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Official: Private Plans Part Of Medicare Drug Solution

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NU Online News Service, April 17, 7:36 p.m. – The top Bush administration health official today emphasized the importance of including competition from private health insurance plans in efforts to provide prescription drug coverage for Medicare beneficiaries.

“For too long, Medicare has been a ?one size fits all’ program,” Tommy Thompson, secretary of the U.S. Department of Health and Human Services, testified before the House Ways and Means Committee, according to a prepared version of his remarks posted on the committee Web site.

“Private plans have been a critical source of drug coverage and other innovative benefits for seniors, and should remain so,” Thompson said.

But Thompson and other witnesses also emphasized the difficulty of reconciling the conflict between the cost of providing good benefits and the weakness of the trust funds backing the Medicare program.

The Congressional Budget Office has estimated that the average Medicare beneficiary used prescription drugs with a cost of about $1,756 in 2001, according to David Walker, the head of the U.S. General Accounting Office.

Ten percent of Medicare beneficiaries generated at least $4,000 in expenditures on drugs.

A few years ago, Medicare health maintenance organizations seemed to be gearing up to solve the drug problem. Many competed for market share by rushing to offer free or cheap drug benefits.

Now, witnesses said, private plans are fleeing from the Medicare HMO program because of complaints about bureaucracy and inadequate reimbursement rates. Many of the private HMOs still in the Medicare market are cutting prescription benefits because of concerns about skyrocketing drug costs.

Witnesses estimated that only about 10% of Medicare beneficiaries, or 4 million Americans, now get drug benefits from HMOs, down from 15% in 1999. Over the next 10 years, the witnesses predicted, 1 million of the beneficiaries who still have HMO drug benefits will probably lose them.

But, costly as drugs are and as much as private plans may need incentives to stay in the game, “as currently structured, Medicare is fiscally unsustainable,” Walker testified.

Even without adding a big new prescription program, Medicare could go broke sometime between 2016 and 2030 if Congress fails to act, Walker warned.

“I cannot overstate the importance of adopting meaningful financial reforms,” Walker said.

But Thompson argued against trying to cut costs by going with a single-payer system for drug benefits. “We believe it is critical for seniors to have a choice of drugs plans so that they can pick the one that is best for their needs,” he said. “This is not a decision the government should make for them.”

Walker recommended that the administration and Congress cope with the conflict between needs and resources by adopting a reasonably priced system that focuses on protecting Medicare beneficiaries against catastrophic prescription expenses.

The Ways and Means Committee has posted copies of Thompson’s remarks, Walker’s remarks and other speakers’ remarks at