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September 22, 2000
"Medicare Reform and Prescription Drug Proposals"
AIM and PPI sponsored a September 22 briefing for Congressional staff on
the leading Medicare reform and prescription drug proposals.
Speakers included Dr. Jeanne Lambrew, Associate Director for Health and Personnel, Office of Management and Budget; Mr. Keith Hennessey, Policy Director, Office of Senate Majority Leader Trent Lott; Ms. Monica Tencate, Senior Health Policy Analyst, Office of Senator Bill Frist; and Mr. John McManus, Health Legislative Assistant, Office of Representative Bill Thomas, Chairman, House Ways & Means Health Subcommittee.
Dr. Lambrew discussed elements of the White House Medicare prescription
drug proposal which is supported by Vice President and Democratic Presidential candidate Al Gore. (The proposal advocates expanding the current fee-for-service program to include prescription drug benefits
without extensive reform of HCFA or the Medicare managed care program.) She also outlined areas of fundamental disagreement between the White House proposal, H.R. 4680 (the House-passed bill), and the proposal
from Republican Presidential candidate George W. Bush. First, Dr. Lambrew acknowledged Medicare's excessive complexity and cited the needs to modernize HCFA's payment structure and benefits. She
recommended giving the traditional Medicare program more flexibility and authority. Further, she recognized disagreements on management of a drug benefit and called for competitive contracting as proposed in
the White House plan. Dr. Lambrew cited "evidence that private sector insurers are not interested" in a drug-only insurance market in stating that a private sector-managed benefit is unworkable.
Additionally, Dr. Lambrew stated that the White House does not believe prescription drugs is a "low-income issue" and stated that nearly one-half of Medicare beneficiaries are without drug coverage at least one
month per year.
She stated her belief that state-based programs cannot provide drug benefits because states consider Medicare a Federal responsibility and the White House believes building on the current program is the "quickest, most effective way to get Medicare beneficiaries into the system." Finally, Dr. Lambrew cited seniors' desire for choice of doctors, drugs, and pharmacies as a reason to build upon the current fee-for-service program instead of moving toward a private sector, managed care model.
Mr. Hennessey outlined fundamental policy questions separating existing
proposals for Medicare reform and a prescription drug benefit as follows: 1) should the Federal government subsidize drugs or subsidize insurance coverage for drugs; 2) should a drug benefit be voluntary as
part of a high option plan or mandatory as part of the traditional fee-for-service program; 3) should benefits be managed by government contracted PBMs, private plans or providers; 4) should a benefit be uniform or
flexible; 5) should government obtain prescription drugs through its own buying power or through a market-based system; 6) should prescription drugs be provided as part of broader Medicare reform or should the focus
be on the benefit only; and 7) how should the costs of these programs be divided between government, beneficiaries, and providers? Mr. Hennessey also outlined Republican Presidential candidate George W. Bush's
proposal and characterized it as a "largely FEHBP-like" model although he acknowledged that it was not as detailed as the Breaux-Frist proposal. Finally, Mr. Hennessey discussed Mr. Bush's proposal to
provide interim drug coverage through state-based grants and stated that this proposal is not meant to be a substitute but a temporary program to provide benefits more quickly than other proposals would permit.
Mr. McManus outlined the House-passed bill, H.R. 4680, and stated that the
primary goals of the proposal are to provide a flexible standard benefit package to allow seniors to choose a plan which best meets their individual needs and to allow the benefit to evolve with the
marketplace. Citing HCFA's inefficient bureaucracy, Mr. McManus also outlined the bill's Medicare modernization provisions and proposal for a new Medicare agency to manage both a prescription drug benefit and
the Medicare managed care plans.
Ms. Tencate provided an overview of the Breaux-Frist proposals, S. 1895
and S. 2807, and discussed the needs for Medicare reform, including projected program enrollment increases over the next 20 years.
Ms. Tencate cited the work of the National Bi-Partisan Commission on the Future of Medicare as the primary starting point for S. 1895. Key elements of S. 1895 as outlined by Ms. Tencate are: establishment of a competitive premium system; creation of a Medicare Board to oversee Medicare plans and competition; creation of a unified trust fund; development of a prescription drug benefit; and encouragement of HCFA flexibility. According to Ms. Tencate, S. 2807, introduced in June 2000, is a "down-payment on reform" and a recognition that full-fledged Medicare reform would not be possible this year. She stated that some aspects of the Commission's recommendations were retained in S. 2807 but that the proposal included a different payment structure, a different Medicare agency structure, and fewer HCFA reform provisions than S. 1895.
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