Remarks on the Conference Report on H.R. 1
Medicare Prescription Drug Benefit Legislation
U.S. Senator Ron Wyden

November 23, 2003

"M. President, as Congress considers Medicare and prescription drugs, I keep remembering the older people whose stories spurred me to choose a career in public service. For seven years before I came to the Congress, I worked with the elderly and spent many hours visiting them in their homes. During those visits, seniors would often bring out shoeboxes full of health insurance policies that were supposed to fill the gaps in their Medicare coverage. It was common for a senior to have seven or eight of these policies, and many of them weren’t worth the paper they were written on. Slick, fast-talking insurance hucksters kept coming around and scaring these older folks, and it was heartbreaking to see seniors ripped off this way. After working all their lives, they went without every month because they were paying for these junk policies with the precious funds they really needed to pay the heating bill, or buy some groceries.

"When I got elected to Congress, I vowed to stop this fleecing of America’s seniors. I helped to write the first and only tough law to stop the rip-offs of private health insurance sold to the elderly. This statute has worked to drain the swamp of fly-by-night Medigap policies that used to rob seniors blind.

"The days of the shoebox full of policies are long gone. But skyrocketing drug costs and lack of access to medicine, two of the problems that plagued seniors even back then, is more of a problem today.

"During those home visits with seniors, I saw firsthand the pain they felt when they couldn’t afford life-saving medicines. Their anguish was physical, and emotional. They lived with pain. They feared for their futures. They worried that the choices that financial constraints forced them to make might not be the right ones.

"Stories like theirs are familiar today. Caseworkers in every Senate office hear them all the time. A senior is supposed to take four pills, but because she can’t make ends meet, she takes two pills for as long as she can afford that. Then she runs short of money and she takes none. Eventually, she ends up in the hospital – where the hospital portion of Medicare, known as Part A, will cover her drug treatment, but sometimes then it’s too late.

"I’ve worked to rewrite stories like that since I came to Congress. That’s why I worked with Senator Pryor’s father so that the states could bargain aggressively, and get more for their Medicaid dollar when buying prescription drugs that would help low-income seniors. I’ve tried to expand coverage for generic drugs. I’ve worked to supplement these efforts by creating new health care options for seniors, including in-home care, and increased payments for providers in low-cost areas – funds that can be used to offer prescription drug benefits.

"Because of my history, I’m acutely aware that there is so much more to do. The reason the debate on this bill is so important is that government has an obligation to do right by a generation that deserves our nation’s respect and care – not the runaround when it comes to their health.

"My years working with seniors have governed my decision on this bill. I have tried to keep the focus on determining whether this Medicare prescription drug legislation could make a genuine, positive difference for a significant number of America’s seniors, or whether it would fall short of that objective.

"As part of the process, I’ve developed criteria for evaluating this legislation. I’d like to describe the questions I felt were key, and the answers I have found.

"First, does the bill help a significant number of seniors with low incomes or big prescription bills?

"In their editorial endorsing this legislation, the New York Times stated that “the bill is strongest when it comes to the most important target groups: elderly people with low incomes or very high drug bills.”

"But I didn’t take their word for it – particularly because they are just one voice in a chorus coming from both sides.

"I have gone to considerable lengths to examine the figures and data from all angles. The data that’s been available has been compiled from those strongly in favor of the bill, such as the federal Center for Medicare and Medicaid Services, as well as those strongly opposed to the bill, such as the non-profit Center on Budget and Policy Priorities.

"Critics say this legislation has significant gaps in coverage for all seniors – particularly those of modest income. Proponents of the bill claim that millions of seniors will have coverage they didn’t have before. There seems to be some truth on both counts, and that’s why I’ve zeroed in on some figures that seem to be beyond doubt.

"Using data from the 2000 Oregon census, my staff determined that 78,829 older people in Oregon had health costs that were more than the catastrophic cap of $5000 and, under this bill, would have their prescription drug costs reduced by one half. Using 2001 data from the non-profit Kaiser Family Foundation, my staff determined that Oregon has 106,765 seniors on Medicare with incomes at or below $12,123 for an individual or $16,362 for a couple. Under this legislation, this low-income group would pay no premium for their drug coverage and would be responsible for a co-pay of no more than $2 for generic drugs and no more than $5 for brand-name drugs. The least fortunate would pay only $1 for generics and $3 for brand-name drugs.

