Press Briefing by Deputy Assistant to the President on Health Policy, Chris Jennings on Report on Low Income Prescription Drug Plan (9/18/00)
                              THE WHITE HOUSE

                       Office of the Press Secretary

                                                                  Monday, September 18, 2000

                              PRESS BRIEFING

                            The Roosevelt Room

1:10 P.M. EDT

     MR. JENNINGS:       Today we're releasing a report that was done by
the National Economic Council, Domestic Policy Council on low income
prescription drug benefit proposals.  It was done in conjunction with the
Office of Management and Budget, HHS, specifically, the Health Care
Financing Administration and ASPE.  And I want to thank them for all the
work that they did to contribute to this important analysis.

     Basically, we're focusing on the low income initiative because there
are a number of proposals on Capitol Hill to move their first, as you know,
taking the position that we can go first and foremost to the people who
needed it most, and we can do it immediately and we should go ahead and do
it -- so say the advocates of low-income prescription drug plans.

     We have done an analysis, which we'll go through, and I'm going to
walk you through the executive summary and there is a lot of interesting
detail, back-up tables, as well, I may reference with you as we go forward.

     In short, we conclude that not only do such proposals leave out at
least 25 million seniors and people with disabilities with absolutely no
assistance, it also is not very effective at covering the population it
explicitly purports to cover.  And, in fact, after we go through this, you
will learn our conclusion, after this analysis, is that if you really do
want to target low- income beneficiaries, the best way to do it is through
a Medicare program, because of the participation rates, historic, being at
98 percent-plus nationally, in terms of actual enrollment in the program.

     I'm going to walk through step-by-step on this executive summary, and
then I'm going to open up for any questions you may have.

     First, you'll see on the first page of the executive summary an
analysis of the population that proposals such as this explicitly exclude.
In particular, it's two-thirds of all Medicare beneficiaries would be
provided no assistance.  Those are individuals who are over 175 percent of
poverty, which is at least 20 million beneficiaries.  And then there is
roughly another 5 million who are currently Medicaid eligible, which, under
these proposals are explicitly not covered for fear of buying out the base.

     I think that if you go through each of these -- and I must say, in
this analysis we are specifically focusing on the most generous of the two
Senate Republican proposals that are currently pending.  As you may know,
Senator Lott and Senator  Nickles have supported a version, I think it's
150 percent of poverty.  The proposal that we're analyzing is 175 percent
of poverty, which is for a single, $14,600; and for a couple, $19,700.

     I may say parenthetically, however, that although they say the policy
goes to 175 percent of poverty, the flexibility is given in the legislation
that would permit the states not to go up to 175 percent of poverty, which
is the fundamental underpinning of when we say at least 25 million.  If any
state went below 175, it would be more than 25 million beneficiaries.

     If you go through the subtext bullets, you'll note that under this
analysis this would explicitly exclude three-fifths of all seniors and
people with disabilities who have today absolutely no coverage for
prescription drugs.  It would also exclude three of five Medicare
beneficiaries with the highest prescription drug costs today.

     It would also exclude three-fifths of the seniors who purchase Medigap
private insurance.  Which, as you know, those are the policies that can
range well over $100 per month, have a deductible of $500 and generally
have a cap at $1,250 with no catastrophic protections.  And, obviously,
this policy would exclude most Medicare managed care enrollees, as well.
Some people say they have insurance.  But if you look at the managed care
enrollment and what benefits they're receiving, you're seeing that a vast
majority of them that cap out benefits at or about $1,000, which many
seniors would say is very inadequate.

     Now, I think that is obviously the population that it leaves out.
Virtually every middle income senior and person with disability would be
provided absolutely no assistance.

     But I think what this report does, I think quite carefully and well,
is to focus specifically on the low income population that the policy
purports to help.  This is a very important point, because no one should be
interested in advocating policies that don't achieve the outcomes they
state, particularly if we know of another policy initiative that can do
such a better job of targeting this population.

     First, if you look at Medicare beneficiaries today, within the low
income eligible populations currently in place -- for example, I'm talking
about the qualified Medicare beneficiary programs which provide assistance
for low income seniors for premiums, and in some cases, copayments -- you
have a very low participation rate.  In this particular section we're
saying that nationally -- there's different data on this -- but there is 55
percent of the current population who is eligible are explicitly not
enrolled in these programs.

