NOT ALL PRESCRIPTION DRUG PROPOSALS ADD UP FOR MEDICARE BENEFICIARIES

NOT ALL PRESCRIPTION DRUG PROPOSALS ADD UP FOR MEDICARE BENEFICIARIES

House Democrats, House Republicans and Senate Democrats unveiled their latest Medicare prescription drug proposals during the first week of June 2002. Medicare beneficiaries, their families and their advocates are advised to look carefully at these proposals. The Republican proposal is promoted as being similar to the Democratic proposals, with a lower price tag for the American public. However, that proposal doesn’t really do what its proponents claim. As a result, the lower cost to the public translates into very limited coverage at a much greater cost to the older people and people with disabilities who rely on Medicare.

Here’s how the proposals compare based on what the press releases say:

Plan Element	House Republican	House Democrat	Senate Democrat

Premium	$35 per month	$25 per month	$25 per month

Deductible	$250 per year	$100 per year	$0

Co-pay	20% co-pay on costs from $250-$100 50% co-pay on costs from $1000-$2000	20% co-pay on costs from $100-$2000	$10 co-pay on generic drugs $40 co-pay on preferred brands

Out of Pocket "Gap"	No coverage after $2000	No gap	No gap

Catastrophic Coverage	Catastrophic coverage at $5000	Catastrophic coverage at $2000	Catastrophic coverage at $4000

Additional Co-pays	Imposes for first time a $40 co-pay for home-health benefits	No additional co-pays	No additional co-pays

Low-Income Protections	Private plans can charge $5 co-pay Beneficiaries pay 100% of cost in the "gap"	No cost-sharing or premiums for low-income beneficiaries No asset test	No cost-sharing or premiums for low-income beneficiaries No asset test

Here’s how they compare based on what the bills say:

Plan Element	House Republican	House Democrat	Senate Democrat

Guaranteed Benefit	NO	YES	YES

	Must obtain coverage through private insurers, who say they won't offer benefit	Medicare covers prescription drugs like other benefits. can receive benefit through traditional Medicare or through M+C plan	Medicare covers prescription drugs like other benefits. can receive benefit through traditional Medicare or through M+C plan

Defined Benefit	NO	YES	YES

	Private insurers can offer the "suggested" benefit in the proposal or a different benefit that is "actuarially equivalent." Beneficiaries won't know what their premium or cost-sharing is.	Benefit is set in the law. Beneficiaries will know exactly what premium and cost sharing they will pay.	Benefit is set in the law. Beneficiaries will know exactly what premium and cost sharing they will pay.

Premium	NOT DEFINITE	GUARANTEED	GUARANTEED

	$35 per month, but plans can charge more	25$ per month	$25 per month

Deductible	NOT DEFINITE	GUARANTEED	GUARANTEED

	$250 per year, but plans can charge more	$100 per year	None

Cost-sharing	NOT DEFINITE	GUARANTEED	GUARANTEED

	Variable, up to 100%	20%	$10 generic, $40 for medically necessary brand-name

Coverage Gaps	YES	NO	NO

	No coverage for costs over $2000 until reach out-of-pocket maximum	Continuous coverage after deductible	Continuous coverage starting with first prescription

The Democratic proposals, introduced by Senators Graham, Kennedy, Miller and Daschle in the Senate, and by Congressmen Rangel and Dingell in the House, are true Medicare prescription drug proposals. They establish a benefit that is part of the Medicare program, Medicare Part D, and that is administered like other Medicare benefits and not by private insurance companies. The benefit is a defined, guaranteed benefit that would be available to all beneficiaries regardless of where they live. The Democratic proposals don’t rely on gimmicks such as charging co-payments for home health services to finance the drug benefit, a gimmick that requires the most frail beneficiaries to pay more for current services in order to get prescription drug coverage. In addition, the Democratic proposals increase low-income protections by eliminating an asset test for eligibility.

In contrast, the Republican proposal, introduced by Congressman Thomas, relies on private insurance companies and not on Medicare. Thus, the problems experienced by the 14% of Medicare beneficiaries enrolled in Medicare+Choice plans offered by private insurers would be replicated for all beneficiaries who enroll in prescription drug plans. And if private insurance companies don’t offer a drug benefit, individuals on Medicare may be forced to join an HMO to get drug coverage. The Republican benefit is neither defined nor guaranteed. Private insurers can vary premiums, co-pays and deductibles from the suggested amounts in the bill. Private insurers may even vary premiums from county to county, so beneficiaries in one state may pay more for the same coverage than beneficiaries in another state. The benefit itself is more limited, requiring greater co-payments for drug costs between $1000 - $2000 than either Democratic proposal, and providing no coverage for costs between $2000 and the maximum out-of-pocket limit. Low-income beneficiaries will have no protection for their costs between $2000 and the maximum, and may even be required to pay $5 per prescription.

Do the math. Senate Democrats estimate that a beneficiary who buys 2 generic prescription drugs and 2 preferred brand name prescription drugs per month at a total cost of $400 per month and $4800 a year would pay $1500 under their proposal and $4120 under the Republican proposal. The beneficiary’s savings would be five times as great under the Senate Democratic proposal. The savings under the House Democratic proposal would be even greater because of the lower out-of pocket maximum and flat co-insurance. The Republican benefit adds up to no benefit for beneficiaries.