This document provides background information and summarizes the debate over Medicare Prescription Drug Coverage. The links to the left will lead you to public documents that we have found.
One of the public's
greatest political concerns is the cost of prescription drugs. For those who
have good insurance coverage, most of the cost of their pharmaceuticals will
be covered. For those without insurance coverage, the cost of the drugs they
need to maintain their health can be prohibitive. It is not unusual for an
individual's monthly drug bill to be in the hundreds of dollars, a considerable
sum of money for those of fixed incomes. For the elderly, their primary insurance
is Medicare, the government program created to make sure that the nation's
senior citizens receive the medical care they need. Although the program has
been expanded over the years to broaden coverage to additional services, it
does not cover drugs. The result is that some seniors go without some of the
drugs they need, take fewer pills than prescribed by the doctors so as to
stretch the medicine out over a longer period of time, or cut back on other
expenses (such as food) in ways that diminish their quality of life.
Every elected official in the United States agrees that this is a serious
problem. But the agreement stops there. Instituting a Medicare drug benefit
is enormously expensive and alternative approaches must be weighed carefully
against the relative costs and benefits. The political difficulties in reaching
agreement are enormous. Due to the huge costs of various prescription drugs,
there is considerable pressure to restrict the costs of the drugs. Drug companies
and their primary trade association, the Pharmaceutical Research and Manufacturing
Association (PhRMA) have lobbied vigorously to protect their business by trying
to convince policymakers that it is counterproductive for them to force down
the price of drugs. They argue that the public just doesn't understand how
much it costs to bring an individual drug to market. Most drugs that begin
development in the lab ultimately fail and the drugs that succeed must be
priced upwards to compensate for the research and development costs across
the company.
On the other side
of the political equation are organizations like the American Association
of Retired People (AARP) argue that the costs of drugs are far too high because
the drug companies build in too much profit and marketing into the cost structure
of their drugs. The AARP has pushed hard for a Medicare drug benefit, but
is open to various proposals to accomplish this. Said one spokesperson, AARP
advocates "a Democrat benefit plan with a Republican delivery system."
But there are more than two sides to the issue as the problem involves a huge
swath of the health care industry. Hospitals, for example, are all for a Medicate
prescription drug benefit as long as it doesn't cost them anything. The lobbyist
for one hospital association told us, "Whatever you do, just don't cut
hospital payments."
Although President
Bush says he favors a prescription drug benefit for Medicare, finding common
ground has been difficult. Not only do Democrats and Republicans differ on
what to do, a band of very conservative Republicans differ with Bush and their
congressional leadership on the issue. They want a deal that couples a prescription
drug benefit with other changes that would reduce overall Medicare costs.
The enormous expense of such a benefit became more of a stumbling block since
the recession and the war in Iraq have pushed the federal budget into a deep
deficit. Still, the political benefits of passing a plan pushed House and
Senate negotiators closer together and a bill seemed possible sometime before
the 108th Congress expired.