"Most seniors with low incomes and high drug costs are likely to be eligible for both Medicaid and Medicare. These people are commonly known as “dual eligibles.” This bill assures that they receive a drug benefit through Medicare so they are not left at the mercy of perennial State budget crises and so they will not have to compete against other vulnerable groups in State budget battles.

"Another factor to consider with respect to a drug benefit is based on what I hear from seniors at town meetings, senior center and nutrition sites. Many seniors will fear that this bill will fence them in to a drug benefit they don’t want. Expectations for this program are sky high. I know that some seniors will find that this bill does not offer benefits that match their expectations. But at the very least, because the program is voluntary, no senior will be forced to accept the terms of this legislation.

"Based on the statistics I’ve cited here, I believe that a significant number of low-income seniors and those with high bills will benefit. That strikes me as a step in the right direction.

"My second question: how does the bill affect seniors who currently get their prescription drug coverage through corporate retiree benefit packages?

"You can pick up a newspaper almost every day and read about another employer dropping their retiree benefits or cutting them back significantly. There has been a dramatic reduction in such corporate retiree health benefits, and it’s taking place right now before the enactment or rejection of any legislation.

"From 1988 to 2002, the percentage of large employers offering retiree health benefits dropped from 66 percent to 34 percent. Consistently, employers who have kept coverage have required retirees to shell out for higher co-payments and premiums.

"Employers say they have to make these cuts because of the rising costs of health care, and the effects of a lousy economy. Now along comes Congress with a bill that many believe will dramatically affect retiree plans in the future.

"Employers are already cutting back on retiree benefits – the Employee Benefit Research Institute says that even the number of big employers with bargaining power who offer health benefits to their retirees is going down. Given that this legislation offers $71 billion tax-free to employers to keep their coverage, I have concluded this: those funds can only be a plus in developing a strategy for getting more employers to retain existing coverage. This is a subsidy those companies will not see, absent this bill. Wouldn’t companies be less likely, not more likely, to drop coverage if they get the funds offered tax free under this bill?

"The corporate retiree provisions in this conference report are better than the provisions in the original Senate bill, which was approved by more than 75 members of this body. Each employer will get back 28 percent of what they spend on drug coverage, up to $5,000 per employee. Corporate retiree plans have significant flexibility with respect to their design. They can use cost containment policies such as formularies.

"Bernstein Research says employers spend about $1900 per year, per senior, on retiree drug benefits. Based on my calculations, this bill gives corporations a significant tax-free incentive to cover not just retiree drug benefits, but other senior health care costs as well.

"Does the bill significantly undermine traditional Medicare?

"Critics have focused on this issue, and I share their view that seniors believe in Medicare, and want it modernized – not undermined. The critics seem to believe that any effort to create choices outside the basic Medicare fee-for-service program is a mistake. I disagree.

"I believe seniors need good quality choices beyond fee-for-service. I simply believe those choices must be accompanied by strong consumer protections, and that you must strike a balance, making sure those new choices never cut off access to the traditional Medicare that seniors know so well, and with which they feel so comfortable.

"I have never been opposed to private-sector involvement with Medicare. In many Oregon communities, upwards of 40 percent of the elderly get their Medicare through private health plans. My Medigap law standardized ten private-sector policies to help seniors fill the holes in Medicare. The key to making private-sector choices work is a combination of strong consumer protections and a level playing field between the private-sector choices and health services offered by the government. I have considerable ambivalence about how this legislation will affect that balance.

"In the bipartisan prescription drug legislation that I drafted with Senator Olympia Snowe, we offered private-sector options for seniors that contained strong consumer safeguards. The Seniors Prescription Insurance Coverage Equity Act, known as the SPICE bill, did not tilt the playing field toward the private sector the way the legislation before Congress does today, with its health savings accounts and premium support.

"Unfortunately, the health savings accounts in this bill - which are tax breaks for purchasing health care - are structured to disproportionately benefit the healthy and wealthy. Seven billion dollars of tax subsidies are directed to these accounts. This has gone from a demonstration project to a major expense – that siphons away money that could beef up the drug benefit.

