Statements on Introduced Bills and Joint Resolutions

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. CONRAD (for himself and Mrs. LINCOLN):

S. 2343. A bill to amend title XVIII of the Social Security Act to improve the medicare program, and for other purposes; to the Committee on Finance.

Mr. CONRAD. Mr. President, today, I am being joined by Senator BLANCHE LINCOLN in introducing the Medicare Prescription Drug Improvement Act (MEND) of 2004, which aims to make various improvements to the recently enacted Medicare Prescription Drug, Modernization, and Improvement Act of 2003 (H.R. 1).

I said when we passed H.R. 1 that we could do better for seniors and that I would keep pushing to improve the Medicare drug bill. This bill is an important first step in that effort. It provides a better, more stable prescription drug benefit and lowers the costs of drugs for seniors. It also removes the giveaways to health plans and it will reduce the deficit. In short, this bill is a win for seniors, a win for good government, and a win for taxpayers.

I supported the new Medicare law, but this was not an easy decision. While this legislation takes important steps to add a drug benefit to the Medicare program and makes needed provider payment reforms, this legislation has many flaws that must be addressed. The legislation I am unveiling today takes steps in this direction.

Before I describe this new effort, I'd first like to highlight why I believe supporting the Medicare bill was the right decision, particularly for Medicare beneficiaries in my home State of North Dakota.

The first-and most basic-reason I supported this legislation is because it takes critical steps to add a drug benefit to the Medicare program. This benefit will provide America's seniors-for the first time-the opportunity to receive help with their medication costs. If seniors are satisfied with their current health care coverage, they do not have to sign up for this new benefit. But if they need extra help covering their prescription costs, the new Medicare drug benefit offers an important coverage option.

The second major reason I supported this legislation is because it provides a very generous benefit for lower-income seniors with incomes below 150 percent of the Federal poverty. Under the legislation, about 40 percent of seniors in North Dakota will get the vast majority of their drugs covered, with minimal out-of-pocket costs. This extra assistance will make a critical difference to lower-income seniors in my State, many of whom have told me that they are often faced with the choice of paying for their medicines or paying for food, rent and other living costs. In my view, this is a choice that no senior citizen should be forced to make. The legislation we passed took important steps to address this problem.

In addition, the Medicare drug benefit will provide substantial assistance to those with catastrophic drug costs. Specifically, after a beneficiary spends $3,600 out-of-pocket, Medicare will pick up 95 percent of the cost. This catastrophic coverage is an important component of the bill, which we estimate will help nearly 11 percent of North Dakota seniors better afford high-cost medications.

As we move forward on implementing this new benefit, it is my strong hope that it will improve health care coverage for the millions of seniors across the Nation who are struggling to afford life-saving and life-enhancing medications.

Finally, another major reason that I supported the Medicare bill is that it includes a whole host of rural provider payment reforms that I authored along with Senator CRAIG THOMAS from Wyoming and Representative EARL POMEROY from my State of North Dakota. These measures take important steps to address payment disparities that were causing rural health care providers to receive significantly less reimbursement than their urban counterparts. Over the next 10 years, these payment changes will improve funding to the rural health care system by more than $20 billion. It is my hope that these important provisions will help ensure health care providers can continue offering quality and affordable health care services to rural communities in my State and across the Nation.

Those are positive aspects of the recently enacted Medicare legislation. But, as I said when we passed it, the bill also had a number of significant flaws. The bill I am introducing today addresses these flaws and makes some important improvements to the new Medicare law.

To be clear, my new legislation does not include every change I would like to make to the Medicare law. To do that, we would need to spend hundreds of billions of dollars. Given the Federal budget deficit we are facing, this is simply not possible.

But it is possible to make some common-sense improvements to the bill. And that is what my legislation does. Let me describe it in further detail.

The first area of my bill will include new measures to reduce the costs of prescription drugs. We know that drug costs have skyrocketed over the last few years. This is a real problem for seniors and others across the Nation who are having increasing trouble affording their medications.

It is also a problem for the Medicare program, which will face increasing cost pressures when we add the new drug benefit. Given this situation, we must take steps to reduce and control drug costs. My legislation would do that in two ways.

