President Releases Medicare
Reform Proposal
March 7, 2003 - President Bush March 4 released a
conceptual framework
to "modernize and improve" Medicare by offering
expanded plan choices to Medicare beneficiaries and providing
immediate discounts to prescription drugs through a discount
drug card. In addition, low-income Medicare beneficiaries
would be eligible for a subsidy to help cover the costs of
prescription drugs.
The President's framework will "give all Medicare beneficiaries
access to:
- Prescription drug coverage that enables seniors to get
the medicines they need, without the government dictating
their drug choices.
- Choice of an individual health care plan that best
fits their needs - just like Members of Congress and other
federal employees enjoy today.
- Choice of the doctor, hospital, or place they want
for the treatment and care they need.
- Full coverage for disease prevention such as screenings
for cancer, diabetes, and osteoporosis.
- Protection from high out-of-pocket costs that threaten
to rob seniors of their savings."
Beyond the $600 subsidy for low-income seniors, the framework
does not detail specified dollar amount for premiums, co-pays
and deductibles and other out-of-pocket costs. The framework
also does not identify the kinds of benefits the additional
plan options would cover.
According to the framework, beginning in 2002 all seniors
will have access to a prescription drug discount card, which
is estimated to save between 10 and 25 percent. Additionally,
low-income seniors would be eligible for a $600 subsidy to
help pay for prescription drugs.
Beginning in 2006, seniors will have three plan options:
traditional fee-for-service Medicare, "enhanced Medicare,"
and "Medicare advantage." Those staying in Medicare
fee-for-service (FFS) will "be able to receive coverage
to protect them against high out-of-pocket prescription drug
expenses, at no additional premium." In addition, two
new Medigap plans will be added to the existing ten plans.
The two new Medigap plans will include "prescription
drug assistance, additional protection against high out-of-pocket
costs, and would reduce, but not eliminate, deductibles and
co-payments."
The second option, called "enhanced Medicare" is
based on the Federal Employee Benefits Health Plan (FEHBP)
model. President Bush stated "this option will include
full coverage for preventive care, a comprehensive prescription
drug benefit, protection again high out-of-pocket costs, and
extra help for low-income seniors to be able to get the drug
benefit." "Enhanced" plans will submit bids
to and be administered by a new Medicare Center for Beneficiary
Choices (MCBC) under the Department of Health and Human Services.
The MCBC will designate large, multi-state Medicare regions.
Plans would be able to serve one or more of the Medicare regions.
Beneficiaries who enroll in an average priced plan in their
region would pay a premium for the "medical portion"
of their coverage equal to the Part B premium.
"To provide an array of choices in [prescription drug]
benefit design and to encourage plan innovation," enhanced
plans would be able to structure their drug benefit differently
according to an undefined federal standard. In addition to
providing full coverage of preventive services, lifetime limits
for inpatient hospital care would be eliminated. Cost sharing
would be more "fair" and the Part A and B deductibles
would be combined into a single deductible.
The third option, "Medicare Advantage," appears
to be similar to the current "low-cost" and "high-coverage"
Medicare Plus Choice or managed care program. Under this new
program, "plans in competitive markets will bid to provide
participants with Medicare's enhanced basic benefit package.
Participants who select more efficient plans will benefit
from savings, and some participants in the most efficient
plans could pay no premium at all and potentially qualify
for a rebate on their premium."
The outline will allow Congress to work out the details.
Democratic leaders, as expected, heavily criticized the plan
for its privatization elements. House Ways and Means Committee
Chairman Bill Thomas (R-Calif.) said he looks "forward
to working" with President Bush to strengthen Medicare.
Senate Finance Committee Charles Grassley (R-Iowa) said the
plan is a step in the right direction, expressing interest
in a "universal drug benefit" for those who stay
in traditional Medicare as well as choose the new option.
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
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