Mr. President, I will now turn to the other issue we are confronting in the Senate. I don’t see how we can deal with a Medicare bill of this significance at this time when, so far as my office knows, we still do not have the final bill as I came to the floor. We will have a lot of explaining to do to our constituents.
Every Member hoped we could get a bill to provide a prescription drug benefit for our seniors. They need it and they deserve it. I wish I could support this bill. Analyzing what we are able to find out and what the likely impacts will be leads me to conclude that not only will this bill not deliver on the promise of a drug benefit for our seniors but it will mean the slow, but steady unraveling of the Medicare system.
Let’s look at some of the people who will be directly affected by this 1,100-page bill. I cannot avoid mentioning this is a long bill. I am not sure anyone has read it yet–maybe some staff person in the basement has read it all–but it is 1,100 pages. I remember another long bill 10 years ago, a bill to change the whole health care system, not just tinkering with Medicare and trying to provide a benefit.
A lot of our seniors are asking: What does this mean? Who can tell me what is in it? How will it affect me? On an individual level, that is an impossible question to answer. We do not know who is a winner or loser. My office is being inundated with calls from constituents, asking: I am a senior in New York City living on a small pension; what does this do for me? Or a widow in Buffalo, with high drug benefits: What does this do for me? We do not know yet.
Here is what we do know. At first glance, there are a number of groups who definitely lose under this legislation. The numbers in the groups add up to about 25 percent of all Medicare recipients, 10 million or so. This bill causes retirees to lose benefits they currently have. At least 2.2 million retirees will lose under this deal and over half of them have incomes below $30,000. In New York, over 200,000 Medicare beneficiaries are likely to lose their retirement benefits.
As a result, my phones are ringing off the hook over this. People are saying: I have good benefits; I do not want this if it will take away the good benefits.
I have to say, honestly, based on my reading, the assessment on the numbers who will lose, I may even be a little conservative. Nevertheless, there will be a loss.
We could have done more to avoid having 2.2 million lose, but the conferees chose instead to spend $12 billion on a slush fund for private insurers and $6.8 billion on tax breaks that will undermine insurance coverage even beyond Medicare.
It is fair to say this bill threatens benefits that people already receive from their employers. There is no argument it is going to take that reality and turn it into something other than what it is. It is a bitter pill to swallow.
This bill also threatens to reduce drug coverage for the 6 million people who are eligible for both Medicare and Medicaid. I have spoken about the so-called dual eligibles before because they are the people about whom I am most concerned. They are the lowest-income, sickest Medicare beneficiaries. Many rely on Medicaid right now for drugs because Medicare does not cover drugs. This bill bars Medicaid from providing drugs not covered by the new Medicare plan. That is a departure from the practice for all other Medicare benefit gaps. This will affect nursing home residents, people with disabilities, and the truly indigent nationwide. We estimate it will affect 440,000 in New York alone.
If we look at the New Yorkers who are eligible for both Medicaid and Medicare, right now they can get access to any drug they need and they can access most any pharmacy. This bill will increase their copays, limit their choice of drugs, and restrict the pharmacy network.
HIV/AIDS patients are particularly affected since this bill only requires coverage of two drugs in any class. HIV/AIDS patients need multidrug cocktails that may require more than two such drugs and often require very specific medicines that are prescribed for their condition. Some drugs they might take or have taken for a period of time could eventually encounter resistance within their bodies. For those patients, this provision on dual eligibles does a grave injustice.
The millions who currently receive coverage through State prescription drug assistance programs, such as the one we have in New York called EPIC, are also at risk. In New York, over 400,000 seniors, nearly a quarter of our Medicare beneficiaries, rely on EPIC, which does not have a formulary and often offers better coverage than what a senior will be able to get under this bill. The compromise in the bill puts seniors in EPIC at risk of a new formulary, higher copays than they have now, and places limitations on the pharmacies they can use. It will force the New York Legislature to change the law and the design of EPIC, assuming they even want to continue it.
