Will a Medicare Rx Drug Benefit ‘Fall Short’ of Expectations?
"[E]ven the most generous benefits" being considered for a Medicare prescription drug plan could "fall far short of what many of the elderly expect," the New York Times reports. A new Kaiser Family Foundation study found that seniors had "a severe case of sticker shock" when informed of the drug benefit plans that lawmakers have proposed, and focus group "participants are stunned" that the plans would "offer a lot less coverage than they would have imagined, at a much higher price." Seniors expected to a copay of around $10 or $15 per prescription, the study said while current proposals would require premiums of around $50 a month and deductibles. Kaiser Family Foundation Executive Vice President Diane Rowland said that recent reports about the large budget surplus prompted seniors to expect lower drug benefit premiums and copays. Health policy experts say "soaring" pharmaceutical costs and "limited" federal funding earmarked for a drug benefit are responsible for the "gap in expectations." The Congressional Budget Office has estimated that spending on prescription drugs for Medicare beneficiaries -- including spending by beneficiaries themselves and spending by insurers -- would reach $1.3 trillion between 2004 and 2011. Lawmakers have set aside $300 billion over 10 years for a drug benefit, which would cover about one-fourth of the Medicare population's total anticipated drug spending.
How the elderly respond to details of proposed prescription drug benefit plans "is critically important" in building political support for legislation and ensuring the "ultimate success" of such a benefit, the Times reports. For instance, many seniors will not enroll in a new drug benefit program "if they think the premiums are too high." Lawmakers have "had difficulty" crafting a "realistic, affordable plan," the Times reports. Sen. Bob Graham (D-Fla.) has proposed a bill (S 1153) that would establish a voluntary drug benefit for all Medicare beneficiaries, who would pay a $53 per month premium and a $250 annual deductible. The plan would cover 50% of seniors' prescription drug costs up to $3,500, 75% of costs between $3,500 and $4,000 and all costs more than $4,000. Graham has said that the $53 premium requirement has raised "concern across the board," as Democratic senators from rural states have said that seniors could not afford "expensive" monthly premiums, "even with generous subsidies for the lowest-income people." Members of the Senate Finance Committee, which has jurisdiction over Medicare legislation, have discussed proposals to reduce the premium to between $30 and $35 per month and the annual deductible to $100, but such a plan likely would raise seniors' out-of-pocket drug costs by at least 60% to 65% and the out-of-pocket cap to $5,000 a year.
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Lawmakers face a number of other "hurdles" in passing a drug benefit this year, the Times reports. Most Republicans and some Democrats, including Sen. John Breaux (D-La.), have said that they would not support a drug benefit without a broader Medicare overhaul, but many Democrats, such as Sen. Edward Kennedy (D-Mass.), oppose the reforms. Although the Senate Finance Committee had planned to vote this month on legislation that would revamp Medicare and add a drug benefit, committee members have not yet reached an agreement on a proposal. Finance Committee ranking member Charles Grassley (R-Iowa) said that the panel would likely vote on the issue in mid-September (Pear/Toner, New York Times, 7/22).