As chairman of the Senate committee responsible for Medicare policy, Grassley last week steered through the committee a historic, bipartisan plan to expand Medicare, the government's health insurance program for 40 million older and disabled Americans. Committees in the House of Representatives are taking action on Medicare legislation this week.
The Senate debate on Grassley's proposal is expected to continue over the next two weeks. A copy of Grassley's opening statement follows here.
Mr. President, last Thursday the Finance Committee reported out a breakthrough bill that would make prescription drug coverage a reality for 40 million Medicare beneficiaries. On a bipartisan vote of 15-6, the Committee approved a sweeping package of new comprehensive prescription drug benefits and other program improvements that makes good on our commitment to our seniors.
Since 1965, seniors have had health insurance without prescription drugs. By passing our bill last Thursday, the Finance Committee made history and came one step closer to changing that.
How did we get to this point? This important breakthrough came because of the tireless work of our Committee members, both Democrat and Republican, over the last five years. Senators Frist and Breaux led the way on prescription drugs before any of us were listening. And Senators Snowe, Hatch and Jeffords carried the torch for two years working on the Tripartisan bill, an effort I was proud to be a part of.
Finally, this breakthrough came because of the President's unyielding commitment to getting something done for seniors once and for all. His budget put real money on the table for prescription drugs ? $400 billion over ten years. The Finance Committee wasted no time in scooping that up last week and reporting out a good bill. I'm glad about that. Now its before us on the floor.
The bill we passed is a balanced, bipartisan product that flowed from good faith, fair dealing and a commitment to consensus across party lines. I hope that same spirit will prevail here on the Senate floor over the next two weeks. I will do everything I can to ensure a safe and successful passage for this legislation. To do that, I will work hard to keep the climate on the Senate floor as reasonable and as bipartisan as it was in the Finance Committee.
Of course, legislation of this size and scope will not make everyone happy. This bill can't and won't be all things to all people. I expect to hear from many senators about provisions large and small that they're unhappy with. Of course, I welcome those who want to tell me that about those they are happy with, too.
I pledge to work with all senators in the days ahead to address concerns in the underlying bill. But I will keep my eyes on the larger prize. That prize is passage of a comprehensive prescription drug benefit that will give immediate assistance ? starting in January and continuing as a permanent part of Medicare ? to every senior in America.
S.1, the bill before us today, puts on the path to that prize. The Prescription Drug and Medicare Improvement Act brings Medicare into the 21st century. The bill provides affordable, comprehensive prescription drug coverage on a voluntary basis to every senior in America. The coverage is stable, predictable and secure.
And most importantly, the value of the coverage does not vary based on where you live, or whether you've decided to join a private health plan. For Iowans and others in rural America who have been left behind by most Medicare private health plans, this is an important accomplishment that I insisted on in the Finance Committee bill.
Overall, we rely on the best of the private sector to deliver drug coverage, supported by the best of the public sector to secure consumer protections and important patient rights. This combination of public and private resources is what stabilizes the benefit and helps to keep costs down. Keeping costs down is essential, not just for seniors but for the program as a whole. Across this bill, we have targeted our resources carefully, giving additional help to our poorest seniors.
Consistent with the policy of targeted policymaking, we have worked hard to keep existing sources of prescription drug coverage viable. Our goal all along was not to replace private dollars with public dollars. This bill accomplishes that, by keeping Medicaid, State Pharmacy Assistance Programs and retiree health benefits strong.
Surely any change of this magnitude will have some ripple effect on other sources of coverage. Regarding company-based benefits, our bill gives employers more flexibility than ever to participate fully in the new drug benefit. We all know too well the pressures employers face in maintaining health care coverage under mounting cost pressure. Decisions about scaling back coverage or dropping it altogether are bound to be made regardless of whether or not we pass this bill.
In the days ahead we will work to encourage employer participation in the new drug benefit. But I'm confident that the balanced policy here before us is a good place to start.
Now let me turn to another important aspect of this bill. The second part of the bill's title is called the "Medicare Improvement Act." Beyond just prescription drugs, our bill is a milestone accomplishment for improving traditional Medicare, especially in rural America.
Included in our bill is the best rural improvement and Medicare equity package the Senate has ever seen. I insisted on including it in the Committtee mark because the most important Medicare "reform" involves fixing outdated and bureaucratic formulas that penalize rural states. This package passed the Senate 86-12 last month on the Jobs and Growth package, but it was tabled in the Conference.
The President, however, wrote a letter shortly thereafter endorsing these same provisions in this Medicare bill. I am pleased to include them here today with his support. And I ask unanimous consent that a copy of the President's letter of May 22, 2003 be included in The Record.
