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MEDICARE SAVINGS PROGRAMS AND LOW

INCOME SUBSIDY: KEEPING MEDICARE’S

PROMISE FOR SENIORS AND PEOPLE WITH

DISABILITIES

HEARING

BEFORE THE

SUBCOMMITTEE ON HEALTH

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MAY 15, 2007

Serial No. 110–45

(

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov
COMMITTEE ON ENERGY AND COMMERCE

JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, JR., New Jersey

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

DIANA DEGETTE, Colorado

Vice Chairman

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

JANE HARMAN, California

TOM ALLEN, Maine

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

G.K. BUTTERFIELD, North Carolina

CHARLIE MELANCON, Louisiana

JOHN BARROW, Georgia

BARON P. HILL, Indiana

JOE BARTON, Texas

Ranking Member

RALPH M. HALL, Texas

J. DENNIS HASTERT, Illinois

FRED UPTON, Michigan

CLIFF STEARNS, Florida

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE WILKINS MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff

GREGG A. ROTHSCHILD, Chief Counsel

SHARON E. DAVIS, Chief Clerk

BUD ALBRIGHT, Minority Staff Director

(II)
(III)

SUBCOMMITTEE ON HEALTH

FRANK PALLONE, JR., New Jersey, Chairman

HENRY A. WAXMAN, California

EDOLPHUS TOWNS, New York

BART GORDON, Tennessee

ANNA G. ESHOO, California

GENE GREEN, Texas

Vice Chairman

DIANA DEGETTE, Colorado

LOIS CAPPS, California

TOM ALLEN, Maine

TAMMY BALDWIN, Wisconsin

ELIOT L. ENGEL, New York

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

JOHN D. DINGELL, Michigan (ex officio)

NATHAN DEAL, Georgia,

Ranking Member

RALPH M. HALL, Texas

BARBARA CUBIN, Wyoming

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

STEVE BUYER, Indiana

JOSEPH R. PITTS, Pennsylvania

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE WILKINS MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

JOE BARTON, Texas (ex officio)

(V)

C O N T E N T S

Page

Hon. Frank Pallone, Jr., a Representative in Congress from the State of

New Jersey, opening statement .......................................................................... 1

Hon. Nathan Deal, a Representative in Congress from the State of Georgia,

opening statement ................................................................................................ 2

Hon. Heather Wilson, a Representative in Congress from the State of New

Mexico, opening statement .................................................................................. 3

Hon. Gene Green, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 5

Hon. Marsha Blackburn, a Representative in Congress from the State of

Tennessee, opening statement ............................................................................ 6

Hon. Hilda L. Solis, a Representative in Congress from the State of California, opening statement ........................................................................................ 7

Prepared statement .......................................................................................... 8

Hon. John B. Shadegg, a Representative in Congress from the State of Arizona, opening statement ...................................................................................... 8

Hon. Tammy Baldwin, a Representative in Congress from the State of Wisconsin, opening statement ................................................................................... 9

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 11

Hon. Edoulphus Towns, a Representative in Congress from the State of

New York, prepared statement ........................................................................... 13

WITNESSES

Monica Sanchez, deputy director, Medicare Rights Center, Washington, DC .... 15

Prepared statement .......................................................................................... 18

John Coburn, director, Make Medicare Work Coalition, Health & Disability

Advocates, Chicago, IL ......................................................................................... 28

Prepared statement .......................................................................................... 30

Lilla Sassar, beneficiary, Syacauga, AL ................................................................ 47

Prepared statement .......................................................................................... 47

Gail Clarkson, chief executive officer, the Medilodge Group, Bloomfield Hills,

MI, on behalf of the American Health Care Association (AHCA) .................... 48

Prepared statement .......................................................................................... 50

N. Joyce Payne, member, Board of Directors, AARP, Washington, DC .............. 64

Prepared statement .......................................................................................... 66
(1)

MEDICARE SAVINGS PROGRAMS AND LOW

INCOME SUBSIDY: KEEPING MEDICARE’S

PROMISE FOR SENIORS AND PEOPLE

WITH DISABILITIES.

TUESDAY, MAY 15, 2007

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON HEALTH,

COMMITTEE ON ENERGY AND COMMERCE,

Washington, DC.

The subcommittee met, pursuant to call, at 2:05 p.m. , in room

2123, Rayburn House Office Building, Hon. Frank Pallone, Jr.,

(chairman) presiding.

Present: Representatives Green, Allen, Baldwin, Solis, Matheson,

Deal, Wilson, Shadegg, Murphy, Burgess, Blackburn and Barton.

Staff present: Yvette Fontenot, Brin Frazier, Amy Hall, Christie

Houlihan, Purvee Kempf, Bridgett Taylor, Robert Clark, Chad

Grant, Melissa Bartlett, Ryan Long, and Nandan Kenkeremath.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. PALLONE. The hearing is called to order. Today we are having a hearing on Medicare savings plan and low income subsidy,

keeping Medicare’s promise for seniors and people with disabilities.

And I will recognize myself initially for an opening statement.

The focus of today’s hearing is on the Medicare savings programs

which consist of the Qualified Medicare Beneficiary or QMB Program, the Specified Low-income Beneficiary or SLIMB Program

and the Qualified Individual or QI Program. We will also be hearing about the newest financial assistance program available to

Medicare beneficiaries, the low-income subsidy that was included

as part of the new Medicare Part D benefit.

These financial assistance programs are a vital part of Medicare

because they help ensure that millions of low-income beneficiaries

are able to access the health benefits that they are entitled to.

Many of the Medicare beneficiaries who qualify for these programs

are our most vulnerable. They are more frail, more disabled, have

greater health care needs that are often more expensive, and they

are also more likely to be female, live alone and more likely to be

racial minorities.

Ensuring the success of the MSP and LIS Programs means ensuring access to health care services to those who need it most.

Without the Medicare savings programs and low-income subsidy,
2

millions of low-income beneficiaries would be faced with the inability to afford the premiums, deductibles and cost-sharing requirements they are responsible for.

According to the Kaiser Family Foundation, in 2005, over half of

the people with Medicare lived on less than $20,000 a year. Most

of their income came directly from their monthly Social Security

checks. And while I applaud the work that has already been done

to enroll millions of Americans in these critical programs, there is

clear evidence that we are not doing enough to ensure that everyone who is eligible for these benefits is receiving them.

According to the Congressional Budget Office, participation rates

for QMB and SLIMB Programs are 33 and 13 percent, respectively.

That is pretty awful. Furthermore, there could be up to 5 million

Medicare beneficiaries who are eligible for the low-income subsidy

under the prescription drug benefit but are not enrolled. According

to the Kaiser Family Foundation, more than 2.3 million of those

beneficiaries meet the necessary income requirements to qualify for

the low-income subsidy but are deemed ineligible due to the asset

test.

Now we can and should be doing more to improve participation

rates in these programs and ensure these beneficiaries have access

to the health benefits they need and deserve. Today we will hear

from a number of witnesses about ways we can improve these programs, such as adjusting the asset test under the Medicare Part D

LIS Program so it is not so burdensome. We will also hear about

the importance of improving outreach efforts, streamlining the application process and increasing income eligibility limits under the

MSP Programs.

For the past 6 years, President Bush and the previous Republican-led Congress have shelled out continuous subsidies worth billions of dollars to the prescription drug and insurance industries in

an attempt to privatize the Medicare system. Between Medicare

Part D and Medicare Advantage, they have made out like bandits

in my opinion—these programs have been at the expense of the

American taxpayer and the Medicare beneficiaries themselves. We

have talked previously about Medicare Advantage and the different

payment schedule. The time has now come to refocus our attention

and target our resources more effectively so we can provide the

most help to our most vulnerable citizens.

I am looking forward to hearing from the witnesses today about

these programs and how they are working and how we might be

able to improve them. I appreciate your being here today, and I

now recognize our ranking member, Mr. Deal. Before I do, let me

mention that we do expect to have votes, so it may be that we can’t

finish with our opening statements or may have to interrupt the

panel because I think the votes are expected within the next half

hour or so, but we will proceed until we hear the bell. So, at this

time, I will recognize the ranking member, Mr. Deal.

OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

Mr. DEAL. Thank you. When I came to Congress in 1993, the

Medicare Part D monthly premium was $36.60.
3

Premiums are set similarly today and are adjusted each year in

an effort to ensure that Part D premiums compose 25 percent of

the program’s cost. But today, at $93.50 a Medicare beneficiary

pays almost two and a half times what they paid in 1993. What

has changed since I came to office is the overall cost of health care

services and in turn the price of the Part D program.

As I am sure everyone in the room is aware, premiums will continue to go up each year unless Congress acts to reform the health

care sector to stabilize the sky-rocketing cost of health care services. This hearing focuses on a few programs designed to ensure

low-income Medicare beneficiaries have assistance with their Medicare premiums and cost sharing.

