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S. HRG. 110–729 

SENIORS AT RISK: IMPROVING MEDICARE FOR 

OUR MOST VULNERABLE 

HEARING 

BEFORE THE

SPECIAL COMMITTEE ON AGING 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

WASHINGTON, DC 

May 22, 2008 

Serial No. 110–29 

Printed for the use of the Special Committee on Aging 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

SPECIAL COMMITTEE ON AGING 

HERB KOHL, Wisconsin, Chairman 

RON WYDEN, Oregon 

BLANCHE L. LINCOLN, Arkansas 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

BILL NELSON, Florida 

HILLARY RODHAM CLINTON, New York 

KEN SALAZAR, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

CLAIRE McCASKILL, Missouri 

SHELDON WHITEHOUSE, Rhode Island 

GORDON H. SMITH, Oregon 

RICHARD SHELBY, Alabama 

SUSAN COLLINS, Maine 

MEL MARTINEZ, Florida 

LARRY E. CRAIG, Idaho 

ELIZABETH DOLE, North Carolina 

NORM COLEMAN, Minnesota 

DAVID VITTER, Louisiana 

BOB CORKER, Tennessee 

ARLEN SPECTER, Pennsylvania 

DEBRA WHITMAN, Majority Staff Director 

CATHERINE FINLEY, Ranking Member Staff Director 

(II) 

C O N T E N T S 

Page 

Opening Statement of Senator Gordon H. Smith ................................................. 1 

Statement of Senator Sheldon Whitehouse ........................................................... 2 

Statement of Senator Ken Salazar ......................................................................... 4 

PANEL OF WITNESSES

Statement of Judy Korynasz, beneficiary witness, caregiver for her Mother, 

Hillsboro, OR ........................................................................................................ 6 

Statement of Barbara Bovbjerg, director, Education, Workforce, and Income 

Security Issues, U.S. General Accountability Office, Washington, DC ........... 12 

Statement of Joyce Payne, member, AARP Board of Directors, Washington, 

DC .......................................................................................................................... 33

Statement of Laura Summer, senior research scholar, Georgetown University, 

Health Policy Institute, Washington, DC ........................................................... 44 

Statement of Lisa Emerson, program manager, The Senior Health Insurance 

Benefits Assistance (SHIBA)/director, Oregon State Health Insurance Counseling and Assistance Programs (SHIPs), Salem, OR ....................................... 55 

APPENDIX 

Prepared Statement of Senator Robert P. Casey, Jr. ........................................... 75 

Statement of Richard Grimes, president and CEO, Assisted Living Federation 

of America ............................................................................................................. 75 

Statement for the Record from Alliance for Retired Americans .......................... 76 

(III) 

(1) 

SENIORS AT RISK: IMPROVING MEDICARE 

FOR OUR MOST VULNERABLE 

Thursday, May 22, 2008 

U.S. SENATE

SPECIAL COMMITTEE ON AGING

Washington, DC. 

The committee met, pursuant to notice, at 10:33 a.m. in Room 

SH–216, Hart Senate Office Building, Hon. Gordon H. Smith, presiding. 

Present: Senators Smith [presiding], Salazar, and Whitehouse. 

OPENING STATEMENT OF SENATOR GORDON H. SMITH, 

RANKING MEMBER 

Senator SMITH. Good morning. With the blessing of Senator 

Kohl, we will begin the hearing. With respect to our witnesses, we 

want to be mindful of your time and take advantage of what you 

have to contribute today to the U.S. Senate Special Committee on 

Aging. 

We have an impressive list of witnesses, all of whom will share 

with us their perspective on the improvements that are needed to 

ensure the Medicare program provides help to America’s most vulnerable seniors. 

I want to extend a personal welcome to Judy Korynasz and Lisa 

Emerson, both of whom have flown all the way from Oregon, a trek 

I know all too well. Thank you for being here this morning despite 

the jet lag you no doubt feel. I always enjoy having Oregonians testify before Senate committees, and we truly appreciate your efforts 

to better our understanding of this important issue to America’s 

seniors. 

All too often, seniors and their needs get lost in the flurry of debate over spending priorities and the race to finish legislation. I 

want everyone to know that I will not let that happen. I intend to 

fight for seniors and will work to ensure that the Medicare package 

includes policies that make healthcare more affordable to our most 

vulnerable. 

It was just 2 years ago that the Medicare program began offering 

seniors the option of receiving coverage for their prescription drugs. 

Since that time, the program has been highly successful, with 85 

percent of eligible seniors receiving some form of coverage for their 

medication. 

Every good program, however, always has room for improvement. 

In fact, as I think back on my 12 years here, I have never voted 

on a perfect bill yet. There is always a new chapter in democracy 

and a chance to improve on success. 

2 

As of January 2008, the Centers for Medicare and Medicaid Services estimated that of the 12.5 million beneficiaries eligible for the 

low-income subsidy, 2.6 million still have not enrolled. In addition, 

the Social Security Administration has reported a significant percentage of those applying for the subsidy who qualified based on 

their income were determined ineligible because their assets exceeded the eligibility requirement. 

We also must look at other Medicare assistance programs that 

like the Part D low-income subsidy, are intended to help our poorest and most vulnerable seniors afford their healthcare. Sadly, low 

utilization, overly restrictive asset limits, and poor coordination 

among our agencies are just a few of the reasons these programs 

also aren’t being utilized by those who need help. 

Congress must consider creating parity between Medicare’s different programs. Right now, the low-income assistance programs 

under Part B are significantly more restrictive than the help offered under Part D. Even the congressional advisory panel, 

MedPAC, recommends that the program’s eligibility criteria should 

be the same. 

We also need to look at policies that ensure the agencies are 

doing a better job of sharing information and coordinating application processes. We can and should do better to ensure that seniors 

with the greatest need are eligible and receiving assistance. 

Last year, Senator Bingaman and I introduced a package of bills 

to improve Medicare Part D for most of our vulnerable seniors. One 

important aspect of our legislation would help us to target beneficiaries who might be eligible for LIS by allowing the Internal Revenue Service to share tax-filing information with the Social Security Administration. Our legislation also raises the asset test limits 

to allow seniors like Mrs. Korynasz, her mother, to qualify for the 

low-income subsidy. 

As Congress continues to develop the Medicare package needed 

to stave off the 10 percent physician payment cut, I hope my colleagues will remember that the most vulnerable of our seniors also 

need help. I hope today’s discussion will provide some valuable information to guide us as we make Medicare successful and beneficial for all seniors. 

With that, we have been joined by two of my colleagues. We will 

go to Senator Whitehouse first, then Senator Salazar for any opening statement you may have. 

STATEMENT OF SENATOR SHELDON WHITEHOUSE 

Senator WHITEHOUSE. Thank you, Chairman. 

I just wanted to express my appreciation to you for holding this 

hearing. I particularly want to welcome Ms. Korynasz, who wins 

the prize for most miles traveled to get here today, and I am glad 

you did because I think it is an important issue. 

I think that in the discussion, particularly about Part D, the 

powerful vested interests in Washington hold far too much sway, 

and individual seniors are far too often overlooked. 

I am from Rhode Island. Rhode Island has the eighth- highest 

senior population of any State. States that have a higher senior 

population include Florida and Arizona, which are destination 

3 

States for seniors, very often well-off seniors who go there to retire 

and enjoy the benefits of the weather and so forth. 

Which leaves Rhode Island as a State that has a uniquely high 

profile of seniors who need the kind of assistance that Part D provides. Over and over and over again, we have witnessed the tragedy of seniors falling into what is benignly and falsely called the 

‘‘donut hole’’ and what should probably be called the Bush senior 

trap for unforeseen expenses. 

Yes, clearly, if they had looked through all of the fine print, they 

could have seen that this was waiting for them, and they would ultimately fall into it. But a lot of the seniors who are highly dependent on multiple medications—heck, I will confess, I don’t read 

through the complex medical forms that I get myself. I think it is 

a lot to expect elderly seniors who are very dependent on multiple 

medications to do the same. So it often comes as a surprise. 

There was a woman from Woonsocket, who had been independent her entire life. She lived in a tenement, which is Rhode 

Island for a three-decker, and walked wherever she went. She discovered that she had fallen into the trap when she went to her 

pharmacist, and they said, ‘‘Well, you will have to pay for these. 

I am sorry. Your coverage is not good.’’ 

She had no idea that was going to happen, and she didn’t have 

the money. So she had to walk away from the pharmacy window 

empty-handed. It was a terrible and frightening thing for her, and 

she had to face the prospect of losing her independence, losing her 

apartment. I mean, this was a woman who had fought for her independence for 90 years, and she did not want to give it up lightly. 

But she was really presented with no choice, except for the fact 

that she had a grandson who was willing to come and look after 

her and take care of it. But stories like that play out over and over 

and over and over again. They are all completely avoidable, completely avoidable. 

