Federal News Service
HEADLINE: HEARING OF THE SENATE SPECIAL COMMITTEE ON AGING SUBJECT: HELPING THOSE WHO NEED IT MOST: LOW-INCOME SENIORS AND THE NEW MEDICARE LAW
CHAIRED BY: SENATOR LARRY CRAIG (R-ID)
WITNESSES PANEL I: MARK MCCLELLAN, M.D., PHD, ADMINISTRATOR, CENTERS FOR MEDICARE AND MEDICAID SERVICES;
PANEL II: GAIL WILENSKY, PHD, JOHN M. OLIN SENIOR FELLOW, PROJECT HOPE, FORMER ADMINISTRATOR, HEALTH CARE FINANCING ADMINISTRATION;
THOMAS("BYRON") THAMES, M.D., TRUSTEE, AARP; JANE DELGADO, PHD, M.S., PRESIDENT AND CEO, THE NATIONAL ALLIANCE FOR HISPANIC HEALTH, FOUNDING MEMBER, THE ACCESS TO BENEFITS COALITION;
PATRICIA NEMORE, ATTORNEY, CENTER FOR MEDICARE ADVOCACY, INC.
LOCATION: 628 DIRKSEN SENATE OFFICE BUILDING, WASHINGTON, D.C.
TIME: 2:00 P.M.
SEN. LARRY CRAIG (R-ID): Good afternoon, everyone, and welcome to the Senate Special Committee on Aging.
The new Medicare law enacted last fall represents the most substantial expansion and improvement in the program since its creation 39 years ago. Not surprisingly, debate about this new law was and remains quite spirited. However, there is one aspect of the new program about which few should disagree. It is this: the new Medicare law offers dramatic new assistance, billions of dollars of it, for seniors of modest and low income. Those seniors who are struggling the hardest to pay for their prescriptions are precisely the seniors whom this bill targets most generously, and that is as it should be.
We are here today to explore the specifics of what this legislation will mean for seniors in greatest economic need. Our discussion will begin with an updated look at how the new prescription drug card is doing, and in particular ways in which CMS and its partners are working to bring the low-income $600 transitional assistance to as many seniors as possible.
On this front, we will hear encouraging news from CMS Administrator Mark McClellan-Mark, welcome to the committee-who we are pleased to have with us today. I understand, for example, that seniors are now signing up for the cards at a rate of 25,000 per day. Yes, that's right, 25,000 per day. And also that the drug price savings continue to be impressive. CMS, meanwhile, continues to aggressively expand its outreach and enrollment efforts, including improvement in the Price Compare website and through grant assistance to community-based organizations and to national coalitions. One of these, the Access to Benefits Coalition, will also be providing testimony today.
Even more importantly, we will also hear testimony about the new law's full drug benefit scheduled to begin in 2006, and the ways in which low-income seniors stand to benefit tremendously under the new assistance that is now just 17 months away. Nearly half of the new law's funding is targeted specifically to low-income seniors, and more than one in three seniors will qualify for assistance. For the vast majority of these seniors, this will mean zero premiums, zero deductibles and no gaps in coverage, and co-pays of just a few dollars per prescription. It is difficult to imagine a stronger package.
It is not to say this will be easy. This is a tremendously complex program and it's being implemented on a very ambitious timetable. Our witnesses today will offer guidance on such critical questions as how we can tailor our outreach efforts more effectively. Reaching as many qualifying beneficiaries as possible should be a top goal.
When debate over adding prescription drug benefits began several years ago, the guiding motivation was first and foremost to help those seniors who were struggling to make ends meet. To this, those seniors who were sometimes forced to choose between food and prescriptions. For those seniors in the greatest need, this new law is truly a godsend.
We have a remarkably accomplished panel of witnesses today, but before I turn to our panel, let me turn to my ranking colleague and partner here, Senator John Breaux of the great state of Louisiana.
