Bush moves to reduce drug costs for seniors

The White House is learning that promising seniors a prescription-drug benefit is a much easier task than actually delivering it.

Recognizing the difficulty of adding a new drug benefit to the nation's creaking Medicare system while simultaneously overhauling the giant health-entitlement program, President Bush is expected to unveil today an interim measure to help seniors pay for costly medication.

The help would come in the form of a discount card - something already available in the private sector, where such cards can bring discounts of 10 to 30 percent. Discount cards can help take some of the immediate pressure off seniors' budgets, while the inevitably slow work of Medicare reform grinds ahead, say administration officials.

"Under any scenario, the ability to get prescription drugs to seniors under Medicare is several years down the road," a senior administration official says.

In another sign of how tough the Medicare issue is, the president is also expected to send Congress a series of "guiding principles" today to help lawmakers shape legislation on Medicare reform. The principles include the administration's views on a longer-term solution for a drug benefit. The package is short on details, the official said, because a detailed approach has only resulted in a dead-end in the past.

"If you take a look at what happened last year, for example, there was a commission that delved into a great deal of specificity ... and it went nowhere," he said. "The president believes the best way to get Medicare reform done and through is to "not to draw any early lines in the sand."

But even the discount card, as well as the broad principles, is sure to face criticism from patients, the health industry, and lawmakers with differing views on reform. The card "is like dealing with poverty by asking Wal-Mart to send the poor promises of 20 percent off," says Henry Aaron, a Medicare specialist at the Brookings Institution here. "It's an easy solution. It may have some benefit. But it leaves the lion's share of the expenses on the back of the individual."

The way the card operates in the private sector is that insurers work with companies that manage drug benefits to buy prescription drugs in bulk. Participants in the plan pay a small fee for the card, which they can then present at participating pharmacies. One such plan, run by Merck-Medco and Reader's Digest Association, allows card holders discounts of 10 to 30 percent or more for a membership fee of $25 a year.

The administration is expected to announce that Medicare patients will also be able to purchase such cards. It says legislation isn't needed to implement the plan because it can be handled internally through the Department of Health and Human Services.

But many drug stores and pharmacists oppose this trend. The National Association of Chain Drug Stores, which includes such retailers as CVS and Rite-Aide, reportedly advised the administration against taking this step. They say discount cards place an unfair burden for reducing prices on pharmacies, who don't necessarily see a reduction in their wholesale prices.

Indeed, a group of pharmacists filed suit and stopped a drug-discount program instituted last summer in Washington State.

"It's a small step in the right direction, but it's not a substitute for the real thing," says Robert Reischauer, former director of the Congressional Budget Office and now head of the Urban Institute.

The real thing, as Mr. Reischauer calls it, will be in the White House Medicare principles. Mr. Bush is expected to take Medicare in the direction of greater reliance on the private sector and more personal choice.

Americans 65 or older, for instance, should be able to choose among some private insurers. Medicare should play a more active role in preventive care.

As for a prescription-drug benefit, the principles are expected to call for patient choice among at least two pharmacy benefits companies in each of several regions around the country.

While the private sector would play a major role, the government would provide subsidies for all beneficiaries. The government would also set a limit on out-of-pocket drug costs for beneficiaries, and, for the first time, would make payments to HMOs to cover a drug benefit.

"They look fine," says Robert Moffitt of the Heritage Foundation here, speaking of the principles. "They rely on the private sector, and permit personal choice."

The administration is insisting on coupling a prescription-drug benefit with Medicare reform. It doesn't want to add a costly benefit to an entitlement system on track to insolvency in 2029. But it could be waiting forever if insists on reform or nothing.

The Senate Finance Committee, for instance, is struggling with competing bills that differ over the degree to which Medicare should turn to the private sector, and how much the government should subsidize a drug benefit.

Meanwhile, Sen. Edward Kennedy, the Democrats' point person on health issues, has said that while the Senate may work out a drug benefit, it's not likely an overhaul of Medicare will go along with it. "It's a tough issue," says Mr. Moffitt.

(c) Copyright 2001. The Christian Science Monitor