The Medicare Savings Programs and the Low-income Subsidy

Program target the near poverty senior population by paying for all

or part of what is typically the beneficiary’s responsibility in Medicare. With the rising cost of health care, these programs have a

role to play to ensure our poorest seniors continue to have access

to their physicians and medications.

Some of our witnesses today will testify that more could be done

to enroll seniors in these programs, and I certainly look forward to

their testimony. However Mr. Chairman I believe more could be

done to reform the health care industry to stabilize premiums for

all beneficiaries.

Additionally, addressing underlying health care costs would assist those beneficiaries who may not qualify for a program which

pays for their deductibles and co-insurance. I do not believe the answer to rising premiums and the cost of care is simply for the taxpayer to bear this burden by shifting more people into the Medicare rolls.

It is certainly important for the committee to evaluate the effectiveness of our existing programs. But it is time for us to broaden

our focus and evaluate health care reforms which address rising

costs for patients with and without Medicare.

Hopefully this would ensure that, in another 14 years, the Congress can continue to fulfill its obligation to our seniors without

forcing them to pay a premium two and a half times what they pay

today or increasing the burden on already strained State and Federal budgets.

Thank you. I yield back.

Mr. PALLONE. Thank you, Mr. Deal.

Next we have the gentlewoman from New Mexico.

OPENING STATEMENT OF HON. HEATHER WILSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW MEXICO

Mrs. WILSON. Thank you, Mr. Chairman. I very much appreciate

your holding this hearing today.

In New Mexico, there are about 65,000 people who are enrolled

in the Medicare prescription drug benefit and in the low-income

subsidy that we have there. They get their medicines for little or

no premium and no copay and without the gap in coverage. That

is about 23 percent of the Medicare population in New Mexico, so

we have very high participation in the low-income subsidy program. And it is saving folks a lot of money, about $3,300 a year.
4

About 95 percent of the seniors in my congressional district now

have drug coverage either through Medicare Part D, a former employer or from the Veterans’ Administration, which is one of the

highest enrollment rates of any congressional district in the country. Still there are many more seniors who are probably eligible for

the low-income subsidy but are not enrolled. I want to commend,

particularly in New Mexico, the Social Security Administration for

their efforts to find eligible seniors and to help them enroll, particularly a wonderful case worker named Eva Lujan who is the liaison with the local Social Security office who has done a wonderful

job in finding seniors who might be eligible. And she has been tremendously patient in hundreds of different forms in helping seniors

get enrolled through traveling offices and working with our office

and others.

For some people, the asset test has really prevented them from

enrolling. And I think this is one of the things we do need to look

at. In 2007, the asset test of about $11,000 for individuals and

$23,000 for a couple really may be too low to expect people to be

able to liquefy those assets and somehow spend them on medicine.

So we may want to look at increasing those limits.

I think we also need to simplify the application process so that

seniors can make their way through the paperwork if they are actually eligible.

I introduced legislation earlier this year that would make, I

think, several important improvements to the Medicare Part D

drug benefit. And I strongly support the benefit, and we really

have made tremendous progress in helping people to be able to pay

for their drugs and using competition in the marketplace to keep

the premiums low for everyone. That said, there are always things

that can be improved.

My legislation would allow States to use Medicare funds to pay

co-payments on behalf of dual-eligible seniors, would also allow the

Medicare Part D program to cover benzodiazepines, which has been

a particular class of drug which was written out in the law and

probably shouldn’t be. It is used commonly for seniors to relieve

anxiety and treating insomnia and seizure disorders, and I think

we need to add that back in.

Medicare savings programs are also saving about 27,000 low-income seniors in New Mexico on Part D premiums and deductibles.

I support those programs strongly as well. I look forward to seeing

how we can make these programs work better, particularly how we

can improve the communication between agencies in the Federal

Government, Medicare and Social Security so that the Social Security folks know who is registered in what program in a fairly tight

turn around because I think the way it is set up now we have often

got agencies who are not communicating, who are not sharing information about eligibility of benefits, and enrollment and it makes

it much more confusing for seniors and their families. And if we

can even improve that part and make it harder to apply, I think

we would deal with a lot of the problems that are driving the low

enrollment rates as we haven’t.

Thank you, Mr. Chairman, I appreciate very much your holding

this hearing.

Mr. PALLONE. Thank you.
5

I recognize our vice chair, the gentleman from Texas.

OPENING STATEMENT OF HON. GENE GREEN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. GREEN. Thank you, Mr. Chairman, for holding this hearing

on the Medicare savings programs and low-income subsidy available for seniors participating in Part D prescription drug benefit.

These programs provide low-income seniors with much-needed financial assistance with their premiums or other cost-sharing obligations under Medicare. We have a fairly long history of Medicare

savings programs in the groups of beneficiaries they seek to assist,

specifically the qualified Medicare beneficiaries, the specified lowincome Medicare beneficiaries and qualifying individuals. Despite

the fact that this assistance has long been available to low-income

seniors, enrollment levels unfortunately remain low. Premium and

cost-sharing assistance for qualified Medicare beneficiaries have

been available for nearly 20 years, yet only one-third of beneficiaries eligible for this assistance take advantage of it. Even

worse, only 13 percent of the specified low-income Medicare beneficiaries take advantage of the Part D premium assistance available to them.

We all thought the enactment of Part D benefit and the availability of a low-income subsidy would help increase enrollment levels

in other Medicare savings programs. Enrollment levels are higher

for low-income subsidy, with about two-thirds of eligible Medicare

beneficiaries taking advantage of the subsidy. Yet we haven’t seen

a corresponding increase in enrollment in Medicare savings programs.

A big problem is the fact that most beneficiaries seek the extra

help for Part D through the Social Security Administration which

neither screens beneficiaries for eligibility for Medicare savings

programs nor refers them to their State Medicaid Program for

screening.

We need to streamline this process to make sure that folks are

taking advantage of all the extra help available to them. In my

area of Houston, we have undertaken an education and outreach

enrollment campaign to help low-income Medicare beneficiaries

maximize their Medicare benefits. This effort has been coordinated

through Gateway to Care, a local community access collaborative

that was started with Federal dollars through the community access program which this committee worked to create.

Gateway to Care was one of the nine community organizations

across the country to receive a $100,000 grant as part of my Medicare Matters initiative in the National Council on Aging, the Access to Benefits Coalition and AstraZeneca to develop innovative

approaches to identify and reach out to low-income people. In

Houston, Harris County, Texas, we know there are roughly 60,000

Medicare beneficiaries who qualify for these programs but are not

involved. Houston, Harris County, have close knit communities and

Gateway to Care is utilizing community health workers who have

intimate knowledge of our medically underserved and are trusted

with these communities to reach out to beneficiaries.

Gateway to Care is also utilizing our area’s 211 system ensuring

that inquiries directed toward knowledgeable folks in our commu-
6

nity to assist our low-income seniors. The community approach is

critical to any outreach and enrollment, and I think My Medicare

Matters demonstration will teach us a lot about what works and

about what can be improved.

Mr. Chairman, again, I thank you for calling the hearing and our

witnesses today, and I yield back my time.

Mr. PALLONE. Thank you.

I recognize the gentlewoman from Tennessee.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

Mrs. BLACKBURN. Thank you, Mr. Chairman, I thank you for the

hearing today.

And I want to say welcome to all of our witnesses. It is important

to recognize that programs such as the Medicare Savings Program

and Part D low-income subsidy were created to address the needs

of a specific population, and they have provided great benefit to

those low-income individuals who might otherwise go without their

medication. And as we have seen with programs like Medicare Advantage, the Government has been successful in providing access

to quality care for low-income individuals.

Today, instead of discussing how CMS is progressing with the

administration on these programs, we are listening to a discussion

on further expansion of entitlement programs. This is exactly what

happened in my home State of Tennessee with the TennCare Program, Tennessee’s State-wide nearly universal health care service

run by the State.

In 1994, Tennessee implemented managed care in its Medicare

Program and used savings anticipated from the switch to expand

insurance coverage to the uninsured, uninsurable adults and children. The State basically allowed carte blanche enrollment to anyone. And those people could never get out of the system, even when

they decided they wanted to get out of that system.

Since then, Tennessee has faced financial peril in numerous unsuccessful attempts to reign in the State’s runaway health care system. State spending accelerated from $2.5 billion in 1995 to $8 billion in 2004 for TennCare alone.

To date, TennCare has consumed over one-third of our State’s

budget.

Combined State and Federal funding could not sustain

TennCare’s rising costs, and the program effectively lowered the

quality of health care available to all Tennesseans. If Tennessee

can’t even pay for the program it has, how is the Federal Government going to pay for the unsustainable expansion of current entitlement programs down the road?