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SEN. CRAIG: John, thank you very much for that fine statement. And now we'll search for the bumps in the road, because I think your analysis of it is very apropos.
Our first witness today is Dr. Mark McClellan, the new administrator for the Centers for Medicare and Medicaid. As we all know, Dr. McClellan has what may well be the hardest job in Washington these days: overseeing implementation of the vast and complex new Medicare law. But if anyone's up to the task, I suspect you are, Mark. A former commissioner of the Food and Drug Administration, senior White House health advisor, professor and medical doctor, Dr. McClellan brings to this job an unprecedented array of experience. So we welcome you before the committee and are anxious to receive your testimony. Please proceed, Mark.
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SEN. CRAIG: Mark, thank you very much for that testimony and opening comments. During debate on this bill, I think the biggest focus was on those seniors who didn't otherwise have drug coverage and who just couldn't afford it themselves. Does the new low-income assistance in the 2006 benefit meet that need?
MR. McCLELLAN: It does. As I mentioned before, there are over six million dual eligible beneficiaries who will be able to get access to a comprehensive benefit that must cover all classes of drugs, very broad formulary, very important national and universal appeals rights, plus millions more who have limited means but who are not able to enroll in state programs now because the states haven't been able to provide coverage for them. So altogether it's about a third of Medicare beneficiaries, as you said, who are going to have access to a comprehensive benefit as part of this overall Medicare legislation.
SEN. CRAIG: In that category, most of the qualifying low-income seniors in '06 will pay, so we now understand, zero premium, zero deductible, and a few dollars per prescription.
How does that compare to the kind of drug coverage the average non- senior is likely to find out in the private marketplace today --
MR. McCLELLAN: Well, very --
SEN. CRAIG: -- or is there a comparison?
MR. McCLELLAN: Yeah, very favorably. The drug coverage available to many people of limited means today has significant co- payments. Usually the co-pays are lower for generic drugs than for brand name drugs, and the Medicare benefit has that same structure. But this is a more comprehensive benefit for people with limited means, and these millions of beneficiaries don't have access to this kind of coverage in the private markets today, and that's why it's so important to bring it into Medicare right now.
SEN. CRAIG: Mark, weeks prior to the ability to enroll, and then following that, there was a considerable amount of criticism as it relates to-seniors just were not signing up. And the figure I used in my opening comments, and you've used it, 25,000 now signing up per day, when I first saw that figure I thought, they must be thinking about 2,500. So talk to us about that. How has enrollment accelerated recently and what are the reasons for this?
MR. McCLELLAN: Well, it's definitely continuing at a steady clip. I think one of the things that-we went back and looked at the previous experience when the federal government tried to implement other major new benefit programs that offer very affordable coverage and help people with their healthcare costs substantially. And, in general, it takes some time.
For example, in the CHIP program, the Children's Health Insurance Program, which now provides coverage to many millions of lower-income children and their families, that program took more than a year to reach the million enrollees mark because of issues with states working with the federal government to set up access to the program and important issues about education and outreach, letting people know that these benefits are there and helping them through the decision process so they could sign up. So they could decide this is really a good deal for them and sign up for it. So it took a little time, but enrollment picked up. And these kinds of barriers to enrollment are present any time a new federal program starts, and we're working harder than ever to overcome them.
So in this case we tried to look back on that experience and learn from it. In addition to the steps that we're taking through our 1-800 number, through advertising, through mailings to beneficiaries, through mailings from the Social Security Administration, we formed new partnerships with state health insurance assistance programs, and recently we've been getting partnerships underway with many private organizations that are very good at doing outreach and education for low-income beneficiaries.
I think this is a win-win effort for us. It helps get people informed and enrolled in the Medicare prescription drug benefit program. It also is a good foundation for the education and outreach that we intend to do as part of the comprehensive low-income drug benefit that's coming next year. We've got a little bit more time to do that, but we want to take full advantage of all of that time. So with new partnerships, with proven effective approaches to doing outreach, I think the numbers are picking up.
