Medicare Prescription Drug, Improvement, And Modernization Act Of
Mr. President, we are now on this historic piece of legislation. I want to begin a discussion of that shortly. But since the majority leader discussed the subject of asbestos legislation, and the chairman of the Judiciary Committee, who…
Mr. President, we are now on this historic piece of legislation. I want to begin a discussion of that shortly.
But since the majority leader discussed the subject of asbestos legislation, and the chairman of the Judiciary Committee, who has been largely responsible for moving that legislation as far as it has come to date, is here and wishes to make a couple of comments, I would like to yield a couple of minutes to the distinguished Senator from Utah and then regain the floor to discuss the Medicare bill.
Mr. President, I say again, this asbestos legislation, discussed by the leader, is very important for us to conclude early next year, and I make the point again, were it not for the work of the chairman of the Judiciary Committee, we would not be at the position where we hope to be close to finishing that legislation at some point.
I will be happy to yield to the Senator from Nevada.
Mr. President, might I suggest that during the time I am speaking, those who would like to speak in conjunction with the Senator from Nevada begin to work up a schedule. I would be happy to propound a unanimous consent request when that is concluded to reflect the agreement, at least for the next several hours, if that could be done.
Mr. President, this is a historic day. Obviously, when one goes back to 1965 and thinks about the creation of Medicare, a lot has changed since then. We are here today to begin debating in the Senate a bill which passed early this morning in the House of Representatives, has long been advocated by President Bush, and which many people have worked on for a very long time, to try to modernize our Medicare system which, after 35 years, we recognize in this new 21st century needs to be changed to some extent.
For example, during that period of time, prescription drugs have become a major component--indeed, in many cases the first component--of treatment for ailments, disease, and afflictions of people.
Mr. President, 35 years ago prescription drugs were used to alleviate symptoms of pain and occasionally to treat conditions, but more intrusive methods were the order of the day at that time. The Medicare program for seniors reflects the conditions then by covering hospital stays and physician benefits, but not outpatient prescription drugs. The prescription drugs which have over the last 35 years become a key, if not the key, component of medical treatment have not been a part of Medicare because they were not as key in 1965. So we know we need to add prescription drug coverage for our seniors and for those who are disabled and who qualify for Medicare.
There are other changes we know, also, that would help to strengthen Medicare, to ensure that as we proceed to provide Medicare to the baby boom generation, we will be able to do so with the highest quality of care possible, at prices that both they and the American people can afford and, as I say, which really encompasses the new concepts of modern medicine in this treatment.
So the question was how we would develop a system to provide prescription drugs as a component of Medicare. There were several different options, but the option that has been finally settled upon is one which I can support, and as someone who actually advocated a somewhat different approach, I would like to speak to those primarily who, like me, were not particularly pleased with the initial direction in which this legislation proceeded, to talk about why, at the end of the day, it is the best we can do under these circumstances and I think under any foreseeable circumstances of the near future, and therefore why it is important to move forward with this legislation.
It is momentous, it is huge in terms of the amount of money we are talking about, a commitment over the next 10 years of $400 billion. That was the amount that Congress agreed to with the adoption of our budget and the crafting of this legislation. We resolved that this money would be set aside to provide this prescription drug benefit and make changes in Medicare to ensure the benefits of Medicare would be available to everyone in a quality way during the 21st century.
Let me discuss first of all some disappointments I have with the bill because these have been discussed by others and I want them to know I am very cognizant of the concerns that have been expressed.
I served on the conference committee that crafted this legislation and I spent literally hundreds of hours working with colleagues through these issues. Some of the battles we fought, I helped to prevail on, others we did not prevail on. But it is the nature of compromise between the two bodies and between the two parties, especially when the Senate is almost equally divided that no one is going to get everything they think is best.
Let me first of all talk about the approach that was taken here and why in some respects I think we made some wrong turns, but how we have tried to recognize that and to ameliorate the effects of those wrong turns as much as we could.
There was a sense in this country, because there are many people who could not afford all of the prescription drugs they need in their treatment, that the Medicare plan had to be modified to ensure they could have access to those drugs at a reasonable cost. That was an approach that many Members thought would best utilize the funding available, to provide the maximum amount of benefit to those who most needed it.
Somewhere along the way, a major decision was made which fundamentally altered that concept. It was a decision that was strongly favored by the AARP, for example, a group which I am very pleased to say is in support of this legislation and has taken a strong role in educating America about the benefits of this legislation. That decision was to make the benefit of prescription drugs universal; that is to say, to make it available to all Medicare-eligible people, not simply to try to help those who needed the help the most.
The first result of that was it significantly reduced the amount of money we could make available to those who need it the most because, obviously, if you provide a universal benefit, you are providing it to everyone who qualifies for Medicare basically equally to those who do not need the benefit, because they have more money, as well as those who do need the benefit. Once that decision was made, it reduced the amount of money we could allocate to help those who needed the help the most. I regret that. We could have structured a plan that would have more targeted the benefits where they were needed the most.
In addition, we created some other problems. One of the problems is, employers who provide prescription drug retiree benefits will have less incentive to do that in the future because the Government will do so if they do not. Many will argue, why should we spend our money, our corporate funds, to support the prescription drug retiree benefits that we have done in the past when, if we stop that coverage, the Government will pick it up? The result of that was we had to allocate over $70 billion of this money to be paid to these business plans, union plans, and even government plans, that provided retiree health care benefits with drug coverage. We had to provide that money to them to enable them to continue providing the coverage. Some call it a subsidy. It is a fair term, I suppose. But one might say we are paying them three fourths of what it would cost the Government, to provide this particular benefit.
So from the Government's point of view, we are saving money because if these company plans did not continue the coverage, the Government would have to pick up 100 percent of the cost. Nevertheless, it took a chunk of the money out of the program to pay for benefits that are already being paid for by somebody else, thus further reducing the amount of money we could allocate to those that need the care the most.
So those are just two examples of problems created by this initial decision.
The original idea of many Members was that we should provide more choices to seniors. Many Members came to that conclusion because Federal Government employees such as Members of Congress have a lot more choices in our drug coverage. We are entitled to enroll in something called the Federal Employees Health Benefits Program, or FEHBP, and we have a lot of health insurance options. These insurance options are integrated health-care plans. They provide all of our care, from hospitals to doctors as well as prescription drugs.
A lot of Federal employees, 10 million strong, like those kind of plans. Many are PPOs, preferred provider organizations, where you go to any one of the doctors on a list who has signed up with that organization, or you can even go out-of-network, you can go to a different doctor, and that is still OK. This was the concept the President originally announced and it is a concept I strongly supported because it would maximize choices.
At the same time, we recognize that a lot of people would still want to maintain what they currently have, what we call traditional fee-for- service Medicare, and simply add a drug benefit on top of that. We did not want to take that choice away. So the concept was to have basically two choices: Stay in traditional Medicare with the new drug benefit, or sign up with one of these new insurance programs, a PPO or what we call today Medicare+Choice, which is predominantly HMOs. That choice has been created in this legislation. The choice is a good choice.
I regret, however, that I don't think we have given the health insurance option a good enough chance to attract very many beneficiaries. There are efforts in the bill to do that, but I think we put too many restrictions on the PPOs, in particular, to expect they will be very successful. For one thing, we strongly regulate how much they can be paid. As a matter of fact, their payment rates are directly tied to what we pay in regular fee-for-service Medicare. That is price control. Congress and the administration set the prices that can be paid under the traditional Medicare Program. We were trying to get away from that heavy price control with this new insurance option. Unfortunately, in an effort to make sure we could keep the costs ratcheted down and compare those costs to what we are paying for traditional Medicare, there is a direct relationship between what we pay in traditional Medicare and what will be paid on the private health insurance side. It is not really like regular private insurance. This is very highly regulated, controlled price, controlled private insurance as the alternative to fee-for-service Medicare.
I think it is less likely those PPOs are going to succeed as a result of that. Nevertheless, we at least, for the first time, have the concept of private health insurance as an option to traditional fee- for-service Medicare for all beneficiaries.
Senator Nickles, in particular, and I worked strongly to increase the flexibility that the insurance option could provide so there could be literally dozens of products out there like the FEHBP for Federal employees, and people could decide what was best for them. Again, unfortunately, that flexibility has been greatly limited in this legislation, primarily because of concerns by the Congressional Budget Office that if very much flexibility were provided, the cost of the program could exceed the $400 billion.
As a result, the options that are offered by these private plans will be very limited. For example, as you will hear others get into the details of the legislation, especially the drug benefit--and my colleague, the Senator from Iowa, the chairman of the Finance Committee, Mr. Grassley, is in the Chamber. I know he will go into great detail about precisely how this works.
When that occurs, and you see how this benefit is going to be provided, one of the things you will see is that even though there is a very generous benefit--the Government will pay 75 percent of your drug costs up to $2,250, after a $250 deductible; so it will pay about $1,500 worth of drug benefits--at that point, then, the individual is going to be responsible for a little under $3,000 worth of drug benefits, before the catastrophic coverage of 95 percent Government- paid kicks in. Some people refer to this as a donut hole.
