Secure Fence Act of 2006 - Motion to Proceed

SECURE FENCE ACT OF 2006--MOTION TO PROCEED -- (Senate - September 21, 2006)

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Mr. REED. Mr. President, I rise today to discuss my deep concerns about the Medicare Part D Program. The ``D'' was supposed to stand for a new prescription drug benefit, but now seniors are finding that ``D'' really stands for doughnut hole. Unlike most other types of health insurance, the Medicare drug benefit was intentionally designed with a coverage gap or doughnut hole that requires beneficiaries to pay for all yearly prescription drug spending between $2,250 and $5,100.

Let me explain. It is baffling to most people that the Part D Program was designed so that beneficiaries paying premiums each month receive support for their drug costs until they have spent $2,250, and suddenly the insurance goes away. The premium stays, but the insurance goes away until you reach $5,100. That is an unusual insurance program, to say the least. Seniors will experience this lapse in coverage once their drug costs have exceeded $2,250. When they are in the doughnut hole, they have to pay for all the drugs out of pocket, as well as paying the monthly premium. That does not sound like a sensible insurance program. That is, in effect, what this Part D Program involves.

According to one estimate published in the journal Health Affairs, the average Part D beneficiary will spend almost $3,100 this year on prescription drugs. So the President's idea of cost containment is not to drive pharmaceutical manufacturers to rein in prices but to just cut off seniors' benefits when they most need the coverage.

Many Medicare beneficiaries with high drug expenses already have begun to fall into the doughnut hole and are struggling to pay for their medications or are unable to fill their prescriptions at all. It has been reported that average Medicare Part D beneficiaries will also begin falling into the doughnut hole this week. It almost sounds like ``Alice in Wonderland,'' where suddenly you are swept into a new world as you go through the hole. A world that requires seniors to come up with their the resources to pay for these premiums as well as their prescription drugs.

I am hearing from many seniors in my State facing problems with Medicare Part D. I know I am not alone. I think every Member of this Senate, when they go home and talk to seniors, is hearing it. We will hear it with more frequency as their expenses increase and their experience with the doughnut hole increases.

In one case, an individual sent a letter to the Rhode Island attorney general and copied me on it because they thought a crime was being committed. They literally thought they were being robbed because one day they got help with the prescriptions, and the next day there is no help at all.

Now ``D,'' besides standing for doughnut hole, stands for dire circumstances. These are the circumstances in which seniors will find themselves unless we do something to fix this problem because the doughnut hole will only get bigger and bigger year after year.

Today, over 38 million Americans on Medicare have some form of prescription drug coverage. Of these beneficiaries, 10 million have coverage through a standard Part D prescription drug plan, and up to 7 million could be subject to the doughnut hole between now and the end of the year. The numbers will only grow in the coming years if the administration allows drug prices to continue to escalate. What trips seniors into the doughnut hole is the cumulative spending on drugs. If drug prices go up, seniors very quickly reach that threshold where the doughnut hole kicks in. Tragically, many beneficiaries are unaware that this coverage gap exists and only learn about this lapse after they have fallen into the hole. To add insult to injury, these beneficiaries are expected to continue paying monthly premiums through their drug plans even though they receive absolutely no coverage in return. This is a very unusual health care plan, to be paying a monthly premium but not be eligible for coverage.

When we pay health care premiums, we hope we don't have to use any of the coverage, that we are healthy and well, but we all have in the back of our minds the knowledge: If something happens that month, I am eligible, I can get the help. Not so in the doughnut hole. Seniors keep paying the monthly premium, and then they pay, out of pocket, the full cost of the prescription.

I didn't support the Medicare Modernization Act which created Part D because I believed the benefit was insufficient and the emphasis on a privately administered program made it excessively complex. By relying on over 40 private plans in each region, each with a different benefit structure, many beneficiaries are confused about the plan offerings and which plan may suit them best. Moreover, a recent General Accounting Office report finds an alarming number of private Part D plans are providing inaccurate or incomplete information to Medicare beneficiaries about the coverage and benefits provided under the various plans.

No doubt, there are some people who have benefited from this new program, but for too many Part D enrollees with complex medical conditions, the benefit has largely been a source of great confusion and concern. We could have done it differently. We could have done it more simply. We could have done it more efficiently.

Many of the problems we are seeing today could have been averted if the Administration had not made the program needlessly complicated and if they had done a better job of preparing the public. Despite all of the serious shortcomings of Medicare Part D, the program has taken effect. It is now incumbent upon us to work together to turn things around and improve the situation.

In an effort to provide some modest short-term relief to seniors, I am working with Senators DORGAN and BINGAMAN on the Prescription Fairness Act. This bill has a simple premise: beneficiaries should not have to continue paying monthly premiums when they have no drug coverage. The bill waives the Medicare Part D premium for any month that a senior falls into the doughnut hole. During this time, the Secretary of Health and Human Services would be responsible for offsetting these monthly premium costs. It seems only fair to me. We are making seniors pay premiums, yet they do not qualify for the benefit. If they don't qualify for the benefit, let's absolve them of the premiums until they do, once again, qualify for the coverage.

There is another aspect of the doughnut hole that needs to be addressed. That is the fact that expenditures by other drug subsidiary programs do not count against beneficiaries' true out-of-pocket costs--this is an acronym, TrOOP: true out-of-pocket costs--during this lapse in Part D coverage.

Medicare beneficiaries on fixed incomes should not be penalized for seeking assistance from other programs that provide prescription drugs or drug assistance.

