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Public Statements

Prescription Drug and Medicare Improvement Act of 2003—Resumed

Location: Washington, DC

Mr. President, I thank the distinguished ranking member and congratulate both him and Senator Grassley on what is obviously an extraordinarily important, complicated, and difficult road—to try to move toward prescription drug coverage for seniors in America. I wish to share a few words, if I may, at the outset, before moving specifically to the amendment, and to talk generally about the bill itself.

Obviously, all across our country we have accomplished an extraordinary service for seniors through what we have achieved through Medicare. It is one of the great social programs of the United States of America. I can remember years ago a shared responsibility by Republicans and Democrats alike. I think it was President Nixon who signed the enormous proportion of it into law in the beginning of the 1970s. We lifted a great many seniors in this country out of poverty as a consequence. It has benefited millions of Americans who would otherwise go without quality health care and otherwise either be forced into poverty or remain in poverty. The face of poverty in the United States of America changed because of this program.

I might add that it is a Government program. Often, the Government comes under great criticism. But the truth is that this is a program that has worked, a program that has made a difference in the lives of our fellow Americans, and a program that a large proportion of America appreciates, respects, and doesn't want to see destroyed. I think we have a duty to try to strengthen and improve the program by adding a comprehensive, affordable, and guaranteed prescription drug benefit to Medicare.

Notwithstanding the very best efforts of the chairman and ranking member and others on the committee on which I serve, there are still questions as to whether this in fact does that at this point in time.

That doesn't mean it isn't perhaps for some people worth voting for. I haven't made a final decision with respect to final passage. That may depend somewhat on what we achieve over the course of these days. But we need to put to the test the question of what we are doing versus what we could do. This is a fair standard for us to try to measure.

My concern today is that the underlying bill as currently drafted is a good start, it is a good foundation, but it doesn't fulfill the full measure of the promise of comprehensive, affordable, and guaranteed in ways in which I think we could do it. Our Nation's seniors, I fear, will experience a very severe case of sticker shock when they learn how far the bill falls below their expectations for relief.

Also, I wish we did not have to wait until 2006. I have serious questions about why, given it took us only 11 months to set up Medicare itself, it takes us 2½ years to set up the Medicare drug benefit. Frankly, it is beyond my acceptance of what is a legitimate reason. I know the reasons. I have heard the reasons. But think about that: We set up the entire Medicare Program in about 11 months, and now we are told to add a benefit within it, we ought to wait about 2½ years. I think it has far more to do about budgets and far more to do about elections than it does with the realities of what we need to do.

Seniors, obviously, need this relief. Nearly 40 percent of Medicare beneficiaries report having no—zero—prescription drug coverage. And the average amount they pay out of their own pocket for prescription drugs has increased from $644 in the year 2000 to $996 in 2003. These expenses are projected to grow to $1,147 in 2004 and $1,454 by 2006, which is the year when the benefit actually gets implemented. So we are talking about a much larger bill than we have today.

People who are measuring this bill by what we have today are actually measuring it short of what the need is because the need is going to be the year of implementation, 2006, and then we will have more than doubled the amount that individuals are paying for prescription drugs. That means the average annual out-of-pocket spending by seniors for prescription drugs will have doubled over that period. And I think seniors are to going to question: Well, if they all knew that, why am I still having such a hard time paying for prescription drugs?

Now, again, I want to underscore, I know how hard it is for the chairman and Senator Baucus to try to do this. And the reason it is so hard is because we have been given an arbitrary number. And I will say something more about that in a minute.

Let me say, for a moment, what I think is good that we have accomplished. No. 1, we have rejected President Bush's efforts to force seniors into private plans. We have rejected the President's plan to disadvantage seniors who want to stay in traditional Medicare and to keep the same doctors they have now. We have rejected the President's plan to give a windfall of incentives to PPOs to encourage their participation in the program. And we have adopted certain longstanding Democratic principles that include significant cost-sharing protections for low-income beneficiaries, a guaranteed fallback plan, and some key efforts that are targeted at improving the traditional fee-for-service benefits under Medicare.

But there are concerns I expressed in my "no" vote in the Finance Committee, and I want to express those concerns now on the Senate floor.

First of all, there are crucial areas I would hope we would try to find a way to improve. The most important of those is this gap in the coverage, in the donut hole as it is called, where seniors are charged a premium, but they do not get anything for the premium.

