While the new prescription drug coverage under Medicare isn’t
perfect, I voted for it because it provides voluntary prescription
drug coverage for 41 million seniors and disabled Americans,
including 4 million in California. I believe this was the only
chance we had to get this done.
While the new prescription drug coverage under Medicare isn’t perfect, I voted for it because it provides voluntary prescription drug coverage for 41 million seniors and disabled Americans, including 4 million in California. I believe this was the only chance we had to get this done.
This program, which was approved by Congress in November and was signed into law Monday, provides $400 billion over the next 10 years in excellent coverage for America’s low-income Medicare recipients and access to a significant benefit – including catastrophic coverage – for every other Medicare recipient who chooses to enroll in the program.
Let me be clear: This prescription drug program is not mandatory, but is available to all Medicare recipients who want to join the program.
Furthermore, the actual Medicare drug coverage does not go into effect until 2006, giving us ample time for additional legislation to make improvements to the program.
Until then, recipients will be eligible to purchase a drug discount card for about $30 that could reduce retail drug costs by an estimated 15-20 percent per prescription.
For recipients who earn less than $12,123 (or $16,362 for couples), $600 will be credited to their drug discount card to defray drug costs further and the discount card will be provided to them free of charge.
Then in 2006, when the coverage goes into full effect, the program will provide the following coverage:
– Low-income Medicare recipients – those earning $12,123 (or $16,362 for couples) or less and who have assets (excluding home, a car or jewelry) less than $6,000 ($9,000 for couples) – will receive full drug coverage. Recipients will pay no premium, no deductible and Medicare will pay al drug costs with the exception of a nominal co-pay (not to exceed $2 for generics, $5 for brand names.)
Furthermore, Medicare will pay all drug costs for catastrophic illness, when total drug spending exceeds $5,100. The fact is that in most cases of catastrophic illness, drug costs are far higher than $5,100.
– Those who earn up to $13,470 (or $18,180 for couples) and who have assets (excluding home, a car or jewelry) less than $10,000 (or $20,000 for couples) will receive similar coverage with slightly higher costs to the recipient – a premium that averages less than $35 a month, a $50 deductible and a nominal co-pay, $2 for generics, $5 for brand names, for catastrophic coverage.
This is substantial coverage that will benefit approximately 1.4 million Medicare recipients in California alone. It will go a long way to helping people in need pay for their prescription drug costs.
– All other Medicare recipients – those earning more than $13,470 ($18,180 for couples) – will be eligible to receive the standard coverage under the bill.
– Those enrolling in the program will be charged premiums averaging $35 a month per person and will pay a $250 deductible. In other words, the Medicare recipient pays the first $250 of drug costs annually and then Medicare will pay 75 percent of the remaining drug costs up to $2,250.
– After $2,250 in total drug costs, Medicare will pay nothing more until drug spending reaches $3,600 out of pocket (or $5,100 in total drug spending.) This is the “donut hole,” which has often been criticized. Here’s the problem: without this gap in coverage, the total cost of the program explodes well beyond the $400 billion authorized by this bill.
– When drug spending exceeds $3,600 out of pocket (or $5,100 in total drug spending), Medicare will pay 95 percent of the cost of each prescription. Medicare recipients will then only have to pay for 5 percent of these drug costs. This catastrophic coverage is very significant because the cost of a serious illness can be in the hundreds of thousands of dollars.
So despite the “donut hole” this program provides a significant benefit where there was previously nothing.
The Medicare bill also will strengthen many California hospitals and help keep physicians in the state.
Over the past seven years, 62 California hospitals have closed and even more have relocated. Additionally, physicians have left the state in increasing numbers and many who have stayed have refused to provide care to Medicare patients.
This bill will help address these problems by providing additional dollars for hospitals that serve the poor, for teaching hospitals, like UCLA and Stanford Medical Centers, for rural hospitals like Community Medical Center in Fresno and for California physicians.
This increased funding will hopefully translate into improved quality of care for California residents.
As I said before, this bill is not perfect. Under the bill, for instance, Secretary of Health and Human Services, Tommy Thompson, is prohibited from negotiating with drug companies and pharmacies for lower drug prices.
I have discussed this with Secretary Thompson and I plan on introducing legislation that would give him the ability to use the purchasing power of the U.S. government to obtain the lowest possible price for prescription drugs. This, I think, would be a substantial improvement in the program.
Finally, I know that some are concerned that this bill will privatize Medicare. It does not.
It does, however, establish six, three-year demonstration pilot programs in 2010 where Medicare will compete with private insurers – to determine if there are ways to make Medicare more financially competitive.
Furthermore, in areas where the demonstration programs take place, Medicare Part B premiums (outpatient care) cannot increase by more than 5 percent per year as a result of the demonstration and those who earn less than $13,470 (or $18,180 a couple) will not see any change in their premiums or coverage.
It would take an act of Congress to extend the pilot programs or broaden them beyond those demonstration areas.
Bottom line: This bill is a step in the right direction, especially because it provides comprehensive low-income drug coverage and ensures that every Medicare recipient has access to a voluntary drug program with catastrophic coverage.
Sen. Dianne Feinstein (D-California) has served in the United States Senate since 1992.
