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GOVERNMENT & MEDICINE

Bush's state-based Rx drug program gets cool reception

Some doctors criticize Bush's first step toward a Medicare prescription drug benefit as too limited.

By Jane Cys, AMNews staff. Feb. 19, 2001. Additional information

Washington -- President Bush kicked off this year's congressional debate on a prescription drug benefit and comprehensive Medicare reform when he formally proposed a plan in late January to expand state-based drug programs with an infusion of federal funds.

The four-year, $48 million plan, which fulfills one of Bush's campaign promises, didn't get an enthusiastic response from Republican or Democratic lawmakers. While most publicly applauded the president for stepping forward with a plan, they also grumbled about what they viewed as serious flaws in the proposal.

Republicans generally prefer to see a drug benefit enacted as part of comprehensive reform and fear that Bush's plan, if approved, would further curtail momentum toward that goal. Democrats argue that Bush's plan doesn't help enough seniors and fails to address the issue of ever-increasing drug prices.

Physician groups joined with other organizations in expressing reservations about the state-based drug plan, but added that they were heartened to see Bush start the debate on the prescription drug issue so early in his administration.

"It's an important first step in the sense that it recognizes that there is a real problem out there, but [the plan] doesn't really begin to scratch the surface of the problem," said Richard G. Roberts, MD, president of the American Academy of Family Physicians.

Bush intends for his stand-alone drug plan, dubbed "Immediate Helping Hand," to be a stopgap measure that would help low-income seniors while Congress works on developing and implementing comprehensive Medicare reform. The reform debate -- as well as the implementation of whatever plan Congress approves -- is expected to be lengthy.

"If there is a concern about helping low-income seniors ... then we have to try and find a strategy that might work in the short term," said Gail Wilensky, PhD, chair of the Medicare Payment Advisory Commission and a Bush health policy adviser during the campaign. "That was the drive for coming up with something like a block grant that could work off existing state programs."

Bush's plan would subsidize the full premium for individual seniors with annual incomes up to $11,600 and pay 50% of the premium for seniors with incomes between $11,600 and $15,000. All seniors with yearly out-of-pocket drug costs that exceed $6,000 would be eligible to participate in a state insurance program at no charge.

Twenty-six states currently offer drug assistance programs to seniors, and several others are considering creating such programs, according to Bush. States would be given some flexibility to implement strategies to control their drug costs.

AAFP's Dr. Roberts pointed out that relying on the states to help seniors with drug costs will create a patchwork of programs with varying administrative and eligibility requirements across the country. Many physicians, he added, have patients from more than one state.

"Knowing which set of rules applies to which person can be very challenging already, and adding a prescription drug benefit to that will create a real problem," Dr. Roberts said.

Bush's plan may help low-income seniors, Dr. Roberts added, but those in the next-higher income bracket won't get any relief until they spend at least $6,000 annually. "These seniors might continue to do as many do now, stretching out prescriptions or not filling them," he said.

The AMA hasn't finished reviewing Bush's state-based drug plan, said Richard F. Corlin, MD, AMA president-elect. A Medicare drug benefit, however, should adhere to several key principles, he noted.

For example, Dr. Corlin said, any drug insurance coverage benefit must be actuarially sound, and enrollment should be mandatory to prevent adverse selection. The financing for a drug benefit also should be kept separate from Medicare Parts A and B to prevent the drug costs from mingling with hospital and physician expenses.

"The reason for saying that is that only by keeping the costs in a separate category will we be able to get a handle on what the true costs of a drug benefit and the true administrative costs of the overall program will be," Dr. Corlin explained.

Getting the ball rolling

Once Bush put his state-based drug plan before Congress, senators and representatives began offering their own proposals as alternatives lawmakers can consider when they start negotiating the details of a plan.

At press time, Sens. John Breaux (D, La.) and Bill Frist, MD (R, Tenn.), were expected to reintroduce their comprehensive Medicare reform proposal. Their plan, based on the work of the now-defunct National Bipartisan Commission on the Future of Medicare, incorporates a drug benefit into structural reform of Medicare.

Democrats with the Congressional Progressive Caucus countered Bush's drug plan by introducing one of their own. Its features include Medicare paying for 80% of seniors' drug costs up to $2,000 -- a limit that would increase to $5,000 in 2009.

Whether Congress will pass a workable drug benefit or comprehensive Medicare reform remains to be seen.

Some Republicans pointed out that chances of a drug benefit's passage have improved, given recently revised Congressional Budget Office estimates that project the budget surplus, excluding Social Security, will reach $3.1 trillion by 2011.

"We have more than enough money for the creation of a Medicare prescription drug benefit," said Sen. Jim Jeffords (R, Vt.), chair of the Senate Health, Education, Labor and Pensions Committee.

Sen. John D. Rockefeller (D, W.Va.) questioned whether enough money could be found to fund the drug benefit, given the size of the president's proposed tax cut and other initiatives. He also said Congress should pass a drug benefit and not "hold seniors hostage" to the concept of broad Medicare reform.

Robert Reischauer, president of the Urban Institute, said he thought public pressure would force the GOP-controlled Congress and Bush to pass some form of prescription drug benefit. "If some [drug benefit] legislation doesn't pass before the 2002 election, the Democrats would be handed a huge club that they can use to beat Republicans over the head," he said.

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 ADDITIONAL INFORMATION: 

Medicare drug plan unveiled

Here are some details of the state-based prescription drug benefit that President Bush proposed in late January. The initiative would:

  • Pay the full drug insurance premium for seniors with annual incomes up to $11,600 (or $15,700 for married couples) who are not eligible for Medicaid or a comprehensive private retiree benefit.
  • Cover 50% of the drug insurance premium for seniors with incomes between $11,600 and $15,000, and for married couples with incomes between $15,700 and $20,300.
  • Make all seniors, regardless of income, eligible for state-based drug programs if their annual out-of-pocket drug expenses exceed $6,000. No premiums would be charged.
  • Give states discretion to implement a range of strategies to control costs, including creating utilization review programs and providing incentives for seniors to use "on-formulary" and generic drugs.
  • Sunset in four years or when a comprehensive Medicare prescription drug benefit is implemented. The program would cost $48 billion, according to campaign documents.

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Copyright 2001 American Medical Association. All rights reserved.

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