Grassley Floor Speech Relative to Opponents Attacking Drug Benefit Law
Sen. Chuck Grassley
Floor Speech Relative to Opponents Attacking Drug-Benefit Law
March 24, 2004
I want to take this opportunity to talk about the new prescription drug-benefit law. My colleagueswho opposed the bill have made several recent attacks on the bipartisan legislation that was passedinto law last year. This law represents years of hard work by Republicans and Democrats alike. Wehad the chance to fulfill a commitment to our seniors last year and we took it. And I’m glad we did.
For the first time in the history of Medicare, seniors will have a voluntary prescription drug benefit.
Additionally, for the first time, seniors will receive coordinated disease management, better coverageof preventive screenings and protection against catastrophic drug costs. The plan helps to reducedrug costs by harnessing the buying power of 40 million Medicare beneficiaries to negotiate lowerprices and by speeding the entry of lower cost generic drugs to market. I remind my colleagues whoinsinuate that the bill was some fly-by-night idea cooked up in some back room and passed in thedark of night that over 350 outside groups supported this law. That includes AARP, the Alzheimer’sAssociation and the National Council on Aging.
Let me speak directly now to some of the criticisms from my colleagues who opposed this law tohelp seniors.
Advertisement of the Medicare Law
First, some are attacking the Administration’s efforts to educate the American public about the newdrug benefit. I’m surprised some of my colleagues would oppose providing seniors with timely,accurate and clear information about changes made by the law. In January of this year, severalDemocratic members of Congress accused the Administration of “robbing the Medicare program”and asked the General Accounting Office to investigate whether or not the ads constituted a misuseof federal funds. GAO confirmed that the law mandates the Department of Health and HumanServices to educate seniors and that the ads are not political.
The GAO report makes clear that the Department has a responsibility to inform seniors and to makesure that they understand the new benefits and how they might help them. What information iscurrently available to seniors may be coming from unscrupulous sources. On February 17, 2004,the New York Times featured a story about people going door to door offering “Medicare approved”cards, though none have been approved and enrollment does not begin until May. According to onefederal official, scam artists are fraudulently impersonating or misrepresenting Medicare bytelephone and by door-to-door visits to beneficiaries’ homes. In some cases, a caller obtainedpersonal information about beneficiaries before visiting their homes.
These ads are not propaganda, as confirmed by the GAO. They are filling an important void that notonly will educate America’s seniors but also will prevent criminals from taking advantage of andpotentially harming America’s seniors. Educating our seniors on the new Medicare ModernizationAct is not only required by law, it is also the right thing to do.
Cost Estimates
Now I want to respond to the accusations we have heard that the “true cost” of the Medicare bill wassomehow hidden from Congress before the final vote. This is simply political election-yearhyperbole.
The opponents of the drug benefit are making this claim because the final cost estimate from theCMS Office of the Actuary was not completed before the vote took place.
Let’s be clear, the cost estimate was not withheld from Congress, because there wasn’t a final costestimate from CMS to withhold. Their cost estimate wasn’t even completed until December 23 —long after the House and Senate vote.
Let me also be clear that we did have the official cost estimate on the Medicare bill before the voteand that is the one from the Congressional Budget Office.
Now no government official should ever be muzzled from providing critical information toCongress. If that happened last year, that was wrong.
These accusations about whether information was withheld have raised questions as to whetherCongress had access to a valid and thorough cost estimate for the prescription drug bill before thefinal vote.
It should also be made clear that while the cost analysis by the Office of the Actuary is perhapshelpful, it is not the cost analysis that Congress relies on.
Congress relies exclusively upon cost projections by the Congressional Budget Office. It is CBO’scost estimate we use to determine whether legislation is within authorized budget limits.
For Congress, if there is a “true cost” estimate that is CBO’s. CBO’s cost estimate is the only onethat matters.
And when Congress approved a $400 billion reserve fund to create a Medicare prescription drugbenefit, this meant $400 billion according to CBO — not CMS.
With all due respect to the dedicated staff who work at the CMS Office of the Actuary, their costestimates were irrelevant to the process.
The Congressional Budget Office worked closely with the conferees to the prescription drug bill andthe staff to ensure that a full analysis of the projected costs was completed.
The conferees and staff regularly and constantly consulted with CBO throughout the developmentof the Senate bill and in the preparation of the conference agreement.
CBO worked nearly round the clock and on weekends for months to complete an extremely thoroughand rigorous cost analysis of the prescription drug bill.
