the Senate, even with all that, I 
think it is important to sort of see how we got here.
  At 2:54 in the morning on a Friday in March, this House cut veterans 
benefits by three votes. At 2:30 a.m. on a Friday in April, in the 
middle of the night, House Republicans slashed education and health 
care by five votes. At 1:56 a.m. on a Friday in May, the House passed a 
leave-no-millionaire-behind tax cut by a couple of votes. At 2:33 a.m. 
on a Friday in June, House Republicans passed a Medicare privatization 
and prescription drug bill by one vote. At 12:57 a.m. on a Friday in 
July, the House Republicans eviscerated Head Start by one vote. Then 
after summer recess, at 12:12 a.m. on a Friday morning, in the wee 
hours of Thursday night in October, the House voted $87 billion for 
Iraq. Always in the middle of the night, always a contentious bill, 
always after the press had passed their

[[Page 32160]]

deadlines, always after the American people had turned off the news and 
gone to bed.

                              {time}  2100

  With that track record, and the gentleman from New Jersey (Mr. 
Pallone) has illustrated this, we should not be terribly surprised that 
when the House passed legislation that privatizes Medicare, that 
dramatically changes the 38 years of Medicare as we know it, that the 
House did it at 5:55 on a Saturday morning. The Republican leadership 
delivered this 100-page Medicare bill to House Members on Friday 
morning at 1:46 a.m. We voted on it 25 hours later.
  But, Mr. Speaker, in a lot of ways I do not blame my Republican 
colleagues. If I produced that bill, I would not want people to know a 
lot about it either, because when Republicans sit down behind closed 
doors with the insurance industry and the drug industry and write a 
bill to privatize Medicare, of course they do not want the public to 
know, because this bill is not a prescription drug bill when we really 
look at it. We could have agreed bipartisanly. The gentleman from New 
Jersey (Mr. Pallone) and I and our Republican friends could have 
written this bill, we could have agreed bipartisanly to deliver a $400 
billion prescription drug benefit inside of Medicare, delivered to 
people the same way that people get their doctor and hospital and get 
their choice: they send the bill to Medicare and it would work. But 
this bill is more about Medicare privatization. For that, Republicans 
have a long history.
  Republicans have never much liked Medicare as a Federal program. Turn 
the calendar 38 years back to the beginnings of this most popular 
program perhaps in American history. When Congress passed the 
legislation creating Medicare in 1965, in the spring of 1965, there 
were 140 Republicans in the House of Representatives. Only 13 out of 
those 140, less than 1 in 10, fewer than 1 in 10 Republicans in this 
House voted to support it. Every leading national Republican voted no. 
Future President Gerald Ford, future Presidential nominee Bob Dole, 
future legislative leaders Bob Michel, John Rhodes; future Defense 
Secretary Donald Rumsfeld, every leading national Republican voted 
against the creation of Medicare.
  Now, after that passed and they realized the public liked it, there 
were no major efforts to try to get rid of it until 1995 when 
Republicans had their first chance to do it when Republicans captured 
the majority of the House of Representatives. In 1995, Newt Gingrich, 
Speaker of the House, immediately during the Contract With America 
tried to cut Medicare $270 billion to, what do we think, pay for a tax 
cut for the richest people and the most privileged people in the 
country. Gingrich in that year, in October of 1995, said, now, we did 
not get rid of Medicare in round one, we did not think that is 
politically smart. We do not think that is the right way to go through 
a transition, but we believe it is going to wither on the vine.
  Texas Governor, then Governor George Bush was a strong supporter of 
that privatization effort. Majority leader Dick Armey, another Texas 
Republican said, Medicare is a program I would have no part of in a 
Free World. Bob Dole bragged, I was there fighting the fight against 
Medicare. The gentleman from Georgia (Mr. Linder), Committee on Rules 
member, a Republican, told me in a meeting in 2002 at the Committee on 
Rules, Medicare is a Soviet-style system. It is on and on and on. The 
gentleman from California (Mr. Thomas) who, with the drug companies and 
the insurance industry, wrote this Medicare privatization bill this 
