October 27, 2004


Danny Stanley
2149 Lamplight Drive Marietta, Georgia 30062-6088

Dear Danny:

Thank you for contacting me regarding issues that are important to you and many seniors across America. I appreciate your thoughts on this issue and the opportunity to respond to them.

Following months of policy discussions, dozens of hearings and countless hours of debate, H.R. 1, The Medicare Prescription Drug and Modernization Act of 2003, was approved on November 22, by the U.S. House of Representatives by a vote of 220-215. The current Medicare system was developed 40 years ago, before major advances in medical technology began allowing doctors to recognize potential problems and before preventative drugs were developed that, if administered properly, could prevent huge costs to health and pocketbooks down the road. Although additional reforms are needed, this is a long overdue Medicare modernization bill.

Within six months after the bill is signed, Georgia residents will be eligible for Medicare-approved prescription drug discount cards, which will provide them with savings of between 10 and 25 percent off the retail price of most drugs. Beneficiaries with incomes of less than $12,123
($16,362 for couples) who lack prescription drug coverage (including drug coverage under Medicaid) will get up to $600 in annual assistance to help them afford their medicines, along with the discount card. That's a total of over $259 million in additional help for 216,019 Georgia residents in
2004 and 2005.

Beginning in 2006, Medicare will provide all of Georgia's 974,779 beneficiaries with a stand- alone drug plan or the option to join a private health plan that offers prescription drug benefit. Individuals will be charged an estimated premium of $35/month. The program would also include a $250 deductible, after which 75% of prescription drug costs - up to $2,250 - for the majority of people who choose to enroll, would be covered. The bill also provides catastrophic coverage for seniors with ex tremely high drug costs. In addition, Medicare, instead of Medicaid, will begin to assume the prescription drug costs of over 171,000 Georgians who are eligible for both Medicare and Medicaid, which will save Georgia $469 million over 8 years.


The bill also provides incentives to employers to continue offering prescription drug coverage for their retirees. Once a senior is in Medicare, the bill allows private health plans to compete for seniors' business by providing better coverage at affordable prices-helping to control the costs of Medicare by using market-place competition, not government price-setting. Employers are also provided tax incentives for keeping health coverage in pension plans.

This bill is more comprehensive than just providing prescription drug coverage for seniors, it also includes some much needed modernizations to Medicare and improvements for health care providers, such as an increase in payments to doctors, so that seniors continue to have access to physician services. The 4.5% cuts in physician payments that were supposed to have gone into effect in 2004 and 2005, will be replaced by a payment increase of 1.5%.

The agreement also contains the most generous package Congress has ever considered for rural and suburban health care. Specifically, a floor on reimbursements for a component of the physician fee schedule will be established to bring equity to rural and suburban providers. Georgia's seniors will have better access to doctors, hospitals and crucial treatment options, regardless of where they live.

I am especially pleased with the creation of new, portable Health Savings Accounts (HSAs) that will allow Americans of all ages to save money for their future health care needs on a tax-free basis. These accounts are a first step toward making future generations better able to save for long-term care needs and prevention health. Young professionals have the most to lose if the current system is not reformed. HSAs allow them to save money now, on a tax-free basis, to prepare for their retirement years and fill any gaps that may exist in Medicare and private insurance.

This bill will give Georgia's seniors more choices through competition, which will improve the quality of care and keep costs under control. The one-size-fits-all system that was created in the 1960's is simply not working for our seniors in the 21st Century. We have now taken a step forward in strengthening the private delivery of medicine, as opposed to strengthening the government involvement in medicine. This bill is the first step in truly modernizing the healthcare system in America.

In response to your concern with Social Security, I share your interest in this important issue. As you know, the Social Security system will be solvent for approximately 35 more years. However, the program faces serious long-term problems with the retirement of the Baby Boom generation around 2014. Many of the problems facing the program result from its "pay-as-you-go" financing mechanism where most of the current payroll tax revenues go directly to pay the benefits of current retirees. Another issue we must address is the low rate of return on Social Security taxes. For example, a household of two working, 30-year old earners with children averages a 1.2 percent rate of return. This is almost a third of the 3.4 percent that is paid on Series I U.S. Savings Bonds.

