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FOR
IMMEDIATE RELEASE |
CONTACT: |
President's Framework
for Medicare:
Bad Medicine for Seniors and the Disabled
(Statement of Gail
Shearer,
Director of Health Policy Analysis, Washington Office)
The President's "Framework to Modernize and Improve Medicare" outlines three coverage options (ranging from traditional Medicare coverage to a variety of private insurance options) that would help pay for at most 22 percent of projected prescription drug expenditures of Medicare beneficiaries. The framework is short on crucial details and short on guarantees for Medicare beneficiaries. Consumers Union's key concerns are:
· The framework lacks a
guarantee of adequate prescription drug benefits, regardless of which option
a beneficiary chooses. The only guarantee in the President's plan is the
certainty that if you stick with traditional Medicare, you will not have access
to affordable prescriptions. Those in traditional Medicare would only have access
to an ineffective discount drug card and a yet-unspecified catastrophic prescription
benefit (with a deductible, perhaps in the range of $6,000). Even if discount
drug cards yield 10 percent savings, this discount is unlikely to keep up with
prescription drug inflation, leaving a growing burden of out-of-pocket prescription
drug costs. Even the so-called "Enhanced Medicare" and "Medicare
Advantage" proposals fail to specify the details of the prescription drug
coverage.
· The proposed budget of $400 billion is inadequate for the size of
the problem. The Congressional Budget Office projects that Medicare beneficiaries
will spend $1.8 trillion on prescription drugs over the next 10 years. The President's
proposed budget of $400 billion over this time period will cover, at best, only
22% of their expenditures. Considering that billions will be siphoned off to
pay the extra costs associated with a privatized market (higher administrative
costs, marketing, and insurance company profits), it is clear that this proposed
program will not provide adequate financial relief to the population in need
of prescription drug coverage.
· The framework is silent about necessary measures that will rein
in prescription drug expenditures, e.g., accelerating the introduction of generic
drugs, or adopting measures to improve the cost-effectiveness of the nation's
prescription drug dollars. Consumers Union believes that an essential element
of Medicare reform is assuring that consumers and taxpayers get better bang
for their prescription drug buck. In order to do this, Congress needs to speed
the introduction of generics and take steps to provide consumers and doctors
accurate information about the comparative effectiveness and cost-effectiveness
of different prescription drugs. The Administration proposal does not indicate
any commitment to stand up to the pharmaceutical industry and assure that we
spend our prescription drug dollars more effectively.
· The framework puts unwarranted reliance on the private marketplace,
which has proved unreliable for Medicare beneficiaries in the past. The
framework ignores the recent experience with Medicare HMOs that have abandoned
the Medicare market and forced beneficiaries to find new coverage. It ignores
that fact that HMOs have lured in beneficiaries with comprehensive prescription
drug coverage and then cut back on this coverage, leaving seniors and the disabled
without the protection they need.
· Medicare beneficiaries are guaranteed a complicated decision process.
The framework suggests that there will be a minimum federal standard for benefits,
but would allow private companies to vary the benefits. Beneficiaries will not
be able to make apples-to-apples comparisons of policies. Confusion in the marketplace
will undermine the goal of a healthy private competitive marketplace, will help
insurance companies attract relatively healthy enrollees (and boost their profits),
and will place an inordinate burden on Medicare beneficiaries who may have vision
restrictions or other cognitive impairments that make this choice of plan burdensome.
· The framework guarantees that private companies will come hat in
hand to Congress to pressure it for larger payments in order to assure their
continued participation. Medicare beneficiaries are desperate for adequate
prescription drug coverage. Insurance companies and HMOs know this, and they
know that if they threaten to pull out of the market, they will be able to force
Congress to boost the subsidies they receive. The Administration's framework,
by design, assures a powerful special interest lobby will have a lot of clout
and may get whatever it takes to continue participation.
In sum, the President's relies on a flawed structure for the new Medicare program, fails to provide needed guarantees of benefits and affordability, fails to adequately rein in prescription drug expenditures, and puts taxpayers (and beneficiaries) at the mercy of private insurance companies who will exert pressure on Congress. Medicare beneficiaries and taxpayers need a Medicare reform framework that guarantees all will have access to affordable prescriptions and that assures that taxpayer dollars are spent wisely.
###
Consumers
Union, publisher of Consumer Reports magazine, is an independent nonprofit testing,
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