I have also asked that seniors who will either have to disenroll from the current EPIC plan or will have to enroll in two plans to continue to qualify for drug coverage be given a grace period so they are not penalized if, in the confusion and disruption of this transition, they do not understand what they have to do to continue to get whatever State program is available because they have to sign up for a new Medicare benefit program to continue with EPIC.
I recently heard from the people who are finalizing the bill that the new formularies, limitations on pharmacies, and higher copays will not only affect seniors in State prescription programs but also veterans who depend on the VA and members of the military in TRICARE, many of whom currently pay very low and in some cases zero copays. Again, the millions who have coverage throughout these programs will be worse off than they are now.
What about the issue of premium support? For those 6 million seniors affected by the premium support experimental demonstration, overall Medicare premiums will increase yet again; this time, as the price of privatization.
MedPAC has studied this issue and found that private plans cherry-pick. That means they pick the healthiest seniors to be in their plans. That is how they make a profit. If you are insuring the healthiest people, you do not have to pay as much money as if you insure people who are not so healthy. Therefore, they try to attract the healthiest beneficiaries. That way, they get a big payment for those healthy beneficiaries and they, frankly, do not have to pay much out when it comes to beneficiaries needs.
The GAO has said the population is so much healthier that the Medicare+Choice plans are now overpaid by 19 percent when one considers the health condition of their beneficiaries.
If fee-for-service has to compete and it is the only plan willing to continue to serve the sickest and costliest patients, anyone who wishes to keep their regular fee-for-service Medicare will see their cost rise, probably up 5 percent each year. But who knows how high that percentage will go in the future? Ultimately, the 6 million seniors across the country who are going to be put in the demonstration experiment will pay more just to maintain their Medicare benefit.
This is not just an academic exercise for me because New York is likely to be one of the States with residents chosen for this experiment. Our seniors will be used as guinea pigs, so to speak, in the rush to try to in some way prove that Medicare, which has the most cost-effective delivery system, which has provided a guaranteed benefit that is the same across the country now for nearly 40 years, is somehow inadequate and unable to really deliver the goods. So we are going to see what happens when over 500,000 New York seniors who reside in areas that could be chosen for premium support are thrown into that mix, and told that you are just going to have to pay those higher prices, and just shovel that money out the door to the HMOs and other health insurers that are going to be standing there with their hands out.
But the bill does not just create a radical scheme for Medicare; it really does take aim at our whole system of insurance by the inclusion of these so-called HSAs. They used to be called MSAs, medical savings accounts; so now I guess they are health savings accounts. The new name does not change the fundamental problems with these proposals.
By promoting these accounts, these provisions will allow wealthy and healthy seniors to get tax benefits. But it would also mean increased premiums of as much as 60 percent for those who wish to keep their current private insurance.
To arm the enemies of Medicare, there is a so-called cost containment provision which designates an arbitrary cap on Medicare. We are bound to hit that cap as the baby boomers age. Once we hit it, that guarantees that current Medicare benefits will be on the chopping block year after year. So I have to send out a big warning to everybody on Medicare, but also to those like me who are not that far away from Medicare, that we are looking at the dismantling of this program, and we are moving back toward a survival of the richest and the fittest.
Now, considering all those harmed by the bill, you would think we would be getting a generous drug benefit out of all of this. Well, in fact, we do not. Many seniors will be paying more out of pocket for drugs under the skimpy benefit in this proposal than they are now without any so-called drug benefit at all.
Every single senior in this country will pay more out of pocket than they do now for doctor services in 2005. That means that before the drug benefit even starts, seniors will be hit with increased cost-sharing. Seniors can expect a 10- increase in their Part B deductible right away, and yearly increases after that for the first time in history. Those increases are pegged to grow at a rate faster than seniors’ Social Security checks.
In addition, the drug premium may be $35 a month, on average, but it increases so quickly that seniors will be left paying more and more for little additional benefit.
