Expansion Of Prescription Drug Benefits

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

Featured in half-yearly report: G-politik in Industrieländern 2

Abstract

In November 2003, Congress passed the Medicare Modernization Act to provide drug coverage to the elderly, either through a stand-alone drug plan or a private health plan. Seniors would pay an annual deductible and monthly premiums. Medicare would cover 75% of annual drug costs ($250-2,250), and provide catastrophic coverage for drug costs > $5,100. Legislation included subsidies for low income seniors, incentives for private health plans and employers, and tax-preferred health savings accounts.

Purpose of health policy or idea

Pharmaceuticals are an increasing integral part of medical treatment, particularly for the elderly, who, in the United States represent 14% of the population and account for more than one-third of total prescription drug expenditures. Medicare, the Federal program enacted by Congress in 1965 to provide universal health insurance coverage to the population over age 65 years, did not include coverage of outpatient prescription drugs. (Juliette Cubanski et al. The Commonwealth Fund Issue Brief, # 538, April 2002).

Of the 40 million Medicare beneficiaries in 2003, more than 10 million elderly (24%) have no form of prescription drug coverage. Most Medicare beneficiaries (75 percent), however, have some outpatient prescription drug coverage either through a retiree benefits package (33%), enrollment in a Medicare+Choice managed care plan (10.6%), purchase of a Medigap policy or Medicare supplemental insurance policy (15%), State-based Medicaid coverage (12%), or, state drug assistance programs for the low income, Department of Veterans Affairs, or Department of Defense (3%).  Nonetheless, because of the great variability in beneficiaries' cost-sharing responsibilities and the extent of coverage provided under these arrangements, many of those seniors with coverage have only partial coverage with increasing out-of-pocket costs. Out-of-pocket drug spending among Medicare beneficiaries was estimated to average $850 in 2001, with 27 percent of seniors paying more than $1,000." (J.Cubanski and J. Kline. The Commonwealth Fund Issue Brief #538, April 2002).

The quality implications of poor coverage are extremely serious. In a 2001 survey of seniors in eight states, it was shown that nearly one-fourth of seniors spent $100 per month for prescription drugs; 42 percent of poor seniors without drug coverage did not fill a prescription in the past year because of costs or skipped medication dosages to make a prescription last longer (Dana Gelb Safran et al., Kaiser/Commonwealth Fund Report, 2002).

On March 5, 2003 President Bush unveiled his plan to provide prescription drug coverage for senior citizens covered under Medicare, "21st Century Medicare: More Choices-Better Benefits: A Framework to Modernize and Improve Medicare". The President's  proposal presented an expansion of Medicare in 2006 to include prescription drug coverage ais part of a broader re-structuring of Medicare. In the interim, starting in 2004, the plan proposed that all seniors would get a prescription drug discount card offering projected savings of 10 to 25 percent (slightly less according to General Accounting Office estimates). Low income seniors would get a $600 annual subsidy added to their cards.

The estimated costs of the Bush plan over 10 years were $400 billion. In light of the Congressional Budget Office estimates that spending for prescription drugs for Medicare beneficiaries would total $1.84 trillion over the next 10 years, it was apparent that the Bush plan would fall short of what seniors need, and at most, cover only 20 percent of their prescription drug burden. The Administration's 2004 budget, approved by Congress in April 2003, included the $400 billion over 10 years that the President requested for Medicare reform.

The President's Plan " Prescription Drug Coverage for Seniors Under Medicare" , is outlined below (See Report #1 , covering the period September 2002 -February 2003, for more detail):

o       Traditional Medicare -enrollees would keep their current fee-for-service Medicare benefits but would not have a comprehensive drug benefit.  Protection would be provided against catastrophic drug costs but coverage would only begin after the beneficiary had had substantial out-of-pocket expenses for medications in a given year. Enrollees would also have a drug discount card to save 10 -25 percent on prescriptions, and Medicaacre would provide low income beneficiaries with $600 per year to help cover prescription drug costs.  

o       Enhanced Medicare - Under a new private system, Medicare beneficiaries would pay a premium to join a participating plan that offers drug benefits subsidized in part by the government, along with basic Medicare benefits including hospital and physician services. Depending on the plan, beneficiaries would have different drug benefits, premiums, copayments and deductibles. This option would offer an expanded choice of private plans, predominantly Preferred Provider Organizations (PPOs), full  coverage for preventive care, and lower out-of-pocket costs for hospital stays. Low income enrollees would receive assistance for out-of-pocket drug costs, and those with the lowest income would pay no drug premiums or deductibles.

o       Medicare Advantage - would be similar to the current Medicare+Choice program, which offers beneficiaries a choice of private managed care plans (HMOs) with and without drug coverage but no guaranteed drug benefit.  Low income seniors would not pay the added costs of a drug benefit but have limited choice of provider.

