Press Release Tuesday, June 27, 2000

Contact: David Butler/Janell Duncan/Gail Shearer, 202-462-6262 Consumers Union's Washington, DC Office

WASHINGTON, D.C. -- Consumers Union urges Members of Congress to vote against H.R. 4680, "The Medicare Rx 2000 Act." While Consumers Union strongly supports building a prescription drug benefit into Medicare, it opposes H.R. 4680 for the following reasons:

· H.R. 4680 relies on the voluntary participation of private insurance companies, and thus fails to assure that all Medicare beneficiaries are guaranteed access to an affordable prescription drug benefit.

· H.R. 4680 flunks the kitchen table test. It allows insurers to vary the prescription drug benefit. Variation in benefits will translate into confusion for consumers, and encourages insurance companies to market selectively to the healthy. This creates an enforcement nightmare, as the government seeks to police against insurance companies following their profit-seeking incentives.

· Insurance companies will have every incentive to follow the lead of other special interests such as Medicare HMOs - with future pleas to Congress to increase their subsidy so that they will continue to participate in the program.

· The bill provides inadequate relief to the poor. While proposing to subsidize premiums and cost-sharing for people with incomes below 150 percent of poverty, H.R. 4680 limits this relief by requiring these vulnerable consumers to enroll in the low-cost plan and by requiring them to meet both income and assets tests.

"Consumers Union believes that H.R. 4680 fails to assure affordable, comprehensive prescription drug coverage for all Medicare beneficiaries," said Gail Shearer, Consumers Union's Director of Health Policy Analysis. "It lacks public accountability, and assures that there will be future special interest requests from insurers. It is destined to confuse consumers and to lead to a complicated marketplace with incentives for cherry-picking the healthy. It fails to guarantee fair prices for beneficiaries."

Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumers. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers.