Democrats Send Letter to Bush Criticizing Employer Prescription Drug Coverage Subsidy Under Medicare Law

A group of 17 congressional Democrats sent a letter to President Bush saying that new Medicare rules to provide a subsidy to employers that provide prescription drug coverage to retirees could "contribut[e] to the steady erosion of retiree health benefits," CongressDaily reports (CongressDaily, 2/3). Under the new prescription drug benefit, Medicare will provide tax-free subsidies to employers equal to 28% of retired workers' annual drug costs. To qualify for the subsidy, employers will be required to offer a prescription drug plan at least as generous as the Medicare coverage, and they will be required to contribute at least as much as Medicare (California Healthline, 1/28).

However, the Democrats -- led by Senate Finance Health Care Subcommittee ranking member Jay Rockefeller (D-W.Va.) and House Ways and Means Health Subcommittee ranking member Pete Stark (D-Calif.) -- wrote that the "policy provides employers an additional incentive to reduce benefits and shift new costs onto their retirees" because "employers can receive 100% of the subsidy while offering retirees 75% of the full value of the standard benefit." The Democrats are asking that Bush work with them to resolve the concerns (CongressDaily, 2/3).