Medicare Education Payment Clarification Act of 2003

Mr. President, today, we stand at the precipice of opportunity. Culminating a decade of work, we have before us legislation that will forever change the face of Medicare--providing every senior in America with a prescription drug benefit under a Medicare program that will experience the largest expansion in its 38- year history.

We would not have arrived at this day without the exceptional commitment made by Finance Chairman Grassley to advance this issue and meld the considerable political and policy differences that have marked the development of this bill. His efforts were nothing short of Herculean from the outset, and guided us through a challenging conference. He, as well as Ranking Member Baucus, have remained committed to the bipartisan principles that forged the Senate legislation, which garnered the support of 16 members of the Finance Committee, and a remarkable 76 members of the full Senate.

I want to recognize the outstanding leadership of the President--who in 2001 challenged Congress to enact the Medicare Prescription drug benefit . . . propounded a set of principles . . . and has provided strong impetus during this ``home stretch'' for Congress to complete our work and send to his desk legislation he can sign this year. I know firsthand from my conversations with the President that this is a cornerstone of his agenda and absent his driving force we wouldn't be here today.

So, too, has the Majority Leader redoubled his longstanding and unflagging commitment to enacting into law a bipartisan bill, moving us ever closer to that goal. Thanks to the unique confluence of his skills . . . his unparalleled knowledge and grasp of the issue . . . and his single-mindedness of purpose, more than three quarters of the Senate came together to support S. 1, the Senate's prescription drug bill. And in bringing us to the eve of final passage of this conference report, he has been typically respectful of--and responsive to--all the wide- ranging concerns and recommendations voiced to him, and I thank him for his leadership and for guiding and shaping this process to its ultimate and successful conclusion.

I also want to extend my appreciation to my colleagues Senators Hatch, Breaux, and Jeffords, with whom I've worked so closely on a prescription drug benefit over the past 3 years--they have been stalwarts in this fight and together we developed the template for the ``tripartisan'' proposal that helped frame the proposal before us. And certainly no one has more fiercely championed the cause than another colleague I've joined with in this battle in the past--Senator Kennedy--who I recognize does not support this conference report, but whose early, longstanding involvement and passionate policy advocacy unquestionably built momentum for this issue in Congress.

Finally, I want to thank my good friend and colleague, Ron Wyden, with whom I began my ``prescription drug coverage journey'' almost 6 years ago, when we developed the first bipartisan prescription drug coverage bill in the Senate, which established the principles that I believed were critical to shaping this bill.

We reached across the party isle because we recognized that only a bipartisan plan could ever ``see the light of day''. And we joined forces as members of the Budget Committee to establish in the 2001 budget a $40 billion, 5-year reserve fund. Well, look how far we've now come--from the $370 billion tripartisan plan developed last year, to the historic passage of S. 1 in the Senate this past June.

But I can tell you from my own personal and professional experience that Congress' journey along this road has never been easy--although it has been infinitely more arduous for America's seniors. The process has borne witness to a multiplicity of goals and philosophies across the spectrum.

Some have wanted to add a drug benefit to the existing Medicare program to leverage the purchasing power of 40 million seniors, while others have sought to use the issue either as a vehicle for the wholesale privatization of Medicare, or full-scale, Government administered benefits.

Some have said we are providing too great an incentive for people to enroll in private plans, while others argue we are starving those very same plans.

And some have argued the benefits provided in a particular bill are inadequate, while others submit that they are, in fact, too generous and should be limited to a low-income catastrophic plan.

Yet, today, we essentially all agree we are well beyond one question--the question of need. Therefore, it is imperative we acknowledge the reality that, just as the journey thus far has been imperiled by the ``slings and arrows'' of those on all sides of this issue, it will not become easier with the passage of time--not when you're debating the creation of the largest domestic program in nominal terms ever.

Not when you're attempting the largest expansion in the history of the third largest Federal domestic spending program.

And not when significant challenges loom on the horizon such as strengthening Social Security and Medicare as 77 million baby-boomers begin to retire in 2013--all while we face record-setting Federal deficits.

We did have an optimal window for positive change just 2\1/2\ years ago when the Congressional Budget office was projecting surpluses ``as far as the eye could see''--about $5.6 trillion through 2011. Now, next year's deficit alone is projected at nearly $500 billion. That is how quickly the tide can turn. That is how quickly opportunities can be lost.

Just think--a little over a year ago, the Senate was presented with a choice between a ``tripartisan'' plan that ensured coverage would be available to

all seniors . . . was comprehensive, with the maximum benefit possible for lower-income seniors . . . and was a permanent part of the Medicare program--and the alternative, which was temporary and would have ``sunset'' . . . and would have statutorily restricted access to drugs. Talk about lost opportunities! Indeed, those who are dissatisfied with what we have before us today should fondly recall that tripartisan bill, and lament its unfortunate demise.

So here we are. The conference report before us is the result of an attempt to balance the competing viewpoints not only among Members, but between the stunningly disparate House and Senate legislation. The simple truth is, while I continue to prefer the Senate bill, it is this conference report upon which we will vote. And after careful review, I have concluded that while it isn't everything it could be, it isn't everything it should be. In the end, millions of seniors will benefit over the stagnation of the status quo.

To quote AARP, ``Enactment of this legislation is essential to strengthening health security for all Americans. This is an important step toward fulfilling a longstanding promise to older and disabled Americans and their families. While this legislation is not perfect, it will help millions of people, especially those with low incomes and high drug costs.''

Margaret Thatcher once said, ``You may have to fight a battle more than once to win it.'' Well, some of us have been fighting this battle now for nearly 6 years. The bottom line is, we cannot hold hostage our seniors' futures to a political unwillingness to compromise. And this bill provides us with our best available opportunity to secure, for the first time, a legislative foothold that honors the same basic principles I have expounded upon since I first came to this issue--

That, in keeping with the basic tenets of Medicare, the prescription drug benefit must be universal, comprehensive, affordable, voluntary, permanent, and provide equal benefits across all plans. And that--like the Senate bill and the tripartisan proposal before that--it directs the most assistance toward those seniors with the lowest incomes . . . includes a reliable Government fallback of last resort . . . and continues to ensure seniors access to, and the stability of, the traditional Medicare program. In its totality, this conference report fulfills all of these principles.

In evaluating the individual components of the package, Mr. President, we should be mindful of how we arrived at this destination. As the Senate passed a bill with overwhelming bipartisan support, the House passed its bill with the most razor thin margin of just one vote--and as we witnessed it passed the conference by a mere five vote margin, after an historic three hour vote held open to secure the necessary votes.

And we see the result in the starkest terms, reflected in the nature of the benefit designed out of necessity by the conferees. It includes aspects modeled after each bill--the deductible was set at the House's lower level of $250 and the conferees worked to improve this proposal by offering a benefit with an actuarial value higher than the benefit from both bills. However, in providing these improvements concessions had to be made--in doing so the Senate's $4,500 benefit cap was lowered to $2,250. But in the same respect the cost sharing provided under this cap was lowered from 50 percent provided for in the Senate bill to 25 percent. So as you can see, while not perfect this benefit represents the art of compromise.

Recognizing that this bill is not perfect, I find it imperative to note I was disappointed to see two provisions that I oppose are included in the conference report--means testing of the Part B premium and indexing of the Part B deductible. The Senate-passed bill did not include language to means test the Part B premium and I successfully fought to defeat efforts on the Senate floor to add it. Unfortunately, the House bill did contain this concept and the conferees chose to include in it the conference report. And while the Senate bill did contain language to index the Part B deductible, I opposed this provision in the Finance Committee and had hoped it would be removed by the conferees.

But in recognizing the flaws of this proposal, at the same time, the conference report will at least get the federal ``foot in the door'' in providing a significant level of assistance to the one-out-of-four Americans who right now have no coverage whatsoever. Most seniors--for a $35 monthly premium--will save 50 percent on their cost of prescription drugs. For example, a senior who spends $3,600 will realize $1,714 annually in savings.

And in examining the assistance provided to the lowest income, I am relieved to know that the conferees utilized the model set by the Senate bill. Most critically, in keeping with the Senate bill, seniors with incomes below 150 percent of poverty who qualify for one of the low income categories will not experience a gap in coverage--and will receive a generous level of assistance. This means that in Maine over 93,450 beneficiaries, or more than 40 percent of the Medicare population, will receive a generous benefit with no gap in coverage.

And while the Senate bill may have extended this coverage to a greater number of seniors, unlike the Senate bill, this proposal ensures that all seniors, even the so-called ``dual eligibles''--those who qualify for both the Medicare and Medicaid programs--receive a Medicare drug benefit. This will ``federalize'' 47,100 beneficiaries in Maine and approximately 6 million nationally. This results in a savings of $161 million over eight years to the State of Maine. So, while this benefit does not achieve all that I would like, it has laid the foundation from which we can and must build in the future.

Yet, not only do seniors deserve a subsidy to help make prescription drugs more affordable, they should also have the benefit of choice when it comes to the coverage they purchase.

Because seniors shouldn't be limited in their options for coverage, we ensure that all seniors will have a choice of at least two privately delivered drug plans. Furthermore, all drug plans are required to offer access to two drugs from each therapeutic class and category. Not only does this provide seniors with options, it helps ensure they will receive the drug their doctor determines is the most appropriate.

And let us not forget, there was a time when it was proposed that if seniors desired prescription drug coverage, they would be obligated to enter an HMO. Well, thankfully--and appropriately--this conference report shuns the ``one size fits all'' philosophy of placing all seniors into managed care and maintains the critical protection of choice of ensuring seniors can remain in the Medicare program. Seniors absolutely should have the option of staying where they're comfortable--without sacrificing guaranteed and equal prescription drug benefits.

Still others on the opposite end of the spectrum have said that the privately delivered stand-alone drug coverage option is doomed to fail--that this type of plan doesn't exist in nature and insurance companies won't participate. However, this conference report includes key principles developed in the Senate bill--including risk corridors, reinsurance and stabilization accounts--which are intended to build a stable, productive model that I believe will attract and keep companies in the program.

Ultimately, however, there is no way to guarantee private companies will deliver services in every region of the country. Therefore, as we were developing the Senate bill, many of us who represent the 12 rural States in which no Medicare+Choice programs operate included a fall back of last resort--which I'm pleased to say is sustained in this conference report. This key provision will serve to provide security to beneficiaries by knowing that no matter where they live, they will be assured of coverage even when private plans choose not to participate.

Throughout this debate, concerns have been voiced that with the enactment of a Medicare prescription drug benefit some employers will be provoked into reducing coverage that they offer to their former employees. Indeed, I have expressed concern about this issue throughout my six years of involvement in developing Medicare prescription drug legislation. And while I have concluded that we can take steps to mitigate the problem of employers ending coverage, I do not believe we can eliminate it.

That is because this bill is not causing employers to cease coverage--in fact, from 1999 to 2002--prior to the enactment of a Medicare prescription

drug benefit--almost 10 percent of employers stopped offering retiree coverage. So this bill cannot be held responsible for this problem that exists regardless of the enactment of this bill. But we most definitely should use this bill as an opportunity to help reverse the trend of the last decade and offer incentives that will prompt employers to maintain their retiree benefits.

This conference report takes important steps toward alleviating the problem. Looking back to the development of the Senate bill, the Congressional Budget Office estimated that S. 1 would prompt 37 percent of employers to reduce the drug coverage they offer to their former employers. In comparison, the conference report includes a combination of options--both policy and tax incentives--that CBO, and most importantly employers, believe will provide incentives strong enough to encourage the maintenance of private sector coverage. It reduces the expected drop rate from the Senate bill's 37 percent to 16 percent; this means an additional 1.6 million seniors will retain their employer-sponsored coverage--seniors who might have lost this coverage regardless of the outcome of this bill.

This proposal also takes vitally important steps to create better balance within the Medicare program to ensure that all providers, regardless of where they are located, receive adequate and appropriate payments. For too long, States like Maine, which ranks number 47 in Medicare reimbursement, have been underfunded simply because they are rural. This bill, thanks to the leadership and persistence of Chairman Grassley, finally brings Medicare payments into equilibrium.

This proposal provides an additional $25 billion over ten years to help States, like Maine, receive more equitable Medicare payments. Hospitals in Maine stand to gain an additional $125 million through payment improvements for our Disproportionate Share Hospitals (DSH), teaching hospitals, critical access hospitals and rural hospitals. Further, Maine's rural home health care providers will see increases to their reimbursement rates, along with rural ground and air ambulance providers to name just a few. And let us not forget our physicians. This bill reverses the 4.5 percent reimbursement cut expected for 2004 and provides an additional increase to payment rates for rural doctors, which together total more than $22 million.

I was especially pleased to have been able to work with the Chairman to add, in the Senate Finance Committee, a provision that would ensure the continuation of the country's rural health care residency training programs. This provision reiterated the Congress' intent to allow physicians to volunteer their time as supervisors of residents, and allowed programs to use Medicare funding to support these residents instead of utilizing funding provided by the community.

I added this provision in an effort to protect policy that I worked to include in the 1997 Balanced Budget Act, which, for the first time, allowed residency training programs to place their trainees outside of hospitals, most often in rural communities, and receive Medicare reimbursement. Unfortunately, the Centers for Medicare and Medicaid Services (CMS) recently tried to regulate around that law and prohibit programs from utilizing this option by making it so onerous that programs instead choose to move the residents back into the hospital instead of complying with the agency's new rules.

While I was able to include the corrective policy in the Senate- passed Medicare bill, some of the House conferees refused to maintain this critical Senate provision. But, working with the Chairman, who recognized the importance of this provision to rural States, I was able to secure support to provide a one-year moratorium that prohibits CMS from taking action against programs that allow physicians who supervise residents to volunteer their time. the provision also calls on the Secretary of Health and Human Services to perform a review of this issue and report to Congress on the impact to rural training programs if physicians are not allowed to volunteer their time as a supervisor.

Though the moratorium is helpful, it does not resolve the issue, and I, therefore, will continue to fight on behalf of these vital programs. I have introduced as a separate bill, S. 1897, which contains the language from the Senate-passed Medicare bill that will in fact protect these programs and ensure their continued viability.

This bill also includes a key provision that corrects an inequity that has disadvantaged millions of Medicare beneficiaries who suffer from cancer. This bill directs the Secretary to establish a 2 year transitional benefit in 2004 and 2005 utilizing at least $200 million to allow Medicare to cover all available oral anticancer treatments.

Currently, Medicare provides coverage of a limited number of oral anti-cancer drugs that originally were available in intravenous, IV, form. However, since Congress first expanded coverage to this limited type of oral anti-cancer treatments, the technology has advanced and many of the most innovative and effective drugs do not qualify for coverage because they did not evolve from the IV form. By including in the conference report authority for CMS to extend coverage to all oral cancer treatments, we ensure that in 2004 and 2005, prior to implementation of the comprehensive prescription drug benefit, seniors will have access to the best treatment options available.

The conference report before us, includes another noteworthy improvement to the Medicare program, one that will help make an important tool in the fight against breast cancer more accessible for women--diagnostic mammography. This year alone, 211,300 women in the U.S. will be diagnosed with invasive breast cancer, and almost 40,000 will die from the disease. Yet, the FDA reports that the number of mammography facilities closing now number over 700 nationwide. These closures have led to longer waiting periods for women scheduling annual and follow-up mammography visits which could lead to delayed diagnosis and delayed treatment. This is not acceptable.

The bill before us includes provisions closing the gap between the Medicare reimbursement and the actual cost of diagnostic mammography by removing the reimbursement of diagnostic mammography performed in a hospital setting from the Ambulatory Payment Classification and placing the procedure in the Medicare Fee Schedule. This would bring the hospital technical number closer to the actual cost of the procedure, thus reducing the financial disincentive for hospitals to continue these services.

Having been the lead Republican cosponsor of this bill for a number of years, I am pleased the conference report before us today seeks to turn the tide on these closures as too many imaging facilities can no longer afford to offer these procedures due to low Medicare reimbursement.

One million additional women become age-eligible for screening mammography each year. This action will help ensure that these women will have access to the screening they need to detect and combat this disease earlier and, hopefully, with less invasive procedures. This inexpensive provision in the Medicare conference report could save countless lives, and I am pleased that it will be enacted into law along with the rest of this bill.

Finally--and fortunately--this conference report unquestionably represents the end of the House bill's open-ended efforts to move Medicare toward a national, privatized system through an untested, untried policy known as ``premium support'' that could have led to the patchwork delivery of health care that existed prior to the creation of Medicare in 1965.

This approach would have fostered wild fluctuations in premiums for the traditional Medicare program. Whereas, incredibly, Medicare now provides all seniors the same benefit for the same premium, under this proposal premium variations would have occurred not just from State to State, but within a State and even within a congressional district!

And you don't have to take my word for it. According to the Centers for Medicare & Medicaid seniors living in Miami, FL, would pay $2,100 a year for traditional Medicare, compared to $900 that seniors would pay in Osceola for the same benefit. And when you compare this to North Carolina, the variation from State to State grows even wider with Rowan County, North Carolina paying just $750 for traditional Medicare. So let there be no mistake,

this House-backed provision was a full frontal assault on traditional Medicare. Yet, according to CBO, this proposal that supporters touted as the savior of the program ultimately would have saved Medicare less than $1 billion.

I happen to believe that prescription drug legislation should be about providing seniors with a drug benefit. And while we certainly can consider and incorporate new policies that improve and enhance the underlying program. The drug benefit should not be used as what someone appropriately described as a ``Trojan Horse'' to open the door to the privatization of Medicare.

I ask unanimous consent that this letter, as well as another letter my colleagues and I sent in October, and an editorial from the Bangor Daily News be printed in the Record.

In a letter that 43 colleagues sent, we expressed our strong opposition to this ideological venture.

It is rewarding to note that significant changes were made that transformed the full-scale national premium support proposal into a limited bona-fide demonstration project, as seen in this chart.

Where once efforts centered on the wholesale national privatization of Medicare under a proposal that offered seniors zero protections from premium fluctuations, conferees shifted to crafting a bona-fide demonstration project.

Notably, this proposal exempts seniors from the demonstration who have incomes below 150 percent of poverty.

This bill includes a sunset that ends the demonstration project after six years, limits premium increases to 5 percent annually; and because the demonstration is phased in over 4 years, the actual impact to premiums is significantly less than 5 percent. In fact, the true cap on premiums during the first 4 years of the 6 year demo is only one- quarter of the five percent increase.

Further, under the initial proposal the premium increases would have compounded annually, which could have resulted in a net increase in the traditional Medicare premiums of over 30 percent during the 6 year project. But we worked with the conferees and even this component was removed so that the increases are not compounded.

Finally, we were able to secure support to include selection criteria that identifies qualifying MSAs. Sites must have at least 25 percent private plan participation and seniors living within the MSA must have access to at least two local private plans. Further, the demo must include--one of the largest MSAs--one with low population density--one multi-State MSA--and all must be from different parts of the country. Under this criteria, Maine will not qualify as a demonstration site.

According to CBO this criteria serves to limit the scope of the project to between 650,000 and 1 million seniors, as opposed to the proposal we addressed in our letter, which would have captured 10 million seniors.

Looking back it is remarkable how far this provision has come. Where discussion back in October once focused on the House-passed provisions that created a national premium support program, we now are considering a limited, bona-fide demonstration project that is a legitimate avenue for exploring new ideas to ensure the future of Medicare.

Looking back on the development of the Senate bill, many notions existed about how best to encourage private plans to participate in Medicare. But as we discovered, expectations about the impact and results produced by these proposals often were in conflict. With one proposal, while CMS predicted 43 percent of seniors would participate in private plans, CBO estimated only two percent. Yet at a later point, in considering a measure to establish a payment system for the MedicareAdvantage program, CBO estimated it would cost hundreds of billions of dollars, while CMS predicted it would save Medicare money.

Clearly, it is imperative that we first test proposals before sending Medicare down a path of change. To do otherwise would be to potentially imperil the very health care system seniors have come to reply upon.

So I am pleased that in the final analysis the premium support proposal that once threatened to unravel the very thread of Medicare has been reduced to a limited, focused, true demonstration project, which starts in 2010; is limited to 6 years; is limited to 6 MSAs that according to CBO captures only 1 million seniors; limits premium increases to 5 percent per year without a compounding affect; terminates the financial incentives offered to private plans under the MedicareAdvantage program; and protects seniors whose incomes are below 150 percent of poverty by holding them entirely harmless.

There is one place where this conference report fails to hold seniors harmless, and that is in the skyrocketing costs of prescription drugs which are increasing at a rate seven times higher than the rate of inflation and grew 16 percent between 1999 and 2002.

