Of the 231.5 million Americans paying premiums for health insurance, about 24 million are people on Medicare who have purchased supplemental health insurance, primarily to pay for prescription drugs.

The prescription drug costs for some seniors on Medicare are extremely high. For one New Yorker with arthritis and now a heart condition, the drug expenses are $300-$400 a month -- $3600 to $4800 a year. His Social Security payments per month are $1,250 dollars. He now travels to Canada where he can buy the same drugs for a fraction of the U.S. price. For another New Yorker, who lost a kidney to cancer and who should be taking medication to prevent kidney stones, the annual cost is $5,540 a year. He either goes without his medication or occasionally buys half a month's supply.

The artificially high pricing system for patented prescription drugs thus leaves many seniors on Medicare with two options -- go to Canada or to Mexico to get the same for drugs for one-half to one-third their cost in the United States, or simply exist with lower amounts of the medicine or do without it entirely.

But we should stop here a moment and consider the actual problem as a matter of public policy. And if we look at this as a matter of public policy, we should quickly realize that this problem of prescription drug prices which affects not only senior Americans but all Americans, actually breaks down into three alternatives:

ALTERNATIVE ONE: Destroy the artificially high pricing system for prescription drugs, and bring the price of patented prescription drugs down to the First World average, which is about 50% to 60% of the U.S. prices.

ALTERNATIVE TWO: Maintain the artificially high pricing system for prescription drugs, and ameliorate the problems of U.S. seniors by the creation of large regional purchasing groups who could bargain with the pharmaceutical companies to reduce the prices of drugs.

ALTERNATIVE THREE: Maintain the artificially high pricing system for prescription drugs, and ameliorate the problems of U.S. seniors through subsidies. In short, give money to the seniors, directly or indirectly, so they can buy the high-priced drugs.

From 1995 to the present, Democrats in the Congress have made several attempts involving a variety of means to break down the pricing system established by the pharmaceutical industry. All of these have failed, primarily because the news of these attempts has been CENSORED by the Mainsream Media.

The Clinton health care plan of 1993-1994 contained provisions for regional purchasing cooperatives who could bargain with the pharmaceutical companies to attain the "most favored" prices already being provided hospitals, HMO, and health insurance companies.

The pharmaceutical companies and the Republican Party fought this because it would reduce the amount of profits by the pharmaceutical industry and because it would interfere with the creation of prescription drug "profit centers" for the HMOs and health insurance companies.

The 1997 Balanced Budget Act contained legislation which provided large subsidies to pharmaceutical companies, HMOs, and health insurance companies for a program called Medicare Plus. In exchange for the subsidies, persons on Medicare would be allowed to buy prescription drug insurance policies at a low rate. The subsidies would be in effect for just two years -- 1998 and 1999 -- with the subsidies running out as of January 1, 2000. A General Accouting Office report (GAO/T HEHS 00-74 March 9, 2000) for the Congress said that the cost of the Medicare+Choice program to the Federal Taxapay was $37 billion dollars in FY1999. For the two years of the program the Federal Taxpayer probably paid out about $60 to $70 billion dollars to subsidize the pharmaceutical industry.

In October 1999, the House Democrats published a study on prescription drugs entitled "SENIORS BEWARE: The Need For Medicare Prescription Drug Coverage, How Drug Pricing Has Harmed Seniors and Debunking the Myths of Drug Makers -October 28th, 1999"

The study reported that 15 million Medicare recipients had no prescription drug insurance coverage and that they pay twice what those covered by Medicare HMOs pay. The study also noted that since 1998, the Medicare HMOs were throwing people out of the program. More recent figures show that beginning in 1998, the Medicare HMOs have dropped more than 700,000 Seniors from their rolls because of their claimed "lack of profitability" over prescription drugs. By 2001, the Medicare HMOs will drop 934,000 more Seniors from their rolls.

In addition, the Medicare HMOs were cutting back on the benefits for those that remained in the program. In 1999, 21% of Medicare HMOs limiting drug coverage to $500, and in 2000 - it is estimated that 32% will impose such limits.

In June 2000, Representative Andrews (D-NJ) described the impact of the Medicare+Choice program on his constituents in southern New Jersey (pages H4287-H4288 of the Congressional Record):

"Mr. Chairman, in 1997, this House enacted the Medicare+Choice Program. The idea was to give some senior citizens the ability to get extended benefits under Medicare, including prescription drugs, by enrolling in managed care plans.

There were advertisements in newspapers and on televisions across the country advertising zero premiums and very cheap premiums, and millions of senior citizens across the country flocked into the program. In my area, it is estimated that 35,000 Medicare recipients flocked to the program.

The law provided for the first 2 years of the program a substantial Federal subsidy to the Medicare+Choice Program. That subsidy evaporated at the beginning of this calendar year. As a result of that, on January 1, 2000, senior citizen enrollees in this program across the country received significant increases in their premiums.

For example, in the part of New Jersey that I represent, people who were

paying nothing or $10 a month saw their premiums skyrocket to $85 dollars or $100 or $120 a month. This is a serious problem.

The way to address it is for us to bring to the floor of this body legislation that would create for the first time a real and meaningful and comprehensive prescription drug benefit under Medicare. . . .

In my region, we have the indefensible situation where constituents are paying $120 a month in premiums for the same benefit under the same program where people who are literally a mile away living across the river in Pennsylvania are paying $15 or $20 or $25.

Now, Mr. Chairman, they are living in the same regional economy. They pay the same hospital costs. They pay the same prescription drug costs. But the difference of ZIP code separates this price increase and imposes upon my constituents in southern New Jersey a price increase that is substantially higher than that of our neighbors."

The same March 2000 GAO report pointed out in very dense bureaucratic language the "integrity issues" in Medicare+Choice. A translation into English follows:

"Broadly speaking, the following three situations illustrate the program integrity issues that potentially exist in Medicare+Choice. First, plans could purposely seek to attract and retain only those beneficiaries who are relatively healthy and low-cost. Second, plans could fail to deliver required services to beneficiaries. Finally, since payment rates are based in part on plan-provided information, erroneous or misreported data could lead to inappropriate payments. Previous work by us and the HHS OIG has uncovered instances in which plans received inappropriate payments or did not deliver services that they were paid to deliver."

(GAO/T-HEHS-00-74, March 9, 2000)

TRANSLATION: A number of HMOs and health insurance companies went into the Prescription Drug Insurance business after the Congress agreed to subsidize the Medicare+Choice program in 1997. As we have seen, a number of of the Medicare HMOs are now dumping Medicare beneficiaries from these programs because Wall Street has complained about the profitability of the programs and besides, the subsidies were cut off at the beginning of 2000. In the meantime, some Medicare HMOs made a killing by cherry-picking the beneficiaries they would cover, by not delivering the required services, and by providing fraudulent information to the HHS.

Now, President Bush proposes to spend $45 billion dollars over four years in funds to the states to help pay the prescription drug prices of the poorer people on Medicare.