In response to the President's proposals, a number of alternative proposals were put forward by both Democrats and Rep both Republicans and Democrats and i.ublicans developed alternative proposals, strikingly divided on philosophical grounds. In June 2003, At the same time, Medicare reform bills were developed and passed by the Senate Finance Committee aand the House of Representatives Ways and Means Committee, respectively, both of which currently have Republican majorities.

A conference committee, chaired by Representative Bill Thomas, (Rep- California) was charged with reconciling the Senate and House bills. Two Democrats Sen. John Breaux, (Dem-Louisiana) and Sen.  Max Baucus ( Dem- Montana), were included on the Medicare conference committee.

A compromise agreement was reached on Medicare legislation - the House approved a final bill on November 22, and the Senate passed a bill on November 25, 2003  - in both houses, a sharply divided vote largely along party lines.

The Medicare Modernization Act, the largest single change in Medicare since its creation in 1965, included the following provisions:

Beginning in 2006,  Medicare beneficiaries will be able to enroll (on a voluntary basis) in a stand-alone  drug plan or join a private health plan (Medicare Advantage) that offers drug coverage.

 

A. Prescription Drug Benefit

• Seniors would pay an estimated $250 annual deductible and $35 average monthly premium for the drug coverage. Medicare would cover 75 percent of annual drug costs between $250 to $2,250.  There would be a gap in Medicare coverage between $2,250 and $5,100, where seniors would have to pay 100 percent of their drugs costs (referred to as the doughnut hole"),  after which catastrophic coverage would take effect and the government would cover 95 percent of their drug costs that exceed $5,100.

• Drug benefits would be provided through stand-alone prescription drug plans, comprehensive plans that integrated enhanced Medicare Part A and B benefits for hospital and outpatient services, or employer-sponsored retiree plans. 
• Medicare beneficiaries with annual incomes below $12,000 would not pay a premium or deductible, but would have to make copayments of $1 for generic medications and $3 for brand-name prescriptions.
• Beginning in 2004, seniors could purchase a drug discount card, which is projected to provide savings of 15 percent on the price of medications, to bridge the gap until benefit was available in 2006. Low income seniors would receive a further $600 subsidy to help reduce drug costs.

B. Incentives and Increased Privatization Provisions of the Medicare Modernization bill

• As an incentive to get Medicare beneficiaries to move into private plans, private plans could bid lower than the estbalished benchmark for the program and offer additional benefits above the basic Medicare benefits. 
• Employers that provide drug coverage to retirees would receive $70 billion in tax-exempt incentives to continue to provide that coverage once the Medicare benefit took effect; the government would pay 28 percent of the costs for coverage from $250 to $5,000. 
• The bill renames Medicare + Choice, which becomes Medicare Advantage, and reforms the payment method to Medicare Advantage plans beginning in 2004. Private health plans would receive $12 billion as an incentive to participate in Medicare. 

New participating plans under Medicare Advantage PPOs would have to be region-wide, with the country to be divided in to 10 to 50 regions, determined by the Secretary of Health and Human Services.  The newly established Stabilization Fund would provide enhanced payments to regiona plans and encourage plan entry and retention.  

• In 2007, Medicare would begin to link the premiums under Part B, which pays for outpatient services, to income.
• The bill further provided a provision that would allow the creation of tax-preferred health savings accounts for individuals (not limited to just Medicare beneficiaries) with health plan deductibles of $1,000 per year and couples with deductibles of $2,000 per year. 
• Under the legislation, U.S. residents would be able to purchase drugs from Canada but only if the Secretary of HHS certified safety of the practice.
• The bill provided $12 billion for demonstration  projects beginning in 2010 in which traditional fee-for-service Medicare would compete with private plans in six metropolitan areas; beneficiaries would have to pay more to remain traditional Medicare plans if that cost more than the private plans, although Medicare would cap premium increases at 5 percent per year and exempt the oldest and poorest beneficiaries.
• In addition, the bill included a cost containment provision that required Congress to consider options for reducing spending if general tax revenues account for more than 45 percent of Medicare spending, e.g. increase in taxes, reduced spending, reduced payments to providers, etc.
• The bill also included a provision that prohibited the federal government from negotiating lower drug prices with the pharmaceutical companies,  requiring a particular formulary or instituting a price structure for the reimbursement of medications.

(American Health Line: National Journal's Daily Briefing, November 24-25, 2003)

The President announced that the drug benefit would cut prescription drug bills by 50 percent. (American Health Line: National Journal's Daily Briefing, November 3, 2003). With $400 billion put on the table, the bill is expected to aid millions of seniors in paying for prescription drugs, but the degree to which it would, varies considerably across the elderly population and there are notable gaps in coverage that would require seniors to incur out-of-pocket costs.  For those who have no drug coverage, the bill could offer significant relief, but for others, with drug costs in the middle range or the "doughnut hole", the coverage will be disappointing. People with low incomes as well as those with high drug costs would benefit most.