Obviously, with $400 billion allocated to the problem, we are not going to be able the pay all of everybody's drug costs. There is not enough money in the Federal budget for us to do that. As a result, you can only cover what that amount of money will cover.
Well, it is hoped that the private sector insurance option will provide different ways of ensuring against that donut hole, ensuring against that out-of-pocket expense that individuals will have to pay. But, unfortunately, that cannot be done under this legislation. The threshold can be raised, but the out-of-pocket amount still has to remain the same. As a result, there is a limitation on the insurance product that can be offered.
Again, Senator Nickles and I had hoped there would be a lot more flexibility. I am hoping in the future we can loosen this up so these health insurance options can act like regular insurance options.
Another point: If you go to an insurance company today, a preferred provider organization, and you would like to get treatment from a different doctor who is not in their network, you can go to that different doctor. The plan will only pay an agreed-upon amount, and then you are billed for the difference between that and the physician's reasonable and customary fee. That is standard practice today.
That cannot be done under the way this legislation is written. That has to be fixed as well. Right now there is a price cap on that, and, therefore, it will discourage people from going out of the network, which will discourage people from signing up with PPOs in the first place.
These issues will have to be addressed later because we did not give sufficient flexibility to the insurance company alternative in this current bill. Again, I am speaking primarily to those who, like me, approach this with the idea that we could provide coverage similar to FEHBP coverage that the President originally articulated as the goal, and as someone who did not win all of the battles in this negotiation, but who still believes that at the end of the day, this is the best we are going to do, either now or any time in the future, that I can predict, given the politics, given the closeness of the Democrat- Republican split in the Senate and in the House of Representatives and the various other factors that influenced the decisions that we made.
Let me talk a little bit more about the drug benefit. Seniors today buy Medigap insurance, and that provides them a certain degree of drug coverage. It is regulated by the Government, but I think a lot of seniors believe they have pretty good drug coverage because of the Medigap insurance they have. The reality is, they are paying a lot of money for not that great of coverage. They pay almost as much money in premiums as the amount of coverage they receive. So it is not completely dollar for dollar, but it is not the kind of insurance that ordinarily we would think of.
As a result, the drug benefit that we provide here will be more substantial for the amount of money that is paid. But I do fear a lot of people will see the drug benefit we provide here as less than they are able to obtain today through their Medigap insurance, and it is going to be incumbent upon all of us to explain to people how this drug benefit will work. Again, it calls for us to try to loosen up the way the private insurance market can provide the drug coverage to meet seniors' objectives, not all of which are precisely the same.
Therefore, in order to convince them there are good alternatives to what they have today, since they are not going to be able to purchase the new drug benefit through the means of
Medigap insurance anymore--that will be done through a different mechanism--it is going to be important for us, I think, to provide them the maximum type of flexibility and choices, something, again, that we are going to have to address in the future because it is too restricted in the bill as we have it written today.
There are other items--and I do not want to dwell on the negative-- but just to cite two or three others to show areas in which we could have done better.
Today, we reimburse physicians and hospitals in a very irrational way. It is very tightly controlled. It is price controls. We never get it right. We tend to want to save costs, so we do not reimburse them enough, and then hospitals begin to shut down, doctors begin to get out of Medicare, and we realize we have made a horrible mistake. So then we ratchet the payments back up, and it is a very herky, jerky way of reimbursing the very people we rely upon to provide the critical health care that we want. As a result, we have tried to figure out ways to make this more rational.
Well, the best example is in the case of oncologists, doctors who provide us drugs to treat cancer. The oncologists are not reimbursed at anywhere near what it costs them to provide this service for us. As a result, what they have to do is to buy the drugs for the chemo part of chemotherapy, and they mark up the value of those drugs, sell them to the patient, and that is how they get reimbursed for what they do. Of course, people have said: Well, it is a huge markup. They are making a lot of money off these drugs. And it is true that there is a huge markup. It is not a rational way of reimbursing them.
So what we tried to do was to go back and fix the basic formula, called the practice expense formula, to figure out how much it really costs those doctors to stay in business to provide this all-critical care for cancer patients, and we begin to re-adjust that formula so it will pay them more, and, at the same time reducing the markup they get on the drugs so they would not have to be paid out of that pot of money, in effect.
Well, we got about halfway there, but we still have more work to do on that particular formula. So it is just an example of how the Medicare system served seniors well, but there are clearly things in it that need to be fixed if we are going to continue to provide high- quality care and to ensure that we have physicians and hospitals that can stay in business to take care of us.
