CU issues report on Medicare prescription drug legislation

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