"You couldn’t move my own mother out of Medicare with a bulldozer.

 She trusts it, believes in it.  It’s served her well.”

-- Representative Billy Tauzin [Washington Post, 3/4/03]

The President’s first Medicare privatization proposal, unveiled shortly before his State of the Union Address, was met with widespread opposition from health policy experts, seniors groups, and prominent Republicans in both the House and Senate.  Today, President Bush unveiled his “revised” plan, which they claim includes drug benefits for seniors in the traditional Medicare program.  But once again, the Administration’s rhetoric won’t match its reality. 

The President’s “new” plan still requires seniors to leave the traditional Medicare program if they want insurance coverage that helps them with the routine costs of medication.  Seniors in traditional Medicare would get an inadequate drug discount card – which GAO has found to provide less than a $3.50 discount per prescription – and a limited catastrophic benefit that won’t help the majority of seniors.  Low-income seniors would receive an inadequate subsidy for the discount card that won’t provide any meaningful help with the routine costs of medication.  With his new rhetoric and old Medicare policy, the credibility gap separating the President from the American people continues to widen.

THE BUSH PROPOSAL – A PLAN ONLY A BIG DRUG COMPANY COULD LOVE

“I don’t think that anyone is going to be introducing the White House plan…it’s still not sufficient.”

-- John Rother, Director of Policy at AARP [Wall Street Journal, 3/4/03]

Prescription drug costs are skyrocketing at a rate of 13 percent annually, and almost one-third of seniors nationwide have no prescription drug coverage. The problem is worse for rural seniors, 50 percent of whom have no prescription drug coverage. [KFF, 10/02]  The President’s “new” plan privatizes Medicare.  It still requires seniors to leave the traditional Medicare program if they want insurance coverage that helps them with the routine costs of medication.  The President also refuses to take meaningful steps to increase access to low-cost generic drugs. 

·         Seniors who want insurance coverage that helps them with the routine costs of medication must drop out of traditional Medicare.  Seniors who want insurance coverage that helps with the routine costs of medication must drop out of the traditional Medicare program, forcing the millions of seniors who need drug coverage to leave the traditional fee for service program and enroll in an HMO or other plans outside of Medicare instead.  Currently, 87 percent of seniors are in the traditional Medicare program. [KFF, 2002]

·          Prescription drug discount cards don’t provide much help to seniors struggling with medication costs.   GAO has found that existing drug cards save consumers an average of only $3.31 per prescription. [GAO, 2001]  The President’s plan has no guarantee of a set discount off of the manufacturer’s price, which means that seniors probably won’t save much more than existing drug cards offer. And the low-income subsidy of $600 to supplement the inadequate drug discount plan is a false promise of assistance for seniors, who spend an average of $2,317 on prescription drugs each year. [KFF 2/03]  

·         HMOs and other plans outside of Medicare hold seniors hostage and leave them with no guarantee. Forcing seniors to depend on the whim of HMOs for their drug coverage means that HMOs can vary premium costs, benefit design, and the availability of drug coverage across the country.  They can create strict formularies that limit access to prescribed drugs and bar access to local pharmacies.

BUSH PROPOSAL IS NOT BASED ON THE FEDERAL EMPLOYEES HEALTH PLAN

·         The Bush plan takes away choices from seniors, rather than increasing them.  Members of Congress get prescription drug coverage as a standard benefit, regardless of the plan they choose.  Under the President’s plan, seniors would only get insurance coverage that helps with the routine costs of medication if they joined an HMO or other plans outside of Medicare.  That’s a false choice.

·        Bush plan still contains huge coverage gap that will leave seniors paying thousands in drug costs.  Republicans will claim that their HMO plan gives seniors ‘choices’ – just like Federal employees have.  But this new benefit is much less generous than Federal Employees Health Benefits Plan (FEHBP). Under the Bush proposal, seniors pay a deductible of hundreds of dollars; have huge gaps in coverage; and a undefined catastrophic benefit that could be as high as $7,000 – too high to help most seniors.  This means that millions of seniors will have no drug coverage for large portions of the year, even though they will have to continue paying premiums year round.

·         High cap on catastrophic drug costs guarantees that few seniors benefit.  Less than 8 percent of Medicare beneficiaries spend enough on prescription drugs to benefit from the Administration’s  $5,500 limit on out-of-pocket costs. [KFF, 6/02]

NO NEW INVESTMENT MEANS NO NEW BENEFIT: NEW RHETORIC, SAME OLD POLICY

·         CREDIBILITY GAP:  Brand new benefit for the traditional Medicare program with no new investment?  President Bush will claim that his “new”, improved Medicare proposal will provide the 40 million seniors and people with disabilities (89 percent of all seniors) in the traditional Medicare program with a new prescription drug benefit.  But the cost of the “new” privatization plan is the same as the cost of the old privatization plan. That’s because even though the President’s rhetoric has changed, his policy hasn’t.  The President’s plan still requires seniors to leave the traditional Medicare program if they want insurance coverage that helps them with the routine costs of medication.

PRESIDENT’S PRIVATIZATION PLAN BASED ON FAILED EXPERIMENT OF MEDICARE+CHOICE

·         Medicare+Choice plans have dropped over 2.4 million seniors from coverage since 1997.  Despite millions in increased payments to HMOs for each year of the Medicare managed care program, HMOs have dropped 2.4 million seniors from coverage over the past five years. [WP, 1/24/03]

·         On average, premiums increased by 53 percent for all Medicare+Choice from 2001 to 2002.  According to the latest data available from HHS, premiums for all Medicare+Choice plans – whether they included a drug benefit or not – increased by 53 percent (from $21.64 to 33.14).  In addition, the number of enrollees with premiums over $50 doubled over the same time period. [CMS, 2002]

·         Medicare+Choice plans have already scaled back prescription drug coverage.  Even Medicare+Choice enrollees who were unaffected by the HMO withdrawals in 2002 still faced cutbacks in their prescription drug coverage.  In 2002, 50,189 seniors had their Medicare HMO eliminate their drug coverage and 855,695 no longer had coverage of brand name prescription drugs as part of their basic drug coverage. [CMS, 2002]  

FAILS TO INCLUDE STRONG MEASURES TO LOWER THE COST OF PRESCRIPTION DRUGS

In a cynical political effort to protect the pharmaceutical companies, President Bush refuses to support tough legislation proposed by Democrats to increase access to low- cost generic prescription drugs and save consumers $60 billion over 10 years, despite the fact that it had overwhelming bipartisan support in the Senate. 

Office of the Senate Democratic Leader March 4, 2003