THE WHITE HOUSE
Office of the Press Secretary
PRESS BRIEFING BY
SENIOR ADMINISTRATION OFFICIAL
ON PRESCRIPTION DRUG BENEFITS
The James S. Brady Press Briefing Room
10:30 A.M. EDT
SENIOR ADMINISTRATION OFFICIAL: I just wanted to give you a quick heads-up on some of these issues. I think the report speaks for itself, so I won't bore you with a reiteration of the numbers that you've heard before. I think what's most important is to talk about our strong belief that this year it is very possible, in fact, it should occur, that we pass a bipartisan Medicare reform initiative that includes the provision of a voluntary, affordable, accessible prescription drug benefit for all Medicare beneficiaries.
The President feels that we have probably an unprecedented opportunity this year to get things done. We've noted that the Republican leadership has been moving in a significant direction from not really talking too much about this issue to acknowledging it truly is an issue, to rejecting a block grant approach to states to moving towards what they say is a Medicare drug benefit that meets principles that sound familiar and similar to those that we have advocated -- i.e., that it is voluntary, affordable and accessible, and utilizes market-oriented principles to negotiate -- and practices -- to negotiate prices and rebates and discounts, much like the private sector does -- actually, exactly like the private sector does.
The issues that we've raised to you, some of you recently, that we feel quite strongly about is that we think specific answers must be provided to major questions about the short-comings of the Republican plans. And that includes the adequacy of the financing for the drug benefit, both short-and long-term; the assurance that it is going to be available to all beneficiaries, because, obviously, if you only provide a direct premium assistance to 150 percent of poverty, and you utilize a private sector drug-only benefit that the insurance industry itself continually raises serious objections to and concerns about, we really question whether you can say it will be accessible to all beneficiaries, let alone affordable.
And the affordability issue, even if in some areas of the country this policy is available, it may well, in fact, it likely will not be affordable. And there are a number of reasons why. One, of course, is the direct premium assistance is just 150 percent of poverty, which is just over $12,500 for an individual; and secondarily, it uses a market that historically hasn't negotiated discounts or rebates. The Medigap market, because it's so small, unreliable, and expensive, has attracted very small participation in the Medicare program -- by that I mean, for those who buy a Medigap option with a prescription drug benefit. As a consequence, we're utilizing an unreliable, expensive approach that the industry itself has raised major concerns about.
What we would really like to get to is an agreement on the policy. We think that we've moved towards getting closer to an agreement on the principles and the goals of any reforms, and that's not insignificant, because if we can all agree on that, then we believe that there is the possibility for working out a bipartisan consensus on reforms that include a prescription drug benefit.
Why don't I close with that, because I think I will just take any questions you have about both the issue itself, the report, and any other issues you have around Medicare reform and the chances for passage this year, which we still think are quite good.
Q Would you define "voluntary"?
SENIOR ADMINISTRATION OFFICIAL: Certainly. A voluntary benefit means that if I, at age 65, become eligible for the Medicare program, I have the choice of opting for a prescription drug benefit or not; if I have a retiree health plan, if I'm comfortable with my not having coverage, if I'm comfortable with a Medigap option, I can retain that. But we believe that every Medicare beneficiary should have access to that option at age 65.
We also believe, by the way, that because of the trend in retiree health care plans being dropped by employers, that if someone makes a decision to not have coverage at age 65, that they should have the ability to opt into the Medicare program if their plan is subsequently dropped, which our plan does provide for.
Q Have you had to revise your cost estimates for the President's plan based on the information that you're releasing today?
SENIOR ADMINISTRATION OFFICIAL: No, and it's obviously the Families USA report, but we've had two estimates on the President's plan. We've had the OMB and administration estimate, which is $195 billion over 10 years -- we need to include the $35 billion catastrophic. CBO had scored the base benefit, which we scored at $160 billion -- they scored that at $150 billion. So they actually are scoring our proposal, at least without the catastrophic option, at slightly less -- $10 billion less over 10 years than our policy.
Obviously, CBO and OMB have had access to the same type of pricing trends that Families USA has. The findings today don't surprise us. We do believe that if you utilize private negotiating practices, as does the insurance industry, you will have the benefit of rebates and discounts that all private insurers do, and we think the Medicare population should have access to a similar option.
Q So is the difference between the House Republican plan and your plan $120 billion, or what --
SENIOR ADMINISTRATION OFFICIAL: Their numbers they say is up to $40 billion over 5 years. They have not released the 10-year numbers, which is quite troubling to us. And the reason why it's quite troubling is that it appears that if you look at the tax cuts assumed in the budget resolution, and you see their unrealistic growth rate assumptions that they're contemplating, that the tax cuts will eat up all available resources and more, leaving little to nothing for a prescription drug benefit in the second five years. And so we want to make sure that one of the answers to the questions we raise is, is it adequately financed for the short-and the long-term, and is it more than an empty promise.
Right now, the Republicans, unlike in the past, the Senate has not released its 10-year numbers. They will, under the budget rules, be required to do so when they actually vote on the budget and we'll have a better sense as to how many resources are available.
But I would say, in terms of your specific question about what else, the only difference is -- I mean, I think that we're encouraged about the principles. We're encouraged that they are saying that they want to dedicate significant resources to this issue. What we're discouraged about is whether or not those resources are adequate, and secondly, the structure of the benefit, which does not achieve the principles. Because if you use a drug-only benefit that is administered by the private insurance industry, who continually and consistently raise concerns about that option, we don't believe that you can say and look into the eyes of all beneficiaries and say that that would be available for all of you, even if it's affordable.
But the second point is, even if it is available in some areas of the country, it won't be affordable because in the first time in their program's history, they are providing direct premium assistance only to 150 percent of poverty. We don't do that with any other benefit in the Medicare program. And our strong feeling is that this isn't the time to change course.