year, said, to those who say that this bill would end Medicare as we 
know it, our answer is I certainly hope so.
  This bill, as the gentleman from New Jersey (Mr. Pallone) went 
through, it jeopardizes employer-sponsored retiree coverage for the 12 
million-plus seniors who have this coverage. Understand, as the 
gentleman from New Jersey (Mr. Pallone) has said, there are 12 million 
seniors today who have pretty good prescription drug coverage as part 
of their retirement plans, retirement packages from their employers. 
Some, between one-fifth and one-third of those, according to the 
Congressional Budget Office, will have their employers yank that 
coverage, and they will then be thrown into this privatized Medicare 
system.
  Now, this bill, in addition to the problems that the gentleman from 
New Jersey (Mr. Pallone) mentioned, this bill creates a $12 billion 
slush fund for HMOs to encourage them to provide coverage; it increases 
drug industry profits by $139 billion, increasing their profits by 40 
percent. We could go on and on and on and on. We know, we know about 
the profitability of the drug companies; we know about how the drug 
companies have, by and large, written this bill.
  We know that the drug companies benefit from this bill way more than 
everybody else. They have 675 lobbyists in Congress; 675 drug industry 
representatives walk the halls of these Chambers. There are 1.3 
lobbyists per Member of the House, and they spent $91 million in 
lobbying activities. That is just what they disclose; we do not know 
what they really spent. They spent $50 million more on everything from 
ads to direct mail. They spent nearly a half a billion dollars lobbying 
since 1997. They gave $30 million overall for the 2002 election cycle; 
about three-quarters of that to Republicans and, as the gentleman from 
New Jersey (Mr. Pallone) and I have talked, we hear on the street that 
Mr. Bush and Mr. Cheney are going to receive $100 million in campaign 
funds from the drug industry.
  But let me, before finishing, let me go back to what exactly happened 
that Friday night, early Saturday morning when the drug bill passed. 
The vote started Friday at about midnight, the vote on the Medicare 
privatization bill. The debate started Friday at about midnight. The 
rollcall began at 3 a.m. Most of us took our vote cards, our little 
plastic cards, put them in the little box and pushed either the green 
or the red button. The clock runs out after 15 minutes, but it is 
usually kept open for another 2 to 5 minutes. Typically, a vote here is 
often about 20 minutes.
  But the Republicans were behind the entire evening; the vote was 
losing. At 3:30, 4 o'clock in the morning, the vote was 216 to 218. It 
was defeated. A majority was voting ``no,'' with only one Member, a 
Democrat, not yet voted. At about 4 o'clock the vote had stayed open 
for 1 full hour. That is when the assault began. The gentleman from 
Illinois (Speaker Hastert), the gentleman from Texas (Majority Leader 
DeLay), the gentleman from Missouri (Republican Whip Blunt), the 
gentleman from Louisiana (Mr. Tauzin), the chairman of the Committee on 
Commerce; the gentleman from California (Mr. Thomas), the chairman of 
the Committee on Ways and Means all were walking the floor, surfing for 
stray Republicans who were most likely to cave whom they could bully or 
whom they could brow beat. They surrounded the gentleman from Ohio (Mr. 
Chabot), trying a carrot and then a stick; but he stood his ground and 
was defiant. They tried a retiring Republican, the gentleman from 
Michigan (Mr. Smith), whose son is running to succeed him. They 
promised support if he changed his vote to ``yes'' and threatened his 
son's future if he refused. He steadfastly, to his credit, showed his 
integrity and stood his ground.
  Many of the two dozen Republicans who had voted against the bill had 
left the floor hoping to avoid the onslaught from the gentleman from 
Illinois (Speaker Hastert), the gentleman from Texas (Mr. DeLay), the 
gentleman from Missouri (Mr. Blunt), and the committee chairmen. One 
Republican that I saw was hiding in the Democratic cloakroom.
  By 4:30, the bullying and the brow beating had moved into the 
Republican cloakroom, out of sight of the television cameras and of the 
public. The Republican leaders by then had waked up President Bush, and 
the White House was passing a cell phone from Member to Member in the 
cloakroom. At 5:55, 2 hours and 55 minutes after the rollcall began, 
literally twice as long as a vote had ever taken in the

[[Page 32161]]

