“Mr. Chairman, I would like to comment on the Resolution of Inquiry relating to estimates and analyses of the cost of the Medicare prescription drug law. 

 “The majority is insisting that the Democrats are raising this issue to score political points.  But the truth is the law was violated when Congress was not told that the Medicare Actuary’s projected cost of the Medicare bill was $550 billion, not $395 billion.  We all know that if this estimate were known to all members, prior to the three hour vote on November 25, 2003, the bill never would have passed the House. 

 “The lack of cost containment in this law, combined with inadequate coverage, will mean that beneficiaries’ costs will rise drastically over time.  Next year, seniors and people with disabilities will face the largest Medicare premium increase in history, a hike equal to more than 17 percent.  As a result, approximately seven percent of beneficiaries, 2.1 million, will not see any Social Security increase next year.  A chart produced by the Office of the Actuary, conveniently excluded in this year’s Medicare Trustees Report, indicates that more than 37 percent of the typical 65 year-old beneficiary’s Social Security check will be devoted to Medicare cost-sharing obligations.  By 2022, this figure will amount to more than half the check.

 “Most of the premium increase is driven by the flawed Medicare prescription drug bill and overpayments to HMOs.  Almost 15 percent of this increase is due to the overpayments to HMOs passed in the Medicare drug bill ($46 billion over ten years).  All beneficiaries pay this increase, even though only small minorities, five million out of the more than 40 million beneficiaries, about 11 percent, are actually enrolled in the plans.  None of my constituents in Maine have access to a Medicare HMO.  As a result of this law, HMOs get an additional $2.75 billion in 2004 – $229 million per month – above the cost of fee-for-service Medicare.

 “And what are beneficiaries getting in return for these overpayments to private Medicare plans?  According to a recent CMS analysis, only 5.9 percent of the $23.5 billion in new excess payments to HMOs, approximately 1/8 of which will come from beneficiaries through higher premiums, will be devoted to providing better benefits for those who enroll in the plans.  Even worse, CMS reports that beneficiaries who do join HMOs will only see an additional $1.4 billion in new benefits as a result of this new money to HMOs, while the HMOs will be allowed to keep almost as much, $1.2 billion, in profit.

 “By passing a bill that enrolls beneficiaries in multiple private drug insurance plans instead of traditional, trusted Medicare, and dividing them up into small sub-groups and prohibiting the Secretary from using the Medicare market’s clout to negotiate lower prices, Republicans have guaranteed high premium increases and even higher drug costs for years to come.  I urge support for H. Res. 776.”

contact: Mark Sullivan, (207)774-5019