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Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Conference Report

Location: Washington, DC

PAGE S15670
Nov. 24, 2003

Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Conference Report

Mr. KERRY. I thank the Chair.

Mr. President, the real test of this bill, in the final analysis, is what it is really going to do for the senior population of the country. I know the arguments have been made forcefully that it is going to take $400 billion and give seniors something. But the test is not whether we are going to give them something, the test is whether or not we are going to do more harm than good.

I believe when we measure the overall impact of this legislation on seniors and on the overall Medicare system, the bottom line is this does more harm than good. That is why I believe the Senate should stop the bill where it is.

Obviously, we would like to pass a prescription drug benefit. All of us want that. This bill could be better. It could be better by being closer to what was sent out of the Senate which had the support of my colleague, Senator Kennedy, and others because it did more good than harm. But this bill moves in the wrong direction because while it was in the conference with the House, it was loaded up with major giveaways to the drug companies, insurance companies, and has put some measures in such as the restraint on the ability of the Federal Government to even negotiate for bulk purchases and thereby lower costs, which is an extraordinary reduction in the ability of the Government to try to constrain the costs overall of prescription drugs.

These are the reasons I think this bill does more harm than good:

No. 1, the prescription drug benefit for many is not affordable, it is not comprehensive, and it is not guaranteed. There are holes in coverage and complex rules. The coverage gaps remain too high, and seniors are still charged premiums even after their benefits shut down in the so-called donut hole.

Seniors are not assured a Government fallback plan with a set national premium. So if there are places where you don't have HMOs or there are other problems, they are going to have increases in their premiums under Medicare. It seems we ought to have a fallback with some sort of fixed price that will be affordable. At least 3 million seniors are projected to lose their gold-plated retiree prescription drug plan and be forced into a lesser benefit under the Medicare plan.

The bill fails to adequately fix protections for low-income seniors and people with disabilities who currently rely on both Medicare and Medicaid for their coverage. That could cause as many as 6 million people to pay more money for fewer benefits.

For seniors who think this bill is only designed to give them new benefits, they are going to be shocked to find that this legislation actually raises $25 billion in new revenue directly out of the pockets of senior citizens by increasing the costs for traditional Medicare coverage of doctor and hospital visits.

[Page S15676]

They will also be surprised to find out that while we are in such a rush to pass this bill, the benefit is not actually going to come to them until 2006. In the meantime, seniors get a disingenuous discount card. Most of them have four or five of the cards today anyway with the same amount of reduction, and it will give them no more discount than any of those handful of cards available to them in the marketplace now.

The question ought to be asked: Why are we not beginning a Medicare prescription drug benefit until 2006? It took 11 months to put the entire Medicare Program in place. Are we telling seniors we can't, in the age of computers, put a prescription drug benefit in place in a matter of months? Why 2006?

We all understand why. It has to do with the private companies and their taking time to ramp up, the amount of money they are going to get, and the unaffordability today.

One of the biggest failures of this bill is its silence on controlling the rising prices of prescription drugs. Without an effective means to restrain double-digit drug price increases, this bill does nothing to protect seniors from ever-growing out-of-pocket costs. When they are pushed off Medicare into HMOs and the HMOs raise the prices, seniors are going to be screaming about the increased cost of prescription drugs.

This bill prohibits the Government, as I mentioned earlier, from using its bulk purchasing power to negotiate volume discounts for Medicare prescription drugs. That doesn't make sense. In the State of Maine, they have done that with good results. It is interesting, they were taken to the Supreme Court and challenged in their right to do that, and the Supreme Court upheld their right to do that. As a consequence, they are able to provide more affordable prescription drugs to their citizens.

This bill is more about shifting medical costs to beneficiaries than actually reining in prescription drug costs.

In the name of private competition and to prevent the Federal Government from running the program, the Republicans came up with an unprecedented $12 billion slush fund to entice private plans to participate in this risky market. On top of giving them extra payments to participate, the bill does nothing to require that those private plans operate efficiently.

