July 13, 2001

Bush Releases Medicare Reform Principles, New Prescription Drug Discount Card

President Bush July 12 announced principles for improving Medicare and unveiled a prescription drug discount card for seniors that would be implemented without Congressional action.

His eight principles for Medicare reform included the following:

• All Seniors should have the option of a subsidized prescription drug benefit as part of modernized Medicare;
• Modernized Medicare should provide better coverage for preventive care and serious illnesses;
• Today's beneficiaries and those approaching retirement should have the option of keeping the traditional plan with no changes;
• Medicare should provide better health insurance options, like those available to all Federal employees;
• Medicare legislation should strengthen the program's long-term financial security;
• The management of the government Medicare plan should be strengthened so that it can provide better care for seniors;
• Medicare's regulations and administrative procedures should be updated and streamlined, while the instances of fraud and abuse should be reduced; and
• Medicare should encourage high-quality health care for all seniors.

The President's remarks provided some further detail as to the overall structure of reform. "The two parts of Medicare must be combined into one," said Bush. "When popular alternative plans are established, the government's contribution to any one Medicare plan should eventually be tied to the average cost of all Medicare plans, preventing any one plan from driving up the costs that all Americans must pay."

The centerpiece of the plan, a prescription drug discount card, would allow seniors to buy prescriptions at a discount of about 10-25 percent off retail prices. The Medicare-approved cards would be offered by private providers such as pharmacy benefit managers and would be available to all beneficiaries. The cards would be available free of charge or at a nominal one-time enrollment charge. The companies offering the cards would negotiate the prices of the drugs with the manufacturer. Medicare would require the approved card sponsors to publish the discounted prices for most prescription drugs purchased by seniors to encourage price competition.

Information: Lynne L. Davis, AAMC Office of Governmental Relations, 202-828-0526.