"Another drawback of the bill is the premium support provisions, which are designed to test competition between traditional Medicare and private plans. These could drive seniors out of the fee-for-service programs they want. Premium support demonstrations could allow insurance companies to cherry-pick the healthiest seniors, leaving the truly ill to go to poorly funded government programs sicker than they are. Even though premium support doesn’t start until 2010, it shouldn’t be in this bill at all.

"I don’t believe this legislation will wipe out traditional Medicare. I do believe that Congress would have to be extraordinarily vigilant with respect to this part of the legislation. Without careful management, it’s certainly possible that health savings accounts and premium support could tilt the Medicare program away from providing traditional fee-for-service Medicare for every senior who wants it. If this legislation passes, it will be the job of the Congress to make sure that doesn’t happen.

"The next question is especially important. Virtually every senior in America wants to know – what will this legislation do to keep their prescription drug costs down?

"In my mind, the key to effective cost containment is creating bargaining power for older people in the health care marketplace. Today, when a seniors gets his prescriptions through a health plan with many members, that plan has significantly more bargaining power than that same senior would have walking in by himself to a Walgreen’s or Fred Meyer to buy his medicine. Getting seniors more purchasing power by getting them into large buying groups is an absolute prerequisite for keeping costs at bay.

"That was the principle behind my Medicaid drug rebate law with the first Senator Pryor. That’s the principle I worked to follow in 1999, when Olympia Snowe and I proposed the SPICE bill. SPICE would have allowed large groups of seniors to choose from a vast array of competing drug benefit plans. It was a market-based proposal based on private sector competition, offering consumers a wide range of options for coverage under guidelines similar to the Federal Employee Health Benefit plan – a program proven to contain costs well because of the sheer size of the group of federal employees for which it bargains.

"The conferees clearly rejected a model like the Federal Employees’ Health Benefit Plan, and that’s unfortunate. They did take some baby steps in the right direction. This bill begins to leverage the potential bargaining power of 30 million seniors by giving them the opportunity to join large managed care plans and big fee-for-service plans that can use their numbers to negotiate discounts. The bill does remove some of the barriers to getting cheaper generics to market faster. It also recognizes there is great value in comparing the effectiveness of similar drugs, so that seniors, providers and the government can spend funds on the best medicines at the lowest cost. This is very much in keeping with the way my own state has approached cost containment.

"But I wish this bill would go further. There should be a way to bargain for even bigger segments of seniors, not just for the fractions of the population who end up in various HMOs or other private health care plans. I’m concerned that while private plans have the power to bargain under this bill, the Medicare program is specifically enjoined from bargaining. By prohibiting the Medicare program from giving seniors the kind of bargaining power members of Congress have in the FEHBP, the field is being tilted away from Medicare and toward private plans. I am also concerned that there is no ongoing monitoring to assure that drug prices are not increased unfairly before the bill takes effect – or after, for that matter.

"This bill doesn’t contain costs the way the bipartisan Snowe-Wyden legislation would have done. It borrows from the principles of our bill. However, in the end, I believe that more and better cost-containment measures will have to be taken.

"I also wanted to look at the big picture. Does this legislation seek to address Medicare’s broader challenges, including the large number of retirees that will join in the near future?

"A demographic tsunami is about to occur in our country. As the baby boomers come of age, there will be extraordinary pressures on the health care system. Health care advances mean that seniors will live longer, and many of those advances will come in pill form. What is exciting is that the more researchers learn about the way medicines affect individuals, the more personalized treatments using pharmaceuticals will become. Drugs that work one way for Bob, will work differently for Mary. In the years ahead, I believe a new field known as “personalized medicine” will help to increase the quality of patient care, and cut down on wasteful spending.

"As of now, however, baby boomers face the prospect of joining a Medicare program already short of funds. That’s why the $400 billion authorized in this legislation is a lifeline for those baby boomers. Those funds provide some measure of security for future retirees and some tangible evidence that Congress is laying the groundwork to support the growing Medicare population – which will need both prescription drugs and the broader program.

"I’ve already discussed the need for more cost containment in the drug benefit. One of the controversial provisions of this bill deals with how Medicare costs should be contained overall. Because this demographic tsunami is coming, explosive cost increases are inevitable.

"This legislation contains something called a “budget trigger.” This means that if at any point Medicare spending takes up 45 percent or more of the country’s tax dollars, the President has to submit proposals to contain costs.