One effective means to reduce the cost of prescription drugs is through importation. Regrettably, this conference report perpetuates the status quo by insisting on maintaining the safety certification requirements that have to date made it impossible for either the former or current Secretary of Health and Human Services to certify the integrity of imported drugs. Yet one in eight American households already use imported prescription drugs, and according to William Hubbard, senior associate commissioner at the FDA, in his testimony before the House Government Reform Committee in June, there is ``no evidence that any American has died from taking a legal drug from another country.''

The FDA has a critical role to play in the Secretary's ability to certify the safety of imported drugs--and they're not fulfilling that responsibility. Rather than expending the resources to develop the tools necessary to improve safety, and thus open access to this medications, the FDA is instead directing their efforts to threaten consumers. This is astounding because we know we have the ability to improve safety. For a few pennies, anti-counterfeiting packaging can be used. We use it on a twenty dollar bill--a lifesaving prescription deserves no less. Further, drug manufacturers were mandated back in 1992 to track their products using a ``pedigree'', something which has yet to be enforced.

I challenged the FDA to commit itself to improve packaging and require better tracking to protect consumers, and maintain high confidence in the products of our pharmaceutical industry. The public cannot be held hostage to the seemingly never-ending increase in the cost of prescription drugs, and this a fight that will continue to be waged in the halls of Congress, our citizens deserve no less.

So taken in its totality, while I am disappointed with aspects of this legislation, passage of this legislation will be looked upon as a transformational moment in the history of the Medicare program, because now there will be no going back.

There will be no returning to the days when Medicare lived in the dark ages, oblivious to the fact that remarkable drugs were available to save lives, prevent disease, and halt the progression of disease.

There will be no returning to the days when many needed to be convinced that prescription drug coverage was even a topic worthy of serious debate in the United States Congress.

There will be no returning to the days when a quarter of our Nation's seniors struggled without any assistance whatsoever in paying for the prescription drugs that can be the difference between a decent quality of life--and life itself.

With this bill, we will finally pass the point of no return--and thankfully so. This bill--while far from perfect--is the new baseline, the new benchmark which future progress will be measured--and attained. To paraphrase Winston Churchill, in viewing this legislation, it is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.

For all of these reasons, I will support this conference report, and I encourage my colleagues to do likewise.

Mr. President, I rise to engage the chairman of the Finance Committee in a colloquy regarding pending committee action with respect to the tax treatment of company-owned life insurance, COLI. Let me again express my appreciation for the efforts the chairman made on October 1 in securing the committee's unanimous consent to conduct a hearing on issues surrounding COLI and to mark up a COLI provision shortly thereafter.

I welcomed the opportunity the chairman provided in the committee hearing on COLI that occurred on October 23. By the end of

that hearing, I believe committee members had a solid grasp of the legitimate problems that still remain after the numerous legislative reforms of COLI over the last 20 years.

Since the hearing, the chairman and I have worked toward the development of a COLI proposal that would garner the support of the broadest possible consensus in the committee and in the full Senate. I believe that last week we were close to an agreement on a proposal that responded to every legitimate criticism of COLI heard during the course of the October 23 hearing.

I regret that the crush of Finance Committee legislation on the Senate floor in October and November has so far prevented the chairman from scheduling a markup. Unfortunately, it is now clear that the markup agreed to on October 1 cannot before the end of this session of Congress.

Mr. President, I support the Medicare conference report that is before us.

This was not an easy decision, because the conference report is far from perfect, but I believe it is the right decision for three reasons.

First, most basically, the bill provides $400 billion to add a voluntary prescription drug benefit in Medicare. Prescription drugs are an integral part of modern medicine. Yet they are not covered by Medicare today. No other health insurance program in this country today fails to cover prescription drugs. It is long past time to add drug coverage to Medicare.

The bill before us creates a voluntary prescription drug benefit in the Medicare program starting in 2006. Here's how it would work. Those beneficiaries who choose to sign up for this benefit will pay a premium estimated to average $35/month starting in 2006. Beneficiaries would then have to meet a deductible of $250 in out-of-pocket spending on prescription drugs. Above $250, Medicare will pay 75 percent of the next $2000 in drug costs. Then, the benefit cuts off. Medicare will pay nothing until the beneficiary has paid an additional $2850 out-of- pocket. Beyond this gap in coverage, Medicare will then pay 95 percent of all additional drug costs.

Obviously, this is not a perfect drug benefit. It is not the drug benefit I would have designed. And it is going to fall short of many seniors' expectations. The simple reality is that one cannot produce a comprehensive drug benefit that looks like the private health insurance coverage most Americans are used to for just $400 billion.

But the $400 billion in drug benefits provided by the conference report will mean a significant improvement in health coverage for millions of seniors across the country. It will provide a meaningful-- if imperfect--benefit to seniors who currently have no coverage, and it will offer more comprehensive coverage and catastrophic protection to seniors who currently rely on medigap plans. This is a step forward. If we do not pass the bill before us today, seniors could be forced to wait years before we get another opportunity to update the Medicare Program. In my view, we need to take this opportunity to lock in a prescription drug benefit now. We can come back later to fill in the gaps in coverage and fix the other troubling provisions of this bill.

Second, the bill provides a very generous benefit for low income seniors--those with incomes below 150 percent of the Federal poverty level, or about $13,470 for singles and $18,180 for couples. Seniors in this category--about 40 percent of the seniors in my State--

will not face a gap in coverage. They will get the vast majority of their drugs covered, with minimal out-of-pocket costs. In addition, they will get a $600 annual credit toward their drug costs in 2004 and 2005 before the main drug benefit takes effect. These low income seniors by definition are the ones who most need help paying prescription drug costs.

In particular, all seniors with incomes below the Federal poverty level--about $8,980 in annual income for singles and $12,120 for couples--will pay no premium. They will pay no deductible. They will have no gap in coverage. They will pay just $1 for generic prescriptions and $3 for brand-name drugs.

Those with incomes up to 135 percent of the poverty level and less than $6,000 in countable assets will also pay no premium. They will pay no deductible. They will have no gap in coverage. And they will pay only $2 for generic drugs and $5 for most brand-name medications.

Those seniors with incomes above these thresholds, but still below 150 percent of the poverty level, will pay a sliding scale premium based on income. They will pay a $50 deductible. And they will pay 15 percent coinsurance on all their medications, until their drug costs reach $3600. After that, they will pay only 5 percent coinsurance. Seniors who qualify for any of these low income benefits will get an extremely generous drug plan. In my view, this benefit alone is a very significant achievement.

Third, the bill includes a whole host of rural provider provisions that I authored or coauthored. Currently, rural areas face huge payment disparities. For example, Mercy Hospital in Devils Lake, ND, gets paid just half as much as Our Lady of Mercy Hospital in New York City for treating exactly the same patient with exactly the same illness. Yet hospitals in North Dakota don't pay half as much for equipment as their urban counterparts. And rural hospitals have much smaller patient loads over which to spread their costs. As a result, rural hospitals are on the brink of financial failure. These hospitals are critical economic anchors in their communities. Other rural health care providers, from clinics to home health to ambulance services, face similar payment inequities. This bill will go a long way to eliminating some of the Medicare funding inequities that have hurt rural health care. It will help make sure rural Medicare beneficiaries continue to have adequate access to health care.

Specifically, this bill will close the gap in standardized payment rates, which will ensure rural hospitals' base payments are equal to those of urban providers. The legislation also takes important steps to address inequities in the wage index system, which is intended to account for labor costs. And it provides a new, low-volume adjustment payments for facilities serving the smallest communities in the state. In addition, the Medicare bill includes important provisions to improve the Critical Access Hospital Program. Today, about 28 hospitals in my state have this designation. This bill will place them on sounder financial footing.

Along with the provisions to assist North Dakota hospitals, the Medicare bill will also address payment inequities experienced by our physicians and will ensure they do not face payment cuts in the coming years. There are also new adjustments for home health care providers and ambulance services. I hope these provisions will make a real difference in their ability to continue providing quality care across our state. In total, this part of the bill is a very significant victory for rural America.

For these three reasons, I have concluded that we should pass this bill, but we should not oversell it either. As I noted at the outset, this bill is--in many respects--very disappointing. Quite simply, it could and should have been a much better bill.

Democrats in the last Congress put together a prescription drug bill that I was proud to sponsor. It provided a good drug benefit to all seniors. It did not have any gaps in coverage, where seniors would continue to pay monthly premiums but get no assistance from Medicare with their drug benefits. It did not rely on creating a whole new type of insurance plan to meet the drug needs of seniors. Instead, it used the delivery mechanism that the private sector uses to provide drug coverage. It was a bill that would have provided much more comprehensive prescription drug coverage to seniors at a reasonable price. Compared to what we have before us today, it was simple and easily understandable for seniors. It did not have a complex scheme of differing copayments, coverage gaps, and premiums. But that bill was blocked by Republicans.

This year, the leadership on the other side appears to have put ideology and special interests ahead of the interests of seniors in crafting many of the details of this drug bill. As a result, seniors will be facing an untested delivery model that may not provide the advertised benefits at the advertised prices. The simple fact is that there is no such thing as a private, drug-only insurance plan in the commercial insurance market anywhere in this country. They just do not exist. By contrast, we have a proven, successful delivery model in the traditional Medicare program. It works just fine in providing medical and hospital coverage to seniors today. Yet, in drafting this bill, the authors insisted that the plan rely on untested private, drug-only insurance plans. However, it is possible that no such plans will materialize. Or they may be highly unstable--entering a region one year, just to turn around and leave the next year if they are not making a profit.

In my view, it is a serious mistake to set up a system that could force seniors to change drug plans every year. Under this approach, each year seniors could face a different premium, different coinsurance charges, and different lists of covered drugs. I think seniors will be very surprised to learn that they will not have the same benefit from year to year. During consideration of the Senate version of this bill, I fought to correct this plan. My amendment would have allowed seniors to stay in a government-sponsored back-up plan if they liked it. But that effort was rejected by those who insist--in a triumph of hope over experience--that private drug-only plans will work even though they do not exist today.

In the conference, the option was further scaled back to make it even less likely that seniors can choose a stable, government sponsored backup. The Senate bill required that seniors be given the option of enrolling in the so-called fallback plan if they did not have at least two private drug-only plans to choose from. But the conference report will not give seniors the fallback option if there is just one private drug only plan available, so long as there is also a managed care Preferred Provider Organization plan in the region. I fear that this will give seniors an unpalatable choice if they want access to drug benefits. Either they will have to join a PPO that restricts their access to health care providers of their choice, or they will have to join the one private drug-only plan even if it charges excessive premiums.