But, you know, no program works unless it delivers real benefits, and this program is delivering real savings when it comes to the prices that beneficiaries who get the drug card can pay when they go to their local pharmacy, and it's especially delivering benefits in terms of literally thousands of dollars in help this year and next year for the low-income beneficiaries who do not have drug coverage today. That's the ultimate thing that's driving the significant enrollment in this program and that's why we're so pleased to have so many partners on the outside in this unprecedented effort to get millions of people signed up faster than ever for a new federal benefit program.
SEN. CRAIG: Back in March, CMS testified before this committee that you anticipated savings from the cards of between I think 10 to 15 percent on the total spending and with about 25 percent on individual drugs. Your testimony today suggests that actual savings are in many cases proving better, and that especially is true of, I believe, generics. What are the reasons why the savings seem to be even better than expected, and do you expect price savings to continue to go down as the program stabilizes?
MR. McCLELLAN: Well, we are seeing significant new savings I think for two main reasons. One is that seniors are able to band together now more effectively and stick together long enough to get negotiated discounts on prices from drug manufactures. So seniors are very good comparison shoppers now, and many of them have been able to find through a pharmacy discount card or something like that, some small sources of discounts at their local pharmacies. Well, this does better. It adds to that by getting them those negotiated discounts which are being passed on from the drug manufacturers.
And the other very important step is making the price information available. Now, not every senior goes and looks at every piece of price information on the 60,000 drug products at the more than 50,000 pharmacies around the country, but the fact that that information is out there has created a new ability to comparison shop for drugs, much like people in the past have done for many other products and services, their groceries, their vacations, their mortgages. You name it.
And we've seen over the past two months with this program the prices available come down, especially for cards that were initially higher priced. But across the board we're seeing now reductions, not increases, in drug prices for brand name drugs over the first couple of months that our price comparison has been active. So it's a new way of comparison shopping, coupled with a new ability for people to band together and get the big discounts.
SEN. CRAIG: That's good news.
Let me turn to my colleague, Senator Breaux, John.
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SEN. CRAIG: Thank you, Senator.
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SEN. CRAIG: Thank you for those questions. Let me ask that deals-and I am pleased that we have looked at that assets test. I will submit for the record the conference agreement and how it applies. It doubled the SSI test and it excluded specifically certain items, like the house, like the carpet, transportation, up tot $2,000 worth of household goods. It doesn't exclude the wedding ring and life insurance up to $1,500. And so I think there is a substantial increase in the general generous character of the test. And I'll submit that for the record.
Mark, both with respect to the drug card going on right now and with respect to the '06 benefit, low income seniors are often the most challenging to reach. And you've talked about a variety of scenarios and groups you're involving. Answer this for us, if you would, please. What are the reasons for this difficulty and what outreach strategies are best for reaching the low income seniors and is your outreach effort being tailored for both world populations and for specific minority populations?
DR. McCLELLAN: It absolutely is. I'm just picking up on your point. I think that, you know, looking back over the history of well- intentioned programs intended to help people with limited means who are really struggling to get by, outreach, I think, is one of the most critical barriers and problems that often doesn't get the attention it deserves. That's why there have been previous federal programs that can take many years to get up to even 50 percent of eligible enrolment. We will do better than that this time and we are also going to take steps to increase enrolment in those other federal programs by doing many unprecedented outreach steps.
This includes steps that we've tried already and have been proven to be effective, steps like mailings from the Social Security Administration and Medicare that are targeted with some simple facts, that people can use to figure out how to start taking advantage of the new benefits. Advertising, especially advertising targeted at communities that have a high preponderance of these low income beneficiaries can help as well. Broadcast advertising, in particular, not just English language, we're doing Spanish language and other advertising now as well. And working with private groups. Around the country, many of these individuals have connections in one way or another in their community, connections to faith-based organizations, connections to seniors organizations, connections to other types of ethnic organizations.
