1 Medicare and Prescription Drugs Rescuing Medicare Step 1 in Saving U.S. Health Care Diane Archer Founder and Special Counsel Medicare Rights Center May 13, 2004

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3 Medicare and Prescription Drugs What is the Medicare Rights Center (MRC)? MRC is the largest independent source of Medicare information and assistance in the U.S. Founded in 1989, MRC helps older adults and people with disabilities get high-quality, affordable health care. MRC has three main programs: n Education and training n Client services n Policy and advocacy

4 Medicare and Prescription Drugs Tonight’s talk What people really want to know about the new Medicare reforms What lies beneath: the demons lurking among the MMA’s 681 pages Why Original Medicare works How we can save Medicare, and set the country on the path to NHI

5 Medicare and Prescription Drugs #1 concern: paying for prescription drugs A wide range of people with Medicare struggle to afford their medicines n Disabled individuals under 65 n Retirees with no retiree drug benefits n People with incomes that are low but too high for Medicaid n People with HMOs but inadequate benefits

6 Medicare and Prescription Drugs Lack of Rx coverage impedes access to medicine People with Medicare without prescription drug coverage are significantly more likely to: n Skip prescribed doses n Spend less on basic needs to afford drugs n Completely forgo prescribed drugs

7 Medicare and Prescription Drugs The big question on the minds of people with Medicare: How will the new law help me afford my prescription drugs? For the vast majority, it won’t.

8 Medicare and Prescription Drugs The new law: the Good, the Bad, and the Ugly The Good: may help people with low incomes afford drugs The Bad: these limited benefits will not help and will likely hurt millions of people with Medicare The Ugly: the benefits sugarcoat changes designed to poison Original Medicare

9 Medicare and Prescription Drugs The Good All people with Medicare whose incomes fall below 135% of poverty can get $600 annual subsidy for drugs in 2004 and 2005 and a free drug discount card People with low incomes can get additional help paying for drugs starting in 2006 People with very high drug costs and enough means to spend $3,600 on drugs will have catastrophic coverage.

10 Medicare and Prescription Drugs The Bad To get low-income assistance, people must actively enroll and pick a card out of a sea of conflicting options n Experience with MSPs shows bureaucratic, opt-in systems depress enrollment n Web card comparison tool is overwhelming The list of drugs discounted by a card and the price of drugs can change at any time

11 Medicare and Prescription Drugs The Bad (continued) The government is spending tens of millions of taxpayer dollars to promote cards that offer discounts often worse than those available via other options Even though drugs discounted can change, people are locked in for a year

12 Medicare and Prescription Drugs The Bad (still more) The 2006 Medicare drug benefit will: n have a premium that will likely be prohibitive for millions with Medicare n require people to pay $3,600 out of pocket on covered drugs before catastrophic coverage kicks in Low-income assistance will not be automatic for most people, who will have to pass an asset test

13 Medicare and Prescription Drugs The Ugly Promoted as “Same Medicare, More Benefits,” law includes provisions to privatize Medicare n Adds $130B in overpayments to private plans over 10 years n Forces people to get 2006 drug benefit from a private plan n Imposes 2010 “premium support” demonstrations on six metropolitan areas n Creates special trigger to allow Congress to slash payments and restructure Medicare

14 Medicare and Prescription Drugs Medicare is good government Original Medicare is one of the most successful government programs n Automatic coverage n Dramatic reduction in poverty n People love it n Protects wide choice of doctors n Better at cost containment n Able to negotiate reasonable prices

15 Medicare and Prescription Drugs New law undermines strength of Original Medicare program Law prohibits Medicare from negotiating reasonable prices for drugs n Permits drug prices to soar unchecked n Makes discount cards’ 10-20% discounts meaningless n Leaves sour taste in people’s mouths – for $539 billion, can’t government do better?

16 Medicare and Prescription Drugs Need confidence in government Since Medicare’s birth, faith in government has plummeted Right wing push to highlight failings of government and virtues of private marketplace Confidence grows from results n Private marketplace has never been able to meet the needs of people with costly health conditions; why Medicare was started n Can the government effectively lower your drug prices?

17 Medicare and Prescription Drugs Private marketplace is poor model for health insurance Leaves behind the most vulnerable people n Pre-Medicare older adults n People with disabilities or other conditions Worse at cost containment First principle is profit motive (not patient health)

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19 Medicare and Prescription Drugs Key to national health insurance Original Medicare’s success is the best evidence that national health insurance can work But creating NHI – in effect, Medicare for all – will depend upon confidence in Medicare

20 Medicare and Prescription Drugs The road to NHI First, preserve Original Medicare n Build off the people’s confidence in this form of national health insurance Then, expand Original Medicare n Give other age groups access to what can continue to be a successful program

21 Medicare and Prescription Drugs How you can help NOW Demand that Congress repeal the provision forbidding government “interference” with drug pricing n Local letter writing campaign n Phone calls n Jumping on cars

22 Medicare and Prescription Drugs Conclusion New Medicare law is anathema to national health insurance because it undermines confidence in government Long-term success in NHI movement may depend on preserving Medicare now

23 Medicare and Prescription Drugs Stay abreast of Medicare news and advocacy efforts Sign up for MRC’s free advocacy and educational newsletters at To learn more about the Medicare Rights Center, visit