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MCCAIN STATEMENT ON MEDICARE PRESCRIPTION DRUG BILL
June 26, 2003
Washington, D.C. - U.S. Senator John McCain (R-AZ) delivered the following statement today regarding the Prescription Drug and Medicare Improvement Act:
"The passage of the Medicare prescription drug benefits legislation is a difficult vote for me. It is unacceptable that in a country as wealthy as ours, seniors across the country are struggling to afford the high cost of prescription drugs. I have supported adding a prescription drug benefit to Medicare because I believe no beneficiary should have to choose between life-sustaining prescription medications and other vital necessities. Far too many American seniors face those choices every day. Many ration their supplies of medication, skip dosages, or cut pills in half.
"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 on-line pharmacies selling reduced-priced prescriptions imported from other countries, oftentimes with questionable safety.
"That said, I also recognize, as does every other member of Congress, that Medicare is on a fast course toward bankruptcy. The most recent Trustee's Report adjusted down the year Medicare will reach financial insolvency by four years to 2026. Clearly, it is incumbent on us to include comprehensive reform of the system in any Medicare prescription drug package in order to ensure that Medicare is financially sound for current beneficiaries as well as future generations.
"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. The simple fact is, 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 bill 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 addresses a real problem, the need to help struggling middle and low income seniors. However, we must have no illusions. There are dangers, complexities, and potential unintended consequences associated with this bill.
"We must be realistic about the cost of this new entitlement program. For anyone who believes this bill will cost a maximum of $400 billion over the next ten years, I have some ocean front property in Gila Bend, Arizona to sell you. Medicare and Social Security, together, represent an enormous unfunded liability for our nation. In a few short years, millions of baby boomers will hit retirement age, and the system will quickly become insolvent.
"The numbers speak for themselves. Medicare currently has an unfunded liability of $13.3 trillion dollars. Some have estimated the unfunded liability of the package before us in the $6 to $7 trillion range. A scholar at the American Enterprise Institute estimated that if passed, the Senate's prescription drug benefit legislation will result in a $12 trillion unfunded liability. Social Security and Medicare, with a prescription drug benefit, will together consume an estimated 21% of income taxes by the year 2020.
"Mr. President, long after the members of this Congress and administration have left office, our children and our grandchildren, and a future Congress and Administration, will be stuck with the burden of cleaning up the mess we have created.
"In the past two years, we have passed two large tax cuts. Government spending has continued to increase well above the inflation rate. Much of that spending is unnecessary, and represents a lack of fiscal discipline more common in times of federal budget surpluses. Yet our current budget deficit and national debt have risen dramatically. Security concerns in the post 9/11 era necessitate substantial increases in spending on defense and homeland security. We cannot sustain this level of fiscal profligacy indefinitely.
"This extraordinarily large new entitlement we are debating will impose an equally extraordinary burden on taxpayers. The money has to come from somewhere, Mr. President, and none of the 'somewheres' are desirable. The reality is, this new benefit will be funded by raiding other entitlement trust funds, or by increasing our national debt, or by substantially increasing taxes.
"Despite the enormous cost of this bill, this new entitlement won't provide the prescription drug coverage many seniors expect to receive. Nor does it enact significant reform measures needed to ensure the long-term solvency of the Medicare system.
"Those seniors who think this bill will solve their financial problems will soon learn that there are substantial limitations to the benefit. If and when it does pass, the 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.
"Low-income seniors will benefit from this package, and I'm pleased that they will. Many other seniors, however, will not receive a generous benefit, and might not even get out of the system what they will pay in deductibles and premiums. The Congressional Budget Office (CBO) estimates that 37% of employers currently providing coverage to Medicare eligible seniors, will drop coverage if this bill passes. Last week the Wall Street Journal quoted one analyst who called this bill the 'automaker enrichment act,' because companies such as the automakers who currently provide their retired employees with a prescription drug benefit are unlikely to continue doing so if the federal government assumes part of the burden for them.
"Mr. President, I am concerned that we are about to repeat an enormous mistake. I've been around here long enough to remember another large Medicare prescription drug entitlement program we enacted in 1988, Medicare Catastrophic. The image of seniors outraged by the high cost and ineffectiveness of that package should be a cautionary tale to all of us.
"Moreover, I am not confident that the Medicare Advantage portion of this new scheme, which establishes regional PPO options for seniors, will succeed. Many in the insurance industry have expressed skepticism and concern that such plans will not be profitable. In the end, the federal government, which acts as a fallback if no private plans are available, might end up covering the majority of the country. Not exactly the reform we all had hoped for.
"The American people should be aware that this new benefit has substantial cost to seniors, and to current and future generations of taxpayers, who will bear the majority of a crushing financial burden. There will be unintended consequences of our actions, Mr. President. We can be sure of that. Moreover, we should be honest about the cost of this measure - $400 billion is merely a down payment for what we are creating. Given the fiscal realities we face, realities that will become more dire with every passing year, Congress and the Administration should have committed to addressing the acute need for a drug benefit to alleviate the impossible choices confronting lower income seniors. And, most importantly, begun to seek consensus among responsible members of both parties for the reforms we all know are necessary to save Medicare.
"I recently heard a good assessment of this package: it is 'an effort to do too much with too little, and thus doing nothing very well at all.'
"Mr. President, there are several good amendments that have been adopted during this debate. I am encouraged that a bill Senator Schumer and I worked on for the last four years, might finally be enacted into law as part of this package. Our amendment will increase competition in the pharmaceutical industry and ensure that all Americans have access to lower cost generic drugs. That amendment, which would not have been possible without the leadership of Senator Gregg and the support of Senator Kennedy, will reduce the cost to the government of any Medicare prescription drug benefit.
"I am a cosponsor on an important amendment with Senators Feinstein, Nickles, Chafee and Graham, which I believe will add some fiscal discipline to the bill and the Medicare program by adding a means test to Medicare Part B, and increasing co-payments for wealthier seniors. I hope the Senate adopts this sensible and fair improvement to the bill.
"I am also pleased that several measures which I have supported and cosponsored as separate bills, have been adopted as part of this package, including the Immigrant Children's Health Improvement Act, the Blind Empowerment Act, and funds to reimburse hospitals for the uncompensated cost of caring for undocumented immigrants. Additionally, there have been several good amendments that I think will improve overall health care in our country. In particular, I believe Senator Grassleys amendment which requires agreements between brand and generic pharmaceutical companies to be reported to the Federal Trade Commission (FTC) and the Justice Department will shine some much needed light on potential collusive agreements.
"But despite these welcome improvements, and recognizing that this legislation will address the crisis faced by lower income seniors, the costs of this entitlement remain, simply put, beyond the means of this country absent real reform of Medicare. Therefore, after much thought, I regret that I cannot vote for this legislation. 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 benefit, which will not, despite it's staggering expense, provide the assistance many beneficiaries will expect.
"As I noted, Mr. President, Congress and the Administration should have addressed the acute need for assistance of lower income seniors. And before we consider extending that assistance to other seniors, we should save Medicare first by instituting the reforms we all know are necessary, but which we apparently prefer to defer until we have retired from public service. I know that those reforms pose a very difficult political challenge to us, and that the bipartisanship we have commended in the drafting and consideration of the legislation before us today would be put to a far more severe test should we genuinely attempt to save the Medicare system from insolvency. However, should we simply add another, huge, new unfunded liability to an already fiscally unsound entitlement, imposing a breathtakingly heavy tax burden on our children and their children, with devastating consequences for their prosperity and the national economy, we will have done the one thing no public servant should want to be remembered for, we will have left the country worse off than we found it.
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