That brings me to another area that I think will be a surprise to seniors: the variation in premiums. The authors of this bill like to talk about how the premiums will be $35 a month. But what they don't tell seniors is that $35 a month is just an estimate. Individual drug plans will have premiums that can vary substantially. If the drug plan's projected cost for delivering the benefit is only slightly higher than the national average--a real concern in many areas--the premium would be substantially higher than $35 a month. I think seniors will be very surprised to learn that their premiums may actually be as much as $45 or $50 a month instead of the $35 that has been advertised. These differences will be compounded because monthly premiums will increase each year in line with the increase in prescription drug costs.

The thing about this bill that might be the biggest surprise for seniors will be the coverage gap, sometimes called the donut hole. The authors of the bill understandably don't want to advertise this gap in coverage. Many seniors probably don't even know that it exists. But when they hit this gap in coverage, they are going to be mighty surprised. The will discover that Medicare isn't covering one penny of their drug costs even though their monthly part D premium keeps coming out of their Social Security checks. And they're

going to be doubly surprised when they find out that the gap isn't a little more than $1000 wide, but is closer to $3000.

The authors of the bill like to talk about a coverage gap from $2250 in drug costs to $3600 in drug costs. When you read the fine print, you learn that the real gap is from $2250 to $5100. That's because the $2250 counts all drug costs, by both Medicare and the beneficiary. But the $3600 counts only spending by the beneficiary. When total spending hits $2250, the beneficiary has paid $750--the $250 deductible and 25 percent coinsurance on the amount from $250 to $2250. So Medicare won't pay another dime until the beneficiary has paid an additional $2850 out-of-pocket.

Some who are watching might ask, Who in their right mind would design a drug benefit that starts, then stops, then starts again, the way this one does? Why does the benefit have this gap in coverage? The answer is simple: money. It would cost tens of billion of dollars to close this gap. The folks on the other side of the aisle made tax cuts for the wealthy a higher priority than a prescription drug benefit for middle income seniors. As a result, they didn't have enough money left over to provide a drug benefit without this gap in coverage. By most estimates, about one third of all seniors will reach a point at some time during the year when Medicare just stops paying any part of their drug bills. They will keep paying premiums, but Medicare will not pay another dime until and unless they reach the catastrophic spending threshold.

Finally, I am concerned about the effect of this contorted benefit structure on retiree drug coverage. Millions of seniors currently have retiree health coverage that provides more generous prescription drug coverage than this bill will provide. When the Senate passed its bill last June, the Congressional Budget Office estimated that one third of those with retiree drug coverage would lose that coverage because spending by an employer plan does not count toward reaching the catastrophic coverage threshold. In other words, if you have employer coverage, no drug spending by your employer plan counts toward the $3600 you have to spend out of your own pocket before the catastrophic coverage kicks in. This provision creates a clear incentive for employers to cut back or drop coverage so that a beneficiary will more quickly reach the catastrophic coverage threshold and Medicare--not the employer--will pay the remaining costs.

When this bill passed the Senate, I said it was not a Cadillac drug plan. It wasn't even a Chevy drug plan. Instead, it was a bare bones plan. To stretch that analogy, in conference, some of the bones got fractured, leaving the plan even weaker, and some of those bones were replaced with untested artificial substitutes that may not work the way they have been advertised.

The conferees did not just widen the coverage gap and decrease the stability of the fallback drug plans that will be important in many rural and other areas of the country. They also loaded down those weak old bones with a new, heavy load: This bill now is carrying a number of provisions that, in my view, will harm the Medicare program and our health care system.

For example, the bill requires demonstration projects to privatize the Medicare program, taking the first steps in turning it from a defined benefit entitlement to a voucher program. I am pleased that this demonstration has been limited to just six areas. I am hopeful that even these few demonstrations may not get off the ground. I, nonetheless, strongly oppose this effort. This policy will allow private plans to cherry-pick younger, healthier beneficiaries, leaving older, sicker beneficiaries to face higher premiums in the traditional Medicare program. This is terrible health policy, and I hope we will succeed in reversing it in the future.

The bill also contain a $10.5 billion ``stabilization fund'' that allows the Secretary of HHS to make additional payments to managed care plans. This slush fund will just add to the substantial overpayment of managed care plans that already exists in the Medicare plan. To me, it makes no sense to talk about managed care saving money for Medicare when it costs Medicare more to move people into managed care. Why should we pay managed care billions and billions of dollars more than we would pay in traditional Medicare to provide the same benefit? That money could have been put to far better use in other ways, either by improving the drug benefit or by devoting money to chronic care disease management in traditional Medicare.

The fact is that about 5 percent of Medicare beneficiaries account for roughly 50 percent of total Medicare spending. These beneficiaries often have a number of conditions, but they don't get coordinated care because they see different doctors for different problems. This can result in adverse drug interactions, the failure to treat underlying causes rather than symptoms, and higher spending than necessary. Yet Medicare does nothing today to coordinate care in the traditional Medicare program that serves nearly 90 percent of all beneficiaries. Spending a little money up front in this bill could produce significant cost savings over time for the Medicare program. I hope we will be able to find money to expand the chronic care demonstrations in the bill.

The bill also expands health savings accounts that are both bad tax policy and bad health policy. These accounts will allow both untaxed contributions and untaxed withdrawals, a terrible precedent. If it is copied for other tax-preferred savings accounts, this policy could have devastating consequences for the future of our tax base. Moreover, like the privatization voucher program, health savings accounts fragment the health insurance market, undermining the fundamental principle of spreading risk that allows insurance markets to work. Health savings accounts will pull wealthier, healthier workers out of the insurance pool, giving upper income taxpayers significant tax savings. Those who remain in traditional insurance plans--average workers who would gain little in tax benefits from the HSAs and those with significant medical costs--will then face higher premiums. This is the first step toward creating a two-tiered health system in this country. I oppose this policy. The money spent on these tax giveaways could have been far better spent to help ensure that existing retiree health coverage is not eroded.

Finally, the bill fails completely to impose any restraint on the costs of prescription drugs. One of the chief complaints I hear from North Dakota seniors is that drugs cost far too much. I had hoped that Medicare--which has been more successful in holding down health care cost increases than the private sector--could use its enormous market clout to negotiate lower costs for prescription drugs. Unfortunately, the bill does not do that. In fact, the bill contains language that specifically prohibits Medicare from using its market clout to negotiate with pharmaceutical companies.

In addition, the conference failed to include a strong provision on drug reimportation that was passed by the House of Representatives. As a result, Americans will not be able to access lower cost medications from other countries. Reimportation will not serve as a brake on rising drug costs in this country. As a result, the Congressional Budget Office tells us the bill will accelerate increases in the costs of prescription drugs.

These are serious flaws. I wish many of the provisions were far, far better. I wish other provisions had never been included. But at the end of the day, we are faced with the question: Is this bill, with all its flaws, better than doing nothing?

For me, the answer is yes. For millions of seniors who do not have access to any kind of prescription drug coverage at any price, this will give them a new option to have a portion of their drug costs covered. Millions of low income seniors will be significantly better off, with a new generous drug benefit that they do not now have. Rural health care facilities that are now on the brink of closure because they are underpaid for their services will get a new life from the rural Medicare reimbursement provisions in the bill.

Even with these significant victories, if I thought this bill fundamentally threatened the existing Medicare program, I could not support it. I know that there are some who sincerely believe that the privatization demonstrations will fundamentally undermine the program. Although I share their view that these demonstrations are bad policy-- perhaps even terrible policy--I

do not believe that six demonstration projects affecting less than 5 percent of all Medicare beneficiaries will destroy Medicare.

Although this bill is far from perfect, I have concluded that we should pass it. On balance, this bill is a step in the right direction. We do not know when we will have another, better bill that can pass the Congress and be signed into law. In my view, it would not be fair to those seniors--including tens of thousand of North Dakota seniors--who have no access to drug coverage of any kind at any price to deny them this first step in the uncertain hope that we might be able to do better at some point in the future. Rather, we must take the $400 billion opportunity that is on the table today and start providing prescription drug coverage to America's seniors. Then we can and we will go to work to improve the prescription drug benefit provided by this bill.

Mr. President, on the question of time, we have the last 5 minutes. That will probably be leader time. The leader, obviously, ought to have whatever time he needs.

I thank the Chair.

Mr. President, I bring to the attention of the Members a picturesque description of what the reaction is to this proposed legislation. It is written in a very explicit article this morning in the Boston Globe. I want to share the article with the Members.

The title is ``In Dorchester, Seniors Weigh Changes Against Their Needs.''

It reads:

Thomas Lombardi dropped his private health insurance a few

years ago when the price rose steeply. Then he switched from

Coumadin, a prescription anticoagulant he took for heart

disease, to half an aspirin to save about $15 a month. Living

on Social Security and a bit of savings, Lombardi, 75, says

he frequently has ``to cut corners to stay alive.''

But over lunch at the Kit Clark Senior Center in

Dorchester, he said he doesn't support the $400 billion

Medicare drug benefit that is about to become law and provide

coverage to millions of seniors like him. Echoing the

comments of many others at the center yesterday, he said it's

far too complicated and probably won't go far enough to help

him because of gaps in the coverage designed to keep down the

cost of the new benefit. Besides, many said, it will be two

years before the full benefits kick in.

``I don't believe it's good for me,'' said Lombardi, who

owned a welding business in Dorchester.

``This is part of the Bush strategy to . . . destroy

programs put in place years ago,'' Said Richard Schultz, who

qualifies for Medicare at 60 because he is disabled. ``I

understand that it would benefit some low-income people in

the short term, but combined with huge tax cuts, this is

going to drive the deficit up. Then they're going to decide

they don't have the money, and, in the long run, the program

will be dissolved''. . . .

Barbara Burke, who operates the switchboard at the senior

center, disparagingly called the new benefit ``a Band-Aid.''

It's not enough with the high cost of medicines,'' said

Burke, who said she's still working at 66 because she

won't be able to afford her prescriptions if she retires.

The center does not pay health benefits for retirees, she

said, and she has chronic lung disease that costs her more

than $200 a month for inhalers alone.

``People that can't afford to buy medications should get it

at a minimum charge,'' she said. . . .

