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Prescription Drug Plan

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"More than half the seniors without any prescription drug coverage at all are middle-class seniors. On average, middle-class seniors without coverage buy 20 percent less drugs than those who have coverage, not because they're healthier, but because they can't afford it."

President Bill Clinton
Monday, March 13, 2000

Today, in Cleveland, OH, President Clinton highlighted new data documenting the financial burdens middle-income Medicare beneficiaries face in purchasing prescription drugs and accessing affordable insurance coverage for these lifesaving medications. The analysis being released today shows that middle-income beneficiaries without prescription drug coverage purchase 20 percent fewer drugs but pay about 75 percent more out-of-pocket than those with drug coverage. The data also show that premiums for private Medigap insurance with drug coverage - mostly purchased by middle-class seniors - are extremely expensive and get more costly as beneficiaries age. These findings, along with other recent research, reveal the shortcomings of proposals by some Republicans that fail to cover middle-income seniors. The President renewed the call for his own comprehensive plan that includes a voluntary drug benefit accessible to all Medicare beneficiaries.

LOW-INCOME BLOCK GRANT WOULD EXCLUDE MILLIONS OF SENIORS. Some Republicans propose to expand prescription drugs through a block grant to states to cover low-income seniors. The data show that targeting only those with low income would leave millions of seniors without affordable, dependable coverage:

  • Middle-income seniors without drug coverage purchase 20 percent fewer prescription drugs but pay about 75 percent more out-of-pocket on drugs than insured middle-class beneficiaries;
  • Over half of Medicare beneficiaries who lack prescription drug coverage have income above 150 percent of poverty, which would disqualify them from most low-income block grants. In Ohio, most seniors would not qualify for a low-income block grant, earning too much to receive assistance in a low-income plan but too little to afford expensive private premiums; and
  • Governors oppose shifting responsibility of drug coverage for seniors to states.

MEDIGAP AND TAX PROPOSALS LEAVE GAPS IN COVERAGE. Expanding private Medigap insurance and offering tax breaks as solutions to the prescription drug problem, as some in Congress are proposing, would disproportionately assist high-income seniors and would leave millions of middle-income seniors without a dependable, affordable option. And because they do not promote group purchasing, these approaches cannot leverage price reductions for seniors.

  • New General Accounting Office data being released today show private Medigap premiums are expensive - especially for older seniors;
  • In most states, Medigap for an 80-year-old costs 33 percent more than the same coverage for a 65-year-old. In Ohio, an 80-year-old can expect to pay over 50 percent more - $84 per month - than a 65-year-old for Medigap that includes prescription drugs;
  • The extra cost for a plan with prescription drugs is high - in some states, higher than the value of the coverage itself.
  • Only about 10 percent of beneficiaries get prescription drugs through Medigap - and almost half of Medigap enrollees do not keep it for the entire year;
  • A new prescription Medigap plan covering only prescription drugs would be prohibitively expensive or inaccessible;
  • Providing tax breaks for prescription drug costs misses those with no tax liability - about 40% of seniors; and
  • Tax and Medigap approaches not only offer poor coverage, but do not provide discounts for medications purchased.

PRESIDENT'S APPROACH ASSURES AFFORDABILITY AND ACCESS. President Clinton's FY 2001 budget includes a comprehensive plan that makes Medicare more competitive and efficient and dedicates part of the surplus to improve Medicare's solvency and to add a long-overdue prescription drug benefit. The President's plan is voluntary, accessible and affordable to all beneficiaries, provides meaningful protection and bargaining power, and is consistent with broader Medicare reform.

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