Energy and Health Care

ENERGY AND HEALTH CARE

Mr. WYDEN. Mr. President, with the Senate heading for the break for the Fourth of July recess, obviously, there will not be many more days left in this year's schedule. I am going to spend some time on the floor in the days ahead focusing on those areas where there is significant bipartisan support for making a real difference for the American people, especially on those key domestic issues of energy and health care, two areas I know the Presiding Officer, the distinguished Senator from North Carolina, cares a great deal about.

For example, on the energy front, today, I and Senator Kyl and Senator Snowe and Senator Lieberman sent a letter to the distinguished majority leader, Senator Frist, asking that we have an opportunity to debate how the Government can save between $20 billion and $80 billion on an energy program that is totally out of control. It involves the Federal Government's oil and natural gas royalty program.

It is a program that began at a time when oil was somewhere in the vicinity of $20 a barrel. It has been a bipartisan concern of Senators that it makes no sense to spend billions and billions of dollars subsidizing the price of oil when it is at record levels.

I spent, as you know, Mr. President, about 5 hours on the floor of the U.S. Senate discussing this issue a few weeks ago, and I certainly have no intention of duplicating that this afternoon. But I do think it is important to zero in on those issues that have bipartisan support, and I want to describe what has happened in the Senate and in the other body since I and Senator Kyl talked about this program a number of weeks ago.

After we discussed it for those many hours on the floor of the U.S. Senate, on May 17 the House of Representatives voted on a measure that was virtually identical to the final Wyden-Kyl amendment. Two-hundred and fifty Members of the House of Representatives, with regard to this issue, after a lengthy debate, voted to address a mistake that has been pointed out by Senators of both political parties here on this floor.

So my hope is--and this is the point of our bipartisan letter to Senator Frist today--we can get an opportunity for a real debate on this issue on the floor of the U.S. Senate before the Senate breaks for the August recess.

It is one thing to talk about subsidies at a time, for example, when the price of oil is low, when the oil sector is hurting, when they are having difficulty getting the adequate dollars together for the investments that are needed in this vital part of our economy. But certainly that is not the case today. Today we are talking about record profits, we are talking about record prices, and we certainly do not need record subsidies.

I and Senator Kyl would like a chance to put this issue before the entire U.S. Senate. On our letter today to the majority leader, Senator Snowe and Senator Lieberman--two Members who have been very involved in these issues for a number of years as well--are joining us.

I also point out the mistakes in this program are bipartisan. Certainly, there were mistakes made during the Clinton administration when there was a failure to address what is called the threshold issue to ensure you do not subsidize these oil companies at a time when profits are extremely high and you do not need these incentives. So the Clinton administration mangled the job before President Bush and his team took over. But certainly the problem was compounded by Gale Norton, who was then Secretary of the Interior, who insisted on raising the subsidies even more administratively.

And then, as I talked about on the floor of the Senate when the Congress passed the energy bill as part of this session, the deal was sweetened even more. Again, virtually no independent expert thought the subsidies were needed. When I asked the oil company executives, who came before the Energy Committee, on which the Presiding Officer, the distinguished Senator from North Carolina, and I both serve, the executives, to a person, said: We do not need these subsidies at a time of record prices and record profits.

So the Congress is behind the American people. Frankly, the Congress is lagging behind even what the oil executives have said they could live with. At a time when the House of Representatives--more than 250 in number--has voted to cut these subsidies, the Senate should not be dawdling on this issue any longer.

We are talking about substantial sums of money. The General Accounting Office has said it is in the vicinity of $20 billion. There is litigation underway now. If the litigation is successful, the bill to the Government could be in the vicinity of $80 billion. That is a substantial amount of money to be frittering away now when there are all these pressing needs here at home and for our country.

So given that I am going to be talking in the days ahead about issues where there is significant bipartisan support, specifically focusing on these key domestic issues of health care and energy, I start today by making a unanimous consent request that the letter that I, Senator Kyl, Senator Lieberman, and Senator Snowe have sent to Senator Frist be printed in the RECORD.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

U.S. SENATE,

Washington, DC, June 26, 2006.
Hon. BILL FRIST,
Majority Leader, U.S. Senate,
Washington, DC.

DEAR SENATOR FRIST: Serious concerns have arisen regarding the implementation of the federal government's oil and natural gas royalty program. Recent news reports and the administration's own statements suggest that the government may be unable to collect billions in royalties from certain leases of federal land and waters. With oil and gas prices at historic levels, there is no good reason for royalty relief incentives.

