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SUSAN DENTZER: The Medicare reforms that the full Senate launched debate on this week are momentously numbered Senate Bill One.
SEN. JIM JEFFORDS: The Prescription Drug and Medicare Improvement Act is a landmark improvement. This is a large and complex bill, measuring over 600 pages. It is not at all unusual for a proposal of that size to have issues remaining… this year I sense a cautious optimism among our colleagues that this Congress, this year will be successful.
SUSAN DENTZER: The bipartisan plan is the latest attempt in Washington’s multi-year struggle to extend outpatient prescription drug benefits to Medicare’s elderly and disabled enrollees. Backers from both parties said they were determined this time to work through a long list of amendments to pass legislation.
SEN. CHUCK GRASSLEY: We have two long weeks ahead of us. My commitment is to stay here until the lights go out to ensure that we pass a balanced bipartisan bill.
SUSAN DENTZER: Senators spent much of today simply going over the basics of the complex bill. Democrat John Breaux of Louisiana, a key architect of the plan; he explained that beneficiaries would have two different ways of obtaining drug coverage through private insurance plans.
SEN. JOHN BREAUX: Beginning in 2006, every Medicare recipient would be able to stay right where they are today if they like the current program. We would establish a standalone drug program for everybody who stays in traditional Medicare. It would, for the first time, use a private delivery system to be able to receive their pharmaceuticals.
SUSAN DENTZER: The second option would allow beneficiaries to enroll in so-called Preferred Provider Organizations similar to those available to millions of privately insured Americans.
SEN. JOHN BREAUX: They would also have an opportunity of their choice to go into a new program called Medicare Advantage, which would deliver to every Medicare recipient who wants to join an integrated health plan, which would provide them hospital coverage, doctor coverage and prescription drug coverage. Preferred Provider Organizations, like we have in the federal system, would come in and offer different plans and different options to our nation’s seniors.
SUSAN DENTZER: Backers like Republican Senator Jim Bunning of Kentucky said the new Preferred Provider Organizations or Medicare Advantage plans, would offer enrollees flexibility.
SEN. JIM BUNNING: Another positive about the bill’s benefits is the fact that seniors will have more of a choice to find a drug plan that best suits their needs. For example, the benefit structure for plans can differ slightly, and the formularies for the plans will likely be a little different one from another. It is this flexibility and choice for seniors which really helps makes this bill a winner.
SUSAN DENTZER: But at a Capitol Hill news briefing earlier today, some Democratic lawmakers raised objections; they protested a so-called fallback provision that would only have the government step in to provide benefits if not enough private plans did so.
SEN. BARBARA BOXER: When it comes to a prescription drug benefit, Medicare must be an option, not just a fallback for times where you don’t have two companies competing.
SUSAN DENTZER: Back on the Senate floor, other lawmakers protested that the plan’s convoluted drug benefits in the plan would leave the elderly and disabled exposed to coverage gaps. They vowed to look for ways to address that, even if doing so added more costs to a plan already estimated at $400 billion over ten years.
JIM LEHRER: And to Gwen Ifill.
GWEN IFILL: We get more on the Medicare reform debate now from Senator Debbie Stabenow. She’s a Democrat from Michigan, and one of the leading critics of the bill and Senator Gordon Smith, who is a Republican from Oregon who spoke in favor of the bill on the Senate floor today. Bill Novelli is the CEO of AARP, an advocacy group representing more than 35 million seniors and Robert Laszewski is president of Health Policy and Strategy Associates, a consulting firm that works with insurers.
Senator Smith, give us in a nutshell the pros and cons of the bill as we saw it debated on the Senate floor today.
SEN. GORDON SMITH: I think the pros are is you measure it against having nothing. This is substantial improvement. It is focused on those who need it most. It helps immediately with a discount card. It provides for all seniors by 2006 catastrophic coverage. So that in America if you lose your health it doesn’t mean you have to lose your home. It makes medicine more affordable, more accessible to our seniors. It leaves them better than they are today.
