[Congressional Record (Bound Edition), Volume 152 (2006), Part 6]
[Senate]
[Pages 7525-7527]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        HEALTH INSURANCE REFORM

  Mr. NELSON of Florida. Mr. President, the underlying bill we are 
discussing is an attempt at a much needed reform of the health 
insurance system of this country.
  If you wonder why there is the organization of health insurance in 
this country that we have, it is as a result of a historical accident. 
It was when all the veterans were coming home after World War II that 
employers, in order to get them to come and work for their company, 
would offer fringe benefits,

[[Page 7526]]

one of those fringe benefits being health insurance. Therefore, a 
system developed in this country of organizing health insurance around 
an employer.
  As time grew and things got more complicated, health insurance 
offered by an employer that was a large employer, with hundreds and 
thousands of employees, could offer a cheaper rate because of the 
principle of insurance; that is, you take the health risk, you spread 
it over the most number of lives, and therefore you bring down the per-
unit cost or the cost to the individual for the health insurance 
premium. Because in a much larger group, you have young and old, you 
have sick and well; instead of a group being smaller and smaller--
especially if it is a mom-and-pop store that wants to insure their 
employees--there are not many lives over which to spread that health 
risk, and therefore the cost of that health insurance is going to be so 
much more than on a large group.
  That is why we have used the Federal Employees Health Benefits Plan 
as an example we should try to achieve. There are approximately 9 
million people in that health insurance plan. So you have 9 million 
people over which to spread the health risk, and therefore you can 
bring down the per-unit cost. You can let it be private enterprise with 
the individual insurance companies competing for that business. And you 
give the consumer the choice: do they want a ``Cadillac'' policy with a 
lot of bells and whistles or do they want a ``Chevrolet'' policy, which 
is much more pared down?
  Now, that is the ideal we ought to achieve, and that is what the Enzi 
bill is trying to achieve. The problem is that the Enzi bill has a 
fatal flaw; that is, there is no regulation of the insurance companies. 
That is the fatal flaw.
  Now, I can inform the Senate, this Senator from Florida, prior to 
coming to the Senate, had the privilege--and I might say the toughest 
job in my entire adult life of public service--to be the elected 
insurance commissioner of the State of Florida. And through one crisis 
and another, you kind of, in that crucible, start to learn something 
about insurance. One of the things I learned is, if insurance companies 
are not regulated, then, guess what, insurance companies will want to 
insure the lower risk--in other words, the healthier people, the 
younger people who are not going to get sick--and if they do insure the 
sicker and the older, the price is going to go up through the roof.
  You need a regulator to regulate the business of insurance, to 
protect the interest of the public. That is why, in the 1930s, the 
McCarran-Ferguson Act, passed by the U.S. Congress, left to the 50 
States the regulation of insurance, and that is why departments of 
insurance are set up in most States--most of which, by the way, have an 
appointed insurance commissioner; very few States have an elected 
insurance commissioner--and they are there for the purpose of 
protecting the consumers of a product which is not a luxury and has now 
become a necessity. In the case of health insurance, we Americans look 
at it as almost something that is, if not a right, clearly something 
that is a necessity for the good health we all want to have.
  So what is wrong with the Enzi bill? I can tell you, there is not a 
finer Senator than Senator Enzi. There is not a finer gentleman than 
Senator Enzi. So as I have talked to Senator Enzi about the deficiency 
of his bill, the fatal flaw--the idea of pooling is great, but when 
insurance companies are not regulated, as is the case in his bill, what 
is going to happen? The price is going to get jacked up. The group is 
going to get smaller and smaller. It is going to get older and older. 
It is going to get sicker and sicker. And the insurance premiums are 
going to continue to go up.
  So I have talked to Senator Enzi, and I have said: Let's correct this 
deficiency by amending it so we impose what has been the delivery of 
insurance in this country since the 1930s; that is, the protection of 
the consumers with a regulator. But guess what. Senator Enzi is under 
the direction of the majority leadership, and the majority leadership 
says, in the consideration of this bill, they will not allow it to be 
amended.
  Now, isn't the Senate the place where deliberation is to occur? And 
if this Senator from Florida, on the basis of his experience for 6 
years as an insurance commissioner, can point out an improvement to the 
bill that otherwise, if passed and went into law, would do one thing: 
jack the rates up--exactly the opposite that all the small businesses 
that are advocating for this bill want; it would have the exact 
opposite result, it would jack the rates up--is it not the business of 
the Senate to deliberate, to consider amendments, to amend, to perfect, 
to improve, and then, hopefully, pass a much needed piece of 
legislation to give small business some relief from this accident of 
history that started at the end of World War II with the veterans 
coming home, organizing insurance around an employer?
  Small business has it rough because small business cannot afford the 
cost of the insurance.
  Now, another amendment that, of course, we would like to entertain 
happens to do with health insurance as well. But it has to do with 
senior citizens' health insurance; that is, Monday, May 15, is a 
deadline for senior citizens signing up under the new prescription drug 
benefit. Increasingly, senior citizens are anxious because they have 
this deadline they are being forced into.
  Many of them--millions of them--not the ones who have automatically 
gone into the new program under the new law--I am talking about senior 
citizens who have to make a choice, knowing they are going to be 
penalized if, by Monday, they choose a plan, and then, if it is the 
wrong plan, it cannot be changed until the end of this year. So they 
are stuck. Or if they do not sign up for this plan by Monday, May 15, 
they are going to be penalized 1 percent a month. How many months is 
that between May and the end of the year? Six or seven. In other words, 
then, when they sign up, they are going to have to pay a 6- or 7-
percent penalty. That is not right. We should not do that to our 
seniors.
  All we could do is amend this bill. OK. Do not take my position, 
which gives them to the end of the year. Well, let's give them 2 or 3 
or 4 months before the deadline comes. But the clock is ticking, and it 
is ticking down to next Monday, May 15.
  I yield to the Senator.
  Mr. KENNEDY. Mr. President, wasn't the Senator's impression that the 
prescription drug program was going to be a voluntary program? And for 
millions of people--or for hundreds of thousands in my State--people 
felt it was going to be a voluntary program. They were absolutely 
confused. We have 45 different programs with a wide variance in copays 
and deductibles with individuals on a formulary one day and off a 
formulary another day.

