New Congress, New Results on Prescription Drugs?
By Max Heuer
WASHINGTON, Dec. 04, 2002–After a record-breaking campaign season in which the Republican party took back control of the Senate and widened its majority in the House, a new class of Republican lawmakers are preparing to join the ranks of the 108th Congress in January with a bundle of issues to address.
Few will be as important as passing a prescription drug benefit for Medicare for the millions of seniors in America who enroll in the government sponsored health care.
But as some inside the Beltway have trumpeted a new GOP mandate after establishing a majority on both sides of Capitol Hill, the issue will still be a hotbed of controversy.
Last summer, four bills in the Senate failed because none could garner the 60 votes necessary to end filibustering.
In June, the Republican-controlled House passed a prescription drug package for Medicare – estimated by the Congressional Budget Office at a cost of $337 billion over 10 years. That bill was sharply criticized by some Democrats and liberal organizations as inadequate.
Republicans maintain their version of the bill will help seniors and is more affordable than the Democratic version.
At the heart of the conflict last session is the classic dividing line of private versus public: The Republican plan uses HMOs and insurance companies to provide prescription drug programs for Medicare recipients, while many Democrats favor a government run benefit – although a few on both sides of the aisle have voted against the majority of their party on the issue.
While there is tri-partisan support in the Senate for increased aid to low income recipients and seniors whose prescription drug prices are “catastrophic,” Democrats have criticized the GOP plan for a perceived “doughnut hole” in coverage.
Sen-elect John Sununu, R-NH, said he expected the Senate GOP to push for legislation similar to that already passed by the House.
With a narrow Republican Senate majority, the GOP leadership will try to include any new legislation into a budget resolution, which does not face the same 60 vote parliamentary hurdle. If the GOP fails to pass a budget, like the Democratic Senate last session, experts say the likelihood of passing a benefit would be reduced significantly.
The issue is rife with complexity, but it is of the utmost importance for New Hampshire’s 148,000 residents 65 or older, none of who receive prescription drug coverage through Medicare, according to the New Hampshire Medication Bridge Program.
A study in 2000 revealed that 56% of seniors in New Hampshire do not have prescription drug coverage, higher than the national average of 38% at the time, according to the New Hampshire chapter of the American Association of Retired Persons.
To The Victors, Goes The Accountability
Campaign promises and post-election statements make providing relief for seniors on Medicare – who are faced with daunting prescription drug bills – a priority for the GOP in the 108th Congress.
“It seems to me there is an awful lot of activity aimed at getting something done in the first six months,” said Ed Howard, executive vice president of the Alliance for Health Reform, a non-partisan, non-profit informational group. “The first thing out of (House Speaker) Dennis Hastert’s mouth, when asked what his agenda was, was health care.”
“We’re going to see significant legislative action in the next Congress, and I even think it’s likely to occur in the first year,” said Ron Pollack, executive director of Families USA, a liberal health lobby.
“This is something that so many people campaigned on that I can’t image its not going to have a lot of momentum going forward,” Howard said.
Whether that will get a bill passed is still up for debate.
Bill Hamilton, director of advocacy AARP New Hampshire, said that the chances the Senate could pass a bill may be improved “with a new a environment in January.” But Hamilton added, “I don’t know if anybody is exactly sure why it didn’t go through the last time.”
The fact that Republicans in the House got legislation may have helped the GOP in the midterm elections. Some wonder whether the flurry of proposals in the Senate was designed to fail by both parties.
“I think with the elections coming up as it was going through the Senate, I don’t think either one wanted the other one to get credit for what happened,” said Hamilton.
Howard said the failure of the Senate to act in July only served to illustrate what happens in politics “when an issue is so big politically that both parties have a stake in making sure that the issue survives as opposed to the policy proposal.”
Ku said there were “political risks” at the time for Republicans, because there would be disappointment in what the “middle class senior will be getting” if the legislation’s benefits were limited.
But now, some say the onus now falls on the Republicans’ shoulders to deliver a bill.
“The Republicans are in a position where they have really got to deliver, there is no ability to hide behind a Democratic Senate,” Pollack said.
The Budget
With a slumping economy and the federal government back in deficit, the Republican majority could try to restrict fiscal spending and maybe even push for a less expensive prescription drug benefit for Medicare.
“Inherently this is going to be something expensive,” said Leighton Ku, senior fellow at the Center for Budget and Policy Priorities, a nonpartisan policy center emphasizing the issues that affect middle and low income people. “Three-hundred (billion) was the low end… the question is, gee, well can we afford this given the fact that the federal budget is in deficit for the next several years, and there’s continuing interest in further tax cuts and a war with Iraq.”
