Perspective               

Highlights of the Medicare Overhaul Bill

At the end of November, the House and Senate gave Congressional approval to the most sweeping changes to Medicare since its creation in 1965. In early December, President Bush signed the changes into law. The law will likely confuse many people with Medicare and their caregivers and push up their health care costs over time, but it has some positive elements. Once again, Medicare will cover as much physical, occupational, and speech pathology therapy as people need. It will cover a physical examination for people in the first six months after they enroll in Medicare Part B. The new legislation also will cover preventive benefits such as blood tests to screen for cardiovascular disease and lab tests to screen high-risk individuals for diabetes.

The broadest and most talked-about elements of the legislation are its prescription drug benefit, which will provide good drug coverage to people with low-incomes and to people with substantial drug needs. The benefit is designed to cover 95 percent of the cost of drugs for people after they have reached $5,100 in drug costs a year and, if your income is below 150 percent of the Federal Poverty Level and your assets below certain limits, it will pay almost the full cost of your drugs.

For people with fewer drug needs, the benefit is fairly meager, paying only $1,500 towards $5,100 worth of drugs.

Among the most disturbing elements of the law is that it does not allow the government to negotiate drug prices with the drug companies, and because drug prices are rising rapidly, projections are that people will be spending more on drugs with the Medicare drug benefit, which begins in 2006, than they are currently spending.

No one knows exactly how the new law will work yet. But, it is designed to allow the government to cap Medicare payments, which will likely mean that it will shift additional health care costs to people with Medicare.

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