Testimony by Rep. Cal Dooley

House Committee on Government Reform

Subcommittee on Human Rights and Wellness

September 24, 2003

Thank you, Mr. Chairman, for the opportunity to testify today on the
important issue of Medicare Prescription Drug Coverage. As the
Conference Committee continues to struggle with a reconciliation of the
House and Senate-passed bills, many seniors, advocacy groups, and
Members of Congress have recognized there is a better way to provide a
universal, affordable Medicare drug benefit to our nation's seniors.

Earlier this year I introduced H.R. 1568, the Medicare RX Now Act, a
universal zero-premium Medicare drug benefit that would target
assistance to seniors who need the most help -- the nation's sickest and
lowest-income seniors -- and provide market-based discounts for all
Medicare beneficiaries. Recognizing that a majority of seniors already
have some form of prescription drug coverage, our benefit was designed
to maintain existing coverage provided by employers, states and private
insurance options. In addition, we designed our benefit with the goal of
spending no more than the \$400 billion provided in the Republican
budget.

# *Universal Coverage for High Drug Costs*

Under H.R. 1568 all seniors would be entitled to a new Medicare Part B
drug benefit at no additional premium. Each senior would select a
Medicare Approved Drug Card Plan that would provide him or her with
immediate access to negotiated prices, projected to save that senior
anywhere between 10 and 20 percent off the price they currently pay. The
card would also act as an accounting mechanism to track all drug
spending. Seniors with very high drug costs -- in excess of \$4,000 a
year -- would trigger a catastrophic benefit. The government would pay
roughly 80 percent of drug costs after \$4,000 and the individual would
pay a flat co-payment.

Because the coverage would be automatic and provided at no additional
premium it would avoid the adverse selection problems that plague many
other proposals and provide seniors with a new benefit for no additional
out of pocket cost to the senior.

# *Targeted Assistance to Those Most In Need*

Considering current budget shortfalls and projected deficits for years
to come, we must target our resources to seniors with the greatest need.
In addition to the universal benefit for all seniors who incur very high
drug costs, our legislation recognizes that some low-income seniors do
not have the ability to pay large deductibles and need immediate
assistance. Under H.R. 1568 seniors up to 200 percent of poverty would
be eligible for first dollar drug coverage with low three-tiered
individual co-payments.

Seniors above full Medicaid eligibility but below 135 percent of poverty
would pay flat co-payments equivalent to an 80/20 cost share. Seniors
with incomes between 135 percent and 150 percent of poverty would
receive a subsidy equivalent to a 70/30 cost share. And states would
have the option of covering seniors between 150 percent and 200 percent
of the federal poverty level. The federal government would match state
payments at the SCHIP level.

# *Won't Disrupt Current Coverage* 

H.R. 1568 recognizes the first principle of medicine -- to do no harm.
We cannot afford to enact a Medicare prescription drug benefit that
would leave the majority of seniors who already have some form or
prescription drug coverage worse off than they are today. According to
CBO, under the proposals being considered by the Conference Committee,
between 37 and 32 percent of employers who provide retiree drug coverage
would drop their existing coverage. That translates into almost 4
million beneficiaries losing their existing employer-sponsored
prescription drug coverage. It's unconscionable to think that we'd enact
a drug benefit that would spend hundreds of billions of dollars to make
seniors worse off than they are today.

My legislation would not require seniors to switch out of their current
coverage to get the new drug benefit --- instead it would reinforce all
current forms of drug coverage, including employer-based retiree
coverage and state-based pharmaceutical assistance programs. Because its
benefits are based on all drug spending --- including drugs purchased
under insurance plans seniors already have, not just out-of-pocket
spending --- the proposal is fair to seniors who have existing coverage
and to the employers who provide it. With a deficit for FY 2004
approaching \$500 billion, it is fiscally irresponsible to replace
prescription drug coverage financed by private sector dollars with
federal dollars.

***[Conclusion]{.underline}***

Thank you, Mr. Chairman, for the opportunity to testify today. In
summary, we need to enact a Medicare prescription drug bill that
provides a benefit that seniors can understand, targets the most
assistance to seniors with high drug costs and with low-incomes, and
keeps employers and states in the system. The Medicare RX Now Act is
easy to understand and within the Medicare Part B system that seniors
trust.

I look forward to working with you, members of the committee and the
rest of our colleagues toward the enactment of the Medicare Prescription
Drug benefit that our nation's seniors deserve.