As we know, this bill creates a new insurance structure where seniors will continue to pay premiums for part of the year even though they are receiving zero benefit at the same time. Now, I don’t know. I don’t think we have ever passed an insurance plan in this country where you are told you have to pay all year but there are going to be a few months in the year that you don’t get sick, don’t get hurt, don’t have an accident because you will be out of luck.
There is not an insurance commissioner in this country who would gladly allow such an insurance policy to be marketed in their State. Yet here we are. Seniors will pay premiums, even in the so-called gap months, when they have no benefits.
Then the $35 premium goes up to $40, and then nearly doubles, reaching $60 by 2013. I think that is a burden for seniors if the benefit they return is not guaranteed all year, every year, and if it, in and of itself, may not even meet the cost they put into the system.
I have heard from some analysts that the break-even point for seniors in this bill is $835. Now, 40 percent of seniors spend less than that on drugs each year. According to the analysis I was given, this bill will actually represent a net loss to 40 percent of our seniors if they join. That is a lot of seniors. We are talking about 16 million or so. They will end up paying more in costs in premiums than they receive in returns. So when all is said and done, this is a bill that decreases some people’s benefits, eliminates other people’s benefits, and costs more to many.
I think history has demonstrated the political repercussions of such experiments that go right to the heart of what people value the most; namely, their health.
But now, even though there are many losers in this bill, I want to be fair. There are also some winners. They are many industries and some individuals. But there are winners. A recent study found this bill will give drug companies a $139 billion windfall. Because there is no cost containment in the bill, the drug companies are assured of their profits.
Furthermore, the health plans–already overpaid 19 percent compared to what Medicare is paying for seniors in traditional Medicare–will receive another 7 percent on top of that in addition to the $12 billion slush fund in this bill.
Now, there may be some help in this bill for some of the 12 million or so Medicare beneficiaries without any kind of drug coverage–not through Medicaid, not through Medicare+Choice, not through the VA, not through TRICARE. They simply do not have it. Maybe some among those 12 million might be winners but only if they make it through a thicket of confusion and hit a moving target.
Because, let’s face it, this is a very complicated bill. It is going to be very complicated to implement. I remember hearing a lot of complaints about that bill of 1,300 pages, the Health Security Act back in 1994, and that dealt with the entire health care system, not just with seniors.
Now, all signs show this bill is not seeking to add prescription drugs; it is seeking to change the whole health care system. I have to give them credit, they got it to 200 pages less, so that is some accomplishment.
I think we ought to look at what is going to be facing seniors as they try to make decisions about their health care.
What I have done is to take the tales of two seniors, to look at what the differences would be, and what a typical senior would face when trying to determine what they could have under this bill.
The first tale concerns a retired small business owner in New York City, an urban senior. Now, this senior has many choices in the first year, 2006. He looks at his choices. He has PPOs and HMOs and private drug plans and Medicare. He has choices. So he takes a look at his choices and decides to stay in traditional Medicare. He picks the private, stand-alone drug plan with the lowest premium of $35 a month.
He gets into that plan. Then he discovers, too late, that his drug that he has been taking for a few years is not on the private insurer’s formulary. So even though he has had bad side effects from the drug that is listed, he has to go through a lengthy appeals process. Although he eventually wins his battle with the private insurer, he has had to pay out of pocket for the drug in the interim.
So suppose what he is suffering from is, let’s say, diabetes–a very common disease among our seniors. In the process of trying to get on the right drug, trying to pay for the drug he has been on, he is locked into this plan and he cannot change until the next year.
Now, let’s go to year 2, 2007. So let’s say the private drug insurer plan the senior was in has dropped out of Medicare, which happens all the time because its low premium, the $35 a month premium, could not sustain enough profit. But our elderly gentleman does not mind because he wanted to switch anyway. He did not want to stay in that drug plan because they did not treat him well.
So he chooses another private drug insurer and he pays a higher premium. This time he decides to go with a more expensive premium, thinking he is going to get more of what he needs. He pays $50 for drug coverage on top of his now $79 Part B premium. But he makes absolutely sure his drug for diabetes is on the plan’s preferred drug list and he can continue to see his doctor.