     If you look beyond the Medicaid program and you look at the
state-based programs that were highlighted, or have been highlighted by
advocates of low income programs earlier this month, there really are less
than 800,000 seniors nationwide even participating in these programs in the
first place.  So it's a very small amount of people who have benefit in the

     There are many, many enrollment barriers within these programs.  And
although states have tried in other ares, they have not made very
successful strides in simplifying enrollment.  And, in fact, if you look at
some of the data here, you'll find that eligible seniors must fill out
long, complex applications; in over half the states, they have to meet
extensive documentations on income and asset qualifications -- which those
of you who have been covering the children's initiatives know that where
there are such assets tests they're significantly declines in terms of the
actual participation.  And many require signing up through public
assistance or welfare offices, which seniors, in particular, as the last
points make clear, have frequently had large trouble in either accessing
having a desire to access.

     But if you go through -- so that first point really is how few people
are actually enrolling in these programs and the reasons why.  But then,
after you get to the next point -- and let's just talk to the population
who have actually enrolled in these programs and what they are receiving.
In the Medicaid program -- which is a voluntary option, although all 50
states now provide it -- states once having provided that benefit can limit
the number of drugs for beneficiaries to access per month.  In fact, there
are 14 states who specifically do that and a number of states limit it to
only three drugs a month.

     Also, if you look at the non-Medicaid program, the states-based
program, they not only can limit the number of drugs covered, they can
limit the type of diseases that are covered.  So the state-based programs,
these non-Medicaid states-based programs frequently will limit the type of
drugs that are available by disease category -- diabetes or arthritis or
you pick the popular disease -- which I think is quite disconcerting for

     The other thing that I think is very important, and again highlighted
in this report, is that the enrollment in these programs would almost
inevitably be capped, one, because their resources are so small that have
been allocated to these programs -- in fact, in the most generous Senate
plan option, it's $1.3 billion that are allocated in 2001 -- and that
funding for those states can be used to not buy out the Medicaid
population, but they can be used to buy out the current state-based
programs.  And today, that would eat up a good portion of that $1.3 billion
in 2001, and most people who have followed some of the financing approaches
that states have historically taken would probably conclude that there
would be a lot of substitution of federal for state dollars in that regard.

     The next point really deals with, we think, another very important
point relative to actually providing assistance to low income populations,
and that is that if you're going to implement 50 state different programs,
it's going to take a lot longer to do that than it would to implement a
Medicare program.

     This is important, and it's important to note many, many different
conflicting problems that would be faced by the states, or people within
those states who would like to access these benefits.  What we found within
the CHIP program was that it helped a great deal in getting these programs
up and rolling when there was strong bipartisan support for these proposals
at the get-go, and the governors were quite committed to moving ahead.  And
even with that commitment, as has been well documented, it has taken a
number of years to get the programs up and running, and then there are
still problems in a number of states, despite our best efforts to the

     In this case, we have most governors, and all governors signed-off on
the most recent NGA resolution, that explicitly stated that they would
oppose the state best program that was either administered or paid for by
the states.  Either one of them would create great difficulty.

     Particularly when you contemplate that this is for a time limited
period, they're saying that this program would be sunsetted out, and if you
assume then, you look at those proposals, it would be very hard to project
forward that many governors would relish going into the programs in the
first place, starting them up, even -- and taking years of times to do
that, for a sunsetted program.

     And then once having set that up, because they're programs that they
historically have not wanted to administer, fearing that the Medicare
benefit would not be there for them when they thought it was supposed to,
four or five years later, and they would be required to continue to provide
the resources that they never wanted to provide in the first place for this

     I think that lastly, just from a political and policy perspective,
dedicating a huge amount of political, policy, financial resources to
state-based programs will not accelerate the movement towards a Medicare
drug benefit.  I think by any definition, it would slow it down and
complicate things, and particularly when there are insufficient resources
in the first place to do it at the state level, and a lack of commitment to
do it.

     I must say, in recognizing that some states would not want to pick up
this option, some of these proposals have a fall back mechanisms to the
Medicare program, or some federal government administration component,
although there are no significant resources dedicated to that all.  The
idea that Medicare or any other federal government would dedicate a whole
host of resources that aren't provided in this legislation, to do it and
get it up and running in 2001, and not have an impact on the success of
being able to do a Medicare benefit for all seniors, I think borders on
being preposterous.

