Senior Spotlight
By John Toscano

Senate Panel OKs Bill To Cover Prescription Drugs Under Medicare

The prayers of millions of seniors for a prescription drug benefit from Washington are closer to being answered, now that the U.S. Senate’s Finance Committee has approved such a benefit plan, which would be the most far-reaching change in Medicare since it was created 38 years ago.

What must follow now is approval by the full Senate, which is almost guaranteed.

Then the House of Representatives must pass a bill identical to the Senate, which might take some doing. The House favors a bill differing in several ways from the Senate bill, but chances are the problems can be resolved in negotiations between the two houses.

President George W. Bush is on record as wanting a prescription drug bill for seniors, so he will be pushing to get one. He’s already made concessions backing away from some of the provisions he initially wanted to ensure that a bill will be passed, giving him a major issue he can take into the 2004 campaign.

The bill passed by the Finance Committee would cost $400 billion over 10 years. It carves out a role for private health plans, but not the president’s proposal to give seniors more benefits if they join a private plan than if they continue in Medicare. Under the Senate plan, no matter which plan a senior decides to take, private or Medicare, the prescription drug benefit would be basically the same.

These are the provisions in the Finance Committee-approved plan:

•The average premium will be about $35 a month ($420 a year) and a member would pay a $275 deductible, that is, the first $275 for drugs before federal aid kicks in is an out-of-pocket expense.

•Medicare would then pay 50 percent of drug costs from $276 to $4,500 a year and the member would pay the other half.

•After this, the beneficiary would pay for all drug costs from $4,501 to about $5,800.

So between the premium ($420 a year), the annual deductible ($275), and drug cost obligations between $276 and $5,800, about $3,411 a year), total maximum out-of-pocket expenses could amount to slightly more than $4,000 a year.

However, catastrophic coverage would kick in when a Medicare member’s out-of-pocket expenditures reached the $3,700-a-year mark. When this occurs, Medicare will pay 90 percent of drug costs exceeding $5,800 a year.

Under the Senate bill, all Medicare beneficiaries receive the same coverage no matter what their income. But under the House proposal at this point, single beneficiaries with annual incomes of more than $60,000 and couples with $120,000 a year income must spend more of their own money before they qualify for catastrophic drug coverage.

Under the House bill, developed by the Republican majority, the $35-per-month premium would apply, but the annual deductible per member would be $250, $25 less than under the Senate plan.

Coverage would begin with Medicare paying 80 percent of the drug costs from $251 to $2,000, and the beneficiary paying the other 20 percent, or $349.80.

The beneficiary would then be responsible for all drug costs from $2,001 to $5,100, or $3,099.

Thus, a beneficiary would have maximum out-of-pocket expenses of about $4,120 under the House proposal before reaching the catastrophic coverage stage. Just as in the Senate plan, catastrophic coverage would start when the beneficiary’s out-of-pocket costs reach $3,700 per year. But under the House bill, Medicare would pay 100 percent of drug costs exceeding $5,000 per year.

However, as previously mentioned, under the House proposal beneficiaries with incomes of more than $60,000 (single) or $120,000 (couples) must spend more of their own money before the catastrophic drug coverage kicks in. The higher a person’s income, the more he or she would have to spend before catastrophic coverage begins.

About 88 percent of the 40 million Medicare members more than 35 million people, are covered under the federally administered Medicare program. The other 12 percent are covered under private healthcare programs paid for by Medicare.

Under both House and Senate programs, the 25 million Medicare members will receive drug benefits from government subsidized insurance companies that cover drug costs exclusively.

BUSH EASES RULES ON GENERICS: Last Thursday, Bush released new rules which would make it easier to introduce generic versions of prescription drugs manufactured and sold by major drug companies. Basically, generics are the same as brand name products, but cost much less.

The president said that under the new rules, the major drug firms would be limited in their ability to delay the generic firms’ introduction of off-brand versions of major drugs.

Basically, this means the Federal Food and Drug Administration would be able to block major drug firms from filing patent infringement lawsuits against a generic firm when a new generic is introduced. A suit can usually block a new generic from coming on to the market for several years.

Last week, a bill sponsored by U.S. Senator Charles Schumer (D–NY) which would have the same effect as the president’s new rules, was approved by a Senate committee and appears ready to be passed by the full Senate.

Commenting on the president’s issuance of the new rules to help generic drugs come to market, Schumer said his bill has provisions making blocking a generic much more difficult than the president’s new regulations. He also said the new rules could be blocked by a lawsuit.