Congressional Response: Senator Richard Lugar (R, Indiana) Responds To Your Prescription Drug Petition

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Congressional Response: Senator Richard Lugar (R, Indiana) Responds To Your Prescription Drug Petition

I appreciate your interest in the debate on Medicare prescription drugs. I share the view that Congress must be very careful about how it proceeds on this issue.

Several considerations have not received adequate attention. For example, we must determine: 1) how the country will pay for a prescription drug benefit during a period of budget deficits and war; 2) how other Medicare services will be impacted by a prescription drug benefit; and 3) what a government prescription drug plan would do to private prescription drug insurance, which many seniors enjoy as an employer-provided benefit of retirement.

Recently, the Senate had an extended debate on Medicare coverage of prescription drugs. There is virtual unanimity in the Senate that Medicare should provide some type of prescription drug benefit. However, sharp disagreements remain over the size, scope, and delivery of such a benefit.

In the Fiscal Year 2002 Budget Resolution, Congress set aside $300 billion in a reserve fund for Medicare prescription drugs. Unfortunately, all plans proposed this year 'save one' cost significantly more than the funding set aside. The plan proposed by Senate Democrats, for instance, was estimated to cost as much as $600 billion. I believe that we should stay within our budget. We must be careful not to jeopardize Medicare solvency or drain resources from other beneficiaries.

I also believe it is vital that any Medicare prescription drug plan enacted by Congress not conflict with seniors' current coverage. Many seniors are happy with their current coverage. We must be careful not to encourage employers to drop coverage for their retirees.

During the prescription drug debate, Senators Hagel, Ensign, Gramm and I and offered a plan that I have long supported. Our plan fits within the budget resolution and begins from the principle that every senior should be able to afford to join and that every senior should benefit from joining.

For a $25 sign up fee, the Hagel bill would reduce the price of drugs for all seniors by giving them the same bargaining power enjoyed by workers in employer-subsidized insurance plans. Seniors would get a discount drug card and membership in a discount drug purchasing pool that would negotiate volume discounts for drugs. Through this method, drug prices for seniors could be cut up to 25 or 30 percent. In addition, every senior with an annual income less than $100,000 would get a government-guaranteed 'stop-loss' cap on his or her out-of-pocket drug expenses. Since most private insurance plans do not include a 'stop-loss' cap, the Hagel bill would compliment private insurance plans, not replace them.

I believe the Hagel bill is a sensible and responsible way to improve the Medicare system within the constraints of the budget. It would protect families from catastrophic drug costs without undercutting private insurance plans and choice for seniors.

Again, I appreciate your interest in this issue.

Sincerely,
Richard G. Lugar
United States Senator

October 2002