Opening Statement of the Hon. Nancy L. Johnson, M.C., Connecticut,
and Chairman, Subcommittee on Health

Hearing on Medicare Reform: Laying the Groundwork for a Prescription Drug Benefit

March 27, 2001

Today's hearing continues the Subcommittee's examination of Medicare modernization. Our first hearing focused on fundamental Medicare reform ideas. Our second hearing addressed Medicare's complexity and the regulatory burden on the providers that serve beneficiaries. Last week, we heard from the Medicare Trustees that the fiscal challenges to the program remain formidable.

Today we will examine the inadequacy of the current benefit package - specifically, the absence of an out-patient prescription drug benefit. Every member of this committee understands the importance of this issue to Medicare beneficiaries. Increasingly, medicines are the preferred method of treatment for a variety of ailments. This is particularly true for those with chronic conditions, that disproportionately impact the Medicare beneficiary. Prescription drugs will only become more important, as the biotechnology products currently in the pipeline are approved by the FDA for illnesses such as Alzheimer's, arthritis, cancer, osteoporosis, heart disease and stroke.

Nevertheless, since its inception in 1965, the Medicare program has generally excluded coverage of outpatient prescription drugs. While more than 7 out of 10 beneficiaries do have supplemental prescription drug coverage, millions of beneficiaries do not. And much of the current supplemental prescription drug coverage, such as Medigap, remains expensive and generally inadequate.

Medicare beneficiaries consume more prescription drugs than any other demographic group. Yet those without coverage have the least bargaining power and are therefore often paying the highest prices. Further, low income beneficiaries often have to make unacceptable decisions between taking their medicines and other necessities of life. No one would design a seniors' health program without fully integrating prescription drugs. The lack of coverage symbolizes just one of the many ways Medicare has not kept up with modern health care.

Today, we will hear testimony from the Congressional Budget Office, about its new projections that any prescription drug benefit will cost us one-third more than it projected last year. We will also hear CBO's analysis of the critical design elements of a prescription drug benefit that drive or constrain costs.

Then we will hear testimony from a researcher at the Health Care Financing Administration that seniors' prescription drug coverage increased from about 65% in 1996 to 73% in 1998. The research also makes clear that those seniors without coverage tend to consume far fewer drugs than those with coverage. Additionally, we will hear from an academic about ideas to reduce prescription drug errors and improve quality, critical aspects of any successful prescription drug benefit.

Finally, we will hear from current and future Medicare beneficiaries about principles they think are important in the design of a prescription drug benefit. We will hear from a beneficiary without coverage, a beneficiary with good retiree coverage who wants to keep it, a young person representing "Third Millennium," concerned with the cost and structure of a Medicare drug benefit, and an advocate representing the National Committee to Preserve Social Security and Medicare.

In short, this hearing will bring us up to speed on the status of prescription drug coverage, and the challenges in successfully integrating drug coverage into a modernized Medicare program. Last year, our respective political parties toiled on this issue in separate rooms. It is my hope that through this series of hearings and our regular Member seminars we can bridge differences and develop a bipartisan consensus on how to tackle the difficult and complex challenge of modernizing Medicare.