Perspective
House and Senate Pass Medicare Prescription Drug Legislation
Late in June, both the House of Representatives and the Senate approved separate bills that make prescription drug coverage available to people with Medicare starting in January 2006. Both bills have significant shortcomings. The House bill, in particular, includes radical measures that would privatize Medicare and gut traditional Medicare.
Consumer advocates have called on members of Congress to fix the major flaws in the bills through the following measures:
- A level playing field for traditional Medicare and private plans: The House bill restructures Medicare so that traditional Medicare bears the bulk of the risk of ensuring older and sicker people with Medicare, while private plans would attract younger, healthier, and less expensive consumers. Under the House bill, Medicare will grant additional payments to private plans effectively supporting their risk, and starting in 2010 force traditional Medicare into an unfair competition with private plans. This will lead to soaring costs for people in traditional Medicare. In fact, Medicare actuaries have said that the House provisions could increase traditional Medicare premiums as much as 25 percent. If there is to be competition, Medicare and private plans should compete on a level playing field.
- A guaranteed Medicare drug plan fallback: The Senate bill requires the federal government to step in and administer a prescription drug plan for one year in areas where less than two “stand-alone” prescription drug plans are available. The House bill provides no government fallback option even though private insurers have never been willing or able to sell “stand-alone” prescription drug plans in the individual market.
The Medicare Rights Center has created a chart for consumers evaluating the House and Senate bills according to these and other key principles. To access the chart, click here.