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Public Statements

Kennedy, Stabenow: Give Seniors the Medicare Prescription Drug Benefit They Deserve

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Location: Washington, DC


KENNEDY, STABENOW: GIVE SENIORS THE MEDICARE PRESCRIPTION DRUG BENEFIT THEY DESERVE

NEW MEDICARE PERSCRIPTION DRUG OPTION WILL LOWER PRICES, GIVE SENIORS A REAL CHOICE

**STATEMENT, FACT SHEET INCLUDED**

WASHINGTON— U.S. Senators Edward Kennedy (D-MA) and Debbie Stabenow (D-MI) today announced legislation to offer a streamlined, user-friendly prescription drug benefit administered directly through Medicare. The new benefit will offer seniors and people with disabilities a real choice that alleviates many of the problems with the new Medicare Prescription Drug program.

"Instead of the Medicare program that seniors know and trust, the Administration and its allies in Congress turned the drug benefit over to the drug and insurance industries," Kennedy said. "Instead of allowing Medicare to bargain for discounts on prescriptions as the VA does, they made negotiations prohibited." "The program was unsatisfactory to start with, and its implementation was so incompetent that President Bush didn't even mention it in his State of the Union Address," said Kennedy. "Seniors across the country have been denied the medicines they need, or forced to pay excessive costs to fill their prescriptions. It's time to fix these failures. Our proposal gives seniors a real choice, by adding drug coverage to Medicare's coverage of hospital and doctor's bills. It ends the outrageous ban on bargaining for discounts on drug prices. It's a realistic solution to the Administration's failed approach."

"I have received thousands of calls and letters from people across Michigan about the trouble they are having with the new program," said Stabenow. "And while the Administration must take action to fix these problems, the one choice that seniors want is the one choice they don't have -- a comprehensive, affordable prescription drug benefit administered by Medicare. Our bill will give seniors the prescription drug benefit they deserve -- one that works for them, not against them."

The Stabenow-Kennedy bill will establish a standard prescription drug benefit administered directly by Medicare. Seniors who choose this option will have a modest deductible and co-payments for prescriptions, without any gaps in coverage. The benefit would also provide protection for seniors against drug costs above $5,100 per year. Everyone who chooses the Medicare-guaranteed option would pay a low, uniform monthly premium, regardless of where they live.

By instructing the Secretary of Health and Human Services to negotiate prices directly with pharmaceutical companies on behalf of those enrolled in the Medicare-guaranteed option, the Stabenow-Kennedy bill will help lower prescription drug costs. Negotiating group prices will result in lower expenses for seniors and savings for taxpayers.

Additional sponsors of the Stabenow-Kennedy legislation are Senators Hillary Clinton (D-NY), Carl Levin (D-MI), Frank Lautenberg (D-NJ), Daniel Akaka (D-HI), Frank Lautenberg (D-NJ), Barbara Boxer (D-CA) and Mark Dayton (D-MN).

STATEMENT OF SENATOR EDWARD M. KENNEDY INTRODUCTION OF MEDICARE BILL

It's a privilege to join Senator Stabenow in introducing a bill to cure the serious defects in the Medicare prescription drug law.

Passage of Medicare was one of the great triumphs of public policy of the past half-century. In 1965, Congress and the President made a solemn promise to every senior citizen that if they worked hard and played by the rules, they would be assured of quality health care in their golden years.

In 1965, medical care primarily involved doctor visits, hospital stays, and nursing care, and these were the costs that Medicare covered. Few illnesses were treated with costly drugs. Four decades later, medicine has changed dramatically. Thanks to extraordinary breakthroughs in the life sciences, we now have a range of miracle drugs to treat a wide range of dangerous health conditions and illnesses that were once untreatable or required costly and invasive surgery.

As a result, the great unfinished business of Medicare in recent years has been to provide coverage for the drugs that millions of seniors need to protect their health and save their lives. After years of growing controversy and increasingly burdensome costs for seniors, the Senate finally acted last year to provide that coverage, but the bill was hijacked by the most doctrinaire elements of the Administration and its allies in Congress and the pharmaceutical and insurance industries.

Instead of the Medicare that seniors know and trust, the drug benefit was turned over to these special interests. Instead of allowing Medicare to bargain for discounts on prescription drugs, as the Veterans Administration does for drug for veterans, such bargaining for lower costs for seniors was made illegal.

The result has been a disaster. The bill that passed was a nightmare of complexity and confusion. Seniors across the country were denied the drugs they need, or were forced to pay exorbitant fees to fill their prescriptions.

The program was such a debacle that President Bush did not even mention it in the State of the Union.

But the budget the Administration sent to Congress a few days ago contains this incredible statement: "The Medicare prescription drug benefit is off to a good start."

Off to a good start? What world is OMB living in? Only an insurance or pharmaceutical company executive could say something like that.

Try telling that to seniors across the nation who have struggled to make sense of the baffling array of the plans and the uncertain coverage for the drugs they need.

