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Medicare, Beyond Prescription Drugs

What 'modernized' care might well look like. 'We have to start someplace,' a Long Beach resident says of the legislation now under discussion.

November 07, 2003|Vicki Kemper | Times Staff Writer

WASHINGTON — Jewett Pattee of Long Beach, who at 80 still enters cross-country bike races and works part time as a pharmacist, has every reason to be loyal to his Medicare HMO.

For Medicare's standard monthly premium of $58.70, he is charged just $10 or $15 for each doctor's visit and for his annual physical and eye exam. Another co-payment gets him unlimited generic drugs and some brand-name prescriptions -- a benefit not covered by basic Medicare.

Pattee was in Washington for the first time last week to hear President Bush promote legislation adding prescription drug coverage to Medicare.

"This bill we're trying to get passed has to be done," Pattee said. "A lot of seniors can't afford the medication, and they just stop taking it."

But there is a lot more to the bill than prescription drug coverage. And many seniors strongly oppose key elements that could emerge next week from a House-Senate conference committee.

With the deadline for action fast approaching, both Democrats and Republicans ratcheted up the political rhetoric this week.

Sen. John B. Breaux (D-La.) warned that unless both sides were willing to compromise, Congress would end up with nothing more than "a basket full of excuses to give to seniors.... And they can't take excuses to the drug store to get their prescriptions."

Here, based on the tentative agreements negotiators have reached and the details of unresolved matters that remain on their agenda, is what a "modernized" Medicare might look like.

* How much will prescription drugs cost me?

For the first time since the program was created in 1965, Medicare beneficiaries would not have to buy a private supplemental policy or hock the family silver to pay for their medications. But they would still have to pay more than many working people who have employer-sponsored insurance.

Within six months after Congress passed a bill, seniors could get a Medicare-endorsed drug discount card. For an annual fee of about $30, the card would give seniors discounts of 15% to 25% for each prescription. Beneficiaries with incomes of less than $12,123 for an individual or $16,362 for a couple (35% more than the federal poverty level) would qualify for a federal subsidy of $600 a year.

The discount card would be phased out in 2006, when the full drug benefit would take effect. In most areas of the country, the benefit would be administered by a private insurance company. Some beneficiaries might have direct access to a Medicare-administered drug plan.

The government would likely pay almost all drug costs for seniors with incomes less than 35% above the poverty line. Seniors earning slightly more could also receive significant assistance.

Most other seniors who wanted the benefit would pay a monthly premium of about $35 and an annual deductible of about $275. Medicare would cover roughly 75% of seniors' prescription costs between $275 and about $2,200. Seniors would have to pay the entire next $1,400 themselves. Only when beneficiaries' drug costs had reached about $3,600 would Medicare begin picking up 95% of the tab.

For the 10 million Medicare beneficiaries who now have no drug benefits, this "doughnut hole" plan (the term used to describe the large gap in Medicare coverage) would be an improvement on their current situation.

But for many of the 12 million seniors who get drug benefits from their former employers, the proposed Medicare plan is less generous than what they already have.

On top of that, government and independent estimates indicate that a Medicare drug benefit would prompt employers to drop retiree health coverage for as many as 4 million seniors.

Lawmakers are deeply concerned about that possibility, and a final bill is likely to include $80 billion in incentives designed to prevent it.

* Where will I get my health care, and how much will it cost?

A proposal by House Republicans to slowly change the basic structure of Medicare -- from a fee-for-service plan in which seniors can go to any doctor or hospital that accepts Medicare to a managed-care approach -- remains the biggest sticking point in House-Senate negotiations.

Aside from prescription drugs, seniors should expect to pay more for almost all other kinds of health care. Medicare premiums for outpatient services -- which have gone up only once in 38 years -- would increase every year at the rate of inflation.

For the 12% of beneficiaries who now belong to HMOs, little would change. But for the 88% of seniors who choose their doctors the old-fashioned way, things could get more complicated and much more expensive. Their premiums could increase sharply. If they could not afford to stay in traditional Medicare, they would need to join a managed-care plan.

This change would likely be more stressful for older seniors and other beneficiaries who have never participated in managed care. But for new retirees, a PPO that provided drug coverage could smooth the transition from employer-based health insurance to Medicare.

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