An Kim Hoang, 67, said she can't afford a copayment of $3

for a brand-name drug, which will be required under the new

plan for those below the poverty level. Those with incomes

from $8,980 to $12,123 will face copayments up to $5 per

prescription. Seniors currently getting drug coverage through

the MassHealth, the state-federal Medicaid program for the

poor, would be shifted to the federal program.

In fact, that is going to be eliminated in terms of coverage. That is part of the 6 million low-income seniors who will pay more.

Hoang, speaking through a translator, said she borrows from

friends to cover the $2 copayment required by Medicaid for

each of the eight prescriptions she takes to treat mental

illness. ``$1 is OK,'' she said, ``but $2 is too much.''

This is the real world, Mr. President. This is putting a face and name on the 6 million low-income seniors who will pay more.

``$1 is OK,'' she said, ``but $2 is too much.''

That was put in here to save some $12 billion to $15 billion put into a slush fund to provide additional benefits to the HMOs.

Because of the Medicaid copayment, her friend Quy Nguyen,

71, said she limits herself to four prescriptions she needs

most and tries to get by without several others. She said she

envisions that choice becoming more difficult under [this

program.]

Josephine DeSantis said the new benefit would help her

immensely, since she struggles to scrape together the $157

she spends every three months for drugs to prevent ulcers and

dizziness. But at 78, she said, she's upset that the benefit

won't start until 2006.

``In two years,'' she said, ``I'll probably be dead.''

There you have it, Mr. President, reaction in a working class community in Dorchester. We have the reaction in real life about what the low-income seniors pay.

When we talk and bring out these charts, as we have in the past few days, this is the very instance about which we are talking. It did not have to be this way. This is just an illustration of the overall challenges of this legislation and a reason that it should not pass the Senate.

How much time do I have, Mr. President?

Mr. President, I yield 7 minutes to the Senator from Florida.

Mr. President, I oppose the Medicare bill before the Senate, but I want to express my understanding of the refinements of the Hatch-Waxman Act found in Title XI of the Medicare bill now before the Senate. I was deeply involved in the negotiations of these provisions in the conference. The Hatch-Waxman Act, which passed in 1984, reflects efforts by the Congress to promote two policy objectives: to encourage brand-name pharmaceutical firms to make the investments necessary to research and develop new drug products, and to enable competitors to bring cheaper, generic copies of those drugs to market as quickly as possible.

The Hatch-Waxman Act has worked very well for almost 20 years. It has provided the incentives necessary to bring the many medicines to market that have so transformed the shape of modern medical practice. And it has brought generic drugs to market faster than ever, saving consumers billions of dollars.

As the Federal Trade Commission has shown, however, in recent years both brand-name and generic drug companies have exploited certain aspects of the Hatch-Waxman Act to delay generic competition. The changes to the Hatch-Waxman Act found in Title XI represent refinements to the present system that will stop these abuses, will restore the original balance the law intended, and will ensure Americans more timely access to affordable pharmaceuticals.

Most significantly, the Hatch-Waxman provisions in this bill limit brand-name drug companies to only one 30-month stay of approval of generic drugs. This change will stop the multiple, successive 30-month stays that the Federal Trade Commission identified as having delayed approval of generic versions of several blockbuster drugs and cost consumers billions of dollars.

It also restructures how the 180-day generic exclusivity provisions work. The 180-day exclusivity gives a generic company 180 days during which it is the only generic competitor to the brand drug. The exclusivity is a very valuable incentive for generic companies. The exclusivity encourages generic companies to challenge patents that are likely invalid or not infringed and, because it goes to the first generic applicant to challenge a brand-name drug patent, it encourages challenges of those patents as soon as possible. These incentives mean that consumers will be able to enjoy the lower prices provided by generic companies sooner rather than later.

The Federal Trade Commission reports that the exclusivity has at times been parked through collusive agreements between brand and generic companies. Parking the exclusivity has blocked other generic companies from getting to market and has cost consumers billions of dollars. The Hatch-Waxman provisions in this bill are intended to prevent parking of the exclusivity. It does this by providing for several situations in which a generic company with the exclusivity forfeits the exclusivity, clearing the way for other generic companies to bring their products to market.

The Hatch-Waxman provisions in this bill also make the exclusivity available only with respect to the patent or patents challenged on the first day generic applicants challenge brand drug patents, which makes the exclusivity a product-by-product exclusivity rather than a patent- by-patent exclusivity, and the exclusivity is available to more than one generic applicant, if they all challenge patents on the same day.

Yes, I will yield to my friend from New York.

That is correct.

The Senator is correct.

Yes, I very much appreciate your question on this point. We do intend that a court decision like the one in the D.C. Circuit's 1999 decision in Teva v. Shalala--a decision dismissing a declaratory judgment action for lack of subject matter jurisdiction because the patent owner has represented that the patent is not infringed--will count as a court decision under the new ``failure to market'' provision. Under the failure to market provision, the conditions for forfeiture are intended to be satisfied when a generic company has resolved patent disputes on all the patents that earned the first-to- file its exclusivity. After a court decision such as that at issue in Teva v. Shalala, the patent owner is estopped from suing the generic applicant in the future and the patent dispute is resolved. So these sorts of decisions should be recognized as court decisions under the failure to market provision.

I'd also like to point out the importance of the declaratory judgment provisions that are in the Senate bill and are retained in modified form by the conferees in the conference report now before the Senate. Amendments made by this bill to both the Federal Food, Drug, and Cosmetic Act and Title 35 clarify that generic applicants may bring declaratory judgment acts to ensure timely resolution of patent disputes. These provisions authorize a generic applicant to bring a declaratory judgment action to obtain a judicial determination that a listed patent is invalid or is not infringed if the applicant is not sued within 45 days of having given notice to the patent owner and brand-name drug company that it is challenging the patent. This clarification of a generic applicants right to bring a declaratory judgment action is crucial to ensuring prompt resolution of patent issues, which is essential to achieve our goal of speeding generic drugs to market.

It's worth pointing out that the Hatch-Waxman Act has always provided that patent owners and brand drug companies can bring patent infringement suits against a generic applicant immediately upon receiving notice that the generic applicant is challenging a patent. The declaratory judgment provisions in Title XI of this bill simply level the playing field by making it clear that the generic applicant can also seek a prompt resolution of these patent issues by bringing a declaratory judgment action if neither the patent owner nor the brand drug company brings such a suit within 45 days after receiving notice of the patent challenge.

Yes, I will yield.

Certainly. The provision in Title 35 is intended to clarify that Federal district courts are to entertain such suits for declaratory judgments so long as there is a ``case or controversy'' under Article III of the Constitution. We fully expect that, in almost all situations where a generic applicant has challenged a patent and not been sued for patent infringement, a claim by the generic applicant seeking declaratory judgment on the patent will give rise to a justiciable ``case or controversy'' under the Constitution. We believe that the only circumstance in which a case or controversy might not exist would arise in the rare circumstance in which the patent owner and brand drug company have given the generic applicant a covenant not to sue, or otherwise formally acknowledge that the generic applicant's drug does not infringe.

The mere fact that neither the patent owner nor the brand drug company has brought a patent infringement suit within 45 days against a generic applicant does not mean there is no ``case or controversy.'' The sole purpose of requiring the passage of 45 days is to provide the patent owner and brand-name drug company the first opportunity to begin patent litigation. Inaction within the 45-day period proves nothing, as there are tactical reasons why a patent owner or brand drug company might refrain from bringing suit on a patent within 45 days.

For example, the brand drug company might have several patents listed in the Food and Drug Administration's Orange Book with respect to a particular drug. It could be in the company's interest to bring suit within 45 days on one patent and to hold the others in reserve. The suit on one patent would automatically stay approval of the generic application until the lawsuit is resolved or the 30 months elapses. Holding the other patents in reserve would introduce uncertainty that could discourage generic companies from devoting resources to bring the generic drug to market and that would give the brand drug company a second opportunity to delay generic competition by suing the generic company for infringement of the reserved patents after the resolution of the initial infringement suit.

Or for patents on which no 30-month stay is available, the brand drug company could sit back to create uncertainty and similarly delay generic entry by delaying resolution of those patents. Or when generic applicants are blocked by a first generic applicant's 180-day exclusivity, the brand drug company could choose not to sue those other generic applicants so as to delay a final court decision that could trigger the ``failure to market'' provision and force the first generic to market.

In each of these and in other circumstances, generic applicants must be able to seek a resolution of disputes involving all patents listed in the Orange Book with respect to the drug immediately upon the expiration of the 45-day period. We believe there can be a case or controversy sufficient for courts to hear these cases merely because the patents at issue have been listed in the FDA Orange Book, and because the statutory scheme of the Hatch-Waxman Act relies on early resolution of patent disputes. The declaratory judgment provisions in this bill are intended to encourage such early resolution of patent disputes.

I agree with the distinguished Senator from Arizona. It is clearly our intent that, under these

provisions, courts considering jurisdictional challenges to declaratory judgment actions brought by generic drug companies should apply the standards set forth in this bill to such challenges in any case pending (either in the trial court or on appeal) at the time of enactment in order to resolve patent issues as soon as possible and to clear the way for quicker generic entry.

Mr. President, I ask unanimous consent to use the 5 minutes reserved for the leader. That has been cleared on both sides.

I yield 7 minutes to the Senator from Connecticut. How much time remains on each side?

So we have 12 minutes. I yield 7 minutes to the Senator from Connecticut.

Mr. President, how much time do we have remaining?

I yield 1 minute to the Senator from Illinois.

Mr. President, how much time remains?

I withhold our time.

How much time is on the other side?

Mr. President, I yield myself 5 minutes.

Mr. President, my friend from Iowa talked about what is happening to the retiree programs. This is the most recent study. Firms offering retiree health benefits dropped 40 percent in the last 8 years. With this legislation, it will go right down through the cellar, make no mistake. We brought that out in this debate.

My friend from Connecticut has talked about what will happen in his State, about the retirees. It happens in Connecticut, it happens in Massachusetts, it is happening in every State of this country, the losing of retirees. The low-income elderly and disabled will pay more. Thousands are going to fail the assets test. That is what is happening in the bill.

In my early years of service in the Senate I was privileged to participate in the final stages of the long debate that culminated in the enactment of Medicare.

