Some seniors don't see the benefit of Rx-drug bills Anger and confusion reign as Congress moves to finalize a historic change to Medicare.

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Some seniors don't see the benefit of Rx-drug bills Anger and confusion reign as Congress moves to finalize a historic change to Medicare. A political minefield awaits

By William M. Welch

USA TODAY, September 3, 2003

PRINCETON, N.J. -- Like many of her friends, 71-year-old Claire Krulik has carefully calculated what she spends on prescription medicines and how much help she can expect if Congress agrees to add drug coverage to Medicare.

Her stark conclusion: She would be better off without either of the dueling plans facing the House of Representatives and Senate this fall. Both include a complicated array of premiums, deductibles, co-payments and gaps in coverage. Krulik, who takes medicines for diabetes, high blood pressure, asthma and other ailments, gets her drugs from Canada, where they cost up to 50% less. ''For me, it wouldn't be worthwhile,'' she says of the potentially historic drug-benefit legislation moving through Congress. ''I'd still be better off getting my medications from Canada.''

For members of Congress returning this week from a month-long summer break, sentiments such as Krulik's might slow progress toward what looked like a political triumph two months ago, when the House and Senate passed differing Medicare expansion bills. Most lawmakers think Congress needs to come up with a compromise plan in the next two months. After that, the 2004 presidential campaign is likely to make agreement more elusive.

There are risks both for Republicans, who lead Congress and have promised action, and Democrats, who have long urged an expansion of the Medicare program that serves 41 million Americans. On one hand, failure to reach agreement could cause backlash among seniors, a politically powerful group. On the other hand, passage of a drug benefit could backfire if it's seen as too complex or too stingy.

Both bills incorporate President Bush's proposal to devote $400 billion over the next decade to the drug benefit. But at best, that would cover less than one-quarter of seniors' drug spending, which health analysts project at $1.8 trillion over that period.

So far, seniors appear skeptical about the existing proposals to add prescription-drug coverage through private insurers. A new USA TODAY/CNN/Gallup Poll indicates that an overwhelming majority of seniors and others believe what Congress is offering would not do enough to help the elderly pay for prescription drugs. Slightly more people think the plans would make things worse than those who think they'd make things better.

Among the questions raised here in New Jersey and elsewhere during the past month:

Why would the drug benefit offer only limited assistance to most seniors? Why would it not take effect until 2006, long after the next election? And how might it undermine drug benefits some seniors already receive through private coverage?

The cool reaction among seniors is only one obstacle to the first major expansion of Medicare since 1965, when the national health system for Americans 65 and older was created to cover doctors' bills and hospital stays. Also standing in the way: the different philosophies of Democrats and Republicans, which go to the heart of what Medicare will look like in a decade.

Democrats, who take credit for Medicare's creation, have long favored making it more generous by adding prescription-drug coverage. They are determined to preserve seniors' ''entitlement'' to health coverage that came with Medicare's creation. And under the Senate bill, the federal government would offer drug coverage directly if private insurance was unavailable in any part of the country.

Republicans have long favored cost controls and an increased role for the private sector within Medicare. They want to force Medicare to compete with private insurers in order to make it more efficient. Under the House bill, which they had difficulty passing by one vote because Democrats opposed the GOP's approach, government-run Medicare eventually could become more expensive to beneficiaries than private insurance.

A history of failure

''A Medicare deal will be very difficult to do,'' says Robert Laszewski, a former health insurance executive and now a consultant. ''Either conservative Republicans are going to have to agree to forgo the fundamental changes to Medicare they say are necessary, or the Democrats . . . are going to have to agree to end the 40-year Medicare entitlement.''

Both parties are aware of how difficult changing the nation's health care system can be.

In 1988, President Reagan signed bipartisan legislation designed to protect seniors against catastrophic medical expenses, including high drug bills. The measure had passed with great fanfare as the biggest expansion of Medicare since its inception.

But when middle- and upper-income seniors studied the details, they revolted at the prospect of paying a surtax of up to $800 a year for benefits that some already had through private insurance. One of the authors, House Ways and Means Committee Chairman Dan Rostenkowski, D-Ill., ran into an ugly scene when seniors surrounded his car and rocked it outside a Polish-American center in Chicago. Congress quickly retreated; the law was repealed in 1989.

Ten years ago, President Clinton, assisted by first lady Hillary Rodham Clinton, attempted an even larger health-care change aimed at assuring health insurance for all. But the concept's initial popularity gave way to criticism from all sides as its 1,342 pages of details came under scrutiny. Its insurance-purchasing cooperatives, caps on premiums and mandates that employers pay for workers' coverage were opposed by powerful interest groups, including the insurance industry and small business. Many Americans who had health insurance saw a chance that they could lose benefits under the new system. After a yearlong debate, Congress did not act.