U.S. House of Representatives, 2 obscure Western Republicans emerged 
from the cloakroom, they walked, ashen and cowed down this aisle, I was 
sitting right there, down this aisle to the front of the Chamber, they 
picked up a green card to change their votes, they scrawled their names 
and district numbers on the cards, and they dispiritedly surrendered 
the cards to the Clerk. Quickly the Speaker gaveled the bill. Medicare 
privatization had passed.
  Now, imagine an election, an election at home when the polls close at 
7:30. Everyone has voted. One candidate trails by a few votes, but 
election officials, just not liking the outcome, decide to keep the 
polls open for 3 more hours. They brow beat; they bully. They threaten, 
they offer jobs, they promise goodies for their neighborhood or for 
themselves. Finally, lo and behold, the election turns out the way they 
want.
  The new rules in this House of Representatives, Yogi Bera might put 
it tell us, ``It ain't over until the Republicans and the drug 
companies win.'' It is sort of Florida all in one night. But the 
American people should expect more. They should expect the House of 
Representatives conducted in the open. They should expect Members to 
honestly, straightforwardly, openly cast their ballots; they should 
expect a drug pricing policy and a Medicare bill that can hold up, not 
only in the dark of night, but also in the bright light of the morning.
  Mr. PALLONE. Mr. Speaker, I want to thank the gentleman. He made some 
great statements there; and we will have to develop a few of those, if 
the gentleman does not mind.
  First of all, I wanted to talk a little bit more about what happened 
that night because, as the gentleman knows, this afternoon, our 
Democratic leader, the gentlewoman from California (Ms. Pelosi), 
offered a privileged motion which of course was defeated by the 
Republicans, and she paid much attention in her privileged motion to 
what happened that night and how it was very wrong and undemocratic, 
and I think that the gentleman's analogy about keeping the polls open 
back at home when we are voting in a congressional or Presidential 
election is a very good analogy.
  But if I could just point to the case again with the gentleman from 
Michigan (Mr. Smith), a lot of commentary has been written about that 
over the last 2 or 3 days, and I wanted to specifically mention a 
column by Robert Novak which was in the Chicago Sun Times recently. And 
he mentions what happened with the gentleman from Michigan (Mr. Smith), 
and I just wanted to point to that and then I wanted to point out the 
whole legality of it, because there is a serious question about whether 
what the Republican leadership did to the gentleman from Michigan (Mr. 
Smith) was legal.
  In Novak's column he said that Smith, a self-term-limited 
Congressman, is leaving Congress; and his lawyer son, Brad, is one of 
five Republicans seeking to replace him from a GOP district in 
Michigan's southern tier. On the House floor, Nick Smith was told 
business interests would give his son $100,000 in return for his 
father's vote. He of course declined, and then fellow Republican House 
Members told him they would make sure that Brad Smith, his son, never 
came to Congress. After Congressman Nick Smith voted ``no'' and the 
bill passed, Duke Cunningham of California, another Republican 
Congressman and other Republicans taunted Smith that his son was dead 
meat.
  I mean, needless to say, it is outrageous that this would even occur, 
and certainly no one is suggesting that it did not occur. I have not 
heard anybody suggest that what Novak said is not true; I mean, it 
obviously is true.
  But just earlier this week, there was a watchdog group called the 
Campaign Legal Center that on December 3 urged the U.S. Department of 
Justice to investigate whether Members of the U.S. House attempted to 
bribe a Member of Congress into voting in favor of the recently passed 
bill. They referenced the gentleman from Michigan (Mr. Smith), and the 
group urged the House Committee on Ethics to investigate the matter. 
They sent a letter to the Justice Department, and they referenced a 
section under title XVIII, section 201 of the U.S. Code where it says, 
``A person commits bribery who directly or indirectly, corruptly gives, 
offers, or promises anything of value to any public official or person 
who has been selected to be a public official or offers or promises any 
public official or any person who has been selected to be a public 
official to give anything of value to any other person or entity with 
intent to influence any official act such as a vote.''
  Now, I am sure courts can interpret this thing however they want, but 
it seems to me on its face that what happened that night that my 
colleague from Ohio talked about was bribery, and it is going to be 
very interesting to see. Of course, we have to kind of assume that the 
Justice Department is going to be a little biased, because it is 
Republican appointed, but I do not see how they can get away from the 
fact that the facts and the circumstances in that case were, in fact, 
bribery.
  The thing that really bothers me, I say to the gentleman from Ohio, 
he talked about the Republican responses when our leader, the 
gentlewoman from California (Ms. Pelosi), brought this privileged 
motion up today, I listened carefully to the debate back in my office, 
and I was amazed to see how some of my Republican colleagues responded. 
Essentially, if my colleagues listened to what many of them were 
saying, it was the ends justify the means. They were saying that this 
vote was so important and the issue of Medicare's future and the 
prescription drug benefit were so important, that that justified, in 
some cases they said, leaving the board open as long as it took until 
they could get the votes to pass the bill.
  Well, that is the most undemocratic thing I ever heard of. 
Essentially it means that if I believe that something should pass, and 
I am in the majority, I am just going to keep the board open until I 
get my way. That is it. It is the end justifies the means.
  Mr. BROWN of Ohio. Mr. Speaker, that is exactly right. It is also, if 
we look at the context of all of this, the context is the huge, 
enormous influence that the drug industry has on this body. I mean, the 
drug industry has a strangle hold on the Republican leadership, pure 
and simple. They give millions of dollars to Republicans, as we have 
said before, we are hearing as much as $100 million to President Bush's 
reelection. Nothing in this Chamber, nothing happens without the drug 
industry saying it is okay. The drug industry puts millions of dollars 
in campaigns. They hire so many lobbyists, 670-some I believe at last 
count, well over 600. They run all kinds of television ads and radio 
ads under the name of something else. They basically launder their 
money through the United Senior Association, through other groups, 
these disease advocacy groups that are not really legitimate, with 
millions of dollars and hide who they are, the drug industry, and try 
to communicate with the public that way. I mean, they are so powerful 
and so strong, but at least we ought to keep them off the House Floor. 
But in that sense, in the wee hours of the morning on Saturday, that 
Saturday morning, that late Friday night, while Secretary of Health and 
Human Services Tommy Thompson was on the floor, which is unusual, I do 
not ever recall seeing a cabinet member on the floor like that, but 
that is not a violation of the rules and it is not unethical, either. 
But we could see the influence of the drug industry on the floor of the 
House of Representatives.

