Prescription Drugs And Medicare

By John F. Dickerson

Bush's plan would fundamentally reform Medicare by putting the focus on helping seniors buy private insurance--but not everyone would be guaranteed equal coverage

THE PLAN Bush would allow the elderly to stay in traditional fee-for-service Medicare or provide them with a fixed sum of money to pay for private insurance plans, some of which will offer a prescription-drug benefit. How much recipients pay and what benefits they receive depends on the plan they choose.

WHO PAYS WHAT? Medicare would pay all costs for elderly recipients whose income was at or below 135% of the poverty line ($11,300, or $15,200 for couples). There would be a sliding scale of partial subsidies for those with incomes up to 175% of the line. It would cover at least 25% of premiums and all catastrophic costs over $6,000 for all seniors. Bush would also give states $48 billion immediately to provide partial prescription-drug coverage until the plan goes into full effect in 2004.

WHO BENEFITS? The poorest of the elderly would receive free, complete coverage. But those above 135% of the poverty level would have to choose which plan they could afford. They would get a subsidy that wouldn't fully cover premiums and deductibles.

STRENGTHS AND POTENTIAL PROBLEMS Bush's plan would provide quicker drug coverage for the aging poor by sending money to the states. And it would attempt to fix Medicare's long-term solvency problems. But it wouldn't provide universal coverage for all seniors. Many of those without prescription-drug coverage now might not be able to afford it under the Bush plan. And insurance companies haven't shown much eagerness to be a part of Medicare.

--WHERE DOES THE MONEY GO? To Medicare reform $110 BILLION To states for immediate Rx drug coverage $48 BILLION To hospitals for restoring recent Medicare cuts $40 BILLION TOTAL: $198 BILLION

Gore would add a full prescription-drug benefit and kick in more money to keep Medicare secure--but without reform, the system is likely to face bankruptcy in coming decades

THE PLAN Gore would strengthen the current Medicare program, putting aside $435 billion to keep it solvent--most of it in a "lockbox" outside the federal budget. And he would expand the program by adding a universal Rx drug benefit for all seniors. He also would allow people from ages 55 to 65 to buy into Medicare with the help of a tax credit.

WHO PAYS WHAT? All seniors would get a prescription-drug benefit for a $25-a-month premium, with Medicare paying half the bill up to $2,000. That would increase to half the bill up to $5,000 by 2008. Gore's plan would also pay all costs for the elderly who earn less than 135% of the poverty line and partial costs for those between 135% and 150%. All prescription-drug costs over $4,000 would be paid for under the plan for all seniors, regardless of income.

WHO BENEFITS? Every senior would get universal benefits, including prescription-drug coverage. Low-income elderly would receive subsidies to pay for premiums and out-of-pocket costs, and people between 55 and 65 could buy into Medicare early.

STRENGTHS AND POTENTIAL PROBLEMS Gore's plan would keep Medicare as a universal set of benefits for all seniors. But the prescription-drug benefit wouldn't go into effect as quickly as the Bush plan, with its immediate aid to states. And it might not provide enough to cover the drug bills of middle-income older people. The plan also wouldn't solve the long-term danger of Medicare's going bankrupt when the baby boomers reach retirement age.

--WHERE DOES THE MONEY GO? To Medicare reform $87 BILLION To Medicare Rx benefit $253 BILLION To Medicare off-budget "lockbox" $360 BILLION To shore up Medicare with extra cash $75 BILLION TOTAL: $775 BILLION