GWEN IFILL: Senator Stabenow, do you see any cons? Obviously you said you think there is something good to be said for this bill but what are the drawbacks?
SEN. DEBBIE STABENOW: First of all, as my colleague said, it is a first step. I think it is a very shaky first step though because in the last five years seniors have had a choice between traditional Medicare where they can choose their own doctor and going into a Medicare HMO. Eighty-nine percent of our seniors have picked traditional Medicare. And yet under this plan, the only choice that is not available to them is to stay in traditional Medicare and to have a Medicare-run prescription drug benefit. They can’t do that unless private insurance plans aren’t available in their area. So the one choice that they’ve picked is not available.
And my concern is this is much more designed for what’s best for pharmaceutical companies who don’t want seniors all in one place under Medicare to be able to negotiate big, deep discounts rather than saying how do we best design something that is best for seniors to get them the medicine they need?
GWEN IFILL: Senator Stabenow, I know you say it’s a shaky first step. Is that shaky first step likely to pass this year?
SEN. DEBBIE STABENOW: I think it is because all of my colleagues are wanting to find a way to move forward. I share that feeling. My concern is though that we listen to seniors. We say that we want to give them a choice, but the choice that they have selected, staying in Medicare, choosing their own doctor, knowing that regardless of where they live, whether you’re in the upper peninsula of Michigan or in Detroit or down South, you can have your doctor know what the cost is, it’s stable, dependable, and you will know it’s there.
What is offered unfortunately is a plan where seniors are going to have to every year go through reams of papers to figure out between different insurance plans with different premiums and different benefits. It’s really left up to the insurance company to make the decisions rather than seniors knowing that a stable, dependable plan will always be there for them.
GWEN IFILL: Senator Smith, do you agree that in spite of whatever questions there may be about the pros and cons, the good parts and the bad parts of this bill, whether it’s shaky or not that it’s going to pass this time?
SEN. GORDON SMITH: Too often in legislating, the perfect is the enemy of the good. This is at least a very good start. It does give seniors a choice. Our parents are likely to stay where they are, as Senator Stabenow has suggested. But Senator Stabenow and I are both on a PPO right now. We enjoy what the federal employees have. That’s what’s proposed to be made available to them and to allow some market forces to work that can actually operate as real reform in Medicare to keep this program within some cost boundaries.
What I hear from Oregonians is, yes, we must have a prescription dug benefit but please don’t undo the financial integrity of Medicare. And so there have been trade-offs. There is a bipartisan solution worked out here to give seniors more choices, to give them a benefit, and to provide some reforms that will not undermine the financial integrity of Medicare.
SEN. DEBBIE STABENOW: Gwen, if I may just add….
GWEN IFILL: Excuse me, Senator. I’d really want to get to Mr. Novelli for a moment. I’ll be back with you though.
SEN. DEBBIE STABENOW: Sure, of course.
GWEN IFILL: Mr. Novelli, you represent millions of seniors. Are the trade-offs that Senator Smith talks about, are they worth making for this bill?
BILL NOVELLI: Well, there’s no question but that there’s a huge problem out there among seniors. I think that both senators and the entire Congress realize that seniors are really hurting. I’m talking about not just low- income people but middle-income people as well. They think Medicare works. They want to keep what they’ve got. The biggest thing that they’re worried about is keeping their doctors. The doctors they already have. So this legislation is a landmark. It’s a big step forward, but we’ve got to make sure that we don’t disadvantage people staying in traditional Medicare.
GWEN IFILL: How about that, Mr. Laszewski?
