Prescription Drug and Medicare Improvement Act of 2003 - Continued

PRESCRIPTION DRUG AND MEDICARE IMPROVEMENT ACT OF 2003—CONTINUED

Mr. KENNEDY. I commend Senator DODD for offering this important amendment today. This amendment will address one of the gaping holes in this plan—its failure to treat retirees and retiree health plans fairly. Today, we have the opportunity—and the obligation—to correct that unfairness.

Ten million senior citizens depend on retiree health plans to fill the gaps in Medicare. Especially given the limitations of the drug benefit we are debating, supplemental coverage from retiree health plans is crucial. But retiree health plans are being abandoned or cut back all over the country—and prescription drug costs are a key part of the problem. For retirees who are over 65, prescription drugs make up about half of all plan costs—and as much as 80 percent of recent cost increases.

But the prescription drug plan before us treats those plans unfairly, by taking the unprecedented step of making senior citizens with retiree health plans second class citizens under Medicare. The Congressional Budget Office has concluded that even with the new assistance provided under this plan, one-third of all retirees—4 million senior citizens—could lose their supplemental drug coverage. That should be unacceptable to every Senator.

The issue is not one of providing a bail-out or a windfall to retiree health plans. It is one of simple fairness. Currently, whenever Medicare covers a benefit or service, Medicare is the primary payer for that service. If a retiree health plan covers the service, it pays only for what Medicare does not cover.

The reason for that is straightforward. Employers pay taxes to support the Medicare Program. So do retirees. So do active workers who accept lower wages during their working years in order to have supplemental retirement health care in their retirement years.

But under this legislation, these workers and these employers do not get the full benefit of their contribution to the drug benefit. Because of the "true out-of-pocket" concept included in the bill, Medicare does not pay for catastrophic expenses of these workers, even though the cost of covering these expenses accounts for more than one-third the cost of the current bill.

And the higher the costs the retiree faces, the more the discrepancy between what Medicare pays for the retiree with employer-sponsored insurance and what Medicare pays for all other senior citizens grows. If the individual's drug costs are $6,000, Medicare pays $2,113 for the retiree with insurance but $2,281 for all other senior citizens. If the individual's drug costs are $8,000, Medicare still pays $2,113 for the retiree with employer-sponsored insurance, but $4,081 for all other senior citizens. And if the individual's drug costs are $10,000, Medicare still pays just $2,113 for the retiree, but pays $5,881 for all other senior citizens.

This is double taxation at its worst. These retired workers and companies are taxed twice. They pay once to support the Mecicare program. Then they are forced to pay again by being denied the Medicare benefits their contributions have earned. During the debate on the tax bill we heard a lot about the injustice of double taxation of dividends from the other side of the aisle. Apparently, for them, double taxation of the unearned income of millionaires and billionaires is wrong, but double taxation of moderate income retired senior citizens is just fine.

The fact is that it is not fine. The American people understand that it is wrong. American companies struggling to provide for their retired workers in this sour economy understand that is wrong. The Senate should understand that it is wrong, too, and right this injustice.