Cost-sharing is key to Medicare reforms

Federal legislators eager to pass -- before the Fourth of July holiday -- bills that eventually will provide Medicare coverage for prescription drugs were successful. Both the House and the Senate passed differing versions of Medicare-reform legislation late last month.

Now the real work begins.

Not only are the House and Senate versions different, but there is still a big gap between those in Congress who want to provide comprehensive drug coverage and those who want the new Medicare drug benefits to reflect the realities of health-care plans currently in effect for millions of working Americans.

At issue are deductibles and co-payments -- components of most of today's health plans that are familiar to employees who have seen their premiums go up year after year while they have become responsible for paying a bigger share of upfront costs. In addition, both the House and Senate Medicare bills would set earnings thresholds that would affect coverage under new drug benefits.

While a broad congressional consensus appears ready to expand the Medicare program to cover at least a portion of the cost of prescription drugs taken by the elderly outside of hospitals, there is a divide -- one that goes beyond partisan bounds -- over how much and how best to add benefits and, at the same time, change other parts of the program to keep it financially solvent.

Elderly Americans who struggle to pay for their medications will likely get only minimal relief for the next two years under the Medicare proposals currently under consideration. This would be accomplished through a discount drug card which participants would have to purchase and which would save most drug users about 15 percent a year on their prescription bills.

However, poorer Americans would have more of their drug costs paid by the government. And more affluent senior citizens would find they have to pay most of their own drug costs.

These earnings guidelines fit with the deductible and co-pay components of the proposed Medicare drug plans. Virtually every private-sector health plan in recent years has shifted more of the burden of medical care and prescriptions to those who use them, which means those who use them the most pay the most. For many workers covered by health plans, this expense-sharing option has made them acutely aware of the increasing costs associated with health care.

Both the House and Senate Medicare bills incorporate similar cost-sharing formulas. In addition, the bills would allow the elderly more options for primary care, including preferred provider organizations. Republicans in both chambers are pushing for lower premiums for those who choose the most efficient plans, thereby saving the federal government millions of dollars.

Making deductibles, co-payments and earnings thresholds a part of Medicare reform isn't likely to be widely popular, but it's financially responsible. And, given the fact that most Americans moving from job-connected health care to retirement and Medicare coverage are used to this system, it only makes sense to match government programs with those offered by private insurers.