ROBERT LASZEWSKI: Well, this is a big step forward. It’s a step forward. It is the art of the possible in Washington. I think what’s different about Washington today is at least a majority in Congress have decided it’s time to move forward and so they’re going to do that. I think the larger context is important also. Over the next ten years, the Congressional Budget Office estimates that seniors will spend 1.8 trillion — trillion with a “t” – trillion dollars on drug costs. The Congress in these proposals is budgeting about $400 billion. So we’re talking about a proposal that will in the aggregate only pay about 22 percent of all seniors’ drug costs. It’s very important to keep that in mind I think to understand just how much this program will do and how much it won’t do.
GWEN IFILL: Is it worth doing if it falls so incredibly short?
ROBERT LASZEWSKI: I would think that most seniors… I was talking to a senior on the phone coming over here and he responded that seniors are desperate to get anything. I think that’s the sense even in Washington is that $400 billion is what we can afford. Now there’s somewhat of a debate over how we spend that and I think the Congress has tried to take that $400 billion and sprinkle it in different places. There’s a fair amount for low-income people. There is some amount for seniors that have a few dollars of prescription drug costs. There’s some amount for people that sort of with medium costs and there’s something for people with catastrophic. That leads to a fairly complex proposal for seniors to be able to understand because it’s sprinkled in all those different places.
GWEN IFILL: But, Senator Smith, there is what they call the “donut hole” in the middle of this bill. That is to say there’s a point in this reimbursement for prescription drugs in which seniors who have run up a certain amount of — number of bills don’t get any payment at all and then they have to have a lot of prescription drug bills in order to get reimbursed by Medicare. How do you address the fact that there are a couple million people at least who are going to fall through that loophole?
SEN. GORDON SMITH: Well, most seniors will not get to the donut but let’s be honest. There is a donut hole where there is no coverage. But what they’re buying is a policy essentially for catastrophic insurance. So that when you get to $3700 in total in aggregate for a year, after that, you are covered over 90 percent for everything thereafter. What that means is that in America that if you lose your health that because of prescription drugs you don’t have to lose your home. And I think it’s a wonderful advancement. So if people understand the donut hole is about buying insurance against catastrophe, it will be a lot more palatable to them.
GWEN IFILL: Senator Smith, do you see this as a first step? We just heard Mr. Laszewski talk about the $400 million that this bill would provide versus the… I’m sorry, $400 billion this bill would provide versus the $1.8 trillion that you’d need over the next ten years.
SEN. GORDON SMITH: There’s no question but that it is a first step. And we have to both continue to provide choices, provide reforms that work to also secure the financial integrity of Medicare. This is a promise we simply must keep to our seniors.
GWEN IFILL: Senator Stabenow, what do you say to that? Is this such a modest first step that it’s worth doing at all?
SEN. DEBBIE STABENOW: Well, I think we want to help in any way we can. I know I certainly do. But around here in the Congress and the president are all about making choices based on our values and priorities. And a month ago we had in front us a plan that will equal over a trillion dollars in tax cuts to a privileged few in our country — very few people. I argued at that time that if we took those dollars and put it into a real comprehensive prescription drug package, we could put hundreds or thousands of dollars back into the hands of our seniors to buy medicine so that they can get what they need.
This is about decision-making in terms of values and priorities. I would argue that when we say that there’s not enough to do this right, it’s because other choices were put as a higher priority. And I think we should revisit that and look at the fact that this particular plan is very weak. I do believe it begins to move in the right direction but when you look at a senior with $500 a year or more in or — excuse me $500 a month or more in costs and they will lose probably three months of any help at all during that year, right when they may in fact need it the most or possibly they get to the time when they’re not covered and find out there’s a serious illness or cancer or some other catastrophic problem, we can do better than that. This plan is a step and I appreciate that. But we could do a lot better if we put our seniors first.
GWEN IFILL: Mr. Novelli, you talk to members of your membership. You’ve talked to members of your board about this. Do you think that this is what they’re expecting, or are the expectations so high: Wow, we’re finally going to get a prescription dug benefit, that people haven’t begun to realize what they’re not getting.
