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March 18, 2003
BUSH ADMINISTRATION'S MEDICARE PROPOSAL
Providing
a prescription drug benefit for Medicare beneficiaries has
been a critical issue for both Republicans and Democrats because 24
percent of Medicare beneficiaries have no outpatient prescription drug
coverage and millions more have limited drug coverage. A major stumbling
block has been the expense of such a program. On March 4, 2003, the Bush
Administration announced a proposal to provide prescription drug coverage
to Medicare beneficiaries through one of three coverage options:
The Administration would offer seniors three Medicare options:
- Traditional Fee-for-Service Medicare with a Prescription Drug Card and
a Ceiling on Out-of-Pocket Drug Costs The out-of-pocket maximum has not
yet been defined. The prescription drug card would offer discounts of 10 to -25
percent on outpatient drugs. (The Bush Administration has twice attempted
to introduce a prescription drug card via regulations, but has been rebuffed
by the federal courts, which have said that Congressional authorization is
needed to do that.)
Beneficiaries could continue to purchase Medigap and other supplemental plans.
The Administration calls for the creation of two new Medigap programs, which
would include prescription drug coverage.
- "Enhanced Medicare" Enhanced Medicare would allow Medicare beneficiaries
to select a private health plan in the same manner as enrollees under the
Federal Employees Health Benefit Plan (FEHBP). The proposal states that these
Medicare beneficiaries would still have a choice of any health care provider.
Beneficiaries would pay the Medicare Part B premium and could pay an additional
premium depending on the richness of the plan they select. Health plans would
be selected on a regional basis by a new administrative agency, and would have
to accept any Medicare beneficiary living in the region who wishes to enroll.
Enhanced Medicare would have standard benefits, including the following:
- A standard prescription drug benefit (subsidized for low-income seniors) with
a monthly premium, annual deductible and out-of-pocket maximums for drug coverage,
- Coverage of preventive services,
- Protection from certain out-of-pocket costs, such as elimination of the lifetime
limit for inpatient hospital care, and
- Modified cost sharing, including a single deductible for Parts A and B and changes
in certain deductibles.
- "Medicare Advantage" The current Medicare+Choice program would be renamed "Medicare
Advantage." Under Medicare Advantage, seniors could enroll in managed care plans like
health maintenance organizations (HMOs) in which they would receive higher benefits
with lower cost-sharing, generally in a limited provider network. The managed care plan
would include a prescription drug benefit.
The Administration proposal is not yet developed in legislative form. There are no details,
for instance, regarding the amount of copayments, deductibles or premiums. However a fact
sheet published by the White House lists the outlines of the proposed coverage modifications.
To see the fact sheet, which is available on the White House Web site, click
here.
Outlook
While the Administration's
proposal brings the prescription drug debate to the forefront
again, no legislation has been introduced and it is unclear when Congress will take up
the matter.
The Administration indicates
that if Congress passes its proposal this year, it would go
into effect in 2006. They estimate the cost of the proposal at $400 billion over 10 years.
The Administration also proposes a stop-gap measure that would begin in 2004, which would
give all seniors a prescription drug discount card and give low-income seniors an additional
$600 per year for prescription drugs.
House Democrats introduced a
competing prescription drug plan on March 4, which they contended
would offer a more comprehensive benefits plan, and cost more than the Administration's proposal.
Their proposal would include an outpatient prescription drug benefit with a $100 deductible and
20 percent coinsurance. The plan would have a $2,000 maximum out-of-pocket for drug costs, and
would cost $25 per month. Low-income beneficiaries would have little or no premiums or cost sharing.
Capital Checkup is The Segal
Company's periodic electronic
newsletter summarizing activity in Washington with respect to health
care and related subjects. Capital Checkup is for informational
purposes only. It is not intended to provide guidance on current
laws or pending legislation. On all issues involving the interpretation
or application of laws and regulations, plan sponsors should rely
on their attorneys for legal advice. |
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