Today, Medicare is so much a part of the essential fabric of our society that it is hard to remember the harsh reality the elderly faced before its enactment. Too often, their lives were blighted by the fear of a costly illness that would swallow the savings of a lifetime and leave them impoverished. Too often, their lack of access to affordable medical care made a mockery of the dignified and secure retirement that should be the birthright of every American. Private health insurance had failed the elderly, and Medicare was the response.

Today, Medicare and Social Security are the most beloved and successful government programs ever enacted. They form the cornerstone of our nation's retirement system. But they are also under assault from a heartless right-wing ideology that ignores the lessons of the past.

This ideology views health care as just another commodity. It sees Medicare as another potential profit center for HMOs and insurance companies, not as solemn commitment between government and its citizens. It says senior citizens should be subject to the sink or swim economics of the marketplace--and if they sink, it is their failure, not our society's.

The legislation we are debating today started as an important down payment on the comprehensive prescription drug coverage the elderly have long needed to complement the coverage of hospital and physician care that Medicare provides. That was the essence of the bipartisan bill that passed the Senate by an overwhelming majority. But that bipartisan bill is not the one we are debating today.

Instead, the legislation before the Senate is a partisan document that embodies this administration's right-wing ideology and its desire to fuel the profits of the wealthy and powerful who support it. It cynically uses the elderly's need for prescription drugs as a Trojan horse to reshape Medicare. The Republican majority has hijacked this conference.

Their program draws its essential inspiration from the President's original program to limit prescription drug benefits to senior citizens who join an HMO. That plan was too crude and obvious to withstand public scrutiny, so the House of Representatives--and now

this conference committee--has crafted a more subtle but no less destructive approach. That is why this legislation had to be rammed through the House of Representatives in the dead of night, with the support of only one party, and only after the rules of the House were bent and broken. That is why this legislation is being rammed through the Senate after only 3 days of debate, and only after the Senate waived its own rules in a very close and narrow vote.

This bill is a cold, calculated program to unravel Medicare, to privatize it, to voucherize it and to force senior citizens into the unloving arms of HMOs. It is the first step in the Administration's campaign to reshape America to fit its right-wing ideology. And the White House has already announced that if they are successful in enacting this first step, the privatization of Social Security will be the next step. Today, big HMOs, insurance companies, and pharmaceutical companies are the winners. Tomorrow, when Social Security is privatized, it will be the big banks and brokerage houses. And, in both cases, senior citizens and their families will be the losers.

The bill uses a triple threat to unravel Medicare.

It creates a new program called premium support. They call it a demonstration, but it is really a vast social experiment using millions of senior citizens as guinea pigs. It is designed to raise Medicare premiums, so that seniors will be forced to join HMOs to get affordable care. They call it competition, but it's not competition, it's coercion.

It raises Medicare payments to HMOs so that Medicare can't compete--a 25 percent overpayment. They use the elderly's own Medicare money to undermine the Medicare program they depend on.

It creates a $12 billion slush fund for private insurance plans to make Medicare even more competitive.

The assault on Medicare is the worst aspect of this bill, but that's not the end of the dishonor roll of this bill.

Three million retirees with good coverage through a former employer will lose it as the result of this legislation.

Six million of the poorest of the poor elderly and disabled people will face higher costs for the drugs they need and less access to medical care the day this legislation is effective.

The government will be prohibited from bargaining to obtain reasonable drug prices for senior citizens.

The bill imposes a cruel and demeaning assets test that disqualifies millions of the lowest income elderly from the special help they need.

The bill provides $6 billion in tax subsidies for health savings accounts, a program that has nothing to do with Medicare but everything to do with benefiting the healthy and wealthy while driving up insurance premiums for other Americans.

Rejecting this misbegotten legislation is not a rejection of our senior citizens' needs for prescription drugs. It is an affirmation of their need for Medicare and of their right to choose the doctors and hospitals they trust. If this legislation is rejected today, the pending business before the Senate will be the good, bipartisan prescription drug program we passed in July. Let us make the vote today, a new start to do the right thing rather than a conclusion to do the wrong thing.

In its own way, this is as historic as the debate that enacted Medicare. Medicare is the heart and soul of our society's commitment to compassion and fairness. Today, the Senate will decide whether that commitment will be abandoned for other values--the values that are measured in the cold coins of profit and power rather than on the scales of humanity and justice.

The Senate should reject this mistaken choice. It should stand with the elderly and their families, not with HMOs and insurance companies and pharmaceutical industries. It should reject this legislation.

Mr. President, I yield myself such time as I might consume.

First, I very much appreciate the passion of the opposition. Hopefully, they will look back on this day and come to the conclusion that we have not only provided prescription drugs for seniors as the first improvement in Medicare in 38 years and the strengthening of Medicare that follows it, but that we are also in the process of giving baby boomers an alternative Medicare Program, if they would so choose.

The basis of such legislation is the right to choose for seniors. No one is forced to do anything. We will give those baby boomers a program that is much closer to the health insurance they have in the places from which they retire.

Regardless, there are two classes of people covered today or not covered today with prescription drugs that we are emphasizing. For low- income people, too often our seniors are choosing between heat and prescription drugs, particularly in the cold areas of the country, or between food and prescription drugs. This legislation is going to lessen the chances that low-income people are going to have to make such choices.

The other group of people are those who have catastrophically high prescription drug costs. There is heavy subsidy and help in this bill for those two categories of people. Those are significant categories of people.

Also, we are doing something for everybody in this legislation from the standpoint that for the first time there will be in place mechanisms to dramatically negotiate down the price of drugs. That is obviously going to help the people who voluntarily choose to go into these plans, but the extent to which that is going to have an impact on everybody, old or young, is very important because all I hear from opponents of this bill is that we do not do anything to help cut down on the costs of drugs.

We do it through the subsidy. We do it through negotiations. We do it through getting generic drugs on the market much sooner than before.

Also, this bill is about enhancing quality of life, because none of us think the quality of life is enhanced by putting people in the hospital if they do not need to go to the hospital.

Remember when Medicare was enacted 38 years ago, the practice of medicine was to put everybody into the hospital. Today, the practice of medicine--and a lot of the thanks can go to prescription drugs--is to keep people out of hospitals and out of operating rooms. So people who cannot afford drugs, who go to the doctor very sick,

are going to not only end up in a place they do not want to go, because people would rather not go to hospitals, rather not go to operating rooms. It is going to save our programs a lot of money, both private and public payment programs, for doctors and hospitals, when we can have people go into programs where they can get prescription drugs and keep their health up so they do not go to the hospital.

So we are bringing Medicare and the practice of medicine into the 21st century. In strengthening and improving Medicare, we are doing today exactly what we would be doing if we were writing a Medicare Program in the year 2003 as opposed to the year 1965.

I hope the opponents, in a few years, can look back and say this is the day we have done the right thing for seniors, for their economic life, for the quality of their life; we have done the right thing for our hospitals and our doctors; we have done the right thing for America.

I would like to spend just a little bit of time counteracting the arguments that are used against this bill by those who say we are not doing enough for low-income people. In fact, this bill is coming back from conference doing better for low-income people than when it went into conference.

One of those major changes that were made, not only at the behest of the House of Representatives but also at the behest of a lot of people in this body, probably more prominent in the Democratic Party than in the Republican Party, was to make sure the category of people we call dual eligibles--those low-income seniors who are already on Medicare but also qualify for Medicaid--is to put all of those into the Medicare Program so we didn't have an inequality. Maybe it was not a very big inequality but at least there was some inequality from one State to another State because of the Federal-State partnership in Medicaid that enables the State legislatures in some States to maybe set up a little different program--a little more rich, a little less rich--than what might be done in another State.

So dual eligibles are in this bill because of the demands of mostly Democrat Senators and people in the House of Representatives. That is something I didn't believe should be done, but I supported it because that was a necessary compromise. But now I find people who were advocating that position complaining about the legislation. So I want to tell them how wrong they are or how, if they are right just a little bit, they are right in such an insignificant way that it is immaterial because that ought to be seen as something that results from something they wanted us to do in this legislation.

This conference report, then, contains a generous drug benefit for these dually eligible seniors. There is, first of all, no donut hole for low-income Medicare beneficiaries. Let's get this clear. Let me make it clear. People on that side of the aisle are complaining about a donut hole. But for low-income people there is no donut hole. The bill guarantees all 6 million dual eligibles access to prescription drugs.

Under our conference report, dual eligibles will have better access through Medicare, especially since State Medicaid programs are increasingly imposing restrictions on patients' access to drugs, and that is what brings about greater inequity from State to State. Since States are in a budget crunch, forced to do that, some dual eligibles might be treated less generously in one State as opposed to another, but when they are all under the Federal Medicare Program, that will not be the case.

Further, States have the flexibility to provide coverage for classes of drugs, including over-the-counter drugs, that are not now covered by the Medicare Program. This bill ensures appeal rights for dual eligibles. Under the agreement, dual eligibles will maintain appeals rights like those in the Medicaid Program. The dual eligibles are a fragile population and I think, because of the conference report as opposed to either bill in its original form, they are taken care of better in this bill. The conference report recognizes and provides generous coverage to these 6 million people.

I hope we can take the summation of the AARP when they said this bill ``is a historic breakthrough and [an] important milestone in the Nation's commitment to strengthen and expand health security for its citizens. . . .'' I hope that will be conceived or considered as a toning down of the partisan opposition to this legislation.

I reserve the remainder of my time just in case some colleagues come over. I have more to say, but I will say it later if other colleagues don't show up, so I yield the floor.

Title XI

The purpose of this bill is to ensure that Medicare beneficiaries get the benefit of negotiated discounts that the private sector is able to achieve. We want seniors, who today pay the highest prices, to have access to discounted prices. And we also don't want to see the situation we have today with Part B covered drugs. Isn't it true that the Federal Government dramatically overpays for the drugs that are currently covered under Medicare today?

Isn't this requirement the same standard that applies to the Federal Employees Health Benefits Plan?

Yes, CBO estimates that under the conference report seniors will be offered average greater savings under the Senate bill. The price for prescription drugs will almost certainly be lower than the prices seniors who do not have drug coverage pay today.

company-owned life insurance

I thank the Senator.

I agree. The hearing was informative and prepared the committee to come to an agreement on the reforms that ought to take place.

I share this regret. Let me pledge to have this markup on a COLI provision at the Finance Committee's first opportunity in 2004. I look forward to completing the action we began in October.

That is correct, Senator. The Medicare conference agreement contains a number of significant reforms, which will save billions of dollars in overpayments from Medicare covered drugs, while also substantially increasing payments to physicians. I intend to preserve continued access to high-quality cancer care.

