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Prescription Drugs and Medicare Reform

Congress and the administration has many priorities, and the nation's deficits are higher, so finding adequate resources for drug coverage will be difficult. But there is simply too much public and political pressure - and too much pain - to maintain the status quo.

This morning you heard the President address this, and present a framework for debate and action. We are very encouraged by the President's leadership on this issue. Policymakers in Congress in both parties and both Houses are working on this. So the Medicare debate is moving forward, and there is broad commitment to find a solution. But it will not be easy.

Some lawmakers believe that adding prescription drugs to Medicare is the single, urgent need and should be the goal. Others say that Medicare itself must be reformed and prescription drugs should be just a part of this overhaul.

Our position is that Medicare should be strengthened for the decades ahead. But we must also remember that it is a program that works. And, it works reasonably well, especially when compared to most other aspects of the American health-care system.

We advocate sensible improvements to strengthen Medicare, as long as they include prescription-drug coverage and ensure that the program remains the solid rock of health care that more than 40 million Americans rely on.

The first step is to ensure that enough money is available in the budget to accomplish these goals. The Administration's willingness to increase the level of funding for a Medicare prescription-drug benefit and other reforms is an important step. As all the research and analysis shows, an adequate Medicare drug benefit is going to require a very substantial funding commitment.

So, what does that benefit look like? Our members tell us a prescription-drug benefit must meet five criteria. It must:

  1. Ensure all Medicare beneficiaries have access to affordable, meaningful prescription-drug coverage in all Medicare options-no exclusions due to age, geography, health status or ability to pay;
  2. Provide stable coverage that beneficiaries can rely on from year to year;
  3. Protect beneficiaries from extraordinary out-of-pocket costs;
  4. Provide lower-income beneficiaries with additional assistance;
  5. Not create incentives for employers to drop current retiree coverage or disadvantage beneficiaries in the traditional Medicare.

Older Americans and their families don't expect first-dollar coverage, but they do want a benefit they can depend on over time. To meet these criteria, it may be possible to integrate drug coverage into a total benefit package. We are concerned that a drug-only benefit in Medicare may be unstable due to rising costs.

We are also concerned that it may not offer a benefit that is generous enough to attract an adequate number of enrollees. If that were the case, the risk pool might be too small to hold down premium costs and to sustain the program over the long term.

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