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- Library provides free lunches this summer (6/19/17)
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Bush OKs new Medicare drug coverage
WASHINGTON -- President Bush signed a new prescription drug benefit into law Monday as part of historic Medicare changes that also will confront seniors with numerous and sometimes difficult choices regarding their health-care coverage.
Bush said the new drug insurance "will save our seniors from a lot of worry." But the bill's critics said the worries have just begun for Medicare's 40 million older and disabled Americans.
The government will spend nearly $400 billion over the next 10 years to subsidize prescription drug coverage, which begins in January 2006. At the same time, the government will encourage insurance companies to offer private plans to millions of older Americans who now receive health-care benefits under terms fixed by the federal government.
"Medicine has changed but Medicare has not -- until today," Bush said, explaining that prescription drugs and outpatient care have replaced hospital stays over the past two decades. "Our seniors are fully capable of making health-care choices, and this bill allows them to do that."
Mailing in the spring
Republicans generally hailed the signing as a political triumph they could use in next year's election to neutralize Democrats' historical advantage on issues regarding the elderly.
Democrats pledged to fight in the Republican-controlled Congress for changes in the law, principally for measures to bring down the price of prescription drugs.
The first tangible result of the Medicare law will be prescription drug discount cards that the president said would take effect in June. He said seniors will receive a mailing in the spring to explain the card, available for a fee of no more than $30 a year. It will offer discounts that Bush said will range from 10 to 25 percent off retail prices. Critics say the promise of savings is wildly inflated.
The president sought to reassure seniors Monday that their choices will be explained to them in detail and that they can keep the health care they have.
"If you don't want to change your current coverage, you don't have to change," Bush said.
But that option may not exist for some seniors. The Congressional Budget Office estimates that 2.7 million retirees will lose the drug coverage they now receive from former employers, although other projections are much smaller.
And those seniors who now rely on supplemental insurance to defray the cost of prescription drugs will be forced to make a change, as these so-called Medigap policies will be barred from offering a drug benefit beginning in 2006.
Some Medicaid beneficiaries, among the poorest of seniors, also could see restrictions placed on their drug coverage, several health analysts said.
Whether to sign up for the drug benefit or switch from traditional Medicare to an HMO or preferred provider organization will be a decision that for many seniors will depend on their current or anticipated future spending on drugs.
After paying for the first $250 in prescriptions, seniors will be responsible for 25 percent of the next $2,000 in drug costs. Between $2,250 and $5,100 in drug costs, the government will pay nothing. Over $5,100, the government pays all but 5 percent of prescription costs.
The monthly premium for the drug plan is estimated to be a national average of $35 in 2006. But the exact shape and cost of the drug benefit also could differ from one region of the country to the next. And nothing in the law precludes private insurers from offering more generous but also more costly plans.
The president said the average senior will see today's drug bill cut roughly in half, but his calculation includes a savings of 20 percent that is not found in the law. Instead, the administration assumes that insurers will take advantage of seniors' aggregate purchasing power to negotiate drug prices that are on average 20 percent less than today's retail prices.
The discount drug card will offer the administration a test run of how well it can explain seniors' choices.
The cards will be sponsored by insurance companies, wholesale and retail pharmacies and pharmacy benefit managers that now administer drug insurance programs for companies and the government.
The cards are likely to offer different discounts for different drugs made by different companies, so that seniors will have to choose the drug card that meshes best with their prescription medicines.
Pricing information will be posted and updated on the Medicare Web site and also will be available from the Medicare help line, (800) MEDICARE.
Prices and prescriptions may change, but the bill says participants can opt for a different card only during the annual enrollment period or under exceptional circumstances, such as a long-distance move. The drug benefit will have a similar restriction.