                              {time}  2115

  One could almost see these Members of Congress who have depended on 
drug company money, who are addicted to drug company money, one could 
see the kind of way that they were pushing their fellow Republican 
Members, the Members whom they lead. So it is not a very long jump from 
there to what they tried to do apparently with the gentleman from 
Michigan (Mr. Smith) who showed a lot of guts and integrity, as I might 
add.
  And so when there is that much money at stake, the drug industry is 
slated to increase its profits already

[[Page 32162]]

for 21 years straight, the most profitable industry in America, when 
the drug industry already so profitable, increased its profits $140 
billion over the next 8 years, 40 percent increase in profits for the 
most profitable industry in America, not to mention the insurance 
industry and its impact here. With that kind of money at stake it does 
not come as a surprise to me that Republican leadership would play that 
kind of hard ball, do it in the middle of the night, or who knows what.
  We do not know what was said to Member after Member after Member to 
pass this bill. That is not a prescription drug bill; it is a bill that 
turns the Federal Treasury over to the drug companies and the insurance 
companies and privatizes Medicare in the bargain. So it is pretty clear 
to more and more Members of this body and to more and more members of 
the public that the corruption in this body when it comes to drug 
money, the corruption is just unbelievable. It has increased every year 
since I have been here. It is getting to the point that it is almost as 
if Members have signed their vote card over to the pharmaceutical drug 
industry lobbying association.
  Mr. PALLONE. Mr. Speaker, I wanted to point out another example of 
what you are talking about too. It has also come to light over the 
Thanksgiving recess, and this is the people within the Department that 
were drafting the legislation, as you know, the Federal Government 
official who runs Medicare and was very much involved in drafting the 
legislation to put this bill in place, Tom Scully, announced during the 
break, during the Thanksgiving recess that he was leaving the Medicare 
program to go into the private sector. And there were serious questions 
about his whole involvement in this because basically he had been 
looking for a job in the private industry for something like 6 months.
  There is an article that was in the December 3 New York Times where 
it said that Mr. Scully, this is the Medicare administrator, had made 
no secret of the fact that he had been looking for jobs outside the 
government for more than 6 months even as he spent hundreds of hours in 
closed sessions with House and Senate negotiators working out countless 
details of the legislation.
  Now, again, there are so many conflicts of interest with this 
administration, it is just unbelievable. This guy, who I do not know 
him that well, but I understand he is a fairly nice guy, but the idea 
that 6 months ago he was looking for a job, a job essentially with some 
of the same law firms that were negotiating on behalf of the drug 
companies in order to get a favorable bill, the ethics law actually 
says, and I will read it because it is in the same article in The New 
York Times, ``The ethics rules issued by the Department of Health and 
Human Services say that employees who have begun seeking jobs in the 
private sector must immediately recuse themselves from any official 
matter that involves the prospective employer.''
  Now, this covers legislative initiatives and proposed rules. Now, 
apparently, what Mr. Scully is saying is that he got a waiver from the 
Department so he would be allowed to work on matters of general 
applicability like the Medicare reform bill while he talked to 
potential employers. We have no information about how this waiver was 
garnished. The waiver has never been made public. The bottom line is 
the guy is negotiating this bill basically looking for a job with some 
of the same lobbying firms that are representing the drug companies. 
And as soon as the bill is passed, within a few days he announces that 
he is leaving to go join those same law firms. What possible 
justification?
  Mr. Speaker, I yield to the gentleman from Ohio.
  Mr. BROWN of Ohio. Mr. Speaker, I saw that article. I like Tom 
Scully. He came to our committee and he spoke. He is a reasonable, 
