Symposium

0 Comments | Insight on the News, June 10, 2002 | by Merrill Matthews, Jr., | Bill Novelli

Q: Should there be a means test for a prescription-drug benefit for senior citizens?

YES: Seniors without prescription-drug coverage already have access to other programs designed to help.

The Bush administration and Congress are considering ways to create a prescription-drug benefit for senior citizens. Some proposals would limit the benefit to those seniors who fall under an income threshold--in other words, means-testing. Those eligible would include low-income seniors who do not have prescription-drug coverage or those with very high drag costs. On the other hand, other proposals would make a drug benefit available to any senior who chose to join.

We already have a public-policy debate about why wealthy people get the same benefits under Medicare (and Social Security, for that matter) as the poor. What this debate boils down to is this: Should taxpayers subsidize Ross Perot's prescription drugs? You would think that, during an economic slowdown and budget crunch, the answer would be obvious. But in an election year the obvious answer often is the one least noticed.

The push for a nationwide, comprehensive, prescription-drag benefit for seniors always has been driven more by politics than by need. True, in most cases Medicare does not pay for outpatient prescription drugs, but 62 percent of seniors already have some form of prescription-drug coverage. Many of those who don't are relatively healthy and use very few prescription drugs or have reasonably good incomes and assets and can afford them. Only 6.7 million seniors without prescription-drag coverage have incomes of 200 percent of the federal poverty level or less.

The average senior citizen between the ages of 65 and 74 uses about 9.5 prescriptions annually, while seniors age 75 and older use about 11.5 prescriptions annually. Even if those prescriptions averaged $50 apiece (generics likely would be much less expensive), they still would be spending between $500 and $600 a year.

Of course, for low-income seniors on a fixed budget and no prescription-drug coverage, $500 a year can be a lot. But many states have set up drug-assistance programs that help low-income seniors get the drugs they need. In addition, many pharmaceutical manufacturers have created their own assistance programs that provide drugs to poor seniors at little or no cost.

But that's not all. Late last year, drugmakers GlaxoSmithKline and Novartis created drug-discount-card programs. Qualifying low-income seniors can get a discount card that reduces the cost of drugs produced by those companies by 25 to 40 percent.

In January, Pfizer unveiled a new program that allows participating low-income seniors to purchase any of its drugs for a fiat $15 per month. Not to be outdone, Eli Lilly introduced a program at the beginning of March that allows participating low-income seniors to purchase any of the manufacturer's drugs for $12 a month. Subsequently, seven drug companies announced that they jointly would offer a discount card.

Thus most seniors have prescription-drug coverage, and many of those who don't have access to both government- and industry-sponsored programs that will help them.

Nonetheless, some seniors still fall through the cracks. Their stories can be tragic and heartrending, creating a political impetus to do something about the problem.

House Republicans appear determined to have a prescription-drug-benefit bill passed by Memorial Day. According to news reports, they will propose a plan that will require Medicare beneficiaries to pay $35 to $40 a month to participate in the program. After meeting a $250 annual deductible, the program

would cover 70 to 80 percent of the first $1,000 in prescription-drug costs and 50 percent for expenses between $1,000 and $2,250. Participants would pay all costs between $2,250 and $5,000, but the program would pay 100 percent of prescription-drug costs exceeding $5,000. Those with incomes 135 percent below the federal poverty level would have all their expenses paid.

The Democrats' plan looks very much like the one presidential candidate Al Gore campaigned on: a $25 monthly premium (to start with), no deductible and a 50 percent co-payment up to $4,000, at which point the government would pay all costs.

It must be remembered that these proposals are only the first volley. Once the election-year bidding war gets going, who knows how large and comprehensive they will grow--and cost. AARP is pushing for $750 billion over l0 years for a prescription-drug benefit and Medicare reform--more than the annual gross domestic product of Canada.

Does it make any sense to be doing this, especially in a budget crunch? Perhaps for seniors with incomes 135 percent below the federal poverty level and those with annual costs of more than $5,000. It also would make sense to look at fundamentally reforming Medicare so that a prescription-drug benefit is integrated into the program. But a comprehensive drug benefit added on to the current Medicare program is asking for the federal government to micromanage the system.