I can tell you exactly what continued expansion in Medicare and

Medicaid will do to our Nation using TennCare as a model. Since

TennCare’s inception, Tennessee’s doctors and hospitals charged

that the $8 billion program was underfunded by the State and Federal governments, forcing providers to bear disproportionately higher costs. Rampant fraud and abuse have plagued the problem. Hospitals have gone out of business, and the poor cannot find providers

to take care of them.
7

Mr. Chairman, I know what runaway health costs and a broken

health care delivery system look like. Health care and TennCare

are clear evidence that Government managed health care programs

allow for serious mismanagement, cost overruns and inadequate

service. We have to be very diligent in the oversight. Rather than

encouraging expansion of inefficient, ineffective Government bureaucracy in every day health care, I hope we will promote economic growth in the health care marketplace through the private

sector, an area that has proven time and again to foster competition, reduce cost and provide choices and options for our consumers. I thank you, Mr. Chairman, for the hearing. And I yield the

balance of my time.

Mr. PALLONE. Thank you.

Mr. Matheson.

Mr. MATHESON. Mr. Chairman, I appreciate you calling the hearing. I look forward to hearing from this panel, and I am not going

to make any more opening statement than that. I yield back.

Mr. PALLONE. Thank you.

Mr. Burgess.

Mr. BURGESS. Thank you, Mr. Chairman. I will reserve time for

questions.

Mr. PALLONE. Ms. Solis.

OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. SOLIS. Thank you, Mr. Chairman. I do want to make a comment. I want to thank you for having this hearing and to welcome

our witnesses that are here today. It is very important that we

have the discussion on Medicare savings plans and low-income subsidies for our seniors. I represent a very diverse district, highly

low-income, heavily Hispanic and large Asian population, so of

course, you can imagine the kind of problems that they confront.

They deal with problems such as language access, not being able

to access current programs that are available and also inadequate

numbers of staff, adequate staff available at these key sites where

people can gain information and trust.

And one of the things I am working on this year, Mr. Chairman,

is a piece of legislation to look at how we can provide support to

community workers, community organizers that can help us go out

and reach these seniors, particularly in the hard-pressed areas

where we could help navigate them through the system to apply

where appropriate for these programs and to better understand

what options they have. Of course, premiums will vary over various

programs, and I think that the more tools and information that we

give our community in their language that is legitimate in terms

of linguistic and culturally competent services, we know in the long

run we can save a lot of money.

So I am promoting that, and I look forward to listening to the

testimony from you, and I will submit the remainder of my statement. Thank you, Mr. Chairman I yield back.

[The prepared statement follows:]
8

PREPARED STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF CALIFORNIA

Mr. Chairman, thank you for holding this hearing today to discuss the importance

of Medicare Savings Plans and Low Income Subsidies for our seniors and disabled

individuals. Seniors were promised that after a lifetime of working and paying into

Medicare, they would have access to health care coverage during their retirement

years, regardless of their geographic location, their age, or their income.

Today, more than 44 million seniors and people with permanent disabilities depend on Medicare to meet their health needs. However, health care costs have skyrocketed, and Part B premiums and other out-of-pocket expenses are quickly becoming unaffordable. For instance, Part B premiums are $93.50 this year, which is over

$1,100 per year. In addition, the Part A deductible is almost $1,000.

The 2003 Medicare Current Beneficiary Survey found that Medicare beneficiaries

in poor or fair health had $2,980 in out of pocket spending, in addition to another

$661 in premiums. This is particularly troublesome given the importance of access

to quality, affordable health care in minority communities which often encounter

greater burdens of disease. They consequently have greater need for medical services but are less likely to afford them.

Low-income Medicare beneficiaries are disproportionately people of color who need

help with paying for Medicare’s cost-sharing, including premiums, deductibles, and

coinsurance. Although Latinos make up only 6 percent of all Medicare beneficiaries,

more than 14 percent are low income seniors. This is why the Medicare Savings Programs and Low Income Subsidy Program are critical for our vulnerable populations.

We need to make sure that people are getting the financial help they need. We

must change the Low Income Subsidy’s asset requirement so that seniors still have

incentives to save for retirement We must also work to help the 3 million people

who do not have drug coverage but are eligible for the subsidy.

Appropriate outreach to inform hard to reach seniors about these programs is essential. Having timely access to health services and prescription drug coverage can

be a matter of life or death.

I thank the witnesses for coming today, and I look forward to hearing their recommendations about how we can reduce barriers to enrollment for these programs.

I yield back the balance of my time.

Mr. PALLONE. Thank you.

The gentleman from Arizona.

OPENING STATEMENT OF HON. JOHN B. SHADEGG, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARIZONA

Mr. SHADEGG. Thank you, Mr. Chairman, and thank you for

holding this hearing. When the Congress contemplated the Part D

in the Medicare Modernization Act, I was firmly of the belief that

there was a population in America which desperately needed help.

Those for whom people were making a decision or they were forced

to make a decision between paying their rent or purchasing their

drugs; those who were forced between buying food for their table

or purchasing their medications. And I think we all know sadly

many of these people would make the necessary choices of paying

for their rents or purchasing their food rather than buying the

drugs they need. That, of course, is counterproductive and damages

their health.

So I think it is important that we look at how the program is

operating. And I commend you for holding this hearing, and I also

welcome our witnesses.

I have a concern as the evidence has mounted that enrollment

continues to be a problem. It has been an issue in many Government programs. We see it as an issue in the SCHIP where we just

continue to have a difficult time encouraging people or getting people to enroll.
9

And anecdotally, I know that in my own State of Arizona, when

the SCHIP was enacted, time and again, we ran into this problem

where people said, I would just as soon not enroll. I know I can

go here and get care. I know I can go there and get care. And I

don’t want to go through the paperwork burden of enrolling.

So it seems to me it is incumbent upon us to look at ways to try

to make sure that people are getting the benefits they are seeking

and to get enrolled in these programs.

In that respect, I would like to make a comment, Mr. Chairman,

about an initiative I have been pushing since I entered Congress,

and that is trying to make the change from life before Medicare to

life after Medicare less dramatic.

In that respect, I have introduced in Congress now for the past

10 years legislation that would give a tax credit, and specifically

a refundable tax credit, to Americans to get health care and to purchase their drugs. It is important to understand that a refundable

tax credit is a tax credit where the Government simply hands you

cash and that what this program would look at is that the Government would say to anyone, if you will go out and buy a health insurance plan, and it could be a plan that has at least a certain

minimum drug coverage, we will allow you either to reduce the

amount of taxes you pay, but in this instance, for the poor—the audience we are talking about for this hearing—it will say, we will

pay and we will actually give you the cash to go buy that plan. It

seems to me that one of the difficulties in getting people to enroll

in a Government plan is that they find it confusing and they find

it difficult and they don’t enjoy it or they resist the bureaucracy of

enrolling in such a program.

If in fact the poor in America, those that we are talking about,

those who are in need of assistance to buy their everyday drugs,

those forced into the decision of making a decision between paying

the rent and buying the groceries and buying the drugs they need,

if they were to know ahead of time that even before they became

Medicare eligible they were getting a refundable tax credit, that is

cash to purchase the drug benefit they needed and the Medicare

health care or health care plan they needed and then, once they become Medicare eligible, the same thing were true, I believe we

might overcome many of the enrollment problems.

And I believe that that type of a system which provides payment

directly for their health care plan or, in this instance their drug

program, would be a step forward and might help us overcome the

enrollment issue we face. So I look forward to hearing the testimony. I do have a conflicting hearing which I might have to step

out from time to time, but I thank you, Mr. Chairman, for holding

this hearing.

Mr. PALLONE. Thank you. The gentlewoman from Wisconsin.

OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN

Ms. BALDWIN. Thank you, Mr. Chairman, and thank you to the

witnesses who join us today. I appreciate the fact that we are highlighting these important programs, whether we are talking about

the Medicare savings programs or the Part D low-income subsidy,
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they all serve an important purpose which is to ensure that lowincome seniors have some help in paying for their premiums,

deductibles and copayments or more simply these programs make

sure that low-income seniors can access health care.

These programs are vitally important, and I look forward to

hearing about ways to improve these programs and more specifically to improve coordination between these programs.

I am particularly interested in hearing more from our witnesses

regarding the asset test part of the Part D low-income subsidy.

This asset test penalizes those seniors who have saved a little bit

of money in the bank for a rainy day. This might not be something

that my generation and those younger are so good at. But our seniors, the Greatest Generation, they know the value of a penny

saved. And I have heard from many seniors in Wisconsin who applied for the Part D low-income subsidy and were then denied because of their modest possessions. Maybe it is a small house that

they have owned for the last 40 years or a small savings account,

but these are not seniors with millions of dollars in the bank by

any means.

We shouldn’t be telling our seniors that, in order to get help paying their Medicare costs, they have to give up all of their modest

financial security. This isn’t right. And I look forward to the committee addressing this issue.

Additionally, I think that we should be making it as easy as possible for all of our seniors to enroll in these programs. Burdensome

paperwork and lengthy application processes will only deter those

who may need the help the most from seeking it in the first place.

