Knowledge is power, and to bolster its efforts to strengthen the new Medicare prescription drug law, the AFT wants members to know the facts about the law.

Q. What is the new Medicare prescription drug program?

A. The program is voluntary and will not be administered by Medicare but by private insurance drug plans (PDPs) that will develop the list of drugs to be covered by the plan. Those who participate must choose to join a new PDP or a Medicare+Choice plan—renamed Medicare Advantage—administered either by a health maintenance organization (HMO) or a preferred provider organization (PPO). Under these plans, you are limited to healthcare providers in your plan—you cannot choose a doctor outside the plan without paying more out of pocket.

Q. Will I be forced to join the Medicare prescription drug program?

A. Although the new prescription drug program is voluntary, your retiree health plan may require you to join as a condition of participating in that plan. Many union contracts and state laws governing retiree health coverage require participation in Medicare as a condition of eligibility for continued coverage in your retiree health plan.

Q. Will drug prices drop because of the new law?

A. The law prohibits Medicare from negotiating lower drug prices. The Bush administration claims that PDPs and Medicare Advantage plans will negotiate lower drug prices by 10 percent to 15 percent, but it is not known which drugs will be covered and how much the discount on any given drug will be.

Q. In the past, many Medicare+Choice plans have dropped coverage, raised costs or eliminated benefits. Will the new law prevent this?

A. No. Unlike traditional Medicare, which guarantees benefits, there is no guarantee that private plans will always be there to provide coverage. If they cannot earn enough revenue to match or exceed their costs, these plans will be sold, merged or go out of business.
Since shortly after passage of the new prescription drug benefit, the AFT has been meeting regularly with like-minded members of Congress who want to reform Medicare to develop a unified approach to achieving lower drug prices, guaranteeing coverage and shoring up traditional Medicare. Specifically, the AFT is working to strengthen the law so it allows Medicare to negotiate drug prices and administer a drug program, closes the benefit gap and provides much better coverage and stronger incentives for employers to continue providing healthcare benefits.

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