Q&A - Medicare options available

President Bush on Monday signed legislation that changes the federal Medicare law and provides for prescription drug coverage. Many questions remain about the new prescription plan. Elderly Americans in the Medicare program who currently rely on supplemental insurance can choose to keep such Medigap policies under the new law, but Medicare beneficiaries cannot be enrolled in both a Medigap plan and the new prescription drug plan, which leaves a "doughnut hole" of expenses that aren't covered. Below are portions of a transcript of a press conference, also held Monday, with White House press secretary Scott McClellan responding to questions about the new Medicare coverage.

Q. Scott, why did the president support the provision in the Medicare bill that would ban Medigap coverage for the so called "doughnut hole" in prescription drug coverage?

McCLELLAN: Well, it was a consumer protection measure, number one. But the president supported this legislation because it will lead to the biggest improvements and greatest advance in health care for our nation's seniors since Medicare was created in 1965. This legislation will provide some 40 million seniors access to prescription drug coverage under Medicare for the first time in history. Seniors have been waiting too long for the kind of modern, updated benefits that others have access to. And the president was pleased to sign this legislation that will give seniors more choices, better benefits, and more control over their health care.

It is important for seniors to have the same kind of access to the medicine and plans that members of Congress now have access to. And this legislation -- the provision you're talking about is about consumer protection for seniors in making sure that insurers aren't offering duplicative, overpriced coverage to them.

Q. The way that I've heard it, though, is that the administration has concerns that if seniors have Medigap covers, they'll overuse the benefit, and that this is ... .

McCLELLAN: Well, first of all, and keep in mind, in this legislation that the first choice that seniors are going to have is the choice to keep their current coverage if they like the way it is working. This is a voluntary program. It provides more choices and better benefits, and the bill permits the renewal of traditional Medigap policies, as you bring up, but prohibits the selling of duplicative coverage that this bill makes available to them.

Q. Right. But, still, seniors will get stuck -- seniors who have drug costs that run just below catastrophic coverage, or even over, will still get with this $2,800 out-of-pocket expense because they will not be able to buy Medigap insurance to plug that hole. And I'm wondering why the president saw fit to support that particular provision.

McCLELLAN: Again, why I said; because it's a consumer protection measure that I just outlined to you. And under this legislation, seniors are going to see great savings for their prescription drug coverage. Seniors ... .

Q. But they could see more, though, if they could buy that insurance.

McCLELLAN: Seniors who have no coverage right now will be able to join a Medicare-approved plan that will cut their yearly drug cost in half, nearly in half, in exchange for a $35 monthly premium. In many instances, the savings are going to be far greater than that. Seniors with no drug coverage and monthly drug cost of $200 would save more than $1,700 on drug costs. Seniors with no drug coverage and monthly drug cost of $800 would save nearly $5,900 on drug cost. So this is a lot of savings in low-income seniors in particular.

Q. I understand the savings, but there is still this doughnut hole, as people like to call it, that they can't get coverage for. And I'm just wondering why the president would see fit to not allow them to get coverage for it.

McCLELLAN: You asked specifically about the Medigap policy and stories that ran over the weekend, and what I addressed was the consumer protection measure that was put in the Medicare legislation, for the reasons I stated.

Q. How is a consumer protected by being denied the choice to purchase a product in the free market that he or she thinks will help them?

McCLELLAN: No, they will be able to -- they will be able to keep that coverage if they ... .

Q. But they won't be able to buy -- you just said they will be banned from buying Medigap insurance.

McCLELLAN: If they want to. This package that was passed by Congress is comprehensive and offers a very generous benefit package for seniors. Low-income seniors, at the lowest levels, will be covered completely. And it's a broad benefit, which is why the AARP and doctors are solidly behind this bill.

Q. I understand, those are your talking points. But we're curious about this provision in the law which bans ... .

McCLELLAN: Insurers could go in there and overcharge seniors for a duplicative coverage. That's the concern. That's why -- I mean, that's why that measure was put in there.

Q. But car dealers could overcharge me for cars. Isn't the bias of this administration to be free market and let people essentially decide for themselves and let the market decide?

McCLELLAN: That's why I emphasized that under this legislation that seniors -- the one choice that they will always have is to be able to keep the coverage they have now. And they can go and renew their traditional Medigap coverage if they so choose. But what this legislation is going to do is going to insert competition into the system which will make health-care coverage for seniors more affordable and offer better care to our seniors at the same time.

Q. And insert a little cost discipline. Isn't one of the objectives here to have people feel the cost ... .

McCLELLAN: I mean, you all are looking at this -- you all are looking at one specific area that was a consumer protection measure. Let's keep in mind the historic nature of these sweeping changes to Medicare that will offer -- that will strengthen and modernize the Medicare for our nation's seniors, for 40 million seniors and people with disabilities who have access to Medicare coverage. It will provide them prescription drug coverage. It will lower drug costs for many of our seniors, particularly the low-income seniors.