It seems to me there ought to be adequate protection to ensure, also, that employer coverage is not substituted or dropped. We do not want to create a situation where employers are covering people today, but because you have a fallback situation, they may decide, OK, we are going to drop that coverage, and, in fact, people are downgraded in what is available to them because there are not enough private people coming in to make up for that; therefore, the fallback is what they get. In addition, we must improve the stability of the fallback plans to minimize confusion and inconvenience to seniors.

Finally, I think we have to protect lowest income seniors by making sure they, too, can get the Medicare benefit. We ought to guarantee—or do our best to guarantee—a uniform national premium, somehow, for that benefit, and try to eliminate the new increases in beneficiary cost sharing under traditional Medicare and be more aggressive about providing additional benefits under the program.

But the stark reality is, all of these constraints are not the fault of Senator Baucus or Senator Grassley. There is a reason we are operating under this straitjacket where we have had to tell a bunch of seniors they are going to pay a premium, they can buy insurance, they get to buy insurance up to $3,000—whatever it is—$4,500, and then they stop, but they continue to pay premiums. They continue to pay, but they are not going to get any benefit. They have to go back and start paying their full premium. But then when they get up to the $5,800 of catastrophic level, it begins to cut back in.

The reason we are there is fundamentally that $400 billion is all the Congress was given to deal with this—the arbitrary: Let's pick a number. Here is what we will put into prescription drugs.

I think every American has a right to ask—and they will ask over the course of the next years—why they were limited to $400 billion when the U.S. Congress chose to take $3 trillion off the table in tax cuts that went to upper income Americans over the course of the last 2 years.

Now, that is a fair question. That is the choice in America today. We make choices. People sent us here to make choices. And the choice made on behalf of the American people is that it is more important to reward people earning $315,000 a year than to make certain a lot of seniors don't have a donut hole in their coverage in prescription drugs.

When I heard Senator Craig Thomas a moment ago say not that many seniors are going to be left out, I said, well, that is interesting because in the next breath he said we can't afford it because it is going to cost $200 billion. Well, if it costs $200 billion, it sounds to me as if somebody is being left out to a pretty large amount of money.
You cannot have it both ways. If it is expensive, it means it is meaningful to a lot of people. And if it is meaningful to a lot of people, we ought to be thinking about why we are not doing it.

Warren Buffett—the second richest man in the United States of America—wrote a letter a couple weeks ago where he said: Well, I own my own company. And now that I own my own company, and I've been given this very nice dividend benefit by the Republicans, I can pay myself $1 billion. And when I pay myself $1 billion, I'm not going to have tax, in this first year, on $365 million of it. It's tax free. That's it. He said he thought it would have been better to give 365,000 families in America $1,000 each. He did not think he ought to get that benefit.
Now, I think it is going to be fair for a lot of seniors in this country to ask the question, as we go forward, why Warren Buffett thinks that, and a whole bunch of people here think it is OK to do something else.

So if we are going to offer a prescription drug benefit that stands the test of time, the test of coverage, the test of fairness, and ultimately the test of the compact that Medicare created with our seniors, I think we ought to try to eliminate the coverage gap in this bill.

I think it is hard to turn to a senior at some point in time and say: Look, we want to help you buy drugs, but we are only going to help you up to the point where it gets really expensive. Then, when it gets really expensive, you are going to have to start carrying the bigger weight until it gets really, really expensive, and then we will come back and help you. It seems to me a lot of seniors are going to be asking questions about that choice.

I think we also could do better in protecting seniors with retiree coverage. The current bill contains a flawed definition for the true out-of-pocket costs by prohibiting any drug spending payments made on behalf of Medicare beneficiaries by an employer-sponsored plan from counting toward the stop-loss threshold.

In other words, they have an employer. That employer has given them a plan as a retiree, and they retire. They are qualified for Medicare. They paid into their retiree plan. It is their deal. But that is not now going to count toward their out-of-pocket expense. So they could, in fact, be left without the coverage that they deserve as a consequence of this definition. And that means that retirees covered under employer-sponsored plans will likely never reach the stop-loss threshold, and they will effectively be denied benefits under the catastrophic portion of the Medicare plan, even though they qualify for Medicare and worked just like everybody else for retirement and put money into the system.

Seniors who have retiree prescription drug coverage from their former employer worked a lifetime. They made wage concessions over the years, with the expectation they were going to receive those benefits. This bill comes along and, in effect, denies them benefits and treats them unequally in the context of the Medicare plan. It is unfair to change those rules after the fact. We ought to try to change it and reward employers who do the right thing and provide retiree coverage for their employees.