     Now, as we conclude in this report, we say, well what is the best way
to get low income population -- and I really begin or conclude as I began,
which is to say that if you really do care about targeting the low income
population, you'll want to pass a Medicare prescription drug benefit,
because of the historic enrollment rates and the success in ensuring that
all eligible do participate in the program.

     And you want to make sure that as a meaningful benefit, that would not
vary from state to state, that would not have caps on the number of drugs
covered, that would not have limitations on the type of diseases covered,
that would not have variations from state to state about who's eligible and
what they're eligible for.  And the best way, obviously, to do that is
through a federally administered program to the Medicare, through a
Medicare voluntary option that we've been advocating for on Capitol Hill
now for some time now.

     I'm going to just take one more moment to refer you to a couple of
tables and charts in this report that I think are particularly instructive.
On page three -- actually, excuse me.  I wanted to show one other --
where's our pie chart?  Oh, page four, okay, well let me start with page
three.  I started there.

     I think you -- it's important to note this distribution of need by
income brackets for seniors and people with disabilities.  If you look at
it, there really is no difference in terms of income distribution.  Middle
income and higher income need a drug benefit as much as low income, and
trying to pick an arbitrary number, 175 percent, really raises a whole host
of equity issues that I think are extraordinarily difficult to justify.

     For example, an $18,000 widow who has $8,000 in drug costs versus a
$13,000 widow who has $1,000 in drug costs.  Who's hurt more?  The former
has a much greater percentage of her income dedicated to her health care
expenses than the former.  They both desperately need help.  We think that
$18,000 or $15,000 is not a high income person by any definition.

     Secondly, if you look at page four, the pie chart, you'll see that
again, this goes to the distribution point.  Most of the seniors would not
be eligible, at all.  You see the noneligible category would be either over
175 percent of poverty or Medicaid eligible.  The eligible not enrolled
would be the population that is likely not to be enrolled because of
outreach and enrollment barriers that I've gone through previously, and
then you have a very small population of seniors that might receive
assistance -- but, then again, even that assistance that they receive would
have the problems that I've mentioned previously about what type of
benefits they'd receive.

     The next page shows distressing enrollment decline in some of these
states-based programs.  One very popular program in the country that is
frequently highlighted is the PACE program in Pennsylvania, but if you look
at the enrollment numbers in recent years, you see a dramatic decline in
the participation in these programs.  It certainly raises questions whether
this is going to be a reliable mechanism to cover even the low income
populations that we're talking about.

     On page six you'll see a table that explicitly lays out those states
who have specific limits on the number of drugs, as well as limits on the
type of drugs.  The type of drugs list is probably smaller because there's
much fewer states who obviously are -- the state-based programs.

     If you go to the next page, on page seven, you'll have specific sights
of governors' stated positions on their discomfort with providing a
Medicare prescription drug benefit, and all these are taken from the winter
2000 NGA resolutions.
Then if you flip all the way back to page 12, you'll see a table on state
data that I think you'll find it to be interesting.  The first column goes
down and highlights the number of seniors within those states who would not
be eligible for any assistance whatsoever.

     The next column gives a state-by-state breakdown of the participation
in low income programs for seniors within those states.  And then you have
some specific numbers of the states who have programs up and running for
low income populations.  They don't mention -- they list 14 states, this is
as of 1999, there's a couple other, there's about five more that are
projected to take place -- come into the future and two in,  sometime in

     If you look at the next column, you'll see the limited coverage by
state, the number being that they limit the drugs by number; the reference
to type, meaning they cover by specific types.  State funding column is how
much in the more generous Senate Republican approach would be allocated by
state.  And you'll note that the number right beside it is how much the
states are currently dedicating for the states-based program, which will be
eligible to be bought out by those allocations.

     So, for example, if you look at New York, you'll see that there are
allotments of $92 million.  If the state chose to, it could buy out its
entire $78 billion allotment that it currently allocates.  Then if you do a
distribution by the number -- dollars amount, people per covered state --
excuse me, state dollars per person covered, you see how low the dollars
per person that we would be -- or excuse me, that these proposals would
allocate, when you -- and you have to recognize that the average cost for
seniors is around $1,000.  So it's a very, very small income --

     Q    What are the asterisks on some of those numbers on that last

     MR. JENNINGS:  Sorry, what are the asterisks?