All of those sources can be great opportunities for outreach and connection. For example, we've been working with the National Alliance for Hispanic Health and they've just come up with a new instruction manual in Spanish on how to use the Medicare approved drug discount card and how to get that thousands of dollars' worth of additional assistance beyond the discounts available for low income beneficiaries. We can't do this by ourselves. But because they have a tremendous amount of experience and connections with community groups that reach and deal with low income beneficiaries on an ongoing basis, we can talk to a lot more and we can connect with a lot more people.
That's the philosophy behind the new grants that we are awarding. We've just announced $4.6 million for community based organizations recently. That's the philosophy behind doubling our support for the State Health Insurance Assistance Plans and also doing new grant programs for the Administration on Aging, the Indian Health Service and other federal agencies that also have good connections and good experience and outreach.
All together, I think these efforts will not only help us boost enrolment from the people who can get the most out of these new programs for the drug benefit but will also end up increasing enrolment in these other federal programs that too often have fallen short of the maximum benefits that they can provide. So this is a huge outreach effort. We're looking at all of the approaches that can be proven effective. We're working even with the FDA in some of their local agricultural offices, which is a good connection point for people in rural communities.
We're going to keep that open and redouble our efforts over the coming year for both the drug card transitional systems which people can get and use right now and for the full drug benefit in 2006.
SEN. CRAIG: Senator, yes.
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SEN. CRAIG: Mark, thank you very much. As Senator Stabenow said and as John and I certainly also agree, we're going to keep a very close eye on you.
DR. McCLELLAN: Thank you very much. I think this kind of dialogue is extremely helpful for us in focusing our efforts effectively and we definitely appreciate your support for getting real relief right now to people who already have been waiting too long with high drug prices. Thank you very much.
SEN. CRAIG: Well we know that you have a very difficult task in front of you with a very complicated bill. We'll always expect you to be on time and on schedule.
DR. McCLELLAN: And I'll do my best. Thank you.
SEN. CRAIG: Thank you very much.
Now, let us ask our second panel to come forward please. Well, thank you all very much. Our second panel today, we will hear from Gail Wilensky, a former administration of the Health Care Financing Administration. That's the old HCFA versus the new CMS and currently the John M. Olin Senior Fellow at Project Hope where she is one of the country's foremost authorities of Medicare, Medicaid and healthcare policy.
Next, we will hear from Dr. Byron Kanes --
DR. THOMAS "BYRON" THAMES: Thames.
SEN. CRAIG: Thames, a family physician from Orlando, Florida, joining us today as a trustee of AARP, an organization, of course, whose support and counsel was critical to the enactment of the Medicare legislation we are discussing today. Next will be Dr. Jane Delgado, as president and CEO of the National Alliance for Hispanic Health and also a founding member of the new Access to Benefits Coalition, that Dr. McClellan talked about, an organization dedicated to promoting outreach and enrolment of low income seniors in the new Medicare drug program. Lastly, today, Patricia Nemore, an attorney and Medicare expert who is with the Washington office for Center for Medicare Advocacy, an organization focused on improving access to Medicare and quality healthcare.
Well, we thank you all very much and, Gail, we'll start with you.
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SEN. CRAIG: Gail, thank you very much.
Now, Dr. Thymes .
DR. THAMES: Thames, yes.
SEN. CRAIG: Thames, thank you very much.
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SEN. CRAIG: Doctor, thank you very much.
Now let us turn to Dr. Jane Delgado. Doctor.
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SEN. CRAIG: Jane, thank you very much.
Now let me get to the last of our panelists on panel two, Patricia Nemore. Patricia, welcome.
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SEN. CRAIG: Patricia, thank you very much.
And to all of you, again, thank you. My questions will be somewhat general in nature. So as one responds and the other feels they can add to or need to take from, please feel free to do so as we proceed to do all of this.