During the year, however, the private insurer changes its formulary–there is no rule that says it cannot–so that his drug gets assigned a higher coinsurance amount. Although the plans can change what they cover during the year–it can be the old bait and switch: Sign up with us. Your drug is on the formulary; and 6 months later, no, it is not–the senior cannot get out of the plan until the year is up.
So year 3, our senior does the math. This is a man who has really been working on this. He has spent a lot of his waking hours trying to figure out this maze of so-called benefits.
To stay in traditional Medicare, he will pay the monthly premium of $83 in 2008, plus at least $50 for prescription drugs, in addition to relatively high copayments. The private insurer he was with has dropped out. If he joins an HMO, he can pay $75 for base Medicare coverage, plus $42 for prescription drug coverage.
Now he is up to $192 a year extra to stay in regular Medicare, and he has to worry about whether or not the private drug plans are going to change on him again as they have in the past. You could make this even worse because suppose that the HMO plan no longer recognizes his doctor, and if he joined he would be stuck again for another year. It just goes on and on. I am not looking forward to explaining this to my 84-year-old mother. We are going to have to set up a whole gigantic bureaucracy of individual case counselors to try to explain to seniors what this all adds up to. And this maze, this totally confused picture, is what is available in an urban area where at least there are choices for seniors. Let’s look at what happens to a woman who lives in upstate New York.
Let’s pick an 85-year-old widow who has had a stroke. She hasn’t had drug coverage before. She has lived on a Social Security payment and a small pension from her late husband. She took regular trips across the border to Canada, though, because we are lucky in upstate New York. We can just go right across that border, or we used to be able to go right across that border. She could afford those drugs because they were a lot cheaper, and they were absolutely the same drugs. She takes five different drugs on a daily basis.
In the first year, 2006, no private HMOs or PPOs plan to come to her town. She is up in the North Country, up near the Adirondack Park. For anybody who has been up there, it is really beautiful. It is isolated, and it is really rural. She loves living there, and she wouldn’t live anywhere else.
Well, she has never had any of these private plans in her community before, and she doesn’t know what is going to be available to her. So, two of the new private drug-only plans are offered. One has monthly premiums of $60; the other has monthly premiums of $50. The lower premium plan has a complicated set of copayments that tends to be higher, when you add it all up–assuming somebody helps you figure out how to add it all up–than the higher premium plan. But she goes ahead and chooses the $50 plan, and she sees some relief. But she calculates that with annual drug costs below the catastrophic benefit, she is still not getting a very good deal because for her, she is still paying about 70 to 80 percent of what she had before.
Now year 2–and this happens all the time in rural areas, as we know–the private plan drops out of Medicare. That is a common experience for rural residents. So Medicare must provide a fallback plan. This plan seems quite good to our widow. She pays $5 less than what she paid in the private plan the previous year, and her prescription drug benefits are covered. But year 3 the local papers announce that the payment rates for HMOs, which are 30 percent above the local cost of traditional Medicare, have finally attracted an HMO to the area. Remember, we are pumping all this premium subsidy out there. We have billions and billions of dollars to entice folks to come to the North Country and other areas.
Well, this creates a dilemma for our senior because she now has to determine with whom she can go and who is going to take best care of her because if the HMO comes, maybe it will attract some competition. And let’s say that another private drug-only insurer shows up. Medicare is providing bonuses to private plans who come to the area. So as a result, remember, even if it only lasts for just a year, even if it doesn’t have your drug on the formulary, even if it no longer is affordable for you, once you have two competing private insurers, there is no fallback plan as an option. So the senior faces the so-called choice of monthly premium increases of $24 to stay in traditional Medicare or just $1 more per month to join the HMO. Given that this difference is $288 a year, it is not even a choice. That would wipe out her annual increase in Social Security benefits.
