wfn.org | [PCUSANEWS] Some Presbyterians may feel the pinch if Medicare

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Note #8018 from PCUSA NEWS to PRESBYNEWS:

Presbyterians may feel the pinch if Medicare 'reform' agreement passes
03498
November 19, 2003

Some Presbyterians may feel the pinch if Medicare 'reform' agreement passes
Congress

Analysis by Pat Gleich
Associate for National Health Ministries
Presbyterian Church (USA)

Editor's note: Information for this analysis has been drawn from a balanced
variety of sources. It is as current as possible, given that the final form
of the Medicare bill is still being negotiated by the House and Senate. -
Jerry L. Van Marter

LOUISVILLE - Depending upon your perspective and your income, the preliminary
information on the proposed Medicare changes just released by the Conference
Committee is either good, bad or a combination of both.

For Presbyterians who are living on fixed incomes, retirement savings and
Social Security, the proposed changes in Medicare may pose some financial
hardships.  The report of the conference committee contains complicated but
crucial information.

For the first time, seniors would be eligible for a drug benefit that would
cover a portion of their annual prescription costs.   Under the tentative
agreement, beginning in 2006.

     {7 80 percent of older adults use a	 prescription drug every day
      7 People over age 65 spend  43 cents of	      every dollar spend on
prescription drugs	   account for 40 percent of all prescription	     
drug use, but only 12 percent of the	     population.}

Medicare beneficiaries would have access to the drug benefit by enrolling in
either a stand-alone private drug plan or a private health plan that offers
drug coverage.	 The new Medicare drug benefit	would pay 75 percent of
seniors' drug costs up to $2,200 a year, with a $275 deductible for
prescription  drugs and a monthly premium that would average $35.

The agreement also calls for premiums under Medicare Part B, which covers
outpatient services, to be linked to senior's incomes beginning in 2007.  The
higher premiums would be phased in over five years and would affect the 3.5%
of beneficiaries who have annual incomes of more than $80,000 for an
individual and more than $160,000 for a couple.   Regardless of
beneficiaries' income, the annual deductible for Medicare Part B beginning in
2005 would increase annually from the current $100 per year.

Individuals 65 years or older who sign up for the benefit will be confronted
with a number of issues that would determine whether the drug benefit would
actually help them:

(1)  Seniors would pay annual premiums of about $35 per month and an annual
deductible of $275. Medicare would cover 75% of annual drug costs between
$275 and $2,200.  The program would pay nothing more until the beneficiary
had spent a total of $3,600 out of pocket.  Then,  the beneficiary would pay
a sliding scale of co-payments for each new prescription, depending  on his
or her income level.

(2)  If income eligible beneficiaries signed up for a prescription drug
discount card before the drug benefit began, they would be eligible for $600
in additional assistance per year to buy drugs in 2004 and 2005. The
Department of Health and Human Services estimates that the discount card
could provide seniors with savings of 15 percent to 25 percent.

(3)  The premium and deductible would be waived for people making less than
$12,124 a year, provided they do not have more than $6,000 in liquid assets.
People who do qualify for premium waiver would still  have co-payments of $1
to $5 per prescription.   If their income is higher or if they have assets
totaling more than $6,000 they must pay a monthly premium for coverage.  This
could disqualify approximately 2.8 million poor seniors from the subsidies
they need to make medicines affordable.

	 2003 Health and Human Services
		 Poverty Guidelines
Size of     48 Contiguous    Alaska    Hawaii
Family Unit State and
	     Washington DC
1	      $ 8,980	      $11,210	$10,330
2		12,120	       15,140	 13,940

(4)  Seniors at or below the poverty level who have been receiving drug
benefits through state-administered Medicaid programs stand to lose current
benefits because of a provision to the Medicare legislation that House
negotiators insisted upon. Under existing Medicaid policies, the states pick
up the co-payments for low-income seniors and make sure they receive all
medically necessary drugs.   Elimination of the benefit for those who are
eligible for both Medicare and Medicaid - the 'wrap-around' help with their
Medicare drug co-payments  may cause as many as 6 million of the
lowest-income Medicare beneficiaries to pay more for their drugs than they do
today.