In an effort to promote the exploration and production of natural gas and crude oil in deep water, the Deep Water Royalty Relief Act of 1995 implemented a royalty-relief program that relieves eligible leases from paying royalties on defined amounts of deep-water production. This would be accomplished by allowing the Secretary of the Interior and the oil and gas companies to enter into leases with a defined volume suspension and price threshold. This incentive was intended to help companies that undertook these investments in particularly highcost, high-risk areas to be able to recover their capital investment before having to pay royalties on their gross revenues. It came at a time when oil and gas prices were low and the interest in deep water drilling was lacking. At that time, the program was needed to encourage production and it helped achieve that goal. The American Petroleum Institute estimates that since 1996, natural gas production is up 407 percent and oil 386 percent.

However, during 1998 and 1999, price thresholds were not included in terms of the leases, thereby allowing companies to recoup their capital investments long before the expiration of volume suspension. The absence of price thresholds in these leases allows companies to benefit both from both high market prices and volume suspensions. The Mineral Management Service has said the failure to include price thresholds was not intentional, but a costly mistake--and one that must be corrected with some help from Congress.

On May 17, the House of Representatives during consideration of the Fiscal Year 2007 Interior Appropriations Bill debated and voted 252-165 to address this mistake. We do not necessarily believe the House proposal is the answer, but we should have an opportunity in the Senate to take up the issue. We want to correct the error by requiring the federal government to add price thresholds to all leases including those issued in 1998 and 1999.

We ask that you schedule an up-or-down vote on the issue at the earliest opportunity and no later than the August recess. Thank you for your prompt consideration of our request.

Sincerely,
Ron Wyden
Joseph I. Lieberman
Jon Kyl
Olympia Snowe

Mr. WYDEN. It is the hope of the bipartisan group of Senators that have followed this issue that this program, run by the Minerals Management Service, can be corrected. These are costly, costly mistakes involving billions of dollars. The Presiding Officer, the Senator from North Carolina, has been a great advocate of renewable energy.

For example, think what you could do if you took just a fraction of the money that is being wasted on royalty relief and moved it to the renewable energy field. You could help stimulate renewable energy production and reduce the deficit simultaneously. So that is what the bipartisan group of Senators want to do on this key issue.

Since I talked at some length about this a few weeks ago, I think I will move on to the other pocketbook issue. But I do hope, with hundreds of bills having been introduced in the Senate in both the energy and health care areas, that as we go into these last days of the session, the focus can be on those pieces of legislation that have significant bipartisan support. That is true in the case of oil royalty relief and cutting those needless subsidies. It is also true with respect to prescription drugs, and I will wrap up with a few comments in that regard.

Mr. President, on the prescription drug issue, we saw, just a few days ago, two reports issued, one by AARP and the other by Families USA, indicating we have seen a very significant increase in the cost of prescription medicine since the beginning of this year. This comes, of course, at a time when Medicare Part D, the prescription drug program, is just kicking in. It comes at a time, of course, when we have seen the costs of this program skyrocket far beyond the original projections.

It would indicate to me that some of those who said competition in the private sector alone was going to do the job have not dealt with the consequences of what happens when the Government does not back up those private-sector kind of efforts. As you will recall, in the prescription drug debate, I was one of nine on this side of the aisle who voted for the legislation. I have got the welts on my back to show for it.

Senator Snowe and I said then that we have to make sure the Government isn't the only part of the prescription drug arena where there is no opportunity to hold down the cost of medicine. Everybody else bargains today for the cost of medicine. That is true for any manufacturing in North Carolina. It is true in Oregon. It is true anywhere. Nobody ties their hands behind their back when it comes to trying to get the full value for their dollar in the health care sector. The only one who has their hands tied behind their back is the Federal Government when it comes to prescription medicine purchased under the Part D Medicare Program.

My sense is that this is another area where, with significant bipartisan support, Congress can move ahead. On the question of lifting the restriction so that Medicare can bargain to hold down the cost of medicine, Senator Snowe and I got 54 votes for our bipartisan proposal to change the law. Once again, significant bipartisan support was given for a major change that will help taxpayers and consumers.

