Medicare Rx Drug Benefit and Discount Act of 2003

The House Democratic prescription drug proposal, the Medicare Rx Drug Benefit and Discount Act of 2003, provides seniors and the disabled with a meaningful, comprehensive benefit for prescription medications in Medicare. The bill would create a new voluntary Part D in Medicare to offer beneficiaries the option to enroll in a dependable and affordable prescription medication benefit that would provide coverage for drugs like they get for other Medicare benefits today.

Access to Fair Prices

The House Democratic proposal ensures that elderly and disabled individuals will access significantly reduced prices on prescription medication. Medicare will use pharmacy contractors (PCs), who will be required as a condition of their Medicare contract to get additional reductions in the cost of drugs for Medicare beneficiaries. Only pharmacy contractors who meet or exceed these standards will be able to participate in Medicare. In addition, the Secretary of Health and Human Services (HHS) will negotiate on behalf of the 40 million Medicare beneficiaries to get discounted prices on certain drugs where there is no competition. Because the Secretary will have the market power of Medicare behind him, the negotiated prices will be significantly lower than prices beneficiaries face today. The Secretary will be able to compare the prices that Medicare pays with the drug prices paid by other payers (i.e., employers) to ensure the Medicare is getting a good deal for beneficiaries and taxpayers.

Access to a Real Medicare Benefit Without Gaps or Gimmicks

The House Democratic proposal provides full coverage for prescription drugs with no gaps or gimmicks. Unlike other proposals which only provide coverage for part of the year (even though beneficiaries must pay premiums for all year), the Democratic proposal provides coverage for every drug for every beneficiary all year long. All beneficiaries, no matter where they live, will be guaranteed a low $25 premium. After meeting the $100 deductible, Medicare will pay 80% of the cost of each preferred prescription medication, and the beneficiary will be responsible for the remaining 20%. (This benefit is identical to coverage seniors get today under Medicare for doctor visits and other Part B services: a $100 deductible and 80/20 cost-sharing.) Beneficiaries will be able to count on this coverage – with no holes in coverage – for all of their prescription needs. Once beneficiaries spend $2000 out-of-pocket on prescriptions, Medicare will totally protect beneficiaries against any additional drug costs.

Access to Needed Prescription Medicines

The House Democratic proposal ensures that seniors and the disabled can get Medicare coverage for the medication their doctor says is right for them. Unlike other proposals that allow private insurance plans to restrict or deny access to needed drugs, under the Democratic plan Medicare will always cover the every drug a senior needs. Medicare PCs, under the oversight of the Secretary, may establish a list of "preferred medicines" which are the most clinically appropriate medicines for particular conditions. Medicare will pay 80% of the cost of a preferred medicines. If a beneficiary ever needs a medicine that is not on the preferred list, they (or their doctor) can appeal to get that medicine at the preferred cost-sharing of 20%. If a situation should arise where the senior’s appeal is unsuccessful but he is reluctant to change to a different drug (e.g., from a medicine he has been taking for a long time), he can always choose to stay with his old drug and will be able to get that drug at a reduced price from the PC and receive Medicare coverage for that drug. In all cases, Medicare will give beneficiaries reduced prices and assist them with the cost of the drugs their doctor prescribes.

Dependable Coverage

Under the House Democratic bill, beneficiaries will be able to count on a meaningful Medicare benefit, low premium, affordable cost-sharing, and real stop-loss protection no matter where they live. Seniors won’t have to worry about whether or not their private insurance plan will be there from year to year or whether a private insurance plan’s premium will be affordable next year. They won’t have to worry about switching to a new private plan every year and they won’t have to worry about their coverage stopping mid-year. Of course, under the Democratic model a senior can always choose to enroll in a Medicare+Choice plan, but they will never be forced to enroll in an unreliable private plan if they would rather have the security and choices offered by traditional Medicare.

Real Choice

The Democratic plan gives seniors and the disabled the choices that are important to them. They will always be able to choose traditional Medicare, without penalty of increased premiums or lesser benefits, so they can continue to see the doctor or other health provider they feel most comfortable with. Democrats will not force seniors to enroll in a private insurance plan that can limit choice of doctors or hospitals or limit benefits and increase cost-sharing in order to get prescription drug coverage. The Democratic plan gives seniors and individuals with disabilities real choices without privatizing the Medicare program and turning it over to private insurance companies.

Access to Local Pharmacies

For Medicare beneficiaries, access to a local pharmacy is critical. The House Democratic bill will ensure that the elderly and disabled can always access their local pharmacy. The Secretary will determine broad standards for pharmacy participation to protect beneficiaries and ensure quality and program integrity. Pharmacies must also agree not to charge beneficiaries more than the Medicare-negotiated price and may not discriminate against beneficiaries who are low-income. Pharmacy contractors may also have additional standards to protect beneficiaries, but any pharmacy that meets the standards must be allowed to participate.

Protections for Low Income Elderly and Disabled Beneficiaries

The Democratic prescription drug proposal ensures that the new Medicare drug benefit is affordable to all beneficiaries, including those with limited incomes. Medicaid will provide full coverage of premiums and cost-sharing for beneficiaries enrolled in Medicare Part D up to 150% of poverty ($13,470 per year) and assistance with the Part D premium on a sliding scale and nominal cost-sharing for beneficiaries between 150% and 175% of poverty. Unlike the Republican bill, the Democratic proposal preserves the existing Medicaid protections on out-of-pocket costs (cost-sharing may not exceed a nominal amount defined in statute) and ensures that low-income beneficiaries can not be refused treatment if they can not afford their co-payment.

Voluntary Benefit that Preserves Access to Existing Prescription Drug Coverage

Enrollment in the new Medicare Part D benefit is voluntary. Beneficiaries who have existing prescription drug coverage can always choose to keep that coverage. In addition, in an effort to encourage employers to continue to provide quality retiree benefits, Medicare will provide a subsidy equal to two-thirds of the costs of the retiree prescription drug benefits, if those benefits provide coverage that is at least equal to what Medicare provides.