The Medicare Program in its entirety now spends only 2 percent of its total expenditures on administration. By contrast, many of the health plans in the private market often commit as much as 15 to 20 percent of their expenditures to administration. So every dollar that goes to administrative costs is a dollar not available to improve benefits for Medicare beneficiaries. Smart stewards of taxpayer funds ought to demand that private plans be more efficient if they want to participate.

So this bill is not just about adding a prescription drug benefit to Medicare, it is also a bill that represents an ideological excess by some who want to force the traditional Medicare Program down the path to privatization.

Under this bill, 7 million seniors will be given this choice: pay more for Medicare and get forced into an HMO, give up on choosing your own doctor and hospital or watch your bills skyrocket. This so-called premium support provision is, in my judgment, irresponsible and unfair.

The so-called cost containment provisions add insult to injury. By essentially placing a cap on future Medicare spending, this bill is going to attempt to force future Congresses to reconcile Medicare spending growth by cutting benefits, raising premiums, or increasing the payroll tax. I think that is unacceptable.

In addition, this bill squanders another $6 billion on tax breaks for wealthy people, and that is going to have an impact in harming Medicare. The reason is that when a tax-free, high-deductible, catastrophic health policy, known as a health savings account, is created, it is principally going to be used by those who have the money who can afford it. The result is it is going to undermine traditional Medicare by cherry-picking the healthiest people and the wealthiest seniors out of the risk pool, thereby raising premiums by as much as 60 percent for those who are left behind.

In the end, we have to ask ourselves who wins and who loses in this bill. I think I have shown how seniors lose. So who wins? Well, insurance companies, pharmaceutical companies, lobbyists, and special interests of every stripe: A $125 billion to $139 billion bonanza, and the stock market confirms it. My hope is we will go back to the table and come up with a measure closer to what the Senate originally did.


Mr. KERRY. Mr. President, the Senator from Montana just admitted the case. He said it is much less than that. He is arguing over fewer people being hurt, not whether any are going to be hurt.

The question is, Why are people going to be hurt? How many people know there is going to be $25 billion raised in new revenue directly out of the pocket of senior citizens because we are going to increase the cost for the traditional Medicare coverage for doctor and hospital visits?

This is following right in the wake of the Energy bill. Same deal. You pick up the newspapers and you see a headline: Drug companies win in battle over prescription drugs. Who do you think lost if the drug companies won? The senior citizens.

There will be $139 billion or $125 billion, depending on which you read, of windfall profits to the drug companies. Why are the drug stocks going up the way they are? The difference between Medicare administrative costs, which are 2 percent, and drug company administrative costs, which are 15 to 20 percent, are now going to run roughshod over seniors who are going to be paying the additional administrative costs, and they are not going to get the benefit of lower cost drugs.

There is nothing in this legislation that lowers the cost of prescription drugs. Indeed, it is the opposite. By pushing seniors off Medicare into HMOs and giving them the tough choice that if they were to stay where they have the ability to, they are going to pay more, they are going to be picking up the additional cost. This is going to be like catastrophic insurance in the 1980s when they pass legislation they think is good and seniors find out how complicated it is and how much more they are paying, which is exactly why it has been set for 2006 for implementation. It took us 11 months to put the entire Medicare Program in place. Why can't we put a prescription drug benefit in place 2 months from now or 3 months from now? Why does it have to be 2006 after the 2004 election? This is one of the greatest giveaways that I have seen in this city in a long time.

We are not even going to allow Medicare to negotiate lower bulk prices. The State of Maine is allowed to do that. We have veterans who are allowed to do that. We have veterans in this country for whom the VA, in an almost unanimously adopted amendment in this body, can go out and do bulk purchasing. And we are not going to allow Medicare to bulk purchase and lower the prices.

We should vote no. This is wrong. It is a giveaway. It is a special interest bonanza.

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