First and foremost, I believe every current and future retiree should continue to receive the full level of benefits they have been promised and not be subject to additional taxes on their social security. A number of bills have been introduced in the 108th Congress that address Social Security Reform. I believe a major component of reform should be to give workers the option of diverting a portion of their taxes to a personal retirement account. On January 7, 2003, Rep. Clay Shaw (R-FL) introduced H.R. 75, The Social Security Guarantee Plus Act. Under the Shaw Plan, workers would receive annual tax credits equaling 3 percent of wages up to $17,829 (in 2002) and 2 percent of wages above that, up to the Social Security wage gap ($84,900 in 2002). The tax credit would be automatically deposited into the worker's personal retirement account, which would be managed by selected investment companies containing a 60/40 percent split of stocks and bonds. Workers would have a choice of qualified asset managers and have the option of changing managers annually. Upon retirement, 95 percent of a "life annuity" would be transferred monthly from each worker's account to the Social Security system. The other 5 percent would be given as a lump sum to the retiree. I have signed on as a cosponsor to this bill and look forward to it coming to the House floor.

I believe the Shaw plan offers a strong alternative to the current system and will give workers more autonomy and retirement security. Moreover, it does not require making such changes as raising the retirement age, increasing taxes or cutting benefits. We need to act now to allow more time for savings to prepare for the retirement of the Baby Boomers and beyond. The longer we delay, the bigger the problem gets. I am committed to addressing this issue and reforming Social Security in the 108th Congress.

Finally I am very much in favor of protecting retirement savings and pension benefits of working Americans. As you may know, on October 8th,
2003, the House passed the Pension Funding Equity Act (H.R. 3108) by a vote of 397-2, a bipartisan measure supported overwhelmingly by the House. The Senate passed its version of the bill on January 28th, 2004. House and Senate conferees reached a conference agreement on April 1st, 2004.

On April 2nd, 2004 the House overwhelmingly passed a fair and responsible pension agreement (H.R. 3108) that will help troubled worker pension plans stay afloat in the short-term while Congress prepares comprehensive solutions to reform and strengthen the defined benefit system. The measure passed the House by a strong bipartisan vote of 336-69, and I was pleased to vote for it.

H.R. 3108 includes a key interest rate fix to replace the artificially low
30-year Treasury rate with a more accurate benchmark for employers to measure their pension funding promises to workers. Economists have warned that if Congress fails to enact a 30-year replacement bill before mid-April, it could deal an unnecessary blow to an economy that is showing clear signs of picking up steam. On April 2nd, 2004 the Bureau of Labor Statistics announced 308,000 new jobs were added last month - the highest growth in four years.

Not only is this short-term pension bill fair and responsible to all parties, but it good for the economy, for workers and employers, and for the overall health of the nation's pension system. Strengthening the nation's private pension system is essential to the security of American workers, retirees, and their families, so it was important we completed action on this bill now. The passage of the conference report represents a major victory for every hard working American who counts on defined benefit pension plans for their retirement. This two year replacement for the 30-year Treasury rate will help millions of pension plans stay afloat and give American workers security in their retirement savings as Congress mulls a permanent solution to the defined benefit system. The Senate passed this legislation by a vote of 78-19 on April 8, 2004, and the President signed H.R. 3108 into law on April 10, 2004. I was glad to see the Senate pass this legislation and send the measure to President Bush for his signature before April 15, the deadline for employers to make their quarterly contributions.

I thank you for your thoughts on all of these issues and I hope that I have accurately conveyed my position in response to your concerns. I will keep your thoughts in mind when legislation concerning any of these issues comes to the House floor.

Please feel free to visit my website at www.house.gov/isakson for more information on issues that may be of importance to you, as well as to sign up for my monthly email update. Thank you again for contacting me, and I hope you will not hesitate to call on me in the future if I can be of assistance to you.

Sincerely, Johnny Isakson

 Member of Congress