By Crystal Swann
December 8, 2003

On November 26, Congress passed Medicare prescription drug legislation (HR 1 — H Rept 108-391), which would give the nations 40 million Medicare elderly and disabled beneficiaries federal help in paying for prescription drugs and opening the program to private insurer competition. By a vote of 54 to 44, the Senate cleared the sweeping Medicare drug bill for President Bush's signature.

In addition to the drug benefit, the legislation will also create a six metropolitan statistical area demonstration project that will allow for direct competition for Medicare patients from private health plans. It would provide $25 billion in new federal payments to doctors and hospitals and other providers in rural areas. The drug benefit, itself, covering about 75 percent of drug costs up to $2,250 a year, would begin in 2006; meanwhile, seniors would be eligible next year for Medicare'sponsored drug cards that would help seniors pay between 15 percent and 25 percent on their prescriptions.

The legislation also includes an employer-based subsidy program providing $86 billion in payments and tax advantages over 10 years to employers who provide drug coverage to nonfederal working aged and retirees. In addition, the bill emphasizes preventive health care. Medicare would cover a comprehensive medical examination for new beneficiaries so doctors would know their needs. Medicare would also cover screenings for heart disease and diabetes and would pay experts to coordinate care for elderly people with chronic illnesses. The bill includes a provision that allows consumers to import prescription drugs from Canada but only if the Secretary of Health and Human Services certifies that the drugs are safe. HHS Secretary Tommy Thompson has already indicated that he will not issue such a certification.

Opponents of the bill say that it will force beneficiaries to make very difficult choices, including either pay sharply increased premiums to stay in traditional Medicare where they can choose their doctor, or be forced into an HMO. The drug benefit portion of the bill also bars the government from negotiating for lower prices, using the size of the Medicare program as leverage. The concern centers on controlling the costs of the ever-escalating cost of the prescription drugs. Opponents have vowed to introduce legislation that will "fix" the more contentious aspects of the bill including the drug reimportation provision.