     MS. LAMBREW:  The states, some states have a minimum allotment, so
you'll see they all are $6.5 million.  And that's what the law says, that
there's a minimum amount.  And it makes your dollars per person look
higher, because it's a lot more than they would have gotten if the formula
just worked.

     MR. JENNINGS:  Which helps explain the last thing.  Maybe you should
go to Alaska if this legislation passes.

     At any rate, with this data in mind, we certainly conclude, and we
think that most others would conclude, that taking a low income approach, a
low income only approach to coverage of seniors and people with disability
would serve neither the population or the policy outcome, the desired
policy outcome.

     We think, therefore, it strongly advocates for Congress to move
quickly to pass a meaningful, affordable and optional Medicare prescription
drug benefit.

     With that, I'll conclude my presentation and be happy to take any
questions you may have.

     Q    Chris, it seems certain that Congress is not going to do anything
this year, so what's wrong with this as a temporary stopgap to give 15
million people coverage in the year 2001, and then Congress and the new
President, whoever he is, comes back to do a Medicare benefit.  Why not do
this temporarily?

     MR. JENNINGS:  Bob, I don't understand how we just go through this
presentation and you could say 15 million people would be covered.

     Q    Well, you said 25 were excluded.  Presumably 15 million
theoretically could be covered.

     MR. JENNINGS:  Well, as we mentioned, and we showed, very few people
would be covered in the first place.  And, secondly, the benefit that they
would receive would be very little.  And, thirdly, to the extent that you
moved in this area, you would reduce the chances of getting a Medicare
benefit for seniors -- which, by the way, would be the best way to get low
income populations covered.

     Lastly, I'd point out that this administration has not given up on the
possibility of getting a Medicare prescription drug benefit this year, and
we will work until the end of the year to get a Medicare prescription drug
benefit done, if people are so inclined to do so.

     But we think a low income prescription drug benefit offers little more
than an empty promise.  And I think this report makes quite clear that it
is a step backwards, not a step forward towards providing meaningful
prescription drug coverage to seniors or people with disabilities.

     Q    Well, if this is going to help so few people, why would it reduce
in any measurable effect, the chances of actually getting a prescription
drug benefit in future years?

     MR. JENNINGS:  Well there might be -- it might be true that there
would be such dissatisfaction with this that it might expedite that
process.  But I'll tell you that if you're dedicating resources and time
towards trying to implement a program, then I have seen it happen time and
time and time and time and time again in the Congress, that they work on
fixing the program that they currently have in place, and then they delay
movement towards something else -- the line being, well, let's make this
program work first, and then let's build on that.

     I think that it clearly is the case that when we know we have a policy
that today will be much more effective of covering low income
beneficiaries, middle income beneficiaries and all beneficiaries who need
to have a prescription drug benefit, why should we delay in moving towards
passing a voluntary Medicare prescription drug benefit?

     Q    If Congress were to send something like this to the President in
the last bill of the session, which if it were to happen is probably where
it would happen, and basically it became either this or nothing, do you
think the President would veto it?

     MR. JENNINGS:  The President will not support any initiative that is
nothing more than an empty promise that would delay the likelihood of
getting a Medicare drug benefit.
     Q    Is that a yes?

     MR. JENNINGS:  The President uses the word veto and it gets authorized
by only the President.  But there is absolutely no reason for him or anyone
in the administration to want to move towards a policy that will undermine
the outcome of providing a meaningful affordable prescription drug benefit
for seniors and people with disabilities.

     Q    And if they say that's because this is an election year, and
you're trying to deny them any achievement so you can run against them,
what about that?

     MR. JENNINGS:  We want this legislation to be passed, enacted this
year.  The President would like nothing more.  The President would like
nothing more than to pass a meaningful patients' bill of rights.  The
President would like nothing more than to pass long term care.  The
President would like nothing more to expand coverage this year.  The
President would like nothing more than to do a minimum wage legislation.
The President would like nothing more than to do meaningful investments in

     We are going to work every day, for the remainder of this Congress, to
achieve all those outcomes, and he -- the only thing I would like to add to
that is to say what the President always says:  no matter what we agree to
this year, there will be plenty to disagree in the November elections.  Of
that we are certain.

