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Fact Sheet: President Clinton Cites Florida As Case Example for Need for Medicare Prescription Drug Benefit (7/31/00)

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The Briefing Room
                         PRESCRIPTION DRUG BENEFIT
Releases New Report on the Need For Drug Benefit for Medicare Beneficiaries
                             With Disabilities
                               July 31, 2000

Today, in an event at the David Barksdale Senior Center in Tampa, Florida,
President Clinton will critique the shortcomings of the House Republican
prescription drug proposal and release a new Domestic Policy Council /
National Economic Council report highlighting the necessity of prescription
drug coverage for Medicare beneficiaries with disabilities.  The President
will cite Florida as a case example of why a private insurance model, such
as the one proposed by the House Republicans, will not work.  He will point
out that most Medicare beneficiaries in Florida who need affordable
prescription drug coverage must turn to the expensive and limited-value
private Medigap options or the unreliable Medicare managed care market.
The new White House report documents how Medicare beneficiaries with
disabilities are in poorer health and require more prescriptions.  The
President will highlight the finding that Medicare beneficiaries with
disabilities who lack prescription drug coverage pay fully 50 percent more
out of pocket for 50 percent fewer prescription drugs than those with
coverage.  This report strongly validates the need for a voluntary Medicare
prescription drug benefit that rejects the private insurance model and
instead offers an affordable and meaningful Medicare benefit for all
eligible people with disabilities as well as all seniors.

DRUG BENEFIT.  The President will point to the barriers 2.7 million
Floridian Medicare beneficiaries face in accessing affordable prescription
drugs.  He will cite the private Medigap insurance market in Florida and
throughout the nation, which provides for an expensive but extremely
limited benefit with no protections against catastrophic expenses.  The
President will also highlight the serious shortcomings of Medicare managed
care plans, which all too frequently move in and out of participation in
the program and recently announced decisions that would effectively drop
87,000 Floridians.  He will underscore that while the Medicare managed care
program needs to be strengthened through the provision of direct subsidies
for prescription drug coverage, neither it - nor a Medigap drug-only plan -
can be relied on as workable options to provide a much-needed prescription
drug benefit for seniors and people with disabilities.

PEOPLE WITH DISABILITIES.  About one in eight Medicare beneficiaries - over
5 million (284,000 in Florida) ? are people with disabilities under age 65.
Over the next 10 years and the number of beneficiaries with disabilities is
projected to increase by 38 percent (from 5.5 to 7.6 million).  Key
findings of the report include:

Medicare Beneficiaries with Disabilities Have Poor Health and Significant
Health Care Needs. Most disabled beneficiaries -- 60 percent of disabled
beneficiaries ? report fair to poor health, compared to 22 percent of aged
beneficiaries.  Nearly 30 percent have functional limitations due to health
problems, compared to 18 percent of elderly beneficiaries.

People with Disabilities Face Unique Coverage Challenges.  Medicare
beneficiaries with disabilities are much less likely to have, be able to
access, or be able to afford private insurance coverage. The report

?     People with disabilities are 35 percent less likely to have
employer-based coverage.  While some elderly get coverage through retiree
health plans, the non-elderly disabled have typically lost access to
employer-based insurance before qualifying for Medicare (22 percent for
disabled versus 34 percent for aged).

?     Restricted access to individual Medigap insurance with drugs.  Less
than one in 20 Medicare beneficiaries with disabilities have drug coverage
through private Medigap insurance (versus 12 percent of elderly
beneficiaries).  A recent study found that only 10 states guarantee people
with disabilities access to a Medigap plan with prescription drugs.

?     Unaffordable premiums for private Medigap plans.  Only 7 of the 10
states that guarantee access to Medigap for people with disabilities have
full or partial community rating that improves the affordability of this
coverage.  Without protections, premiums range from 10 to 72 percent higher
for beneficiaries with disabilities than for those who are elderly.

?     Unlikely to get prescription drug insurance through Medicare managed
care.  While about 12 percent of Medicare beneficiaries are disabled, only
5 percent of Medicare managed care enrollees are beneficiaries with
disabilities.  In contrast, in 1996, 16 percent of elderly beneficiaries
got drug coverage through managed care.

Beneficiaries With Disabilities Need a Voluntary Medicare Prescription Drug
Benefit.  The report concludes that to ensure access for people with
disabilities, a prescription drug benefit must:

?     Ensure a Medicare option rather than rely on private insurers that
have failed to extend prescription drug coverage to people with
disabilities.  Only a small number of beneficiaries with disabilities have
access to drug coverage through private insurers, and when they do, it is
often unaffordable.  As such, any proposal must provide a Medicare
prescription drug option.

?     Have an affordable premium and a meaningful benefit.  Any proposal
must have sufficient financing to ensure that premiums are affordable to
all Medicare beneficiaries.  And to ensure that its benefit is meaningful,
it must protect against catastrophic prescription drug expenses. Medicare
beneficiaries with disabilities are more likely to have high drug costs
given their greater use.

?     Have access to the prescriptions that they need and pharmacies that
they trust.  Because Medicare beneficiaries with disabilities often have
multiple, complex health problems, it is also important that proposals
allow doctors to prescribe any drug that is medically necessary.  Also,
people with disabilities often face physical challenges in getting to
pharmacies.  Proposals should ensure that qualified community pharmacies
can participate.

?     Be adequately financed and part of a plan to improve Medicare.
Strengthening Medicare is the best way to assure that it will be available
when future retirees and people with disabilities need it.  Extending
program solvency, improving efficiency, and restoring provider payments
should be included in any Medicare reform plan.  Additionally, enough
budget surplus must be set aside to finance a meaningful prescription drug
benefit and take its trust fund off budget.

?     Does not provide a Medicare benefit.  Outpatient prescription drugs
would not be part of the Medicare benefits package like doctor or hospital
care.  Beneficiaries would pay expensive premiums to private Medigap plans
rather than to Medicare for an affordable option.  The private insurance
industry itself confirms that a private insurance model such as the House
Republican proposal will not work.  In fact, it has stated that ?to pass
legislation to provide access to such coverage would constitute an empty
promise to Medicare beneficiaries.? [Blue Cross / Blue Shield Association
Letter to Senator Roth, 4/24/00]

?     Is seriously underfunded and provides for an inadequate benefit.  The
House Republican plan dedicates less than half of the resources the
President and the Democratic leadership allocates to a Medicare
prescription drug benefit ($40 billion versus over $80 billion).  As a
result, the premiums are approximately 30 percent higher ($25 versus $37),
and its benefits are significantly less meaningful ($0 deductible versus
$250 deductible; catastrophic stop-loss protection beginning at $4,000
versus $6,000).

?     Would leave millions of  Medicare beneficiaries without prescription
drug coverage. The Congress? own budget office has projected that the House
Republican plan would leave out over half of the Medicare beneficiaries who
currently have no prescription drug coverage.  This finding validates that
the House plan is underfunded and does not provide sufficient benefits to
be able to make the prescription drug option attractive or affordable
enough to some of the nation?s most vulnerable seniors and people with

?     Limits choice of drugs and pharmacies.  The so-called ?choice? model
offered by the Republicans breaks up the pooled purchasing power of seniors
and people with disabilities, forcing insurers to reduce prices through
restrictive formularies and limited choice of pharmacies.  Not all
prescription drugs that a doctor determines are medically necessary would
be available ? only after an inappropriate drug has been taken can a
beneficiary can appeal for a needed drug.  Additionally, insurers could
restrict access to local pharmacies.

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