Cardiothoracic surgeons are another group. The very best of these surgeons go into the operating room with their own team. This is life and death. They have teams that work together for years. They have had a lot of experience in doing what they do. But they do not get reimbursed for their team members, their nurses, and so on. What they have to do is pay for that out of their own pocket. You can obviously see, at a certain point, they are not going to be able to provide the high-quality care. What they have to do is basically go into the hospital and take whoever the hospital has at that time. They do not work together as a team, and they provide about half as many people as some of these surgeons need in order to provide the highest quality cardiac care.
Here is another area in which we could have provided at least a demonstration project or two to figure out how best to reimburse these cardiothoracic surgeons. We failed to do so in this legislation. We need to do that in the future. Cost containment was another matter. We wanted, given the fact this legislation could explode in cost, to have something in this bill that would ensure that the costs would be controlled.
There is a section in here that purports to do that, but it is largely illusory. It basically says, at a certain point in time we have to get together and make some recommendations. The President has to send some recommendations down to us. We do not have to act on them, of course. And it is really very hard to change the rules of the Senate to force us to act on something like this.
So I just want to let my conservative friends know that, no, there is not good cost containment in this legislation. But I would also ask them to think about one other thing; and that is, there is no free lunch. If you want high-quality health care, you are going to have to be willing to pay something for it.
I think sometimes conservatives look at one side of that ledger but not the other. We have to do everything we can to ensure that taxpayers can afford this expense. But we also do not want to be penny-wise and pound-foolish when it comes to providing quality health care for our seniors and for others who are on Medicare.
Indeed, for those who say we are going to control the costs in this legislation, I would say that the means of doing so that are in the bill are primarily price controls by the Government, which have been demonstrated not to work very well, and I think we can expect that the younger generation is going to bear the full brunt of this expense.
It is a $400 billion expense over 10 years. It is not taken out of any kind of payroll tax or other kind of payment by the beneficiary for that segment of what we are providing. It is going to be paid for out of the pockets of people who are working to earn a living and pay for their kids' education. We have to stop and evaluate whether, with a lot of seniors who are well enough off to afford drug coverage, it is fair to ask their kids, who are struggling at this point to make a living, to bear more of the burden.
There is well over $100 billion of this, probably about $150 billion, in premiums and copays and deductibles that will go toward the benefit we are providing here that is worth $400 billion. But let us not forget that the $400 billion money is being paid by taxpayers. So cost containment is important, and it will boil down to the discipline that we in the House and Senate and the President can exercise in keeping the right balance between cost containment and providing high-quality care.
I have stressed the negatives to try to establish a point. I didn't get my way negotiating this legislation despite hundreds of hours of work in the conference committee. Nobody got 100 percent of what they wanted. For those conservatives who are disappointed because of the kind of things I have been talking about here or the lack thereof that shows we really missed a historic opportunity to make the bill better, I would like now to address why I think, nevertheless, they should support the legislation.
It boils down to the fact that it is extraordinarily difficult with something this big and this complicated and important to so many people, with every Senator and every Representative having a very big stake in trying to get it right, to reach the kind of compromise that is going to make any particular group happy.
I note there was a scathing op-ed piece against one of the Democratic Members who was substantially involved in these negotiations, criticizing him for not representing his point of view well. I can't tell you how wrong the writer of that piece was. From my perspective, that distinguished Senator got far more than I did out of this. He won more of the battles than I did.
I think one should be a little bit careful about simply putting the ideology out there and saying, because one side didn't get everything it wanted, therefore it is a bad bill. The reality is that under the circumstances we face today, I think it would be impossible to put together a bill that would provide drug benefits for our seniors that would do it any better than what we have done here.
Why do I say that? Some people say, let's let this bill fail and we will come back and simply provide a drug benefit to those who need it the most. I think we have gone too far for that. Groups such as AARP are not going to support that. Their support is very important for a program such as this. I don't think a lot of Senators would support that. So even though that might have been how I would have liked to have started this process, I don't think that is going to pass.
Do we let 2 or 3 more years elapse without providing a drug benefit? I don't think that is an alternative. So I would challenge anybody who says this bill isn't perfect to demonstrate to me how they could cobble together a majority to provide an important drug benefit and still achieve all of the objectives they want to achieve and get it passed.
We do need to include prescription drugs in Medicare. They haven't been included, and we all know this is the preferred method for treatment by most physicians for many illnesses and diseases today. We also need to ensure that those who don't have coverage can get it. The options we provide in this bill at least get us part way down that road.
Importantly, we will be reducing the costs of prescription drugs both to third party payers, whether it be the Government or the employers, as well as the seniors for the part they have to pay. How is this done? There are a variety of mechanisms in the bill. One of them is the fact that the Government and the private plans will be buying in bulk. Everybody can understand that concept. You can buy for a lower cost if you buy in bulk. Another is that there are a lot of incentives to use fewer drugs, to use generic drugs, drugs that are based on a formulary that more specifically fits the particular patient's need, and not to have a lot of extra drugs sitting around in the drug cabinet. Almost all of us have extra drugs sitting around, which is probably not a very healthy thing. It is a costly thing as well.
There are a lot of incentives built in this legislation that should permit us to reduce the cost of drugs both for the third party payers as well as for the seniors themselves for the portion they are going to have to take care of.
Another important thing in this legislation is that we at least go a little way toward rationalizing the system of paying the doctors and the hospitals and other health care providers that have not been adequately reimbursed. There were large cuts in store for hospitals and doctors. Those cuts are no longer in place. In fact, there are very modest increases for physicians and hospitals: A 1.5 percent increase for the physicians, instead of the 4.5 percent cut that was going to take place starting January 1 if we did not act. At least there is modest support for those that we really count on when the chips are down to take care of us.
As I said, if we defeat this bill now, I don't see how we can come back and provide these things, how we can get consensus to do it anytime in the near future.
Another important item is the health savings accounts provision. Many of us have believed for a long time this could really provide a long- term way for people to build up the savings they can apply toward health care for insurance and out-of-pocket expenses so that they won't need to rely as much on Medicare when they get to be eligible for Medicare.
We know one of the reasons we have high-priced drugs is that Americans have to bear almost the full burden of the cost of production of drugs since other countries, such as our friends to the south and north, have price controls on how much they can reimburse the drug companies for their prescription drugs. This is unfair trade. It puts all of the burden, a cost shift, on the American consumer. This bill provides instruction to our Trade Representative to come up with a way to deal with those other countries to get them to share more of the burden of the expense of producing these important drugs for us.
We also include the affluence testing of the Medicare Part B premium for those at the very wealthy end of the spectrum; a senior who makes over $80,000 a year, for example. I think it is not too much to ask them to pay a little bit more in their Medicare premium for the coverage they receive.
We index the Part B deductible so we don't have to come back every 10 years and have Congress pass a law. This will basically keep up with the cost of inflation. We also include a change for so-called 340B hospitals. These 340B hospitals are public safety net hospitals, and we enable them to purchase their inpatient drugs cheaper than they can purchase them today. I introduced legislation earlier on this subject, and I am pleased we have that provision included here.
Then finally a provision that is important to those States such as the border States--Arizona, Texas, California, and others--that are required under Federal law to provide treatment to illegal immigrants because of the law called EMTALA, the Emergency Medical Treatment and Active Labor Act, that says no emergency room can turn away a patient whether that patient can pay or not.
Because emergency rooms now are faced with treating illegal immigrants under this requirement and because the Federal Government has not been able to enforce the law to prevent those people from coming into the country illegally in the first instance, we believed it was important for the Federal Government to at least help these hospitals defray some of the expenses they are incurring, which in some cases are so severe, it is forcing hospitals to consider closing down and certainly shutting down emergency room care.
That can't be. American citizens should not suffer because of a law that requires that we provide care to illegal immigrants. We can at least reimburse those hospitals for a portion of the cost they bear. This bill provides $250 million a year for 4 years to provide that kind of reimbursement.
There are a lot of positives in the bill. There is a lot more I know the chairman of the Finance Committee will discuss in more detail.
What I want to do is discuss it from the standpoint of somebody who has been critical, who has constantly said: We can do better. We are missing opportunities. We ought to do this in a way that is more flexible, that looks more like the FEHBP. I didn't win a lot of those battles, but we have an opportunity to at least implement a plan that we have a possibility of making better over time as people see the advantages of the concepts we have put in the legislation.
We have the knowledge that at least in the foreseeable future, because we are adequately reimbursing those people upon whom we rely for care, that we are going to have that care provided to us in a quality way and that our seniors will not suffer because we didn't consider it important enough to provide for them the very best.
Without this legislation, they will continue to pay more than they should for prescription drugs. They won't receive as much in the way of prescription drug coverage or care. And that will be a shame at a time when this country has the capability of providing that kind of care.
Notwithstanding all of the concerns I have noted, the challenges we need to face in the future, we should support the legislation.
I chair the Health Care Subcommittee of the Finance Committee in the Senate. I intend to have hearings next year into areas that may need improvement. I look forward to working with my colleagues to improve this historic legislation as we move forward. We owe our senior citizens no less.