Friday, Nov. 21, 2003 | 9:05 a.m.
Congress is expected to vote soon on a prescription drug plan for the nation's 40 million beneficiaries of Medicare, which covers seniors and the disabled. When Medicare was enacted in 1965, the role of drugs in treating illnesses wasn't as widespread as it is now, so prescription benefits weren't part of the original plan. Today, prescription drugs often can be more effective than surgery in treating a serious ailment, but the Medicare program was never changed to match this reality. These drugs can carry huge price tags, however, putting them out of the reach of most Americans without health insurance plans.
Some seniors have private insurance plans that offer prescription drug benefits, but the premiums and the co-payments can be expensive, making these private plans unaffordable for many others. The state of Nevada has a prescription drug plan, which is run by a private insurer. But the state's plan has been limited to just 7,500 low-income seniors, a number that is expected to grow to slightly more than 12,000 within the next two years. Even with Nevada's Senior Rx program, there are seniors who fall somewhere in the middle -- they either don't have enough money to get private insurance or they are ineligible for the state's program because their incomes are too high -- so they go without prescription drug coverage. They can be faced with the terrible prospect of having to choose between food or drugs.
The prescription drug legislation drafted by Republicans and two moderate Democrats -- Sens. John Breaux of Louisiana and Max Baucus of Montana -- is a good starting point. Details still could change, but the proposal, which would begin in 2006, would cost $400 billion over 10 years. The monthly premium would be $35 and after meeting a $250 deductible, insurance would pick up 75 percent of the drug costs up to $2,250. There would be no coverage, however, for drug costs between $2,250 and $3,600, out-of-pocket expenses that have been referred to as the plan's "doughnut hole." If a recipient's expenses exceed $3,600, then the insurance would cover 95 percent of the prescription costs. Compared to the lack of coverage today, that benefit appears promising, but a closer look reveals serious questions.
The "doughnut hole" we mentioned is a shortcoming in the legislation, and something that could cause a backlash among seniors if the plan becomes a reality. This year, the Congressional Budget Office has estimated, Medicare beneficiaries will spend an average of $2,439 on prescription drugs. Families USA, a liberal-leaning group that has advocated a prescription drug benefit, notes that the amount spent on drugs will grow even larger if the program gets under way in 2006 because of the ever-increasing costs of prescription drugs. We're worried that under this plan too many seniors won't be able to afford this $1,350 gap in coverage.
It also is discouraging that the plan would be administered by insurance companies instead of by the federal government. There's no need for a middleman. Prescription drugs should be treated just like any other procedure that's covered by Medicare. Plus, if the federal government uses its enormous purchasing power, rather than pay private insurers to provide the benefit, it would receive much larger discounts on the price of drugs, helping contain the program's costs. Instead, we have a giveaway to insurance companies that very well could be the opening conservatives have sought to privatize Medicare overall.
Another disturbing issue is that while the bill was negotiated in secret for several months, the Republican leadership in Congress has been pushing for a vote just a week after the bill was unveiled. There haven't been substantive hearings on the bill and it's terrible public policy to ram this through. In light of this and our other concerns about the bill, we're concerned that seniors won't get the kind of coverage they need. Members of Congress shouldn't feel pressured by the White House, which supports the plan, or Republican leaders in Congress, to hastily vote for this flawed proposal. They should instead work for changes that will create a meaningful plan.
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