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Prescription Drug Funding on Way

Medicare: Pair of programs would give states some federal funds to help low-income seniors with costs.


WASHINGTON — The Bush administration Monday announced two initiatives that would give states some federal funds to provide prescription drug coverage to low-income elderly.

If fully funded by the states and Congress, the programs could eventually help pay drug costs for 3 million low-income seniors--three out of every 10 seniors who currently have no prescription drug coverage.

The two programs are aimed at reducing the impact of spiraling drug costs on the elderly, whose Medicare benefits do not cover prescription drugs.

AARP, the leading seniors' lobby with 35 million members, said last week that passage of a prescription drug benefit for the elderly is its No. 1 priority this year.

At the beginning of an election year, the administration wants to show that it is concerned about the problem and that the president's priorities extend beyond the anti-terrorism and homeland security efforts that have dominated the political agenda since Sept. 11.

President Bush and a bipartisan group of lawmakers who met with him at the White House on Monday afternoon acknowledged that such programs are stopgaps until a prescription drug benefit can be provided for all 40 million people covered by Medicare.

"The long-term goal is to modernize Medicare and include prescription drugs," Sen. Bill Frist (R-Tenn.) said after the meeting. "But we also have to act now."

The larger program would provide federal aid to help all states, once they provided prescription drug coverage to all their poor elderly, to extend the coverage to the near-poor.

A $77-Billion Tab

The federal government would pay $77 billion over 10 years to expand drug coverage to seniors whose income fell between 100% and 150% of the poverty level. The federal government would cover 90% of the costs, while the states would pay the remaining 10%.

Bush will include funding for the program in his fiscal year 2003 budget, which will be submitted to Congress on Feb. 4. Congress would have to approve the program and authorize funding for it.

A separate proposal, Pharmacy Plus, would allow 18 states that already provide coverage to immediately expand their drug benefits for low-income seniors.

The states, which include California, provide coverage to seniors earning no more than poverty-level income ($8,590 for a one-person household). They would receive Medicaid matching funds to provide similar benefits to seniors earning up to twice that amount.

Illinois received permission from the government Monday to undertake such a program.

Many state Medicaid programs, which cover 44 million low-income people, already are having serious problems funding current benefit levels.

Because of the national recession, state revenue is declining just as the numbers of unemployed workers and Medicaid-eligible residents are increasing.

As a result, it is unclear how many states would be able to afford an expanded drug benefit for poor seniors, even if the federal government shared the cost.

In California, the Medi-Cal program already spends roughly $2.5 billion to provide drug benefits for about 3 million seniors who earn up to 133% of the poverty level, said Glen Rosselli, undersecretary of the state Health and Human Services Agency.

An additional 1.3 million seniors could benefit under the new administration proposal, Rosselli said, but he did not know immediately if the state could afford its share of their benefits.

"This is a very tough year to ask the states to pay more of a share of Medicare," Rosselli said. "These are tough times.

"We are encouraged by any new ideas" the administration has, he added. "But at first blush, this looks like another example of the federal government trying to shift responsibility . . . to the states."

The California government pays 49% of the cost of the Medi-Cal program while the federal government picks up 51% of the tab.

Prior Commitments

The announcement in Washington by Health and Human Services Secretary Tommy G. Thompson of what he called a five-point plan to strengthen Medicare came on the eve of the president's State of the Union address.

Some elements of the plan--a $190-billion, 10-year effort to overhaul Medicare and a revised prescription drug discount card for seniors--are intended to symbolize the administration's renewed commitment to proposals it made last year.

Both of those proposals ran into trouble: The administration's first discount card plan was blocked by a federal judge, and many Republican and Democratic lawmakers continue to say that Bush's $190-million Medicare plan is too little, too late. Administration officials estimate that a comprehensive drug benefit for seniors cannot be implemented until 2006.

The president's proposals show that access to affordable prescription drugs is "one of the foremost domestic issues facing Americans, especially seniors," Sen. Olympia J. Snowe (R-Maine) said outside the White House on Monday.

"The president is willing to commit political capital [to the issue] in an election year," said Rep. W.J. "Billy" Tauzin (R-La.). "This is a must-do."

John Rother, director of policy and strategy for AARP, said the administration's reiteration of its commitment to a Medicare drug benefit was "a positive step, even though in the end we are going to need more money."

Craig Fuller, president of the National Assn. of Chain Drug Stores, also had qualified praise for the proposals.

The trade group sued the administration last year over its discount drug card proposal, and remains opposed to any benefit that would reduce the earnings of drugstores and limit the role of pharmacists.

Prescription drug costs increased more than 17% in 2000 and overall health-care costs now are increasing at double-digit rates for the first time in 10 years.

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