That cost estimate — our official cost estimate – was available to every Member of Congress beforethe measure was presented to the House or Senate for a vote.
It is also pretty disingenuous for the opponents of the Medicare bill on the other side of the aisle tosuggest that the price tag for the Medicare bill causes them concern.
The fact of the matter is that they supported proposals that cost hundreds of billions of dollars more.The House Democratic proposal last year would have cost nearly $1 trillion, and the SenateDemocratic proposal in 2002 cost more than $200 billion more than the bill that was enacted intolaw.
Further, there were more than fifty amendments offered on the floor of the Senate during the debateon the Senate bill that would have increased the cost of the bill by tens of billions of dollars.
The bottom line is that there should be no doubt in anyone’s mind that we had a true cost estimatefor the prescription drug bill last year and everyone had access to it before the vote.The impact on the Medicare Trust Fund is also something that needs to be addressed here. TheTrustees’ Report revealed yesterday that the Medicare Trust fund insolvency date has been movedup seven years to 2019.
Most of the change is due to higher health care costs, changes in the economy, better data analysisand projections, and improved data on the health of beneficiaries.
The Medicare bills impacted two of the seven years in the solvency analysis and these were due toefforts to ensure that beneficiaries continue to have access to quality care, especially in rural areas.
We all have to be concerned about the future solvency of Medicare. We have to stay focused onimproving and protecting Medicare for future generations. And we have to do this while also notjeopardizing access to care.
So-Called “Prohibition” on Negotiating
Now let me address the accusations that Medicare is prohibited from negotiating with drugcompanies.
That could not be further from the truth. The truth is that Medicare prescription drug plans will benegotiating with drug makers. These negotiations are at the heart of the new Medicare drug benefit.
The absurd claim that the government will not be negotiating with drug makers comes from a noninterferenceclause in the Medicare drug bill.
This non-interference clause does not prohibit Medicare from negotiating with drug makers. Itprohibits CMS from interfering in those negotiations.
Let me be clear, the non-interference clause is at the heart of the bill’s structure for deliveringprescription drug coverage. This clause ensures those savings will result from market competition,rather than through price fixing by the CMS bureaucracy.
This same non-interference clause was in the Daschle-Kennedy-Rockefeller bill and the Gephardt-Dingell-Stark bills in 2000.
This is almost identical to the non-interference clause that was in the Gephardt-Dingell-Stark bill andthe Medicare Modernization Act, which was signed into law.
The Congressional Budget Office has concluded that the market-based approach in the new Medicarelaw will result in a higher prescription drug cost management factor for Medicare than any otherapproach considered by Congress.
Here is what the CBO about eliminating the non-interference clause said in a letter earlier this year:“the Secretary would not be able to negotiate prices that further reduce federal spending to asignificant degree.”
The CBO, in that letter went on to say, “CBO estimates that substantial savings will be obtained bythe private plans.”
Let’s be clear, direct government negotiation is not the answer. The government does not negotiatedrug prices. The government sets prices.
The bill’s entire approach is to get seniors the best deal through vigorous market competition, notprice controls.
Even the Washington Post editorial page wrote in a February 17th editorial that “Governments arenotoriously bad at setting prices, and the U.S. government is notoriously bad at setting prices in themedical realm.”
Price controls won’t work, whether we are talking about all drugs or just so-called “single sourcedrugs,” as the Senator from Oregon has proposed.
The Congressional Budget Office said that such a proposal “could generate no savings or evenincrease federal costs.”
It would seem, then, that the devil is in the details, so to speak.
So, we did not rely on CMS price fixing but instead created a new drug-benefit that relies on strongmarket competition and creates consumer choices.
This approach has been analyzed by the experts as getting the best deal for seniors on lower drugprices.
Summary
So just to conclude. It is an election year and plenty of people are using Medicare to play politics.The new Medicare law was a bipartisan proposal that resulted from years of work by Republicansand Democrats.
The new law creates a voluntary benefit that is targeted to low-income seniors and those with highdrug costs.
The new law lowers drug costs by speeding the delivery of new generic drugs to the marketplace,lowering costs for all Americans, not just those on Medicare.
The new law also revitalizes the rural health care safety net with the biggest package of ruralpayment improvements in the history of the program.
As the AARP has made clear when providing its strong endorsement, the Medicare bill “helpsmillions of older Americans and their families,” and is “an important milestone in the nation’scommitment to strengthen and expand health security for its citizens . . .”
Mr. President, I yield the floor.
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