But other than that, we're making progress.
Q At the same time that the President was in the Roosevelt Room, Vice President Gore was in Hartford, Connecticut, and he went with Shirley Kindle, a 65-year-old Social Security recipient, to a pharmacy where she got her prescriptions filled. The druggist made a big show of ringing each one up, and it was like $506. How much coordination is there between the White House and the Vice President's presidential campaign on an issue like this?
SENIOR ADMINISTRATION OFFICIAL: Well, I can tell you that we don't talk on the political side of it significantly with the Vice President's office. He was aware through the internal process of policy announcements that we were going to be making the announcements. He was briefed on the Families USA report that was going to be released yesterday. And I think this was a -- as I recall, this has been scheduled for a few days, so he knew that we were going to be doing something on prescription drugs, and I think he wanted to amplify the message. But it was not something that we say, hey, we're doing this, you should do that. They make their own decisions about what they do in their campaign, and it has very little to do with what we do here, as far as I can tell.
Q Can you walk through the scenario -- you said, chances are quite good for passage this year -- between now and whenever the summer is, June or August, of something actually being signed? How is that going to work? Who is going to compromise? How is that going to come together?
SENIOR ADMINISTRATION OFFICIAL: Well, I think it's important to look at the evolution of where the Republican leadership has gone. We've been talking about the prescription drug benefit for years, but in -- and last year no one wanted to talk about this issue at all on that side of the party. They now have moved towards saying they want to move forward to a prescription drug benefit that is available to all beneficiaries. I think that's a significant move. It's not -- it's something that should be acknowledged. I think it's important to acknowledge that they're dedicating some significant resources, at least for the short-term.
We believe that just as that has evolved from where they were to where they are today, it's similarly can evolve to a better policy in the future, in the next couple of months. In terms of timing, it's our understanding the Finance Committee is hoping to mark up their legislation -- their Medicare reform legislation -- which is not just a drug benefit only option, but it is a Medicare reform initiative -- sometime later in May. So sometime next month.
If we can get a bipartisan consensus for moving that forward, then we would have a bill on the floor, hopefully sometime in June, that can be debated and amended, and hopefully that will influence the House to move forward as well. If they do, we will still have two months of real good legislative time to get something done this summer.
I think if it doesn't get done this summer, it's going to be more challenging, obviously. But we do believe it is very viable right now. I mean, it is clearly one of the most compelling health policy issues I've seen in a long time, and I think members of both sides understand that we should start addressing it.
Q A financial question. How much does the more optimistic report of the trust fund help you out? In other words, it defers the argument for overall reform before you try to do a drug benefit.
SENIOR ADMINISTRATION OFFICIAL: Well, I think that it gives greater confidence to those who want to provide for a voluntary optional drug benefit, that we can and should do that within the Medicare program. But I don't think in any way it reduces the argument for, or the incentive to have some reforms in the program that make the program more competitive.
And I would just say that, although everyone says it can be either-or, it is -- and I've said this before -- I don't see the Senate Finance Committee reporting out a bill on prescription drug benefit only. I think they will be talking about other reforms to the program, and I think with that in mind, we'll see both occurring, mostly because many members, both Democrats and Republicans, think we should have at least a down payment on some reforms. Now, whether it's absolutely comprehensive and everything we want to see or everything that some of the Republicans would want to see, I'm not sure. But I do believe there will be a down payment reform in addition to a Medicare prescription drug benefit.
Q On a different issue, when are you going to send an Internet pharmacy proposal to Congress?
SENIOR ADMINISTRATION OFFICIAL: You know, it's my understanding that that legislation has been sent up to the Hill. I don't know if it's been introduced, but it has been sent up. And if I'm wrong on that, I will call you later. But I know it is virtually, if not completely, done, and I had understood it has been conveyed to the Hill -- to the Labor Committee.
Q Why are you so encouraged by what the Republicans have done? After all, you, or Mr. Sperling in the briefing the other day, criticized them for putting forward a pretty measly plan. They've obviously had a lot of time to think about this. Doesn't that suggest to you that maybe it's a political document and not a real step forward?
SENIOR ADMINISTRATION OFFICIAL: Well, I think the principles are a real step forward, but the policies are not. And I don't think that my comments today are in any way inconsistent with what we talked to you about, which is to say that we need to make sure that the policy matches up to the stated goals and principles. Their current policy does not do that. As such, it would be unacceptable.
But I think if you look at this in the context of how their policy positions and their stated public position has evolved over the last several months, that there's no reason to contemplate that that can't continue to evolve and we can get a strong benefit.
So we tend to be a half-cup full type group over here in the White House, and I think it's because we think that as long as you push for a policy that's based on solid -- has solid grounding, has strong public support, and is long overdue, you have the opportunity to get something as long as you keep pushing, which clearly we will be doing throughout the course of the year.
Q And also, you say that they're not providing enough funding because their budget assumptions are unrealistic and there are too much taxes, but that's their budget. And they're not going to pass another budget for you for prescription drugs. How should they address that financing issue if there's not going to be the money for that?
SENIOR ADMINISTRATION OFFICIAL: Well, it's not impossible to amend -- I used to work in the Senate, you're not constrained by law to modify your dedicated stream of dollars. You certainly can do that. It requires 60 votes. So we think that there's a very solid group of Democrats who will provide the vast majority of those votes, and I think that many Republicans are starting to think that they need to move forward on an adequately financed drug benefit.
So I don't think it's precluded at all. And hopefully we'll find out over the next month or two that they will continue to evolve their position to something we can support.
Thank you very much.
END 10:55 A.M. EDT