“I would hope that, you know, we’re able to pass a prescription drug benefit plan,” First congressional district Rep-elect Jeb Bradley, R-NH, said in a phone interview last week. “It certainly was something I talked a lot about during the campaign, I said it should be targeted to low and middle income senior citizens and it needs to be affordable.”
Sen. Ted Kennedy, D-MA, co-sponsored a bill with Sens. Bob Graham, D-FL, and Zell Miller, D-GA, estimated to cost about $594 billion over eight years, by far the most expensive proposed last session.
The Congressional Budget Office estimated the House passed version at $337 billion; the tri-partisan Senate legislation – whose sponsors included Sen. James Jeffords, I-VT – was similar to the House version in cost.
The final Senate bill, a bi-partisan measure sponsored by Sens. Bob Graham, D-FL, and Gordon Smith, R-OR, aimed to compromise between the two competing versions, was estimated at $395 million.
“I think the message has been sent by the American people loud and clear to Congress: Work out your differences, keep things affordable, and at the same time provide meaningful drug relief to senior citizens,” Bradley said. “As long as we’re reasonable, I’m pretty optimistic.”
But just how reasonable that is could shift depending on the circumstances.
“The numbers are going to be subject to maneuvering,” Howard said.
Some say those numbers could even fall from last year’s estimates.
“Sen. Lott talks about going for the low income (benefit),” Ku said. “This could be a signal a new bill would go below last year’s proposals.”
The Doughnut Hole, Among Other Things
One of the biggest conflicts this past year over the various plans was a perceived “hole” in drug coverage. Under the plan passed by the House, drug coverage under Medicare would end at total drug expenditures of $2,000 and only start up again once the amount of money spent out of the recipient’s own pocket reached $3,700, or $4,800 in total spending, according to a Congressional Research Service report.
In 2001, Medicare beneficiaries spent an average of $1,756 on prescription drugs, according to the Kaiser Family Foundation.
“It’s the so called doughnut hole,” said Howard. “But here’s the political dilemma, it’s very expensive to insure that because that’s where most of the expenses are.”
Under the House plan, a senior with $2,500 in annual drug costs would have to pay $1,400 themselves plus a $396 premium, totaling 72 percent of the senior’s total prescription drug expenses, according to a Families USA release in September.
Beyond the hole, the debate starts to get more ideological.
The House relies on Medicare+Choice plans and prescription drug plans (PDPs) to provide the drug benefit. The bill promotes competition by also relying on private plans to compete and provide coverage, with federal subsidies to encourage participation.
The M+C plan, which can provide prescription drug coverage, has dwindled in the Medicare system as an option because HMOs contend they cannot afford it
“Medicare+Choice is currently the only part of Medicare where you can get a prescription drug benefit,” Sununu said. “One of the reasons we need to further modernize Medicare is to make sure we further fund that option.”
“The problems with a one size fits all prescription drug benefit that’s managed by government bureaucrats is that it’s an expensive, inefficient way to do business,” he said.
Experts say that while there is tri-partisan agreement that the legislation will include broad coverage for the very poor, just how much the drug plan reduces costs for the average senior citizen is still something of a debate.
The disagreement highlights major divides in how big a role the Medicare program should have in providing the benefit.
While Bradley said the House bill passed last session would have cut drug costs between 40-45 percent for the average senior, others say the benefit would have been more like 25 percent.
“It may be that 300 or 350 (billion dollar appropriation) can really only pay for a decent low income benefit,” Howard said.
Pollack said prescription drugs will cost consumers over $2 trillion over the next ten years, and therefore even a plan allotting $500 billion would only cover 25 percent of that cost, and the GOP benefit would amount to about 15 percent off.
Sununu called this reasoning “ridiculous” and said the GOP’s estimate factored in a decline in drug costs because of the bulk purchasing and competition spurred by the legislation. Sununu said these factors would shrink prescription drug costs an estimated 15 percent, adding to the total savings of the recipient.
Ku also added this was an issue “that distinguishes Republicans versus Democrats” because a Medicare benefit coupled through private plans could increase the efficiency, which helps “shave off some of the cost.”
“One of the features that seemed to be malleable… was the extent to which you guarantee that this benefit was going to exist even if private insurance companies didn’t see fit to offer it,” Howard said.
While there is concern among Democrats that giving private insurance companies control would hurt consumers, insurance companies say having the necessary flexibility to give people a variety of choices is crucial to doing business.
“Some in the Senate wanted to see a purely government run program, just to add drugs to the existing benefit,” said Larry Akey, a spokesperson Health Insurance Association of America. “We think that the lessons to be learned from the last 40 years is that benefits designed by the Congress take away the innovation that a private market can bring.”
