The House Republican bill defines a model drug insurance policy known as "standard coverage." Under this policy, beneficiaries will pay approximately $40 per month for premium costs and an annual deductible of $250. Once beneficiaries meet the deductible, they will pay for half of the next $2,100 a year in drug costs. Most patients will then be responsible for their own drug expenses, but out-of-pocket costs are limited to $6,000 per year.
Under the bill, the government will pay subsidies to private insurance companies to encourage them to offer insurance policies covering drug costs of the elderly. But the government itself will not directly provide drug coverage, nor will it purchase drugs or regulate drug prices. If approved by the Senate, the legislation will be implemented in the year 2003, and will cost $40 billion over five years.
In the Senate, Chairman of the Senate Finance Committee, Senator William Roth (R-DE), has introduced a different prescription drug measure that would include grants to states for providing drug coverage to low-income seniors. Unlike the House, it appears that there may be no consensus on passing this legislation. Several other key prescription drug measures have been introduced this year:
The Senior Prescription Insurance Coverage Equity (SPICE) Act, introduced by Senator Ron Wyden (D-OR), creates a prescription drug benefit for Medicare beneficiaries to choose among various private-sector prescription drug plans. An independent board, reporting to the Department of Health and Human Services (HHS) would approve plan designs and premiums. Beneficiaries would have a 25 percent premium subsidy with the subsidy percentage increasing as income level decreases.
Senator Ted Kennedy (D-MA) introduced a significant package of two legislative measures. The Prescription Drug Fairness for Seniors Act, S. 731 would allow all Medicare beneficiaries to buy outpatient prescription drugs at "capped prices" from retail pharmacies. The Access to Prescription Medications in Medicare Act, S. 841, creates a prescription drug benefit for Medicare beneficiaries who do not have coverage and provides payment to plans that already cover outpatient prescription drugs for Medicare beneficiaries. The benefit would have an annual deductible of $200, with a 20 percent maximum cost-sharing per prescription up to $1,700 per year. After beneficiaries have paid $3,000 in out-of-pocket expenses, Medicare would cover all additional expenses.
The Medicare Preservation and Improvement Act of 1999, S. 1895 was introduced by Senators John Breaux (D-LA) and Bill Frist (R-TN). Under the measure, which would take effect in 2003, prescription drug benefits would be offered with an actuarial value of $800 under Medicare fee-for-service and managed care "high option" plans. People under 135% of the federal poverty level would not pay premiums for the coverage. There would be a sliding scale of premium subsidies for those between 135% and 150% of the federal poverty level. Those above 150% would receive a 25 percent discount on the drug benefit premium. Plans would be encouraged to use cost saving mechanisms such as formularies and Pharmacy Benefit Managers (PBMs).
Finally, the Clinton Administration has proposed a plan that establishes a voluntary Medicare Part D prescription drug benefit under the traditional fee-for-service program. Beneficiaries would not pay deductibles. In 2002, Medicare would cover half of the first $2,000 in prescription drug expenditures ($1,000 in costs), increasing to $5,000 in 2008 ($2,500 in costs). The benefit is fully subsidized for individuals with incomes up to 135% of the poverty level.