The "Tripartisan" Bill Is The Wrong Rx For Medicare

THE "TRIPARTISAN" BILL IS THE WRONG RX FOR MEDICARE

Senators Hatch, Grassley, Snowe, Breaux, and Jeffords maintain that their "21st Century Medicare Act" is the right prescription for a Medicare prescription drug program. This is not the case. The bill fails to put in place any limits on the amount that seniors will have to pay for the program. Under the bill, premiums could reach inordinately high levels. In addition, the benefits are skimpy, with a huge "donut hole" that leaves moderate-income seniors with no coverage at all once they reach a certain level of spending. We urge Senators to pass the Graham-Miller alternative, S. 2625, the "Medicare Outpatient Prescription Drug Act," which offers continuous coverage, a guaranteed premium, and real incentives for seniors to switch to generic drugs.

The "Tripartisan" Plan does not guarantee premiums for beneficiaries, and as a result could be unaffordable for many beneficiaries. Although CBO has estimated that this plan would require $288 yearly premiums from beneficiaries, the legislation does not guarantee it, and it has a structure that makes much higher premiums likely. Under the bill, insurance companies could charge any premium at all, either for legitimate or non-legitimate purposes, leaving seniors an illusory benefit they might not be able to afford.
The "Tripartisan" Plan has a huge "donut hole," forcing seniors to pay 100 percent of the cost of prescription drugs from $3,451 to $6,299 in prescription drug spending. Moderate income seniors would have to spend almost $5,000 in total out of pocket costs (including the premium) before the catastrophic benefit kicked in. This provision would hit hardest moderate-income seniors with high prescription drug spending. These seniors wouldn't have access to low-income subsidies and might not have the means to pay in full the nearly $3,000 donut hole. If the bill passes, some seniors might still have to choose between paying for their living expenses and paying for prescription drugs. The Graham-Miller alternative, which provides coverage at all levels of prescription drug spending, would give seniors a better, more stable level of coverage.
The "Tripartisan" Plan may lead to a "death spiral" of costs. Under the structure of the plan, seniors with low prescription drug costs would be likely to opt out of the voluntary program, since those spending less than $826 actually would pay more in premiums, deductibles, and copayments than they would receive in benefits. As healthier seniors opted out, the pool of covered seniors would become riskier, forcing premiums up. This could lead to even lower participation by the healthier seniors, engendering a cycle of higher and higher premiums. As an alternative to this poorly conceived approach, the Senate should require a stable prescription drug benefit to be added as an integral part of Medicare, as S. 2625 does.
Although the "Tripartisan" Plan supposedly guarantees seniors the choice of at least two health plans, this guarantee is meaningless since it relies on voluntary insurer participation and lacks any mechanism to any prevent the upward spiral of premiums. Unless either or both plans featured a stable and predictable premium, for the reasons described above, this "choice" would be merely illusory.

The "Tripartisan" bill lacks a guarantee for Medicare beneficiaries that their prescription drug benefit will be available and affordable. We urge Senators to oppose this legislation.

Consumers Union Washington, DC Office

View Files Sorted By Office: Consumers Union OPI, New York - Washington DC Office
West Coast Regional Office - Southwest Regional Office - Consumer Policy Institute

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