House And Senate On Course To Pass Medicare Prescription Drug Legislation
The House and the Senate, following separate tracks, are poised to approve a new $400 billion Medicare prescription drug benefit.
Both chambers of Congress were considering bills at press time, and the widespread speculation was that they would complete work on their bills–S. 1 in the Senate and H.R. 2473 in the House–before breaking for a week-long July 4th recess beginning June 30.
The two bills were going through the amendment process at press time, and some minor changes are possible. However, the basic thrust of the bills will likely be preserved.
Under H.R. 2473, beginning in 2006, Medicare beneficiaries would have a new optional prescription drug benefit subject to a $250 deductible.
Above $250, Medicare would pay 80% of all costs up to $2,000. Coverage would then be suspended until a beneficiarys out-of-pocket costs reach $3,700. Above that amount, Medicare would pay all costs.
Beneficiaries could receive coverage through the traditional fee-for-service plan or through a managed care plan.
The Senate bill, S. 1, is largely similar. Under the plan, standard coverage would be available to beneficiaries subject to a $275 deductible.
Between $276 and $4,500 in drug costs, Medicare would pay 50%. Then, coverage would be suspended until a beneficiaries out-of-pocket costs reach $3,700, at which point Medicare would pay 90% of all costs.
Again, coverage would be available both through the traditional fee-for-service plan and managed care plans, although private insurers would offer the coverage and assume some of the risk of loss.
Following passage of the two bills in their respective chambers, a House-Senate Conference Committee would convene to work out the differences and develop a consensus final proposal.
Karen Ignagni, president of the Washington-based American Association of Health Plans, praises the efforts of Congress to create a Medicare drug plan but says more is needed to secure Medicare.
“We applaud Congress for its bipartisan efforts to create a workable plan to give all Medicare beneficiaries access to prescription drug coverage, as well as disease management and preventative services that only the private sector can provide,” she says.
She also praises Congress for looking to health plans as the foundation for creating a strong and viable partnership between the government and the private sector.
“For this partnership to succeed, Congress must stabilize the existing Medicare+Choice program by restoring funding to a level that reflects the current cost of health care,” Ignagni adds.
This, she says, will secure private sector choices for seniors in the future.
In other news, industry-backed efforts to create an above-the-line deduction for long term care insurance received a boost last with the introduction of legislation in the Senate called the Long Term Care and Retirement Security Act (bill number not available at press time).
The legislation, which is co-sponsored by Senate Finance Committee Chairman Charles Grassley, R-Iowa, and Sen. Bob Graham, D-Fla., is a companion to legislation introduced earlier in the House, H.R. 2093.
Graham says the legislation is needed to help people cope with the financial responsibilities of aging.
“As the population ages, we must help Americans to adequately plan for their health care needs, including long term care,” he says.
Frank Keating, president of the American Council of Life Insurers, Washington, says the legislation is critical to the economic security and peace of mind of all American families.
“Now, more than ever, Americans need to plan for their future,” he says.
Donald Young, president of the Health Insurance Association of America, Washington, notes that nursing homes can cost more than $50,000 a year, while in-home care can run to more than $12,000 a year.
This makes long term care one of the largest unfunded liabilities facing baby boomers, Young says.
An “above-the-line” deduction is one available to all taxpayers, whether or not they itemize.
Finally, a senior member of the House Financial Services Committee has introduced legislation aimed at enhancing disclosure and accountability among mutual funds.
The legislation, H.R. 2420, would require mutual funds to disclose, in a document besides the prospectus, such information as estimated operating costs incurred by each shareholder, portfolio transaction costs and revenue-sharing arrangements used to obtain fund distribution.
In addition, the legislation would require that two-thirds of all mutual fund board members be independent and that a funds board chairman be independent.
The legislation would also require disclosure of how portfolio managers are compensated.
Rep. Richard Baker, R-La., who introduced the bill, says it is needed to assure that investors get the facts they need to make informed choices.
In addition, he says, the legislation would assure that investor money is being managed in the most professional manner possible.
In effect, Baker says, the legislation would apply the Sarbanes-Oxley Act corporate accountability reforms to mutual funds.
Reproduced from National Underwriter Life & Health/Financial Services Edition, June 30, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.