PRESIDENT CLINTON CITES FLORIDA AS CASE EXAMPLE FOR NEED FOR MEDICARE

                       PRESCRIPTION DRUG BENEFIT
     Releases New Report on the Need For Drug Benefit for Medicare
                    Beneficiaries With Disabilities
                             July 31, 2000

Today, in an event at the David Barksdale Senior Center in Tampa, Florida, President Clinton will critique the shortcomings of the House Republican prescription drug proposal and release a new Domestic Policy Council / National Economic Council report highlighting the necessity of prescription drug coverage for Medicare beneficiaries with disabilities. The President will cite Florida as a case example of why a private insurance model, such as the one proposed by the House Republicans, will not work. He will point out that most Medicare beneficiaries in Florida who need affordable prescription drug coverage must turn to the expensive and limited-value private Medigap options or the unreliable Medicare managed care market. The new White House report documents how Medicare beneficiaries with disabilities are in poorer health and require more prescriptions. The President will highlight the finding that Medicare beneficiaries with disabilities who lack prescription drug coverage pay fully 50 percent more out of pocket for 50 percent fewer prescription drugs than those with coverage. This report strongly validates the need for a voluntary Medicare prescription drug benefit that rejects the private insurance model and instead offers an affordable and meaningful Medicare benefit for all eligible people with disabilities as well as all seniors.

PRESIDENT CITES FLORIDA AS CASE EXAMPLE OF NEED FOR MEDICARE PRESCRIPTION DRUG BENEFIT. The President will point to the barriers 2.7 million Floridian Medicare beneficiaries face in accessing affordable prescription drugs. He will cite the private Medigap insurance market in Florida and throughout the nation, which provides for an expensive but extremely limited benefit with no protections against catastrophic expenses. The President will also highlight the serious shortcomings of Medicare managed care plans, which all too frequently move in and out of participation in the program and recently announced decisions that would effectively drop 87,000 Floridians. He will underscore that while the Medicare managed care program needs to be strengthened through the provision of direct subsidies for prescription drug coverage, neither it - nor a Medigap drug-only plan -- can be relied on as workable options to provide a much-needed prescription drug benefit for seniors and people with disabilities.

PRESIDENT CLINTON RELEASES A NEW STUDY ON THE IMPORTANCE OF MEDICARE TO PEOPLE WITH DISABILITIES. About one in eight Medicare beneficiaries - over 5 million (284,000 in Florida) -- are people with disabilities under age 65. Over the next 10 years and the number of beneficiaries with disabilities is projected to increase by 38 percent (from 5.5 to 7.6 million). Key findings of the report include:

Medicare Beneficiaries with Disabilities Have Poor Health and Significant Health Care Needs. Most disabled beneficiaries -- 60 percent of disabled beneficiaries -- report fair to poor health, compared to 22 percent of aged beneficiaries. Nearly 30 percent have functional limitations due to health problems, compared to 18 percent of elderly beneficiaries.

People with Disabilities Face Unique Coverage Challenges. Medicare beneficiaries with disabilities are much less likely to have, be able to access, or be able to afford private insurance coverage. The report indicates:

• People with disabilities are 35 percent less likely to have employer-based coverage. While some elderly get coverage through retiree health plans, the non-elderly disabled have typically lost access to employer-based insurance before qualifying for Medicare (22 percent for disabled versus 34 percent for aged).
• Restricted access to individual Medigap insurance with drugs. Less than one in 20 Medicare beneficiaries with disabilities have drug coverage through private Medigap insurance (versus 12 percent of elderly beneficiaries). A recent study found that only 10 states guarantee people with disabilities access to a Medigap plan with prescription drugs.
• Unaffordable premiums for private Medigap plans. Only 7 of the 10 states that guarantee access to Medigap for people with disabilities have full or partial community rating that improves the affordability of this coverage. Without protections, premiums range from 10 to 72 percent higher for beneficiaries with disabilities than for those who are elderly.
• Unlikely to get prescription drug insurance through Medicare managed care. While about 12 percent of Medicare beneficiaries are disabled, only 5 percent of Medicare managed care enrollees are beneficiaries with disabilities. In contrast, in 1996, 16 percent of elderly beneficiaries got drug coverage through managed care.

Beneficiaries With Disabilities Need a Voluntary Medicare Prescription Drug Benefit. The report concludes that to ensure access for people with disabilities, a prescription drug benefit must:

• Ensure a Medicare option rather than rely on private insurers that have failed to extend prescription drug coverage to people with disabilities. Only a small number of beneficiaries with disabilities have access to drug coverage through private insurers, and when they do, it is often unaffordable. As such, any proposal must provide a Medicare prescription drug option.
• Have an affordable premium and a meaningful benefit. Any proposal must have sufficient financing to ensure that premiums are affordable to all Medicare beneficiaries. And to ensure that its benefit is meaningful, it must protect against catastrophic prescription drug expenses. Medicare beneficiaries with disabilities are more likely to have high drug costs given their greater use.
• Have access to the prescriptions that they need and pharmacies that they trust. Because Medicare beneficiaries with disabilities often have multiple, complex health problems, it is also important that proposals allow doctors to prescribe any drug that is medically necessary. Also, people with disabilities often face physical challenges in getting to pharmacies. Proposals should ensure that qualified community pharmacies can participate.
• Be adequately financed and part of a plan to improve Medicare. Strengthening Medicare is the best way to assure that it will be available when future retirees and people with disabilities need it. Extending program solvency, improving efficiency, and restoring provider payments should be included in any Medicare reform plan. Additionally, enough budget surplus must be set aside to finance a meaningful prescription drug benefit and take its trust fund off budget. THE HOUSE REPUBLICAN PRIVATE INSURANCE PLAN IS FLAWED. The plan:
• Does not provide a Medicare benefit. Outpatient prescription drugs would not be part of the Medicare benefits package like doctor or hospital care. Beneficiaries would pay expensive premiums to private Medigap plans rather than to Medicare for an affordable option. The private insurance industry itself confirms that a private insurance model such as the House Republican proposal will not work. In fact, it has stated that "to pass legislation to provide access to such coverage would constitute an empty promise to Medicare beneficiaries." [Blue Cross / Blue Shield Association Letter to Senator Roth, 4/24/00]
• Is seriously underfunded and provides for an inadequate benefit. The House Republican plan dedicates less than half of the resources the President and the Democratic leadership allocates to a Medicare prescription drug benefit ($40 billion versus over $80 billion). As a result, the premiums are approximately 30 percent higher ($25 versus $37), and its benefits are significantly less meaningful ($0 deductible versus $250 deductible; catastrophic stop-loss protection beginning at $4,000 versus $6,000).
• Would leave millions of Medicare beneficiaries without prescription drug coverage. The Congress' own budget office has projected that the House Republican plan would leave out over half of the Medicare beneficiaries who currently have no prescription drug coverage. This finding validates that the House plan is underfunded and does not provide sufficient benefits to be able to make the prescription drug option attractive or affordable enough to some of the nation's most vulnerable seniors and people with disabilities.
• Limits choice of drugs and pharmacies. The so-called "choice" model offered by the Republicans breaks up the pooled purchasing power of seniors and people with disabilities, forcing insurers to reduce prices through restrictive formularies and limited choice of pharmacies. Not all prescription drugs that a doctor determines are medically necessary would be available -- only after an inappropriate drug has been taken can a beneficiary can appeal for a needed drug. Additionally, insurers could restrict access to local pharmacies.

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