Newsroom and Press Releases

INTERIM DRUG CARD

In 2004 and 2005, older Americans would qualify to purchase a discount card that the Bush administration estimates would yield savings of 15 % or more off the cost of drugs. Low-income elderly people would get an annual subsidy of $600 to defray costs further.

MAIN DRUG BENEFIT

Beginning in 2006, Medicare beneficiaries could sign up for a stand-alone drug plan or join a private health plan that offers drug coverage. They would be charged an estimated premium of $35 per month, or $420 per year. After meeting a $250 deductible, insurance would pay 75 percent of drug costs up to $2,250.

• Coverage gap: There would be no coverage for drug costs between $2,250 and $3,600 out of pocket.

• Catastrophic coverage: When out-of-pocket spending reaches $3,600, insurance covers 95 % of drug costs or requires a modest co-payment.

• Low-income subsidies: The premium, deductible and coverage gap would be waived for people earning up to $12,123 a year. To qualify for the subsidy, seniors could have no more than $6,000 in fluid assets. The subsidies would be phased out between $12,123 and roughly $13,500 in yearly income.

• Retiree coverage: Tax-free subsidies, perhaps worth as much as $70 billion, would be provided to employers who maintain drug coverage for retirees once Medicare drug benefit begins in 2006.

DOCTOR, OUT-OF-HOSPITAL COVERAGE (Medicare Part B)

• Premium: By law, Medicare beneficiaries pay 25 % of the Part B premium and the government pays the rest. Individuals with incomes greater than $80,000 would pay a larger premium. The size of their premium would increase on a sliding scale, topping out at 80 % for people with incomes over $200,000.

• Deductible: It would rise from $100 to $110 in 2005 and thereafter be indexed to the growth in Part B spending.

OTHER CHANGES

• Role Of Private Companies: Private firms would administer the drug benefit on a regional basis. The bill would provide $12 billion in subsidies to private insurers that choose to offer basic health insurance. Those include preferred provider organizations (PPOs), which encourage use of certain doctors but allow patients to go elsewhere if they pay extra, and private fee-for-service plans, which allow patients to see any doctor.

• Beginning in 2010, traditional Medicare also would face competition from private plans in six metropolitan areas in which at least two private plans enroll at least 25 % of Medicare beneficiaries. For those who remain in traditional Medicare, premium increases would be capped at 5 % a year and waived for low-income seniors. The competition would last six years. The government would provide drug coverage in any region that does not have at least one stand-alone drug plan and one private health plan.

• Rural Health: Would spend about $25 billion to increase payments to rural hospitals and doctors, among others.

• Generic Drugs: The bill would speed generic drugs to the market by limiting ability of pharmaceutical companies to block cheaper equivalents.

• Drug Importation From Canada: The bill would maintain the ban on importing prescription drugs. It would allow such drugs from Canada, but only if the Health and Human Services Department certifies safety, something it has declined to do. The legislation would authorize a study of safety issues.

• Hospital Payments: The bill would allow hospitals to avoid future cuts in payments by submitting quality data to CMS. At the same time, it would increase payments through Medicaid to hospitals that serve a large number of disadvantaged patients.

• The bill would impose an 18-month pause in development of new specialty hospitals and limit expansion of existing ones.

• Physician Payments: The bill would block planned cuts in physician payments in 2004 and 2005 and instead provide a 1.5 percent increase.

• New Benefits: The bill would cover an initial doctor’s appointment for new Medicare beneficiaries and screening for diabetes and cardiovascular disease. It would provide benefits for coordinated care for people with chronic illnesses, and would increase payments for doctors administering mammograms in hope that more are given.

• Health-Related Tax Savings Accounts (Health Savings Accounts): The bill would allow people with high-deductible health insurance policies – at least $1,000 a year for individuals, $2,000 for couples – to shelter income from taxes. Individuals younger than 65, employers or family members would make pretax contributions equal to the deductible, up to a maximum of $2,600 a year for individuals and $5,150 for families. After 65 years of age, earnings and distribution also would be tax-free, provided the money is used for health expenses, including insurance premiums, prescription drugs and long-term care. Otherwise, a 10 % penalty would apply.

• Home Health Care: The bill would cut payments to home health agencies, but not require co-payments from patients.

• Cost Containment: When general revenues constitute 45 % of Medicare spending, Congress and the administration would have to review Medicare’s finances.