When Medicare was created in 1965, it offered a state-of-the-art system to deliver health care services to America’s seniors. However, Medicare hasn’t kept pace with modern medicine. Today, the most glaring problem with Medicare is that it doesn’t cover the ever-increasing cost of prescription drugs.
The typical senior today spends nearly $1,300 per year on prescription drugs-and gets no help from Medicare. Furthermore, while seniors consume more prescription drugs than any other group, they often pay the highest prices because they lack the bargaining power that comes from insurance coverage.
We need to address this situation. Prescription drugs are an integral part of health care. They treat and manage diseases less invasively than medical procedures, and they often replace or deter more expensive surgeries and hospitalizations.
That’s why, after several years of the House of Representatives taking the lead on this issue, the leadership of President Bush has allowed the Senate to finally follow suit and pass legislation integrating prescription-drug coverage into Medicare. Now, both chambers are poised to pass legislation that will update this program that’s so vital to our nation’s seniors.
Both the House and Senate approved prescription drug bills in June, and they’ve been working ever since to reconcile the differences between the two bills. We hope to have a bill on the President’s desk this fall.
I’d like to emphasize the prescription drug benefit being crafted in Washington is a voluntary program. A Medicare beneficiary doesn’t have to participate in this new program. An individual can certainly stay just as they are under Medicare. Additionally, if a person currently has a prescription drug plan-as many Caterpillar retirees do-you won’t be forced into a prescription drug plan under Medicare.
While members of the House and Senate are negotiating over the differences in the bills, there are several similarities: both call for a new, voluntary prescription drug program to begin in 2006; both would encourage private companies to offer a new type of managed care plan to Medicare beneficiaries; both allow for the reimportation of prescription drugs; and, most importantly, both bills carry the same overall price tag-$400 billion over 10 years.
There are some differences though. While the monthly premium is the same in both bills-$35-the deductibles and percentage of costs covered need to be finalized. Also, under the House bill, there’s a provision for some means of testing after a beneficiary exceeds a certain level of drug costs.
The House plan also calls for a tax-preferred savings account to assist with health-related costs. The "Heath Savings Accounts" could be used for medical expenses such as treatment, prescription drugs, and long-term care expenses. The Senate bill has no provision for these accounts.
Another difference to be worked out between the bills is the rate at which hospitals are reimbursed for Medicare expenses. Both bills increase reimbursements to hospitals, but the actual reimbursement rate differs in the two bills, and it needs to be agreed upon.
I believe providing a prescription drug benefit is one of the most pressing issues before Congress today. It’s an issue I hear about over and over again as I travel to the communities of central Illinois. IBI