"I share the view of critics who say that this percentage is arbitrary. But to do nothing is unacceptable, and if this legislation passes, this cost containment issue absolutely has to be revisited.

"There are several modest benefits in this bill that look promising to me. One would focus on an approach known as disease management. This will be attractive in the years ahead, because it will allow many of the country’s future seniors to have better, more cost-effective care for their chronic conditions. Medicare has lacked this benefit to date.

"In addition to these direct benefits for seniors, the legislation helps to gear Medicare up for the baby boomers with significant increases to many deserving providers. Over ten years, hospitals in my state would receive almost $95 million.

"This includes $72 million in additional funding from adjustments to payment rates. Oregon hospitals would receive almost $2 million dollars for what’s known as indirect medical education. That programs helps hospitals account for teaching expenses.

"More funds come to some Oregon hospitals in the form of an extra million dollars for those who see a smaller number of patients – and so have trouble covering big expenses. More than $19 million is made available through a program called “Medicare DISH,” or disproportionate share. This program helps hospitals who see more than their share of patients who are too poor to pay for care.

"Right now, doctors across the country are expecting decreases in their Medicare reimbursements in 2004 and 2005 – at least 4.5 percent effective this January 1. This legislation blocks that cut in funding. In fact, it increases Medicare provider payments by 1.5 percent in both of those years. This is important because government cost shifts have already cut reimbursement to doctors, many of whom have a large number of low-income patients, to record lows. Many seniors are finding it hard to get care today – because many doctors can no longer afford to take Medicare patients.

"This is particularly true in rural areas, where doctors are often in short supply anyway. Medicare has traditionally paid rural doctors less for their work. This bill takes steps to make payments for rural doctors – and for rural hospitals – more equitable.

"Getting Medicare ready for the tidal wave ahead is not going to be a walk in the park. Fixing all the problems Medicare has today is a huge task. The additional resources this bill provides, coupled with a new focus on promising opportunities such as “personalized medicine,” can make a real difference for millions of seniors and their families.

"Finally, I considered this: was there any way this legislation could provide a path to a health care system that works not just for seniors, but for all Americans?

"There is a provision in this bill that offers health care hope not only for seniors, but for every American. It’s a provision I wrote with Senator Hatch - based on our Health Care that Works for All Americans Act.

"The Health Care that Works for All Americans provision would, for the first time, involve the American people in the process of comprehensive health care reform. The result would be a blueprint for making health care more accessible and affordable than ever before.

"Two hundred ninety million Americans live and die by the health care system every day. In my view, they deserve to make the hard choices of health care for themselves. Senator Hatch and I have been able to convince those on the Medicare conference committee that once the public has the facts about the real costs of health care and the resources available to spend, they will be able to make sensible decisions about what this nation’s health care system should provide for every person.

"This provision represents the chance to launch a national dialogue on health care reform that is long overdue. I believe that dialogue is the only path to real reform. Let me tell you why.

"In 1993, then-President Bill Clinton announced his intention to create a health care system that worked for all Americans. The idea was popular with the American people at first. Yet by the time a 1,390-page bill was written with no input from the public, sent to Congress, and torn apart on the airwaves by special interest advertisements, the people could not distinguish the truth from the special interest spin, and the effort died. Without public support, the opportunity for change was lost.

"Senate leaders from that time have told me: had the Clinton effort begun with even six months of consultation with the public – had they been enfranchised and encouraged to lead the way – the Finance Committee could have written and passed bipartisan legislation with enough of a grassroots push behind it to move through Congress, and America could already be seeing meaningful health changes.

"The Wyden-Hatch amendment to the Medicare bill offers a chance to restart the process in a new way. It creates a Citizens’ Health Care Working Group to first inform the public on the current state of American health care and possible ways to improve the system, and then to oversee, online and through town hall meetings and other forums, opportunities for citizens to describe the kind of health care system they want. The Working Group will synthesize the public’s concerns and recommendations – and the public’s views will be guaranteed, by law, a timely hearing in every committee of jurisdiction in the U.S. Congress.

"This plan offers the people a chance to drive the process from the beginning. In so doing, it guarantees a national groundswell of support. A number of American grassroots organizations believe public input is the best road to reform, and are ready to pitch in.

