Prescription Drug Plans Moving Through Congress

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Prescription Drug Plans Moving Through Congress

An election-year battle over prescription drugs is heating up on Capitol Hill. House Republicans recently passed legislation that would add a prescription drug benefit to Medicare. Senate Democrats plan to vote on competing legislation in mid-July. The two sides are at odds over the cost and how to structure the benefit. As of this writing it is unclear whether the House and Senate will come to agreement on a final bill.

Medicare beneficiaries will spend an average of $2,150 per person on prescription drugs this year according to the Congressional Budget Office. While private insurance pays some of these costs, across the nation nearly one-third of all Medicare beneficiaries have no prescription drug insurance.

Dueling Drug Bills
Component	House	Senate
	(led by Republicans)	(led by Democrats)
	Private insurance companies would receive subsidies from the government to offer “drug-only” insurance. The companies could set their own premiums, deductibles, and co-insurance as long as the insurance would be equivalent or better than “standard coverage.” For 2005, standard coverage wouldbe:	More like traditional Medicare, drug benefits and premiums would be uniform throughout the country.
Premiums	Expected to average $34 among plans	Expected to cost $25 per month
Deductibles	Beneficiaries pay first $250 per year	No deductible
Beneficiary Cost Sharing	After $250 deductible, beneficiaries would pay 20% of costs from $251 to $1,000 and 50% of costs between $1,001 and $2,000. Beneficiary would pay full cost from $2,001 through $3,700. Medicare would cover 100% over $3,701up	A flat copayment of $10 per prescription for generics and $40 for brand-name drugs. Out of pocket expenses would be capped at $4,000, after which Medicare covers 100%
Subsidies for Low-income Seniors	Seniors with incomes 150% of poverty* or below would pay no premiums, or deductibles or co-insurance below $2,000 for the lowest cost planavailable	Seniors with incomes 150% of poverty* or below would pay no premiums or co-pays.
Cost to Government	$390 billion over 10 years and would continue indefinitely	$500 billion over 10 years

According to the 2002 Poverty Guidelines from the U.S. Health and Human Services: * 150% of poverty is about $13,290 for individuals, $17,910 for couples.

Sources: "Drug Plans for Elderly are Unveiled by 2 Parties," Robert Pear, "The New York Times," May 2, 2002. "Dems, GOP Tout Competing Drug Plans," Janelle Carter, The Associated Press, May 2, 2002. "Dueling Medicare Plans Offered in Congress," Joanne Kenen, Reuters, May 1, 2002.

Congressional Budget Office Cost Estimate, Medicare Modernization and Prescription Drug Act of 2002, June 24, 2002.

July 2002