Senate Democrats Criticize Bush Medicare Reform Proposal; AARP Unveils Plan for $700B Rx Drug Benefit

Senate Democrats on Feb. 27 criticized President Bush's 10-year, $190 billion Medicare reform and prescription drug benefit package as inadequate, CongressDaily/AM reports. That figure "doesn't come close to anything providing the adequate comprehensive, affordable universal coverage [seniors] deserve," Sen. Bob Graham (D-Fla.) said. Sen. Edward Kennedy (D-Mass.) added that creating a benefit with only $190 billion "is like trying to stuff an elephant into a breadbox" (Rovner, CongressDaily/AM, 2/28). Bush's plan, announced earlier this month, would give $77 billion to states to provide prescription drug coverage to seniors through Medicaid. The program would cover seniors with annual incomes up to 150% of the federal poverty level, about $12,880 for singles and $17,400 for couples. Bush's plan would also allocate an "unspecified amount" to add a limited drug benefit to Medicare and add two more options for MediGap supplemental policies (Kaiser Daily Health Policy Report, 2/5).

Still Not Enough?
Graham said that even the $350 billion plan that he proposed last year -- which was supported by "most Democrats" -- would not go far enough because it calls for seniors to pay $50 monthly premiums for drugs, which would put the benefit beyond the reach of many low- and moderate-income seniors (CongressDaily/AM, 2/28). Graham's plan (S 1135) would create a voluntary drug benefit available to all seniors. To participate, seniors would pay a $250 annual deductible, after which the government would pay 50% of seniors' prescription drug costs up to $3,500, 75% of costs between $3,500 and $4,000 and all costs after $4,000 (Kaiser Daily Health Policy Report, 6/29/01). Graham said he wants to reduce the premiums to between $25 and $30 per month. "[O]ther sources" have estimated that such a prescription drug plan with those lower premiums would cost the federal government up to $600 billion over 10 years, CongressDaily/AM reports (CongressDaily/AM, 2/28).

AARP Plan
Echoing concerns that current Medicare prescription drug proposals would not be sufficient to assist seniors, the senior advocacy group AARP is planning to ask Congress to approve a 10-year, $700 billion Medicare reform package, including a comprehensive prescription drug benefit, that would be partly financed by dipping into the Medicare trust fund, Inside CMS reports. The group sent letters this week to the House and Senate budget committees proposing that $350 billion come from general revenues and the other half from the trust fund, a plan that will "surely shake up the debate over adding a prescription drug benefit to Medicare." Although both Republicans and Democrats "have been vocal on their insistence to keep the Medicare and Social Security Trust Funds" intact, support from a "powerful consumer group" such as AARP "could make the move feasible," Inside CMS reports. The Medicare trust fund, which by current law can only be used to pay Medicare benefits and administrative costs, had $177.5 billion in assets at the end of 2000, but its "prognosis after 2012 is bleak." Some experts say that using $350 billion from the trust fund could reduce its surplus by half and "threaten" Medicare's long-term viability. However, Inside CMS reports that "AARP could make the case that the Medicare reforms that accompany the prescription drug benefit would solve the long-term dilemma facing Medicare."

Provider Payments
In a shift from its prior policy, AARP also is advocating Medicare provider payment reform and broad modernization in its proposal, instead of solely focusing on a drug benefit (Marre, Inside CMS, 2/26). But in its letters to the budget committees, AARP told Congress that it should not approve any increased provider payments without first completing work on a drug benefit. "Our members would not understand why Congress could find money to help providers but not meet their increasing drug needs," AARP Executive Director and CEO William Novelli wrote in a letter to Senate Budget Chair Kent Conrad (D-N.D.), adding, "We therefore would strongly oppose funding for a 'givebacks' package prior to an agreement on a meaningful Medicare improvement package that includes drug coverage." Providers have been in "turmoil in recent weeks," CongressDaily/AM reports, because language in President Bush's fiscal year 2003 budget proposal states that any increases to certain provider groups must be offset by decreases to other groups (Rovner, CongressDaily/AM, 2/28). Medicare reduced reimbursement rates for physicians by 5.4% in January under a formula approved by Congress in 1997 (Kaiser Daily Health Policy Report, 2/22).