Much of the health care industry, including drug companies, managed care plans, rural hospitals and rural providers, are expected to benefit. The drug industry is seen as the big winner - it will get a huge infusion of cash from Medicare, the problem of lower costs U.S.-made drugs being re-imported from Canada is seemingly eliminated; and the threat of price controls imposed by the government is also eliminated.

The legislation represents the largest expansion of the program in 38 years.

The Senate Committee Bill (S-1)

Type of incentives (financial, non-financial):

The Bush administration originally proposed that any Medicare reform plan only give more generous drug benefits to seniors who joined a private plan, which they maintained controlled costs better. The administration subsequently softened its position and told lawmakers that they would accept a Medicare reform bill that offered beneficiaries equal drug coverage, whether they stayed in traditional fee-for-service Medicare or joined a private plan. Competitive prices and coverage of preventive care services, though, would provide added incentives for seniors to join private health plans. (American Health Line: National Journal's Daily Briefing, June 10, 2003)

·        Employers would get $86 billion in payments and tax benefits over the 10 years to encourage them to continue to provide drug coverage to their retirees.

·        HMOs, many of which dropped out of the Medicare + Choice option created by the Balanced Budget Amendment in 1997 because they said Medicare payments did not cover their costs, would return.  They would gain financially because the bill includes a risk-sharing provision to increase reimbursements if medical costs rose and payment rules were changed to give plans a higher rate starting January 2004, although the drug benefit does not take effect until 2006.(American Health Line: National Journal's Daily Briefing, November 24, 2003)

Group(s) affected and how:

·        The legislation would directly affect the 40 million people who make up the Medicare population, many of whom are low income.

·        Some retirees may be affected in spite of the financial incentives provided to employers to maintain prescription drug coverage for retirees. (Initial analyses by the Congressional Budget Office estimated that as many as one-third of retirees who have employer-sponsored drug coverage might lose it as a result of the  Medicare reform legislation, with the concern being that the new Medicare coverage would be less generous and more complicated than most employer plans).  

·        A further group affected, are an estimated six million seniors and people with disabilities who are dually eligible for both Medicare and Medicaid. The Administration supported their being covered through State Medicaid programs rather than Medicare. In the final bill, however, States will no longer provide the drug benefits to low income seniors, but will have to contribute to the coverage provided by the Federal government.

Main points

Main objectives

Expansion of the Medicare program to provide prescription drug benefits to the 40 million elderly in the United States

• Increased privatization of Medicare
• Increased competition in the Medicare program

Type of incentives

• Incentives provided to private health plans and employers
• Increased payments to and risk-sharing for private health plan

Groups affected

Elderly (over 65 years), Disabled

Innovationsgrad	traditionell		innovativ
Kontroversität	unumstritten		kontrovers
Strukturelle Wirkung	marginal		fundamental
Medienpräsenz	sehr gering		sehr hoch
Übertragbarkeit	sehr systemabhängig		systemneutral

According to Commonwealth Fund President Karen Davis, commenting on the Senate's passage of the Medicare prescription drug bill, November 26, 2003:

"The Medicare bill passed by Congress is the first major improvement in Medicare benefits since the program was enacted in 1965. This legislation will help many Medicare beneficiaries who have inadequate prescription drug coverage, especially those with low incomes and those with high out-of-pocket expenses for drugs.

However, the benefit is unnecessarily limited and complex. Many beneficiaries with very modest incomes will receive limited help from this bill. Near-poor beneficiaries will still face high out-of-pocket costs for drugs and will continue to pay a significant share of their income for drugs.

Medicare could achieve greater value for its beneficiaries by providing an integrated benefits option offered through traditional Medicare rather than private insurers. Medicare's experience to date with private plans has been marked by instability on the part of plans and providers, and out-of-pocket costs for sicker beneficiaries in such plans have been rising rapidly in the last four years.

Congress's work is unfinished. Efforts to provide a better option for Medicare beneficiaries--prescription drug coverage that is uncomplicated, comprehensive, and that provides adequate financial protection--must be a continued priority for the future."

(Statement by Karen Davis,"Despite Medicare Bill's Passage, Congress's Work Unfinished," The Commonwealth Fund, www.cmwf.org, November 26,2003)

Political and economic background

In the 2000 presidential campaign, expansion of Medicare to provide a prescription drug benefit was the main health care issue for then Vice President Al Gore and George W. Bush.