If this organization, the U.S. Congress, would simply have the 

courage to stand up to the pharmaceutical industry and say you 

have to behave like every other business and negotiate over the 

price of pharmaceuticals with buyers, instead of doing what we did, 

which is to disable CMS from negotiating with the pharmaceutical 

industry and allow this industry to dictate pricing to our Government and for our seniors. 

I understand that if we had made that simple correction, there 

would be enough savings from the lower prices that we would be 

able to fill this trap into which so many seniors unwittingly fall. 

So, to me, it is really a terrible exercise in public policy and shows 

the power of organized lobbyists, surrounded special interests up 

against folks like Ms. Korynasz and her family and like the lady 

in Woonsocket, who have nobody looking out for them other than 

us. If we are not doing our jobs, they are the ones who pay the 

price. 

Thank you very much, Senator. 

Senator SMITH. Thank you, Senator Whitehouse. 

Senator Salazar. 

4 

STATEMENT OF SENATOR KEN SALAZAR 

Senator SALAZAR. Thank you very much, Senator Smith, as 

Ranking Member, for keeping a focus on the vulnerable. 

I thank Chairman Kohl also for scheduling this hearing today. 

Listening to my friend and colleague, Senator Whitehouse, I remember our days as fellow attorneys general, when he was attorney general of Rhode Island and I was attorney general of Colorado, and one of the things that we had a focus on was the protection of the elderly, the protection of the most vulnerable. In my 

own State, we had many different summits where we brought our 

senior citizens together and other interested stakeholders to make 

sure that we were protecting them. 

Today’s hearing really is about how we make sure that the programs that we have created are, in fact, programs that are made 

available and that seniors know how to take advantage of those opportunities that we have created. This is an excellent opportunity 

to discuss the state of Medicare low-income assistance programs 

and how to reform these programs to meet the needs of seniors and 

to increase enrollment. 

In my State of Colorado and across this country, many families 

are feeling the serious financial pressures as a result of the rising 

cost of energy, gas prices, and medical care. Seniors with limited 

incomes are those who I think are particularly most vulnerable. 

Government programs, such as the low-income subsidy, are critical 

for helping millions of seniors cover the cost of care, including 

91,000 seniors in my home State of Colorado. 

Most Medicare experts, including MedPAC, believe the low-income programs for Medicare beneficiaries are broken. The Congressional Budget Office estimates the participation rates of beneficiaries are very low in the various programs. Only 33 percent of 

eligible beneficiaries are participating in some of those programs, 

while 13 percent in the SLMB program. 

When you exclude dual-eligibles that were auto-enrolled in 2006, 

almost two thirds—that is almost two thirds—of low-income Medicare beneficiaries qualified for the drug benefit low-income subsidy 

but did not receive the benefit. That is two thirds who qualified did 

not receive the benefit. Reasons cited for this include lack of awareness that the program exists and an inability to complete the application to receive the benefit. 

Compared to other Federal benefit programs, participation in 

Medicare low-income programs falls far, far behind. Participation 

rates are estimated to be 75 percent for the earned-income tax 

credit, 66 percent for supplemental security income, and 66 percent 

for Medicaid. Experts are all in agreement that to fix these programs we must align the eligibility requirements and significantly 

improve outreach and enrollment. 

It is critical that we have similar, if not better, participation 

rates in our Medicare low-income programs so that elderly patients 

have access to the care they need at the time that they need it. 

Using these programs to increase access to care helps us prevent 

costly and unnecessary treatments for advanced disease, which is 

critical to reducing our healthcare spending and improving patients’ quality of life. 

5 

We have been working with Senator Smith and my colleagues in 

the Finance Committee on some of these same issues, and I am delighted that the Aging Committee is also putting a focus on this 

issue here in this Committee. 

When I consider the programs we are discussing here today, I 

am confident, I am convinced that we can reform our system so 

that low-income seniors are receiving the care they deserve. The 

fundamental principles of the programs are sound, but we need to 

make necessary adjustments to include everyone who should be included. 

Thank you, Ranking Member Smith. 

Senator SMITH. Thank you, Senator Salazar. 

To introduce our panel for the record, we will first hear from an 

Oregonian, Judy Korynasz. She will be sharing her experience with 

us as a caretaker of her mother, Charlotte Wachdorf. I am inspired 

and appreciative of her time and dedication to ensuring her mother 

continues to receive proper quality care and look forward to her 

testimony. 

Barbara Bovbjerg is no stranger to this Committee. We appreciate, Barbara, your being here again. She is the director of GAO’s 

Education, Workforce, and Income Security team. She will discuss 

GAO’s work regarding the Social Security Administration’s enrollment of beneficiaries into the LIS program and give an update on 

these efforts. 

Joyce Payne is a member of the AARP Board of Directors. She 

will discuss what AARP is hearing from its members in regards to 

Medicare’s low-income assistance programs and elaborate on recommendations for reform to these programs to ensure that the 

poorest and most vulnerable seniors receive the help they need 

with their healthcare costs. 

Laura Summer is a senior research scholar at Georgetown University Health and Policy Institute. Ms. Summer is a senior research scholar at Georgetown University with over 20 years of experience in Federal, State government, independent policy organizations, and academic institutions. We look forward to hearing her 

testimony and recommendations on the obstacles faced by beneficiaries and how we can improve enrollment in Medicare’s low-income assistance programs. 

Lisa Emerson is also from Oregon, and is the director for Oregon’s Senior Health Insurance Benefits Assistance Program. Ms. 

Emerson will testify on her experience in this capacity. She, her 

colleagues, and volunteers deserve our gratitude for their hard 

work in helping Oregon seniors navigate the Medicare program. I 

am very interested in her thoughts on what improvements can be 

made to make her difficult job easier. 

So, with that, Judy, why don’t we begin with you? 

6 

STATEMENT OF JUDY KORYNASZ, BENEFICIARY WITNESS, 

CAREGIVER FOR HER MOTHER, HILLSBORO, OR 

Ms. KORYNASZ. OK. Good morning, Mr. Chairman, Ranking 

Member Smith, and members of the Committee. 

Thank you for inviting me to testify today. My name is Judy 

Korynasz. I am 66 years old, and I live in Hillsboro, OR. I have 

Medicare, as does my husband, John, and my mother, Charlotte 

Wachdorf, who lives with us. 

I am here today to tell you about my family’s experience with 

Medicare. In particular, I am going to focus on my family’s experiences with the Medicare prescription drug benefits and its effect on 

people like us who have modest incomes and savings. 

My mother’s name is Charlotte Wachdorf. She is 87 years old, 

soon to be 88, and will turn 88 on June 2. She has lived with my 

husband and I since last November. Before that, she lived with my 

brother, a retired Air Force colonel, and his wife for 5 years after 

my father died. When my sister-in-law developed serious back ailments, my mother moved in with us. 

My mother’s health has been declining for several years. She currently has chronic obstructive pulmonary disease, better known as 

COPD, diabetes, neuropathy, which causes nerve damage in her 

feet and up through her legs. As a result of the diabetes, she has 

congestive heart failure, chronic anemia, and an aneurysm and a 

blood clot in her heart. 

She takes more than 15 medications. She takes Procrit once a 

month, and the following medications at least daily. She has 

Synthroid, Detrol, Hydroco, which is a form of Vicodin, Gemfibrozil, 

Folbic, Actos, Lisinopril, Spironolactone, Advair Diskus, Combivent, 

Fluticasone, SennaGen, Mirtazapine, and Singulair. Claritin and 

an iron supplement and a multi-vitamin. She also uses a walker 

and is on oxygen full time. 

The good news is that, thanks to her doctors and these many 

medications, her health has been stabilizing recently. Unfortunately, paying for these medications takes up a good portion of her 

financial resources. 

Even with help from Medicare Part D, my mother’s only income is $1,027 per month in Social Security, an annual income of 

$12,324. She also has, as of this month, $15,213 left in her savings. 

This means she meets the income requirements for the Part D 

extra help program, but she has $3,223 too much in savings. 

As a result, every year since Part D started in 2006 she has fall- en into the coverage gap and has spent over $3,000 of her own 

money on prescription drugs. She has only reached catastrophic 

coverage in December, if at all. Because she has been on hospice 

care during this time as well, she has paid for only about half 

through Part D. If she were not on hospice, she would have even 

higher costs. 

This year, she entered the coverage gap in April, and this month, 

she paid for her Procrit and five other prescriptions, which amounted to $585.13 even with a discount that she obtained from the Oregon prescription discount program. 

If her health continues to stabilize, she will leave hospice care. 

We are grateful for that, but she will then have to pay for the rest 

of her drugs. I don’t know for sure how much that will cost, but 

7 

I expect it would consume most of all of her Social Security check 

while she is in the coverage gap. 