Q. So protecting seniors by prohibiting them from buying what they want to buy on the open market?

McCLELLAN: We don't want seniors to be overcharged or have duplicative coverage.

Q But, Scott, isn't it true that this is a deterrent measure, that if you feel that if you allow seniors to get this Medigap coverage, that they'll over-use the system, or if you make it difficult for them to go above the $2,250 yearly benefit, that they are less likely to reach that benefit level?

McCLELLAN: Well, I think I just explained the way that we view this provision within the legislation.

Q. Yes, but the way that you explained it doesn't make any sense at all.

McCLELLAN: Sure it does. It's a consumer protection initiative.

Q. No, it doesn't, because this is a free market White House that believes that Americans should be able to buy whatever they want on the open market, and you're saying that they can't.

McCLELLAN: And that's what seniors have. They have choice. They have choice and they have benefits that they can choose from. They can keep that coverage if they so choose. That's the first and foremost choice that they have. They can keep that coverage. But we're offering them more benefits and the ability to save even more on prescription drug costs.

Q. Scott, the White House rhetoric is that you don't want seniors to be overcharged, it's going to make it more affordable. But the reality is, this bill does not allow seniors to buy drugs from Canada, and there's also a provision in the bill that does not allow Medicare ... .

McCLELLAN: The reality is that there are safety issues involved with that matter too, and that there is -- FDA and HHS are looking at those issues and looking at that in the long-term context too, about ways that they can address the safety issues.

Q. And then the second part, there's a provision in the bill that does not allow Medicare to negotiate bulk prices, like the Veterans Administration is able to -- since they buy a lot of drugs, they get them at a discount. Yet there's specifically a provision in this bill that says that Medicare can't do that. Why would the president oppose a government agency getting a savings from the pharmaceutical industry?

McCLELLAN: Why would the president support the biggest improvements in Medicare in more than three decades? Because this -- because this is about America's seniors and they have waited long enough. Congress worked hard in a bipartisan way to reach an agreement, and the president was pleased to support this -- to not only to support this legislation, but be out front advocating for the passage of a stronger and more modern Medicare program.

This legislation, beginning next year, will provide seniors immediately with a drug discount card, where they can save some 10 to 25 percent off the cost of most medicines. Beginning in 2006, as I mentioned, seniors without coverage will now be able to join a Medicare-approved plan that would cut their yearly drug costs roughly in half in exchange for a $35 monthly premium. And in many cases, as I pointed out, those savings are going to be far greater.

There would be -- for low-income seniors, they're going to receive additional help paying for their medicines. There would be a $600 annual subsidy that would be added to their discount drug card. There would be no additional premium, no deductible, and low co-payments for seniors with limited savings and incomes at or below 135 percent of poverty.

This is a good piece of legislation that provides seniors with the kind of benefits and choices to control their health care so that they can choose the health care that best meets their individual needs and makes it at a more affordable cost for seniors.

Q. Most Americans, as you know, buy in bulk. They shop at places like Costco and other places. How will it make sense to them when the government isn't willing to buy in bulk to get a discount rate?

McCLELLAN: I think I just addressed that it's important to look at the legislation and what it does for American seniors. And this improves Medicare for America's seniors and allows them the choices and benefits that they deserve, and the kind of modern medicine that they should have had long ago, and the prescription drug benefits, access to prescription drug benefit that they have waited on for far too long because of partisan bickering.

The president is focused on solutions, and we provided a very strong solution to help America's seniors have more affordable and better health care.

Q. Scott, Democrats intend to introduce legislation enable the federal government to negotiate drug prices. Does the White House support or oppose that legislation?

McCLELLAN: The White House has put forward our plans that allow -- or that work toward making health care more affordable, more available, and more accessible to all Americans. And this is historic legislation that we just passed that is going to, as I said, reduce drug coverage -- or reduce the cost of drugs for millions of seniors. There are some 10 million seniors without prescription drug coverage now. And they're going to see their prescription drug bills cut significantly. And that's important for America's seniors.

Q. We got that part. We're a little slow, but we're not that slow. (Laughter.)

McCLELLAN: Well, it is Monday, so maybe I'm slow.

Q. But what I'm asking about is -- obviously, it is an issue about whether or not the government negotiates prices. It's a concern about whether or not it turns into price fixing. So I'm just trying to figure out what the White House position is, what the White House reasoning and view is on whether or not that is a good road to go down or not.

McCLELLAN: The road we took today is a good road to go down, to provide seniors with more choices and better benefits. And the president was pleased to sign this legislation. We're going to continue working on all our initiatives to make health care more affordable, more available, and more accessible, and improve the quality of care for all Americans. And today was a significant step for an important segment of our population -- America's seniors. And you are very well-aware of our health care initiatives that we have put forward, and the health saving accounts that were part of this legislation that will also enable additional savings for Americans.

Q. But do you have a position on legislation ... .

McCLELLAN: I think I've addressed -- our position is, the proposals we've put forward, and that's our view. ...