So thank you to the witnesses for their willingness to join our discussion today. I look forward to hearing your suggestions on how

we can improve these programs to make sure they help even more

seniors in affording their health care. Thank you, Mr. Chairman.

Mr. PALLONE. Thank you. The gentleman from Pennsylvania.

Mr. MURPHY. I am going to reserve mine for the record. I am

looking forward to hearing the testimony, Mr. Chairman.

Mr. PALLONE. Mr. Allen just came in.

Mr. Allen.

Mr. ALLEN. Mr. Chairman, I will waive my opening statement.

Mr. PALLONE. OK, thank you. I think we are completed with the

opening statements by the members and any other statements for

the record may be included at this time.

[The prepared statements of Messrs. Dingell and Towns follow:]
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Mr. PALLONE. We will now turn to our witnesses.

And first of all, welcome to all of you. Thank you for being here

today and let me do a little introduction of each of you. Starting

on the left, or my left, is Ms. Monica Sanchez, who is deputy director of the Medicare Rights Center here in Washington. Mr. John

Coburn, who is director for the Make Medicare Work Coalition,

health and disabilities advocates, and he is from Chicago, Illinois.

And then we have Ms. Lilla Sassar, who is a beneficiary, and she

is from Alabama. And then we have Gail Clarkson, who is the chief

executive officer of the Medilodge Group. And she is from Bloomfield Hills, Michigan. She is testifying on behalf of the American

Health Care Association. And last, is Dr. N. Joyce Payne, who is

a member of the Board of Directors of AARP, and she is based here

in Washington, DC.

Let me say that we will have 5-minute opening statements, and

they become part of the hearing record. And you may, at the discretion of the committee, submit additional statements or comments

in writing for inclusion in the record, and I will start with Ms.

Sanchez.

Thank you.

STATEMENT OF MONICA SANCHEZ, DEPUTY DIRECTOR,

MEDICARE RIGHTS CENTER, WASHINGTON, DC

Ms. SANCHEZ. Chairman Pallone, Ranking Member Deal, members of this committee, thank you for this opportunity to testify on

the Medicare Savings Program and Extra Help.

The Medicare Rights Center is the largest independent source of

health care information and assistance for people with Medicare in

the United States. We know, from the experience of the people we

serve, that the assistance available through Extra Help and the

Medicare Savings Program enables poor Americans to obtain the

medical care they need and the medicines they are prescribed. Access to these programs can mean a healthy life instead of one of

illness and premature death.

People who are eligible for Medicare Savings Program are more

likely to be African American or Latino. They are more likely to be

an older female living alone and in poor health. The good news is

that those who are eligible and enrolled are more likely to see a

doctor and other health care provider and, as a result, they have

improved health.

Just last week, an MRC counselor at the One Stop Senior Center

on West 90th Street in New York met Altagracia Lopez. Ms. Lopez

is 72 years old. Born in the Dominican Republic, she has lived in

the U.S. for 40 years, working in a factory, stitching together children’s clothes. She gets by on $343 a month, $100 in food stamps

and lives in public housing.

When Ms. Lopez had original Medicare and Medicaid, her doctor

visits were free. But she was still paying the Part B premium because she was not enrolled in an MSP. Things got worse when she

was tricked into enrolling in a Medicare HMO which charged her

up to $25 for doctor visits. The plan lost its record of Ms. Lopez’s

eligibility for Extra Help which she had because she is enrolled in

Medicaid. Instead of co-payments of a few dollars under Extra
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Help, she was asked to pay $127 for a medicine to prevent blood

clots and $42 for her diabetes medicine.

We were able to convince her HMO that it is required to charge Ms. Lopez the $1 and $3 Extra Help co-payments so she was able

to get the medicine she needs—to also get the medicine she needs

to control her high blood pressure. We also enrolled Ms. Lopez in

the Qualified Medicare Beneficiary Program, QMB, and helped her

dis-enroll from the HMO. As a result, she will no longer have the

Part B premium deducted from her monthly Social Security check

and does not have any out-of-pocket costs when she goes to her doctor.

Ms. Lopez’s story illustrates a common problem, persistent

breakdowns in data exchanges between State Medicaid offices, the

Centers for Medicaid and Medicare Services, the Social Security

Administration and the companies providing the Part D benefit.

These result in low-income people with Medicare who should be receiving Extra Help instead facing deductibles and co-payments that

they cannot afford.

Ms. Lopez’s story also shows the complicated interaction between

Medicaid, Medicare Savings Program and Extra Help and how

even individuals who are enrolled in some assistance programs are

often not getting all the help that they should be.

Another of our clients is Ms. H, a widow who lives in Manhattan,

New York. She is 74 years old and a typical example of someone

whose assets disqualify her for Extra Help. She receives $400 a

month from Social Security and works part-time to earn an additional $500 to make ends meet. Because she has $12,000 in assets,

just $292 over the limit, she is not eligible for Extra Help. But because she lives in New York State, which has eliminated the asset

test for the QI Program, we were able to get her enrolled in Extra

Help through this back door.

For every person we enroll in MSPs or Extra Help, there are millions more who do not know the help is available or who do not

know how to apply for it. Nationally, there are still between 3.4

and 4.7 million people who qualify for this program but are not enrolled. According to CMS estimates, there are nearly 22,000 such

people in the counties that make up New Jersey’s sixth district and

over 16,000 in the 15 counties of Georgia’s ninth district. The same

story can be told district by district.

How do we fix this situation?

First, Congress should remove the asset test from both the MSP

and Extra Help Programs and allow people to qualify based solely

on income criteria. Legislation introduced by Representative Lloyd

Doggett, Democrat of Texas, takes a small but meaningful step in

the right direction by raising the maximum allowable assets for

Extra Help and takes some important steps towards simplifying

the Extra Help application.

Second, as Congress moves to improve the Extra Help Program,

it should also take steps to bring the Federal eligibility criteria for

MSPs in line with these new, more reasonable standards for Extra

Help. Individuals enrolled in MSP are ‘‘deemed’’ eligible for Extra

Help. If criteria were aligned, then deeming could go both ways.

With two-way deeming, people with Medicare would actually receive the help that Congress promised them.
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Third, Congress must make sure CMS exercises its oversight responsibilities to ensure the plans are not overcharging their low-income enrollees. It also has to make sure the agencies fix these data

exchange problems. The alignment of eligibility criteria between

MSPs and Extra Help will simplify and streamline these programs

and contribute to the solution.

Thank you.

[The prepared statement of Ms. Sanchez follows:]
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Mr. PALLONE. Thank you very much.

Mr. Coburn.

STATEMENT OF JOHN COBURN, DIRECTOR, MAKE MEDICARE

WORK COALITION, HEALTH & DISABILITY ADVOCATES, CHICAGO, IL

Mr. COBURN. Chairman Pallone, Ranking Member Deal and distinguished members of the committee, thank you for giving me the

opportunity to talk to you today about these two important programs and their impact on people with disabilities.

My name is John Coburn, and I am a senior attorney for Health

& Disability Advocates and I am the director of the Illinois-based

Make Medicare Work Coalition. My agency, our coalition and its

partners have assisted hundreds of thousands of beneficiaries in Illinois and other parts of the country with Medicare Part D enrollment and advocacy over the last year and a half. While we assist

and advocate for all Medicare beneficiaries, I want to focus my testimony on Medicare beneficiaries with disabilities under the age of

65.

There are approximately 7 million younger individuals with disabilities enrolled in Medicare, representing approximately 16 percent of the Medicare population. Most of these individuals qualify

for Medicare because of current or former eligibility for Social Security Disability Insurance SSDI and completion of the required 24-

month waiting period. For these younger beneficiaries with disabilities, the Medicare Savings Program and low-income subsidy program are very important.

The average SSDI check is $950 a month. If the average SSDI

beneficiary was forced to pay all of the Medicare cost sharing,

Medicare would simply be unaffordable. With the assistance of

these programs, many individuals are able to access proper and

necessary care under Medicare.

In my limited time before you, I want to focus on one very important issue to Medicare beneficiaries with disabilities and that is

employment’s impact on continuing eligibility for this program. I

did not get a chance to read Ms. Sanchez’s testimony before, but

she did mention, I think, in both of her examples the individuals

were working. So this is a big issue, particularly in the younger

disability community.

Individuals with disabilities want to live securely and safely in

their communities. Employment within the community is a key

component of integration into the broader communities in which

people live. A 2004 National Organization on Disability/Harris Survey, according to that survey, states that only 35 percent of people

with disabilities reported being employed, yet 72 percent of individuals with disabilities surveyed wanted to work.

