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Medicare Prescription Drug Benefit And Other National Priorities
May 25, 2000
THE WHITE HOUSE Office of the Press Secretary
For Immediate Release
May 25, 2000
PRESIDENT CLINTON AND THE DEMOCRATIC LEADERSHIP URGE
THE CONGRESS TO ACT NOW ON A MEDICARE PRESCRIPTION DRUG BENEFIT AND OTHER
NATIONAL PRIORITIES May 25, 2000
Today, the President will meet with the Democratic leadership of the
House and Senate to address national priorities that affect the health, safety,
and economic security of the nation. In addition to addressing strategies for
the passage of a strong, enforceable Patients' Bill of Rights, common
sense gun safety legislation, and a simple $1 increase in the minimum wage,
they will focus on the need to pass a voluntary, affordable Medicare
prescription drug benefit available to all beneficiaries. The President will
underscore his strong belief that a united Democratic party can help produce a
strong prescription drug benefit that receives broad based, bipartisan support,
and he will emphasize that the Congress should act on all of these national
priorities this year. Finally, the President will say that he welcomes the
Republicans' stated goal of developing a prescription drug benefit for all
Medicare beneficiaries, but he will highlight why the approach they have
outlined will not achieve this goal.
MILLIONS OF MEDICARE BENEFICIARIES HAVE NO OR UNDEPENDABLE
PRESCRIPTION DRUG COVERAGE. Millions of seniors and Americans with
disabilities have no prescription drug coverage and millions more are at risk
of losing coverage, or have inadequate, expensive coverage.
Most older Americans without prescription drug coverage are
middle-class. Over half of the millions of Medicare beneficiaries who lack
drug coverage have incomes greater than 150 percent of poverty ($12,525 for a
single, nearly $17,000 for a couple). Seniors without drug coverage fill 30
percent fewer prescriptions than those with coverage, but pay 83 percent more
out-of-pocket for drugs. In addition, not even counting manufacturers'
rebates, prescription drug prices for those without coverage are typically 15
percent higher than prices paid on behalf of people with coverage. This price
gap almost doubled between 1996 and 1999.
Current prescription drug coverage is unstable and
declining. More than three in five beneficiaries do not have dependable
drug coverage. The number of firms offering retiree health insurance coverage
dropped by 30 percent between 1993 and 1999, and Medigap premiums have been
rising at double the rate of inflation. While Medicare managed care plans
usually offer some drug coverage, it is typically limited. The number of plans
with a drug benefit below $500 has increased by 50 percent over the past two
years. In addition, 11 million beneficiaries, who disproportionately reside in
rural areas, have no access to managed care plans.
A UNIFIED DEMOCRATIC FRONT PROVIDES THE FOUNDATION FOR BIPARTISAN
CONSENSUS. President Clinton today will point out that a strong, unified
Democratic position enhances the likelihood of passing a Medicare drug benefit,
just as it helped to assure the eventual House passage of a strong, enforceable
and bipartisan Patients Bill of Rights. He will state that the recent
announcement of Democratic consensus on the details of a drug benefit should
spur the Congress to move forward on this vital issue.
UNIFIED DEMOCRATIC SUPPORT FOR A NEW, PRESCRIPTION DRUG BENEFIT
OPTION THAT IS AFFORDABLE AND AVAILABLE TO ALL BENEFICIARIES. The
Democratic Caucus supports the passage of a new prescription drug benefit that
Voluntary and Accessible To All Beneficiaries. A new benefit
should ensure that all beneficiaries can access prescription drug coverage,
whether they are in traditional Medicare, managed care, or a retiree health
plan. Employers will receive financial incentives to provide retiree coverage
and maintain existing coverage.
Designed To Give Beneficiaries Meaningful Protection. The
proposal would provide a benefit that covers half the cost of prescription
drugs up to a $5,000 limit when fully implemented and would provide additional
protection against catastrophic prescription drug costs. In addition, it would
use market-based purchasing mechanisms to achieve discounts for the price of
Affordable To All Beneficiaries And The Program. Under the
plans, Medicare will contribute at least 50 percent of the prescription drug
premium to make it affordable for all beneficiaries. The plans will also
include special protection for low-income beneficiaries; those with incomes
below 135 percent of the poverty level will receive full coverage of cost
sharing and premiums, and those with incomes between 135 and 150 percent of
poverty will receive premium assistance on a sliding scale.
Administered Using Private Sector Entities And Competitive
Purchasing Techniques. Private sector entities will negotiate prices with
drug manufacturers and administer the benefit, the same as most private
insurers. Drugs will be purchased at privately negotiated rates, giving
beneficiaries the bargaining power they lack today. As a result, beneficiaries
will not only receive prescription drug coverage for the first time, they will
pay lower prices for their drugs.
REPUBLICAN POLICY DOES NOT MEET THEIR STATED GOALS. Although
the House Republican leadership recently recognized the need for an affordable,
optional prescription drug benefit available to all Medicare beneficiaries, the
President will note that the policy advocated by the House Republicans does not
achieve their stated goals. The current House Republican proposal:
Does not assure availability of prescription drug coverage.
Because the Republican plan relies on private insurers to offer a drug-only
benefit voluntarily, this policy cannot be guaranteed to be available to all
seniors in need of a drug benefit. In testimony before the Congress, the
insurance industry itself has expressed skepticism about the effectiveness of
the Republican approach.
Not affordable for most seniors, even if it is available.
Furthermore, because it provides direct premium assistance only to
beneficiaries with annual incomes of under $12,600, the Republican benefit will
almost certainly fail to be an affordable option even if it is available. If
enacted, the Republican proposal would mark the first time in the
program's history that Medicare would not provide universal premium
assistance for benefits, and it would undermine the social insurance concept of