2003: On December 8, 2003, President George W. Bush (R) signed the Medicare Prescription Drug, Improvement, and Modernization Act, later called the Medicare Modernization Act of 2003, which authorizes Medicare coverage of outpatient prescription drugs as well as a host of other changes to the program. This new program went into effect on January 1, 2006. The new drug assistance represents a major new federal entitlement for Medicare beneficiaries, who now spend an average of $2,322 per year on prescription drugs. The drug assistance and other provisions of the law are projected to cost taxpayers at least $395 billion, and possibly as much as $534 billion, over the next decade. Senate Majority Leader Bill Frist (R-Tenn.), one of the initiative’s chief negotiators and political investors, hailed its passage:
“Today is a historic day and a momentous day. Seniors have waited 38 years for this prescription drug benefit to be added to the Medicare program. Today they are just moments away from the drug coverage they desperately need and deserve.”
Medicare Part D: or Medicare Prescription Drug Benefit is an optional United States federal-government program to help Medicare beneficiaries pay for self-administered prescription drugs through prescription drug insurance premiums.
In the wake of this political breakthrough, public opinion on the final product was remarkably negative:
After years of fierce campaigning, lobbying, and legislating over the issue, a landmark agreement finally emerged in Congress this week to provide Medicare prescription drug benefits. Among the key stakeholders in the legislation, there were definite winners and losers. But the group that should have come out on top—America’s seniors—was reeling and confused at the prospect of limited help, while watching industry groups count their booty. In fact, members of Congress from both parties contended that some seniors struggling to pay for prescription drugs may actually end up worse off than they are now.
2004: In fact, for many Medicare beneficiaries, the benefits of the new law are not so immediate or valuable. By mid-2004, the federal government authorized cards that could be used to obtain price discounts on prescription drug purchases and will offer a $600 credit to about 4.7 million low-income beneficiaries.
2006: In 2006 the full-fledged program is scheduled to begin. At that time, more than 40 million beneficiaries will have the following options: (1) they may keep any private prescription drug coverage they currently have; (2) they may enroll in a new, freestanding prescription drug plan; or (3) they may obtain drug coverage by enrolling in a Medicare managed care plan. Medicare will subsidize the cost of coverage for about 14 million low-income beneficiaries. Other beneficiaries will face significant gaps in coverage and, as a result, will still be liable for up to $3,600 or more in annual expenses.
The week of the signing:
In a poll taken in the week that President Bush signed the new Medicare law, 47% of senior citizens opposed the changes, and only 26% voiced their approval. Among people of all ages who said they were closely following the Medicare debate, 56% said they disapproved of the legislation, and 39 percent approved. Their disappointment reflected high expectations as well as the upside-down politics that produced the new reforms:
Even before Bush’s ink on the bill was dry, the two political parties prepared to make the issue a focus of the 2004 elections. Bush, who defied conservatives in the Republican Party by backing a massive increase in a federal program long championed by Democrats, heralded the act as a strengthening of “compassionate government.” And Democrats, calling the legislation inadequate and harmful to many seniors, drafted substantially more generous prescription drug coverage and vowed to “take back our Medicare.”
When observers look back at 2003, they will wonder why it took 38 years to authorize Medicare coverage for such a critical component of modern medicine. Why did political leaders finally agree to address this gap in coverage, at this time, and why was that agreement so fraught with controversy? Why did the new outpatient drug benefits under Medicare take the form they did? What issues remain for policymakers to confront in the future?
By: Laura R. Lucas
Life/Health/Medicare Insurance Agent