HIAA Cautions Lawmakers Against Creating Drug-Only Insurance Plans for Medicare Benefit

The head of the Health Insurance Association of America on April 24 said that the group would not support an expected House Republican effort to provide a Medicare prescription drug benefit through "drug-only" plans administered by private insurers, reiterating a stance that led to a "nasty fight" over a similar proposal in 2000, CongressDaily reports. "We caution Congress against relying on drug-only insurance as the mechanism to deliver a benefit," HIAA President Don Young told reporters (Rovner, CongressDaily, 4/24). Two years ago, House Republicans, led by Rep. Bill Thomas (R-Calif.), proposed a benefit under which the federal government would offer subsidies to private insurers to cover drug costs for Medicare patients, and in cases where no private insurance firms entered the market, the government would provide funding for coverage (American Health Line, 6/14/00). The proposal led to a "very public fight" between Thomas, now chair of the Ways and Means Committee, and former HIAA President Chip Kahn over the latter's declaration that HIAA member health plans would not sell drug-only policies. The problem with such plans, Young said, is that "insurance doesn't work if everyone knows their risk or experiences similar losses. ... If only those expecting high costs purchased insurance, adverse selection would quickly render the market unstable." Young also cautioned Senate Democrats about their plans for a drug benefit, expected to be provided directly through Medicare. Young cited a poll finding that only 38% of seniors would pay a $35 monthly premium for the type of plan being drafted by Sen. Bob Graham (D-Fla.) and others. While HIAA will continue to work with lawmakers to design a plan to modernize Medicare and introduce a drug benefit, Young said his group had yet to see a workable proposal (CongressDaily, 4/24).

Revisiting Reimportation
In other prescription drug news, a bipartisan group of senators from Northern border states said on April 24 that they intend to introduce a bill that would make it easier for Americans to purchase lower-cost medications from Canada. The proposal, which the sponsors say would save consumers $38 billion a year, is a narrower version of a law passed two years ago that then-HHS Secretary Donna Shalala and current Secretary Tommy Thompson refused to implement, "citing concerns about potential increases in unsafe or counterfeit drugs and uncertainty that lower prices would be passed along to consumers." Sen. Byron Dorgan (D-N.D.) dismissed such concerns as "hogwash," saying the new proposal would "make safety and savings obvious." Under current law, only drug companies can import drugs, which are then sold to consumers at U.S. prices, which are the highest in the world. This is an "unconsciously profitability extracted from the American people," Sen. Carl Levin (D-Mich.) said (CongressDaily, 4/24).