Congress continues to work on the actual legislative language to implement the compromise agreement on the Medicare prescription drug bill. Here are some points, based on a summary of the agreement, that Americans should consider when analyzing what assistance, if any, this bill may provide to older people and people with disabilities who rely on Medicare.

1. Does the bill add a prescription drug benefit to Medicare?

THE BILL DOES NOT provide the same coverage as members of Congress have. Beneficiaries will have to pay a separate premium that isn't set in law, the $35 premium is just an estimate.  They will have to pay a large deductible.  And they will have to pay for the full cost of prescriptions when they reach the "doughnut hole" between $2200 and $5000 in incurred prescription drug costs.

2. Does the bill provide subsidies to low-income individuals?

THE BILL DOES NOT provide adequate protection to the lowest-income beneficiaries who will lose some of the Medicaid coverage they currently have for prescription drugs. Medicaid won't fill in all of the gaps in Medicare, like paying for a drug not in a plan's formulary. And beneficiaries, including those in institutions, will eventually have to pay higher co-payments for drugs than allowed under Medicaid. PLUS, the bill includes an assets test, meaning millions of individuals won't qualify for protection at all.

3. Does the bill protect retirees who currently have drug coverage through former employers from loss of that coverage?

THE BILL DOES NOT protect millions of retirees from loss of drug coverage through their retiree health benefits. Vulnerable retirees include people whose employers cannot benefit from the tax credit proposed for employers who maintain their drug coverage. These include state and local government retirees and retirees from non-profit organizations.

4. Does the bill promote competition?

THE BILL DOES NOT promote fair competition. The playing field is tilted toward HMOs and PPOs, who receive massive windfall subsidies under the bill. MedPAC, a government agency which advises Congress on Medicare payment issues, found last month that HMOs and PPOs are overpaid under existing payment formulas, especially because their enrollees tend to be healthier than Medicare beneficiaries in general.

THE BILL DOES NOT promote competition in terms of a prescription drug plan (PDP) for people in traditional Medicare. The fall back provision won't be triggered in any community in which there is one PDP and one HMO/PPO offering drugs. That means that the majority of people who want to remain in traditional Medicare will have to enroll in the one PDP plan, even if it is expensive.

5. Does the bill limit the premium support/voucher program to a demonstration program?

THE BILL DOES NOT protect the over 6 million beneficiaries who can see increased premiums in the traditional Medicare program as a result of the push towards competition with HMOs. Government reports show that premiums for traditional Medicare could be as much as 88% higher in areas that participate in the voucher program.

THE BILL DOES NOT protect all beneficiaries from having the voucher program extended to their community. Right now, half the states have metropolitan statistical areas that would qualify to be part of the voucher effort. It's estimated that by the time the voucher effort is under way, every state will have an area that could be included in the voucher program.

6. Does the bill allow Medicare to meet the growing health care needs of beneficiaries?

THE BILL DOES NOT protect beneficiaries from rising out-of-pocket costs. In fact, the first-ever cap on Medicare expenditures will result in beneficiaries having to pay more for their health care, through increased taxes, increased premiums, increased co-payments and deductibles, and/or reductions in current Medicare coverage.

THE BILL DOES NOT give Medicare the authority to control the real escalating health cost: the cost of prescription drugs. In fact, the bill precludes Medicare from exercising the authority the VA has to negotiate drug prices on behalf of its 41 million beneficiaries.

THE BILL DOES NOT treat Medicare the same as all other federal expenditures. It establishes an arbitrary cap at which point Medicare will be considered insolvent and expenses will have to be reduced. No other federal program - education, transportation, environment, defense, tax cuts - is subject to the same limitations.

7. Does the bill increase subsidies to rural providers?

THE BILL DOES NOT protect beneficiaries who live in rural areas.  Instead of providing a better, uniform prescription drug benefit, the bill provides subsidies to HMOs and PPOs that don't want to serve beneficiaries in rural areas.  IN ADDITION, rural beneficiaries tend to be poorer, so they lose out because of inadequate protection for low-income individuals.

8. Does the bill provide for limited re-importation of drugs from Canada?

THE BILL DOES NOT allow for re-importation of drugs without government approval, and Secretary Thompson has already said he does not support re-importation.

Medicare beneficiaries and their families need to weigh carefully the provisions of the Medicare prescription drug conference agreement to determine whether they will in fact benefit from the proposed changes to the Medicare program. On balance most people will not be better off if the conference agreement is enacted into law.

© Copyright, Center for Medicare Advocacy, Inc. 01/08/2010