Reconciling Congress' Prescription Drug Proposals

After years of promises--but little action--both the Senate and House of Representatives passed their versions of prescription drug reform with breathtaking speed early this summer. The debate was heated, and the House bill passed by a razor-thin 216-215 vote, but Congress met its July 4 deadline of passing legislation that adds an prescription drug benefit to Medicare estimated at $450 billion over 10 years.

Now the action turns to a conference committee, which has the difficult task of reconciling Senate and House bills that differ on many substantive issues. The details worked out in committee will have far-reaching ramifications for what will be the largest expansion of Medicare benefits since its inception in 1965.

Most seniors, especially those who lack adequate coverage for prescription drugs, are keenly interested in costs. Under both bills, the premium for prescription drug coverage under Medicare Part D would cost seniors about $35 a month. Deductibles are $250 under the House bill and $275 under the Senate.

Here's where things get trickier. In the House bill, 80 percent of the costs between $250 and $2,000 would be covered (20 percent would be a co-pay), and Medicare would pay 100 percent of costs above $3,500. Seniors would have to pay all annual costs between $2,000 and $3,500. Critics are calling this the "doughnut hole" in the coverage, but there's nothing sweet about it. The Senate bill also contains a doughnut hole--between $4,500-$5,300. Medicare would pay 50 percent of expenses between $275 and $4,500 and 90 percent of costs over $5,300. (Both bills also contain provisions cutting out-of-pocket costs to those with limited incomes.)

NEA and its partners successfully worked to narrow--but not eliminate--the coverage gap in the Senate bill; however, more needs to be done.

For example, NEA continues to work on a critical definition of out-of-pocket costs that could have a major impact on employer-provided health coverage for retirees.

Here's why. The bills proposed by both the House and Senate do not count employer contributions toward out-of-pocket costs, therefore making it harder for individuals to reach the expense thresholds for government subsidies. NEA's position is that employers' contributions to retirement plans should count toward the out-of-pocket costs for prescription drug expenses, so that individuals could avail themselves of a prescription drug benefit sponsored by the federal government. Excluding employer contributions from the definition of out-of pocket expenses could discourage employers such as state governments, retirement systems, and school districts from providing retiree health coverage (especially during budget shortfalls) because individuals would not benefit from such employer contributions.

In addition, NEA would like to ensure that a Medicare traditional fee-for-service plan is available in areas of the country where private prescription drug plans do not offer coverage. The proposals currently being discussed allow prescription drug coverage in Medicare to be provided by private plans. Presently, the Senate bill provides a Medicare fallback option; however, the House bill does not contain a Medicare fallback, thus providing only a private insurance option without the availability of Medicare traditional fee-for-service coverage.

With the final details of the prescription drug benefit bill still up in the air, it's not too late to voice your concerns. Learn more about NEA's position at www.nea.org/lac and send a message to your elected officials.

--John O'Neil
and Al Campos

What You Can Do

Speak Up
Tell Congress to oppose any conference bill that:

• Encourages employers to stop providing existing retiree coverage

• Excludes government sponsored plans from receiving subsidies for retirees who do not enroll under the proposed R_x program

• Does not provide Medicare traditional fee-for-service fallback coverage