decent guy. I do not accuse him of anything untoward. I do wonder about 
a system, though, where he announced several months ago he was leaving 
the Department and going into the private sector. And he intimated, he 
may have said more specifically, that he would be out doing Medicare-
type work, but he stays in the Department during the 6 months he is 
negotiating with various law firms and Wall Street firms, I believe, 
his future job and then the Medicare prescription drug bill is in the 
conference committee and he is in these meetings. Somebody gave him a 
waiver. I do not quite know what a waiver means.
  Mr. PALLONE. They will not tell us specifically what it is.
  Mr. BROWN of Ohio. It is okay to be in a conflict of interest but 
because our administration is so pro-drug company, we give you the 
waiver? I wish he would answer some questions about what the waiver is 
all about, because I do not think the people at home understand what 
the waiver process is. I do not think I understand the waiver process.
  Mr. PALLONE. The waiver has not been made public.
  Mr. BROWN of Ohio. How a Department gives a waiver to one guy to do 
this and not that. I think Mr. Scully is a man of integrity, but I do 
not think the system is quite right that would allow somebody to look 
for a job, run this Medicare system that has 40 million beneficiaries, 
that has got about, I think, about $300 billion roughly running through 
that system. He runs it. The last 6 months he said he is leaving. He is 
talking about companies that have a major interest in Medicare while 
looking for a job, and then he is helping to write the Medicare bill 
that will affect those companies in the agency he runs. I do not know 
what the waiver is all about. I hope he comes and tells us sometime.
  Mr. PALLONE. I do not think we are going to find out, to be honest, 
specifically because he is leaving. But the thing that is most amazing 
about it is that the time period from when he decided to leave and then 
he actually left was the very time period when he was negotiating the 
bill.
  Mr. BROWN of Ohio. This goes back to earlier comments that the 
gentleman from New Jersey (Mr. Pallone) made just about the 
unseemliness, the conflicts of interest, the huge numbers of dollars 
that are at stake in this bill. $400 billion in taxpayer dollars is 
going to be distributed in the next 10 years, $400 billion. Not to 
mention the amount of out-of-pocket seniors will have, which is a huge 
amount of money, for their drug cost. So that $400 billion, we are 
going to see the drug industry is going to make $140 billion more; the 
insurance industry gets a $20 billion incentive pay, if you will, to 
write drug insurance. Employers are getting subsidized, so not as many 
of them, some still will, but not as many employers drop the coverage 
of their retirees who they have collectively bargained with in many 
cases.
  So there is so much money on the table. The way that the 
administration has done this has been so untoward, the way that from 
the minute the bill really was introduced, was written behind closed 
doors by the drug and insurance industry, to they are not allowing 
amendments, to speak of, on the House floor, to the conference 
committee closed out to Democrats who represent in the Senate more than 
half the population and in the House represent 48 percent of the 
population; and then all of these kinds of secret deals in the bill 
with the drug companies and the insurance companies winking and nodding 
every step of the way.
  I think this bill symbolizes the corruption, the sort of pinnacle of 
the corruption that we have seen in this House of Representatives. We 
are awash with corporate money, awash with all the kinds of cutting 
deals and conflicts of interest and billions and billions and billions 
of dollars available to raid the Federal Treasury. While we cannot 
probably get this bill repealed in the next year, I think we are going 
to see this Medicare issue is going to really show what the political 
parties stand for, what are we going to see in the election next year, 
where on the one hand Democrats want to see a prescription drug benefit 
go directly to seniors, Republicans want to run it through the drug 
industry and insurance industry, enriching their corporate friends and 
then a little bit of it trickles down to seniors. And thrown into the 
bargain is a privatized Medicare system.
  Mr. PALLONE. Mr. Speaker, I wanted to comment, I know the gentleman