     Q    I'm interested in this figure you have, that 55 percent of
low-income people who are eligible for Medicaid do not seek it.  Isn't that
a referendum on the issue of need.  I mean, sure, there's some paperwork
and some things involved there, but if you really need it to have your
drugs paid for, wouldn't you pursue that option?

     MR. JENNINGS:  Let me talk about that for a moment.  State-based
programs, particularly for seniors, particularly when people aren't
interested in actually having them work, have a way of not being marketed
quite significantly.  If you don't know about the option, then you may not
even go through the burdensome process of enrolling.  If you even find out
about that policy, which is a very, very difficult thing to do,
particularly for this low-income population, then you have to go through
burdensome application processes that, frankly, turn away millions of
people and have since time immemorial.

     So there is no question in our minds that a state-based program that
isn't even supported by the very states who previously supported programs
like CHIP is really not going to have a high likelihood of being

     Q    Having said that, if what you say is true, then why would you
want to keep this program in place for those people who are eligible?

     MR. JENNINGS:  You mean currently?

     Q    Yes.  Isn't this predicated on the idea that Medicaid would still
be there for the people who are Medicaid eligible?

     MR. JENNINGS:  Well, what our policy would be to actually pass a
Medicare benefit that would ensure that all beneficiaries, whether they be
Medicaid eligible, state-based eligible, or middle income, would have
access to the same benefit package for all.  You wouldn't be limited by the
type of drugs covered or the number of drugs covered.  And that would be
the far preferable way to deal with a reform in the Medicare program as
well as providing a meaningful drug benefit.

     Q    So your proposal does not keep these people on Medicaid?

     MR. JENNINGS:  Well, they would still be on Medicaid.  In fact,
Medicaid would have additional resources to wrap around the Medicare
benefit that we have.  But, no, the Medicaid population would have access
to the Medicare drug benefit, and then whatever Medicaid wraparound on top
of that that the states decided to provide.

     Q    If Congress wanted to start by doing something to assist
low-income people, do you think they could design a better program, better
benefit than Senator Roth has done?

     MR. JENNINGS:  I think that the answer to that, Robert, is that it's
conceivable you could do a better bill, but it's inconceivable that a
state-based program would come close to being as good as the Medicare
benefit for low-income populations.
     Q    The states that have attempted to limit and manage this by
choosing a type of drug generally have done that to deal with the most high
cost diseases, the most difficult to manage diseases.  Why is that
necessarily a less equitable, more onerous way of managing what is an
enormously spiraling expense for everybody than the kind in your plan and
some of the congressional plans that sort of limit by price, once you're
over the low cap and before you get to the catastrophic threshold, then
you're left exposed -- why is that more equitable than doing it the other

     MR. JENNINGS:  I think that policy -- taking approaches that attempt
to manage cost by choosing which disease should be covered and which
disease should not raises incredible moral, ethical judgments that I think
are extremely difficult for any government to do right well and with any

     Q    Isn't that just kind of the market way that we ordinarily do
everything?  Don't we ration by price?

     MR. JENNINGS:  But there are very -- I may be wrong about this, but I
know of no private insurance plan that rations by specific disease.  I may
be wrong, but I've never heard of one.  And I don't think that we should
expose that to the Medicare program or any other policy.

     How does one choose someone who has a -- let's say that Alzheimer's
isn't covered in those state programs because there's no drug for it, and
then subsequently a drug becomes available for a treatment -- are we to say
that someone who had Alzheimer's is any less deserving than someone who has
diabetes?  I don't think governments can or should make those type of

     Q    Chris, is there anything in the Republican proposals that can
give you a point of departure for negotiations, and is there any sort of
project going on now or that you anticipate?

     MR. JENNINGS:  Every time we talk to the Republican leadership, this
issue is raised.  We hear that there's many discussions going on within the
Republican side about how they want to position themselves into the fall
for the remainder of the Congress on this issue.  Just recently I've heard
that Senator Jeffords, Senator Chafee, Senator Snowe, Senator Collins I
think have all cosponsored the Medicare drug benefit advocated by Senator
Graham of Florida.  I think there's -- I'm sorry, the two cosponsors, they
voted for it.  Snowe and Collins voted for it on the Senate floor for that

     But we think that there's growing interest and support for a Medicare
prescription drug benefit.  And I think when people learn more about the
limitations of a low-income model or private insurance model, then more and
more Republicans who -- are more desirous of moving on toward a Medicare
prescription drug benefit.

