Congress should reject privatization of Medicare and enact prescription drug legislation that benefits consumers


Letter to Representatives:
July 11, 2003
Dear Representative:
As negotiations begin to reconcile the differences in the Medicare prescription bills, Consumers Union, the publisher of Consumer Reports, urges you to provide Medicare beneficiaries with meaningful relief from the devastating burden of prescription drug costs. In particular, we urge you to:
Eliminate the House bill’s “privatization” of Medicare, which would set up competition between private plans and traditional fee-for-service Medicare. This premium support approach would drive premiums up by as much as 25 percent for those who remain in traditional fee-for-service Medicare, the option that assures that the elderly and disabled will be able to choose their own doctor.
Adopt the Senate provision that provides Medicare fallback coverage in the event that private plans are not available. Without this fallback, seniors and persons with disabilities would be out of luck if private coverage does not materialize – and taxpayers will be forced to foot the bill of added subsidies to encourage participation of private companies.
Eliminate the House bill’s provision for expanded health savings accounts which would undermine employer-based health insurance coverage; rechannel the $174 billion that this provision would cost to enhance the prescription drug benefit and eliminate the incentives for employers to cut back their retirees’ benefits.
Adopt the Senate bill’s more generous coverage for low-income beneficiaries, including coverage for the “doughnut” gap, but adopt the House bill’s provision that would allow those who are eligible for both Medicare and Medicaid to get their prescription drug benefit through the Medicare program.
Eliminate the House bill’s means-testing of benefits (limiting the catastrophic coverage for high income beneficiaries), as this undermines the universality of the Medicare program.
Keep the provisions that would restore competition to the prescription drug market by closing loopholes that delay introduction of generic drugs into the marketplace, including the Senate provision that requires reporting to the Department of Justice of any deals in which brand-name manufacturers agree not to market generic drugs.
Eliminating the most troublesome features of the bills that passed the House and Senate is necessary in order to prevent total collapse of the Medicare system. At the same time, however, it is critical that Congress be candid with both today’s and tomorrow’s Medicare beneficiaries about the limited coverage provided in these bills. At best, based on the parameters set out by S. 1 and H.R. 1, the prescription drug benefit will be skimpy and will be even more modest over time since drug expenditures will continue to outpace (by far) the rate of inflation for other goods and services. Both bills undermine the ability to negotiate deep price discounts by dividing the marketplace into scores of private plans that will be unable to bring the full negotiating power of the federal government to work for consumers and taxpayers. Both bills set up a system that relies on the private marketplace to deliver the coverage, but both build in features (e.g., allowing variation from a standard benefit) that will make true competition impossible.
Consumers Union continues to prefer a different approach: covering prescription drugs as part of the Medicare benefit. We also support building in measures that would rein in prescription drug expenditures through tapping the purchasing power of the federal government and encouraging the use of more cost-effective medicines.
Seniors and persons with disabilities are in desperate need of relief from the financial burden caused by prescription drug bills. We urge you to assure that the final legislation enacted by Congress provides greater relief from these devastating costs. Thank you for your consideration.
Sincerely,
Gail E. Shearer
Director, Health Policy Analysis
————————————
Letter to Senators:
July 11, 2003
Dear Senator:
As negotiations begin to reconcile the differences in the Medicare prescription bills, Consumers Union, the publisher of Consumer Reports, urges you to provide Medicare beneficiaries with meaningful relief from the devastating burden of prescription drug costs. In particular, we urge you to:
Eliminate the House bill’s “privatization” of Medicare, which would set up competition between private plans and traditional fee-for-service Medicare. This premium support approach would drive premiums up by as much as 25 percent for those who remain in traditional fee-for-service Medicare, the option that assures that the elderly and disabled will be able to choose their own doctor.
Adopt the Senate provision that provides Medicare fallback coverage in the event that private plans are not available. Without this fallback, seniors and persons with disabilities would be out of luck if private coverage does not materialize – and taxpayers will be forced to foot the bill of added subsidies to encourage participation of private companies.
Eliminate the House bill’s provision for expanded health savings accounts which would undermine employer-based health insurance coverage; rechannel the $174 billion that this provision would cost to enhance the prescription drug benefit and eliminate the incentives for employers to cut back their retirees’ benefits.
Adopt the Senate bill’s more generous coverage for low-income beneficiaries, including coverage for the “doughnut” gap, but adopt the House bill’s provision that would allow those who are eligible for both Medicare and Medicaid to get their prescription drug benefit through the Medicare program.
Eliminate the House bill’s means-testing of benefits (limiting the catastrophic coverage for high income beneficiaries), as this undermines the universality of the Medicare program.
Keep the provisions that would restore competition to the prescription drug market by closing loopholes that delay introduction of generic drugs into the marketplace, including the Senate provision that requires reporting to the Department of Justice of any deals in which brand-name manufacturers agree not to market generic drugs.
Eliminating the most troublesome features of the bills that passed the House and Senate is necessary in order to prevent total collapse of the Medicare system. At the same time, however, it is critical that Congress be candid with both today’s and tomorrow’s Medicare beneficiaries about the limited coverage provided in these bills. At best, based on the parameters set out by S. 1 and H.R. 1, the prescription drug benefit will be skimpy and will be even more modest over time since drug expenditures will continue to outpace (by far) the rate of inflation for other goods and services. Both bills undermine the ability to negotiate deep price discounts by dividing the marketplace into scores of private plans that will be unable to bring the full negotiating power of the federal government to work for consumers and taxpayers. Both bills set up a system that relies on the private marketplace to deliver the coverage, but both build in features (e.g., allowing variation from a standard benefit) that will make true competition impossible.
Consumers Union continues to prefer a different approach: covering prescription drugs as part of the Medicare benefit. We also support building in measures that would rein in prescription drug expenditures through tapping the purchasing power of the federal government and encouraging the use of more cost-effective medicines.
Seniors and persons with disabilities are in desperate need of relief from the financial burden caused by prescription drug bills. We urge you to assure that the final legislation enacted by Congress provides greater relief from these devastating costs. Thank you for your consideration.
Sincerely,
Gail E. Shearer
Director, Health Policy Analysis