June 19, 2003|By Benjamin L. Cardin
ADDING PRESCRIPTION drug benefits to Medicare is the stated goal of both Democrats and Republicans in Congress.
Overwhelmingly, America's seniors want an affordable, guaranteed benefit that will cover most of their outpatient drug costs.
Unfortunately, the proposal that the Senate will consider lacks the elements necessary to accomplish this task.
A meaningful Medicare prescription drug benefit must be voluntary, it must be a guaranteed benefit for all, it must be funded adequately to attract widespread participation, it must contain a mechanism to lower the cost of drugs and it must provide a framework that can be expanded in future years.
Under the Senate bill, participation is voluntary, so seniors may either select it or keep their own retiree or supplemental policy. Many government and private sector retirees enjoy coverage that includes prescription drug benefits.
But the bill lacks three critical elements: a guaranteed benefit, an adequate subsidy and a glide path to a full benefit. Instead, the Senate bill relies on drug-only private insurance plans, a model that is virtually nonexistent in the under-65 market. Although the authors say that the value of benefits will be the same whether seniors stay in traditional Medicare or join an HMO or preferred provider organization, in either case, private plans - not Congress - will decide the monthly premium, which drugs are covered and how much is reimbursed.
This is all about how much money the government wants to set aside for a prescription drug benefit for seniors. The Senate plan would set aside money based on its arbitrary budget projections to define funding, not the reasonable cost of providing seniors with their medicines.
Seniors have already been burned by false promises of private sector participation in the failed Medicare+Choice program. In 1997, eight Medicare HMOs covered more than 100,000 Maryland seniors. By 2002, all had abandoned our state, taking with them the drug benefits that had enticed seniors to leave traditional Medicare in the first place.
To protect seniors from private insurers pulling out of the prescription drug market, the Senate bill includes a "fallback" provision. If at least two plans do not enter a region, the government would offer them more money to induce participation. Only if efforts failed to enlist two participating plans would government provide a fallback option that would vanish as soon as private plans entered the market again.
But the Senate's fallback provision is less than satisfactory. Instead, seniors need a true fallback, one that would offer each beneficiary the option of a guaranteed benefit, with a monthly premium, deductible and co-pay set by law.
In addition, government subsidy of any benefit must be sufficient to encourage widespread participation and avoid adverse selection. The Senate bill spends about $380 billion over 10 years, which is not enough to provide seniors with continuous coverage. The Senate bill would suspend coverage after $4,500 in annual drug costs are incurred and not resume coverage until the beneficiary reached $5,800 in drug costs that year. Many seniors will not want to pay premiums for a plan that has such a break in coverage.
Finally, it is essential that any proposal provide a benefit that can be expanded and modified as needs dictate. However, under the Senate plan, there is no legislative formula to account for increased costs, and private insurance plans that continue to offer the benefit are more likely to reduce their benefits over time, particularly if the government subsidy remains constant and drug costs increase.
In the past, we've seen what happens to benefits that are defined only by dollars and cents in the private market. Seniors need a reliable benefit that is guaranteed under the Medicare program and is not dependent on the profit margins of private insurance plans.
Benjamin L. Cardin represents Maryland's 3rd Congressional District in the House of Representatives.