BILL NOVELLI: I think expectations are high. We’ve done a lot of research among our members, and there’s no question but that they do not understand this coverage gap. They think it’s complicated. They think it’s sort of counterintuitive when they get to a certain point their coverage cuts out. So it will be difficult to explain this to people. They’re going sit down and figure out how much they spend per year on the back of an envelope and decide whether they want to enroll or not. We think this is a very important step forward. And it will help a lot of people. But if we can close the gap, if we can make it a narrower donut hole, we will be a lot better off in terms of getting people to enroll. And of course that’s what the plan is all about.
GWEN IFILL: Mr. Laszewski, the people who you consult with who are the insurers of the private health plans, do they see this as something that is going to be financially feasible for them over the long haul?
ROBERT LASZEWSKI: I think they’re worried like everyone else is, and they’re worried about the limitations on it. Mr. Novelli made a good point where most seniors on the back of an envelope and do a calculation and see if they win or not, and that’s not the way insurance is really supposed to work. Insurance is supposed to be about ensuring the unforeseen. As Senator Smith said, there’s a good catastrophic plan built in here.
But a lot of people are going to look at it for the first dollar sorts of coverage. Any senior with less than a thousand dollars of annual prescription drug costs is going to find that they’re going to pay out more than they’re going to get back in. And many of them may make the decision not to purchase the drug plans. And that’s a problem for trying to create an insurance plan. It could be very difficult for the insurance industry to provide a plan under those circumstances. So I don’t see this as a windfall, if you will, for the insurance industry. This is going to be somewhat of a problematic benefit to be able to deal with.
GWEN IFILL: Senator Stabenow, one of the other things that the president talked about last week and still remains unaddressed in this debate is the issue of generic drugs, cheaper drugs being made available to this same population of people. Is there any way that that is going to get addressed in this particular legislation?
SEN. DEBBIE STABENOW: Yes, we actually have some very good news. We have a strong bipartisan bill that was reported out of committee last week that will close loopholes that brand name drug companies have used to keep the competition off the market. We can actually lower prices up to 70 percent by allowing more generics or, as I say, unadvertised brands on to the market. So I commend my colleagues on both sides of the aisle for that.
And we also can do other things. If we simply allowed Americans to buy their prescription drugs made in America that are sold in Canada for at least half the price, if we allowed that to happen, we could dramatically cut prescription drug prices today and it wouldn’t cost a thing. And one of the things I’m hoping that we’ll do is open the border for seniors to be able to purchase prescription drugs from Canada until this bill takes effect. The bill doesn’t take effect until 2006. So we’re not talking about any of this benefit occurring other than a discount card until 2006.
We can create more competition by allowing our seniors to purchase American-made drugs that they helped to subsidize the research for, to be able to buy those in Canada where they are sold at half the price. We also can support states to be able to do more collective bulk purchasing to lower prices. This is a major issue, not just for our seniors but every small business, every large business, whose premiums are skyrocketing in the insurance policy.
GWEN IFILL: I just want to get to Senator Smith before we’re out of time one last time, which is: There are members of the House who also wrestling with this issue who are saying that no bill is better than this bill. There are Democrats and there are others who just think it’s fallen that short. What do you say to them?
SEN. GORDON SMITH: I just simply disagree. I think their view of the perfect would prevent us from having a very good start and providing our seniors with a very needed benefit and a modernization of Medicare — some reforms that will actually let the marketplace be a part of this, that will give the most vulnerable, the most help but will provide catastrophic coverage for all those who choose to enroll.
GWEN IFILL: You’re convinced that the marketplace will work the way you hope.
SEN. GORDON SMITH: I think it’s the great gamble in this that both sides are… one is saying we want the government delivery. The other side is saying the government delivery will not provide the reforms that will provide the financial integrity. So we’ll find out which system works better.
GWEN IFILL: All right. Senators, Mr. Laszewski, Mr. Novelli, thank you very much.