About the
Medicare Prescription Drug Bill
Many
of you have requested written information about the newly passed Medicare
prescription drug bill. We want to be
sure that the information we provide to you is both understandable and
accurate.
Families
1. “What will
the new Medicare drug benefit look like for consumers?”
This
document offers a concise summary of the major prescription drug coverage
provisions of the bill.
“What will the
new Medicare drug benefit look like for consumers?” is available
at: http://www.FamiliesUSA.org/site/DocServer/New_drug_bill_benefits_costs_Nov_25_2003.pdf?docID=2322
2.
“Understanding the New Medicare Prescription Drug Benefit.”
Families
Both
of these documents will soon be posted on the Health Assistance Partnership Web
site. These documents are in PDF format;
please let us know if you would like this document in another format.
Kaiser
Family Foundation Resources on the Medicare Prescription Drug Benefit Debate
The
Kaiser Family Foundation has created a new resource center on its Web site
where you can find materials related to the enactment of the Medicare
prescription drug benefit. The Kaiser
Family Foundation resource center is available at http://www.kff.org/medicare/rxdrugdebate.cfm.
Specifically
the Kaiser resource center provides a summary of the bill http://www.kff.org/medicare/medicarebenefitataglance.cfm, and a
side-by-side comparison of the House bill, the Senate bill, and the conference
committee agreement that both Houses of Congress recently passed, see http://www.kff.org/medicare/6111.cfm.
You
can find much useful information among the Kaiser materials. For example, according to Kaiser’s “Medicare and Prescription Drug Spending Chartpack” (June 2003), found at http://www.kff.org/medicare/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=14382, average drug
spending in 2003 was $2,322 per Medicare beneficiary and is projected to rise
to $ 3,160 by 2006.
The
Text of the Bill
If
you would like to read the actual text of the bill, you can find it on the
"What's New?" page on the
How
Much Must Medicare Beneficiaries Expend on Prescription Medications Under the
New Bill?
Many
of you have asked about how much a Medicare beneficiary will have to pay for
prescription drugs under the new drug benefit that will come into effect in
2006.
A
Medicare beneficiary who enrolls in the new prescription drug benefit must
first pay the $250 annual deductible out-of-pocket. After the deductible has been met, of the
following $2,000 of drug expenses, the beneficiary will pay $500 (or 25%) and
the plan will cover the remaining $1,500 (or 75%). Then the beneficiary will
enter the so-called “donut hole” in which she must pay $2,850 entirely
out-of-pocket. [1][1] The catastrophic benefit, which consists
of plan coverage of 95% of any further drug expenses, is available only if a
beneficiary continues to accrue drug expenses after the “donut hole.”
The
catastrophic benefit does not come into effect until a Medicare beneficiary has
met a $5,100 annual threshold in total
prescription drug expenses. This amount
of $5,100 is the sum of the $250 deductible, the next $2,000 of drug costs each
year, (of which 75%, or $1,500 are covered by the drug plan and 25%, or $500
are paid out-of-pocket) and the $2,850 that the beneficiary must expend
out-of-pocket in the “donut hole.”
Note
that only the costs of prescription drugs that are on the formulary of the plan
in which the beneficiary has enrolled will “count” towards the beneficiary’s
out-of-pocket expenditures.
There
is still considerable lack of clarity about precisely when low income Medicare
beneficiaries will have their cost-sharing amounts reduced with respect to the
catastrophic drug coverage benefit. The
data contained in “What will the new
Medicare drug benefit look like for consumers?” represents the best
information available at this time. This Families USA documents may be updated
as more information becomes available. We will distribute all updates as soon
as we receive them.
What
Else is in the Bill?
There
is much more in the bill than the Medicare prescription drug benefit. The bill requires a demonstration project to
test competition between Medicare and private health insurance plans in up to 6
major metropolitan areas beginning in 2010. The bill expands Medical Savings
Accounts for the non-elderly population.
It mandates increases to the Medicare Part B premium and to the
jurisdictional amounts that are required to maintain Medicare appeals.
The
bill requires that people applying for the Medicare drug benefit be screened
for eligibility for Medicaid coverage of Medicare cost-sharing, and offers many
enhancements for Medicare participating providers, including increases to
Medicare provider reimbursements.
We
will continue to pass along information and resources about the bill.
The
Status of the Medicare Prescription Drug Bill
The
Kaiser Family Foundation, citing the Washington
Times, is reporting that the President is expected to sign the Medicare
prescription drug bill into law on