We also ought to try to strengthen the guarantee of a fallback plan and provide seniors with more stability and less confusion. Under the current bill, when a fallback program is available, it may not be available for very long. Medicare beneficiaries who are in the fallback program and like it will have to leave that program if two private insurers decide later to serve their region. In other words, the bill says there is only a fallback if you don't have two providers. But the minute you have two providers in a region, people who may have gone into the fallback program will have to turn around and leave the fallback program because there are now two providers, even if the two providers are providing more expensive premiums than they had in the fallback. So they will be forced out of their fallback into a more expensive plan which a lot of seniors are going to find both oppressive as well as very confusing to them as to why they have to do that.

Some people are going to argue there is another area of concern. That is how we treat low-income seniors in this bill. These are our most vulnerable and poorest seniors. They are eligible for both Medicare and Medicaid. But under the bill, they are going to get their benefit from the Medicaid Program. They won't be allowed to go into the Medicare Program because they are poor.

Some people are going to come to the floor and say: Wait a minute, a lot of States offer a better benefit in Medicaid. It is true. Some do. But we are not offering them an option. We are telling them they have to get it from Medicaid. And the problem is a whole bunch of States have a very limited Medicaid drug benefit. For instance, in the State of Texas, the benefit covers only three prescriptions. That is not a lot of protection. So we are forcing people into Medicaid in a State where, because they are poor, they have to take Medicaid, and they may only have three prescriptions available to them in the whole program. We are asking for trouble if that stays the way it is.

Moreover, we all know a lot of States are facing the worst deficits in a generation. That means States are beginning to cut back their benefits. There isn't one of us who hasn't seen a State where a Governor is forced to start to clip back on Medicaid. That means we are going to see higher copayments. We will have tighter formularies, more bureaucracy, and we will not necessarily be achieving the goal we are seeking.

Requiring low-income seniors to stay in a Medicaid prescription program is a bad deal for seniors because of the States that provide an inferior prescription drug benefit in Medicaid. We are now essentially creating the very thing we have always tried not to do. We are creating a second-class tier of citizens based on their income within the Medicare Program. We will for the first time say to seniors who paid into Medicare through a lifetime that just because now in their old age, because of their low income, they are going to have to accept a lesser benefit. That is wrong. For the first time in the history of the Medicare Program, seniors will be denied a benefit simply because of their income. It is a terrible precedent. It strains the social compact that was the foundation of Medicare in the first place.

Another concern in the underlying bill is the lack of the guaranteed premium or uniformity of it. Under this legislation, insurance companies providing the new drug benefit have the freedom to design their prescription drug plan. That is great. I am for the marketplace. I am all for companies offering a private prescription plan to the degree they want to or choose to or can. They can decide what premiums and copayments they want to charge. But the point is, under Medicare, we have always decided there was a fundamental compact with seniors for which they could pay and which ought to have some uniformity of treatment in essence. What we are doing now is throwing that whole sense of the system into the competitive structure of sometimes very limited choices which may ratchet up prices in a way that is going to become very complicated for a lot of Senators and Congressmen to explain to seniors who are used to the Medicare plan being something different in the context of the compact.

The bill promises an "average premium" of about $35 per month. But premiums are obviously going to vary from region to region in the country which means some seniors may pay $39 a month in Alabama, maybe $40 a month in Tennessee, but be charged $160 in New York. I believe we have to be very sensitive and thoughtful about what happens to people on fixed incomes. This is not your average marketplace. This is not a place where people even have the same set of choices.

When a senior on a fixed income winds up with high blood pressure, diabetes, perhaps prostate cancer or a mastectomy, any number of different problems that seniors cope with, they are forced into an economic status, not choosing to get into one. The question is whether we are going to do our best to try to protect them from that kind of volatility.

It is estimated in the first year of the program, approximately 35 percent of the Part D beneficiaries are going to pay more in premiums and out-of-pocket cost sharing than they will save from the new drug benefit; 35 percent will pay more than they are going to save from the new benefit. And to add insult to injury in that context, the bill doesn't just fail to provide an affordable, comprehensive drug benefit, but it also increases cost sharing for other Medicare benefits.

In that context, there are two troublesome cost-sharing requirements. It increases the Medicare Part B deductible from $100 to $125. And then it indexes it by inflation and permits a new coinsurance for clinical laboratory services. That means Medicare beneficiaries will be asked to carry the burden of an additional $24 billion in new cost-sharing requirements over the next 10 years. Wait until your grandmother finds out about that one.

For all of my concerns, we have certainly come closer than we have been at any time in recent years to trying to achieve the great goal of putting prescription drugs into some kind of Medicare benefit. I believe with additional persistence, with additional negotiations between us and the administration, we could make those concerns I just expressed go away or we could mitigate them. We could diminish them. I intend to support a number of amendments on the floor seeking to do that.