The lessons of both experiences color this year's debate. Congress has been careful to assure seniors that anything passed would be voluntary. They could choose to purchase or ignore the new drug coverage. They could stay in traditional Medicare or opt for one of the new managed-care plans that would be created with federal subsidies to private insurers.

Yet some of the same dangers remain. Just as Republicans ridiculed the Clinton plan for its complexity, Republicans' attempts to transform Medicare are being mocked in convoluted flow charts by Hillary Clinton, now a Democratic senator from New York. Other critics warn that the changes could force seniors to confront complicated choices difficult for anyone to sort through, particularly the elderly.

''It's going to confuse everyone who tries to deal with this,'' says Marilyn Moon, a health economist and former trustee of the Medicare system. ''It's important to make sure that we don't make something so convoluted that when we throw this party, we have no one come.''

Another lesson of the past is that changes should not jeopardize existing coverage. One in three retirees now have supplementary insurance provided by former employers that covers part of their drug costs. The Congressional Budget Office has estimated that one-third of them could lose those benefits if Congress provides a Medicare drug benefit.

''I can see what's going to happen,'' says Timmi Jones of Indiana, Pa., who showed up at a recent town hall meeting there held by Sen. Rick Santorum, R-Pa. She says the new federal benefit would prompt her husband's former employer to end the supplemental coverage they now enjoy in retirement. ''They're going to drop us as quick as they can,'' she says.

Seniors do the math

If Congress acts, every Medicare beneficiary will face a calculation on whether the drug benefit would be worthwhile. Several outside groups, including the Kaiser Family Foundation and AARP, the nation's largest organization of seniors, offer help on the Internet.

Both the House and Senate bills estimate that premiums will cost $35 a month initially and rise in later years. The House bill includes a $250 annual deductible, the Senate $275.

Under the House bill, seniors would pay 20% of their annual drug costs from $251 to $2,000. The Senate's version would require seniors to pay 50% of their drug costs from $276 to $4,500.

Both versions then have a gap in coverage where they offer no benefit, a feature derided by critics as a ''doughnut hole.'' Under the House version, seniors would pay all their own drug expenses from $2,001 to $4,900 a year, then pay nothing above that amount; seniors with annual incomes of more than $60,000 would have higher costs. Under the Senate version, seniors would pay all their own drug costs from $4,501 to $5,813, then would pay 10% of all additional spending.

AARP, formerly known as the American Association of Retired Persons, opposes the House bill as an assault on Medicare's guarantee of health coverage for seniors. It isn't enthusiastic about the Senate bill either; it's urging Congress to improve on both in talks this fall.

Bill Novelli, AARP's executive director, sees it as a test of the group's effectiveness and ability to represent its 35.5 million members. He says the drug benefit will be limited, but he is encouraging seniors to view action this year as a start and accept that some assistance is better than none.

''We're not trying to kill it. We're trying to make it happen,'' Novelli says. ''There's still negativism out there. . . . But among those who are listening and thinking about it, I think the tide is turning toward more positive.''

Dean Sprague, 63, a retired railroad worker in North Platte, Neb., says he and his wife Carrie, 68, spend about $6,000 a year on drugs for their ailments. He estimates it would be about $14,000 a year if not for free drug samples their doctors provide them.

Sprague is angry at drug companies for charging high prices and doesn't like the gaps in coverage that would result from either plan. But he would participate if Congress passes a drug benefit. ''I'd be a fool not to because if the drug companies stopped the samples, I couldn't get them,'' he says.

Bill Mayer, 68, a New Jersey AARP volunteer, has made a similar calculation. He receives a variety of medicines by mail from a pharmacy in Canada, a move that cut his annual costs from $3,711 to $1,936. With either the House or Senate plan, Mayer would spend more for drugs than he does now. But he says any Medicare benefit for drugs is better than none. ''I would participate,'' Mayer says. ''I think a lot of seniors would.''

Krulik, a widow who retired to a condominium in Monroe Township a decade ago after a lifetime in Brooklyn, is among the one-third of Medicare recipients who lack any prescription drug coverage. Her expenses would total about $6,000 a year at her local drug stores. She was able to cut that in half by faxing her prescriptions to a Canadian drug store that her niece found on the Internet -- a practice that remains illegal, despite some efforts by local, state and federal officials to legalize it.

But she is frustrated by the costs. ''Now that I'm retired and able to enjoy life a little, I can't,'' she says.

Sen. John Breaux, D-La., is optimistic that Congress can help -- despite the differences between the two bills pending there. ''There has to be a middle ground,'' he says. ''The only thing we've been able to deliver is excuses. If we get this close and can't get it passed, then shame on us.''