       I would be interested as well if the Senator would comment 
     on the General Accounting Office's report that I thought was 
     rather devastating in terms of the ability of the CMS to be 
     able to communicate to seniors about their options.

  As I understand what the Senator from Florida is saying, millions of 
Americans thought the prescription drug program was voluntary, so they 
did not think they really had to get involved in it. Then, they might 
have heard they better sign up. Now they are increasingly conscious 
about the penalty and, at the same time, we have a General Accounting 
Office report that said the ability for our seniors to understand the 
prescription drug program is a real mystery.
  How has that played out for the people in Florida whom you represent? 
How have the conclusions of that General Accounting Office report 
played out that said people would call up and they would get 
misinformation on the phone? There was confusion even among those who 
were supposed to be doing the briefings for seniors. The degree and the 
extent of confusion for seniors is because of the multiplicity of 
programs.
  I would be interested in what the Senator's experience in Florida has 
been.
  Mr. NELSON of Florida. The distinguished Senator from Massachusetts 
is

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exactly right. In my State of Florida, being one of the States that has 
the highest percentage of senior citizens, indeed, they have been 
confused, they have been bewildered, and they have been frightened. 
They are confused because there are 43 plans in Florida they are trying 
to choose amongst. They are frightened because they know if they choose 
the wrong plan that maybe does not have the drug they need, they are 
stuck until the end of the year to make a change into another plan or 
they are frightened because if they are paralyzed to the point they 
cannot make a decision by next Monday, then they know when they do make 
a decision, they are going to be penalized 6 or 7 percent on the 
premiums they are going to pay. Either way, they are going to get hit, 
through no fault of their own.
  If only we would show some compassion here. As I said, as the Senator 
was coming to the floor, you do not have to take this Senator's 
position and delay it all the way to the end of the year. Why don't we 
get some compassion and delay it a few months so that, again, the 
groups that are out there that are trying to advise the seniors--one of 
the major concerns of the senior citizens is getting the health care 
they need; and prescription drugs today means so much to them, indeed, 
to us, as well, with regard to the quality of life we are privileged to 
have not compassionately extend this deadline a few months in order to 
give some relief?
  Yet we come to the floor, we try to do that, and we are prohibited 
through a parliamentary procedure of filling the amendment tree so that 
we cannot offer these amendments, whether it be this one or the one I 
spoke about earlier which is to correct the deficiency of the Enzi bill 
and have some provision for regulation of insurance companies in health 
insurance.
  Mr. KENNEDY. I understand the President is in his home State today. 
Given the track record of the administration and the mismanagement of 
the prescription drug program and the fact that there is genuine 
concern and confusion among seniors, what reason did the administration 
give you for not following your extremely reasonable, sound suggestion 
that could make a difference for seniors all over the country?
  Mr. NELSON of Florida. I thank the distinguished Senator for his 
question. The answer is, I have asked representatives of the 
administration in two different committees this same question. The 
answer comes back, cold-heartedly: We have a deadline. We have to 
enforce that deadline or people will not make a decision.
  I understand the necessity of a deadline. The nature of human beings 
is that we often procrastinate. But there are compassionate exceptions 
that ought to be considered. This is one. Coming from a State, as I do, 
with a high percentage of our population made up of senior citizens, 
this certainly ought to be a compassionate exception.
  Mr. DURBIN. Will the Senator yield for a question?
  Mr. NELSON of Florida. I am happy to yield to the distinguished 
assistant minority leader.
  Mr. DURBIN. I understand we are only about 5 days away from the 
deadline for people to sign up for Medicare prescription Part D. I know 
