• Medicare Rx Goes to Conference
• What the AFT Is Doing, What You Can Do
• Medicare Bills at a Glance
• 37 Senators Set Conditions for Medicare Rx Legislation
• Congress Exempts Itself from Medicare Rx Bill
• Study Finds Seniors' Drug Costs Soaring
• Medicaid Costs Continue To Squeeze State Budgets
• Magazine Discounts for Great Summer Reading
• Quote of Note
• Web Site of the Week

Medicare Rx Goes to Conference
The House-Senate conference committee process to resolve the differences between the House and Senate Medicare prescription drug bills has now begun. It is likely to be a difficult process because there are huge philosophical and technical differences between the bills (H.R. 1 and S. 1, respectively). While most of the work will be done by the conferees, all members of Congress will be talking to the conferees about their constituents' concerns. There is still time to make your voice heard (see below).

The Senate conferees are Max Baucus (D-Mt.), John Breaux (D-La.), Tom Daschle (D-S.D.), Bill Frist (R-Tenn.), Charles Grassley (R-Iowa), Orrin Hatch (R-Utah), Jon Kyl (R-Ariz.), Don Nickles, (R-Okla.), and Jay Rockefeller (D-W.Va.). The House conferees are Marion Berry (D-Ark.), Michael Bilirakis (R-Fla.), Tom DeLay (R-Texas), John Dingell (D-Mich.), Nancy Johnson (R-Conn.), Charles Rangel (D-N.Y.), Billy Tauzin (R-La.) and Bill Thomas (R-Calif.).

The fact that three of the four party leaders in Congress (Daschle, DeLay and Frist) are on the committee demonstrates the important and sensitive nature of the conference. Both chambers have also indicated the importance of this legislation by giving the number "1" to their version of the proposal. House and Senate leaders on June 27 vowed to protect their respective Medicare prescription bills in conference, adding that the complexity of the issues and policy differences between the two bodies may require the conference to spill into the fall. However, the White House is likely to pressure conferees to wrap up work quickly on a bill it views as a critical component of its domestic agenda heading into the 2004 presidential election.

Both bills are seriously flawed, relying exclusively on private providers to supply the prescription drug benefit, leaving huge gaps in coverage and failing to provide adequate incentives for employers to keep retiree drug coverage. The House bill contains the most radical provision: implementing a premium support system in 2010 that would ultimately drive million of seniors out of traditional fee-for-service Medicare and into private providers who could set both premiums and benefits. The Congressional Budget Office has projected that more than 30 percent of Medicare beneficiaries with drug coverage through a private plan sponsored by a former employer would lose it under the current bills.

What the AFT Is Doing, What You Can Do
Here in Washington, the AFT is lobbying hard on Capitol Hill for real Medicare prescription drug coverage. Union lobbyists have joined a coalition of labor and seniors groups in a strong pitch to Sen. Max Baucus (D-Mont.), a key member of the conference committee, to protect employer-provided retiree healthcare coverage and other key reforms needed for real Medicare drug coverage. The union signed on to a letter to all members of Congress, prepared by the Leadership Council of Aging Organizations, outlining measures needed to strengthen the final bill.

The AFT is strongly supporting activities by the Alliance for Retired Americans in opposition to any attempt to privatize Medicare, weaken employer coverage and increase premiums for traditional Medicare. AFT activists are joining the Alliance in meetings with key members of Congress to take on supporters of privatization. It is still not too late to e-mail, call or write your elected officials to let them know you oppose both the House and Senate Medicare bills as now drafted. Call the AFT toll-free number, 800/839-5276, ask for your senators and representative by name and tell them that unless major improvements are made to the current legislation, they should vote "no" when the final bill comes to the floor. Or, visit the AFT Web site at http://www.aft.org and click on the Legislative Action Center to send them an e-mail outlining AFT's key points.

Medicare Bills at a Glance
Both measures (H.R. 1 and S. 1) would spend $400 billion over 10 years, with these highlights:

• Implementation date: House and Senate, 2006.
• Interim provision: House and Senate, prescription drug card, 2004; offers price breaks, with various credit amounts, for low-income beneficiaries.
• Monthly premiums: House, estimated at $35; Senate, estimated at $35. Neither bill sets a cap on premiums.
• Deductible: House, $250; Senate, $275.
• Basic coverage: House, 80 percent of out-of-pocket expenses between $251 and $2,000 paid for by insurance; Senate, 50 percent of expenses from $276 to $4,500 paid for by insurance.
• Coverage gap: House, no coverage between $2,000 and $4,900; Senate, no coverage between $4,500 and $5,800.
• Catastrophic coverage: House, 100 percent of coverage after beneficiary spends $3,500 out of pocket on drugs; Senate, 90 percent of coverage after $3,700 in out-of-pocket drug spending.
• Upper-income beneficiaries: House, sets higher threshold to begin catastrophic coverage, for individuals with incomes of $60,000 and couples with incomes of $120,000; Senate, no threshold difference for income.
• Medicare Part B deductible: House, sets deductible at $106 in 2004, which will increase annually with rising Medicare costs; Senate, sets deductible at $125 in 2006, with annual increases as Medicare costs rise.
• Retirees estimated to lose employer coverage: House 32 percent; Senate, 37 percent.

