Low-income seniors won't lose drug subsidy over heirlooms

WASHINGTON -- Low-income elderly people won't have to declare wedding rings, burial insurance and certain other assets to determine whether they qualify to have their medicines paid for under the new Medicare prescription drug program, the Bush administration said Monday.

Nearly 11 million low-income older and disabled Americans are projected to take part in the drug benefit when it begins in 2006, the administration said in issuing 1,956 pages of proposed regulations to govern the program. On average, the government will pay 95 percent of drug costs for low-income Medicare clients.

Congress included a provision in last year's Medicare law that would disqualify low-income older people with more than a few thousand dollars in assets from receiving subsidized coverage. Studies suggest a couple of million people could be excluded.

Democratic lawmakers and other critics said that the value of heirlooms and insurance policies to pay funeral costs could keep some people from receiving the aid.

The administration agreed and proposed to count as assets mainly bank accounts, retirement savings and real estate other than a beneficiary's home.

"Nonliquid assets are not going to be counted," Health and Human Services Secretary Tommy Thompson said.

The administration's estimate of 11 million low-income participants is substantially higher than that of the Congressional Budget Office, which said that 9.75 million people would get the subsidy by 2013. The difference helps explain their widely divergent predictions of the cost of the new law over 10 years.

CBO puts the cost at $395 billion. The administration says the law will cost $534 billion, and it drew severe criticism, including from some Republican lawmakers who reluctantly voted for the legislation last year, when it revealed the projection in January.

When the drug program begins, participants will pay a $35 monthly premium and the first $250 in drug costs. Medicare will pick up 75 percent of the next $2,000 in prescription expenses, after which there will be a gap in coverage in which participants are responsible for their entire drug bill.

Once prescription costs top $5,100, Medicare coverage resumes, with the government paying 95 percent of the bill from that point.

Despite complaints that the program is insufficiently generous, the administration said the typical older American who now has no insurance would see drug costs sliced in half.

A hotly debated aspect of the drug program is how it will affect retirees who receive drug benefits from former employers.

The number of companies offering health benefits to retirees has been declining for at least 15 years. No one knows whether the Medicare program will accelerate that trend despite a provision in the new law designed to entice companies to maintain coverage.

Medicare chief Mark McClellan refused to say Monday how many people are projected to lose coverage under the administration proposal. "We expect to slow the rate of decline and do the most possible to avoid a decline," he said.

The administration issued the regulations, in the works for months, on the first day of the Democratic convention in the midst of a campaign season in which Thompson said every pronouncement is evaluated for its political content.

However, McClellan insisted politics played no role in Monday's release. "We're getting these regulations out as quickly as we can," he said.

Medicare is accepting comments on the proposal until Oct. 4. It plans to begin enrollment in drug plans in the fall of 2005.

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