This was a prominent issue in the 2000 election campaign, with promises made by both candidates. President Bush, with the House, Senate, and Executive all under Republican control, was under considerable pressure to deliver on this, prior to the 2004 election. While health care played a relatively modest role in the midterm Congressional elections in 2002, the top health care issue was the costs of prescription drugs. Given the rapidly rising cost of prescription drugs and the promises that had been made, expansion of Medicare drug coverage would be a guaranteed issue in the upcoming Presidential election.

Change of government

This was a prominent issue in the 2000 election campaign, with promises made by both candidates.

Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Origins of health policy idea

Where, when, and by whom was the idea generated?

In the President's Budget Proposal, released in February 2003, he offered an initial plan for providing prescription drug coverage to seniors in Medicare + Choice, those enrolled in private managed care plans, but did not mention adding drug coverage to the traditional or fee-for-service Medicare. This proposal was met with strong criticism from both Republicans and Democrats as well as the consumer advocacy groups that represent senior citizens. In March 2003, the President laid out a framework for modernizing Medicare, which relied on private health plans to provide comprehensive drug coverage to seniors but included a provision for catastrophic coverage in traditional-fee-for-service Medicare.

Who were or are the driving forces behind this idea and why?

The issue of modernizing Medicare to include a prescription drug benefit has been on the table for years. This is a bipartisan issue, with both Democrats and Republicans putting forth plans. However, with spending for prescription drugs soaring, increasing more than 17 percent in the last year, and the erosion of prescription benefits under many sources"Ÿretiree health plans, Medicare+Choice plans, and Medigap"Ÿthere was pressure from all corners to address this issue which affects nearly 40 million elderly. 

Efforts to include prescription drug coverage in the Medicare benefit package are not new. Consideration was given to the idea during the programs initial design in 1965, "as well as during subsequent debates over the Social Security Amendments of 1972, over national health insurance in the 1970's, over the Medicare Catastrophic Coverage Act (MCCA) of 1988, and again during the Clinton Health Security Act in 1993-94. While the MCCA succeeded in enacting a drug benefit for Medicare, it was never implemented. The legislation was subsequently repealed as a result of opposition by the elderly and various interest groups to the financing of the benefit. " (J. Cubanski and J. Kline, Commonwealth Fund Issue Brief #538). The need for expansion of the Medicare basket of benefits was included in recommendations by the National Bi-partisan Commission on the Future of Medicare in its report in 1999, and rival plans were put forth by then-Governor George W. Bush and Vice President Al Gore during the 2000 presidential election campaign. A prescription drug bill was passed by the House of Representatives in June 2002 and a counter-proposal was put forward by the Senate Budget Committee.

The president, Congressional Democrats and Republicans, advocacy groups for the elderly, health policy experts and academics, the pharmaceutical industry, and managed care organizations, have all particpated in the debate and staked out positions in trying to move the issue forward.

Is it an entirely new approach, does it follow earlier discussions, has it been borrowed from elsewhere?

In the President's Budget Proposal, released in February, he had offered an initial plan for providing prescription drug coverage to seniors in Medicare + Choice, those enrolled in private managed care plans, but did not mention adding drug coverage to traditional fee-for-service Medicare.  The President's March 2003 proposal, drew on ideas advanced in the mid-1990's for a premium-support model for Medicare, and further developed in legislation introduced by Senators John Breaux (Dem-Louisiana) and Bill Frist (Rep-Tennessee) which would have added prescription drug coverage to both traditional Medicare and Medicare + Choice, but went further in its efforts to privatize the program. The legislation that was passed incorporates elements of competition and an expanded role for the private sector that emerged in earlier proposals, although with substantial changes in order to garner the support needed from Democrats and Republicans to pass in Congress.

Who were the main actors?

The Administration took the lead, with President Bush presenting his plan in March 2003.

Key players included the U.S. Secretary of Health and Human Services, Democratic and Republican Congressional leaders, the National Governors Association, the Food and Drug Administration, the Congressional Budget Office, labor unions (e.g. the AFL-CIO), advocacy and consumer groups (including the Association of Retired Persons (AARP); Consumers Union; Common Cause; the Medicare Rights Center; Families USA ); the pharmaceutical industry; American Association of Health Plans; the American Hospital Association and Federation of American Hospitals; leading health policy foundations (The Commonwealth Fund and Kaiser Family Foundation); and public policy think tanks ( e.g. the Urban Institute, Center on Budget and Policy Priorities, National Academy of Social Insurance).

