Tom Latham: “This is a supply and demand situation, where if they buy them individually, the cost is so much higher. I think that is…”

“This is a supply and demand situation, where if they buy them individually, the cost is so much higher. I think that is one of the reasons we have to look at some of the plans that are out there, and look at the hard and real facts of what does it cover. In 1995, the average cost for a senior in America for drug coverage was about $500. That was the extent of all the drugs that they purchased. But more importantly, we are faced with a situation of trying to integrate what we are here trying to put together in with every State who takes care of the poorest seniors. Somewhere between 58 and 100 percent of those in poverty are currently under Medicaid plans. Those Medicaid plans will be affected by what we do. We have to make sure this is integrated into it. The President made a proposal earlier this year. In the President's proposal, the same 135 percent of poverty are covered, just like we talked about the need to cover them. After that, individuals are asked to pay 50 percent of every dollar that they spend after they buy a premium, an insurance policy. The co-pay is 50 percent. There is no insurance product in the marketplace today like that, nor is there one that anybody would buy. Let me give one figure. On $1,100 worth of drugs under the President's plan, in the year 2002 the benefit, the benefit for the senior would be $197.60. Eight hundred and two dollars of the $1,100 worth of drugs would be out-of-pocket costs by that senior.”