She feels forced to go into the HMO. She loses her doctor, she loses the drug that she needs, and she has to go through an appeal. I can guarantee you, there is not going to be a lot of appeals courts in isolated areas like the North Country. So it is going to take a while even to go through this. Now this 87-year-old woman is having to fight for, litigate for, argue for the drug her doctor says she needs, or her former doctor, because she can’t go to him anymore because there is no affordable regular Medicare fallback. So she is stuck with one of these two private plans. Here today; gone tomorrow.
The lesson I draw from this is whether you live in a rural or an urban area, your choices are tilted toward enrolling in HMOs and PPOs. I think that is a shame.
Medicare’s strength, a reliable system of coverage and predictability, will have been replaced by a complex, insured-driven, cherry-picking system. There may be some seniors who will be helped under this bill. I hope I am healthy enough when I reach that age that I am not going to be disadvantaged by whatever we have in place, but I find it hard to explain how we could end up with a bill that is so much narrower, so much more uncertain than the bill that received a majority of votes in the Senate last year, the Graham-Miller-Kennedy bill.
Among those who might gain under this bill, they are not only small in number, they don’t even know who they are. I asked seniors this morning at a big meeting: Who among you knows for sure that you won’t get hit by the fine print in the bill? How many of you really believe you are winners under this bill? Don’t you wonder why nobody is really telling you everything you need to know to be an informed citizen, to make a decision in your own mind that you can then tell your elected officials what you think should be done?
We are on a course to passing a bill where no senior watching or listening to this debate is going to be sure that he or she will be helped. We have pushed it past the next election so the full burden of trying to figure it out won’t really fall on anybody until 2006. And if you look at this chart, it is kind of hard to draw any other conclusion. If you are a retiree, you would have no idea of knowing whether your former employer will keep you or drop you. If you are poor, you be poor enough to get coverage under Medicaid. And if you are, you may no longer get all the coverage you need for your needs. If you are sick, will you be sick enough to be covered under Medicaid, and under this bill will Medicaid really cover your particular health care needs? If you are in a nursing home, are you going to be really left to fend for yourself in a nursing home in a State prohibited from providing Medicaid wraparound funding. And your health needs will compete with those of children and other needy people? If you are in a State prescription drug program, you will pretty likely be a loser as well. If you are in the premium support guinea pig category, good luck, because I think you will see that you are going to have an amazing obstacle course to try to run.
I must say many of the obstacles confronting our seniors are triggered by decisions we have had made for us in this conference that was quite small in number and exclusive in membership and came out with a product that is going to be very hard to defend. It will be particularly hard to defend if we look down the road and we see the threats to Medicare on the horizon.
I have heard colleagues say–and I respect this–that this bill is not perfect, but it is all we could get. I understand that perspective. There is good and bad in every bill. I don’t think since I have been here I have voted for a perfect bill or voted against a totally bad bill. I understand that perspective. I am grateful this bill does take steps to help our rural and small community hospitals to resolve some of our teaching hospital issues and to address the absolutely compelling physician payment issues. We should be addressing those important matters, but not in the context of a bill which will further undermine the program providing the capacity for hospitals and doctors to provide decent care at an affordable cost.
This bill has too many flaws for us to go forward. The privatization scheme that is tied into this bill, in a box with a big bow saying prescription drugs, is one that will make structural changes to this program which has been the bedrock of protecting our seniors and guaranteeing them the health care they have needed.
So I hope we can still salvage this bill. I hope we can still try to keep faith with our seniors. I think we should postpone dealing with it beyond the forced deadline of right before Thanksgiving, so that everybody has a chance to read and evaluate it.
But if we are required to go forward, then I certainly cannot be a party to a bill that I think will undermine health care for our seniors, fail to provide the benefit that is advertised, and lead to the slow and steady unraveling of Medicare, which I consider to be one of the great achievements of our country in the 20th century.
On behalf of the hundreds of thousands of seniors I represent, who are definitely losers under this bill, I have to respectfully request that we go back to the drawing board, that we try once again to do a job on a bill that will really help our seniors, and that we not take steps that will undermine the guarantee of health care under Medicare.