Today, the President will challenge the Congress to place the nation’s health care interests ahead of special interests by providing an affordable Medicare prescription drug benefit and holding tobacco companies accountable for the cost of smoking related illnesses. The President will express his disappointment with the House Ways and Means Committee straight party line vote for a prescription drug benefit that would be neither affordable nor meaningful for the nation’s seniors and people with disabilities served by Medicare. He will urge the full House to reject this partisan committee vote and work towards a bipartisan agreement on a Medicare prescription drug benefit that is affordable, available, and optional for all Medicare beneficiaries. The President will also commend the House of Representatives for its bipartisan decision on Tuesday to adopt the Waxman amendment, allowing the Department of Veterans Affairs to help finance the Department of Justice (DOJ) tobacco litigation. He will urge the House to take the next step and adopt an amendment permitting DOJ to accept this funding so they can proceed with the litigation, which could provide billions of dollars to improve the medical care of not only veterans, but all Americans.

HOUSE WAYS AND MEANS REPUBLICANS PASS SEVERELY FLAWED PRESCRIPTION DRUG BENEFIT. Last night, the House Ways and Means Committee, on a straight party-line vote, passed out a private insurance drug benefit that the insurance industry itself has consistently stated won’t work. They voted against every Democratic amendment designed to strengthen the benefit and ensure that all Medicare beneficiaries would have access to an affordable prescription drug benefit. When the Republicans had the opportunity to support a true Medicare benefit that would be available to all beneficiaries, each and every one of them voted against it. Clearly, the legislation supported by Committee Republicans serves the pharmaceutical industry’s interests much more than those of the senior citizens and people with disabilities it purports to help. This is why virtually every organization representing older Americans and people with disabilities have strongly rejected the House Republican policy.

REPUBLICAN POLICY DOES NOT MEET THE RHETORIC OF ITS PROPONENTS. Although the House Republican leadership has finally recognized the need for an affordable, optional prescription drug benefit available to all Medicare beneficiaries, the President will note that their policy does not achieve their stated goals. The Republican policy:

• Fails to assure the availability or stability of drug coverage options. The Republican plan builds on the already-flawed private Medigap insurance market rather than adding a prescription drug benefit to Medicare. The insurance industry itself claims that an insurance model will not work for prescription drug coverage – and that insurers will not voluntarily participate. Even if some insurers do offer coverage, they would likely come in and out of the market, move to profitable market areas, and significantly modify their benefit design from year to year based on prior year’s experience. This would result in the same pull-outs and uncertainty that we see in managed care today.

• Provides a private insurance – not a Medicare – benefit. Outpatient prescription drugs would not be part of the Medicare benefits package like doctor or hospital care. Beneficiaries would pay expensive premiums to private Medigap plans rather than to Medicare for an affordable option.

• Fails to ensure the affordability of coverage options. Under the Republican plan, it appears that Medicare would not provide a single dollar of direct premium assistance for middle-class Medicare beneficiaries (any senior with income above $12,600). Instead, it relies on a flawed “trickle-down theory” that would end up subsidizing insurers, not seniors. The Republican proposal appears to subsidize insurers for part of the cost for the most expensive enrollees, hoping that this will result in lower premiums for all enrollees. There are no assurances that seniors will see lower premiums as a result. Even if an insurer passed through every dollar of its subsidy, premiums would still be too expensive for many seniors.

• Does not guarantee a meaningful benefit. The Republican plan appears to specify only the stop-loss amount. Private insurers could define deductibles, copayments and benefit limits, promoting competition on confusion rather than price and quality. In addition, relying on an insurance model where insurers get paid one premium for all enrollees – no matter how sick – and can define the drug benefit puts sicker seniors and people with disabilities at risk of adverse selection. An insurer could discourage seniors with high drug costs from enrolling by offering no deductible, low copayments and a low benefit cap that leaves a large gap before the stop-loss kicks in.

