Senators introduce Medicare reform bill

January 1, 2000

Pharmaceutical Representative

A bipartisan Medicare reform bill proposed by senators Bill Frist (R-TN), John Breaux (D-LA) and Bob Kerrey (D-NE) would offer prescription drug benefits along with structural reform of the Medicare program.

A bipartisan Medicare reform bill proposed by senators Bill Frist (R-TN), John Breaux (D-LA) and Bob Kerrey (D-NE) would offer prescription drug benefits along with structural reform of the Medicare program.

"By proposing a new system that reflects the changing needs of Medicare beneficiaries as we move into the 21st century, we've taken the first step in reforming the current Medicare model that's as outdated as an Edsel," said Frist. "Adopting a stable, integrated system and adding competition to Medicare will give beneficiaries better access and the choice of a variety of affordable, high-quality health care options that best meet their individual needs."

The Breaux-Frist bill guarantees seniors, at a minimum, all current Medicare benefits, including full prescription drug coverage. It is based on a competitive premium system modeled after the Federal Employees Health Benefits Program, which serves nine million federal employees, including members of Congress and their families. Seniors would be able to choose from a number of different plan options offering varying levels of coverage and costs. At the same time, they would be guaranteed the current services covered by Medicare.

"We have included drug benefits along with structural Medicare reforms because the system must be updated and financially solvent before this nation can afford to add the prescription drug coverage millions of Medicare recipients need and deserve," said the senators.

The proposal would require Health Care Financing Administration-sponsored plans and private plans to offer drug coverage through a high-option plan. Beneficiaries below 135% of poverty who enroll in a high-option plan would receive free coverage for all benefits, including prescription drugs.

Beneficiaries between 135% and 150% of poverty who enroll in a high-option plan would receive a discount, ranging from 50% to 25%, off the part of the high-option premium associated with the new drug benefit. Finally, all beneficiaries above 150% of poverty would receive a discount of 25% off premiums for drugs within a high-option plan. All prescription drug benefits are offered only through a high-option plan in the context of the Competitive Premium System.

According to the senators, the bill is a work in progress that both parties will be improving upon in the coming months. "We hope to continue to work in a bipartisan fashion with our fellow members of Congress, beneficiary groups, industry and the administration to build on the proposal introduced [in November]," the senators said. "We all share a common goal of preserving and improving Medicare for future generations."

Industry support

The bill has been generally well received by both the health plan and pharmaceutical industries. "We applaud senators Breaux and Frist for moving Medicare onto the short list of political issues for 2000," said Karen Ignagni, president and chief executive officer of the American Association of Health Plans. "Flouting the conventional wisdom that nothing happens in an election year, these senators want to stabilize the Medicare program and empower beneficiaries to have a choice of the delivery model that best suits them."

Alan Holmer, President and CEO of the Pharmaceutical Research and Manufacturers of America, Washington, praised the plan for not instituting pharmaceutical price controls. "We want to congratulate senators Breaux, Frist and Kerrey on the first legislative introduction of a premium-support model," said Holmer. "We are encouraged by the premium-support proposal because it would promote the key objectives for Medicare reform: high-quality, integrated health care for seniors and the disabled as well as cost containment based on market competition, not government price controls. These elements will promote a fiscally strong program for seniors today and tomorrow."

Holmer also pledged PhRMA's help in finalizing the bill. "The pharmaceutical industry is committed to improving seniors' prescription drug coverage delivered through the private sector as part of a strengthened and improved Medicare program," said Holmer. "We think that the Bipartisan Commission's majority recommendations and [the Breaux-Frist] legislation offer a healthy prescription for achieving these results."

Added Holmer, "Senators Breaux, Frist and Kerrey have said this bill is a work in progress. We will be working to provide input and comments on the bill as it relates to pharmaceuticals." PR