NU Online News Service, March 5, 2003, 12:43 p.m. EDT — Washington

Insurance and business groups are praising President Bush’s new Medicare reform proposal, saying it would modernize the financially troubled program.

“President Bush clearly understands that strengthening and improving Medicare will require giving older Americans access to the same kinds of modern health care choices that private health insurers already offer to millions of working Americans,” says Dr. Donald Young, president of the Health Insurance Association of America, Washington.

Neil Trautwein, director of employment policy for the National Association of Manufacturers, Washington, also praises the proposal, with the caveat that employers that provide drug coverage to their retirees be able to coordinate these benefits with the new Medicare options.

The president’s proposal is encouraging, Trautwein says, but NAM wants to be sure that no Medicare beneficiary is treated differently simply because he or she receives retiree health benefits from a former employer.

The Bush proposal drew sharp criticism from Families USA, Washington, a health care advocacy group.

The president’s plan will leave seniors without drug coverage unless they drop traditional Medicare for a private plan, according to Ron Pollack, Families USA’s executive director.

“Make no mistake, this proposal is a clear effort to privatize the Medicare program,” Pollack says.

“Seniors in this new privatized Medicare will no longer have a guarantee of specific benefits and defined coverage,” he says.

The president’s proposal would offer Medicare beneficiaries three options for how they receive health care.

Option One is traditional Medicare, with the additional benefit of assistance with paying for prescription drugs.

Beneficiaries choosing Option One could participate in a discount drug program that would allow them to save between 10% and 25% on prescription drug costs.

Option Two is an enhanced Medicare program. Participating beneficiaries would be able to choose health plans similar to those offered to federal employees and members of Congress under the Federal Employee Health Benefit Plan.

Enhanced Medicare would include a subsidized prescription drug benefit, with a monthly premium and annual deductible for those who could afford it.

Low-income beneficiaries would receive the drug coverage at no additional premium and receive additional subsidies to limit copayments.

Option Three, called Medicare Advantage, would allow beneficiaries to enroll in managed care plans similar to those in today’s Medicare plus Choice program.

Health plans in competitive markets would bid to provide participants with Medicare’s enhanced benefit package.

Advantage plans would be able to offer a benefits package without prescription drug coverage for participants who already have such coverage from a former employer.