My husband and I will help her as best we can. However, our 

resources are limited as well. Our only incomes are Social Security 

because our former employer went bankrupt, and our 401(k)s were 

lost as a result of that bankruptcy. Although my health is fairly 

good, my husband is a colon cancer survivor and has glaucoma. He 

takes several expensive eye drops to preserve his sight——Cosopt, 

Alphagan, and Lumigan. 

This month, due to the amount that he had to pay out before he 

met his—I forget the name of what they call that. Anyway, he had 

to lay out $273.50 just for two medications, and then the rest was 

covered by his Part D and his health insurance. So we were grateful for that. 

Unfortunately, my husband has also recently been diagnosed 

with the early stages of Alzheimer’s disease. His doctor has told us 

his prescription drugs are likely to increase significantly soon. He, 

too, will probably fall into the coverage gap this year. 

If the limits on financial assets for the extra help program were 

increased, my mother would qualify for the program. She would not 

have a gap in her coverage, and she would not have to spend most 

of her income and the little savings she does have left on prescription drugs. It would also provide my husband and me with considerable peace of mind to know that my mother’s prescription drugs 

would be affordable. 

Finally, I would like to let the Committee know about some of 

the difficulty we have had figuring out Medicare Advantage and 

the Medicare drug benefit. Last fall, when my mother moved in 

with us, I called 1–800–MEDICARE to help us choose a Medicare 

plan for her. I tried every day for 2 weeks several times a day. The 

line would ring, and then I would get cutoff. I never did get an answer. 

As you know, the Part D program is exceptionally complicated. 

I could not get reliable information for my mother’s Medicare Advantage plan or the mail-order pharmacies either because they 

would give me different information every time I called. I spent 

hours wading through information to figure out the best coverage 

for my mother, my husband, and myself. 

Finally, I received invaluable help from the counselors at SHIBA, 

the Senior Health Insurance Benefits Assistance Program. You 

may know it as Oregon’s SHIP program. The staff at SHIBA has 

created an excellent booklet that guides people through Medicare, 

Medicare Advantage, Medigap, and Part D plans. 

The SHIBA counselors were wonderful in helping me understand 

my options and sorting out the information that could otherwise be 

overwhelming. The staff and volunteers at SHIBA do a terrific job, 

and I would like to take this opportunity to thank them publicly. 

I want to thank the Committee, and especially Senator Smith, 

for taking an interest in this issue and for inviting me to testify 

about my family’s experience with Medicare. 

I hope that the rules can be changed to allow people like my 

mother to get the healthcare she needs without spending the last 

penny she has. It seems to me that in a country as wealthy as this 

8 

one, there should not be people who cannot take their medications 

just because they cannot afford them. 

Thank you. 

[The prepared statement of Ms. Korynasz follows:] 

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Senator SMITH. Thank you, Judy. 

Barbara, welcome back. 

STATEMENT OF BARBARA BOVBJERG, DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY ISSUES, U.S. 

GENERAL ACCOUNTABILITY OFFICE, WASHINGTON, DC 

Ms. BOVBJERG. Thank you, Mr. Chairman. 

Mr. Chairman, Senators, I was originally really pleased to be 

here to talk about Social Security Administration and the low-income subsidy of the Medicare Part D program, though I am very 

sobered by the story we just heard. As someone who worries a lot 

about retirement income, I was particularly horrified to hear about 

your 401(k)s, but that is a topic for another day. 

SSA is charged with publicizing the subsidy, with taking and 

evaluating applications, and with determining participants’ continuing eligibility. My testimony today is going to focus on the 

numbers of applicants that have been approved and denied so far 

for the subsidy and the status of SSA’s outreach efforts. My statement is drawn from a report that we issued last year about this 

time on this topic and we have updated a little for progress since 

then. 

First, SSA’s progress on processing. Since the beginning of the 

program, 7.2 million individuals have applied for the subsidy, and 

SSA has approved about 2.8 million of these. SSA received 1.3 million applications in Fiscal 2007, of which they approved 43 percent 

and denied 32 percent. The rest required no decision for a variety 

of reasons, including duplicate applications or applications that 

were withdrawn. 

SSA’s goal is to process 75 percent of the subsidy applications 

within 60 days. And in the first 6 months of Fiscal 2008, SSA reports they processed 93 percent of applications within that timeframe, which is well exceeding its service goal. 

Also, we now have more detailed information on income and 

asset levels for those denied the subsidy than we had previously. 

According to SSA data for 2007, over 60 percent earned income 

above the subsidy program’s limits. About 17 percent were denied 

because their assets exceeded program limits, and another 10 percent exceeded both asset and income limits. The rest were denied, 

again, for other reasons, such as not being eligible for Medicare to 

begin with. 

The extent to which denials exceeded the limit varied, but a significant percentage were barely disqualified. For income-related denials, although the median excess income was $4,500, 10 percent 

of this group had income that was no more than $500 over the 

limit. So they just were barely cutoff. As for assets, although the 

median excess was $13,700, meaning that half were above and half 

were below that amount, about 6 percent of these denials were only 

$500 over the threshold. 

I will turn now to SSA’s outreach efforts. When we began this 

outreach campaign in May 2005, SSA sent targeted mailings, 

which included an application form, to almost 19 million individuals identified as potentially eligible, and had contractors call more 

than 9 million of those individuals who didn’t respond to the initial 

mailing. SSA also conducted other specific follow-up efforts, includVerDate Aug 31 2005 10:56 Feb 19, 2009 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 H:\DOCS\46899.TXT SAG PsN: JOYCE
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ing sending notices to individuals they couldn’t contact by phone 

and more than 76,000 events at senior centers, churches, and other 

community centers. 

Today, however, that focused campaign is more muted. Although 

some subsidy-specific initiatives remain, including a new campaign 

of automated phone calls to those potentially subsidy-eligible, SSA 

has largely incorporated the subsidy outreach into its overall outreach activities for the entire Social Security program. This is understandable, SSA resources are stretched thin, particularly in field 

offices where much of the outreach is carried out, but is likely less 

effective than a more concentrated approach. 

Of course, as we noted last year, it is difficult to know whether 

the outreach measures have been effective or not because no one 

really knows how many people are eligible for the subsidy. Reliable 

data are simply not available to help SSA with its task of reaching 

the eligible population. 

SSA believes that tax data held by the IRS could help. They feel 

that even if many lower-income individuals do not file tax returns, 

they could at least use asset information from the Form 1099 and 

1098 to eliminate some ineligibles from their list. 

However, by law, IRS cannot provide such information without 

specific authorization from the Congress, and IRS staff have expressed doubts that tax information would provide meaningful help 

anyway. This is why last year we recommended that SSA and IRS 

work together to assess whether tax data could, indeed, help. The 

two agencies are working together today to answer this question 

and anticipate results next month. 

In conclusion, reaching the millions of people who are foregoing 

the subsidy remains a significant challenge. While SSA continues 

to approve applications, its efforts to attract new recipients have 

slowed and been folded into the overall SSA outreach. This approach, while likely less effective than a subsidy-focused campaign, 

should not be surprising given SSA’s workload in its field offices 

and its likely inability to devote more time and attention to this 

program. 

Better information to narrow the list of who may be eligible could 

help, and we are encouraged that IRS and SSA are working together to assess the utility of tax data in this role because a better 

understanding of who is eligible could help SSA make more efficient use of its limited staff resources by targeting outreach more 

narrowly to the population who is more likely to be eligible. 

That concludes my statement, Mr. Chairman. Thank you for the 

extra time. 

[The prepared statement of Ms. Bovbjerg follows:] 

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Senator SMITH. Thank you, Barbara. 

Joyce Payne. 

STATEMENT OF JOYCE PAYNE, MEMBER, AARP BOARD OF 

DIRECTORS, WASHINGTON, DC 

Ms. PAYNE. I am Joyce Payne of AARP’s Board of Directors. We 

want to thank you for inviting us to testify on the need to strengthen Part D low-income subsidy and Medicare savings programs. 

One in four people on Medicare live on incomes of 150 percent or less of the poverty level. That is just $15,600 for individuals and 

$21,000 for couples. They desperately need the help these programs 

provide. 

The low-income subsidy covers up to 95 percent of drug costs and 

closes the Part D donut hole. The Medicare savings programs pay 

Part B premiums and for those below the poverty level all Medicare cost sharing. However, millions of older Americans who need 

the help LIS and MSPs provide are not getting it because these 

programs have a serious flaw, an asset test. For LIS, beneficiaries can have no more than $11,990 in savings, $23,970 for a couple, no matter how low their income or how high 

their living expenses. For MSPs, the asset test or the asset limits 

are even more unreasonable—$4,000 for individuals and $6,000 for 

couples in most States, a limit that has not changed for the last 

20 years. These amounts are hardly enough to get people through 

retirement. But anyone who has saved even one dollar over these 

limits is not eligible for help. 

