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June 27, 2000
Dear Member:
We urge you to pass bipartisan legislation that provides a
reliable drug benefit to Medicare beneficiaries. Consumers Union
strongly supports making prescription drugs more affordable to
seniors and people with disabilities. However, for the reasons
outlined below, we believe that the legislation currently under
consideration, H.R. 4680, the Medicare RX2000 Act, fails to assure
affordable, comprehensive prescription drug coverage for Medicare
beneficiaries, and we urge you to vote against it in its current
form.
· The bill fails to guarantee all beneficiaries a defined benefit. Insurers are allowed to vary the benefit offered. Because consumers will be unable to make apples-to-apples comparisons among any drug benefit plans that they might be offered, this proposal flunks the kitchen table test. Just as the variation in the medigap market prior to 1990 standardization led to market abuses, this proposal designs a marketplace destined to confuse consumers and to create a system vulnerable to abuses.
· Under H.R. 4680, the availability of a prescription drug benefit relies on the voluntary, and unreliable, participation of insurance companies. Insurance companies profit from underwriting risks - and marketing to the healthy. They have even told Congress that the proposed structure is unworkable and that they would be reluctant to offer coverage as proposed by this bill.
· The legislation tries to prohibit companies from "cherry-picking" the healthy. However, we believe that it would take a substantial enforcement effort to actually prevent insurance companies from following their natural incentive to increase earnings. Insurers' basic incentives will conflict with the intent of the legislation. This inherent conflict will create an enforcement nightmare.
· The bill leaves the ultimate control over the success of the Prescription Drug Benefit Program in the hands of special interests and limits the control of either Congress or consumers. Because Congress will face future political pressure to assure that beneficiaries can find prescription drug coverage, special interests, such as the pharmaceutical and insurance companies, are likely to exert pressure on Congress to increase future reimbursement and subsidy levels beyond what is truly necessary to meet consumers' needs (making the program more costly over time).
· Because subsidies (to pay for catastrophic costs) go to insurance companies (not directly to consumers) there is no assurance that they will ever reach those most in need of help with out-of-pocket costs. For example, people with income just above 150% of poverty would be ineligible for direct subsidies, and would be likely to simply go without coverage.
In sum, H.R. 4680 fails to assure affordable, comprehensive
prescription drug coverage for all Medicare beneficiaries. The
proposed system encourages future demands from insurers for
additional subsidies. It fails to guarantee fair prices for
beneficiaries, and it is destined to confuse consumers and to lead to
a complicated marketplace with incentives for cherry-picking the
healthy. Unless this bill is substantially restructured through the
amendment process to address these concerns, we urge you to vote
against H.R. 4680.
Sincerely,
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Gail Shearer |
Janell Mayo Duncan |
