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Source: Staff to Medicare
bill negotiators.
Major provisions of Medicare
legislation
Nov. 17, 2003 -
Details of the tentative agreement on a Medicare bill that
would provide older Americans a prescription drug benefit
and overhaul the government-run health care program for 40
million older and disabled Americans.
INTERIM DRUG
CARD:
In 2004 and 2005,
older Americans would be eligible to purchase a discount card
that the Bush administration estimates would yield savings of
15% or higher off the cost of drugs. Low-income seniors would
receive an annual subsidy of $600 to defray drug costs
further.
MAIN DRUG
BENEFIT:
Beginning in 2006,
Medicare beneficiaries could sign up for a stand-alone drug
plan or join a private health plan that offers drug coverage.
They would be charged a premium of $35 per month, or $420 per
year. After meeting a $275 deductible, insurance would pay 75%
of drug costs up to $2,200.
Coverage gap:
No coverage for
drug costs between $2,200 and $3,600 out of pocket.<
Catastrophic coverage:
When out-of-pocket
spending reaches $3,600, insurance covers 95% of drug costs or
requires a modest co-payment.
Low-income
subsidies:
The premium,
deductible and coverage gap would be waived for people earning
up to $12,123 a year. To qualify for the subsidy, seniors
could have no more than $6,000 in fluid assets. The subsidies
would be phased out between $12,123 and roughly $13,500 in
yearly income.
Retiree
coverage:
Would provide
tax-free subsidies, perhaps worth as much as $70 billion, to
employers who maintain drug coverage for retirees once
Medicare drug benefit begins in 2006.
OTHER CHANGES:
Doctor and other out-of-hospital coverage (Medicare Part B):
Premium:
By law, Medicare
beneficiaries pay 25% of the Part B premium and the government
pays the rest. Individuals with incomes greater than $80,000
would pay a larger premium. The size of their premium would
increase on a sliding scale, topping out at 80% for people
with incomes over $200,000.
Deductible:
Would rise from
$100 to $110 in 2005 and thereafter be indexed to the growth
in Part B spending.
Role of private
companies:
Private firms would
administer the drug benefit on a regional basis. Would provide
$12 billion in subsidies to private insurers that choose to
offer basic health insurance. Those include preferred provider
organizations (PPOs), which encourage use of certain doctors
but allow patients to go elsewhere if they pay extra, and
private fee-for-service plans, which allow patients to see any
doctor.
Beginning in 2010,
traditional Medicare also would face competition from private
plans in six metropolitan areas in which at least two private
plans enroll at least 25% of Medicare beneficiaries. For those
who remain in traditional Medicare, premium increases would be
capped at 5% a year and waived for low-income seniors. The
competition would last six years.
The government
would provide drug coverage in any region that does not have
at least one standalone drug plan and one private health plan.
Rural health:
Would spend about
$25 billion to increase payments to rural hospitals and
doctors, among others.
Generic drugs:
Would speed generic
drugs to the market by limiting ability of pharmaceutical
companies to block cheaper equivalents (final details still to
be worked out).
Drug importation
from Canada:
Would maintain the
ban on importing prescription drugs from abroad. Would allow
such drugs from Canada, but only if Department of Health and
Human Services certifies safety, something HHS has declined to
do. Would authorize a study of safety issues.
Hospital
payments:
Would allow
hospitals to avoid future cuts in payments by submitting
quality data to the federal agency that runs the Medicare
program. At the same time, would increase payments through
Medicaid to hospitals that serve a large number of
disadvantaged patients.
Would impose
18-month pause in development of new specialty hospitals and
limit expansion of existing ones.
Physician
payments:
Would block planned
cuts in physician payments in 2004 and 2005 and instead
provide a 1.5% increase.
New benefits:
Would cover an
initial doctor's appointment for new Medicare beneficiaries
and screening for diabetes and cardiovascular disease. Would
provide benefits for coordinated care for people with chronic
illnesses. Would increase payments for doctors administering
mammograms in hope that more are given.
Health-related
tax savings accounts:
Would allow people
with high-deductible health insurance policies — $1,000 a year
for individuals, $2,000 for couples — to shelter income from
taxes. Investors would receive a tax-deduction, and pay no
taxes on the investment and earnings upon withdrawal, provided
the money is used for health expenses. Otherwise, a 10%
penalty would apply.
Home health
care:
Would cut payments
to home health agencies, but not require co-payments from
patients.
Cost
containment:
When general
revenues constitute 45% of Medicare spending, Congress and the
administration would have to review Medicare's finances.
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