Over the years, Congress, the Social Security Administration and

the Centers for Medicare and Medicaid Services have worked to

create and implement programs and policies that remove barriers

to employment of working-age Medicare beneficiaries. The hallmark legislation for this was the Ticket to Work and Work Incentives Improvement Act of 1999, which included provisions that extended Medicare eligibility for people who return to work.
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Through this and other legislation and regulations, the Social Security cash programs and Medicaid fell in line and created an atmosphere where working was rewarded and a path towards greater

self-sufficiency was possible. Unfortunately, our Medicare Savings

Program and our low-income subsidy program which came along

later don’t fall in line with this process. And since Medicare Part

D has started, the low-income subsidy has erected a new barrier,

wherein people don’t want to go back to work for fear of losing

their low-income subsidy.

Increases in earned income, even slight, can disqualify people

from eligibility for these two programs. We put people in a catch–

22. Stay at home, do nothing and keep affordable insurance or go

to work and lose the affordable part of that insurance that allowed

you to work to begin with.

And what choice do we leave for individuals with HIV, multiple

sclerosis and mental illness? Ms. B is an individual in Ohio who

is currently receiving $850 in SSDI income, QMB assistance and

the Low-Income Subsidy. Ms. B lives with a mental illness, and she

wanted to go back to work. She actually went out and found fulltime employment. She then discussed her situation with advocates

and discovered that if she were to take that employment, she

would lose her QMB assistance and her Low-Income Subsidy,

thereby making it nearly impossible for her to afford the health

care that was provided to her that got her to the point where she

can work to begin with.

There are Medicaid buy-in programs in 32 of our States. Many

of the members live in States where those programs exist, but

there are many others who don’t, including Georgia, Florida, Ohio

and North Carolina. In those States, people can purchase Medicaid;

and it gives them the dual-eligible status where they can get the

Low-Income Subsidy. In those other States, that is not possible.

But it doesn’t have to be this way. In the SSI, Supplemental Security Income, Medicaid world, we allow people through something

called 1619(B) to go back to work and keep their Medicaid with no

spend-down until they reach a State threshold. The SSDI beneficiaries with the Low-Income Subsidy and the Medicare Savings

Program do not have this option. I hope that eventually the programs will align, and the SSDI beneficiaries will be encouraged

and go back to work and keep their affordable health care.

Thank you.

[The prepared statement of Mr. Coburn follows:]
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Mr. PALLONE. Thanks a lot. We will hear from Ms. Sassar.

Thank you for being here today.

STATEMENT OF LILLA SASSAR, BENEFICIARY, SYACAUGA, AL

Ms. SASSAR. I am so grateful that I have an opportunity to tell

my story. It is very short, but it has impact, and you can understand it real well.

I am Lilla Sassar, as you all know, from Syacauga, Alabama. I

am 83 years old, and I am enrolled in HealthSpring Medicare Advantage Plan. It is the best thing I have ever had since I have been

on Social Security.

I am on a very limited income, and I do get assistance from the

State. My Social Security premium is paid by the State of Alabama.

Now that I am enrolled with HealthSpring, I can afford to put

food on the table and buy my medicines, too, and go to the doctors

when I need to. I go to the doctor, and I won’t have to worry about

my deductibles, about my Blue Cross/Blue Shield and about my

medication. I won’t pay because I have no co-payment. It is so terrible to have to worry about these things.

I also get to exercise through my HealthSpring membership at

a local hospital. I get to stay in shape and see my friends with the

Silver Sneakers.

HealthSpring even has a van pick me up and take me to the doctor if I have to go to a doctor. This is good because I have a hard

time getting to the doctor. If they didn’t offer this benefit—it sure

cuts down on expensive gas. They bring me back home, too.

I wish everyone could have a program like HealthSpring. People

like me that don’t have a lot of money can still see the doctor and

get medicines and don’t have to worry. This program that I am on

would help a lot of people, and I am so glad I had an opportunity

to have a little input for others, not just for myself but for others,

too. They need to get on HealthSpring.

Thank you for listening to me.

[The prepared statement of Ms. Sassar follows:]

STATEMENT OF LILLA SASSER

• I am an 83 year old woman enrolled in HealthSpring Medicare Advantage Plan

• I am on a very limited income and used to get assistance from the State.

• Now that I am enrolled with HealthSpring, I can afford to put food on the table

and buy my medicines and go to the doctor when I need to.

• I get to go to the doctor and not worry about how I will pay because I have

a $0 copayment.

• I also get to exercise through my HealthSpring membership at the local YMCA

or other facilities. I get to stay in shape and see my friends.

• HealthSpring even has a van pick me up and take me to the doctor and pick

up my medicines. This is good because I would have a hard time getting to the doctor if they didn’t offer this benefit.

• I wish everyone could have a program like HealthSpring. People like me that

don’t have a lot of money can still see the doctor and get medicines and not have

to worry.

Thank you for listening.

Mr. PALLONE. Thank you very much. We appreciate you being

here today.
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Let me just say what we are going to do. We are going to try to

do both of the other two panel members and then take a break.

There is a 15-minute vote followed by four 5-minute votes, and

those are the last votes of the day. So that will probably take us

maybe 45 minutes. But let’s continue with the testimony, and then

we will break and come back.

Ms. Clarkson, thank you.

STATEMENT OF GAIL CLARKSON, CHIEF EXECUTIVE OFFICER,

THE MEDILODGE GROUP, BLOOMFIELD HILLS, MI, ON BEHALF OF THE AMERICAN HEALTH CARE ASSOCIATION

(AHCA)

Ms. CLARKSON. Thank you, Mr. Chairman, Ranking Member

Deal and members of the committee. I appreciate the opportunity

to speak to you today on behalf of the American Health Care Association and NCAL.

My name is Gail Clarkson. I am the chief executive officer of

Medilodge. Our 14 skilled nursing and 4 assisted living facilities

employ 2,500 individuals and care for more than 2,300 patients and

residents in the State of Michigan.

I have worked as a nursing home administrator, director of nursing and an intensive care nurse. I know what it takes to provide

high-quality care for seniors and people with disabilities, even

when the payments do not cover the care and services they require.

I mention this because Medicaid underfunds long-term care by approximate $13 per patient per day nationally and because quality

depends on stable funding, something CMS has repeatedly acknowledged.

Most nursing home patients are both poor and elderly, relying on

Medicaid and Medicare to pay for their long-term care. So nursing

homes have worked long and hard to coordinate care for these dually eligible patients and residents to ensure that these vulnerable

Americans get the best care available.

AHCA and NCAL continue to work closely with CMS on Medicare Part D. I am proud to say that no patient or resident being

cared for in a skilled nursing facility went without his or her medication during the transition to the new prescription drug benefit.

I do not know if the same can be said for the other poor elderly.

Dually eligible beneficiaries in assisted living or residential care

facilities or other home-like settings often only have a small personal needs allowance of a few dollars a month, so co-pays of even

$1 or $3 can add up when that person needs multiple prescriptions.

Like nursing home patients, assisted living residents need, on average, approximately nine medications a day.

The Home and Community Services co-payment Equity Act recently introduced in the Senate would eliminate Part D co-pays for

these low-income Americans and would put dually eligible home

and community-based individuals on par with those in nursing

homes who have no co-pays under Part D. We urge the members

of the committee to enact companion legislation.

Programs like Medicare Part D and the Low-Income Subsidy are

critical parts of the health care safety net in this country, but what

I have found in practice is that accessing these programs can be
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challenging, as was the case with the auto-enrollment of dually eligible nursing home residents under Part D.

For example, we spent considerable time and effort identifying

which Part D plan patients had been automatically enrolled in, and

then in determining whether or not that plan met the patients’

needs. AHCA and NCAL worked with CMS on what it calls the

three-pronged approach to assure that the poor elderly entering the

facility and needing prescription drug coverage could access their

benefits under Medicare and Medicaid.

Our experience shows that Low-Income Subsidy can take effect

in only a couple of weeks, whereas it can be months before Medicaid eligibility is determined. But, in my experience, I have found

that patients, families and health care providers are unaware of

these benefits or even know how the Medicare and Medicaid benefits work with respect to long-term care needs. So we often must

educate and assist patients in accessing these critical benefits.

AHCA and NCAL understand that retrofitting a new benefit is

not easy. That is why we have looked at ways to reform Medicare

and Medicaid to better meet the needs of a swiftly aging baby boom

generation. Our recommendations are included in my written testimony.

Providing high-quality long-term care is a top priority for me and

for AHCA and NCAL members like me, who are participating in

a national campaign to improve quality of care and quality of life

for our patients, residents and staff alike.

We are proud of our commitment to quality and are proud the

data is proving our commitment is real. Nursing Home Quality Initiative data shows improvement in pain management, reduced use

of restraints, decreased number of patients with depression and improvements in physical conditions such as incidents of pressure ulcers. Last week, independent satisfaction data was released that

shows 82 percent, the vast majority of nursing home residents and

families, would rate care as good or excellent.

Even as we strive to deliver the best care possible, we still face

considerable challenges and seek your assistance in meeting those

needs. We are working to be transparent for our consumers. We

ask CMS to be similarly transparent in the criteria it uses to oversee the care we provide. We also ask that CMS not place paperwork over patient care and thank Chairman Dingell and those who

have already called on CMS to redress its final rule on blood glucose monitoring.