Yes. I would also note that the Senator from Kansas, Mr. Brownback, has some concerns over this issue. He has been a forceful advocate for the oncology community. And while I think the package for cancer care is a fair one, I understand that he has some concerns.

The Senator from Kansas is correct. My commitment to cancer patients has not changed. Indeed, according to estimates from the Congressional Budget Office, this bill is expected to actually increase net payments to oncologists in 2004. Also, CBO estimates that the new Average Sales Price Reimbursement model, when coupled with the changes in practice expense reimbursement, will amount to net reductions to cancer care of $4.2 billion over the next 10 years.

The Senator is correct.

I did know that, and I know that certain mental illnesses also fall in that category. This bill contains a number of protections for people who need exactly the right medicine for them.

I agree. And I am pleased with the backup protections in this bill. That if a plan doesn't carry or doesn't treat as preferred a drug needed by, say, a person with AIDS, a simple note from a doctor explaining the medical need for that particular drug could get that drug covered.

I agree with my good friend.

Mr. President, I yield myself such time as I consume and I invite proponents of the legislation to come over so I can yield some time to them.

One of the issues that has been bad-mouthed by the other side, the opponents of this legislation, is that we have not done enough to help retiree coverage; in other words, the problem they would suppose is that a lot of corporations will be dumping their plans on the Government.

First of all, Congress can't pass a law telling any corporation X, Y, or Z that they can't do that. If they decide it is in their interest, they are going to do it. The point is they have been doing it for years and years.

I had a chart up here 2 days ago that showed how we have gone down from about 89 percent to 60 percent over the last 10 years of the corporations that had retiree health plans. What we are doing is putting in place a program so that if a corporation does that, there is at least something for people who have zilch when it comes to prescription drugs.

One of the things we have done to encourage corporations not to do that is we have put $89 billion in this bill to protect retiree health coverage. This funding makes it more likely--not less likely--that employers will continue their retiree benefits. We do that for two reasons. Obviously, it is better for people to keep what they have. So there is an incentive for that. That will help keep a good drug benefit. Second,

if this is dumped on the Medicare Program, it is going to be much more costly than to keep it in the corporation plan. We did it for those two reasons.

The opponents of this bill have been saying retirees are going to be dropped--that they will be left without coverage because of this bill. It is easy to make very clear that these retirees will not be left without drug coverage. That is, obviously, because one of the motivations behind this 3-year effort to get prescription drugs in Medicare is to take care of or at least offer a plan to people who don't have anything. That is about 35 percent of the people today. It is better for those who do not have as good a plan as we are putting on the books. These retirees will still be better off than they are today because today, when their employers drop their coverage, they are left with nothing--no coverage at all.

Because of this bill, these retirees will be getting drug coverage from Medicare, and their former employer will likely pay the monthly premium for that.

This is a bipartisan bill. This bill addresses the problem we saw as a very serious problem. According to the Congressional Budget Office, we have addressed it in a very responsible way and by reducing very much the possibility that these corporate retirees will be dumped onto this plan.

This bipartisan bill protects retirees' benefits. That has been our goal, and we have accomplished it. The time has come strengthen and improve Medicare with this historic bipartisan agreement. It is the culmination of years of work by Republicans and Democrats who have come together to get this done.

As the AARP has made clear when providing its strong endorsement, this bill ``helps millions of older Americans and their families,'' and is ``an important milestone in the nation's commitment to strengthen and expand health security for its citizens. . . .''

This bill offers an affordable, universal prescription drug benefit that will cover about half the cost of prescriptions for the average senior.

It offers generous coverage for 14 million lower income seniors. It expands coverage for lower income seniors far beyond what is offered today. They will have access to drug coverage with lower or no premiums, no coverage cap, and coverage of 85 percent to 95 percent of the cost of prescription drugs.

And the new Medicare drug benefit is voluntary--no one is forced to enroll in this benefit. Seniors can stay in traditional Medicare just like they have today and have full access to prescription drugs.

There is also a guaranteed government fallback. It is a guarantee that seniors will be able to get prescription drug coverage.

This bill also invests $89 billion to protect retiree health coverage. This funding makes it more likely, not less likely, that employers will continue their retiree benefits.

This bill also creates new coverage choices for beneficiaries in a newly revitalized Medicare Advantage program. And this is voluntary too--no one will be forced to join an HMO.

The bill lowers drug costs by speeding the delivery of new generic drugs to the marketplace, lowering costs for all Americans, not just those on Medicare.

The bipartisan bill includes long overdue improvements to Medicare's complex regulations.

It also revitalizes the rural health care safety net with the biggest package of rural payment improvements Congress has ever seen.

I urge my colleagues to put the interests of our seniors first and give them more choices and better benefits by voting for this historic bipartisan prescription drug bill.

We cannot let this opportunity pass.

Mr. President, it has been a long and arduous process to get us to where we are today. This is a process that didn't start this year, or even last year, but many years ago, on the foundation of what we then called the ``tripartisan bill.'' Through many years of discussions and negotiations in the Finance Committee, we have taken the foundation of that first bill and crafted comprehensive Medicare policy that will vastly improve the health and overall well being of our nation's seniors.

Our critics will say it is not enough or that it lacks one provision or another. My response is that no other Finance Committee membership and no other Congress has been able to produce a bill of this magnitude. We have worked tirelessly in the Finance Committee and with our colleagues in the House to try to make this bill as perfect as possible.

The reality is the Medicare program itself is not perfect.

And I challenge those in opposition to this bill, to show me perfect legislation. It is impossible because we're adding layers on a system that has been in place for nearly 40 years. But everyone involved in this process has worked their hearts out to make this bill the best bill that it can be. It has been a sacrifice for all involved. Missed dinners with family, missed weekends with the kids, little sleep, and intense emotions and intellectual energy--to make this bill what it is.

We've all given 150 percent to get this bill done. And I will admit we did not reach ``perfection'', but we reached excellence. And America's seniors will benefit from the commitment that was made by all of us involved. We did it for them. And it will make a positive difference in their lives. To me, that is the closest thing to perfection that we could achieve.

Let me close by thanking my colleagues on the committee, in the Senate, the House, CMS, HHS and the White House. Dedicated individuals across the Congress and the Executive Branch have worked tirelessly, night and day, to make this happen, and they deserve our thanks for their true commitment to this bill and their commitment to this country.

For my part, I want to thank my own current Finance Committee staff: Ted Totman, my Deputy Staff Director who shepherded staff and members through this arduous process; Linda Fishman, my Health Policy Director who led the committee's consideration of this bill and who captained a team of talented analysts, including Colin Roskey, whose daughter, Rose, was born while negotiations played out in the Finance Committee in March; Mark Hayes, who balanced multiple titles of this legislation while attending law school at night; Jennifer Bell, whose dedication to the needs of rural Americans played an instrumental role in the success of our rural healthcare package; Leah Kegler, who managed many of the complex low income and Medicaid policies in the bill; Alicia Ziemiecki, who provided crucial assistance and support to all on this staff and to individual Committee members throughout the year; and Mollie Zito, who joined the staff just this year and immediately made important contributions to the overall effort.

Still other former members of my Finance Committee staff who are not with me on the floor today have been instrumental in the development of this legislation. They include: Monica Tencate, Tom Walsh, Rebecca Reisinger, Hope Cooper, and Jeannie Haggerty, each of whom helped to shape the original Tripartisan proposal, whose imprint on this legislation is unmistakable. Each of these individuals contributed creatively, analytically and energetically to the successful completion of this legislation.

Beyond the health staff of the Finance Committee, I want to recognize other committee staff who played important roles in resolving the many interwoven, complex tax, health and trade policies within this legislation. Mark Prater and Diann Howland helped navigate many of the health savings account and employer-related issues in the bill. Steven Schaefer and Everett Eissenstadt along with Rita Lari of my Judiciary Committee staff helped conferees reach consensus on difficult pricing, importation and generic drug policies. Steve Robinson assisted in budgetary matters, and Dean Zerbe and Emilia DiSanto provided good counsel on matters relating to Medicare program integrity. Jill Kozeny, Jill Gerber, Beth Levine and Dustin Vande Hoef provided cogent and concise outreach and explanation to the media. Leah Shimp, Cory Crowley and Mary Gross kept in close touch with Iowans on the legislation. And Kolan Davis, my Chief Counsel on the committee, provided important oversight and advice throughout the process.

Beyond my own staff, I want to recognize Senator Baucus's staff, with whom I have enjoyed an excellent working relationship over the last few years and with whom my own staff has

worked especially closely: Jeff Forbes, Russ Sullivan, Judy Miller, Bill Dauster, Liz Fowler, Jonathan Blum, Pat Bousliman, Andrea Cohen, Mike Mongan, Kate Kirchgraber and Dan Stein. Senator Baucus's team have shown a sincere commitment to balanced, fair bipartisan legislation and have been consummate professionals throughout.

The staff to my Senate colleagues on the conference are also deserving our thanks. Each contributed to a collegial working environment under enormous time and political pressures: Pattie DeLoatche, Mark Carlson, and Bruce Artim with Senator Hatch; Stacey Hughes, Hazen Marshall and Bini Zomer with Senator Nickles; Don Dempsey, Diane Major, Elizabeth Maier and Lisa Wolski with Senator Kyl; Dean Rosen, Elizabeth Scanlon, Craig Burton and Eric Ueland with Senator Frist; and Sarah Walter, Michele Easton and Paige Jennings with Senator Breaux.

Finally, all of us were extremely well served by the hard work of our Congressional support agencies, including the able work of our Senate Legislative Counsels who toiled longer into the night than most: Ruth Ernst, John Goetcheus and Jim Scott. Technical and analytical support was provided by experts at the Congressional Research Service, including Richard Price, Jim Hahn, Chris Peterson, Hinda Chakind, Jennifer O'Sullivan and Jennifer Boulanger and many others who assisted in the completion of the Conference Report. At the Congressional Budget Office, Doug Holtz-Eakin, Steve Lieberman, Tom Bradley, Chris Topileski, Phil Ellis, Rachel Schmidt, Jeannie De Sa, Eric Rollins, Shinobu Suzuki and many others played crucial roles in developing cost estimates for policies large and small in this conference agreement.

Each of these dedicated individuals is deserving of our thanks for their commitment to improving Medicare and making affordable access to prescription drugs a reality for America's seniors.