More info: http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=18698


37 Senators Set Conditions for Medicare Rx Legisation
In a letter to President Bush July 8, 37 Senators (36 Democrats and Independent Jim Jeffords) laid out several conditions for their support for any Medicare reform legislation that emerges from the conference committee charged with reconciling the separate bills (HR 1 and S 1). Several Senate Democrats said the letter is an attempt to lay down political markers for the House-Senate conference committee. In the letter, initiated by Senate Minority Leader Tom Daschle (D-S.D.) and Sen. Edward Kennedy (D-Mass.), the Democratic senators said they would reject any bill that includes premium support. That provision, included in the House bill, would have the federal government contribute a set amount of money toward health coverage for beneficiaries who choose to join a private health plan. Beneficiaries would have to make up the difference between the government contribution and the actual cost of premiums. The House provision also would establish direct price competition between traditional Medicare and private health plans beginning in 2010. The proposal would allow the wealthiest and healthiest beneficiaries to join private plans, leaving the sickest and costliest beneficiaries in traditional fee-for-service Medicare, noted the letter. The bill would also provide greater funding for private plans.

The senators outlined several other non-negotiable issues: control of drug prices; subsidies for low-income seniors; and additional measures to encourage companies currently offering drug benefits to their retired workers to maintain coverage. In addition to the senators who signed the letter and voted against the Senate Medicare bill, six other Senate Democrats voted against the bill, potentially giving Democrats more than the 40 votes needed to block a final bill on the floor. On the Republican side, Rep. Paul Ryan (R-Wis.) organized 75 conservative House members to send letters to President Bush demanding that the House privatization provisions for Medicare remain in the final bill--and even be expanded.


Congress Exempts Itself from Medicare Rx Bill
In one of the first actions after the July 4 recess, the House adopted legislation (H.R. 2631) July 8 to ensure that members of Congress keep their current prescription drug benefits, which are much more generous that those provided in the new Medicare bills. The bill also covers 270,000 federal retirees. The most popular plan now provided to federal retirees enrolled in the Federal Employees Health Benefits Program covers 80 percent of total drug costs. In the Senate version of the Medicare plan, only 49 percent of drug costs would be paid; in the House version, 55 percent would be paid. The bill's sponsor, Rep. Tom Davis (R-Va.), said the federal government should set an example for private employers to discourage them from ending retiree drug benefits should Congress pass a Medicare drug benefit. Rep. Pete Stark (D-Calif.) countered, "This bill says, 'We take care of our own, and to hell with the average American.' It shows Republicans know full well that employers will dump their employee retirement benefits as soon as they can." The Senate's Medicare bill includes a provision by Sen. Mark Dayton (D-Minn.) that would make prescription drug coverage for members of Congress equal to whatever level lawmakers approve for Medicare beneficiaries.

More info: http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=18674


Study Finds Seniors' Drug Costs Soaring
A Families USA study finds that the average cost for the 50 drugs most often prescribed for the elderly rose more than three times the rate of inflation last year. Prices for the drugs in the study increased an average of 6 percent, compared with an increase of 1.8 percent in the Consumer Price Index. On average, prices for the 50 drugs--35 brand name and 15 generic--rose 6 percent between January 2002 and January 2003, compared with a 1.8 percent inflation rate, which excludes energy costs. Prices for brand-name drugs grew faster than those for generic versions. Drugs with the fastest-growing price increases included Claritin (allergies), Klor-Con 10 (potassium replacement), Miacalcin, (osteoporosis), Premarin (estrogen replacement), Atenolol (generic beta blocker) and Toprol XL (beta blocker). All increased by from nine to twelve times the general inflation rate. Over the years, drug prices have consistently outpaced inflation, with harsh consequences for seniors.

More info: http://www.familiesusa.org


Medicaid Costs Continue To Squeeze State Budgets
Medicaid expenditures are continuing to drive up state budget costs, according to a report released June 26 by the National Governors Association and the National Association of State Budget Officers. The state share of Medicaid grew by 13 percent in fiscal year 2002, and an 8 percent rate of growth is expected for FY 2003, according to the report, The Fiscal Survey of States. Based on governors' budget proposals for FY 2004, Medicaid expenditures are expected to increase by nearly 5 percent. The surge in Medicaid costs coincided with a reduction of state revenues, contributing to state budget shortfalls, reports NGA. Medicaid spending accounts for 20 percent of all state expenditures and overall health care costs account for 30 percent of state spending. Prescription drug spending and costs associated with providing community-based, long-term and nursing home care are driving Medicaid expenditures, says the report.

State action to hold down Medicaid costs and meet balanced budget requirements by scaling back healthcare programs accounted for the decline in the rate of Medicaid growth between FY 2002 and 2003. "The growth rate is down because of cuts that are being made to the Medicaid programs in states throughout the country," said Ray Scheppach, NGA executive director. "The reality is that poor women and children are either experiencing a reduction in benefits or are being removed from the rolls altogether." To contain Medicaid costs, governors are using preferred drug lists, reducing provider payments and reimbursements and scaling back option benefits, says NGA. Far Western and Northeastern states are experiencing the toughest Medicaid challenges.

More info: http://www.nga.org/nga/newsRoom/1,1169,C_PRESS
_RELEASE^D_5631,00.html/


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Quote of Note
"The sad truth [about the Medicare prescription drug benefit legislation] is that it is likely to provide no relief to millions of older and disabled Americans who struggle to pay for the medications they desperately need. [Beneficiaries] will quickly see that they would be better off buying their drugs from Canada rather than paying for this new benefit."

--Diane Archer, Founder
Medicare Rights Center

Web Site of the Week: www.kaisernetwork.org/static/kncalc.cfm
Find out what you would pay for prescription drugs under both the House and Senate prescription drug bills through this online service provided by the Kaiser Permanente Foundation. You'll need to supply how much you spend on prescription drugs a year and your income.