Today, the President will meet with the Democratic leadership of the House and Senate to address national priorities that affect the health, safety, and economic security of the nation. In addition to addressing strategies for the passage of a strong, enforceable Patients’ Bill of Rights, common sense gun safety legislation, and a simple $1 increase in the minimum wage, they will focus on the need to pass a voluntary, affordable Medicare prescription drug benefit available to all beneficiaries. The President will underscore his strong belief that a united Democratic party can help produce a strong prescription drug benefit that receives broad based, bipartisan support, and he will emphasize that the Congress should act on all of these national priorities this year. Finally, the President will say that he welcomes the Republicans’ stated goal of developing a prescription drug benefit for all Medicare beneficiaries, but he will highlight why the approach they have outlined will not achieve this goal.

MILLIONS OF MEDICARE BENEFICIARIES HAVE NO OR UNDEPENDABLE PRESCRIPTION DRUG COVERAGE. Millions of seniors and Americans with disabilities have no prescription drug coverage and millions more are at risk of losing coverage, or have inadequate, expensive coverage.

• Most older Americans without prescription drug coverage are middle-class. Over half of the millions of Medicare beneficiaries who lack drug coverage have incomes greater than 150 percent of poverty ($12,525 for a single, nearly $17,000 for a couple). Seniors without drug coverage fill 30 percent fewer prescriptions than those with coverage, but pay 83 percent more out-of-pocket for drugs. In addition, not even counting manufacturers’ rebates, prescription drug prices for those without coverage are typically 15 percent higher than prices paid on behalf of people with coverage. This price gap almost doubled between 1996 and 1999.

• Current prescription drug coverage is unstable and declining. More than three in five beneficiaries do not have dependable drug coverage. The number of firms offering retiree health insurance coverage dropped by 30 percent between 1993 and 1999, and Medigap premiums have been rising at double the rate of inflation. While Medicare managed care plans usually offer some drug coverage, it is typically limited. The number of plans with a drug benefit below $500 has increased by 50 percent over the past two years. In addition, 11 million beneficiaries, who disproportionately reside in rural areas, have no access to managed care plans.

A UNIFIED DEMOCRATIC FRONT PROVIDES THE FOUNDATION FOR BIPARTISAN CONSENSUS. President Clinton today will point out that a strong, unified Democratic position enhances the likelihood of passing a Medicare drug benefit, just as it helped to assure the eventual House passage of a strong, enforceable and bipartisan Patients Bill of Rights. He will state that the recent announcement of Democratic consensus on the details of a drug benefit should spur the Congress to move forward on this vital issue.

UNIFIED DEMOCRATIC SUPPORT FOR A NEW, PRESCRIPTION DRUG BENEFIT OPTION THAT IS AFFORDABLE AND AVAILABLE TO ALL BENEFICIARIES. The Democratic Caucus supports the passage of a new prescription drug benefit that is:

• Voluntary and Accessible To All Beneficiaries. A new benefit should ensure that all beneficiaries can access prescription drug coverage, whether they are in traditional Medicare, managed care, or a retiree health plan. Employers will receive financial incentives to provide retiree coverage and maintain existing coverage.

• Designed To Give Beneficiaries Meaningful Protection. The proposal would provide a benefit that covers half the cost of prescription drugs up to a $5,000 limit when fully implemented and would provide additional protection against catastrophic prescription drug costs. In addition, it would use market-based purchasing mechanisms to achieve discounts for the price of medications.

• Affordable To All Beneficiaries And The Program. Under the plans, Medicare will contribute at least 50 percent of the prescription drug premium to make it affordable for all beneficiaries. The plans will also include special protection for low-income beneficiaries; those with incomes below 135 percent of the poverty level will receive full coverage of cost sharing and premiums, and those with incomes between 135 and 150 percent of poverty will receive premium assistance on a sliding scale.

• Administered Using Private Sector Entities And Competitive Purchasing Techniques. Private sector entities will negotiate prices with drug manufacturers and administer the benefit, the same as most private insurers. Drugs will be purchased at privately negotiated rates, giving beneficiaries the bargaining power they lack today. As a result, beneficiaries will not only receive prescription drug coverage for the first time, they will pay lower prices for their drugs.

REPUBLICAN POLICY DOES NOT MEET THEIR STATED GOALS. Although the House Republican leadership recently recognized the need for an affordable, optional prescription drug benefit available to all Medicare beneficiaries, the President will note that the policy advocated by the House Republicans does not achieve their stated goals. The current House Republican proposal:

• Does not assure availability of prescription drug coverage. Because the Republican plan relies on private insurers to offer a drug-only benefit voluntarily, this policy cannot be guaranteed to be available to all seniors in need of a drug benefit. In testimony before the Congress, the insurance industry itself has expressed skepticism about the effectiveness of the Republican approach.

• Not affordable for most seniors, even if it is available. Furthermore, because it provides direct premium assistance only to beneficiaries with annual incomes of under $12,600, the Republican benefit will almost certainly fail to be an affordable option even if it is available. If enacted, the Republican proposal would mark the first time in the program’s history that Medicare would not provide universal premium assistance for benefits, and it would undermine the social insurance concept of the program.

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