the Senator has joined me and others in suggesting this program could 
have been done differently, a lot fairer, a lot simpler, could have 
more competition so that seniors would have had even lower drug prices. 
Sadly, major parts of it were written by the pharmaceutical industry 
and by the insurance industry.
  I know the Senator from Florida has spoken to many seniors, as I 
have, and knows that as they have tried to understand the program and 
sign up for it, some of them have been overwhelmed. In Illinois, there 
are over 45 different programs from which to choose. I talked to 
pharmacists, who are a good source of information, who tell me the 
seniors come in, throw up their hands, and say: What are we supposed to 
do?
  I ask the Senator from Florida, when you reflect on the fact that 
there are some 35.8 million Medicare beneficiaries who have drug 
coverage, according to the administration, isn't it true that 70 
percent of those people--more than 26 million--already had prescription 
drug coverage before this program was underway? And of the 16 million 
who previously did not have coverage, about 10 million or so have 
signed up. So we still have about 6 million of the 16 we were trying to 
sign up for drug coverage--sounds to me like a substantial percentage, 
6 million--who have not signed up at this point, about 40 percent. They 
are facing a penalty.
  Do I understand the Senator from Florida has joined with others, 
including myself, in legislation extending the deadline for signing up, 
also saying to the seniors: If you made a mistake in choosing a 
program, we will give you a makeover, a do over, so that you can change 
the program within 1 year without penalty? I ask the Senator to 
explain.
  Mr. NELSON of Florida. The distinguished Senator from Illinois 
understands correctly. If the deadline were extended until the end of 
the year, the administration's own figures are that an additional 1 
million-plus senior citizens would sign up of that group of 6 or 7 
million. If that is a million seniors who would not suffer the economic 
hardship of an additional 6 or 7 percent penalty or the economic 
hardship of not being able to have the right drug they need because 
they signed up with a mistaken decision of a wrong formulary, then is 
that not worth it for the sake of the senior citizens to grant a 
compassionate extension?
  Mr. DURBIN. I ask the Senator from Florida, does he believe, as I do, 
that if we would have allowed the Medicare Program to bargain with the 
drug companies to get, by bulk discount, the lowest prices for seniors, 
just the way the Veterans Administration does, that the end result 
would have been at least one kind of standard program, Medicare 
Program, with lower prices which other private companies could have 
competed with, if they chose? Wouldn't that have offered the lowest 
price to the seniors and one simple standard program to turn to if they 
had any doubts about the right choice?
  Mr. NELSON of Florida. The Senator is correct. As a matter of fact, 
it is something the Federal Government has been doing for over two 
decades in the Veterans Administration. The Veterans Administration 
buys prescription drugs in bulk. As a result, the cost to veterans is 
$7 per month for their prescription drugs. Using the law of economics 
in the private free marketplace, buying drugs in bulk, you can 
negotiate the price down. But when this body passed the prescription 
drug bill 3 years ago, Medicare, the Federal Government, was prohibited 
from purchasing in bulk and negotiating the price down.
  Mr. DURBIN. How much time remains, Mr. President?
  The PRESIDING OFFICER. Less than 1 minute.
  Mr. DURBIN. The administration has argued the reason they didn't let 
Medicare bargain down in bulk discounts is because they wanted the 
market to work its will. Am I correct in remembering that they also 
appropriated hundreds of billions of dollars to subsidize the insurance 
companies that were going to offer this? Is that kind of massive 
Federal subsidy consistent with free market economics?
  Mr. NELSON of Florida. The Senator's point is not only correct, but 
it is so pointed that anyone who hears it should suddenly say: Ouch.
  Mr. DURBIN. I thank the Senator.
  Mr. NELSON of Florida. Mr. President, I yield the floor.
  Mr. FRIST. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BURR. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Isakson). Without objection, it is so 
ordered.

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