New plan of action aims to reduce prescription drug costs by more than 50 percent

Jul 26 2004

The United States Department of Health and Human Services has announced a new plan of action and regulatory mechanisms to deliver greater benefits. These benefits aim to reduce prescription drug costs by more than 50 percent for the average senior without coverage.

The new prescription drug benefit will allow all Medicare beneficiaries to enroll in drug coverage through a prescription drug plan or Medicare health plan with Medicare paying for 75 percent of the premium. Additional benefits for Medicare beneficiaries who have limited means will cover, on average, 95 percent of their drug costs. The new benefits also will provide new protections for retirees who currently receive drug coverage through their employers or unions. All the new Medicare benefits are voluntary as seniors can choose to keep their existing traditional coverage.

The Medicare prescription drug benefit is a key element of the Medicare Modernization Act signed into law on Dec. 8, 2003. The Centers for Medicare & Medicaid Services (CMS) today also proposed rules to implement another key element of the law: strengthening and improving the Medicare Advantage program, including making regional preferred provider organizations (PPOs) available to all Medicare beneficiaries. These provisions will give beneficiaries broad and more secure access to coordinatedcare health plans that provide additional benefits and significantly lower out-of-pocket costs. Though over 60 million Americans in all 50 states including rural areas get their health insurance coverage through PPOs today, they have generally not been available to Medicare beneficiaries. The proposed rules would also implement new, less costly options for Medigap coverage.

Medicare beneficiaries will also have access to supplemental coverage from states, employers, unions and charitable organizations, and they can use these and other sources of their existing coverage to add to the Medicare coverage for more comprehensive assistance.

The rule will go on display today be published in the Federal Register on Aug. 3, 2004. The comment period on the proposed regulations lasts 60 days, closing on Oct. 4, 2004. Final rules are expected to be issued early in 2005. Enrollment for the new Prescription drug plans will begin in the fall of 2005 for benefits starting in on Jan. 1, 2006.

Just over 4 million seniors already are saving on their prescription medicines through Medicare-approved prescription drug discount card. This transitional benefit, which includes $1,200 in subsidies over the next 18 months for low-income seniors, is the first step toward the permanent drug benefit that the new rules are proposing to implement.

This follows John Kerry's announcement on Monday to commit to using innovation to strengthen and ensure health care is affordable and accessible for all Americans.

“We need to modernize our health care system and push the boundaries of medical exploration,” Kerry said. “We can use technology and the promise of discovery to strengthen our health care system and help millions of Americans.”

While ensuring ethical oversight, Kerry and Edwards plan to lift the ban on stem cell research and unleash its promise for the millions of children and adults who suffer from incurable diseases like diabetes, Parkinson’s, Alzheimer’s, heart disease, cancer and spinal cord injuries.

Kerry also plans to use science and technology to cut health care costs and improve technology, including encouraging the use of modern technology to eliminate waste and costly paperwork from the health care system.