[[Page 32163]]

raised so many good points, and I know we cannot go through them all 
tonight, but I wanted to talk a little bit about what I call the 
insurance scam too. We focused a lot of attention on the drug companies 
and how they are benefiting, but I think we have to talk a little bit 
also about the insurance companies that you mentioned.
  I wanted to say in my State the pharmaceutical companies have a huge 
presence and they spend a lot of money on electing candidates. But he 
was very proud of the fact that within a couple days after this 
Medicare bill surfaced, that the largest newspaper in my State, the 
Star Ledger, issued an editorial which was entitled ``Reject Medicare 
Legislation.'' And the largest newspaper in my district issued another 
editorial calling the Medicare plan bad medicine. But I wanted to 
highlight the Star Ledger article. Again, this is the largest newspaper 
in the State, which probably has percentage-wise the largest presence 
of pharmaceutical companies. And they wrote this scathing editorial. 
They focused attention somewhat on the drug companies but even focused 
more attention on the insurance companies. I wanted to read just the 
first couple of paragraphs because I think it says it all about how the 
insurance companies benefited. It is the editorial from November 18. It 
says, ``Reject Medicare Legislation. If profit making insurance 
companies are so much better and cheaper than the Federal Medicare 
program, why do we have to give them $12 billion to help improve it? 
That subsidy is built into the Medicare compromise plan heading for 
Congress and is but one of several excellent reasons the plan should be 
rejected. After handing the industry a $12 billion gift from the 
taxpayers, the bill sets up a fixed competition between Medicare and 
private managed care. They would go head to head in a half dozen 
communities. Once the games begin, private companies could sign up 
younger, healthier, cheaper-to-treat seniors and reject the rest. It 
does not take a genus to predict the result. If Medicare, which must 
take all comers is left with sicker, more expensive seniors, Medicare 
will fail. That will give conservatives a chance to settle one of the 
most successful public programs of all times and replace it with 
private companies. If we end up with a dead Medicare program and 
taxpayer subsidized private profits, where is the victory? The 
insurance industry already can sign up seniors under another Medicare 
option, that is managed care, but it has never attracted more than a 
small percentage of Medicare recipients. Year by year it has reduced 
benefits and dropped hundreds of thousands of policyholders. The 
companies say the Medicare population costs too much to treat and that 
government payments are stingy.''
  I am reading this, but I wanted to explain it a little. We have had 
such an experience in New Jersey. We have had something like, I think 
the figure is 800,000 seniors that joined HMOs, managed care over the 
last 5 or 10 years who were eventually dropped. And the reason they 
were dropped, obviously, was because the insurance companies initially 
took the seniors and then found because of the cost that the seniors 
incurred in health insurance that they could not make a profit. So they 
dropped them.
  Now, what happened then is that the HMOs came before the Congress, 
they came before our committee, they said we cannot make enough money 
with the managed care HMO system the way it is. You do not pay us 
enough money for Medicare to cover for these seniors, so why do you not 
give us a windfall. That is exactly what is in the bill. They got a $12 
billion basic windfall to manage care so they could theoretically now 
sign up seniors and provide seniors with not only the HMO but the 
prescription drug coverage.
  But there is nothing in the bill, just like there was nothing in the 
previous legislation with Medicare+Choice that says that they have to 
take whatever senior comes along. So essentially what this Star Ledger 
article is saying, they are now going to cherry-pick. They realized 
after being in the Medicare program for a number of years that they 
could not make a profit because they took all these seniors who were 
sick and driving up health costs. So now they are going to get this 
huge $12 billion subsidy, and they will be able to cherry-pick and 
essentially take whatever seniors they want and offer a health care 
plan with this big subsidy and leave the traditional Medicare with the 
sicker people that drives up the cost.
  Mr. BROWN of Ohio. Then they are going to come back in 10 years and 
say, see, Medicare does not work. Of course it does not work when the 
insurance company insures you when you are healthy and then taxpayers 
and Medicare get you when you are old and sick. Of course it is going 
to work that way.
  That is the irony of all this. I hear my friends on the other side of 
the aisle over and over tell us that seniors, that the private sector 
can do it better, that government is this huge bureaucracy, that 
Medicare is inefficient and bloated, that nimble, quick-on-its-feet 
Medicare, the private insurance system can do it better. So, okay, if 
that is the case, why, then, does Medicare have lower administrative 
costs, why does Medicare have lower marketing costs, lower salaries and 
all that? But if you accept that they can let them compete, so why are 
we giving the Medicare HMOs $20 billion and say, yeah, of course one 
can compete if we give you $20 extra billion, but if the playing field 
were really level it is clear that the public system wins.
  That is why 38 years ago in the end Medicare was created. Because in 
1965 when President Johnson and Democratic majorities in both Houses, 
because, as we said, almost no Republicans in either House voted for 
this bill to create Medicare, in those days half of America's seniors 
did not have insurance. Why? Because the private insurance market did 
not find seniors attractive. They did not find seniors attractive 
because they are older, they are sicker, and they are poorer.