Examples of drug coverage for seniors exist in several settings:

• Medicare + Choice managed care plans, which typically provide comprehensive prescription drug coverage, based on a formulary list, with patient co-pays and annual caps on drug benefits. However, not all states have managed care plans available to seniors; in many cases seniors are reluctant to join managed care plans because they lose choice of their providers; and, an increasing number of managed care plans have dropped out of the program in the last two years stranding Medicare members and/or cut back on coverage for seniors because of rising costs. At present, only 11 percent of seniors are in Medicare + Choice. Enrollment in Managed Care + Choice dropped 27 percent from 2000 to 2002. The number of plans dropped from 346 in 1998 to 155 in 2003.
• All state Medicaid programs provide drug coverage to their poorest seniors, but eligibility criteria vary as does the extent of coverage. 
• More than half of the states have state-funded programs to provide some assistance for low income Medicare beneficiaries without other sources of drug coverage, again with varying eligibility criteria and benefits. The majority subsidize a portion of drug purchases for eligible seniors, while others offer a discount on the purchase price of prescription drugs.  Despite state efforts to provide coverage, a substantial portion of low income seniors are without coverage.
• Some major pharmaceutical companies have established drug assistance programs to provide medications free of charge to doctors whose patients cannot afford them, with eligibility rules varying by company.
• A few large drug companies have implemented discount drug cards for low income seniors with no drug coverage.
• The provision for Health Savings Accounts would expand on a limited Medical Savings Account experiment that began in 1996 and was available to only 80,000 self-employed individuals and small business employees. The idea is to make it less risky for people to buy high deductible and therefore less expensive health insurance.  (American Health Line: National Journal's Daily Briefing, November 5, 2003)

Approach of idea

The approach of the idea is described as:
amended: Legislation to reform Medicare, a government program to provide health insurance coverage for the elderly, enated in 1965

Stakeholder positions

In the battle to get Medicare prescription drug coverage, the proposals put forth and the positions taken, typically reflected strong philosophical differences between Republicans and Democrats. The Medicare debate also went to the heart of  policymakers' beliefs about the role of government and Medicare and what has been a social contract with senior citizens.

While both Republicans and Democrats agreed that Medicare should be expanded to include prescription drug coverage, there was an ideological difference in their positions, with Republicans backing a market-place approach and drug benefits offered by private insurance companies, and Democrats wanting to add a standardized drug benefit to traditional fee-for-service Medicare.  The other major difference was around the generosity of the coverage and the overall dollar commitment proposed.

Reactions from consumer and advocacy groups were mixed, with the American Association for Retired Persons supporting the legislation but a number of other groups taking critical positions. In general, the pharmaceutical industry and major health care industry players, supported the final bill.

Republicans

The Bush Administration and Republican Congressional leaders maintained that passage of a prescription drug benefit without broader reforms, would bankrupt the program, while Democrats maintained that Medicare was in relatively good fiscal shape and reliance on private health plans to reduce costs was not likely to work. (American Health Line: National Journal's Daily Briefing, April 14, 2003).

Many Republicans would only accept an expansion of Medicare benefits if it was accomplished by increased privatization. Bush Administration officials and Congressional Republicans said that they wanted to give private plans more of a role on the grounds that such plans are thought to improve quality by being better able to coordinate health care services for beneficiaries with chronic conditions than fee-for service plans  (American Health Line: National Journal's Daily Briefing, May 6, 2003).

Conservative Republicans objected to the legislation saying that it introduced too little private sector competition in to Medicare to control costs. Some who voted against the bill maintained that it would create expensive entitlements for all seniors instead of a more targeted, less costly approach and that it lacked necessary cost controls. (American Health Line: National Journal's Daily Briefing, November 17-18, 25, 2003).

Republican leaders, however, hailed the agreement for its cost containment provisions. Representative Bill Thomas, chair of the conference committee (Rep-California) said "We are re-structuring Medicare to create a more sustainable program by a fair sharing of costs between those beneficiaries who can help and the taxpayers."  (American Health Line: National Journal's Daily Briefing, November 17, 2003)

Democrats

In general, Democrats objected to the President's plan because it did not provide comprehensive prescription drug benefits unless seniors joined an HMO or other private insurance plan.  Some strongly opposed it on the grounds that it would dismantle fee-for-service Medicare and result in a re-structuring of Medicare as seniors felt compelled to choose private PPO and managed care plans in order to get much needed prescription drug coverage. Given that traditional Medicare is a very popular government program, has high satisfaction ratings, shifting beneficiaries into private plans was seen as high risk and difficult to justify to Medicare voters.

Democrats criticized the use of private plans as less efficient than fee-for-service Medicare, where administrative costs accounted for 2-3 percent of spending versus 15 percent in private plans (American Health Line: National Journal's Daily Briefing, June 3, 2003), and studies showed Medicare costs per enrollee increased at only 9.6 percent per year from 1970 to 2000 as compared to 11.1 percent average annual growth rate for private insurers (C.Boccuti and M.Moon, Health Affairs, 2003)

Democrats cited seniors' experience with managed care under Medicare + Choice, which was relatively poor in support of their position. Enrollment, which peaked at 16 percent of beneficiaries in 2000, subsequently dropped to 11 percent in 2003, with more than one-half of participating plans dropping out of the Medicare market during that time, and stranding seniors. (G. Dallek et al. Lessons from Medicare + Choice for Medicare Reform, The Commonwealth Fund Policy Brief #658, 2003).

