The other big healthcare election-year issue is over how to give more senior citizens access to an outpatient prescription drug benefit. Today, Medicare only covers prescription drugs dispensed when the patient is hospitalized. Unless a senior is covered by Medicaid or has purchased a private plan that includes outpatient drug coverage, those over age 65 do not have outpatient drug coverage.
With prescription drug costs rising at 15 percent per year, and with seniors using an average of nine to 12 prescriptions per year, the lack of a comprehensive drug benefit within Medicare is a huge issue for the elderly population. A recent study conducted by a University of Maryland researcher for the Commonwealth Fund, a private foundation that supports independent research on health and social issues, found that:
About half of all seniors have prescription drug coverage — 52.7 percent of Medicare beneficiaries had continuous outpatient drug coverage in 1996.
In 1996, 28.4 percent had no coverage (almost 20 percent had coverage for some period in 1996).
Those with insurance who had fair or poor health had an average of 36.7 prescription transactions in 1996, compared to 27.2 transactions for those with no coverage.
Beneficiaries with fair to poor health spent an average of $732 in drugs on 1996.
Thirty-seven percent of Medicare beneficiaries with annual incomes of less than $10,000 did not have drug coverage in 1996 (many were likely eligible for Medicaid coverage). For those with incomes over $30,000, 28 percent had no drug coverage.
The Clinton/Gore administration, as well as presidential candidate Bill Bradley, recognized this issue by proposing new Medicare drug programs. The Clinton/Gore plan would pay for half of a senior’s drug expenses up to an annual cap, have a monthly premium and cost $118 billion over 10 years — to be taken from projected budget surpluses. That has led to a number of alternative programs to be introduced in the Congress.
Republicans have generally been skeptical of any new and costly programs being added to a Medicare program expected to become insolvent by 2017 if major changes aren’t made. It is not that the Republicans don’t favor a solution. Many believe that the overall Medicare problem must be solved before any new entitlements are taken on.
Representative of the Republican attitude is Sen. Bill Frist, R-Tenn. As he put it, “Laying a huge expensive proposal … on top of a system that is going bankrupt… is unacceptable to people such as myself.” He went on to say that passing a drug benefit without first making the needed reforms would be “terribly destructive” to the program.
Republicans point to Congressional Budget Office projections that predict:
Medicare expenditures will grow 4.5 percent in 2000, and 9.1 percent in 2001.
Medicare outlays will grow at an average annual rate of 6.9 percent, well in excess of the average growth projected for the economy — 4.5 percent per year for the same period.
Medicare enrollment will increase by 17 percent over the next 10 years.
The 1997 Balanced Budget Act reductions will expire in 2002, significantly increasing provider payment rates and driving costs up by $25 billion over 10 years.
The ratio of workers paying Medicare taxes will drop from 3.3 workers for every beneficiary now, to 2.1 workers for every beneficiary by 2030.
But the Democrats see another great election-year issue. They want to move on prescription drugs with or without a Medicare overhaul. House Democratic leaders have announced plans to force the Medicare drug issue to a vote on the House floor. They intend to override the Republican leadership by launching a “discharge petition” drive. If they can get a simple majority of members (218) in a House that has only a five-vote Republican majority, they can bring the issue to the floor. While their effort is a long shot and there is no way the Republican-dominated Senate would go along if they did get the issue to the House floor, it underscores the Democrats’ desire to make this a big election-year issue.
The pharmacy industry has waded in as well by running a number of television and print ads around the fictional character, “Flo.” Flo has called for an approach favored by many Republicans that creates more private sector prescription drug options for seniors and provides assistance to low-income seniors in accessing them.
The online pharmacies are really worried about price controls. They have watched as Congress and the administration have repeatedly cut Medicare doctor and hospital reimbursement rates over the past 30 years in order to balance the budget. They want no part of any drug program that is integrated into Medicare and subject to future Congressional and White House price cuts.
The American Association of Retired Persons has also joined the debate. Without endorsing anyone’s specific plan, AARP issued 10 principles with which they can examine the various proposals. AARP believes a drug plan should:
Be part of a Medicare-defined benefit package. (This would be similar to the Clinton/Gore and Bradley approach, but likely at odds with the direction in which Republicans appear to be headed, which generally relies on more private sector options.)
Include a government contribution generous enough to yield an affordable premium, and an attractive benefit design that is responsive to beneficiaries’ needs.
Allow beneficiaries to keep their current coverage if desired and should not cause employers to drop coverage.
Give enrollees access to drug therapies and reduce medical errors and mismedication.
Contain subsidies for low-income beneficiaries and utilize some of the predicted federal budget deficit to pay for the plan.
We really won’t have a prescription drug debate in Congress until the Republicans can agree on a leadership approach. The House Republican leadership has appointed a task force to develop a response to the Clinton/Gore Democratic approach to the prescription drug issue. They are expected to outline a proposal later this spring.