Bush Drug Proposal Gets Cool Reception
By: Source: AARP Bulletin Today Date Posted: 2003-06-27 14:35:20
President Bush's proposal to reform and add prescription drug coverage to Medicare is short on details but offers a "framework," he says, on which Congress can build to pass legislation this year.
The proposal got a cool reception from many lawmakers, including some leading Republicans, because of its most contentious element—offering comprehensive drug coverage to beneficiaries who switch to a new "enhanced" program run by private plans but not to those who choose to stay in traditional Medicare.
The plan would give this latter group—currently 85 percent of Medicare beneficiaries—prescription drug discount cards, help with high out-of-pocket costs and a subsidy for low-income people.
Chuck Grassley, R-Iowa, chairman of the powerful Senate Finance Committee, says Senate Republicans will take White House views into account but will build new Medicare legislation from scratch.
"I think we will go quite a bit further than the president's plan," he says, "because I start from the presumption of some sort of equality between a drug benefit for seniors in old Medicare and those in new Medicare."
Bush's plan would offer three options. Beneficiaries could:
- switch to a new " enhanced " program, run by private insurance plans, that would integrate a comprehensive prescription drug benefit with existing Medicare health services; or
- stay in or switch to a modified version of Medicare+Choice, the managed care program run mainly by private HMOs, most of which offer some drug coverage; or
- stay in traditional fee-for-service Medicare as it is today without overall drug coverage.
The White House says its discount card would save these beneficiaries 10 to 25 percent off pharmacy prices.
High out-of-pocket costs would be capped annually at a dollar amount the White House did not specify. Low-income beneficiaries would also receive a $600-a-year subsidy toward their drug bills.
Democrats and others interpreted Bush's proposal as using drug coverage to entice beneficiaries into private plans, radically changing Medicare's nature. The plan "would privatize Medicare and in the long run eliminate it as universal, dependable health coverage for all seniors," says Debbie Stabenow of Michigan, head of the Senate Democratic health care task force.
Supporters of the proposal say private insurance can provide better options, benefits and flexibility.
Bush said his "enhanced" option "would offer seniors similar kinds of choices now enjoyed by the members of Congress" and about 8 million others enrolled in health plans for federal workers (FEHBP).
He did not indicate how far he'd go to subsidize beneficiaries' premiums. The government currently pays up to 75 percent of FEHBP enrollees' premiums.
Stabenow and others say it would cost at least $750 billion over 10 years—almost twice the amount Bush is proposing—to provide all Medicare beneficiaries with drug coverage comparable to FEHBP.
"Choice without generosity is not going to make people happy," says Marilyn Moon, a Medicare expert at the Urban Institute, a Washington think tank.
Most observers consider Bush's requested budget of $400 billion over 10 years a big improvement on the $190 billion he suggested last year. But many say even this is not enough to produce benefits of the kind the White House envisages.
For example, a cap on out-of-pocket drug spending of $4,000 a year would alone "eat up 85 percent of the $400 billion and help only 17 percent of beneficiaries," Moon says.
Grassley says current thinking among Senate Republicans is maybe for the cap to kick in at $4,000 a year, after which the government would pay 90 percent of remaining costs and the beneficiary 10 percent.
This idea, he says, has already brought criticism from conservative lawmakers who question whether the government should give such a subsidy to well-off people. "And I guess my answer is yes," he adds, "because I want as much universality as we can get."
It will be up to Congress to hammer out such details. Given strong partisan differences on how far Medicare should be changed, that will be a tough battle—especially in the closely divided Senate where 60 votes are generally needed to pass any legislation.
"At the end of this process we want every beneficiary to have a meaningful benefit," says Chris Hansen, an AARP associate executive director. "We see the president's framework as a good first step."
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