First, it would allow pharmacists and licensed wholesalers to reimport less expensive drugs from Canada. The Medicare bill gives the Department of Health and Human Services authority to allow this reimportation, but it put roadblocks in place that will effectively ensure reimportation never happens.

My bill would remove these roadblocks and allow reimportation to begin immediately. If at any time a reimported drug is found to be unsafe, the Secretary would have authority to immediately suspend reimportation of this product.

The second thing my bill would do to reduce costs is to allow the Secretary of HHS to negotiate with drug companies to lower the costs of medications in the new drug benefit.

As my colleagues know, the Medicare law specifically prohibits the Secretary from directly negotiating with pharmaceutical companies to lower drug prices. We know that allowing the government to negotiate in other programs, like the VA, has significantly lowered costs. There's no reason we shouldn't also allow it in the new Medicare drug benefit.

In addition to taking steps to reduce drug costs, my legislation also includes measures to improve the stability of the Medicare drug benefit.

Under the new Medicare benefit, I am concerned that seniors may face different drug costs, different drug formularies, and different approved pharmacies as they switch from plan-to-plan every year. If we know anything, we know that seniors want certainty.

One way to fix this is to allow seniors to stay in the drug plan of their choice for more than 1 year-even if it is a "government fallback plan." My legislation includes this change.

Another shortfall of the new Medicare law is that it prohibits seniors from purchasing supplemental insurance to assist with costs not covered by the new benefit. My legislation would lift this restriction and give seniors another choice for covering their medication costs.

Beyond that, my legislation also includes new measures to ensure seniors retain access to the local pharmacy of their choice. In many communities, the local pharmacist is the most accessible source of health care services. Given this, my bill contains measures to protect local pharmacy services.

Specifically, it would require that the Medicare program allow seniors to go to their local pharmacy to get their prescriptions filled, rather than forcing them to receive their drugs by mail-order or forcing them to go to a pharmacy in a nursing home or hospital that may not be as accessible. My hope is that this provision would ensure that seniors can continue to visit their local pharmacist.

My legislation would also authorize $500 million that could be used to help pharmacists cover the costs of educating seniors about the new drug plan choices. This funding would provide pharmacists a one-time payment for providing information to seniors as they enroll in the new benefit.

My bill also includes other measures to provide seniors with better information about the new drug benefit. Specifically, it would require drug plans to provide seniors with detailed information about what drugs will be covered-before the seniors signs up. It also would require that plans inform seniors of any changes to these covered drugs-either through the telephone, by mail or on the Internet.

My legislation would also take other steps to protect seniors by repealing the premium support demonstration project that is set to begin in 2010. Although seniors will be able to choose whether they want to enter private plans under this demonstration, I believe it is a step in the wrong direction toward privatizing the program and could drive up premiums for those in fee-for-service. Given this, my bill will repeal this privatization demonstration.

Finally, my bill includes additional measures that will help reduce spending and protect the financial integrity of the Medicare program.

In particular, the legislation will include measures to expand the chronic care management demonstration project in the Medicare law.

Today, roughly 5 percent of seniors account for about 50 percent of the entire Medicare budget. The Medicare law will test providing coordinated care to these beneficiaries, which many believe will help improve quality of care and reduce costs. My legislation will build on this effort by providing additional resources to expand chronic care management to more areas of the country. I believe this will save money for Medicare and improve health outcomes for these seniors.

Finally, my new legislation will eliminate provisions in the Medicare law that provide unfair, extra payments to private plans. Specifically, it will repeal a new $8.9 billion taxpayer subsidy to bring more private plans into the market. It will also address inequities that currently allow HMOs to receive significantly higher payments than traditional Medicare-for serving the exact same patient. These policies are simply a waste of money.

According to unofficial estimates by the Congressional Budget Office, eliminating these private plan overpayments could result in significant cost savings. Under my plan, these cost savings would be used to reduce the Federal budget deficit, which has reached record levels this year.

This is a basic overview of the provisions that will be included in my new legislation-the Medicare Prescription Drug Improvement Act (the MEND Act).

I believe this legislation will take significant steps toward improving the new Medicare law. I would like to thank Senator LINCOLN for joining me in this effort and I look forward to working with my colleagues on this important legislation.