In June 2003, Democrats reacted to the House and Senate bills.While some leading Democrats supported the Senate bill many strongly opposed the House bill which called for greater privatization of the program.

Much of the Democrats criticism of the House and Senate bills was over the provision to inject market competition into traditional Medicare, maintaining that the proposed legislation would threaten the whole Medicare system and that the competition package was "an untried, untested, unworkable program."  (American Health Line: National Journal's Daily Briefing, September 9, November 6 and13, 2003). A major concern was that the sickest seniors would choose traditional fee-for-service Medicare and have to pay more to have that option.

Democrats also opposed the plan to create tax-preferred health savings accounts as "a tax gimmick that will primarily help the wealthy and major GOP contributors" (American Health Line: National Journal's Daily Briefing, November 4, 2003)

On the provision that prohibited the government from using its purchasing power to negotiate lower drug prices, Democrats argued that negotiating lower prices would reduce spending while Republicans said negotiations would lead to price controls and discourage drug industry innovation (American Health Line: National Journal's Daily Briefing, November 24, 2003)

Medicare Beneficiaries

A Kaiser Family Foundation/Harvard School of Public Health survey, found 56 percent of seniors thought a prescription drug benefit should be offered through Medicare instead of private plans, and 54 percent said the benefit should be as generous as employers give their workers, regardless of whether that would increase program costs   (American Health Line: National Journal's Daily Briefing, June 9, 2003)

In a poll conducted by USA Today of 252 adults aged 65 and older on December 9, 2003, after passage of the Medicare reform legislation in Congress: 46 percent of seniors favored the bill and 39 percent opposed it; 56 percent said that they were worried the plan did not provide enough help and 84 percent responded that they thought the provisions of the plan were too complicated for seniors to understand.

Managed Care Plansand Providers

Managed care plans and the American Association of Health Plans maintained that risk-sharing between government and health plans was necessary to ensure the viability of the new Medicare program, and that few private plans would enter the Medicare market unless the federal government increased subsidies and guaranteed market stability. The  American Association of Health Plans projected that more HMOs would withdraw from Medicare in 2004 and 2005 if the government did not increase payments. (American Health Line: National Journal's Daily Briefing, July 1, 2003)

In November, the American Hospital Association, Federation of American Hospitals, and Health Insurance Association of America supported the proposed compromise Medicare bill, which increased payment rates to providers.  The American Hospital Association and American Medical Association both launched advertising campaigns to garner further support for the legislation. (American Health Line: National Journal's Daily Briefing, November 14 and 17, 2003)

Consumer and Retiree Groups

AARP, a membership and advocacy organization which represents over 35 million people over age 50, responded to the President's initial proposal that seniors in traditional Medicare should have more comprehensive benefits and that $400 billion was inadequate to create affordable health plans. AARP originally called for a $700 billion benefit and opposed such provisions as linking premiums under Medicare Part B to income. A particular concern of AARP's was that the legislation include assistance for low income beneficiaries and incentives to employers to retain drug retiree coverage. As the compromise legislation emerged, AARP officials called the proposed package an opportunity , saying "the time for broken promises is over. If this legislation is not enacted this year a major opportunity will have been lost.and politics will  have triumphed over policy and public health". It also launched a $7 million television and advertising campaign to garner support for the bill. AARP' s endorsement was considered a critical step in passing the Medicare bill. (American Health Line: National Journal's Daily Briefing, November 13-14, 17, 2003)

The Medicare Rights Center, a nonprofit organization that helps seniors deal with Medicare and Medicare HMO problems, voiced concern about the President's bill and having the medical care of the elderly returned to the private market, which historically did not work well for them. As the compromise legislation emerged, the Medicare Rights Center noted that the bill would provide relief to the very poor and people with immense drug expenses, but would otherwise be at best a meager benefit for millions of people. (American Health Line: National Journal's Daily Briefing, November 3, 2003)

Consumers Union criticized the Senate and House Medicare reform bills saying that "the combination of skimpy benefits and historically high growth of prescription drug expenditures meant that most consumers without prescription drug coverage in 2003 would be worse off in 2007 because of higher out-of-pocket expenses since the Medicare coverage likely would not offset any drug price increase."  (American Health Line: National Journal's Daily Briefing, June 16 and 21, 2003)

