Congress Passes Medicare Drug Bills

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Congress Passes Medicare Drug Bills

Congress is working toward making major changes to Medicare that would add prescription drug coverage. The Senate and House recently passed drug bills that would also boost the role of private insurance companies under Medicare. Although the bills are similar, significant differences remain to be worked out before the legislation goes to President Bush for his signature.

Under the bipartisan Senate bill, Medicare recipients could stay in traditional Medicare and enroll in a voluntary stand-alone drug plan, or enroll in a less restrictive form of managed care plan called Preferred Provider Organizations (PPOs). The PPOs would also provide full supplemental care including doctor visits, as well as prescription drug coverage. The Senate plan mandates that all seniors would have at least two options for private plans no matter where they live. If not, the government would provide a “fall back” plan. In many rural areas seniors don’t have access to managed care health plans.

The House bill has mostly Republican backing. It provides similar coverage, but would require traditional Medicare to compete with private health plans starting in the year 2010. Supporters say this would hold down and stabilize costs. Critics argue that health care costs would likely continue to rise leaving seniors to pay a greater share of out-of-pocket costs. The House bill does not provide a “fall back” plan option if seniors live in an area where there are less than two plans offering prescription drug coverage. Critics say that seniors in some areas of the country could either be left without coverage altogether or could be forced to pay much higher out-of-pocket costs.

The coverage would not begin under either plan until 2006. In the meantime seniors could buy a government-backed drug discount card for $25-$30 that would offer some savings estimated at about 15%. Under the Senate plan all seniors would have the option to purchase discount cards. Low-income seniors would get $600 credited to their cards to buy drugs. Under the House bill all seniors who do not have drug coverage would get $100 credited to their cards, with $500 credited to those near poverty and $800 for those with the lowest incomes. The program would operate for only two years.

How the two plans compare:

What Beneficiary Pays Under Medicare Prescription Drug Legislation

Senate (S.1)	House (H.R.2473)
Premium about $420 per year	Premium about $420 per year
$275 deductible	$250 deductible
50% co-insurance from $276 to $4,500	20% co-insurance from $251 to $2,000
No coverage from $4,501 to $5,800	No coverage from $2,001 to $4,900
90% coverage after $5,800	100% coverage after $4,900

Low-income seniors would get additional assistance under both bills (for details see http://www.tscl.org/NewContent/101971.asp).

Many questions remain whether the legislation will be able to provide more affordable prescription drugs to seniors or how it will impact other senior health care costs. TSCL is working to strengthen the legislation and protect seniors from cost increases or loss of federally-guaranteed coverage.

Sources: “Seniors May Find Drug Benefit Lacking,” The Associated Press, June 18, 2003. “Glance at House, Senate Medicare Bills,” The Associated Press, June 26, 2003.

September 2003