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Ryan Votes for Landmark Legislation to Provide Prescription Drug Benefit for Seniors, Modernize Medicare

WASHINGTON – Wisconsin’s First District Congressman Paul Ryan today voted in favor of legislation to update Medicare with a prescription drug benefit and make other needed improvements to strengthen the system for the long run and make Medicare payments fairer for Wisconsin health care providers.  The House passed the legislation by a vote of 220-215.

“Before making my decision about this legislation, I held listening sessions to hear from Wisconsin seniors, talked to many health care providers, and read through the bill carefully.  I spoke with doctors, patients, insurers and government officials in charge of the Medicare program.  At this point, I am convinced that this is a step forward for Wisconsin seniors and that it will help save Medicare for future generations, including the 77 million baby boomers who will begin retiring soon.” 

“The bill is far from perfect, but it meets the key criteria I set up to gauge whether I could support it.  The legislation modernizes benefits, makes Medicare fairer for Wisconsin, promotes competition to extend the program’s solvency, and works to prevent employers from dropping retiree health benefits,” Ryan said.

“In particular, this bill goes farther toward eliminating the disparity in Medicare benefits for Wisconsinites than at any time since 1965,” Ryan said.  For example, the bill brings over $468 million back to Wisconsin hospitals through more equitable reimbursements.

To follow is a summary of how the Medicare prescription drug legislation meets the criteria Ryan outlined:

Modernizes Benefits

·        Provides a prescription drug benefit for seniors who want it.

-         Immediate savings, up to 25%, through a prescription drug discount card available in 2004 and 2005, before the entire drug benefit begins in 2006.

-         Prescription drug benefit begins in 2006 for seniors who choose to participate.  

-         Seniors will be able to choose between at least two plans under the program and choose service from any pharmacy.

-         Option available for seniors to simply add drug coverage to traditional fee-for-service Medicare without any loss of current benefits.

-         $35 average monthly premium, $250 annual deductible.

-         Medicare pays 75% of drug costs up to $2,250.

-         Catastrophic coverage guarantees Medicare pays 95% of drug costs over $3,600 out-of-pocket a year.

-         Low-income assistance to help the neediest seniors with their prescription drug costs.

·        Covers new preventative care benefits such as new cholesterol and blood lipid screenings and an initial physical.

·        Plans may operate electronic prescription programs that meet federal standards.  (Secretary of Health and Human Services would issue final standards by April 1, 2008, after completing a process to evaluate and test standards.)  E-prescribing would lower the risk of adverse drug interactions and prescribing errors or miscommunications. 

Makes Medicare Fairer for Wisconsin

·        Significant hospital and physician payment improvements.

·        Medicare DSH for rural and small urban hospitals would be increased to 12% cap in 2004.

·        Bolsters Critical Access Hospitals program with increased reimbursements and retains “necessary provider” criteria that will help certain Wisconsin hospitals to become critical access hospitals.

·        Improves the labor share of the usage index for hospital reimbursements.

·        Increases and maintains payments to hospitals in suburban and rural areas to the level of large urban areas.

Promotes Competition to Extend Solvency

·        Gives Medicare beneficiaries the right to choose a health care plan that is best for them: traditional fee-for-service, managed care or preferred provider organizations.

·        Launches Medicare Advantage plans in 2006 that give seniors the opportunity to select health care from competing private plans, such as PPOs and HMOs.  This resembles the health care coverage that Members of Congress and federal employees currently have.

·        Health Savings Accounts

-         Allow individuals with high-deductible insurance to set aside tax-free savings for lifetime health care needs.

-         Savings are portable, from job-to-job and into retirement.

-         Contributions can be made by individuals, employers and family members.

-         Allow annual tax-deductible contributions of up to $2,600 for singles and $5,150 for families.

-         Individuals age 55 and older can make catch-up contributions of up to $1,000.

-         Savings can be used for qualified medical expenses, including retiree health insurance premiums, Medicare expenses, prescription drugs, long-term care services and insurance.

-         HSAs give people control over their own health care dollars, encouraging them to make good consumer decisions and helping to hold down health care costs.

Provisions to Prevent Employers from Dropping Retiree Health Benefits

·        Employers receive a subsidy for 28 percent of drug costs between $250 and $5,000. This is equal to about 2/3 of the actuarial value of the standard benefit.

·        The subsidy is excludable from taxation, increasing its value by about $18 billion.

·        Employer plans receive maximum flexibility. Employers are not required to change any aspect of their plan as long as it is actuarially equivalent to the Medicare benefit.

·        Employers can integrate their current coverage plans with Medicare.

·        Retiree plans exempted from Medicaid “best price” provision, thereby allowing them to negotiate deeper discounts from pharmaceutical manufacturers.

·        Employers benefit from Hatch-Waxman reforms, which accelerate the entry of cheaper generic drugs to the market.

·        Immediate relief under accounting rules because employers are less likely to reach their “FASB cap,” which will improve their ability to continue to provide retiree coverage.

The Medicare prescription drug legislation is supported by AARP, the American Hospital Association, the American Medical Association, the Alzheimer’s Association, the American Heart Association and many other patient groups, health care organizations, and employers.

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