Here is the problem: You go into the doughnut hole. You are desperate for your prescriptions. The expenditures have to come out of your pocket to qualify again. You cannot go to a State agency, perhaps, that has a program because that spending will not be counted. I think that is another problem we have to address.

The Helping Fill the Prescription Gap Act--another proposal which I have cosponsored--would allow costs incurred by federally qualified health centers and patient assistance programs to count toward a beneficiary's annual out-of-pocket threshold. If they can get the help, qualify for the help, it should be counted, as they try to extricate themselves from the doughnut hole.

While these two bills are designed to help ease the burden of Medicare beneficiaries in the doughnut hole, serious structural problems of the program must also be addressed.

``D'' also stands for--besides ``doughnut hole,'' ``dire circumstances''--for the dubious claims the Administration has made about the plan's costs and the savings they would deliver for consumers.

The Administration's original cost estimates for the program were woefully inaccurate, and the benefit is now expected to top $700 billion in the first decade--$300 billion more than was originally advertised.

The fundamental premise behind the Medicare Part D benefit--that vigorous competition among private insurers would lead to lower drug prices--simply has not proven to be true.

``D'' also stands for the do-nothing Republican Congress that during this year's budget debate failed to pass a Democratic amendment that would give the Secretary of Health and Human Services the authority to negotiate the best deal for Medicare prescription drugs.

Instead of harnessing the purchasing power of over 40 million Medicare beneficiaries, the Administration plan called on private insurance plans to administer the program and to negotiate directly with the pharmaceutical companies on drug prices.

Here I think is the structural flaw in this overall program. In order to pull together the bargaining power of the largest number of seniors, the Government should be able to negotiate prices with pharmaceutical companies. The pharmaceutical companies have market power. Many of their drugs are patented and cannot be produced by anyone else. They can drive the price up.

The only way in a market you counter that type of monopolistic pricing power is by banding together as consumers so you have one entity negotiating for the consumers against one entity who controls the product. You will get a better price.

That is what we do in the VA system. The VA system has the legal authority to negotiate prices with drug companies. They have thousands and thousands of clients in their hospitals and in their outpatient settings, and they simply go and say: If you would like to sell us this significant volume of drugs, give us your best price. That is the way I believe we can get drug prices if not down, at least lower the escalation in costs. If we do not rein in price growth, the estimate of $700 billion over 10 years, I believe in a year or two, could be even higher.

Families USA conducted a survey that compared the lowest Part D prices with those the Veterans' Administration negotiated for the five most commonly prescribed drugs to seniors, and the variation in price is staggering. The VA can negotiate on behalf of our Nation's veterans while Medicare is barred from doing so--legally barred. It is part of this legislation: a rather large benefit to the pharmaceutical industry, to the detriment of taxpayers and seniors.

We can save money, and we can pass these savings on to seniors, we hope, but we cannot tie our hands. We have to be able to, as a large entity, as Medicare, negotiate these prices.

I want to work with the President and my colleagues in the Congress to strengthen Medicare for the long term. But the Administration has failed so far in their approach to Medicare reform.

Under the current Part D Program, drug companies hold all the cards. A recent New York Times article revealed that the shift of dual-eligible beneficiaries from Medicaid drug coverage over to the Part D Program has been a financial boon to drug manufacturers.

Previously, under Medicaid--a separate program which is a joint State-Federal program--seniors could qualify in certain cases for drug assistance. In the States, the Medicaid programs were negotiating with the pharmaceutical companies for prices. But with the passage of Part D, these dual-eligibles were automatically enrolled into the Medicare Part D Program. And what happened to drug prices? They zoomed out of sight. That, to me, is evidence that we can do much better, not only to protect seniors but to protect taxpayers.

Now, I believe the pharmaceutical companies deserve a fair return on their investment. They have invested in drug research and development. But allowing them to dictate prices for millions of elderly and disabled Medicare beneficiaries is a bad deal for the Federal Government and a bad deal for the American public.

These are just some of problems with Medicare Part D that must be addressed.

And while Part D is receiving most of the attention lately, seniors also face a 5.6-percent increase in Part B premiums for doctor visits and outpatient services in 2007, which will absorb a disproportionate amount of their Social Security cost-of-living adjustments--their COLAs. In fact, Part B premiums have almost doubled since President Bush took office, so seniors living on fixed incomes will now pay almost $1,200 just for these premiums alone.

This is another example of the growing squeeze, economically, on middle-income Americans. When you look at working Americans, young Americans with families, you have seen tuition costs go up extraordinarily so. You have seen health care costs go up, and many of these families do not have the benefits of the Medicare Program at all. Their costs are going up significantly. And gasoline prices are high. But incomes are not keeping up.

In fact, in real terms, inflation-adjusted terms, from 2000 to 2005, the median income of American families has fallen by $1,300. So you have falling income and increasing prices. It is this vice that is squeezing middle-income Americans.

And then, when you go to seniors, they are looking at some relief in Medicare Part D, but they are falling in the doughnut hole and finding that relief is elusive. They are also finding their Part B premiums going up. They are being squeezed hard also.

Now, through all of this, the Administration has proposed no substantive changes to the Medicare Program to help these beneficiaries. We have to take action. I hope in this Congress--although the days are dwindling down to a precious few--but certainly in the next Congress we have to start looking seriously at reforming Medicare Part D, at making it more affordable for seniors and more affordable for taxpayers.

Let's make the ``D'' stand for what it should stand for: doing right by our seniors.

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