     So that's the approach we're taking.  I think that this is one of
those issues that has more salience than I've seen on almost any issue on
Capitol Hill or in Washington before.  And as the President has always
said, as the Congress comes closer to the people during elections, people
have a way of moving off previously unmovable positions.  So we're going to
keep working it hard.  We hope this report, which is really laid out for
purely informational purposes to help divert policy approaches that we
think actually delay and undermine assistance for low-income populations,
hopefully moves it back towards a Medicare prescription drug policy.

     Q    Chris, to what extent do you think Senator Roth's involvement in
this is a reflection of his own domestic political campaign?

     MR. JENNINGS:  Well, I would choose not to -- well, first of all, I
don't know -- his current policy is the low-income approach.  He previously
advocated a Medicare type of approach.  So are you referencing his current
position in the low-income policy?

     Q    Yes.

     MR. JENNINGS:  I can't for the life of me explain why someone would
want to advocate this policy.  I think that over a period of time -- I
believe that he is a -- we have great respect for the Finance Committee.
We hope that they can work to get something done this year.  We had been
encouraged that he had explicitly rejected a private insurance model
previously and was signaling that he wanted to work with a Medicare drug
benefit in the context of broad reform.  We hope that he'll come back to

     Q    What about the approach Senator Hagel was talking about, which is
kind of federal underwriting of a discount card for drugs?

     MR. JENNINGS:  Well, I think that that's something that we'd have to
deal with if someone in the Republican leadership decides to move in that
direction.  But I have seen little significant movement in that direction.

     Q    What do you think of it in general?

     MR. JENNINGS:  I think I would want to spend some more time looking at
it to understand its implications.  But, clearly, it would be less
preferable than actually providing coverage to people and real insurance
coverage which a Medicare prescription drug benefit does.

     Q    If you think that people aren't signing up for Medicaid or the
drug assistance programs because of the complexity of the application
forms, why do you think that they would apply for assistance under a
federal program if they have their own feelings about welfare programs or
whatever -- why would they --

     MR. JENNINGS:  Well, I think that, first and foremost, there might be
some of those populations who choose not to do the low-income assistance
part of our policy, but I'll tell you this   -- that they would start with
a discount policy, with real insurance, up to $5,000 when fully implemented
with a stop loss protection, from day one of implementation.

     And it would be our belief, and by the way, it is the belief of the
Congressional Budget Office, that there would be significant participation
in programs through Medicare for the low-income benefit, much more so than
if you just had a stand-alone policy.

     Q    You said GOP leadership brings this up all the
time --

     MR. JENNINGS:  We bring it up all the time.

     Q    Are you refusing to negotiate this plan at all?

     MR. JENNINGS:  No, no, no.  I think that there's a belief that -- what
we want to make certain, and the President has been very clear on this --
that we have a viable structure, a viable policy that ensures that whatever
the benefit is, it's available and affordable and meaningful for all

seniors and people with disabilities.

     That does not mean there cannot be negotiation over how exactly it is
administered, or what exactly is the benefit, or what the stop loss is set
at, or what the premium will be, or what level subsidy will be, or what the
cost-sharing will be or -- name your poison.  There are a lot of
initiatives, a lot of provisions, that certainly can be negotiated.

     Q    Even within this specific program, the low-income --

     MR. JENNINGS:  No, no, no within the context of a real, meaningful --

     Q    No, I understand that.  I'm wondering, this is a specific
proposal; are you refusing to negotiate with them on this proposal?

     MR. JENNINGS:  What we're saying is, let's not go down a path that
won't even serve the population most in need, let's go down the path that
actually achieves the stated goal by working on a voluntary Medicare
prescription drug benefit, and let's do that now.

     I think that, to the extent -- we're doing this now so we don't have
to divert a lot of attention over the next few weeks to debating a policy
that we just don't think is going to work.

     Q    So there's no point in talking about this proposal?

     MR. JENNINGS:  We don't think it's wise to build on a proposal that we
don't think will achieve its stated objective.

