November 12, 1999
Medicare Reform Plan Introduced in the Senate
Sens. John Breaux (D-La.), Bill Frist (R-Tenn.) and Robert Kerrey (D-Neb.) introduced Nov. 9 the "Medicare Preservation and Improvement Act of 1999", S. 1895 modeled largely after the premium support plan put forth by the National Bipartisan Commission of the Future of Medicare. The three former members of the commission are moving ahead with legislation after the Medicare commission failed earlier this year to come up with the 11 votes necessary to make a formal recommendation to Congress.
Under the new proposal, the Health Care Financing Administration (HCFA) would be divided into two divisions: one to oversee HCFA-sponsored Medicare plans and another to run Medicaid, the state children's health insurance program and funding for teaching hospitals. Although the legislation stipulates that federal support of graduate medical education be administered by HCFA, it includes no specifics on the funding mechanism to be used.
The legislation retains a proposal advanced by the commission to create a 7-member board appointed by the president and confirmed by the Senate to oversee both private health plans participating in Medicare and the fee-for-service basic and high-option plans that HCFA would operate.
The Breaux/Frist/Kerrey proposal spells out some details of the Medicare board's operation - which critics said were lacking in the plan that the commission put forward earlier this year. Board appointees would serve staggered 7-year terms, with each appointee limited to two terms on the board. The board would "administer the competitive environment and will be responsible for coordinating and determining beneficiary eligibility and enrollment; negotiating contracts with entities offering Medicare plans, including HCFA; and disseminating information to beneficiaries with respect to benefits, cost-sharing, and quality indicators under Medicare plans," according to a summary of the proposal prepared by Sen. Breaux's office.
The new plan also includes prescription drug coverage for Medicare beneficiaries. Medicare currently pays for outpatient drugs only for those patients enrolled in a managed care plan that offers such coverage. Under the proposal, all private health plans participating in Medicare would have to offer a high-option plan with a drug benefit having an annual actuarial worth of $800 and with $2,000 in annual stop-loss coverage for all benefits other than drugs.
The proposal does not yet include some of the revenue-producers included in other Medicare drug proposals such as raising the Medicare age of eligibility or altering copayment and deductible schemes to offset the cost of the bill which will most likely not be calculated until early next year.
The Medicare issue will certainly be front-burner issue during the 2000 campaign season. "It's a red-hot political issue," Sen. Beaux said, because the baby boom generation is concerned about its own future benefits and about elderly family members now served by Medicare.
Information: Paul Bonta or Lynne L. Davis, AAMC Office of Governmental Relations, 202-828-0562.