As Linda Milligan of Lebanon, Oregon, a 66-year old breast cancer survivor, said of her efforts to get the drugs she needs: "I spent three hours a day for two weeks phoning different agencies, and everyplace I called they just passed me on to someone else. I'm just about to have a nervous breakdown." Arlene Arterio of Medford, Massachusetts, said, "I've been on Medicare since 1994, and I'm going crazy trying to figure out what's what with this new drug program. Each time I call, the information is different."

To Janet Chrismore, a pharmacist from Charlottesville, Virginia, the drug program is hardly off to a good start. She knows low income seniors who were told they'll have to pay hundreds of dollars for their prescription drugs. These are her words: "I had one patient whose monthly co-pay went from $51 to $943. Most elderly people can't absorb that kind of increase into their budget." Chris Venier, a pharmacist in Lexington, said of the program: "It's a disaster. Last Friday, one company help line said they couldn't process the call and instructed me to hang up. Then, the help line was closed for the weekend. Medicare is not getting the job done right."

Try telling Edmund Burke of Quincy, Massachusetts, that the program is going well. He's 79 years old and he has to figure out which of the 41 plans in his area cover the six medications he takes every day.

It is no surprise that the Administration is ignoring the facts when it comes to Medicare. They have a long and sorry history of ignoring facts that don't fit their ideology. It's the kind of fundamental incompetence that has led to disaster after disaster in both our foreign policy and our domestic policy.

The White House was warned about the dangers of their inadequate plans for Iraq -- and yet did nothing to avert danger.

The White House was told of the imminent peril of Hurricane Katrina -- but took no action.

We're now in the second month of the new drug program and it's clear that -- despite the warnings -- the Bush Administration was totally unprepared.

They even paid for phony news stories to try to convince the country that their plan was a winner.

Leading figures in the Republican party have claimed that the problems with the drug plan were "inevitable" and "unpredictable", as Secretary of HHS Leavitt said. That's just not the case. The problems weren't unpredictable at all -- they were clearly predicted and just as clearly ignored.

Democrats, seniors, and public health leaders warned the Administration time and again that a Medicare drug plan stuffed with giveaways for the drug companies and the HMOs was a prescription for disaster -- but the Administration did nothing. It's time for the Bush Administration to stop making excuses. It took less than a year from the time President Lyndon Johnson signed Medicare and Medicaid to get those programs up and running and that was before the days of computers.

The President says he wants a bipartisan solution on health care. Let's start right here. Let's start by addressing the crisis caused by the botched Medicare prescription drug program.

We know what the problems in the drug benefit are, and we can fix them. The legislation that Senator Stabenow and I are introducing—the Medicare-Guaranteed Prescription Drug Act -- will give every senior citizen in every community in the nation a choice. They can continue with their current plan if they feel it's satisfactory, or they can stay in traditional Medicare and obtain drug coverage as well. No longer will they have to rely on a bewildering array of private plans to meet their need for drugs. In large cities and small rural areas, from Maine to California, to Alaska and Hawaii, Medicare will be there for every senior who wants it.

The Bush Administration and its allies in Congress say they believe in competition, but they refuse to put it into practice. If those who wrote this bill are so sure that private plans can do a better job of delivering prescription drug coverage than Medicare, why not put it to the test?

Real competition would let senior make a free choice between private plans and the Medicare they know and trust.

There will be some who argue that this proposal reduces choices. Nothing could be further from the truth. It doesn't restrict choices -- it expands them by allowing every senior to choose to stay with Medicare if they wish to do so. It gives the guarantee of Medicare to the countless seniors who deserve a better deal.

Our bill also reverses one of the most flagrant abuses of the Administration's plan—its outright ban on allowing Medicare to bargain for a senior discount on drugs. That provision is so contrary to common sense and the public interest that most people hardly believe you when you tell them the Administration insisted on it.

The Bush plan actually makes it illegal to try to negotiate discounts on drug prices for senior citizens. Companies across America negotiate on the prices they pay for the goods they buy. It's the way free markets work. But can Medicare negotiate for the price of the drugs it buys for seniors? No—the Republican Medicare law makes it illegal.

Why did the drug companies insist on prohibiting Medicare from negotiating discounts for seniors? For the obvious reason—they were afraid it would work. They were afraid Medicare would get a better deal for seniors than the private companies that will administer the drug benefit under the new law.

Obviously, private companies serving a small part of the national market have less ability than Medicare to get a good deal for seniors. Medicare serves the national market. Just as national chain stores get better deals than local stores on products, Medicare could get a better deal on the price of drugs for seniors.

We know that when federal agencies negotiate for drug price discounts, they get them. The Veterans Administration does it. It serves millions of veterans, and the quality of care it provides is among the best in the nation. VA care is more cost effective than most private health systems can provide. How does the VA do it? Part of its success is good use of information technology. Another large part is the good deal it gets on the prescription drugs it provide for our veterans.

Like any business, the VA tries to get the best deal it can on the drugs it buys—and it succeeds.

If consumers walk into a pharmacy to buy Mevacor for high cholesterol, they have pay $4 a pill. The VA negotiated a price of only 26 cents a pill. For Plendil, for high blood pressure, the VA price is 46 cents a pill, but the retail price is $2.37 cents. For Zantac, the retail price is $1.83 a pill, but VA gets it for only two cents a pill. Two cents!