                              {time}  2130

  So, maybe somebody 65 could get private insurance, somebody that 
walked every day, someone in really good shape, but someone 73 or 74 
who was diabetic, who had heart problems, who was arthritic, who was 
not really able to take care of himself or herself, no one will insure 
that person. No one will under the Republican privatized Medicare 
program.
  The whole point is a government plan with a universal coverage pool 
that everybody is in so when you are 65 and healthy you are 
subsidizing, because your health care expenses are not too high, you 
are subsidizing somebody who is 85 and not as healthy. And then when 
you get to be 85, some other 65-year-old subsidizes you. That is what 
the universality of the insurance pool is all about.
  The Republicans want to fracture the universality of the insurance 
pool. They want to skim off for their insurance industry contributors 
and all the corruption around this place that comes from that. They 
want to skim off the most healthy seniors, and they want to insure them 
at great profit and let the government and taxpayers pick up everybody 
that is sick and more expensive. It is pretty simple what their plan 
is.
  Mr. PALLONE. The gentleman described it so well.
  The amazing thing is when we were in our committee and we were 
marking up the bill, I remember asking questions about, well, what 
about the fact that you do not have a set premium? In other words, you 
can charge whatever you want for this, for the health insurance or for 
the prescription drug benefit. And what if the HMO's do not want to 
cover the sicker seniors or certain seniors. And the answer I got back 
from some of my Republican colleagues is, well, if this does not work, 
giving them this $12 billion windfall, they can come back in another 2 
or 3 years and we will give them more money.
  It is incredible how they totally violate the idea of competition 
and, as the gentleman says, a level playing field, and are willing to 
give the HMOs or the private insurance companies more and more money if 
they are not willing to cover the seniors. Where does it end? There is 
no end to it.
  We saw with MediCare+Choice a few years ago, every year they would 
come

[[Page 32164]]

