House Approves Prescription Drug Benefit

June 27, 2003

WASHINGTON, DC - Congressman David Dreier (R-CA), Chairman of the House Rules Committee, voted last night to create a prescription drug benefit under Medicare. The Medicare Prescription Drug and Modernization Act of 2003, H.R. 1, passed with bipartisan support, 216-215.

"Seniors today are living longer and better lives than ever before," Dreier said. "It's high time Medicare caught up with them. The package approved by the House last night will bring Medicare into the 21st century with a prescription drug benefit. Prescription drugs have made tremendous advances since Medicare was created almost forty years ago. Seniors need and deserve access to the drugs that can help them manage their health and even cure diseases."

The legislation approved by the House creates a voluntary prescription drug benefit for all Medicare beneficiaries. Specifically, the plan will cover 80 percent of a senior's drug costs up to $2000 with a $250 deductible. After a senior has $3500 in out-of-pocket costs, the 100 percent catastrophic coverage kicks in. A key element of the plan, however, is choice. If a senior already has prescription drug coverage and it fits their needs, they will not be required to change plans. The bill also addresses the fact that Medicare, much like Social Security, is facing a massive wave of retirees when the baby boomers reach retirement age. It creates a competitive bidding system that will bring down costs and help sustain Medicare well into the future.

A recent report released by the Department of Health and Human Services estimated that the House bill would provide seniors currently paying full price for their prescription drugs up to 25 percent in savings. It also said that seniors with incomes below 135 percent of the poverty level would pay no monthly premiums and only minimal cost sharing ($2-$5 copay), while those with incomes between 135 percent and 150 percent would pay reduced premiums.

Dreier commended his colleagues Ways and Means Chairman Bill Thomas (R-CA), Health Subcommittee Chairwoman Nancy Johnson (R-CT) and Energy and Commerce Chairman Billy Tauzin (R-LA) for their work on the legislation. Because the Senate also passed a version of Medicare reform this morning, the two bills will now be reconciled in a conference committee.