Medicare Bills Have Pitfalls For Poor

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Medicare Bills Have Pitfalls For Poor

By JOHN A. MacDONALD

Hartford Courant, July 16, 2003

WASHINGTON - Millions of low-income elderly Americans would pay substantially more out of pocket under the recently passed House Medicare prescription drug plan than under a rival Senate measure.

But the Senate plan would unravel the current universal nature of Medicare - at least for some recipients.

In some cases, the out-of-pocket difference between the Senate and House plans could amount to thousands of dollars a year, a new comparison shows, because low-income subsidies are less generous in the House plan. The subsidies phase out when beneficiaries' income reaches about $14,000 a year.

"The Senate bill is much more generous to seniors ... by a very large margin," said John C. Rother, policy director at AARP, which represents people 50 and older.

Still the Senate version is flawed, experts said. It would exclude very low-income Medicare beneficiaries from prescription drug coverage under the federal health program for the elderly and instead put their drug coverage under Medicaid, a program for the poor in which the federal government and the states share responsibility.

"That's a major departure from the universal nature of the Medicare program today," said Patricia Neuman, a Medicare expert at the private Kaiser Family Foundation.

The differences between the two bills, which extend to dozens of provisions, will be thrashed out by Senate and House negotiators in talks that are expected to extend into September. The Bush administration so far has remained neutral.

Except for policy experts, the differences in the treatment of low-income beneficiaries have attracted little attention. Democrats, the most vocal critics of the two plans, have focused most of their attention on the charge that Republicans are attempting to privatize Medicare. The Democratic Congressional Campaign Committee last weekend began broadcasting a commercial in eight states that repeats the charge.

The consumer organization Families USA is one of the few groups to quantify the differences between the two plans in out-of-pocket costs for low-income beneficiaries. A Families USA study found that the differences are the largest for those with very high levels of annual drug costs. For example, a beneficiary with $3,000 in annual drug expenses would pay $75 out of pocket under the Senate plan, compared with $1,114 under the House measure, Families USA said.

The reason is that the House plan provides no low-income subsidies between $2,000 and $3,500 in annual drug expenses. The Senate plan includes subsidies for up to $4,500 in annual expenses.

"The bill that recently passed the Senate can provide significant relief for the millions of low-income seniors most in need of help," said Ronald F. Pollack, Families USA executive director. "Unfortunately, the opposite is true about the House-passed bill, which provides very meager help for low-income seniors and will keep drugs unaffordable."

Gail E. Shearer, health policy analyst at Consumers Union, publisher of Consumer Reports magazine, has urged Congress to adopt the Senate bill's "more generous coverage for low-income beneficiaries."

In a letter to President Bush, 37 Senate Democrats, including Christopher J. Dodd and Joseph I. Lieberman of Connecticut, called the low-income subsidies "one of the most attractive elements of the Senate-passed bill."

Timothy S. Jost, a Washington and Lee University law professor who specializes in health care issues, agreed with the senators. He said the House bill is worse for low-income beneficiaries because of the subsidy gap, which he called "quite large."

House Speaker J. Dennis Hastert, R-Ill., has defended the generosity of the House bill. Citing a Bush administration report, Hastert said Medicare beneficiaries on fixed incomes would experience a significant savings under the House plan. For a beneficiary with $1,285 in drug expenses, which Hastert called typical, the House plan would reap a 37 percent savings, he said.

About 7 million Medicare beneficiaries have annual incomes and assets low enough to qualify for both Medicare and Medicaid. Medicaid pays the Medicare premiums, deductibles and co-payments for this group of very poor people, who account for about 17 percent of Medicare beneficiaries.

Under the Senate bill, these 7 million people would, for the first time, be assigned exclusively to Medicaid for prescription drug benefits. Jost said that could subject this group to the ups and downs of state budgets. In addition, Jost said, Medicaid can have a stigma associated with it that Medicare doesn't have, because Medicaid is a program for poor people. Some pharmacies do not accept Medicaid participants, Jost said.

Shearer, the Consumers Union expert, is urging congressional negotiators to accept the House provision on this issue because it does not shift Medicare beneficiaries into Medicaid for drug coverage.

James Firman, president of the National Council on the Aging, said the provision for the 7 million poor people is one of several examples in which the House bill is better that the Senate. "We strongly prefer the House treatment of low-income beneficiaries eligible for Medicare and Medicaid," Firman said.

Leaders of the National Governors Association have objected to the Senate provision, arguing that it would shift what they see as a federal responsibility to the states.

Sen. John D. Rockefeller IV, D-W.Va., tried to delete the Senate provision during debate on the overall Medicare measure. After losing 51-47, Rockefeller said, "It is unconscionable to me that seniors who have the least amount of income and need prescription drug coverage the most are completely left out of this Medicare benefit."

Marilyn Moon, an Urban Institute economist and a former Medicare trustee, said the Senate proposal would treat the 7 million poorest Medicare recipients as second-class citizens. "The 17 percent of beneficiaries who are dually eligible [for Medicare and Medicaid] should be at the top of the list of concerns for reform and not shunted to the bottom," Moon said