We are proud of our successes and acknowledge there remains

far more to do. Mr. Chairman, I have never seen our profession

more committed to ensuring we continue to improve care quality.

In short, we recommend working toward a system that delivers

an array of long-term care services, adequately funded, administered by knowledgeable, quality-driven providers and where beneficiaries move seamlessly to a long-term care spectrum which every

American is likely to need at some point in his or her life.

AHCA and NCAL stand ready to work with your committee and

with all who have a stake in the future of our long-term care delivery system in the future. Thank you.

[The prepared statement of Gail Clarkson follows:]
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Mr. PALLONE. Thank you, Ms. Clarkson.

Dr. Payne.

STATEMENT OF N. JOYCE PAYNE, MEMBER, BOARD OF

DIRECTORS, AARP, WASHINGTON, DC

Ms. PAYNE. Chairman Pallone and Ranking Member Deal, I am

Dr. Joyce Payne, a member of the Board of Directors of AARP.

Thank you for inviting us to testify on the need to improve the

Part D Low-Income Subsidy and other Medicare programs for people with limited incomes.

The extra help the LIS provides to those least able to afford their

drugs is one of Part D’s most important features and a key factor

in AARP’s continuing support. But the LIS Program has a serious

flaw, an asset test. No one with even $1 more than $11,710 in savings or couples with more than $23,410 can qualify. Because of the

asset test, the LIS application form is eight pages of daunting and

invasive questions that are difficult for many people to answer.

That is a serious barrier even for those who meet the asset test’s

unreasonable limits.

Similar problems plague the Medicare Savings programs, known

as MSP, that help pay other Medicare cost-sharing requirements.

As with LIS, millions of beneficiaries living on very limited incomes

are not getting the help they need from these vital programs.

In addition, there is only limited coordination between LIS and

MSP, even though they serve primarily the same populations.

Beneficiaries enrolled in MSP are automatically eligible for and enrolled in LIS. However, Social Security does not screen LIS applicants to see if they are also eligible for MSP. This is a serious

missed opportunity, as MSP criteria in several States are less restrictive than LIS criteria, and some States have effectively eliminated the asset test all together. Thus, many who are eligible for

LIS under their State’s MSP rules are being improperly rejected

because SSA, the Social Security Administration, of course, only

looks at LIS criteria.

AARP believes there should be no asset tests in Medicare. As a

matter of public policy, we should encourage people to save for retirement, not penalize those who do with an asset test. AARP also

believes that there should be full coordination between the LIS and

MSP programs.

Until the asset test is fully eliminated, there are interim steps

Congress can take to reduce the barrier it creates. AARP supports

the Prescription Coverage Now Act, introduced by Representative

Lloyd Doggett. This legislation takes solid first steps toward our

goal of eliminating the asset test, increasing enrollment and improving coordination between the LIS and MSP. This legislation

would increase the asset test limits to $27,500 for individuals and

$55,000 for couples. This will provide relief to millions of beneficiaries who truly need the help the LIS can provide. Even those

who did not oppose an asset test in Medicare’s drug plan agree that

current limits are far too low.

This legislation would also streamline the LIS application. It

would authorize Social Security officials to use income data it already has to target LIS outreach efforts more effectively. It also

would require SSA to screen LIS applicants for MSP eligibility.
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AARP is committed to working to enact this important legislation

this year and eventually completely eliminating the asset test for

both LIS and MSP. We look forward to working with the Members

of Congress on both sides of the aisle to improve the Medicare drug

benefit and Medicare Savings Program to ensure that all Medicare

beneficiaries living on limited incomes get the extra help they need

so desperately and deserve.

We thank you for this opportunity.

[The prepared statement of Ms. Payne follows:]
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Mr. PALLONE. Thank you all.

Now we are going to take five votes. It will take us between a

half hour and 45 minutes, probably more like 45 minutes, but we

will ask you to stay so we can come back and ask you some questions.

Thank you. The subcommittee is in recess.

[Recess.]

Mr. PALLONE. The subcommittee is called to order again.

We are going to have questions from the various Members. I am

pretty sure most of them will come back.

I will start by recognizing myself for 5 minutes, and I wanted to

start out with Dr. Payne.

We heard from Ms. Sassar that she likes her Medicare Advantage private plan. She receives some additional benefits that she

described and I am certainly glad about that. The truth, however,

is that the Medicare beneficiaries who choose to remain in traditional Medicare, 83 percent of all beneficiaries, are forced to subsidize these additional benefits, such as Ms. Sassar’s, because of

the way private plans and Medicare are financed.

In fact, each Medicare beneficiary who chooses to remain in traditional Medicare is forced to pay $24 extra every year in Part B

premiums to subsidize the extra benefits that only the 17 percent

of beneficiaries enrolled in plans receive. And those additional dollars are used to subsidize private plans, administrative costs, marketing costs, aging commissions, profits in addition to some extra

benefits. And by way of contrast, the Medicare Savings Program

provides low-income seniors with a more generous benefit than

Medicare Advantage plans. Under the MSP, the lowest income seniors will have their Part B premiums and Medicare cost sharing

paid for, a value of about $3,700 next year.

According to the Administrator of CMS, beneficiaries enrolled in

MA plans received a total benefit of a little over $1,000 this year;

and traditional Medicare does not have to pay aging commissions,

marketing costs and all these other costs. So I wanted to ask you,

Dr. Payne, would you agree that expanding the Medicare Savings

Program is the most equitable way to target additional benefits to

low-income seniors?

Ms. PAYNE. We are certainly glad that Ms. Sassar is enjoying the

benefits of Medicare Advantage. But the truth is that she does not

get the kind of benefits that one would get under the Medicare

Savings Program and under the Low-Income Subsidy Program in

terms of additional assistance for paying her premiums. We think

that all of the participants should have an option, and Medicare

Advantage may be good for some people, but it certainly doesn’t

provide the kind of advantages that one would get under the Medicare Savings Program and the Low-Income Subsidy.

In addition to that, we are strongly supportive, of course, of

eliminating the asset test, of streamlining the process, of having

greater continuity between the two programs and, we think, any

opportunity to align those programs so that we can have greater

choices but at the same time have greater continuity with improved

efficiency.

Mr. PALLONE. Well, thank you.
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And, Ms. Sanchez, Dr. Payne talked about the inefficiencies and

inequalities of overpaying Medicare Advantage plans. Could you

comment on that but also talk about Ms. Lopez’s story and her

interaction with the Medicare Advantage plan?

In addition, can you tell us more generally about your clients’ experiences with Medicare Advantage marketing abuses, the higher

co-pays, dual sometimes pay under Medicare Advantage or what

are some other consumer problems you have seen seniors and people with disabilities having to endure under the Medicare Advantage Program?

Ms. SANCHEZ. Certainly. We do, like Ms. Sassar, have people who

are happy in their HMO, and we even sometimes help people enroll

in an HMO when it seems to suit their needs. The problem we see

a lot is that, unlike Medicare, it doesn’t ensure their care over the

long term. It is not something that is always there for them.

The benefits change year to year, and people don’t know how to

read those notice of change. They don’t know what is going to happen the next year or the plan drops out.

We had one client that has been in five HMOs that have dropped

him over the years, and he says ‘‘no more’’ because of the problems

with the continuity of care. The doctor can drop out of the plan; the

plan can stop the contracts with providers.

We had a call from someone in Miami whose mother has cancer,

and was getting care at a hospital. Mid-year, the plan dropped that

hospital from the contract, and she couldn’t change anymore. She

couldn’t change to another plan that would cover that hospital.

So the continuty of care problems are enormous; and, also, you

need in some ways to help people even try to figure out what plan

would be good for them. You need a crystal ball, because you don’t

know what disease is going to come down the line, what care you

are going to need in a few months or towards the end of the year,

and, unlike with Medicare and MSP or Medicare or Medigap, that

will cover you no matter what you need, you really have to make

sure you have picked the benefits that you are going to need in this

plan, and you are locked for in a year.

We have seen a tremendous amount of marketing abuses. Like

Ms. Lopez, she was convinced that this plan would offer her all

these extra benefits that were actually covered by Medicaid, and

we hear that a lot when we hear presentation from marketing people, that we will cover transportation, but Medicaid covers transportation. A lot of these benefits in the end don’t outdo the out-ofpocket costs, and they end up having to pay for their regular care

and the chronic care that they need like the doctor visit co-pays

and very high hospital co-pays.

Mr. PALLONE. All right. Thank you very much.

The gentlewoman from California.

Ms. SOLIS. Thank you, Mr. Chairman.

I want to apologize for not being able to hear all the testimony,

but we did receive your testimony in writing, and I do have some

questions for Monica. This is for Ms. Sanchez.