Asset tests contradict efforts to encourage people to save by penalizing those who, despite limited incomes, put away a small nest 

egg for retirement. We should encourage people to save for retirement, not penalize those who do. Asset tests are also a barrier to 

enrollment, even for those who meet the limits because they make 

the application process so very daunting and invasive. The result 

is that millions of people are not getting the needed assistance. 

AARP believes there should be no asset test in Medicare. Again, 

we should encourage people to save for retirement. As a first step, 

AARP supports the Part D Equity for Low-Income Seniors Act introduced by Senators Jeff Bingaman of New Mexico and the Ranking Member of this Committee, of course, Senator Gordon Smith of 

Oregon. 

This legislation would increase the asset test limits, simplify the 

LIS application, and help target efforts to identify and enroll people. It takes an additional important step of allowing Social Security to screen LIS applicants for MSPs. 

We are committed to seeing enactment of first steps toward that 

goal this year as part of the Medicare package currently being considered by the Senate, and we look forward to working with Members of the Congress from both sides of the aisle to improve the 

Medicare prescription drug benefit and to ensure that all older 

Americans have access to affordable prescription drugs and 

healthcare. 

Again, we thank the Committee for this opportunity to speak on 

behalf of our 40 million members who want the Congress to 

strengthen Medicare low-income programs. 

We thank you. 

34 

[The prepared statement of Ms. Payne follows:] 


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Senator SMITH. Thank you very much, Joyce. 

Laura Summer. 

STATEMENT OF LAURA SUMMER, SENIOR RESEARCH SCHOLAR, GEORGETOWN UNIVERSITY, HEALTH POLICY INSTITUTE, WASHINGTON, DC 

Ms. SUMMER. Mr. Chairman and members of the Committee, I 

appreciate the opportunity to testify today. 

Much of my work at Georgetown has involved examining the impact of Federal and State policies on enrollment for public benefit 

programs and particularly recently for the low-income subsidy for 

Part D as well as the Medicare Savings Programs. 

Today, I would like to discuss some program changes to initiate 

a shift from the current enrollment process, which requires that individuals learn about and seek benefits, to one that relies on the 

use of available data to identify and inform low-income individuals 

about their eligibility and to help them enroll. 

First, I would like to make an important distinction. We often 

hear that 80 percent approximately of those who are eligible for the 

low-income subsidy are receiving it. But there are two groups of 

people who qualify for the subsidy, those who are deemed eligible 

by virtue of their participation in other programs and those who 

have to file a separate application for the subsidy. 

Of that group, the 4.2 million who have to file that separate application, it appears from CMS data that only about 38 percent are 

receiving the subsidy, and that is obviously a very low enrollment 

rate. 

There is a tendency in thinking about how to improve enrollment 

in a program to want to publicize it more. But as Mr. Salazar noted 

before, low enrollment occurs not only because people don’t know 

about the program, but also because they find the program difficult 

to apply for. They aren’t familiar with the financial eligibility requirements or the financial benefits, and they simply don’t know 

how to apply. This is what we generally hear when we ask beneficiaries and their counselors about the reasons that people don’t 

apply for the subsidy. 

So some administrative simplification could really help increase 

enrollment. The elimination of the resource test is a key program 

change to simplify enrollment for beneficiaries and for those who 

process applications. As we have heard already this morning, that 

step would allow us to be able to identify the people who really 

qualify for the subsidy and also to target outreach more effectively 

because we have good data from national surveys about the income 

of these folks. But we don’t have good information about the resources of low-income seniors. 

If the resource test is not eliminated, some steps certainly should 

be taken to increase the resource limit and also to simplify the way 

that resources are counted and verified. But simply eliminating a 

resource test or raising the resource limits will not ensure increased enrollment. We have an example from the State of Maine, 

which last year decided that they would do without a resource test 

for the Medicare Savings Program. 

Following that decision, they saw very little increase in enrollment in that State for the Medicare Savings Programs. But then 

45 

a subsequent decision to deem eligible all of those people who were 

participating in the State Pharmacy Assistance Program for the 

Medicare Savings Programs brought a very dramatic increase in 

enrollment. 

As you have heard from others today, the idea of having the Social Security Administration and the IRS work together to determine—to use information on hand to determine who might be eligible for the subsidy is certainly one that has a great deal of merit. 

Without a resource test, it would be even easier to identify those 

individuals who are eligible for the subsidy. 

At the current time, SSA enrolls Medicare beneficiaries when 

they become eligible in both Parts A and Part B of the Medicare 

program, and there is an option to opt out of Part B. Thinking 

about a streamlined way to promote enrollment, the Social Security 

Administration could also enroll people eligible for the subsidy and 

give them an opt-out provision. 

We have also heard this morning about the fact that LIS and 

MSP benefits are available for a similar, but not exactly the same 

population, and two program changes could achieve administrative 

efficiency and increase enrollment in both programs. 

First, a mandate that no matter where a person applies for a 

subsidy or for MSP benefits, they be screened and enrolled for the 

other program, regardless of whether they apply at the Medicaid 

office or through the Social Security Administration, and a similar 

mandate that information be shared between those two programs 

would be very helpful. Of course, aligning the eligibility rules for 

the two programs would foster dual program enrollment. 

I also want to mention that ensuring that benefits continue uninterrupted from year to year is another very important factor in 

achieving high enrollment rates. Some of the people who are counted in those not participating in the program this year are people 

who participated last year, but lost their eligibility when they lost 

their deemed status through Medicaid or when they failed to respond to notices from SSA to redetermine eligibility. 

Barbara did mention some of the new data that are available 

from SSA, but there are other data that would be very helpful to 

have. It would be good to know about the relative value of resources to income for the folks who apply and who receive and who 

don’t qualify for the subsidy. It would also be helpful to know 

whether resources change from year to year for this particular population. Even if the resource test is not eliminated at the time of 

application, I would suggest it certainly should be eliminated at the 

time of redetermination because in our research, we found that 

generally assets do not change for this population over time. 

Finally, I would just say that even with a simpler enrollment 

process, there will still be a need for materials and all kinds of materials, not only publicity and applications, but also notices, all correspondence to be available in a variety of languages so that we 

have linguistically and culturally appropriate information available 

for those people who may qualify for the subsidy. 

We know that beneficiaries tend to seek help from trusted 

sources and that one-on-one counseling is particularly effective. 

Over the past few years, the Federal Government really has played 

an important role in ensuring that there is support for that kind 

46 

of activity. But as the program is more established, it is very important to continue to provide that sort of support so that one-onone assistance can continue to be available on a community level. 

Thank you. 

[The prepared statement of Ms. Summer follows:] 

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Senator SMITH. Thank you, Laura. 

Lisa Emerson. 

STATEMENT OF LISA EMERSON, PROGRAM MANAGER, THE 

SENIOR HEALTH INSURANCE BENEFITS ASSISTANCE 

(SHIBA)/DIRECTOR, OREGON STATE HEALTH INSURANCE 

COUNSELING AND ASSISTANCE PROGRAMS (SHIPS), SALEM, 

OR 

Ms. EMERSON. Good morning, Ranking Member Smith and Senator Whitehouse and guests. I am definitely honored and I very 

much appreciate being here as well to provide testimony today. 

As you know, I am the program manager of the Oregon Senior 

Health Insurance Benefits Assistance Program, also known as the 

State Health Insurance Assistance Program, funded by a Federal 

grant from the Centers for Medicare and Medicaid Services as well 

as some State general fund. 

I would like to take this opportunity to thank Congress at this 

time on behalf of my State and other national partners for approving additional funding for SHIPs this year. 

My primary reason for being here today is to provide testimony 

about the low-income subsidy in Oregon and alert you to the critical role SHIBA plays with people eligible for Part D coverage. Oregon SHIBA is a State-wide free Medicare counseling service based 

in Salem, Oregon’s capital. SHIBA has a certified volunteer base of 

approximately 200 volunteers that provide one-on-one counseling 

assistance to many of Oregon’s over 571,000 Medicare beneficiaries, 

which makes up 15 percent of our total State population. 

The overriding goal of SHIBA volunteers is to help people understand and make informed decisions about their Medicare benefits, 

particularly the Part D options because they are complex. 

Since January 1 of 2007, the SHIBA counseling network has provided one-on-one counseling assistance to over 20,000 Oregon beneficiaries based on the data that we collect. The average time spent 

with each beneficiary has been approximately 38 minutes. The estimated in-kind value to the program for over 14,740 volunteer work 

hours during this period translates to approximately $250,000. 

These estimates illustrate the public reach and impact of Oregon’s 

SHIP. 

SHIBA cannot recruit and maintain a volunteer workforce without the assistance of vital local, county SHIBA partners. We currently contract with 22 local SHIBA sponsoring organizations 

throughout Oregon to provide local SHIBA counseling services to 

beneficiaries. 

During today’s hearing, you did hear directly from Judy and her 

family’s need for the LIS, and she is one of many beneficiaries that 

we speak to in Oregon. These kinds of stories illustrate a very 

small sample of the widespread need for more low-income beneficiaries to be eligible for the assistance LIS can provide. I have included in the attachment some additional anecdotal stories from 

beneficiaries, and again, it is just a sample. 

Oregon SHIBA’s experience with Part D prescription coverage. 

Beneficiaries repeatedly have expressed the following concerns to 

SHIBA about the Part D low-income subsidy program. The income 

and asset requirements for LIS are restrictive and do not make the 

56 

benefit available to enough low-income people who need additional 

assistance with paying for their prescription drugs. 

They report that the income and asset eligibility guidelines for 

patient assistance programs, also known as PAPs, offered by pharmaceutical companies are more generous than those for the LIS. 

And they also report concerns with the eligibility criteria of using 

cash surrender value of life insurance policies, in-kind support and 

maintenance, and undistributed funds in retirement savings plans 

such as 401(k) accounts as assets. 

They often receive conflicting information about the LIS program 

from representatives from their Medicare Advantage company, private fee-for-service plan, Medicare, and Social Security Administration, and even insurance producers or agents. There has been a lag 

in coordination of the reduction in prescription co-pay for LIS beneficiaries when they join new Part D plans, and it has put the burden of proof that they are eligible for the LIS onto the beneficiary. 

Many LIS beneficiaries with 100 percent subsidy report they did 

not realize their subsidy amounts were determined by Social Security Administration rather than by the particular plan that they 

had selected. Letters from the Social Security Administration can 

be confusing, and beneficiaries often do not realize that they must 

apply or reapply in order to receive LIS. 

I would also like to take this opportunity to address the Federal 

grant for SHIBA and other SHIP programs. But in Oregon, the current Federal grant level has—while it has been increased slightly, 

has been insufficient to support the local level of resources and the 

volunteer base needed to meet the CMS/SHIP performance measures and standards and manage the growing number of calls from 

retiring baby boomers. 

The creation of Part D increased the complexity of the coverage 

under Medicare and magnified the confusion among Oregonians 

about their choices and the impacts on their out-of-pocket costs. 

This, in turn, has increased considerably both the volume of calls 

to SHIBA and the amount of time volunteers spend providing assistance to each caller. 

Because the drug benefits offered by individual plans can change 

dramatically from year to year, beneficiaries still require annual 

assistance to ensure that the plans in which they are enrolled still 

cover their prescription medications. 

The CMS/SHIP performance measures implemented in 2005 

have put an increased burden on State SHIP programs to maintain 

or exceed performance, but the funding base does not support the 

resources needed to develop a force of volunteers with the specialized knowledge to counsel the growing number of Medicare eligibles. 

To appropriately address the increasing demand for assistance 

from SHIBA, particularly for Part D coverage, it would require 

having a minimum of one counseling site in every—or in all of Oregon’s 36 counties and a volunteer force of not less than 600 active 

individuals trained in various specialty areas of Medicare. 

I could go on, but I would like to say thank you again for this 

opportunity, Senator Smith, members of the Committee, for the opportunity to share testimony with you today, and I will do my best 

to answer your questions. 

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[The prepared statement of Ms. Emerson follows:] 


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Senator SMITH. Thank you, Lisa. 

Laura, as you have studied other States, how is Oregon doing? 

Ms. SUMMER. Well, Oregon really does have a very active SHIBA 

program that is doing a great job. 

Senator SMITH. Well, that is great. I appreciate that. As you 

think about the kind of information, the data that would be useful 

in helping Lisa help seniors navigate Medicare’s low-income assistance program, what would be the most useful data? 

Ms. SUMMER. Evaluate people’s potential eligibility and try to determine—— 

Senator SMITH. Exactly. 

Ms. SUMMER [continuing]. How to reach them? 

Senator SMITH. Yes. 

Ms. SUMMER. Well, as I said before, if we didn’t have a resource 

test, then information on the income level of people in various 

parts of the State would be very helpful in identifying those who 

are potentially eligible for the benefit. In addition, it is very important not only to know the number of people you are trying to reach, 

but who those people are. 

So, questions about the types of materials, whether they are appropriate linguistically or culturally, are very important to consider. 

Senator SMITH. Do you agree with that, Lisa? 

Ms. EMERSON. Yes, I do. I would like to just mention the efforts 

being made by SSA and CMS and the SHIP programs by doing a 

campaign, an LIS outreach campaign for 2008 that is getting 

kicked off right now. There is information on CMS’s Web site about 

that. 

Ms. SUMMER. Although I would like to add that the site provides 

materials in English and Spanish and perhaps should be expanded 

a bit to cover other languages. 

Senator SMITH. Such as, in Oregon, perhaps Russian? 

Ms. EMERSON. Absolutely. 

Senator SMITH. What other languages? 

Ms. EMERSON. Asian languages, Russian, Spanish, yes. 

Senator SMITH. Judy, like Barbara, I was horrified to hear of 

your retirement difficulties. Your 401(k) is yours. How did it fall 

into the bankruptcy of your employer? 

Ms. KORYNASZ. Illegally. 

Senator SMITH. That is unrelated to this topic, but I am just horrified by such a thing. 

Ms. KORYNASZ. Unfortunately, one of the owner’s wives, she was 

the one who administered our 401(k). She owned her own business, 

which was an insurance business. 

Senator SMITH. Is anybody in jail? 

Ms. KORYNASZ. Well—you know, yes. The Federal Government 

came after them for back taxes for a lot of things. 

Senator SMITH. This is outrageous. 

Ms. KORYNASZ. They received punishment. That is true. They 

lost a lot. She lost her business. She lost everything. But unfortunately, the people that worked for them lost all that they had in 

their retirement. There was just nothing there. 

Senator SMITH. I am so sorry to hear that. That obviously complicates all the additional difficulties you are having with Medicare, 

67 

and that takes us to the purpose of this hearing, I understand you 

have had some difficulty with 1–800–MEDICARE. I have been all 

over CMS for some time to try to reduce wait times and increase 

accuracy in information, and I wonder if you can discuss some of 

the problems you experienced? 

Ms. KORYNASZ. When I tried to reach them, I kept wondering, 

well, why does this number ring through and then clicks off? So, 

I actually had asked—when I got in touch with the SHIBA volunteer, I asked if he would know why you couldn’t get through. He 

said, ‘‘Well, I think it is the high volume of calls. They simply can’t 

handle them.’’ 

Then I read a little piece in The Oregonian that stated that they 

simply did not have the staff to answer all of the calls. So when 

they were overloaded, it just simply cut them off. Not that the staff 

cut you off, the system did because they couldn’t answer the calls. 

Senator SMITH. Kind of like the Senate phone system when we 

are dealing with immigration or something. It melts down. [Laughter.] 

But it points out the need, and I think the pressure that I and 

I know many of my colleagues are putting on CMS to deal with 

this issue. It makes me wonder why the budget requests CMS 

needs in order to manage this problem was not addressed. This 

truly is one of the really crying needs out there. 

Right now, on the Senate Finance Committee, there has been a 

real effort to deal with the issue of what is called the ‘‘doc fix’’ 

around here. It doesn’t do you a lot of good to have Medicare if no 

physicians will take Medicare patients. This is why we have to 

avoid what are scheduled cuts to them. 

My own view is that in taking care of the doctors, which is essential not just for providers, but patients, we do need to address these 

low-income issues as well. I am going to be in a meeting a little 

bit later of Finance Committee members, and I wonder what you 

would tell them? Should we just take care of the docs, or should 

we also address these issues? 

Ms. KORYNASZ. I think it is important to take care of the doctors 

because we ran into that. I mean, my doctor in Medford, when we 

moved up to Hillsboro area, recommended a doctor for me that she 

knew personally. When I made contact with that doctor’s office, 

they said, ‘‘Oh, gee, we are really sorry, but we don’t take Medicare 

patients. We simply can’t handle any more than we already have.’’ 

Then when we tried to find a new doctor recently, we ran into 

the same problem. The doctor that we would liked to have had 

said, ‘‘Oh, we simply can’t take any more Medicare patients. We 

have reached our quota on what we can handle.’’ We had to hunt 

around to find a doctor that was willing to take on new Medicare 

patients. 

Ms. PAYNE. Senator Smith, can I elaborate on that? 

Senator SMITH. Yes, please, Joyce. 

Ms. PAYNE. It seems to me that although the doctors are very— 

the physicians are very important to this, that it shouldn’t have to 

be an either/or decision. We have to deal with the central issue of 

the cost of health in this country. We have to deal with creating 

the kind of system that will be high quality for low-income individuals and for physicians. 

