Overview
House and Senate negotiators are inching closer to an agreement on a bill that would add prescription drug benefits for more than 40 million elderly and disabled people in the Medicare program. This week conferees announced more areas of agreement and some staff said a final bill might be released within a week or two. However, 41 senators told President Bush yesterday the conference agreement is in jeopardy and the final conference bill would have to look more like the Senate bill than it currently does to get their support. It is not certain when – or even if – a final compromise can be reached.

Many issues remain unresolved, but so far conferees have agreed on a price tag ($400 billion), the general structure of the benefit, subsidies for low-income individuals, and treatment of individuals eligible for both Medicare and Medicaid (“dual eligibles“). Both the House and Senate bills (HR 1) allow private insurers to provide the prescription drug benefit, but they differ on the extent of privatization. The House bill would require Medicare to compete with private plans in 2010 – a provision Senate Minority Leader Tom Daschle (D-SD) says will not pass the Senate. There is also disagreement between the House and Senate on a range of other issues, including how to encourage employers to maintain health coverage for retirees, whether people will be able buy prescription drugs in Canada, and how to lower drug prices.

Advocates for low-income people are split on their support for the prescription drug bill. Some advocates are opposed to both the House and Senate bills because neither provides a comprehensive benefit for all Medicare beneficiaries. Other advocates support the Senate bill’s low-income benefit, see this as an opportunity to get help for low-income Medicare beneficiaries and will work to improve the benefit for higher-income beneficiaries in the future.

Low-Income Provisions
Conferees have agreed that dual eligibles will receive prescription drug benefits from Medicare. The drug benefit for low-income individuals tentatively agreed to by conferees (listed below) is less generous than the Senate bill, which would have provided subsidies for individuals below 160 percent of poverty.

Individuals living below 135 percent of poverty
– no deductible
– no premium
– $2 co-payment on generics and $5 co-payment on brand-name drugs with no gap in coverage
– no cost sharing above the catastrophic limit
– The asset test in the House bill applies ($6,000 for individual and $9,000 for a couple)

Individuals living between 135 percent and 150 percent of poverty
– $50 deductible
– sliding scale premium assistance
– 15 percent co-insurance with no gap in coverage
– 5 percent or nominal cost sharing above the catastrophic level
– Bingaman asset test applies ($10,000 for an individual and $20,000 for a couple)

For More Resources:
Families USA Prescription Drug Page
Center on Budget and Policy Priorities Health Policy Page
Alliance for Retired Americans Prescription Drug Page

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