Background: Pricey Prescriptions
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SUSAN DENTZER: Among the hottest issues this election year is providing senior citizens with insurance coverage for ever-more-costly prescription drugs. Take this commercial run by Democrat Brian Schweitzer – he’s a candidate for the U.S. Senate from Montana and one of many politicians hoping to ride the issue to victory.
BRIAN SCHWEITZER: Across America, people are beginning to listen to one Montanan’s crusade to lower prescription drug prices.
SUSAN DENTZER: Schweitzer wants the elderly to get new drug benefits under Medicare. Meanwhile, he’s taken some to Canada where retail drug prices are lower.
BRIAN SCHWEITZER: This busload of people will save $24,000 by buying prescription medicine in Canada for a 12-month period.
SUSAN DENTZER: This week this election-year drug war shifts to the nation’s capital. Over the weekend President Clinton proposed a new version of his earlier plan to add prescription drug coverage under Medicare. The President proposes to make drug coverage available on a voluntary basis for all elderly and disabled citizens enrolled in Medicare. For month premiums starting at $25 a month, the plan would cover one half of beneficiaries’ annual drug costs up to $2,000. The government would pay the premiums for low-income beneficiaries. But the revamped plan has some additional features that the President cited in his weekly radio address.
PRESIDENT CLINTON: I will unveil specific protections for catastrophic drug expenses, to ensure that no senior pays more than $4,000 in prescription drugs and keeping premiums at $25 a month. And I’ll propose making that benefit in the full prescription drug initiative available in 2002, instead of 2003.
SUSAN DENTZER: As a result, Clinton said his new plan would cost $79 billion over five years, or more than double his earlier proposal. Over ten years, the costs would rise to $253 billion. Some experts think they could go higher still. Bruce Stuart is a University of Maryland professor who’s studied prescription drug coverage. He says offering a broad drug benefit under Medicare makes sense, but he cautions it could also lead to sharply higher use of drugs and swell overall drug expenditures that are already rising rapidly.
BRUCE STUART, University of Maryland: There’s a study actually that’s been conducted in our department here at the University of Maryland that suggest that the rate of increase that we can expect over the next five years will be between 15 and 20 percent. It’s quite clear that the, that Medicare cannot afford an unrestricted prescription drug plan that doesn’t have some impact on rising pharmaceutical prices.
SUSAN DENTZER: The President’s souped-up plan was clearly intended to pressure Republicans to switch gears on their own plans for seniors’ drug coverage. Last week, a House panel approved a proposal for coverage for seniors– but one delivered largely through the private sector rather than Medicare. Under the proposal, health insurers would have to offer private drug coverage plans for sale to all Medicare beneficiary, starting in 2003. The plans would feature a $250 annual deductible; pay half of all drug costs up to $2,100 a year; and cover all expenses that topped $6,000. Proponents say premiums would probably average $37 a month. Like the President’s plan, the House Republican plan would pay those premium costs for low-income beneficiaries. The projected cost of the proposal is $40 billion over five years. Speaker of the House Dennis Hastert says the President’s plan is woefully inferior to the Republican approach.
REP. DENNIS HASTERT, Speaker of the House: It’s just reproducing, government doing something that the private sector already provides that we think is redundant. We also think it’s very expensive.
SUSAN DENTZER: But among those who question the Republican plan are private health insurance companies themselves. Earlier this month, their trade group, the Health Insurance Association of America said in a written statement that the plan “simply would not work in practice.” Bruce Stuart agrees. He argues that these private sector policies will be a magnet for some seniors, even as they’re shunned by others.
BRUCE STUART: Individuals who have relatively modest or in some cases no demand for prescription drugs are not going to be purchasing these policies, no matter what the premium is. By the same token, or on the other hand, those individuals who have very high drug expenditures are going to be jumping at the gate ready to buy these policies.
SUSAN DENTZER: Stuart says that means insurers will have to set premiums very high to cover huge drug expenses– making the policies unaffordable, but Hastert rejects that analysis.
REP. DENNIS HASTERT: I think we can work with the companies. We’ve had several insurance companies that say, yeah, they can write these policies. So if several can, I’m sure many can.
SUSAN DENTZER: To drum up support among Republicans, the President proposed a deal yesterday. He says he’ll back their plan for a large tax cut he previously opposed if they’ll buy his Medicare plan.
PRESIDENT CLINTON: If Congress will pass a plan that gives real voluntary Medicare prescription drug coverage, then I will sign a marriage penalty relief law which also costs roughly $250 billion over ten years.
SUSAN DENTZER: The House is now expected to vote on its drug coverage proposal as early as tomorrow.