Others say if Medicare has more control, prescription drug prices will be driven lower.
“The Medicare program would use its very substantial bargaining clout to get prices down,” Pollack, of Families USA, said. “When the pharmaceutical (industry) endorses the House plan, they obviously do not want prices coming down.”
But Sununu said competition was the best way to bring down pharmaceutical prices.
“We should give seniors a choice and some options, and in the long run that competition is going to continue keep costs and prices under control,” he said. “The Kennedy bill would effectively undermine all of the benefits that some senior might already have and enjoy.”
Agreements, Not Many
Democrats and Republicans have agreed, on principle at least, that the largest benefit in any bill go those seniors with a very low income and those who have gigantic prescription drug bills from medical disasters.
The House plan included low-income subsidies for recipients with earning less than 175% of the federal poverty level, which is set at $8,860 for a single person home.
This provision should help a significant number of Granite State residents. About 41,000 seniors in New Hampshire live below 200% of the federal poverty level, according to the Kaiser Family Foundation State Health Facts Online.
Still, the importance of providing at least some assistance to the neediest could be enough to lure some Democrats.
“It seems to me very difficult for Democrats to walk away from $40 billion to low income seniors,” Howard said, roughly referring to the annual cost of the GOP version.
Getting Local
In place of federal assistance, local Granite State residents and lawmakers have devised an array of stopgaps and alternatives to ease the escalating costs of prescription drugs.
Seniors have turned to bus trips and online purchasing to obtain cheaper drugs from Canada.
While the Bush administration has voiced opposition to the growing popularity of obtaining cheaper prescription drugs from Canada, it has not tried to stop such access. In fact, a bi-partisan bill passed in 2000 barred the Food and Drug Administration from blocking seniors’ access to cheaper drugs up north.
Assistance programs have popped up all over the Granite State providing community access to pharmaceutical manufacturers offering assistance. According to the New Hampshire Medication Bridge Program, pharmaceutical companies provided $500 million for prescription drug aid for 1.5 million patients in 1999 alone.
President Bush neutralized, at least somewhat, the polarizing election issue of allowing cheaper generic drug versions into the market by using an executive order to close a loophole in the 1984 Hatch-Waxman Act that allowed drug companies to continually extend patents by filing frivolous lawsuits.
Gov. Jeanne Shaheen, who recently lost to John Sununu in the Senate race, testified before a Senate committee on behalf of the Businesses for Affordable Medicine Coalition, a group of business, labor leaders and Governors concentrated on the generic drug issue.
Sen. Judd Gregg, R-NH, will take the reins of the Health, Education, Labor and Pensions (HELP) committee from Sen. Ted Kennedy, D-MA – which has jurisdiction over generic drug issues. The Finance Committee deals with Medicare prescription drug legislation, according to Gregg’s Press Secretary Jeff Turcotte.
Bush’s new regulations are set to go into effect 60 days after his announcement October 21st. BAM spokesman Brad Cameron said the move was a “good first step” but that “what will happen after that nobody knows for sure.”
Cameron said the new regulations would save consumers about $3 billion annually, if implemented effectively.
New Hampshire’s HHS currently pays $93 million a year for prescription drugs for Medicaid recipients. Generic drugs are 30 to 60 percent cheaper than their brand name counterparts and are therapeutically equivalent, said Lisa Swenson assistant director of Health Planning and Medicaid at the New Hampshire HHS.
But most involved with the prescription drug issue acknowledge that aid from Washington, especially for seniors under Medicare, is a must.
New Hampshire prescription drug expenditures increased 17 percent in fiscal year 2001, costing the state’s residents $88 million.
The New Hampshire American Association of Retired Persons had every congressional candidate this past election cycle sign a pledge in commitment to getting a prescription drug bill passed, said Bill Hamilton, New Hampshire AARP director of advocacy.
New Hampshire was one of only two states in the country – the other being Iowa – that was able to garner signatures from every candidate, Hamilton said, which shows that the Granite State’s elected officials in Washington are committed to finding a solution.
“I think that we will see a prescription drug benefit bill on the president’s desk,” Bradley said. “The elections showed that the American people want results and that its up to the Republican party and the Democrats to produce those results and we’ll be held accountable for our successes or our lack of success.”
The desire to produce those results has left New Hampshire Democrats ready to support just about anything that would help.
“If (the Republicans) can pull it off great,” New Hampshire Democratic Party Chair Kathy Sullivan said. “I wish them luck and I hope it works, and if they do ill be the first one standing there and applauding.”
Published in The Manchester Union Leader, in New Hampshire.