(5)  Health insurers would compete for market share in the new Medicare
business and, in some areas of the nation, would directly compete with
traditional fee-for-service Medicare.  The federal government would provide
increased  reimbursements for health insurers that offer Medicare managed
care plans, which would make the plans a more profitable business. Under the
bill, the federal government would offer health insurers an estimated $12
billion to provide prescription drug coverage for beneficiaries and would
cover more of the cost of medications for beneficiaries

Upper-income seniors who sign up for the benefit will be hit with higher
premiums and co-payments in a program that for the first time would take
their incomes (known as means testing) into account.  The higher premiums
would be charged to the estimated 3 percent of people on Medicare whose
annual income is more than $80,000 a year.

And seniors of all income levels whose annual prescription drug bills
exceeded $2,200 would be required to continue paying monthly premiums to the
programs while their benefit was cut off until they reached the
"catastrophic" level of $3,600, when the benefit would kick in again.  That
refers to the $1400 gap between  $2,200 and $3,600 during which seniors will
have to pay the TOTAL cost of their medication and their monthly premium.
After the catastrophic level is reached the federal government would cover
95% of drug costs.

Beginning in 2006, Medicare beneficiaries will have the option of a voluntary
separate insurance policy to be created by the insurance industry or join a
private health plan that also offers drug coverage. This fee-for-service
Medicare will begin competing with private health plans to lower costs in a
scaled-back compromise, through government sponsorship.  Beginning in 2010
pilot projects in six metropolitan areas in which private plans have achieved
25% of the Medicare market share will be initiated. Beneficiaries would have
to pay more to stay in traditional, fee-for service Medicare if that
program's costs are higher than in private plans, but premium increases could
be capped.

Medicare analysts have indicated that the proposal could do more harm than
good and that the economic benefits of the prescription drug benefit would
not equally benefit all income groups.	Seniors - most in need of the benefit
because they have fixed modest incomes and who spend $4,000 to $5,000 a year
on prescription drugs to treat chronic conditions, will end up getting very
small benefits overall - about 30 percent of their drug costs are covered.
And, they will be adding the cost of the premium.

Additionally, the bill:

* would provide tax-free subsidies worth up to $70 billion to encourage
employers that currently provide retiree drug coverage to continue doing so
once the Medicare drug benefit begins.

* includes an estimated $18 billion in tax incentives for employers that
offer retiree drug coverage; the government would pay 28% of the costs for
the coverage from $250 to $5,000 in drug costs.  The financial support from
the government would be exempt from taxes.

* would likely increase sales for pharmaceutical companies because
prescription drug use among Medicare beneficiaries would likely increase.

* includes $12 billion in subsidies to private health plans to encourage them
to participate in Medicare.

* would allow U.S. residents to purchase prescription medications from
Canada, but only if HHS certifies the safety of the practice; the tentative
agreement also would authorize a study of safety issues surrounding
re-importation.  In addition, the plan would ease market entry of generic
drugs by preventing brand-name drug makers from obtaining more than a
30-month delay in competition from generic drug makers.

* includes an "unprecedented increase" in payments of at least $25 billion to
doctors and hospitals in rural areas.

* would eliminate planned reductions in payments to physicians nationwide and
instead would increase payments.

* gives the Congressional Budget Office responsibility to determine whether
the package will stay within the $400 billion over 10 years that was budgeted
by Congress.   If its cost is higher than what has been allotted, conferees
and Republican leaders will have to make cuts.

Where do groups who advocate for health care coverage of senior citizens line
up?

Although AARP, the largest organization representing senior citizens has
endorsed the agreement (and announced its intention to spend $7 million this
week on an ad campaign to promote the legislation) many other groups are
expressing concerns and organizing grass roots support in opposition to the
agreement as currently drafted. Notable among them:

* Center for Medicare Advocacy, Inc., indicates concern over the "cost
containment" or cap on expenditures.  There will be no money to fill in the
doughnut hole, to cover new procedures and drugs, to increase provider
payments, and to continue the same level of benefits. The low-income
provisions preclude Medicaid from filling in the gaps of the Medicare
benefit, meaning many of the lowest income folks will pay MORE for their
drugs.	Also among the Center's concerns, the premium support proposal is
more than a demonstration, it is an unlimited proposal that leads to
privatization of Medicare.