Some of those who argue against our bill say it's wrong to compare the VA price to the full retail price, and we should really compare the VA price to the price negotiated by private companies.

Every Member of Congress is eligible for the Federal Employees Benefit Plan. That's run by private companies. If the opponents of this bill are right, then the federal plan should do as well as the VA in getting discounts on drug prices. But they don't.

Private plans in the Federal Employees Program get an average discount of 18% on the drugs they obtain. As Members of Congress we obviously benefit from these lower prices. VA does over 3 times better—it obtains average discount of 55% on the drugs it buys for veterans. Some opponents of our proposal claim that private plans will do even better than Medicare in negotiating discounts for seniors.

That's ideology talking—the facts say otherwise. Blocking Medicare from negotiating prices for drugs will cost seniors billions of dollars in needless extra spending on excessive prices for prescription drugs—dollars that needlessly exacerbate the glaring inadequacies in the drug benefit.

It's time for all of us in Congress to work together to fix the failures of the Medicare drug law. Let's give seniors a real choice by allowing them to stay in traditional Medicare. Let's end the outrageous ban on bargaining for price discounts. Let's give real help to millions of seniors who face soaring costs for the prescription drugs they clearly need to protect their health. I urge the Senate to act quickly on the legislation that Senator Stabenow and I are offering.

THE MEDICARE GUARANTEED PRESCRIPTION DRUG ACT

Passage of Medicare was one of the great triumphs of public policy of the past half-century. In 1965, Congress and the President made a solemn promise to every senior citizen that if they worked hard and played by the rules, they would be assured of quality health care in their golden years. In 1965, medical care primarily involved doctor visits, hospital stays, and nursing care, and these were the costs that Medicare covered. Four decades later, medicine has changed dramatically. We now have a range of miracle drugs to treat a wide range of dangerous health conditions and illnesses that were once untreatable or required costly and invasive surgery.

As a result, the great unfinished business of Medicare in recent years has been to provide coverage for the drugs that millions of seniors need to protect their health and save their lives. Sadly, the Republican Medicare bill failed to live up to the promise of Medicare.

Instead of the Medicare that seniors know and trust, the drug benefit was turned over to HMOs and other insurance companies. Instead of allowing Medicare to bargain for discounts on prescription drugs, as the Veterans Administration does for drug for veterans, such bargaining for lower costs for seniors was made illegal.

The result has been a disaster. The bill that passed was a nightmare of complexity and confusion. Seniors across the country were denied the drugs they need, or were forced to pay exorbitant fees to fill their prescriptions. The time has come to address these serious flaws and give seniors the Medicare drugs benefit they deserve.

To address these serious problems, the legislation:

• Gives every Medicare beneficiary the choice of receiving their drug benefit through traditional Medicare, with a formulary that is not allowed to change from day to day or state to state.

• Allows Medicare to negotiate the same good discounts on drug prices that the VA gets for veterans.

• Establishes a consistent nationwide premium for Medicare drug coverage.

• Reduces the annual deductible for drug coverage.

• Increases the share of seniors' drug costs that Medicare will pay.

• Eliminates the so-called "doughnut hole" that will force seniors to bear the full costs of their drugs one a minimum is reached.

Provides true security against runaway costs by assuming the full costs of drug purchases once a maximum out of pocket spending limit is reached

Stabenow-Kennedy Medicare-Guaranteed Prescription Drug Option

The one choice seniors don't have under the current program is the one they want.

Medicare beneficiaries should always have the choice to stay in traditional Medicare and have a comprehensive, affordable prescription drug benefit administered by Medicare.

A Real Choice

The Stabenow-Kennedy legislation would establish a Medicare-operated prescription drug plan in each region of the country. Seniors could continue to choose one of the many new private insurance plans currently being offered, or, they could choose to receive their prescription drug benefit through the traditional Medicare program.

The legislation simply gives seniors and people with disabilities the choice to get their prescriptions filled through traditional Medicare. A Meaningful, Standardized Benefit The Stabenow-Kennedy legislation would establish a standard benefit based on the current Part B benefit: a modest deductible, 20% coinsurance, without any gaps in coverage. The benefit would also provide protection against catastrophic drug costs and would not require any cost-sharing above the out-of-pocket threshold. Seniors enrolling in the Medicare-guaranteed option would get the standard benefit, and would have the peace of mind of knowing they are receiving coverage similar to the coverage they have today for their physician and other Part B benefits. Private plans could provide the new standard benefit, or any actuarially-equivalent package, as they do today. Plans could continue to offer multiple variations of deductibles and coinsurance levels. Affordable Coverage, Affordable Prices All seniors choosing the Medicare-guaranteed option would pay a uniform, low monthly premium, regardless of where they live. The Stabenow-Kennedy bill will also reduce drug prices by instructing the Secretary of Health and Human Services to negotiate prices directly with pharmaceutical manufacturers on behalf of beneficiaries choosing to receive their drugs through the Medicare-guaranteed option.

Seniors choosing to enroll with a private insurer would continue to pay the prices determined by the insurance company.

http://kennedy.senate.gov/index_high.html

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