68 

So I think we have enough resources, we have enough options. 

We can look at IT. We can look at evidence-based research. We can 

look at trying to get drugs into the marketplace, and we have 

enough solutions. I don’t think we have to decide whether it is the 

physicians or low- income. 

Senator SMITH. I agree with you completely, and that is going to 

be my position in the Committee later today. 

Joyce, we are caught between what we need to do, what we want 

to do, and what the budget rules require under the PAYGO requirement. You know, PAYGO is a great campaign slogan. ‘‘Pay as 

you go.’’ 

The truth is, though, that that assumes a static budget and that 

every dollar spent is equal in terms of its economic impact, its 

human impact. Every tax dollar, every tax category is equal to 

every spending dollar. The truth is we don’t have a static budget. 

We have a very dynamic one, and I wonder what would you counsel 

my friends on the Democratic side, frankly, who insist on this 

being in there? We are at loggerheads. 

There aren’t many other budget cuts to be made in Medicare or 

in other spending programs that they want to make or that I believe are advisable to make. There aren’t the votes on the Republican side to raise taxes. So what do we do? 

Ms. PAYNE. Well, certainly I am not the budget expert on this, 

but it seems to me that we need to live up to the code you have, 

that beautiful code on the wall about ‘‘E Pluribus Unum,’’ out of 

many is one. Because one is Judy’s family. One is—there are Judy 

families all over the country. We hear from them every day. 

So it seems to me that however this is worked out, it needs to 

be worked out in the best interest of families like Judy’s who have 

paid into the system, who have made the kind of sacrifices to live 

a good life, a decent life in retirement, and we should be providing 

incentives. 

When you look at defined benefits fading away and you look at 

the issue that she just raised in terms of her 401, there are people 

who are really hurting. They desperately need these services. So, 

we need to think in terms of out of many is one not only for the 

Senate, but for the country. 

Senator SMITH. Well, what happened in the last session of this 

Congress is that it was waived, and I suspect that that is what will 

happen again this Congress, that it will be waived because, I agree 

with you, these are not either/or issues. Although we need to take 

care of the docs, as Judy advises we also need to take care of the 

low-income issues. 

I have asked enough questions. I will turn, before I go to a second round, to Senator Whitehouse. 

Senator WHITEHOUSE. Thank you. Once again, I appreciate the 

Ranking Member having chaired this hearing and giving us the opportunity to hear from these wonderful witnesses. 

All I was going to do was to say how much I appreciated your 

testimony, particularly Ms. Korynasz’s personal testimony and Ms. 

Emerson’s, the attachment that told the stories of all the different 

folks on your SHIBA program and what their lives were like and 

what they were going through. It is so easy for us to forget that 

here, when the tassle-shoed lobbyists show up from the pharmaVerDate Aug 31 2005 10:56 Feb 19, 2009 Jkt 000000 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 H:\DOCS\46899.TXT SAG PsN: JOYCE
69 

ceutical industry and try to have their way, that it really harms 

folks who don’t have a voice all across this country. 

I thought those were really wonderful stories in your testimony. 

I appreciate that you assembled them and brought them to us. So 

that was all I was going to say. 

Then, Ms. Payne said what she said about the need for a forum, 

and I just have to pounce on that because I couldn’t agree with it 

more. I think it is absolutely critical. 

We have heard the testimony in the Budget Committee about the 

$35 trillion in healthcare entitlement costs that is coming at us. 

Unless somebody figures out how to repeal the passage of time or 

repeal the aging of humans or make it more likely that older humans cost less for medical care than younger humans, then this is 

an inevitable, unavoidable fact that is bearing down on us with 

what our wonderful chairman Kent Conrad has called a tsunami 

of cost. 

If we dawdle around here in Congress and don’t do something 

about it until the wolf is really at the door, then the only tools left 

in our toolbox are going to be the fiscal tools that can be deployed 

to solve a problem like this, and there are only three of them. 

One is raising taxes. Anybody who knows what American businesses pay for healthcare already and what competitive posture 

that puts us in vis-&-vis the rest of the world knows that that is 

a pretty tough sale to make, that American business needs to pay 

more in taxes for this healthcare system. 

The second is to throw folks off of healthcare. In a country that 

has 50 million people already uninsured, which is a national disgrace, compared to other developed countries, the idea that we 

would throw more off is pretty awful. 

The third is you cut provider payments, which is what Senator 

Smith was asking about. We are already at the limit with provider 

payments. 

We had this battle in Rhode Island a decade ago when our workers compensation system fell apart, and the industry folks all came 

in and said, well, this is easy. You take your doctors. You pay them 

15 percent less. You chalk up those savings. We will take it. 

Common sense, thankfully, prevailed, and instead we went to a 

medical advisory board for workers compensation. They established 

protocols of care, and some discipline was put into it. The people 

from the specialty groups came in and decided, OK, for this, here 

is the program. They were pretty broad, solid programs. They 

weren’t forcing doctors to make inch-by-inch decisions. 

But it really controlled the cost in the workers compensation 

medical care in Rhode Island after that, and we didn’t have to cut 

because we knew that would be a foolish thing to do. Penny wise 

for the moment, pound foolish in the long run. 

That day is inevitable, and that day is coming soon. Those three 

alternatives that we have to address that day are sickening ones, 

frankly. The only way we are going to get ahead of this is if we 

start doing exactly what you said right now. We have to build a 

national health information technology infrastructure that doctors 

can connect to. To expect them to build it all by themselves is as 

dumb as expecting everybody to build their own roads to work. 

70 

There is a national infrastructure issue here, and we have to see 

it that way, and we have to build that national infrastructure. 

Then everybody can connect their machines. But there are issues 

of privacy. There are issues of coordination, what goes into an electronic health record and so forth, how the health information exchange works that need to be worked out on a national level. 

We also need to focus a lot on quality of care improvement and 

prevention. We way under invest in those things in areas where we 

know it will save money. The Rand Corporation says it could be as 

much as $346 billion a year from a health information technology 

system that supports these quality improvements. 

There is $2 billion a year in Pennsylvania alone that gets burned 

from hospital-acquired infections that are completely unnecessary. 

We kill 100,000 Americans every year from medical errors that 

don’t need to happen. 

There is a huge savings associated with properly targeted quality 

and prevention investments, and we are not pursuing it. We are 

not pursuing it because of the economics of the system. So we have 

to change the way it is reimbursed so that those problems get 

solved. 

But between those three things—a national health information 

technology infrastructure, reform in the area of quality improvement and prevention, and a better reimbursement system—we can 

drive enormous costs out of the system. I mean, it is burning up 

16 percent of our gross domestic product. In the next closest country health care is only 11 percent of their gross domestic product. 

The average for the European Union is only 8 percent of their 

gross domestic product, and those countries have better health outcomes than we do. We are paying twice as much to have worse 

health outcomes. We are the highest- paying country in the world, 

and when you look at the outcomes, we are somewhere between 

25th and 40th. We rank with countries like Croatia and Cuba. I 

mean, it is embarrassing. 

We have to get after that because we either have to do that now 

or face those horrible fiscal adjustments a decade from now. It is 

really vital, and I know it has taken us off point, but I think it is 

such an important point. I am so glad that you raised it. 

I hope that AARP will pick up its stick and go around this building and knock everybody upside the head until they get it because 

if we don’t do that now, time is short. 

Ms. PAYNE. We are working on getting a bigger stick. 

Senator WHITEHOUSE. Good. Good. [Laughter.] 

Senator SMITH. It is going to grow because, as Senator 

Whitehouse points out, the baby boom generation is here, and so 

the ranks of the AARP will grow. 

I wonder, does AARP have a position—I know how it feels about 

the donut hole that captures lots of low- and middle-income people, 

such as Judy’s family, is that the wrong place for the donut hole? 

Medicare Part D is means tested already, but not very much. 

Should it be means tested? 

Ms. PAYNE. Well, we are certainly working on that. We obviously 

want any asset test to be eliminated. We recognize that there are 

some problems with the donut hole, and we are certainly working 

71 

with a number of staffers and trying to resolve some of those 

issues. It is a major problem, and we certainly recognize that. 

Senator SMITH. Well, we would look forward to your counsel on 

that because those of us who may or may not be here, whoever is 

here is going to have to wrestle with these very, very stark and terrible choices. 

Senator WHITEHOUSE. Mr. Chairman, I would suggest that we 

have no farther to look for the solution to the donut hole problem, 

the senior trap problem—I hate calling it the donut hole, it really 

sounds like it is something good—is to the Veterans Administration, which has the authority to negotiate with the pharmaceutical 

industry over the price of prescriptions. 

When you put the prices they get compared to the prices CMS 

pays for Part D side by side, the savings add up to enough to close 

the coverage gap. 