I have an amendment I have just called up that seeks to do one part of that. Let me explain it very quickly. I want to talk about an amendment I have and I will get to the one I just called up in a moment.

We have talked for a long time in the Senate about mental health parity. It is a goal we really want to achieve in this country. Senator Domenici has been a champion for it. There have been bipartisan efforts to try to get there. I would like to see us end the discriminatory practice of charging seniors in Medicare a 50 percent copay for mental health services, when we only charge a 20 percent copay for the other physician services. Too many seniors have mental illnesses that go untreated, and we should try not to make that worse by making it harder for people to be able to get the care.

I have an amendment to bring parity for mental health services for seniors. I am also working with Senator Sununu to try to improve the Medicare benefit by adding vision rehabilitation services to the list of covered services.
I am also pleased to join with Senator Hutchison and Senator Kennedy as a lead cosponsor of an amendment to increase the Medicare indirect medical education—so-called IME—payments for teaching hospitals. I appreciate very much the efforts of Senator Baucus and Senator Grassley to try to accommodate us to find a way to deal with this issue. It is a critical issue. Teaching hospitals incur a different set of costs, and you cannot measure the Medicare reimbursement against the expenses of the hospital in the same way.

Fifty percent of the doctors in Montana were taught at hospitals in, I think, 11 or 12 States, including Massachusetts, New York, California, and a few others in the country. So 11 or 12 States are spending money in their teaching hospitals to provide the benefit to the rest of the country of that quality medical education. When 50 percent of the doctors in Montana were educated in 11 or 12 States, Montana has a benefit, but it is not measured in the Medicare reimbursement. We need to make up that difference so we can continue to have the quality medical instruction and education in our country from which every American benefits.

In the spirit of improving this legislation, the amendment I offer today, which has bipartisan support, would dramatically improve the bill for some of the things I said I think are problems. It does it for very little money.
My amendment will help seniors who are in the coverage gap. What it does, it doesn't fill the whole "donut," but it will offer significant help to seniors who fall into the donut by expanding access to the existing prescription drug safety net.

The Federal Government currently sponsors a discount prescription drug program for those qualifying entities, such as a community health center or a public hospital or the Ryan White grantees, and others. Under this program, which is known as the 340(b) covered entities program, they have access to discounted prescription drug pricing for their patients in the program. In other words, if you have a community health center and your community health center has an in-house pharmacy, they could fill the prescriptions for seniors at discounted rates. They are allowed to do it. We have already had that under law. The problem is, we know a whole bunch of community centers and public health hospitals don't have the in-house pharmacies.

The benefit of this is to provide drugs that are significantly lower than the retail and wholesale prices. Based on a recent analysis of 200 very popular drugs, under 340(b) prices, on average, those drugs were 54 percent lower than the average wholesale price. Another recent survey showed that 340(b) prices were 24 percent lower than those available to groups purchasing as group organizations. So it is a sound program, but it is underutilized. Not all health centers and hospitals have an in-house pharmacy.

One of the biggest barriers to participating in 340(b) for many of the qualifying entities is the very expensive upfront capital cost of putting in place a pharmacy in their facility. So what I would do is establish a $300 million grant fund from the prescription drug trust fund created under the bill for HHS to award grants to health centers, hospitals, and other qualifying 340(b) institutions to help them with the startup costs associated with establishing a pharmacy in their entity. CBO scoring of this bill showed there is about a $10 billion surplus available in the current scoring, and so we have come in under the $400 billion. We have some cushion here. If we took that $300 million and made it available to these in-house entities to create those discount drug centers, then we could have those people who fall into the donut hole go to those centers, get the discount drugs, and significantly reduce the impact of the donut, which I think is a worthwhile effort.

We estimate there are up to 2,000 organizations in communities all across the country who would be assisted to set up in-house pharmacies as a result of this amendment. That will mean seniors all across the country who find themselves in the coverage gap will be able to purchase their prescription drugs for as much as 50 percent below the wholesale price. That savings is very significant in the context of what we are facing here.

My amendment is endorsed by the National Association of Community Health Centers, the National Association of Public Hospitals, and the Public Hospital Pharmacy Coalition. I hope it can earn the support of my colleagues so we can address one of the unintended consequences of dealing with only a $400 billion benefit, such as we are today.

I thank my colleagues for the opportunity to share these thoughts with them. I hope we can pass this amendment or have it accepted at the appropriate time.

I yield the floor and suggest the absence of a quorum.

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