AARP CEO Bill Novelli told members of the Senate Finance Committee today that Medicare must be strengthened and modernized by adding affordable prescription drug coverage this year. He called it an urgent priority for virtually all older Americans, and said it will require an adequate commitment of funds to attract enough voluntary enrollees to make it a viable program.

"AARP believes solid public policy should drive the funding of a prescription drug benefit, not the reverse," Novelli said. "That is why we have asked Congress to renew its commitment from last year, adjusted for inflation and the growing number of eligible beneficiaries, by earmarking $350 billion for prescription drugs and reforms that strengthen the program."

He also recommended that Congress create a reserve fund of about $400 billion that could be tapped, as needed, to provide Congress with the flexibility to design a program that will succeed in the marketplace.

"The challenge is creating a plan that beneficiaries perceive as a good deal and will purchase," Novelli added. He said AARP is open to ideas and will work with Congress as legislative proposals are developed. "With the right mix of benefits and participation of the broadest number of beneficiaries possible, a Medicare drug program will succeed," he said.

Novelli said that the public did not accept last year's $300 billion proposals because that level of funding requires high premiums and provides limited benefits.

"Beneficiaries are not asking for free prescription drugs. They are willing to pay for this coverage through premiums, co-pays, and deductibles. But these payments must be seen as reasonable. We know, for instance, that beneficiaries would not be likely to enroll in a plan with a premium of $50 a month," Novelli said.

Novelli pointed out that support for a Medicare prescription drug benefit remains high across all age groups. "Many people are caregivers, are concerned about their parents, and are thinking about their own later years. They realize that you don't have adequate health insurance today if you don't have adequate prescription drug coverage," he explained.

Novelli said that beneficiaries would apply a "kitchen table test" in determining whether they would purchase a voluntary drug benefit. They will likely calculate their current prescription drug costs, their current Medicare drug premium, any drug coverage they might have, and their current household expenses when determining whether a proposed benefit is right for them.

AARP studies suggest five critical elements of a sustainable program:

• Balance coverage and premiums so people feel they get real value.
• Include cost containment measures to keep the benefit affordable.
• Communicate clearly so people understand the benefit's advantages.
• Attract broad enrollment, not just those with high drug costs.
• Limit the enrollment period so people do not wait until they face high drug costs to sign up.

Novelli noted that cost containment efforts are important for controlling drug spending and keeping Medicare coverage sustainable over the long term. He announced a new AARP national education program for members and the general public to promote the wise and safe use of medications, including generic drugs.

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