[Congressional Record (Bound Edition), Volume 150 (2004), Part 9]
[Extensions of Remarks]
[Pages 12087-12088]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     MEDICARE DISCOUNT CARD PROGRAM

                                 ______
                                 

                           HON. MARION BERRY

                              of arkansas

                    in the house of representatives

                         Monday, June 14, 2004

  Mr. BERRY. Mr. Speaker, I wish to insert into the Record testimony 
submitted by the National Committee to Preserve Social Security and 
Medicare to the Senate Finance Committee regarding the new Medicare 
discount card program. This statement correctly identifies some of the 
concerns Seniors have with discount cards and the Medicare Prescription 
Drug Law in general.

       ``Mr. Chairman, we believe the problems evident in the 
     discount card program have provided Congress with a unique 
     opportunity to correct the flaws in the new Medicare bill 
     before it goes into effect.''--Barbara B. Kennelly, President 
     and CEO, National Committee to Preserve Social Security and 
     Medicare.

Statement for the Record--Senate Finance Committee, Medicare Drug Card: 
    Delivering Savings for Participating Beneficiaries, June 8, 2004

       Mr. Chairman and Members of the Committee: On behalf of the 
     3.2 million members and supporters of the National Committee 
     to Preserve Social Security and Medicare, we applaud Chairman 
     Grassley and Senator Baucus for holding this hearing today. 
     We have discovered through many meetings with seniors around 
     the country that they remain confused and skeptical about the 
     new discount card program. This is unfortunate, because there 
     are some seniors--particularly those who qualify for the low-
     income benefit--who will clearly benefit from the new 
     discount cards. In our written materials and many meetings, 
     we have urged seniors everywhere to research the cards and 
     determine whether they will benefit from them. We welcome 
     hearings such as this, because we believe they can provide 
     critical information to millions of seniors struggling to 
     understand the new benefit.
       Unfortunately, we believe most of the problems with the new 
     cards are inherent in the design of the program and cannot be 
     corrected by the end of 2005. More importantly, we believe 
     the discount cards are a metaphor for the entire new Medicare 
     law. Unless the law is rewritten, the same fundamental flaws 
     that have made the discount cards so frustrating to seniors 
     today will make the new drug benefit equally disappointing 
     when it becomes effective in 2006, and could undermine public 
     support for the entire Medicare program.
       The National Committee to Preserve Social Security and 
     Medicare spent the last six years advocating for a 
     comprehensive, affordable prescription drug benefit offered 
     through the Medicare program, because that is what our 
     seniors have been telling us they need and we believe they 
     deserve. If Congress had worked directly through Medicare 
     rather than a system of private providers to provide both the 
     temporary discount card and the permanent drug benefit, it 
     could have taken advantage of the universal, consistent, 
     inexpensive delivery system that is already inherent in the 
     Medicare program. The result would have been a simple, 
     meaningful benefit to seniors.
       Unfortunately, that is not what has been implemented 
     through P.L. 108-173. We understand that the wide variety of 
     discount card providers was intended as a service to seniors, 
     to give them the broadest array of card choices. But instead 
     of providing a benefit to seniors, the multitude of options 
     has proved to be extremely confusing, particularly with so 
     few seniors comfortable using the Internet. Allowing sponsors 
     of the cards to change both the drugs covered and the 
     discounts on the drugs weekly was intended to encourage 
     competition between providers, further lowering prices. But 
     experience to date has shown the listed prices can go up as 
     well as down, and even those seniors who research the cards 
     carefully cannot be certain they will end up with the best 
     deal. Meanwhile, because seniors are only allowed to have one 
     Medicare-approved card at a time, and they are locked into 
     their chosen card until the end of the year, they worry about 
     being forced to stay with a plan that ultimately does not 
     provide them with significant benefits. This worry can result 
     in paralysis, with seniors preferring not to purchase a card 
     at all rather than risk buying one that does not serve their 
     needs.
       This problem will be exacerbated when the permanent benefit 
     begins. We do not know today how many companies will opt to 
     provide the permanent prescription drug benefit in 2006, so 
     it is not clear whether seniors will be faced with a choice 
     between as many providers. Even if the number of options is 
     smaller, however, their choices will be even more complicated 
     than with the discount

[[Page 12088]]

     card. Not only will they be confronted with a confusing array 
     of multiple providers covering different drugs at a variety 
     of prices, in some cases they will also be faced with 
     choosing between managed care companies with completely 
     different menus of standard health services as well.
       If they choose wrong in the case of the discount card, 
     their only loss is the price of the card and whatever 
     discounts they might have received with a different card. But 
     if they pick a health care provider that does not serve their 
     needs once the permanent benefit begins, the financial 
     consequences could be catastrophic. And unlike the discount 
     card, where taking time to make the right choice does not 
     have adverse consequences, seniors delaying enrollment in the 
     permanent benefit could pay increased premiums for the rest 
     of their lives.
       But the most significant problem with the new Medicare law, 
     Mr. Chairman, is the lack of cost containment. As you know, 
     most seniors are on relatively fixed incomes, dependent upon 
     Social Security for a significant portion of their income in 
     retirement. They are extremely sensitive to price increases 
     because they rarely have a cushion of disposable income to 
     protect them from the ravages of inflation. They are well 
     aware of the skyrocketing increases in prescription drug 
     costs that have been confirmed in two recent studies. 
     Families USA found prices of the 30 most popular drugs used 
     by seniors increased at four times the rate of general 
     inflation during 2003, and AARP found a 28% increase in a 
     broader list of drugs from 2000 to 2003. Small wonder that 
     seniors are less than impressed by a discount card program 
     that offers reductions of 10 to 25 percent.
       CMS has said it intends to monitor the cards to make sure 
     senior discounts are not based on artificially inflated 
     prices, but without a clear definition of what is an 
     acceptable price increase, and considering the issues of 
     artificially inflated prices represented by Average Wholesale 
     Prices, protecting seniors will not be easy. And we are not 
     aware of any federal agency investigating the significant 
     increases prescription drug prices have experienced in recent 
     years, to determine whether those increases were warranted in 
     the first place.
       If the new prescription drug benefit is offered through 
     Medicare, the purchasing power of its 41 million seniors can 
     be harnessed to negotiate for the lowest possible prices, 
     with all the savings passed along directly to seniors. But 
     without effective cost containment, the new prescription drug 
     benefit could well turn out to be an illusion for many 
     seniors, offering limited federal assistance in paying for 
     drugs whose cost keeps skyrocketing unchecked, much as the 
     discount card program appears to many seniors today. And 
     unfortunately, the drug benefit that looks meager today will 
     only become worse with time. According to Medicare's own 
     Trustees, within a few short years seniors will need to have 
     over $8,580 in covered drug costs to trigger the catastrophic 
     coverage. At that point, seniors will be paying over $6,000 
     in out-of-pocket costs, in addition to an estimated $730 in 
     annual premiums, and only $2,500 will be picked-up by 
     Medicare.
       Many in Congress, including you, Mr. Chairman, have 
     acknowledged the lack of cost containment in the new 
     prescription drug program by advocating for reimportation of 
     drugs from Canada and other countries. While the National 
     Committee supports reimportation, we believe any relief it 
     offers will be temporary.
       Mr. Chairman, we believe the problems evident in the 
     discount card program have provided Congress with a unique 
     opportunity to correct the flaws in the new Medicare bill 
     before it goes into effect. We urge you to revisit the 
     program while there is still time to make the fundamental 
     changes that will be needed to provide seniors with the kind 
     of access to affordable drugs that they truly require. We 
     look forward to working with you toward this goal as the 
     process continues.

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