back and ask for more and more money. And now they have this windfall, 
who knows where it will end.
  I know our time is almost up. I want to develop one more point that 
the gentleman raised before we close tonight because I think it is 
important. The gentleman talked about the fact that if the Democrats or 
if, on a bipartisan basis, we had been allowed to develop a bill that 
kept traditional Medicare and just added a prescription drug benefit, 
which is what most of my seniors, and I think most seniors expected. I 
mean, if you talk to the seniors about what they expected with a 
prescription drug benefit, they figured we were just going to have the 
traditional Medicare, and we were going to add the benefit.
  I think it is important before we close that we point out that, as 
Democrats, we developed and offered an alternative as a substitute on 
the floor of the House, exactly that. Basically, what the Democratic 
Party in the House and what our leadership proposed and what both the 
gentleman from Ohio (Mr. Brown) and I supported, was simply adding a 
prescription drug benefit to traditional Medicare. And we used the Part 
B, which now pays for seniors' doctors bills, as an example.
  Under the current Part B, you pay a premium of about $55 a month. You 
have a $100 deductible. Eighty percent of the costs of your doctor 
bills are paid for by the Federal Government. Twenty percent by you; 
that is your copay up to a certain amount catastrophic limit where 100 
percent of the cost is paid for by the Federal Government.
  That is exactly what the Democrats offered as an alternative. We said 
that for a $25 premium you would have a $100 deductible for your first 
$100 in drug costs. Eighty percent of your drug bills would be paid for 
by the Federal Government. Twenty percent copay. And at a certain 
level, I forget what it was, $3,000 maybe $3,500 catastrophic level, 
100 percent of the cost would be paid for by the Federal government. 
And we had a provision in the bill that specifically said that the 
Secretary of Health and Human Services, the Medicare Administrator, 
would negotiate price reductions.
  I know some of the Republicans said that would have been a very 
expensive bill. The bottom line is whatever costs to the Federal 
Government probably would have been outweighed by negotiated prices, 
that would have brought the cost down considerably. So there was 
clearly an alternative out there that would have simply done what most 
seniors expected and simply added a prescription drug benefit to 
traditional Medicare.
  Mr. BROWN of Ohio. That is a very interesting point. I think seniors 
in my district and seniors all over the country, because I was hearing 
this from colleague after colleague, people were wondering why it was 
so complicated? Why was it so difficult? Why can Congress just not pass 
a drug benefit?
  People understand how Medicare works. You go to a physician. The bill 
is sent to Medicare to be paid. You go to a hospital. The bill is sent 
to Medicare to be paid. There is a copay and a deductible. People 
understand that. They understand the premium. It is very simple 
insurance. It is full choice of doctor, full choice of hospital, and 
why not do the same with a prescription? Then you get the prescription. 
It is paid for by Medicare. You have full choice of your prescription.
  Instead, the Republicans had to make it a lot more complicated. Why? 
Because they wanted to get their privatization agenda enacted. That 
means using the insurance companies. It means playing ball with the 
drug industry. It means a lot of that money, that $400 billion that 
should go directly to cover prescription drugs, and very little 
overhead, the 2 percent overhead that Medicare has been able to keep 
their overhead at 2 percent. Instead of that, the Republicans are 
seeing all kinds of money wasted through the insurance and the drug 
companies.
  Frankly, it just kind of amazes me because seniors do think it could 
be simple. The other part of that $400, as the gentleman pointed out, 
that $400 billion would go a lot further under the Democratic plan 
because we would do cost controls. We would do various kinds of 
constraints on costs.
  The Canadians, as we have heard many times in this Chamber, the price 
of drugs in Canada is one-half, one-third, one-fourth of what it is in 
the United States. Tamoxifen, a breast cancer drug, is one-eighth the 
cost in France than it is in the United States.
  If we could have restrained costs, controlled costs, brought prices 
down, whatever you want to call it, if we had done that and put this 
bill into Medicare, put this whole plan into Medicare, a lot less 
complicated, we could have done it months ago, years ago, we could have 
done it; and seniors would have a better plan. They would understand 
what it is about. They would not have all of these questions, but the 
drug industry and the insurance industry probably would not be so 
happy, and I guess that is in the end why this body did what it did.
  Mr. PALLONE. Mr. Speaker, the last thing I wanted to mention, because 
I know we only have a few minutes, was the reimportation. I know that 
many of us saw the reimportation from Canada or other countries as sort 
of a last-minute effort to try to have some kind of cost controls put 
into effect. We would rather have cost containment here rather than 
have to import drugs from Canada or other countries. But the bottom 
line is that both Houses, both the House and the Senate had passed a 
provision that would have provided for an essentially legalized drug 
reimportation, at least from Canada, if not from some of the other 
countries in Western Europe that were comparable to the United States.
  Even though the conference between the House and the Senate had those 
provisions in both Houses, they ended up essentially eliminating it in 
the bill. Also, today in the omnibus bill, the appropriations bill that 
we came back to vote on today, I am sure the gentleman noticed that 
that was stripped out of that as well.
  So every effort has been made by the Republican leadership and by the 
Republican President to do everything possible to make sure that there 
are no cost controls whatsoever. And I still see, and I go back to what 
I said in the beginning, Mr. Speaker, I still see my colleagues on the 
Republican side coming down here and saying there is some kind of cost 
control or savings that the seniors are going to get from this bill.
  That is simply untrue. Everything has been taken out. The 
reimportation language from Canada, specific language that says that 
you cannot negotiate price. Every effort was made to guarantee that 
there would be no fiddling whatsoever with the drug companies's ability 
to simply raise prices as they see fit. That is what we are left to.
  It is really sad to think that we have come to that. I know the 
President signed the bill today, and it is over with in that respect; 
but, hopefully, and I already see it happening, you will get a 
groundswell from America's seniors throughout the country over the next 
few months or the next few years that are going to demand that this 
bill be repealed or significantly altered. I am convinced that is going 
to happen.
  It is sad to think that there was this huge missed opportunity when 
we could have actually passed a good prescription drug benefit and done 
something to help America's seniors, rather than this cruel hoax that 
has been foisted upon them today.
  Mr. Speaker, I want to thank the gentleman from Ohio (Mr. Brown) for 
all he has done on this issue over the last few years.

                          ____________________