New Medicare Bill--Prescription Drug Benefits

The new Medicare bill contains the following provisions for prescription drug benefits:

By April 2004, those eligible for Medicare will have access to a privately administered, Medicare-approved discount card which could result in savings of 10-25% off retail prices of prescription drugs.

Starting in 2006, those eligible for Medicare will have access to private drug-only insurance policies. Premiums will be about $35 per month, but could vary. The policies would provide the following coverage: $250 annual deductible; 75% coverage of drug costs between $276 and $2,250; no further coverage unless beneficiaries' out-of-pocket spending reaches $3,600; 95% of the drug costs above $2,600 for most people, more for couples with incomes of $18,180 or less and individuals with incomes of $13,470 or less per year (under 150% poverty level).

Those eligible for both Medicare and Medicaid will get their drug benefit under Medicare instead of Medicaid; states will have limited ability to supplement those benefits using joint federal-state Medicaid funds.

Those with yearly incomes of $16,362 for couples and $12,123 for individuals (135% poverty level) would have no premiums, no deductibles, and no gap in coverage. They would pay $2 for each generic prescription and $5 for all other prescriptions. They would have no co-payments if out of pocket spending topped $3,600 . Couples with assets of more than $9,000 and individuals with assets of $6,000 would not be eligible for this benefit.

Those with incomes between 135% and 150% of poverty would pay a sliding scale premium and a $50 annual deductible, and would have 85% of out-of-pocket costs covered up to $3,600, after which they would pay $2 or $5 for each prescription. Couples with assets over $20,000 and individuals with assets over $10,000 would be ineligible for this benefit

Beginning in 2006, beneficiaries would have a choice of more types of private plans.

Medicare Part B: Currently covers 25% of program costs, with tax revenues paying the other 75%. After a seven year phase-in, those with incomes over $80,000 for individuals and $160,000 for couples will pay premiums equal to 35% of program costs; those above $100,000 would pay 50%, and those above $200,000 would pay 80%.

Canadian Drugs: Americans will be permitted to purchase prescription drugs from Canada, but only if the Food and Drug Administration certifies that such imports are safe. It should be noted, however, that the FDA has made it clear that it does not intend to do so. The Democratic Party will introduce a bill in an attempt to rectify this problem.