June 17, 2003

Medicare Drug Proposals: A Prescription for Failed Expectations

Consumers Union (CU), publisher of the non-profit magazine, Consumer Reports, today issued an analysis of the current Medicare prescription drug legislation rapidly moving through Congress. The report, prepared by Gail Shearer, CU's Director of Health Policy Analysis, directly challenges claims that the House and Senate bills, as currently Medicare Modernization Act ed, will provide the needed relief that millions of consumers who currently go without prescription drug coverage are expecting.

"This looks like a prescription for failed expectations. The results with regard to Medicare beneficiaries' out-of-pocket costs are most disturbing. Consumers may be shocked to learn that the Medicare prescription drug bills currently being fast-tracked in Congress aren't going to help them nearly as much as they are being led to believe. In fact, the combination of skimpy benefits and the historically high growth of prescription drug costs mean that most consumers who lack coverage today would wind up paying more for prescription drugs in four years than they do now," said Ms. Shearer.

The report identified twelve key elements of importance to consumers to help them determine whether the various bills in Congress meet their expectations. In analyzing the impact of the House and Senate bills that currently have majority backing, the report finds that many consumers would actually face higher out-of-pocket costs in 2007 than they do in 2003.

• Under the House Ways and Means Committee bill, the average Medicare beneficiary (without prescription drug coverage) spending $2,318 in 2003 would find that his or her out-of-pocket costs for prescription drugs (including costs of premium, deductible, co-payments, and "doughnut") are higher in 2007, despite the new prescription drug benefit, and would total $2,954 (real 2003 dollars).
  
  
• Under the Senate Finance Committee bill, the average Medicare beneficiary (without prescription drug coverage) spending $2,318 in 2003 would find that his or her out-of-pocket costs for prescription drugs (including: premium, deductible, co-payments, and "doughnut") are higher in 2007, despite the new prescription drug benefit, and would total $2,524 (real 2003 dollars).
  
  
• If the growth of prescription drug expenditures moderates below historical levels to 12 percent per year, (and this is unlikely because neither bill includes sufficient safeguards to hold down drug prices) the average Medicare beneficiary would still face, under the House Ways and Means bill, out-of-pocket costs in 2007 that are approximately the same as they are now. Under the Senate Finance bill, out-of-pocket costs would be only marginally lower than those of 2003.

"Congress should provide Medicare beneficiaries with true relief from skyrocketing prescription drug costs by designing a comprehensive benefit package and allocating additional funding beyond the $400 billion in the Congressional budget resolution. Consumers should demand that the government use all tools available to rein in the growth of drug prices. For instance, loopholes that delay introduction of generics should be closed, and the federal government's purchasing power should be used to its fullest to negotiate low drug prices. Unfortunately, the Senate and the House Medicare prescription drug bills fail to get the job done," said Ms. Shearer.

To read more about the CU report entitled "Skimpy benefits and unchecked expenditures: Medicare prescription drug bills fail to offer adequate protection for seniors and people with disabilities," click here.

For more information contact:
Gail Shearer, (202) 462-6262

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