"There are tough calls to be made in today’s health care system, including in the Medicare program. But it’s time to make them together. And it’s time to look at the whole picture. Health care is like an ecosystem. Senators should be reminded in this debate about medicine and Medicare that what happens in one part of the health care system affects health care across the board. The Wyden-Hatch provision takes the whole ecosystem into account. Nothing is taken off the table. Not even Medicare.

"I think folks will have concerns about this Medicare drug benefit, as I do. And I feel a lot better knowing there is a mechanism in this bill, in the Wyden-Hatch provision, to revisit these drug benefit issues in the context of the health care system as a whole.

"In crafting this provision, Senator Hatch and I sought to find common ground in order to make a real difference in America’s health care system. I would humbly encourage my colleagues to consider the importance of bipartisanship today.

"Collegiality hasn’t exactly been one of the watchwords of the debate over this bill. There are some very cold considerations entering into this discussion. Perhaps at my some peril, I want to speak frankly for just a moment about the political aspect of the debate.

"Some Democrats believe that the passage of this bill hands the majority party a huge victory on the threshold of a presidential election year, and that will be an enormous benefit on the political trail. Some Republicans have fed these concerns by talking about how Democrats will pay if they dare raise questions about this legislation.

"Are these really the concerns that ought to drive the debate on Medicare, at a time when America has to get ready for the demographic tsunami? Can polarization and division possibly do our seniors – or any Americans – any good when it comes to fixing the health care system they need? In my mind, the answer is no.

"There will be a Democratic president some day. Some day soon, I hope. How would Democrats feel if Republicans denied the nation needed legislation because they simply wanted to deny that Democratic president a victory?

"Actually, we know how we would feel – they did it to President Clinton. But at some point, we need to get off this carousel. It’s not fun. It’s not good for the nation. It’s not even good politics.

"And yet it isn’t difficult to understand the passion on the Democratic side over this legislation. The majority has worked behind closed doors and shut out key Democratic voices that would have made this a far better bill. Their partisan approach has probably guaranteed them a decade of battles over the benefits offered in this bill – battles they will eventually lose on both the politics and the substance.

"M. President, it’s not Casablanca on the Senate floor, where I’m shocked, I tell you, shocked to find out about politics being part of this debate. But excuse my pre-Thanksgiving wish that at this time, in this place, politics should be secondary to what’s good for seniors.

"I say to my colleagues, cast whatever vote you choose on this legislation. But I hope the Senate will do what I’ve tried to do in 30 years of working for seniors. I’ve always looked for people of goodwill, ideas and energy who are willing to work together to make a positive difference.

"I will be the first to admit that uncertainties abound with regard to this bill. I have discussed at length the aspects of this legislation about which I still have questions.

"I can tell you: this vote is a really tough call.

"In the final analysis, M. President, I am concerned that Congress could make a mistake by believing that the $400 billion on the table for a Medicare prescription drug benefit today, will still be there in February of 2005.

"As a member of the Budget Committee, I know how hard it has been to get funding for a benefit in the budget. For example, when Senator Snowe and I began in 1999 to work for funding for a drug benefit, we thought we had lassoed the moon when we successfully got $40 billion in the budget. How, then, do you argue that Congress should walk away from $400 billion?

"Every year of delay has made this benefit cost more. No senator will ever get to go off and write every idea they have into a Medicare bill. Waiting simply costs dollars that could be used to create a better drug benefit.

"I have long said that there are tough choices to be made about the kind of health care system Americans deserve. I have called on my fellow citizens to make those tough choices for themselves. I wrote a provision in this bill to give them the power to make those tough calls and to get them heard by their government. In view of that, I cannot shrink from this decision, no matter how hard it may be.

"I wish this were a better bill. There are a number of legitimate procedural considerations that may come before the Senate during this debate, and I will have to weigh every procedural vote carefully to decide how each might affect the quality of this legislation. If it finally becomes clear that the bill, as is, represents the Senate’s sole opportunity to inject $400 billion and a long-sought prescription drug benefit into Medicare, I will vote yes.

"And should this bill pass this year without the improvements I would like to see, I will come back to this when dawn rises on the new session. I will fight to put more and better cost containment measures into the drug benefit and Medicare overall. I will fight to assure coverage to those who slip through the cracks of this benefit. I will fight to create stronger consumer protections for every senior. I will fight to preserve the option of traditional Medicare. And I will continue to fight for better health care for all. M. President, I yield the floor."

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