During debate on this bill, the biggest focus, I think, for all of us, both in Congress and in organizations like yours, was on those seniors who didn't otherwise have drug coverage and who just couldn't afford it themselves. This is a fairly generic question but does this law substantially, when implemented, in your opinion, alleviate that underlying problem and the primary premise behind this legislation? Gail.
MS. WILENSKY: It does a lot more than that because it is a much broader coverage bill. But it does focus an enormous amount of assistance on the low income population which is where more of the individuals without drug coverage lay. So the answer is that it will cover some individuals who had drug coverage already with more extensive coverage but it will do a very good job in covering those who were without coverage and who were low income, particularly if it is as successful as the president's budget assumes it will be in terms of reaching out to those individuals.
Again, experience in past administrations and other attempts to reach these low income populations, including, but not limited, to my own efforts as HCFA administrator, is this is difficult. It is difficult for all income related programs that I am aware of inside and away from healthcare. And we shouldn't fool ourselves about the difficulty. But some of the assistance activities that have been mentioned will be helpful in making information clear and available will also be helpful.
SEN. CRAIG: Doctor.
DR. THAMES: Senator, I would echo those statements.
In the debate among the board of directors of AARP, when this bill was being formed, and the decision for us to support this, one of the really overriding factors in looking at what this bill was to do was that it was going to help meet the needs of those who truly suffered the most from low income and poverty levels, and those who had catastrophic drug bills and who did have to make those terrible decisions about what to spend their money on, or whether to take the drugs in the appropriate doses or skip doses, skip days. And this was a very important thing. And we believe that this bill will help both those low income and those people with catastrophic drug costs.
MS. DELGADO: I think this is a very important bill in terms of low income people, not just because of what we discussed. But in fact, it moved CMS from being just a payer to being involved in people's health and more of a public health agency by some of the other parts of the bill, such as getting your "welcome to Medicare physical," getting your diabetes diagnosed early. This changes the whole flavor of what the agency is about and for low income seniors, it is a major step forward.
SEN. CRAIG: Patricia.
MS. NEMORE: Senator, we have provided coverage for low income people who did not have any coverage before and that will be tremendously important if the potential of the legislation is actually realized. The complexity of the eligibility process for the low income subsidy, you have two different places that you might apply. There might be different rules that would be applied to you in those two different places. You would be subject to different appeal systems. There is a lot of complexity in getting the subsidy, the low income subsidy and then, on top of that, we have the issue of choosing a plan and having the information you need to choose one plan over another and assure that that plan will be able, in fact, to meet your drug needs. So there is potential here to help low income people who have no coverage, we've made it extremely difficult for them to do it.
And for the dual eligibles, they will lose the wraparound. Whether or not the benefit is better or not better than what is in their state now, they will lose the wraparound benefit that is applicable to all other Medicare coverage for dual eligibles where Medicaid picks up, fills in the gaps of what Medicare doesn't pay, and that is not permitted under this law.
So I think it's a mixed answer.
SEN. CRAIG: Okay.
Patricia, you had mentioned and were suggesting some changes. At the same time, Gail has basically cautioned us in saying you'd better let CMS do its work before you start proposing changes and get it on the ground and get it running and look at it, or you're going to be considerably further down the road before anybody receives benefits.
Also, both of you have talked about dual wraparound, uniformity, benefits back to the states. I'd like to have both of you discuss that a little bit, both with the question of making changes now versus getting done what we've gotten done, if you will, get it on the ground and get it running. And also, I watched this year and the past several years as states that became increasingly generous in their benefits in Medicaid having substantial withdrawal pains, if you will, because of a reduction in revenues based on the economy, and shifts backwards.
In other words, what was not an entitlement, it was simply added benefits pulled back. And the value of stabilizing that benefit, if you will, from a national standpoint, the benefits to the states. And the understanding that I have, while some states may have been more generous, the value of a very small co-pay, if you will, or a very small payment on a prescription by prescription basis to receive relative uniformity and coverage.