* The National Committee to Preserve Social Security and Medicare, deeply
troubled that the proposal continues to include the seeds of Medicare
privatization, issued the following statement:	"The members and supporters
of the National Committee expect Congress to enact prescription drug
legislation that is available to all, affordable and provided through the
Medicare program. This legislation is supposed to be about providing seniors
affordable drug coverage. Unfortunately, this conference agreement not only
provides insufficient prescription assistance, but it also lays the
groundwork for the demise of the Medicare program."

* The Institute for America's Future opposes the agreement on four principal
fronts.  They are:  The beginning of Medicare privatization, means testing
for beneficiaries,  billions of $$ paid directly to HMOs, and the new $6.8
Billion Tax Break allowing  wealthier seniors to shelter income in tax-free
health account plans.

* Health Reform Program (of Boston University School of Public Health), in
releasing New Medicare Rx Benefits Means Big Profits for Drug Makers has
indicated that pharmaceutical makers will receive  $139 billion in new
profits from the taxpayers,  and HMOs will take in at least $12 billion in
new taxpayer subsidies - and there is no reason that actual costs of rugs
would be lowered.

* The Leadership Council of Aging Organizations (representing over 50
organizations) cautions that because this legislation will be the "biggest
change in Medicare since its inception 38 years ago," it is absolutely
essential that every Member of Congress and the American public have time to
read and analyze the bill.

* US Action called the proposal a "Trojan Horse," saying, "An aging
population and rising medical costs will eventually require the nation to
provide Medicare with more money or to cut benefits, or both. Meanwhile,
there are demands for a new benefit: a gradual shift away from hospital
treatment and toward the use of drugs has turned the program's failure to
cover prescription drugs into a gaping hole."

* The Alliance for Retired Americans  strongly and  categorically opposes the
proposed Medicare bill.

* AFL-CIO, which also opposes the measure, has disclosed plans to air
advertising on the subject.   Calling the action of a congress taking
advantage of the urgent need for a prescription drug benefit and coming up
with a plan that would do more harm than good.	The union fears that millions
of people will be saddled with even higher drug costs, and the Medicare
system that has been such a success for our nation's families will be
terminally undercut.

* The Center for Aging Policy and N4A have indicated that the agreement falls
far short of their principles for a Medicare drug benefit they have also
indicated concerns that members will have very little time to review the
massive conference report before the report is brought to both floors for a
final vote.

* Families USA questions the conference agreement's "comparative cost
adjustment program," which is fancy wording for "privatization."  It
establishes the framework for remaking Medicare into a competitive,
market-driven system that  cannot provide the stability that is essential for
a health care program serving seniors and people with disabilities.   Another
concern, the asset test prevents very low-income beneficiaries from getting
help with the donut hole, premiums, co-pays, and deductibles. The asset test
is actually more stringent for the lowest-income people.  Low-income people
face the same donut hole, premiums, deductibles, and co-pay burdens of
higher-income individuals.

* Older Women's League indicates that they The outcome is as bad as feared!  
A bill produced under a secretive process, between House and Senate
Leadership determined to use the vehicle of an under funded and inadequate
Medicare prescription drug benefit to undermine the social contract between
America and its seniors.

*American Public Health Association indicates that the agreement does not
protect senior citizens against situations where private insurers can charge
premiums that fluctuate from state to state or that force them to change
plans, pharmacists or current prescriptions should a private insurer decide
to stop offering coverage in a particular community.  Crucial aspects of a
plan must include:  Guaranteed access for all Medicare eligible older adults
and individuals with disabilities regardless of income or health status;
Protection against premium and out-of-pocket costs for low-income
beneficiaries; Catastrophic protection for all beneficiaries; and Defined
quality of care standards and systems to help prevent medication errors.

For more and updated information, visit the website: 
www.pcusa.org/health/usa.

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