     Q    Starting with the House-passed bill, is there a way that you
could come from that direction and come from your direction and -- are you
saying that there's compromise possible between those two approaches?

     MR. JENNINGS:  I think that the -- on the Medicare issue, we've seen a
lot of divergent moves over the last several months on prescription drug
coverage by the Republicans.  Early on, they were at a low-income policy
that was advocated by Mr. Bilirakis.  That was in the beginning of this

     Then, the House rejected that and said they were going to go to a
prescription drug benefit for Medicare beneficiaries, not a Medicare
prescription drug policy, administered through private insurers, that the
private insurance industry, itself, said would not work.

     Then, we had Senator Roth say, well, that won't work, so let's do a
Medicare-type based program with some hurdles to get there, but let's do a
Medicare-type program.  Then we came back to a low-income policy.

     Then we hear in the House that there is a discussion as to whether
they should stay with a program that's available for all or for some.  And
I think that we need to get around to answering on every other policy other
than the one that works.  And we think that an evolution can occur,
sometimes slower than we would want, but it can occur, and we hope it does.

     And, really, our hope is that as people learn more about the
alternative approaches that don't achieve their stated goals, that they
will move towards a policy that does.  And I have to tell you that I
believe that there will be a growing number of Republicans who decide that
they want a Medicare-based approach, but probably with some variations that
they think are important to them for whatever policy outcomes they want,
and we really long for the day that we can have that discussion.

     Because as I've just pointed out, there are many, many variables that
can be legitimately debated on a policy like that, and we would like to get
to that point as quickly as we can.  And so we thought rather than pull
this out the end of October -- you know, look what this program would have
done or whatever -- we're doing it right, as soon as we could do it, as
soon as we knew they were doing this, we worked with all of the agencies I
mentioned before to try to get this out as quickly as possible so that we
could move towards a Medicare policy.

     Q    As I understand Mr. Thomas's bill -- and I'm probably wrong --
but it does include, essentially, fallbacks.  It does acknowledge that
there are places where no insurer is going to step in, and of course, most
people think that's 90 percent of the places.  But there are fallbacks in
which the Medicare program itself essentially would offer the benefit
although somebody else would sort of be a front.

     I mean, is that approach in any way acceptable to you if Medicare was
a fallback and there were PBMs that sort of fronted for Medicare --

     MR. JENNINGS:  You may know -- I think in this very room, the
President said months ago that if one option could be a Medicare
fee-for-service option and there were other options as well, he would be
willing to entertain a discussion on that point.  But that's very different
than saying only some seniors will have access to it, and only if there are
less than two or more private insurance plan -- whatever their price,
whatever the benefit they offer -- is available.

     We can have competition, we can have choice if that's something people
want to discuss.  But we need to have an assurance that every Medicare
beneficiary has access to the choice of a meaningful, affordable,
fee-for-service option -- not some, but all.  It doesn't mean that all will
take that option; it just means that they all must have that option.

     Q    Does that mean that there has to be a federal subsidy available
to everyone, to all 40 million Medicare beneficiaries who want a drug

     MR. JENNINGS:  Well, that's what -- just as there is with the Medicare
program today.

     Q    That's a yes?

     MR. JENNINGS:  Yes.  Let me make one other point about choice and
older Americans and people with disabilities.  When older Americans and
people with disabilities think of choice, they don't think of choice of
plans, they think of choice of doctors.  They want to make sure that their
doctor can choose any prescription drug they think is medically necessary.

     What we have concerns about with some of these proposals, even the
ones that we've just laid out and the House Republican approach, is that
they would allow private insurers to explicitly limit choice by saying you
have to go through an appeals process to access medically necessary drugs,
or you may not be able to access the pharmacist you trust to be able to
access those medications in the first place.

     Now, the President's proposal ensures that you can get the medication
you need prescribed by the physician you choose at the pharmacist you
trust.  That's what his policy does.  And it does so in the context of
providing for a range of choices -- fee-for-service, managed care, o,r if
you chose to stay in your health plan, you can do that, as well.

     So we can deal with the choice issues, we have dealt with the choice
issues.  We hope that we can collaborate with Republicans this year to get
something done.  But, clearly, we think that the policy foundation has to
be strong and it has to be workable for the populations that it purports to

     Thank you all very much.

                       END                       1:55 P.M. EDT

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