Discussion about both of those I think would be valuable to the committee in understanding it.
Gail, let me start with you.
We'll go to you Patricia, and see if we can't gain from both of your knowledge in this area.
MS. WILENSKY: In the late 1990s states acted in ways that many of us would regard as positive, but set themselves up for a lot of revenue obligations. They expanded the populations that they made Medicaid available to, they increased the benefits and they increased the payments to providers. Nothing that is bad in and of itself, but potentially much more costly than they had been exposed to.
There was a sharp decline in revenue, as you know, for many states, and that has caused them to cut back particularly in terms of payments to providers, sometimes to the benefits as well. It's unclear what will happen as the country is coming out of its recession in terms of state revenues. We know what's happening at the national level, but whether that translates immediately to the states is less clear.
I say that because it's important to understand that while the federal government is not going to share in whether states choose to offer additional benefits to their dual eligible populations or other populations, states are permitted with their own money of course to augment benefits in any way that they see fit. And they will save money, although primarily not early on in the legislation, over what they would have been spending without the passage of the Medicare Modernization Act, about 15 percent of what they would have spent.
The other 85 percent comes back to the federal government to the maintenance of efforts, sometimes called the claw back provision. So precisely what will happen to individuals in some of the states will depend on how both the state responds and how the pharmacy assistance programs that exist in many of the states and how the manufacturers' programs go on. But they will lose this wraparound, largely-more than the majority financed by the federal government, in terms of adding on to what already is existing.
So we'll have to wait to see. Let me explain more carefully about why I feel so strongly about not modifying the legislation before the legislation has primarily rolled out, which will mean the first or second quarter of 2006. People think that that means that CMS has until 2006, but they don't. If the information is going to be mailed out in October of 2005 in order to get enrolment in November so that the benefit can start in January of 2006, an enormous number of decisions have to be made by CMS and the secretary.
Rules have to be promulgated in time so that people can have comments come back, and then respond to all of those. Many people in Congress don't understand the timeliness that that involves in order to have the decisions and then the rules put out and then the comments reacted to from those proposed rules. Both of you seem quite sympathetic with that problem, but let me give you some numbers to illustrate what happens if you come up with a very controversial regulation, which could well happen at some point in implementing the Medicare Modernization Act.
My two experiences with controversial regulations were the Clinical Lab Improvement Act, CLIA, which had 35 or 40,000 comments, only to be outdone by the proposed rule for the relative value scale, which produced 100,000 comments, led largely by the nation's physicians but joined in by other groups as well. And while the administrator doesn't have to respond to each comment specifically, all of the issues that are raised in comments need to be dealt with when the final decisions are made.
That's why I feel so strongly that whatever errors are in this legislation-and all of us would have written the legislation somewhat differently if we could have-I think it's important to allow the major parts of the legislation to rollout and then fix it. There will be cleanup legislation, there always is. I'm sure it will be needed here. But the benefit isn't going to happen if there is legislative change before the rollout.
SEN. CRAIG: Patricia.
MS. NEMORE: Senator, my organization did not support the Medicare Act of 2003, and I intentionally today in preparing my comments did not address the issue of changes in the law that we believe need to be made. The suggestions I made in my oral testimony, and there are more in the written testimony, are all suggestions that we believe can be done, that the secretary and the administrator have the authority under the law --
SEN. CRAIG: The law, okay.
MS. NEMORE: Within the law already to make these. And we believe because this is such a needy population and such a hard to reach population and the law is so complex that it is essential that those decisions always be exercised to advantage the beneficiary and to streamline and simplify the process wherever possible. So that-on the matter of the Medicaid issue, I'd just like to make a couple of points.
Medicaid does require that all medically necessary drugs be covered, be available in the state Medicaid program. That will not be true with any individual Part D plan. Part D plans can choose what to cover and what not to cover. It is true that states have limitations of one sort or another, and many states do, but they have to have an override process.