A coalition of labor, consumer and health groups, including the AFL-CIO, Consumers Union, Center on Budget and Policy Priorities, and United Cerebral Palsy)  urged the elimination of a provision from the final Medicare bill that would expand access to Health Savings Accounts (HSAs), which would enable  people enrolled in private plans to accrue money tax-free to pay for medical expenses, medications, long term care and coverage.  Their objection was based on a concern that HSAs would significantly weaken the employer-based health insurance system, encourage employers to adopt less comprehensive, high-deductible insurance, and shift a greater proportion of health care costs to employees. (American Health Line: National Journal's Daily Briefing, September 15, 2003)

Common Cause criticized the House and Senate bills and Congress' unwillingness to use the purchasing  power of Medicare to negotiate lower drug costs  (American Health Line: National Journal's Daily Briefing,  September 8, 2003)

Families USA criticized the provision of the legislation that would link premiums under Medicare Part B which covers outpatient services to income, and predicted that most seniors would be disappointed with the Medicare prescription drug benefit especially those in the "doughnut hole". (American Health Line: National Journal's Daily Briefing, November 13 and 25, 2003)

Pharmaceutical Industry

 The pharmaceutical industry was adamantly opposed to price controls or government administered prices for drugs for Medicare beneficiaries. They strongly favored privately administered coverage and a governmental defined benefit contribution (premium support).

Drug companies opposed the provision in the House bill that would allow for re-importation of US made drugs from abroad where they are often cheaper, and supported the compromise that included a limited provision that would allow the importation of U.S. made prescription drugs from Canada by American residents, only if the Secreatry of Health and Human Services certified the practice is safe.

(American Health Line: National Journal's Daily Briefing, September 5 and November 14, 2003)

National Governors Association

The National Governors Association, and states with prescription drug programs for low income Medicare beneficiaries, objected to a Medicare reform bill that did not include coverage for dual eligibles and did not relieve the states of drug costs for the six million people who are dually eligible for Medicare and Medicaid.American Health Line: National Journal's Daily Briefing, June 12 and September 8, 2003)

Labor Unions

Labor unions lobbied for provisions that would encourage private employers to retain the drug coverage they currently provided to retirees.

When the compromise legislation emerged, the AFL-CIO launched an advertising campaign against the legislation. (American Health Line: National Journal's Daily Briefing, November 20, 2003)

Congressional Budget Office and Public Policy Think Tanks

In response to the House and Senate bills, the Congressional Budget Office estimated that for 35 percent of beneficiaries, the cost of signing up for the benefit, $695 for the premium and deductible, would be higher than what they would receive in benefits. (American Health Line: National Journal's Daily Briefing, June 16, 2003). The Congressional Budget Office predicted that the $250 deductible and $2850 gap in prescription drug coverage would increase by 10% by 2007 and by 78% by 2013, as drug spending goes up, thereby reducing the value of the benefit relative to seniors' income. (American Health Line: National Journal's Daily Briefing, November 25, 2003).

In November 2003, the Kaiser Family Foundation estimated that the $250 deductible in 2006, would be $445 in 2013, and that the initial cost-sharing limit of $2,250, would increase to $4,000 in 2013.

The National Academy of Social Insurance study found that requiring traditional fee-for-service Medicare to compete with private health plans could make coverage unaffordable for lower income seniors in some regions of the US. and raised concerns that with private plans tending to cherrypick the healthiest patients, direct competition between traditional Medicare and private plans might  devastate traditional Medicare in some parts of the country. Some members of the panel, however, said that lack of competition with private plans would be inconsistent with the desire to give Medicare beneficiaries more choice. (American Health Line: National Journal's Daily Briefing, November 4, 2003)

The Center on Budget and Policy Priorities criticized proposed cost containment measures that would cap the federal government's general revenue Medicare spending at 45% and reduce provider reimbursements, which could disproportionately hurt seniors with low incomes and cause providers to stop treating Medicare beneficiaries (American Health Line: National Journal's Daily Briefing, November 7, 2003)

Influences in policy making and legislation

The Medicare Modernization Act was passed in November 2003.

Legislative outcome

success

Adoption and implementation

The implementation process will include all of the key stakeholders: the U.S. Secretary of Health and Human Services, Congress, the Centers for Medicare and Medicaid Services, State Governors, the Food and Drug Administration, employers, labor unions, the pharmaceutical industry; private health plans, insurers, and, 40 million senior citizens.

The full drug benefit does not take effect until 2006. The initial component of the legislation, a drug discount card for seniors, will be implemented in 2004.

Monitoring and evaluation

The impact of the Medicare Modernization Act on Medicare costs and the current traditional fee-for-service model; seniors' access to drugs and coverage; seniors' out-of pocket drug costs and utilization; trends in drug prices; and private health plan and provider participation in Medicare, will be evaluated by the government, consumer groups, health policy think tanks and independent foundations, and industry.

