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Legislative Update: Sorting Through the Maze of Medicare Prescription Drug Proposals By Virginia Torsch, Director of Legislative Affairs, TREA Senior Citizens League In the April issue of The Social Security and Medicare Advisor, we provided details of President Bush`s plan for a Medicare prescription drug benefit. Since that time, there have been several bills introduced in Congress offering alternative plans for a drug benefit. The major bills in the Senate include S. 10 - Medicare Prescription Drug Coverage Act of 2001, introduced by Senator Tom Daschle (D-SD) and S. 358 - Medicare Prescription Drug and Modernization Act of 2001, introduced by Senators John Breaux (D-LA) and Bill Frist (R-TN). The major bills in the House include H.R. 339 - Medicare Outpatient Prescription Drug Coverage Act of 2001, introduced by Rep. Eliot Engel (D-NY); H.R. 803 - Medicare Modernization and Solvency Act of 2001, introduced by Senator Pete Stark (D-CA); H.R. 828 - Senior`s Health Care Choice Act of 2001, introduced by Rep. Felix Grucci (R-NY); and H.R. 1512 - Medicare Extension of Drugs to Seniors (MEDS) Act of 2001, introduced by Rep. Bernard Sanders (I-VT). Sorting through the various proposals and deciding which to support can be challenging even for the most knowledgeable individual. So here is a quick guide as to which of the Congressional bills meet TSCL`s stated goals for the establishment of a Medicare prescription benefit that provides universal coverage, and is voluntary, understandable, and affordable. (We've also provided a chart summarizing each plan on our website. You can review the chart by clicking on the following link: Medicare Prescription Bill Comparison of 2001) Universal coverage: All of these bills would provide a prescription benefit to all Medicare-eligible beneficiaries. However, all but two of these bills require enrollment in both Medicare Part A and Part B. Only S. 10 and H.R. 1512 don`t necessarily require enrollment in Medicare Part B in order to be eligible for the new Medicare prescription drug coverage. This point is important for those Medicare eligible beneficiaries who never enrolled in Part B either because they had other equivalent coverage provided by an employer, or because they couldn`t afford the premiums. Many of these individuals would face high late enrollment fees if they were forced to have to enroll in Part B in order to become eligible for a new prescription drug benefit. Voluntary Enrollment: All of these bills provide for voluntary enrollment. If you already have prescription drug coverage, you would not be forced to enroll in the Medicare prescription drug plan. Further, three of these bills (HR 1512, S.10 and H.R. 803) provide economic incentives to employers to discourage them from dropping their prescription drug coverage for retirees. Understandable: We evaluated these bills based on how easy it would be for a beneficiary to understand the costs to them, including deductibles, premiums and co-payments, and how easy it would appear to be able to actually use the benefit. All but one of these bills appears to fit this criteria, clearly detailing the cost of premiums, co-payments and deductibles. However, S.10 has a fairly complicated co-payment structure that appears to be based on the previous year`s drug expenditure. This system may be confusing to beneficiaries as they try to calculate what their out of pocket expenses may be from year to year. In addition, this type of co-payment structure may create additional administrative costs to Medicare. Affordable: This feature is probably the most important one to beneficiaries - that is - how much will these different plans cost the average user? H.R. 828 and S. 358 (which essentially offer the same drug benefit) would be the most expensive. These bills don`t specify premium amounts - leaving these amounts to be determined by a competitive bidding process. The premium amount would be waived however for individuals with incomes 135% and below the Federal poverty level, and would be discounted on a sliding scale for those with incomes between 135% to 150% of the federal poverty level. Everyone would have a deductible of $250 before coverage begins and a co-payment of 50%. The annual catastrophic cap would be set at $6,000 - the maximum anyone would have to pay in out-of-pocket costs each year. S. 10 also does not detail a specific premium amount, but rather ties the premiums to actual cost of the benefit to the government divided by the number of individuals who actually enroll in the plan. S. 10 has a deductible of $250 and sets the co-payment according to how much a beneficiary spends each year on drugs (50% co-payment if out of pocket expenditures are less than $3,500 for example). S. 10 has an annual out-of-pocket cap of $4,000. H.R. 803 and H.R. 339 do not specify a premium amount, but rather appear to roll the cost of the drug plan in under Medicare Part B. This could possibly raise Part B premiums for everyone regardless of whether you need the additional drug benefit or not. These bills do specify a $250 deductible and a 20% co-payment. H.R. 803 reduces the co-payment to 5% if out-of-pocket costs rise above $2,000. H.R. 1512 specifies a monthly premium of $24 and a 20% co-payment, but caps the total out of pockets each year at $2,000 so the most anyone would pay under this plan is $2288. In conclusion, although TSCL supports any bill that creates a Medicare prescription benefit that provides universal coverage, and is voluntary, understandable, and affordable, we will strive to ensure Congress passes a bill that provides the best benefit at the least cost available to the beneficiary. At this point, H.R. 1512 - Medicare Extension of Drugs to Seniors (MEDS) Act of 2001 seems to best fit this standard. We will keep our members advised on the progress of this bill, and the others as the debate continues in Congress. In the meantime, we encourage you to write your Congressional representatives asking them to pass legislation creating a Medicare prescription drug benefit THIS year. To draft an e-mail to your Member of Congress or participate in other legislative action click on the following link: http://action.tscl.org/GuidetoContactingCongress.asp This article first appeared in Volume 6, Issue 7 of "The Social Security and Medicare Advisor" newsletter (June/2001). To receive future editions of "The Advisor" in its special, free e-mail version, please click here.
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