So there is in virtually every state the opportunity to seek coverage of any medically necessary drug. But I think the real point is that there is no wraparound. It's not whether Medicaid was better than Medicare is. In the dually eligible context, these are the neediest people we have in the entire population in terms of healthcare needs.
There has always been the model that Medicare coverage is first and Medicaid fills in the gaps, and that's been a very important way for dual eligibles to get the complement of services they need, because each program has its own gaps, and together they provide fairly substantial coverage.
And one other point on the Medicaid issue, Medicaid, as Dr. Wilensky said, Medicaid is more generous or less generous depending on individual state budgets. But it is subject to the political process, and in the state of Connecticut, where my program has its main office, Connecticut advocates and citizens were able to persuade the legislature to remove co-payments this year. So they were able to exercise their advocacy in the political realm to shape the program to work best for beneficiaries. This will not be true with Part D. Each plan will create its own formulary, its own cost-sharing systems and there will not be the opportunity for political advocacy toward any individual plan. But I think the issue of the wrap is really the most important thing for us to keep in mind, the wrap-around benefits.
MS. WILENSKY: Senator Craig, may I add one more comment. This is a very important issue that and a number of points have been raised that I think it is important, particularly for this committee, to understand. I don't disagree with some of the concerns raised outside of the prescription drug area, in terms of the loss of a wrap-around. But I think having Medicare and Medicaid as two separate programs was a bad way to have these extra benefits provided.
The dual-eligibles have long been regarded as not only being by far the most expensive population by virtue of their low income and their medical needs but not particularly well treated because these two programs did not integrate with themselves very well to the extent that we think that the low income assistance that is being provided to individuals on Medicare is not adequate for some of the Medicare low income population because of their additional disabilities. It is important to augment the Medicare program and not have these two programs attempting to interact with each other. It has been an extremely expensive program that is not generally regarded as having functioned well.
So while I appreciate that there may be some benefits that have fallen off, I think we will be far better off to try to augment them, on a very selective basis, for low income disabled Medicare beneficiaries than to think about the two programs lying on top of each other. That just is not a model we should try to replicate.
SEN. CRAIG: I've taken way more than my time. Let me turn to my colleague, John Breaux.
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SEN. CRAIG: John, thank you very much. This will my last question of the panel. I think it goes without saying that assistance in paying for drug benefits helps low income seniors economically. We don't really argue that. But what effect do you expect greater access to drugs to have to the health status of seniors in low income populations, specially considering that serious health problems are often more prevalent among low income seniors?
Dr. Delgado, I'm specially interested in hearing from you in regard to your experience with the health status and the needs of, let's say, the Hispanic community. We're interested in helping people stay healthy or get healthier and we now know, of course, that prescription drugs use the same argument but in a different context than we made 30 plus years ago, as it related to access to hospitals. Would you respond to that? And then any of you wish to do follow-up or your own comments in relation to health versus economics. We think clearly, we're helping them economically. Are we helping them for a health status?
MS. DELGADO: Let me just make three points. First, in terms of health, the fact that people will now be able to take their medicines. For example, in diabetes, it means they won't have to wait to go to a hospital to have an amputation. That they will be able to have better health. The second thing is that, as part of the change in the mindset of CMS, the welcome to Medicare physical starts talking about health promotion, disease prevention, very important for people's health because before, people only went when they were sick to use their benefits. Now, there's an opportunity to say these are things that you can do to prevent illness and to prevent the consequences of illness.
The third thing is that people need to have access to the full range of medicines. We know, for example, that, for Hispanics, for Mexicans in particular, there is data showing that the absorption rate of some medicines is three times the amount that it is for a non- Hispanic, meaning the people will take their medicines and become ill and they go to the doctor, I don't want my medicine. The doctor would say, Oh, my patient is not compliant. But really it wasn't the right thing. By having a system that would cover both generics and brands, we let the physician and the patient decide which is the best medicine for that patient to have a better life.