If the other side says it is OK, I would like to yield 3 minutes to the Senator from Texas.

I yield the remainder of my time to the Senator from Utah.

Mr. President, will the Senator yield for a question?

Will the Senator please explain for me and our colleagues the purpose of the provision in Title XI that amends Title 35 to say that courts must hear declaratory judgment actions brought by generic applicants?

Mr. President, will the distinguished Senator yield?

Mr. President, I'd like to ask the Senator if it is the intent of this legislation that the declaratory judgment provisions in this bill, in particular, the change to Title 35, will be available immediately to help generic drug applicants who are now in federal court seeking declaratory judgments that listed drug patents are invalid or are not infringed by their product?

I thank the Senator for his answer and for his leadership on these issues. His experience and technical expertise have been invaluable. I would also like to thank my friend, the senior Senator from New York, who has worked with me these many years on this legislation. His dedication to American consumers and his commitment to restoring fairness to the drug industry must be commended. The senior Senator from New Hampshire must also be recognized for leadership on this issue in his committee, in the Senate, and in the conference on this bill. I would also like to thank the staffs of all three of these Senators, who have worked tirelessly on behalf of this issue. I ask unanimous consent that a letter from Chairman Muris of the Federal Trade Commission about the value of the declaratory judgment provision in Title 35 be printed in the Record.

Less than 5 months ago, I stood before the Senate and spoke at length of my concerns that such a package would be detrimental to the future solvency of our Nation, and leave future generations with a reckless and unjust financial burden. Since that time, members engaged in conference committee negotiations produced a voluminous package which represents the single largest expansion of Medicare since its creation, offering enormous profits and protections for a few of the country's most powerful interest groups, paid for with the borrowed money of American taxpayers for generations and generations to come.

Everyone here is well aware that Medicare faces enormous long-term fiscal challenges. In recent years, the program's financial state has worsened. The most recent Trustee's Report hastened the year Medicare will reach financial insolvency by four years to 2026. Adding a prescription drug benefit to an already failing Medicare, is like putting a band-aid on a patient that needs surgery.

Earlier today I mentioned several statistics which I believe are worth repeating. Today, our Nation has an accumulated deficit of $7 trillion--which

translates into $24,000 for every man, woman and child in the United States. Making our bad financial condition worse, the Federal Government is estimated to run a deficit of $480 billion in fiscal year 2004.

Passing this bill continues our reckless spending. Although this package is estimated to cost just under $400 billion over 10 years, I guarantee you, $400 billion is merely a down payment. I don't believe there is one person here who honestly believes that $400 billion is the maximum we will pay in the next 10 years.

Additionally, this new package will substantially increase existing unfunded liabilities. The Office of Management and Budget estimates the current unfunded liabilities of Medicare and Social Security at $18 trillion. This new benefit will add an estimated $7 trillion in additional unfunded liabilities.

By 2020, Social Security and Medicare, with a prescription drug benefit, will consume an estimated 21 percent of income taxes for every working American. Adding a new unfunded entitlement to a system that is already financially insolvent, is so grossly irresponsible that it ought to outrage every fiscal conservative.

The American people deserve some straight talk. Passing this package, without implementing the necessary reforms to ensure that the Medicare system is solvent over the long-term, will simply expedite its failure. Clearly, it should be incumbent upon us to include comprehensive, free market reforms, into any Medicare prescription drug package in order to ensure that Medicare is financially sound for current beneficiaries as well as future generations. Unfortunately, this conference report represents a missed opportunity.

Medicine has changed substantially since the creation of the Medicare system in 1965. Advances in medical technology and pharmaceuticals have lead to more prescription-based treatments, and Americans now consume more prescriptions than ever before. In 1968, soon after the enactment of Medicare, American seniors spent about $65 a year on a handful of prescription medications. Today seniors fill an average of 22 prescriptions a year, spending an estimated $999.

The conference report before us represents one of the largest enhancements to Medicare since its creation--setting up an entirely new bureaucracy and establishing a sizable new entitlement program. I believe this bill attempts to addresses a real problem, but falls perilously short. We must have no illusions. There are dangers, complexities, and potential unintended consequences associated with this bill.

This legislation is without a doubt an enormous fiscal and social train wreck. Long after this Congress and this administration have left office our children and our grandchildren, and a future Congress and administration, will be left here to clean up the mess we have created with this bill.

I believe we have an obligation to future generations to start exorcizing some fiscal restraint. While our national debt rapidly mounts, we continue to increase the financial burden our grandchildren will have to bare, without reigning in costs. Unfortunately, this problem is exacerbated by our inability to put a stop to our excessive and wasteful spending, particularly egregious porkbarrel projects which Congress has become addicted to.

We are on a shopping spree with borrowed money. The extraordinarily large new entitlement package before us substantially increases the already enormous burden of current and future taxpayers. We have to stop living in denial, eventually the money has to come from somewhere and none of the options are desirable. The reality is, this new benefit will be funded by raiding other entitlement trust funds, through increasing our national debt, reducing benefits or through increased taxes. An expansion such as this is simply not sustainable.

For the enormous cost of this bill, the most alarming fact is that it won't even provide adequate prescription drug coverage or enact many of the significant measures needed to reform the Medicare system and ensure its long-term financial solvency. To save this system, we must enact true free market reforms and bring Medicare into the 21st century. Some provisions in this bill, including means testing Part B and expansion of health savings accounts, are a good start toward long- term reform. Unfortunately, these minor reforms do not outweigh the burden of the new unfunded drug benefit.

With future generations of American taxpayers funding the purchase of prescription drugs under Medicare, we have an obligation to ensure some amount of cost containment against the skyrocketing cost of prescription drugs. Unfortunately, however, this package explicitly prohibits Medicare from using its new purchasing power to negotiate lower prices with manufacturers. The Veterans' Administration, VA, and State Medicaid Programs use market share to negotiate substantial discounts. Taxpayers should be able to expect Medicare, as a large purchaser of prescription drugs, to be able to derive some discount from its new market share. Instead, taxpayers will provide an estimated $9 billion a year in increased profits to the pharmaceutical industry.

Prescription drug importation is another lost opportunity for cost containment. American consumers pay some of the highest prices in the developed world for prescription drugs, and as a result, millions of our citizens travel across our borders each year to purchase their prescriptions. In Arizona, bus loads of seniors depart from Phoenix and Tucson every week, heading south to Mexico to purchase lower cost prescription drugs. The story is similar across the northern border where seniors make daily trips to Canadian pharmacies.

Throughout the country an increasing number of seniors are looking to online pharmacies selling reduced-priced prescriptions imported from other countries, oftentimes with questionable safety. In all, Americans spend hundreds of millions of dollars on imported pharmaceuticals not because they don't want to buy American, but because they simply can't afford to. Although the conference report does contain language on drug importation, it has been successfully weakened to the point of guaranteeing that implementation will never take place.

The only provision contained in this package that has any potential to help rein in the cost of prescription drugs is a negotiated version of a bill Senator Schumer and I have championed for the last several Congresses. Regrettably, it is weakened from its original form. But, this language still represents a partial victory for consumers. It closes loopholes in current law that have allowed brand name drug companies to unfairly delay generic market entry, empowering generic firms to challenge patents and obtain certainty before risking market entry.

Given the difficult budgetary realities in which we live, this package should have been targeted to the most needy. Today, approximately 75 percent of seniors have some form of prescription drug coverage, but the package before us is a universal benefit, not one that targets those poor seniors who we all know make difficult decisions between life sustaining medicines and other basic needs. One of the ludicrous facts is that this new plan will spend an estimated $100 billion to cover the people who already have coverage. Goldman Sachs analysts estimate that this bill shifts a total of $30 billion a year in U.S. health care spending to the Federal Government.

Despite our differences of opinion over this legislation, virtually everyone involved agrees that in this country, there exists a serious crisis for lower and middle income seniors and the disabled. I believe it is an outrage that in a country as wealthy as ours, seniors across the country are struggling to afford the high cost of prescription drugs.

Here is some straight talk to America's seniors: For those of you who think this bill will solve your financial problems I am here to tell you, there are substantial limitations to the proposed legislation. This new prescription benefit will not be available immediately. In fact, it will take several years just to establish the new bureaucracy which will administer the prescription benefits.

Once this program is in place, an estimated 20 percent of seniors who are currently covered by former employers--2.7 million individuals-- will lose

that coverage. Over the summer, the Wall Street Journal quoted one analyst who called this bill the ``automaker enrichment act,'' because companies will see huge reductions in unfunded liabilities and annual drug spending. It is unconscionable that our grandchildren will be shouldering the burden of legacy costs of big business.

Despite the enormous sums of money we are spending on this package, far too many seniors will find themselves with a benefit that is mediocre, at best. And far too many others will find themselves worse off than they are today. Many other seniors, might not even get out of the system what they will pay in deductibles and premiums.

I am concerned that we are about to repeat an enormous mistake. I have been around long enough to remember another large Medicare prescription drug entitlement program we enacted in 1988, Medicare catastrophic. The image of seniors angered by the high cost and ineffectiveness of that package attacking Rostenkowski's car, should be a cautionary tale to all of us.

The American people must be aware that this new package has substantial cost to seniors, to taxpayers and to the future generations who will bare the majority of the financial burden. We must be realistic, there will be unintended consequences of our actions. Moreover, we must be honest about the cost of this measure--$400 billion is merely a down payment for what we are creating. If we as a body decide to support this bill, we must also commit to fiscal responsibility.

Despite my concern for the overall package, several provisions will provide good fixes to the existing program and a better quality of life to many Americans. Several provisions benefitting our Nation's hospitals, will provide much needed assistance to hospitals in my State, particularly teaching hospitals, those in rural areas and those which suffer from the crippling burden of uncompensated care of undocumented immigrants.

I am, however, disappointed that the Immigrant Children's Health Improvement Act was dropped from the conference report. This bill would have reversed a 1996 law that prohibited States from extending State Medicaid and SCHIP Programs to legal immigrants.

The Wall Street Journal has called this bill ``an awfully high price to pay for expanded Health savings Accounts,'' but I would call it legislative malpractice.

After much thought and careful deliberation, I regret that I cannot vote for this conference report. I have reached this conclusion, not because I believe our seniors and disabled do not need or deserve prescription drug coverage, but because I do not believe our country can sustain the cost of this package and because I fear that our actions will not provide adequate assistance to most beneficiaries.