Medicare was created in 1965 with a basic, fundamental principle in mind: health care coverage for senior citizens should be guaranteed, affordable and equitable. Since its inception, every reform of Medicare has been made keeping this principle in mind.

Earlier this year, the House and the Senate passed competing $400 billion Medicare reform plans. Both plans provided some prescription drug coverage to senior citizens. The Senate bill maintained Medicare’s guarantee as an entitlement to those over 65 by strengthening traditional Medicare. However, the House plan sought to privatize Medicare physician and hospital services, radically ignoring Medicare’s guiding principle.

Neither of these approaches, however, would be as beneficial as instituting the best international price for prescription drugs – an approach that would reduce overall health care costs and not cost the American taxpayer anywhere near the $400 billion price-tag the most current Medicare reform plan carries.

Unfortunately, as these two bills have been reconciled in a Conference Committee, it has become clear that the final bill will have fatal flaws.

Prescription Drug Prices Will Not Go Down. The final bill does nothing to lower prescription drug prices. In fact, it explicitly prohibits the negotiation for lower drug prices by the Secretary of Health and Human Services on behalf of America’s 40 million Medicare beneficiaries. One of the best methods for lowering drug prices is to harness the market power of the Medicare population – potentially one of the largest group-purchasers of medicines in the world. Unfortunately, Republicans have chosen to protect the profits of drug manufacturers instead of providing real savings to seniors.

In addition, the bill includes no significant provisions that allow Americans to import drugs from

Canada or other well-regulated countries where prices are lower. All the final bill creates is yet another give away to the drug industry so they can keep prices high. A recent study from Boston University’s Health Reform Program estimated the most recent Medicare reform plan would lead to $139 billion in increased profits for the pharmaceutical industry over the next 8 years. At $17 billion annually, this means about a 38 percent rise in drug maker profit – already the most profitable industry in the world. Democrats believe we need to address rising drug prices in several ways; unfortunately, this bill keeps drug prices as high as possible ensuring the only beneficiary is the drug industry. 

The Drug Benefit is Inadequate. The final bill does not provide the kind of coverage seniors expect or deserve. The conference bill contains a large coverage gap for seniors that spend more than $180 per month for their medications (or $2200 per year). For several months each year, these seniors could be forced to pay 100% out of their own pockets for their drugs while still paying premiums in excess of $35 per month. No other drug plan, including the drug program available to Congress, is designed to continue to charge premiums despite a complete lack of coverage. In addition, private insurance companies administering the benefit have wide latitude in setting premiums, deductibles and benefits. They have the power to make decisions about which drugs are covered as well as which pharmacies you are allowed to visit. Democrats believe seniors are entitled to coverage they can count on. A drug benefit should be comprehensive, affordable and available everywhere. 

Privatization Will Lead to Higher Premiums for Millions of Beneficiaries. Under the plan, millions of seniors that choose to remain in traditional Medicare would see their premiums rise. In an internal study by the Department of Health and Human Services of the effects on premiums under the proposed legislation some beneficiaries would pay up to three times as much as others for the same Medicare services. That means for physician services, a senior in Arkansas may pay almost $200 a month while a senior in California may be charged only $60. This is unconscionable. Equity has always been a fundamental tenet of Medicare. All seniors deserve a fair deal – not just some that happen to live in a specific area.

Seniors Who Already Have Drug Coverage May Lose It. The plan does not go far enough to ensure that beneficiaries who already have good drug coverage through their former employers will get to keep it. The bill does not provide enough incentives to companies to prevent them from canceling drug coverage they currently provide their retirees.

In July, the Congressional Budget Office estimated as many as a third of beneficiaries with existing coverage may lose it – about 2.5 million people. Most of these people have excellent drug benefits that far exceed any of the plans Congress has discussed. Democrats believe retirees should keep their coverage if they are happy with it. We believe Congress should provide better incentives to companies so they will keep their retirees covered.

Democrats, including me, want a prescription drug bill. However, we will not allow the prescription drug industry to continue gouging America’s seniors and destroy the fundamental promise of Medicare to do it. Unless these problems are fixed, I cannot support this Medicare package. This bill should remain in the Conference Committee until a real benefit that maintains Medicare’s promise to senior citizens is agreed to.