I also want to touch on some of the issues that were raised earlier about people or individuals that we represent that may not understand translated information to them appropriately and how

that care can be improved upon; and we are also looking at popu-
78

lations that have lower literacy levels in many cases, as I mentioned in my opening statement. I would like to get your feedback

on what kinds of things we can do to help improve that and things

that you have seen out in the field that might be helpful for us.

Ms. SANCHEZ. We work very hard to maintain several people

with different language skills in our organization, but, in the end,

I think only streamlining the application process and the services

will help.

For example, we are in New York, and there is a tremendous

number of different languages, different cultures, and as much as

we try to help individuals in explaining these complicated programs to them, unless the programs can be simplified, we are

never going to be able to reach everybody on an individual basis

to try to explain all this incredibly complicated information.

Ms. SOLIS. So are you suggesting that perhaps more uniformity

in those applications or that——

Ms. SANCHEZ. Yes. Certainly. Because, right now, the criteria for

the MSPs varies by State; and they are very different from the

Extra Help. So people don’t even know that when they fill out one

application or they have been deemed for one program that there

are other programs available. They are not told, generally. And if

they went through the process of filling out one application or

found an advocate that could help them with one application, I see

no reason why they should then have to fill out five other applications for different programs. Streamlining all the assistance programs would help tremendously in helping people get the programs

they need.

Ms. SOLIS. One of the issues I constantly come across is data collection and being able to really assess where these populations are

that are hard to get, and anyone on the panel can speak to that.

I would appreciate information that you might have of how we

might do a better job doing that.

Ms. Payne?

Ms. PAYNE. Well, we already know the Social Security Administration has already used income data to work on the premiums for

Part B. So, clearly, we could authorize the Social Security Administration to use that same data to reach those eligible for the MSP

programs as well as the Low-Income Subsidy. I mean, they are already doing some of that for the Medicare Savings Program, so it

seems to me that we ought to give them the authorization to extend that to the Low-Income Subsidy. That is what the Prescription

Drug Coverage Act would do, and that is why we are supporting

it.

I do think it is also important to go back to your first question

to identify some of the activities that AARP is involved in. We have

made a tremendous effort at getting involved with the Latino community. We just had a major conference with I think close to about

16,000, 17,000 people in Puerto Rico. We do publish a magazine in

the language of the community, and we have held town hall meetings all across the country. We issue briefs for the States to follow

in terms of information. We have also published a number of papers and magazines. We have inserts and magazines in all of the

languages that we are serving. So we think that it is very impor-
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tant that we meet those communities where they are in terms of

their language skills.

Ms. SOLIS. I have one last question. This is directed to Dr.

Payne. It kind of falls along the same lines that our chairman was

asking.

There has been some controversy regarding Medicare Advantage

overpayments. While some low-income beneficiaries in the private

insurance plans may be happy with the care they are receiving,

overpayments to private insurance plans and Medicare are reducing the trust fund’s solvency and are raising premiums for all beneficiaries. 35.5 million Medicare beneficiaries who are not in private

plans pay more premiums for the 8 million who are in those plans.

Some plans limit the providers that beneficiaries can see relative

to regular Medicare. Would you say that using MSP or the LIS

would more equitably, efficiently and effectively help low-income

beneficiaries with their Medicare cost sharing?

Ms. PAYNE. I think I sort of alluded to that in response to the

chairman’s questions. We think there ought to be a level playing

field between both of those programs—between all of the programs,

rather. We recognize, as I indicated earlier, that those in the MSP

programs and LIS will get greater help in paying their premiums.

Those in the Medicare Advantage will not have that same opportunity. So we think that it just makes common sense to do that.

Ms. SOLIS. Thank you.

Mr. PALLONE. Thank you.

The ranking member, the gentleman from Georgia.

Mr. DEAL. Thank you, Mr. Chairman.

Dr. Payne, let me ask you a couple questions. What is the position of AARP on means testing for Medicare Part B premiums?

Ms. PAYNE. We don’t think there should be any means testing on

Medicare Part D. Those individuals have already paid their dues

in the years of working, and I don’t think the means test would facilitate the efficiency of the program, and we see no reason to have

it included in that determination.

Mr. DEAL. So you would be opposed to the Medicare Part B premiums that are currently means tested then?

Ms. PAYNE. We would be opposed to any means testing.

Mr. DEAL. So, regardless of whether somebody has a million dollars in savings, their treatment under Medicare should be the

same?

Ms. PAYNE. Well, if you look at all of the confusion that is going

on right now—as a matter of fact, I was at the Social Security Administration myself just a couple of days ago because they are taking much too much money out for Part B. I understand that there

are about 300,000 people out there who have been affected by this.

So we think that we really ought to be concentrating on making

the program much more efficient than having means testing and

asset tests included in the determination process.

Mr. DEAL. OK. Well, it is one thing to maybe means test or not

means test based on Part D on the upper income people. But here

we, of course, are addressing the ones——

Ms. PAYNE. I am sorry. I thought you said Part B.

Mr. DEAL. No, I said B. That was my question. You answered my

question.
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Philosophically, I agree with you. Because Medicare was never

intended to be a welfare program. Start means testing and you

start making it look a welfare program.

Ms. PAYNE. We are concerned that we provide the kind of quality

services and meet those individuals who need the kind of drugs we

have available in the market today; and the means testing for

those who have already paid taxes, for those who have already paid

into the Medicare Program, I don’t see any utility in that.

Mr. DEAL. But here on the lower end, it is a little bit different

issue, even though it is means testing in some of its nature for

those who are asking for more than what might be perceived as a

fair share. In other words, they are asking for additional assistance. It is not like everybody is paying the same premium in Part

B at the upper end. Here we are talking about somebody getting

more than.

What about the situation where someone may not have, in terms

of liquid dollars on a monthly basis, a lot of money, but they have

assets, whether it be large homes—or that would be unlikely because if you got a large home you are going to pay a lot of property

taxes. You are going to have some liquid assets that will pay the

keeping of that asset.

But you could have people who would have large retirement type

accounts or IRA accounts. As I understand the IRA provisions, you

don’t have to have a mandatory draw-down on those until age 70.

Suppose somebody there between 65 and 70 is sitting on a huge

amount of IRA money that they are not having liquid access to because they are not drawing down on it, they are not required to

draw any part of it down. Does that seem quite fair that the taxpayer supplements them additionally for that?

Ms. PAYNE. Well, let me answer it this way. We have been involved for years in financial literacy. In looking at the defined benefits in this country, in looking at the Social Security struggles we

see today, it seems to me we need to be encouraging, in any way

possible, people to save for their retirement.

The kind of folks we are talking about in terms of the Low-Income Subsidy are those individuals that don’t have huge accounts.

They may have a very small nest egg, they may have a house, they

may have some other assets that can be liquidated, but it seems

to me we don’t want to penalize them by applying the means tests

or assets tests.

Mr. DEAL. But when you don’t do that, you encourage fraud and

abuse. In other words, if you don’t require any proof that you meet

any kind of asset or income test, it seems to me that human nature

takes over and people say, oh, well, that is—the taxpayers are willing to pay if I apply for this. I think it just invites fraud and abuse.

Now I am sympathetic with those who have done their best to

preserve their assets. Because there is nothing that makes me any

madder than the one bumper sticker I saw on a big RV moving

down the road that said ‘‘I am spending my children’s inheritance.’’

because if you have that attitude about your assets then you ultimately are going to be the one who is going to ask the taxpayer

to pick up. Because you have lived the good life. You have spent

all of your assets during the time you had them.
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So it is a delicate balance, and I think we all recognize it is a

delicate balance, how to get it all right.

The one piece of testimony we haven’t heard, Mr. Chairman, and

I assume before we do anything we will have to get it, and that

is, what is the cost of these proposals? Obviously, some of them

could have rather significant costs that we would have to wrestle

with.

But I appreciate your testimony. I apologize for having to be in

and out, but some of us have appointments we had to keep in our

office. But thank you for being here.

Mr. PALLONE. Thank you.

Mr. Green.

Mr. GREEN. Thank you, Mr. Chairman.

I am going to follow up on the question I just heard. As for any

of the panelists, as I mentioned in my opening statement, we have

a community access collaborative in the Houston area. It is Gateway to Care, working on outreach and enrollment efforts. The organization has come to learn firsthand about the burden of the assets

test and the barrier to enrollment that it creates.

The executive director of Gateway to Care said it perfectly when

he said, ‘‘seniors are proud and honest people. They are proud of

what they manage to accumulate, even if it is very little by the

standards of an investment banker, for example, particularly in our

district.’’

We know that two-thirds of the qualified Medicare beneficiaries

are not getting premium and cost-sharing assistance, and nearly

one-fourth of low income seniors are not getting the benefits.

Dr. Payne, your testimony mentioned that the assets test is the

primary reason why 3 million to 5 million beneficiaries aren’t getting extra help under Part D. What kind of nest egg are we talking

about? Are most of the seniors or people with disabilities disqualified because they have hundreds of thousands of dollars in stock

annuities or other assets?

