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Drugs Drive Push For Medicare Reform Hardship for seniors caused by the increasing cost of prescription drugs has spurred President Clinton to put Congress on notice that he will aggressively push his plan to add prescription drug coverage to Medicare this year. Prices for the 50 prescription drugs most often used by seniors rose nearly two times the rate of inflation during 1999-3.9%, but price inflation is only part of the picture. Doctors are increasingly using new drug therapies to treat conditions formerly treated by hospitalizations and surgery. Sending on prescription drugs, due to increased use and price inflation rose about 16%, and is expected to do the same this year. Rising spending costs are putting needed medicine out of reach of a growing number of older Americans, particularly the more than 35% of Medicare recipients without prescription drug insurance. President Clinton introduced a plan that would offer a voluntary prescription drug benefit to all Medicare beneficiaries. There would be no deductible and a 50% co-payment. Premiums would start at about $26 per month, rising gradually to $44 per month over five years. The plan would match a beneficiary's drug costs up to $2,000 ($1,000 beneficiary, $1,000 government) rising to $5,000 ($2,500 beneficiary, $2,500 government). It would also provide full assistance for premiums and co-payments for individuals earning less than 135 percent of the federal poverty line, about $11,000 for an individual or couples earning less than $15,000. The non-partisan Congressional Budget Office, estimated the cost of the program to $160 billion over a 10 year period. Democrats recently introduced a revised version of the plan with the president's blessing that added another $50 billion to the price tag. The $50 billion would be used to help Medicare with very high drugs that exceed $3,000. Another proposal which is drawing a substantial amount of support is "The Prescription Drug Fairness For Seniors Act" introduced in the House of Representatives by Tom Allen (D-ME) and in the Senate by Senators Edward Kennedy (D-MA) and Tim Johnson (D-SD). The bill would assure Medicare beneficiaries the same reduced drug prices that drug manufacturers currently give their most favored customers, such as the federal government and large HMOs. Estimates are that the more favored prices would cut drug costs by as much as 40%. A senior citizen spending $150 a month on prescription drugs could save over $700 annually under the legislation. The big appeal of this legislation is the offer of some protection to Medicare prescription drug consumers without huge costs to finance the program. The legislative proposals have raised the hackles of the powerful drug lobbies leading the fight against the initiatives. Their fear is Medicare would be such a high-volume purchaser that the government would dictate prices, thereby lowering industry revenues and profits. They also charge that would mean less money for research and development, weakening the industry's ability to create new drugs or improve existing ones. Source: "Clinton Challenges Medicine Makers," Terence Hunt, Associated Press, October 25, 1999. "Drug Companies Put The Squeeze On Older Americans," Families USA, November 3, 1999. This article first appeared in Volume 5, Issue 3 of "The Social Security and Medicare Advisor" newsletter (February/2000). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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