So it improves the economics but the health of the person is critical. It means the person can stay home and live the kind of life that we want all our seniors to have.
SEN. CRAIG: Patricia.
MS. NEMORE: To the extent that the drug plans are able to actually-are covering the drugs that any individual needs, the low income assistance provided by this legislation will allow people to not have to choose between taking medicine or buying food. That is often a choice that is made by people living on very limited incomes. And this benefit can provide some relief for that. We are very concerned about the formulary rules and what can or cannot be covered.
The plans have enormous discretion in designing their formularies and may in fact not cover a number of drugs even if a person found a plan that covered some of their drugs, it might not cover all of their drugs. So there may well be gaps that would still require people to be paying large amounts of money for their drug coverage. But to the extent that people don't have to choose between food and medicine, that would be a good thing.
SEN. CRAIG: So you can conclude from this also that, in the general sense, fully implemented, while you dislike certain portions of it and would have done it differently, it should in the end produce a healthier senior population.
MS. NEMORE: If we have formularies that allow people to get access to the drugs they need.
SEN. CRAIG: Okay. Dr. Thames.
DR. THAMES: Well, as a family physician who practiced for over 40 years, I am very much impressed with a number of things about the bill and I'll just mention it again. The physical examination you can get, the fact that we're going to have chronic disease management, we're going to be able to discover the disease sooner and treatment centers are going to be more cost effective. We're going to be able to keep more people out of the emergency rooms where costs go up. But we're also going to pay for comparable studies for efficacy of drugs.
So we're going to decide in the same class of drugs, which ones are the most cost effective to do the same job and that should make it a benefit. And poor people who have been unable to get the drugs that they need should be able to get not only the drug they need but we're going to have scientific studies to show them what is the most cost effective drug that they need for their diabetes, for their cardiovascular disease. So I definitely feel that it will be very beneficial to those folks in identifying their disease problems earlier and giving them the medications to keep them out of the emergency rooms and hospital and begin to improve their life expectancy, to come closer to what it is for more middle income Americans, where it is markedly below that now.
MS. WILENSKY: Dr. Thames mentioned a number of points that it is important for the Aging Committee in particular to be mindful of, that in this bill, it is primary a prescription drug bill. But there are a number of very important other provisions like the studies for chronic care which is dominating the ill health of Americans, like the disease management focus, the important preventive healthcare benefits that were included and that, when you think about how anachronistic Medicare has been up until the passage of this bill, focusing on inpatient drug coverage and physician in hospital, home care and nursing care but excluding outpatient drug coverage, something that is hard to imagine any other type of insurance plan doing for the last 15 years, this bill really moves forward in terms of allowing people to have better health because they have fuller healthcare coverage and because we're pushing forward on trying to organize how that care can be provided for chronic care and disease management purposes.
SEN. CRAIG: Well, as each one of you has said, you would have done it a bit differently, I think that's probably true of 100 senators and 435 House members, the reality is we did tackle a very large problem and tried to resolve it. Now, of course, the detail of it being brought through regulation is critical and that's why we're here today and that's why we'll probably ask you or your colleagues to be back again and again as we watch in progress this effort taking shape. I do agree that I think we should be tremendously cautious as public policy about suggesting changes before the fact.
If it's clear within the context of the laws, as Patricia has pointed out, maybe that's a nudging of CMS in the right direction or in a slightly different direction than they may be taking. But I think Congress will be cautious in that. We're very anxious to see in on the ground in a timely fashion so that our seniors can begin to receive the benefits as has been directed by this legislation.
So we thank you for your presence today and your diligence. As I say, we'll have you back again. I think it's important that we build a record, a record that CMS can look at knowing that we're watching them closely as we move toward full implementation of what is, in my opinion, landmark legislation. We thank you all for your time here today.
The committee will stand adjourned.