SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 2200 words

COMMITTEE: HOUSE WAYS AND MEANS

SUBCOMMITTEE: HEALTH

HEADLINE: TESTIMONY MEDICARE DRUG BENEFITS

TESTIMONY-BY: MR. MAX RICHTMAN , EXECUTIVE VICE PRESIDENT

AFFILIATION: NATIONAL COMMITTEE TO PERSERVE SOCIAL SECURITY AND MEDICARE

BODY:
Statement of Max Richtman, Executive Vice President, National Committee to Preserve Social Security and Medicare Testimony Before the Subcommittee on Health of the House Committee on Ways and Means Hearing on Medicare Reform: Laying the Groundwork for a Prescription Drug Benefit March 27, 2001 Good Morning, Madam Chair and distinguished Members of the Committee. I am Max Richtman, Executive Vice President of the National Committee to Preserve Social Security and Medicare, a grassroots education and advocacy organization with several millions of members and supporters around the country. The National Committee is currently chairing the Leadership Council of Aging Organizations, a coalition of forty-six national, non- profit organizations dedicated to the concerns of an aging America. Although Americans have been enjoying a period of economic prosperity, we have not yet addressed one of the most dire health needs of seniors today, access to affordable prescription drugs. In the year 2000, eight out of ten Medicare beneficiaries reported using prescription drugs on a daily basis, with the average senior taking four prescriptions daily and filling an average of 28 prescriptions a year. Because people are living longer, they are experiencing more chronic conditions than ever before. According to HCFA, 73 percent of women and 65 percent of men who are Medicare beneficiaries have two or more chronic conditions, which are more likely to require prescription drug treatments. The high cost of prescription drug prices, which continues to rise, creates an additional burden for the majority of seniors who are on low, fixed incomes. The SPRY Foundation, a research and education arm of the National Committee, predicted that seniors spend approximately three times as much on out-of- pocket expenses as the under 65 population, due substantially to the fact that just over one-third of the beneficiaries (12 million seniors) have no drug coverage, with access for the remaining two-thirds either declining, or becoming more costly, or both. In the year 2000, the average expenditure for prescription drugs for a senior was $1,205, with an average of $590 as their out-of-pocket expense. Drug costs for seniors are also expected to double by 2008, partly due to the rising cost of development of breakthrough drugs and the increased cost of advertising to consumers. In 1996, overall drug spending has increased from $30 billion in 1996 to $50 billion in the year 2000. Escalating drug costs and increased prescription drug use are not just problems for our senior population. It also is becoming a burden for the younger generations, who must help support their parents, as well as their own families. A CNN/Gallup/USA Today Poll conducted earlier this year ranked thirteen possible priorities for the new administration's use of federal surplus dollars. Strengthening Social Security, helping seniors pay for prescription drugs, and ensuring the long term strength of Medicare all ranked among the top five priorities while cutting federal income taxes ranked second to the last. President Bush has said repeatedly that a large part of the budget surplus is the people's money and should be returned to the people. A fair way to return part of this surplus to the people would be in the form of a universal, voluntary and affordable prescription drug benefit as a part of the Medicare program for all seniors. This polling reflects the views of our members as well. Medicare solvency and access to prescription drug benefits remain two of our top priorities. In February 2000, the National Committee to Preserve Social Security and Medicare joined the Leadership Council of Aging Organizations in developing a set of principles for a Medicare Prescription Drug Benefit, which I have attached to my testimony. These principles continue to guide our effort in the 107th Congress. Essentially, we believe that seniors deserve a prescription drug benefit that is comprehensive in coverage, affordable and regularly adjusted to account for inflation, voluntary but guaranteed to all who want it regardless of income or health status and available as part of the Medicare program including traditional fee-for-service Medicare. We are concerned about various proposals that do not meet our basic standards and principles. We are also concerned about proposals to pay for the prescription drug benefit by using Medicare Part A trust fund monies. This would have a major impact on the solvency of the existing trust fund, which finances benefits under the current law. Some premium support proposals suggest that private managed care organizations offer seniors drug coverage. However, access to Medicare managed care has already proven to be unreliable. Following the Balanced Budget Act of 1997, many seniors enrolled in managed care plans, in large part for the prescription drug coverage. This year, about one million beneficiaries in these plans have been dropped from their managed care Plus Choice plans. More and more managed care plans are deciding not to participate in Medicare, abruptly dropping seniors, particularly those in rural and hard-to-serve areas. The dramatic increase in Medigap premiums that include prescription drugs is clear evidence that the private sector cannot provide adequate access to prescription drug coverage for a reasonable cost. Another concern of the National Committee and Leadership Council is that managed care plans, as they have historically done, could participate in favorable risk selection by offering Medicare beneficiaries low-cost, low coverage plans that will attract younger, healthier seniors, leaving the sickest and oldest unable to afford the more generous plans. As you know, President Bush's Blueprint Budget provides $153 billion over 10 years for Medicare reform, including $48 billion for a prescription drug plan called Immediate Helping Hand. The Immediate Helping Hand Proposal will only reach the lowest income seniors through state-based plans. The bipartisan National Governors Association has said that they do not want the federal government to impose the responsibility of prescription drug plans on the states. The twenty-three states that already provide such assistance reach, on average, only about one-fourth of those in need. The National Committee and the Leadership Council agree that these plans do not meet our principles. Most premium support models being considered cannot guarantee affordability for all seniors and the Bush proposal is far from universal in coverage. About one-half of seniors who lack prescription coverage today have incomes above 175 percent of poverty. Ms. Sylvia Kessler, an 81-year-old National Committee member from Florida, is an excellent example of a middle-income senior who does not qualify for her state based prescription drug plan because she is above the income level required. She also would not be eligible for Immediate Helping Hand because she is over 175% of the poverty rate. Ms Kessler testified in February of this year before the House Energy and Commerce Committee's Subcommittee on Health, as a middle-income senior who can barely afford her nine prescriptions for heart disease and high cholesterol. Because her prescriptions cost $2,300 per year (over 10 percent of her annual income), Ms. Kessler must work two part-time jobs at the local Board of Elections and a flea market in order to make ends meet. Last week, the Chairman of the Senate Finance Committee said that President Bush's $153 billion would not be enough to offer drug benefits to all 39 million elderly and disabled on Medicare. Exactly how much is required to provide a drug benefit has been debated, but CBO recently estimated that spending on prescription drugs for Medicare beneficiaries would cost nearly $1.5 trillion from 2002 to 2011. The National Committee and Leadership Council estimates that a meaningful, comprehensive benefit to match what seniors truly need and expect would require a 10 year commitment of more than twice President Bush's Medicare reform amount for the drug benefit alone. Obviously, this endeavor would be expensive. Although precise numbers are not available, it is obvious that there would be cost savings for the overall system due to the dramatic decrease in costs for treatment and hospitalization as a result of patients' ability to comply with their physician's prescribed drug regimes. The Leadership Council and the National Committee calls on members of this body to pass a prescription drug bill that makes drugs affordable, includes drugs in the basic Medicare package, and is universal. It should include a broad spectrum of financing elements including beneficiary contributions and general revenue contributions and utilize Medicare's size to achieve volume price discounts for beneficiaries. Thank you for your time.

LOAD-DATE: March 29, 2001, Thursday