Dueling drug plans: the impact on seniors

Bush's prescription plan tilts toward private insurance. Critics see funding gaps.

When Lois Walker heard about President Bush's proposal announced this week to expand prescription-drug coverage to all seniors, she had only two words to say: "Wonderful, wonderful!"

A widow at 83, her Social Security check doesn't stretch far enough to cover all the medicines her doctors say she needs.

"When my pills for osteoporosis went up to $60 a month, I just had to stop taking them," says the Emmett, Idaho, senior.

But political wrangling may end up dampening Ms. Walker's enthusiasm, at least in the short term. While both Democrats and Republicans have promised America's 35 million seniors they will add some kind of prescription-drug benefit to Medicare, the president has tied his proposal to the most radical reform of the popular healthcare program since its inception in 1965.

He hopes to use enhanced prescription-drug coverage to entice seniors out of the traditional Medicare plan into more cost-conscious managed-care groups. And that is generating opposition, even within his own party.

"In rural states like Iowa, there are almost no health plans," says Robert Blendon of Harvard's School of Public Health. "So what that means is that you sentence seniors who live in those states ... to years without any option for more extensive benefits."

Three sets of options

Under the administration's new proposal, seniors will be offered a choice of three options. They could stay in the traditional Medicare "fee-for-service" plan where they would continue to have a choice of any doctor. But in exchange they'd receive only a limited prescription-drug benefit, that would kick in only after they had already spent several thousand dollars. This plan is not specific about the exact dollar amounts, but in an earlier proposal the drug coverage would begin after seniors had spent between $4,000 and $6,000.

Under what's being called "Enhanced Medicare," seniors such as Ms. Walker would be able to choose from a list of private insurers that offer prescription-drug coverage as part of their plans. In that case, she'd have to choose from a list of doctors that were covered by each plan. The government would pay for most of it, but she would also contribute a small premium and a yearly deductible.

And finally, Walker could choose "Medicare Advantage" which would be similar to the current Medicare+Choice managed-care option currently offered by Medicare. Under that plan, her choice of doctors again would be limited to those who participate in the particular HMO.

In addition, low-income seniors would be given a "debit card" of sorts worth $600 annually that would be used to pay for uncovered costs associated with prescription drugs.

"What the president is doing is modeling the Medicare program after what is the most successful government program, which is the federal employees plan," says Robert Moffit, director of Center for Health Policy Studies at the Heritage Foundation.

Critics are concerned the lack of specific details will push the cost far above the $400 billion over 10 years the administration has estimated. They also want patients in the traditional Medicare plan to have comprehensive drug coverage. Currently, seven out of eight of the 40 million Medicare recipients are enrolled in the fee-for-service program.

"The president has taken a step in the right direction - but he has not gone far enough," said Senator Olympia Snow (R) Maine. "Every senior should have access to comprehensive prescription-drug coverage, regardless of which Medicare option they choose."

Criticisms by Democrats

Democrats and patient advocate groups also charge that the plan is a covert attempt to privatize Medicare by coercing seniors into private plans that so far have had difficulty in serving seniors.

"Private plans have refused to serve seniors in most rural areas, they have abandoned 2.4 million seniors in 'unprofitable' communities," says Ron Pollack of Families USA, a patient-advocacy group in Washington.

Managed-care groups, which are championing the Bush proposal, contend those problems are a result of the underfunding of Medicare HMOs.

"You can't underfund a program, then blame the participants for pulling out," says Karen Ignani, president and CEO of the American Association of Health Plans.

Alternative proposal

The Democrats' proposal would keep the current Medicare system intact but add a comprehensive prescription-drug benefit. They argue that that would turn the government into a huge buying cooperative that could negotiate far lower prices for seniors than private plans. They estimate the cost between $8 and $10 billion over the next decade.

Lois Walker isn't concerned all that much with the details, she's just hoping that Congress and the White House can enact some kind of compromise. "When I had surgery on my eyes, the drops cost over $100," she says. "It just seems it's one thing after ten."

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