• Limits choice of drugs and pharmacies. The so-called “choice” model offered by the Republicans appears to break up the pooled purchasing power of seniors, forcing insurers to reduce prices through restrictive formularies and limited choice of pharmacies. While there may be a limited appeals process available to them, beneficiaries are not guaranteed access to off-formulary drugs that their doctor certifies are medically necessary.

REPUBLICANS REJECT NEEDED HEALTH CARE PROVIDER RESTORATIONS. Last night, the Republicans unilaterally rejected the President’s proposed investment of $21 billion over five years ($40 billion over 10 years) for a Medicare and Medicaid health care provider payment restoration initiative designed to ensure adequate reimbursement to hospitals, rural providers, teaching facilities, nursing homes, home health care agencies, managed care plans, and other providers. It provides $9 billion over 5 years ($19 billion over 10 years) for specific policies that mainly stop payment reductions scheduled to take place on October 1, 2000 and provides $11 billion over 5 years ($21 billion over 10) in unspecified funding to be used in developing additional targeted and / or permanent policy modifications for provider reimbursement. The proposal is designed to continue access to high-quality care, and clearly illustrates that adequate financing for provider payments need not conflict with necessary funding for a long-overdue and voluntary Medicare prescription drug benefit.

PRESIDENT URGES THE CONGRESS TO WORK ON A BIPARTISAN BASIS. The President will urge the House leadership to change their proposal to ensure that it is: voluntary; accessible to all beneficiaries; designed to provide meaningful protection and bargaining power for seniors; affordable for all beneficiaries and for the program; and administered using competitive purchasing techniques. In so doing, he will underscore that there is still time left to do both a voluntary prescription drug benefit and provider payment restoration in the context of broader reforms that extend the life of the Medicare trust fund beyond 2030.

PRESIDENT URGES CONGRESS TO LOOK OUT FOR THE PUBLIC INTEREST, NOT THE SPECIAL INTEREST OF BIG TOBACCO. This week, the House of Representatives took an important step toward protecting the health of all Americans by putting the people’s interests before special interests and passing an amendment on the VA/HUD Appropriations bill allowing the Department of Veterans Affairs to devote a small portion of its funding to help finance the Justice Department litigation against tobacco companies. This litigation would recover billions of dollars in tobacco-related health care costs and finally make the tobacco industry answer to the taxpayers in court for their actions. However, this bipartisan victory was only the first step. The 2001 Commerce State Justice Appropriations bill, as reported by committee, would prohibit the Justice Department from accepting any transferred funds except in cases of defensive litigation. Today, the President will urge Congress to continue the task they have begun by adopting an amendment, expected to be offered by Representative Waxman and others, permitting the Justice Department to accept transferred funds (including those from the DVA) for tobacco litigation and other narrowly defined purposes. The President will reiterate his call on Congress to make the health of our children a priority and to reject the interests of big tobacco so that justice can run its course – the legal responsibility of the tobacco companies should be decided by the judicial process, not the political process.

THE DEADLY INFLUENCE OF TOBACCO. Both the President and Vice President have worked hard since taking office to protect our nation’s children from the dangers of tobacco. Each year, more than 400,000 Americans are killed by tobacco-related diseases. The cost to the federal government is staggeringly large, and includes more than $20 billion in federal payments under Medicare and other programs. Each year, the Department of Veterans Affairs spends more than $1 billion alone on smoking related illnesses. Children have been particularly targeted by tobacco media campaigns. Nearly 4 million children under the age of 18 smoke cigarettes – every day more than 6,000 try their first cigarette, 3,000 become regular smokers, and 1,000 will have their lives cut short as a result. We can and must work across party lines to preserve the health of our nation and the lives of our children. The President will assert that failure to pass the Waxman amendment on the CJS Appropriations bill would be wholly inconsistent with Tuesday's bipartisan vote and represent the worst example of catering to special interests.

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