Mr. President, the rural health care safety net is coming apart. Our bill begins to mend it. Hospitals and home health agencies in rural areas lose money on every Medicare patient they see. Rural physicians are penalized by bureaucratic formulas that reduce payments below those of their urban counterparts for the same service. Our bill takes historic steps toward correcting geographic disparities that penalize rural health care providers.
Let me summarize some of the key provisions of this amendment. On hospitals, we eliminate the disparity between large urban hospitals and small urban and rural hospitals by equalizing the inpatient base payment. The hospitals in my state and other rural areas are paid 1.6 percent less on every discharge. That's a $14 million loss every year in Iowa. It's time to make this permanent.
We also revise the labor share of the wage index for inpatient hospitals. The wage index calculation kills our hospitals in rural areas. They have to compete with larger hospitals in the big cities for the same small pool of nurses and physicians. But because of the inequities in the wage index, they aren't able to offer the kinds of salaries and benefits that attract health care workers. Our bill begins adjusting the labor-related share downward to correct these inequities.
We strengthen and improve the Critical Access Hospital program which has been so successful in keeping open the doors of some of our most remote hospitals. We also create a low-volume adjustment for those small rural hospitals who aren't able to benefit from this program. These hospital corrections are not partisan rhetoric. They are supported by the non-partisan Medicare Payment Advisory Commission, the CMS Administrator in a recent letter to the House Ways and Means Committee and by 31 bipartisan members of the Senate Rural Health Caucus.
For doctors, our bill removes the penalty Medicare imposes on those who choose to practice in rural states. Medicare adjusts payments to doctors downward based on where they live. We believe the value of a physician's service is the same regardless of where they live. But Medicare doesn't. Our bill begins to change that.
My bill also provides assistance to other rural health care providers, like ambulance services and home health agencies, which millions of seniors in rural areas rely on every day.
Mr. President, providers in rural states like Iowa practice some of the lowest-cost, highest quality medicine in the country. This is widely understood by researchers, academics and citizens of those states, but not by Medicare. Medicare instead rewards providers in high-cost, inefficient states with bigger payments that have the perverse affect of incentivizing over-utilization of services and poor quality.
These policies are paid for, not by taking resources away from prescription drug package nor by taking money away from those high cost states I mentioned, but by other modifications to the Medicare program that make good policy sense.
These rural health care provisions are a fair and balanced approach to improving equity in rural America. My colleagues on the Finance Committee recognized that; I trust the full Senate will as well.
I had hoped that more of these provisions would be effective next year, and that monies due to rural providers could be sent out in short order. But because of scoring rules and the Finance Committee's allocation, they cannot be. Because of its work on passing the Jobs and Growth package, the unemployment insurance extension and the child tax credit earlier this year, the Finance Committee has already exhausted its allocation in 2004, according to the Budget Committee.
And while I don't entirely agree with that assessment I'm being forced to live by it. For now, most of our rural health care needs will have to be phased in over the next year. I hope we can do better than that in the coming days and weeks.
In closing on this subject, I want to say one additional thing. I will insist that our rural policies be conferenced first.
My colleagues in the other body may not agree with everything we've done here, but we're going to go through each rural equity policy line-by-line before we conference anything else.
Beyond prescription drugs, and beyond rural health care, our bill goes to great lengths to make better benefits, and more choices, available to our seniors. It specifically authorizes preferred provider organizations to participate in Medicare, something that current law doesn't fully allow.
The idea is that these kinds of "lightly managed" care plans more closely resemble the kind of plans we in the federal government, and close to 50 percent of most working Americans, have today. PPOs have the advantage of offering the same benefits of traditional Medicare, including prescription drugs, but on an integrated, coordinated basis. This creates new opportunities for chronic disease management and access to innovative new therapies. PPOs will also a unified deductible and protection against high out of pocket costs.
Are PPOs right for everyone? We let the senior decide. Our bill sets up a playing field for PPOs to compete for beneficiaries. We believe PPOs can be competitive and offer a stronger, more enhanced benefit than traditional Medicare.
In the days ahead, I'll be working with colleagues on both sides of the aisle to ensure that we set up the right system, one that is truly competitive and viable, for these PPOs. No senior has to choose a PPO. Our prevailing policy has been and always will be one that lets seniors keep what they have if they like it with no changes. All seniors, regardless of whether they choose a PPO or not, can get prescription drug coverage.
Mr. President, we have a two long weeks in front of us. My commitment is to stay here until the lights go out to ensure that we pass a balanced, bipartisan bill. We are in a unique moment in history; we have a limited opportunity to deliver on our promises to get this done once and for all.
Let's not let the perfect be the enemy of the good. I urge my colleagues to continue in the bipartisan tradition of the Finance Committee and deliver a balanced, bipartisan product that does us right by seniors.