Ms. PAYNE. Those are the two priorities we have, the fact that 

we want to eliminate the asset test and certainly give the Secretary the authority to negotiate. 

Senator WHITEHOUSE. Authority to negotiate. Why would we 

privilege an industry from being negotiated with? 

Ms. PAYNE. Absolutely. 

Senator WHITEHOUSE. It is an extraordinary privilege. It is a ridiculous privilege, in my view. 

Ms. PAYNE. We certainly have enough models to follow that. 

Senator WHITEHOUSE. Yes, you have to look no further than the 

VA, which does a wonderful job. 

Thank you, Mr. Chairman. 

Senator SMITH. Thank you, Senator Whitehouse. 

I just have a couple more questions for you, Barbara, and you 

know we have talked about LIS and the asset test. What would 

happen if it were increased $5,000, $10,000, or $20,000? 

Ms. BOVBJERG. Well, actually, I looked at what would happen if 

your proposal to raise the asset threshold, almost double it roughly, 

that is in your bill, what would happen there? Based on the data 

that we got from Social Security, it looked like about half of the 

people who were denied on the basis of asset levels alone would be 

brought into the program. 

Social Security has estimated that that is about 25,000 people. 

It is about 6 percent of the applicants. It could be more because we 

know there are people who would otherwise be eligible who don’t 

apply because either they know or they think they know that their 

asset threshold is too high. So it could be a considerable number 

of people. 

Senator SMITH. You mentioned in your testimony that you expect 

a report from Social Security and the IRS in a month? 

Ms. BOVBJERG. Next month, in June. 

Senator SMITH. What do you think they are going to say? 

Ms. BOVBJERG. It is hard to say. When we did this work a year 

ago, Social Security felt very strongly that they could really use 

these data to help them narrow the potential eligibles and really 

focus on the people who were more probably eligible than the whole 

19 million. 

IRS feels equally strongly that it is not going to help. We didn’t 

have access to the data either, so we couldn’t tell. But they have 

72 

worked together to develop a methodology, and Social Security is 

working with some scrambled data that IRS gave them. They have 

passed some things back and forth. 

It is just hard to say what will happen, but then we will know 

next month. If SSA could use those data to improve their targeting, 

we will know that. I just think that would be a really important 

point if we are to tell IRS that they should provide tax information 

to Social Security. 

Senator SMITH. Well, thank you so very much, each of you. If any 

of you have a closing thought or comment you want to make, we 

are going to have a vote momentarily on the floor. So any thoughts 

come to mind that you think we need to have in the Senate record, 

we would certainly welcome those right now. 

Ms. BOVBJERG. I would like to say something about the eligible 

people, that if you raise the asset limit or remove it, you will certainly have more eligible people. But we will still have this problem 

of not getting them to apply and not contacting them. I think that 

there is merit in some of the ideas about Social Security working 

more closely with community-based organizations. I know that they 

do that now, but perhaps make strengthening those ties would be 

really important. 

Perhaps there are some other things we could look at with the 

way that Social Security communicates with individuals—the notices, the letters—that might make a difference as well. 

Ms. SUMMER. I would add to that that certainly in your bill and 

other pending legislation, there are some relatively small administrative changes that can be made. One of the things that we have 

learned is that sometimes people don’t apply for the benefit because they are afraid that if that benefit is counted as income, they 

will lose other means-tested benefits. 

That is problematic for a number of people who otherwise are eligible for the subsidy. We have actually a precedent for that when 

the drug card was being used, that was not counted as income for 

people. 

So, relatively small changes like that, administrative streamlining, I think sometimes get lost in the conversations about the 

bigger healthcare system and what we need to do to have everyone 

have access, which I think no one would argue with. Those are 

really daunting problems, but some of these small fixes really deserve attention. 

Senator SMITH. Lisa. 

Ms. EMERSON. I would just like to comment that I hear this a 

lot that from people that I work with is that nothing replaces that 

one-on-one noninvasive or nonthreatening help that a neutral counselor can give an individual to walk them through the evaluation 

and application process. That is what we are trying to do with 

SHIBA, but we don’t know who these people are specifically. 

That is the challenge. We get the data of where they are concentrated in the counties, but we don’t know their address. We 

don’t know their name. So, it is kind of a shooting in the dark process, but we are doing our best. 

Senator SMITH. Great. Are you in Pendleton, too? 

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Ms. EMERSON. In Pendleton, we are working to get a formal partnership developed there, but we have informal relations with the 

aging community-based organizations there. 

Ms. KORYNASZ. May I interject something? 

Senator SMITH. Sure, Judy. 

Ms. KORYNASZ. The thing that I found the most frustrating when 

I was trying to get this information was the hours that you have 

to spend talking to people who do not have the answer to the problem and will give you what they think is the answer, and you wind 

up with 10 different answers, none of which agree, and you don’t 

know where to go after that to get the actual answer you need. 

Senator SMITH. The right answer. 

Ms. KORYNASZ. That is why I really believe that the SHIBA organization has been the most helpful to us because of all of the people 

that I talked to, and that include people in Medicare when I finally 

could talk to anyone, they had the most information, the most helpful information, and the most accurate information. 

That is what is important, I think, is not just that somebody tells 

you something. It needs to be accurate. 

Senator SMITH. Right. 

Ms. PAYNE. Mr. Chairman, I would simply reiterate what Laura 

just said, the administrative coordination is very—the streamlining 

of the process is very important, and the Internal Revenue working 

with the Social Security Administration, we think that could be a 

substantial benefit to identifying eligible recipients and also getting 

the word out and outreach activities. 

Senator SMITH. Well, you have all been just wonderful. You have 

been a great panel. It has been a great contribution to the record 

here in the U.S. Senate. Your time is not in vain. There are things 

happening that we are trying to push in the direction I think all 

of you are suggesting, and we will just go to work now. 

With that, we are adjourned with a heartfelt thanks. 

[Whereupon, at 11:46 a.m., the hearing was adjourned.] 

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A P P E N D I X 

PREPARED STATEMENT OF SENATOR ROBERT P. CASEY, JR. 

Mr. Chairman, thank you for scheduling this important hearing on improving 

Medicare for our most vulnerable seniors. We meet today to discuss what can be 

done to enroll all eligible people in the low income assistance programs in Medicare, 

specifically the low income subsidy in the Medicare Part D prescription drug program, and beyond that ways we can improve the program to help these individuals. 

When Congress and President Johnson created the Medicare program over forty 

years ago they guaranteed every citizen over the age of 65 the right to health insurance. This right is now a fixture in the American health care system and as medicine has changed and advanced in the ensuing years the program has changed as 

well. One of the largest changes was the addition of the optional prescription drug 

benefit that was included in the 2003 Medicare Modernization Act. This new benefit 

acknowledged the role prescription drugs now play in maintaining the health of everyone, but especially the elderly. 

One important component of the optional Medicare prescription drug benefit is 

the low-income subsidy. This is a vital part of the program and without it some seniors would still have to choose between taking medications they need to live and 

putting food on the table. This subsidy offers low-income seniors additional assistance in paying for prescription drugs. Specifically, couples earning less than $21,000 

and having assets worth less than $23,970 are eligible for this benefit. At the beginning of this year, 12.5 million Medicare Part D beneficiaries were eligible for this 

subsidy, but of those 2.6 million were not enrolled. Two of the main reasons given 

for this are that beneficiaries do not know how to apply for this benefit, or that they 

do not know they are eligible for it. I look forward to discussing ways we can work 

to change that. 

The asset limit presents a difficult issue for many seniors. Even though their annual income is within the guidelines, they are considered too ‘‘wealthy’’ to be eligible 

for this program because they have managed to save a relatively small amount for 

their retirement. Asset limits exist in many government programs geared towards 

low-income individuals. While it is important to ensure that these benefits go to 

those who truly need them, we must also ensure our senior citizens are not punished because they managed to save a small nest egg. 

In my own state of Pennsylvania, in January of this year almost 400,000 beneficiaries were enrolled in the low-income subsidy program. Clearly many of our constituents are using this benefit and it is helping them get the medications they 

need. Now we must look beyond them and see how we can reach out to others who 

are struggling to pay the cost of their prescription drug medications. 

Mr. Chairman, I thank you again for organizing this hearing and drawing our attention to this most important matter. We must continue to examine and develop 

ways we can help our most vulnerable citizens. This is our duty as public servants 

and especially as members of this committee. I look forward to hearing the testimony of the witnesses and exploring these ideas further. Thank you. 

STATEMENT OF RICHARD GRIMES, PRESIDENT AND CEO, ASSISTED LIVING

FEDERATION OF AMERICA

Ranking Member Smith, Chairman Kohl, and members of the Committee, thank 

you for allowing me to submit this written testimony. 