My sense is the price increases in prescription drugs we are seeing today is because there are few restraints on the prices that can be charged. There are what are called PBMs, pharmaceutical benefit managers. They have a role to play. It can be a useful one. But if we are really going to make sure we are using all the tools to hold down the cost of medicine, the Government ought to have authority to say, if the private sector isn't going to give a fair shake to seniors and taxpayers, there ought to be backup authority. The Government should be able to say: We are going to now make it clear that there is an opportunity to bargain and do what everybody else in America does to hold down the cost of medicine.

The price increases we have seen in the first 3 months of this year comprise the largest quarterly price increases in 6 years. It comes at a time when the Medicare prescription drug program is going into effect. The prices jumped something like four times the general inflation rate. We are seeing, right at a key time when the Medicare prescription drug program is getting off the ground, prices go up four times faster than the inflation rate. We are seeing the biggest quarterly price increases in 6 years. That makes the case for the Congress looking at a bipartisan way to beef up opportunities to contain the cost of prescription drug medicine.

In the Snowe-Wyden legislation which received 54 votes, we specifically state that there can be no price controls and no uniform formulary which would be, in effect, a backdoor Federal price control. I know the Senator from North Carolina has been interested in the question of what will happen to research, what will happen to innovation. I happen to share the view of the Senator from North Carolina that to come up with big price control regimes and Federal arbitrary standards for the formularies that make judgments about medicine would be a mistake. Under our legislation, we specifically say we will lift the restriction on bargaining power so the Government will not be the only part of the health care sector that is not trying to get value for the dollar. But our amendment said no price controls and no uniform, one-size-fits-all formulary that, for all practical purposes, would be a backdoor set of price controls.

These two studies from AARP and Families USA are extremely alarming because the theory behind the Medicare prescription drug program was that having a variety of plans in the private sector would produce competition, and competition would serve to hold down the cost of medicine. Now there is concrete proof that competition alone is not serving to be an adequate strategy for containing the cost of medicine. That is why the bipartisan amendment Senator Snowe and I have been pursuing since the prescription drug program went into effect several years ago is much needed.

When you have these higher prescription drug prices, premiums seniors have to pay almost always bump up. Let's think about what happens if you bump up the premiums the seniors pay for Medicare Part D. One of the things I have seen in my years of working with older people--it goes back to my days when I was director of the Gray Panthers--is you jack up the premiums on seniors and, as sure as the night follows the day, you will get fewer seniors enrolling in the program.

We understand that if this program is going to be successful over the long term, you have to get more seniors signed up. You have to get more seniors enrolled. But what happens when you have higher drug prices as AARP and Families USA found, will be higher premiums next year for seniors in the Part D program. Then all of a sudden, with higher prices and higher premiums, what will happen is fewer seniors will sign up for the program. And without them enrolling in this program, Part D will not be the success we all would like to it to be, especially those of us who voted for it.

I wanted to take a few minutes today to talk about two issues: the question of needless oil company subsidies, an effort Senator Kyl and I have spearheaded that has significant bipartisan support for saving taxpayers money, getting us on track for a fresh, new energy policy that can truly make us free of our dependence on foreign oil; and this question of prescription drug costs where, as well. There is significant bipartisan support to put bargaining power in Medicare. The Snowe-Wyden amendment received 54 votes the last time the Senate voted on it. There is a real role for the Senate to play at this key time now that it has been reported that drug prices jumped up in the first quarter of this year just as the Medicare Part D Program was going into effect.

Finally, we understand that on the Senate calendar there is not going to be a time for every possible issue to be considered. In the case of energy and health care, there are hundreds of bills in both areas, both energy and medical services, that have been introduced by Senators of both parties. My hope is that a handful of these issues can be moved to the head of the queue. The real measure for consideration ought to be significant bipartisan support.

In the areas I have talked about this afternoon, that test has been met. The other body has already passed efforts to reduce these needless oil subsidies, essentially passed the very thing I talked about on the floor of the Senate for 5 hours. A majority of Senators have voted for the effort Senator Snowe and I have spearheaded to hold down the cost of medicine. There are opportunities, at a time when the country is looking at the partisanship coming from Washington, DC, to bring the Senate together around good and bipartisan legislation that addresses the pocketbook concerns of the American people. That is why I have come to the Chamber to talk about how we can make a difference working together for the public.

It is my intention to come back in the weeks ahead to talk about similar efforts that can actually be passed in the Senate before the session wraps up and constitute the kind of good government the American people expect from the Senate.

I yield the floor and suggest the absence of a quorum.

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