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Summary Passed by both houses of Congress in November, 2003. Signed into law December 8, 2003 by President Bush. The Bill is more than a provision for subsidizing prescription drugs for seniors. It lays the foundation for making major changes in the basic Medicare program itself. Creation of Medicare Part D – Prescription drug coverage. The drug benefit program will be delivered by private companies under contract with DHHS. Starting Jan. 1, 2006. Choice of different plans – A) Stand-alone with traditional Medicare – called Prescription Drug Plans (PDP’s.) B) Part of Medicare HMO plan – now renamed as Medicare Advantage (MA.) Part D premiums - $35/month (2006) rising to $58/month (2013.) Part D deductible – $250 (2006) and will rise to an estimated premium of $445 (2013.) Subsidized Medicare premium payments for low income persons will continue in a similar manner as now and will also cover Medicare Part D premiums. Co-payments – Complicated system. Deductible up to $250 annually. 25% co-payment for costs in the range of $251/2250. (Upper limit will increase to $4400 in 2013.) 100% payment of costs by patient in the range $2251/5100 (“doughnut hole”) 5% co-payment of costs over $5100 (considered catastrophic limit.) Catastrophic limit will rise to $6400 (2013.) Only approved drugs on Medicare list will be counted toward catastrophic limit. Only approved drugs on Medicare list will be covered under this program or in other words: Medicare Drug Coverage starting in 2006: $35.00 per month premium. $250 deductible. Medicare will cover 75% of drug costs from $251 to $2,250. No Medicare coverage from $2,250 to $5,100. After $5,100 per year, then Medicare will cover 95% of drug costs. Medigap policies for drug coverage are prohibited. Only drugs on Medicare list will be covered under this program. Medigap policies – No Medigap drug benefit after January 1, 2006. All such drug benefit policies will be terminated. Interim drug discount card – Starting in late spring of 2004, a drug discount card will be issued. The initial premium for this card is $30/year and is estimated to yield about 10/15% in discounts from normal retail prices. Will be in effect until end of 2005. There will be a $600 credit for drug coverage to seniors with income below $12,123 per year (with a 5% co-pay.) Large subsidies to Medicare HMO’s. $10 billion is allocated to subsidize the Medicare HMO’s to provide a fallback plan I providers are losing money in certain areas.) “Premium Support System” – Starting in 2010, demonstration to have traditional Medicare compete with private plans. This demonstration is called Comparative Cost Adjustment Program.) Medicare Part B changes - Coverage extended for certain health examinations for preventative medicine. Part B deductible raised over time. Part B premium raised over time. Medicaid – Starting January 1, 2006, Medicaid coverage of drugs will be shifted to Medicare Part D. Cost containment cap – there is a maximum cost containment cap on the entire program which will trigger a Congressional review of the whole program if the cap is exceeded. Establishment of health savings accounts – Provides tax breaks for individuals to put contributions into health savings accounts. Expected to cost $6.8 billion. Medicare Care Management – The bill provides for a demonstration for Medicare “care management.” This is a medical model program under the control of physicians. See Sect. 649 of H.R. 1 for details. This summary is based on a report by Health Policy Alternatives, Inc. for The Henry J. Kaiser Family Foundation, December 10, 2003. Also on H.R.1, section 649. AREAS OF CONCERN ABOUT THE BILL This bill has provided almost no provision for the federal government to use its purchasing power to negotiate lower drug prices. This bill continues the prohibition of imported drugs from Canada. This bill will necessitate many seniors to submit income and asset information to determine eligibility for certain parts of the program. This threatens to change fundamentally the nature of Medicare towards a financial needs based system. It is estimated that up to half of the
$400 billion in this program will go to private companies rather than directly in benefits
to the Medicare consumer. The cost of this program has recently been re-forecast to exceed $500 billion. There is uncertainty and concern as to how this new bill will affect state drug assistance programs, such as EPIC in New York State. The bill appears to favor the conservative agenda of privatizing much of Medicare by having the medication program delivered by private companies, by subsidizing Medicare HMO’s, and by the demonstration for the “Premium Support System.” It is forecast that healthier individuals will tend to switch to the Medicare HMO’s, leaving traditional Medicare burdened by a more sick and expensive population. This section is based on the web site article "Detailed Medicare Bill Analysis” prepared by the General Board of Church and Society. Also based on Lieberman, Trudy,
“Killing Medicare,” The Nation. Nov 25, 2003. Also based on Madrick, Jeff, “Economics Scene,” The New York Times, Nov. 27, 2003. For the text of the original bill go to http://thomas.loc.gov. Then enter H.R.1 in the appropriate box. To read the section on the Care Management demonstration, click the 5th selection of the bill and scroll down to Section 649. CONTINUING POLITICAL EFFORTS REGARDING THIS BILL Democrats will continue to introduce bills in Congress to try to amend the law. (Pear, Rovert, “Despite New Law, the Fight Over Medicare Continues.” New York Times, Jan. 6, 2004.) - Allow importation of drugs from Canada. - Eliminate tax breaks for health savings accounts - Reduce the “doughnut hole” gap in drug coverage. - Reduce payments to private plans. - Abolish the demonstration project in which traditional Medicare competes with private plans. AARP, reacting to large criticism of its support for the bill, is now saying it will lobby for some reform of the original bill. (AARP press briefing as forwarded by Regina Curran, Public Policy Committee chair of NAPGCM) - Allowing importation of drugs from Canada - Lobbying drug companies to keep down costs of drugs. - Narrow “doughnut hole” gap in drug coverage. - Eliminate asset test. - Improve coordination with state drug assistance programs.
GCM Position of Legislation |
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