In 2003, Congress enacted one of the most substantive changes to Medicare in recent memory, the Medicare Modernization Act (MMA). The prescription drug benefit 

(Part D) contained within the MMA has been well documented in providing access 

and affordability of prescription medicines to America’s seniors. However, while Part 

D has brought control over their own health care into many seniors’ owns hands, 

Part D needs one significant change that will benefit over 100,000 seniors. 

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Prior to the MMA, all dually eligible individuals (those eligible for both Medicare 

and Medicaid) were exempt from co-payment for prescription drugs, regardless of 

the setting in which they chose to receive their care. 

Recognizing the vulnerability of very low-income people living in long-term care 

settings such as nursing homes, and following the precedent set by previous lowincome prescription drug assistance programs, the U.S. Congress exempted dually 

eligible individuals living in nursing homes from any co-payment for Part D prescription drugs. 

Unfortunately, the MMA did not eliminate co-payments for dual eligible residents 

of assisted living, even though the residents of assisted living communities are usually ‘‘nursing-home eligible’’ by definition and have similar needs for medications. 

That is, while the individual living in a nursing home is exempt from co-payments 

for Part D prescription drugs, the individual living in an assisted living community 

is forced to pay the same co-payments for the same Part D prescription drugs. 

Like nursing home residents on Medicaid, the over 100,000 assisted living residents (dual eligible) have very limited financial resources. Their personal needs allowances average $60 a month. For many of these assisted living residents, the 

amount of their Part D co-payments exceeds their monthly personal needs allowances. 

Residents in nursing homes and assisted living use a similar number of prescriptions—approximately 8–10, according to recent studies. Even Part D co-payments of 

$1–$5 per prescription can present financial hardships for dual eligible assisted living residents, and, as we have heard from communities across the country, could 

impede people from receiving needed medications. 

More and more, seniors are looking to assisted living as their preferred senior 

housing option. Time and again, we hear from seniors who are concerned about 

being forced to receive their long term care in an institutional setting such as a 

nursing home. As it stands, the MMA is effectively punishing those dual eligible 

seniors who have chosen assisted living—a community based alternative to nursing 

homes. 

Congressional staff from both sides of the aisle have indicated to us that the inconsistency in the MMA described above occurred for no other reason than simple 

oversight on the part of proponents of this meaningful legislation. 

The stated focus of this hearing was to discuss ways to improve Medicare for our 

most vulnerable Americans. 

Mr. Chairman and members of the Subcommittee: It is not often that we have 

an opportunity to go back and correct an oversight. In the upcoming Medicare package, however, you have an opportunity to do just that. Over 100,000 dual eligible 

seniors in assisted living would be grateful for your swift action to provide this relief 

with a simple statutory change that corrects this oversight. 

Thank you again for this opportunity. 

STATEMENT FOR THE RECORD FROM ALLIANCE FOR RETIRED AMERICANS

The Alliance for Retired Americans commends the Senate Aging Committee for 

holding a hearing on seniors at risk and how to improve Medicare for those who 

are most vulnerable. Founded in 2001, the Alliance is a grassroots organization representing more than 3 million retirees and seniors nationwide. Headquartered in 

Washington, D.C., the Alliance’s mission is to advance public policy that protects the 

health and economic security of older Americans by teaching seniors how to make 

a difference through activism. 

The Alliance thanks the committee for a history of commitment to addressing the 

issues faced by low-income seniors struggling to survive. For example, the well-intended Low-Income Subsidy (LIS) program in the Medicare Modernization Act 

(MMA) of 2003 was designed to address the fact that some seniors need extra assistance to participate in the Medicare Drug program. Notwithstanding this dire need, 

it is worrying to learn that in the five years since its passage, the LIS program and 

other Medicare low-income programs remain underutilized and encumbered by the 

process and administration of these benefits. 

On behalf of our members nationwide, the Alliance for Retired Americans believes 

that the Senate must act now to simplify and align low-income assistance programs 

in Medicare such as Medicare Savings Programs (MSPs) and the Medicare Part D 

LIS. It is imperative that Congress compels appropriate agencies and interested 

parties to greatly enhance their outreach and participation to the population of seniors currently eligible to participate. Incidentally not ‘‘expanding’’ the program, but 

realizing its initial intended success. Additionally, legislative action must be taken 

to stop penalizing seniors for maintaining modest savings. Asset limit tests—which 

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have not been updated in the last 20 years—should be redrawn to reflect current 

cost of living standards. 

It is our hope that today’s hearing will finally result in action appropriate to initiatives highlighted in your previous legislative attempts and reflect our simple, yet 

fundamental, recommendations for addressing the needs of this vulnerable high-risk 

population of America’s seniors. There is an opportunity for these improvements to 

be included in pending Medicare legislation currently being drafted in the Senate. 

These improvements are long overdue, and as this Congress considers ways to address concerns in the healthcare industry generally, we are encouraged that this 

committee has taken this opportunity to highlight principle ways to make 

healthcare more affordable to the most vulnerable populations through Medicare 

beneficiary improvements. In light of the pending Medicare legislation, the timing 

of this discussion is ideal, and we hope that it affects the final legislative product 

introduced in the Senate including Medicare improvements. 

ECONOMIC CHALLENGES ARE DOUBLE JEOPARDY FOR SENIORS

The need to improve low-income programs (such as LIS and MSP) for at-risk seniors must be considered in the context of current national economic trends that 

make life extremely challenging for seniors on low fixed incomes. These seniors feel 

the pressure of rising health care costs. As the price of gas and food rises in tandem, 

many seniors face a daily choice between whether they can afford to eat, take their 

prescription drugs, run their electricity, or drive to visit their doctor. Hard choices 

such as these are between elements essential to one’s survival, and it is shameful 

to consider any federal program a success that has not been able to mitigate this 

situation for its citizens. 

PROGRAM PARTICIPATION

As you know, more than 12 million people are thought to be eligible for help with 

paying Medicare cost-sharing, especially Part B premiums through the Medicare 

Savings Programs (MSP) and Part D premiums, deductibles and co-payments 

through Part D’s Low-Income Subsidy (LIS). The Part D Low Income Subsidy (LIS), 

providing low-income seniors with ‘‘extra’’ assistance in covering their prescription 

drug costs, was added to the 2003 MMA in order to attract additional Senators’ support of the bill. However, while the intent was noble, we know that more than 2.5 

million people—about two-thirds of those eligible but not auto-enrolled—are not getting the Part D low-income subsidy. These participation rates are too low, and with 

minor attention and coordination more eligible seniors could receive life saving 

drugs and benefits. 

IMPROVEMENTS

Now is the time to make needed improvements to these programs, making sure 

that those seniors currently eligible, and those with low incomes whose eligibility 

is disqualified because they have managed to save a small nest egg, can get the help 

they urgently need. One of the principal challenges of participation in these programs is the current asset test limits. These limits have not been updated in 20 

years. It is unfortunate to even have to mention that the program needs to be updated to reflect today’s cost of living. It is unrealistic to apply economic standards 

of eligibility on values that are over two decades old. The asset test limits for both 

MSP and LIS programs needs to be raised to $17,000 for an individual, $34,000 for 

a couple. 

Secondly, the application process seniors must navigate is intimidating and complicated. We hope that as Congress considers a small number of low-cost recommended improvements to simplify and align Medicare low-income assistance programs, eligible seniors will be able to participate in the programs more efficiently. 

This can de done by, for example, allowing beneficiaries to apply for LIS and enroll 

in a plan at any time without penalty like they can in MSP programs; or by not 

including in-kind support and maintenance (ISM) from the LIS eligibility determination. Therefore, actual seniors applying to participate in these programs can be 

discouraged by the application process due to the daunting questions, forms, and 

timeline that ultimately even penalizes seniors that have saved modestly. Finally, 

it is critical that Congress require agencies to coordinate with each other in more 

streamlined and efficient way. Federal agencies need to work together. The Social 

Security Administration (SSA) and the Centers for Medicare and Medicaid Services 

(CMS) should be compelled to coordinate and together enroll needy seniors into 

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Medicare assistance programs. For example, since SSA already is collecting income 

and asset information for the LIS application, it would be relatively easy to screen 

for MSP eligibility at the same time and forward the results to the states. 

Additional funding is also needed to increase outreach and enrollment initiatives. 

Outreach to those currently eligible to increase their participation is essential, and 

special attention should be given to cultural and language barriers. This coordination and targeting is central to improving outreach and enrollment. 

CONCLUSION

The Senate has demonstrated an interest in making improvements to the Medicare program on behalf of at-risk seniors. Currently we are at a watershed moment 

in health care reform, and it is critical that we enact improvements to Medicare at 

this time. It is critical to award eligible seniors with the benefits designed for them 

in order to keep seniors healthy, independent, and in their own homes longer. The 

impending Medicare legislation needs to include long overdue improvements to the 

low-income programs for seniors. 

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