Expected outcome

The President anticipates that the drug benefit will cut seniors' prescription drug bills by 50 percent. With $400 billion put on the table, the bill is expected to aid millions of seniors in paying for prescription drugs, but the degree to which it would, varies considerably across the elderly population and there are notable gaps in coverage that would require seniors to incur out-of-pocket costs.  For those who have no drug coverage, the bill could offer significant relief, but for others, with drug costs in the middle range or the "doughnut hole", the coverage may be disappointing. People with low incomes as well as those with high drug costs would benefit most.

Nonetheless, no one knows whether the drug benefit will work as intended or how well it will work. It is a complicated benefit that may be difficult for seniors and the disabled to understand. The new benefit will be offered by private insurers and health plans, and while the legislation defines a standard benefit, insurers could vary it considerably. It is also not known whether insurers will offer a stand-alone drug benefit, which is at present virtually non-existent.  Questions raised by health policy experts include: "Will elderly people sign up for the new drug benefit? Can insurers secure big discounts in negotiations with drug manufacturers? Will increased federal payments lure private health plans into the Medicare market? Will competition among health plans save money for Medicare? Will private plans cost more than traditional Medicare? Will employers scale back health benefits for retirees knowing they can get a basic drug benefit from Medicare?" (New York Times, December 9, 2003)

The political impact of  passing the Medicare drug benefit is also not clear. It should, according to David Broder, of The Washington Post, be a victory for the Republicans and put them "in a better position to compete for votes from the 40 million politically powerful senior citizens who benefit from Medicare"…  while "Democrats have long been able to claim credit for Medicare, because it was created despite Republican opposition in 1965, the GOP has now earned bragging rights to the reform bills' passage."  (American Health Line: National Journal's Daily Briefing, June 30, 2003).  Nonetheless, as the reaction to the drug bill from senior citizens has been mixed, the reforms will not be fully implemented until 2006, and voter reaction in this Presidential election year will not be fully known until November 2004, it remains difficult to gauge the extent of political impact of this legislation.

Impact of this policy

Qualität	kaum Einfluss		starker Einfluss
Gerechtigkeit	System weniger gerecht		System gerechter
Kosteneffizienz	sehr gering		sehr hoch

It is too soon to judge the impact as the legislation was passed in November 2003 and has not yet been implemented.

References

Sources of Information

Juliette Cubanski and Janet Klein, A Medicare Prescription Drug Benefit: Focusing on Coverage and Cost, The Commonwealth Fund, Issue Brief #538, April 2002.

The Bush Administration's Fiscal Year 2004 Budget: Analysis of Key Health Care Provisions,  (Families USA, February 7, 2003)

Dana Gelb Safran et al. Seniors and Prescription Drugs: Fundings from a 2001 Survey of Seniors in Eight States, The Henry J. Kaiser Family Foundation/The Commonwealth Fund/Tufts-New England Medical Center, July 2002.

President George W. Bush, 21sst Century Medicare: More Choices-Better Benefits: A Framework To Modernize and Improve Medicare,  March 2003.

Christine Boccuti and Marlyn Moon, "Comparing Medicare and Private Insurers: Growth rates in Spending Over Three Decades",  Health Affairs, March/April, 2003

Robert Pear, Plans Improve Federal Workers Drug Benefits, New York Times, July 8, 2003.

American Health Line: National Journal's Daily Briefing, April - November, 2003.

Marilyn Moon, Medicare Prescription Drug Legislation: How Would it Affect Beneficiaries? (The Commonwealth Fund, Policy Brief #678, October 2003).

Bush Unveils Medicare Drug Proposal, MSN/MSNBC News,  www.msnbc.con, March 5, 2003.

Berg Dale et al. State Medicaid Prescription Drug Expenditures for Medicare-Medicaid Dual Eligibles, The Commonwealth Fund Issue Brief #  April, 2003.

Prescription Drug Coverage for Medicare Beneficiaries: A Side-by-Side Comparison of S.1 and H.R. 1, and the Conference Agreement, Henry J. Kaiser Family Foundation, November 26, 2003.

Karen Davis,"Despite Medicare Bill's Passage, Congress's Work Unfinished," The Commonwealth Fund, www.cmwf.org, November 26,2003

Reform formerly reported in

Medicare Drug Coverage for Seniors Process Stages: Strategiepapier, Idee, Pilotprojekt

Author/s and/or contributors to this survey

Robin Osborn; reviewed by Barbara Cooper

Empfohlene Zitierweise für diesen Online-Artikel:

Robin Osborn; reviewed by Barbara Cooper. "Expansion Of Prescription Drug Benefits". Health Policy Monitor, February 2004. Available at http://www.hpm.org/survey/us/c2/1