I know in my district we don’t have folks who have those kind

of resources, and yet some of the assets tests still may keep them

from qualifying. What is the practical implication of the asset test?

Does it really force beneficiaries to make the tough choice between

keeping a small reserve for emergencies and getting assistance

when they need on a day-to-day basis in the medical bills?

If we can talk about that assets test. I share the concern made

by my friend from Georgia, but I also know from some of our experiences, particularly in Texas, it is difficult.

Ms. PAYNE. We think that this—the Prescription Coverage Act,

is really a very modest step toward eliminating the asset tests. I

mean, we know that we possibly have about 3 million people out

there that we aren’t serving, and the kind of nest egg you are talking about are those individuals who would still be in a relatively

low-income status. So we aren’t talking about wealthy folks who

have stocks and bonds. We are talking about folks who are barely

over the poverty level or within that range, and we need to find

a way to serve them. I mean, it is the moral thing to do. It is the

right thing to do. It is the humane thing to do. This is a very modest effort.
82

I think it is also important to point out that if in fact we want

to reach those 3 million people that, as several of the panelists

have alluded to in their testimony, that we need to make this process much more uniform. We need to simplify the process. We need

to eliminate these eight pages of daunting questions that are very

invasive, talking about charity, talking about whether your family

gave you food.

I think we can do better than that as Americans. It seems to me

we need to be concentrating on how we can reach those 3 to 5 million people out there and how we can do a better job at making the

application less daunting.

Mr. GREEN. And I agree. And, in fact, Mr. Chairman, I think we

keep hearing this in our SCHIP hearings, making the application

for the children’s health care initiative easier for parents, just like

what it should be for our seniors.

Ms. PAYNE. Yes. I helped some people in my neighborhood fill out

some of those applications, and it is exacerbated by the fact that

you have at the bottom of the application a statement about the

penalty in terms of imprisonment. So I think that just exacerbates

the whole process. So it seems to me we can do a better job.

Mr. GREEN. Ms. Sanchez do you have a comment?

Ms. SANCHEZ. Yes, in terms of the assets test, there are a lot of

States that have eliminated the assets test, and at least one, sometimes all, of the MSPs, and they did it because they found that the

administrative cost of actually managing, looking at the documentation of assets was very high, and, second, that any kind of

significant assets really led to income that would disqualify the

person. So anyone who has a huge amount of stocks, is going to

have income from the stocks, they are going to be above the income

limits.

Mr. GREEN. If they own a Winnebago, and pay the gas bill and

drive that Winnebago down the road, they are probably not going

to be eligible.

Ms. SANCHEZ. Exactly.

Mr. GREEN. Mr. Chairman, I have another question. I will just

throw it out because we apologize for our vote schedule, but under

Medicare Part D, program beneficiaries can sign up any time of the

year without ever paying a premium penalty. While CMS has

waived the Part D penalty for low-income beneficiaries for the remainder of this year, is there any reason from your perspective to

treat Part D different from Part B when it comes to premium penalties for low-income enrollees?

Ms. SANCHEZ. We are not actually against the premium penalty

for Part B because we do agree with the premise that people should

get insurance and not just wait until they are sick. But with Part

D it is so new, it is so different, and it is so complicated, that to

start the penalty so immediately we think is unfair. It is really

forcing people to make an uninformed decision quickly just because

there is a deadline.

Mr. GREEN. Thank you, Mr. Chairman. Thank you.

Mr. PALLONE. I am going to have a second round, if anyone

wants to participate, second round of questions that is.

I wanted to ask, Dr. Payne, we know that one of the main reasons people aren’t enrolled in the existing programs for extra help
83

is that they weren’t aware that the help was available. AARP has

millions of members, some of whom are surely enrolled in programs

that provide extra help with medical costs like LIS and MSP. But

what has AARP done to conduct outreach about these programs

with its own members in conjunction with other organizations that

help Medicare beneficiaries with enrollment? Obviously I am asking this as a prelude to what we might do to help out.

Ms. PAYNE. Well, Mr. Chairman, as I indicated earlier, we have

had a number of town hall meetings all over the country. As you

know, we are in Puerto Rico. We are in all 50 States with considerable staff members. We have conducted training of our staff and

training of our volunteers.

We are continuing to produce publications for the Hispanic community and publications for low-income communities, targeting

those communities that need this the most, especially in rural

areas and economically distressed communities.

We have done the same kind of outreach that we did for other

initiatives we have been involved in. This is one of our highest priorities. In those town meetings we have devoted most of our attention to enrolling low-income individuals, and with more than practically approximately 77 million more baby boomers coming on, I

can assure you we will be doing even more in the future.

Mr. PALLONE. Do you have any recommendation that the States

or the Social Security Administration or CMS could undertake to

reach those who are eligible but not enrolled?

Ms. PAYNE. Well, again, it seems to me that the Social Security

Administration could do the same thing for the low-income subsidy

that they are doing for other programs, and that is using some of

the income data to do greater outreach, and for us to give them the

authority to do that through the Prescription Coverage Now Act.

Mr. PALLONE. OK, thank you.

I wanted to ask Ms. Clarkson, I would like to better understand

what you are telling us about the challenges that people in the assisted living facilities face with respect to their medication copayments.

Right now a person who is in an assisted living facility is not eligible to get financial assistance with the Medicare Part D copayments; is that correct?

Ms. CLARKSON. That is correct.

Mr. PALLONE. Now, is there any solid basis for discriminating

against these low-income beneficiaries in assisted living? Can you

say a little about the beneficiaries in those facilities? Are they

wealthier than people in nursing homes? Do they have additional

means that they can use to pay for their copayments?

Ms. CLARKSON. No, not the clients we are talking about. They

are essentially the same person that would be in a nursing home

being taken care of in a different venue. They are an elderly person

needing assistance, who is also low income.

Mr. PALLONE. OK. And I just wanted to ask Ms. Sanchez, I know

we kind of beat this to death, but I have a minute left here. Do

you ever come across somebody who meets the income test, but you

know then has a huge amount of assets? Is that a phenomenon

that exists at all?
84

Ms. SANCHEZ. We have never seen it in any of the people we

have tried to help, and if they are over, it is by a couple hundred

or a couple thousand dollars. And they have saved. They have

scrimped and saved their whole lives, and they don’t want to give

up that little bit of security.

Mr. PALLONE. And that is essentially what we have for the most

part.

All right, thank you all.

Mr. Deal.

Mr. DEAL. In that regard that is the problem with setting any

kind of artificial limits is that I am either going to be $5 under,

or you are going to be $10 over. Now, as I understand it, it does

not have an inflation enhancer to it, does it? Or does it?

Ms. SANCHEZ. The LIS does, but the MSP doesn’t.

Mr. DEAL. OK. All right. Maybe that is a better way of dealing

with it, because that is always a moving target and as long as we

have any limit, somebody is going to be just slightly over it and

therefore ineligible, so those are always hard decisions.

I was just looking at the statistics on the low-income subsidy as

it relates to the Part D premiums and looking at some CNS figures,

and it said that, as of the date of this report, there were 13.2 million people eligible for low-income subsidy. And at that point in

time, there had been roughly 10 million who had coverage under

either Part D or some other source, leaving the 3.2 million others.

And 3.2 million out of 13 million is a pretty high number of presumed eligible people who are just not enrolled. It would seem to

me that that is sort of where we ought to focus our efforts and figure out—and you all have alluded to some of the impediments that

maybe contribute to them not enrolling even though they would be

eligible. That ought to be our priority.

It is sort of similar, Mr. Chairman, to my point on our SCHIP

reauthorization is that since that program has as its target children 200 percent of poverty or below, we ought to have a pretty

good saturation of that population before we start expanding it.

And I feel the same way about this; we ought to figure out why

the ones that we think are eligible and are not there, and the reasons you have given, paperwork, maybe not wanting to disclose assets, all of those other things, a lot of that has to do with just education and outreach. I am sympathetic to that.

And hopefully in whatever we do, we can focus on the ones we

have already identified ought to be our primary targets and try to

get more of them covered before we take on more expansive and

more expensive other undertakings, because if we do, we are going

to forget the ones that were the original intended target populations to begin with.

So thank you all for what you contributed here today.

Mr. PALLONE. Thank you. That concludes our questions, but I

just wanted to thank you all. I think that this is a really important

issue that really hasn’t received much attention, and, of course,

mainly it effects people that have lower incomes. And I think a lot

of times their concerns are not heard very often.

So I do appreciate your being here, and we want to take very seriously what you have said to see what kind of action we need to

take. So thank you again.
85

I just remind you that you might get additional questions for the

record from Members. They are supposed to submit them within 10

days, so then we might ask you to respond to those, you would be

notified within 10 days if you get those kinds of questions.

But thank you again, and without objection, the meeting of the

subcommittee is adjourned.

[Whereupon, at 4:25 p.m., the subcommittee was adjourned.]

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