<font size="-1" , face="Arial" ,"Helvetica">National Bipartisan Commission on the Future of Medicare

GO TO: Medicare HOME | Agenda for Commission Meeting of February 24, 1999

OPENING STATEMENT

Medicare Commission

February 24, 1999

SENATOR BREAUX: I’d like to welcome everyone to one of the last meetings of the National Bipartisan Commission on the Future of Medicare. With the Commission’s March 1 deadline fast approaching, we have a lot of important work to do today.

At our last meeting, I proposed a premium support model based on the FEHBP style system. One of the most frequently asked questions since then has been about numbers. Particularly, does this premium support model save money? I’m pleased to say that we now have the answer to that question from three different sources and the answer is a resounding YES. In the time we have today, I would like to ask Bobby Jindal to go over the reports and analyses we’ve received over the past week from Commission staff, the Congressional Budget Office (CBO) and the Health Care Financing Administration (HCFA). I hope to adjourn today’s meeting around 5:00.

Before we get started, I’d like to first reiterate something I’ve said in previous Commission meetings: the reason I have long supported a premium support approach is because I believe it will give us the best opportunity to provide a better benefit package to seniors which includes prescription drugs and to deliver health care in a way that enables Medicare benefits to better keep up with medical technology. We all agree that the Medicare benefits package could and should be better than it is. The 1965 model we’re running Medicare under today needs to be updated and modernized for the 21st century and adapted to conform to modern notions of health care delivery -- I believe that a premium support approach is the best way to do that.

Some people want to talk about new revenues, as well, but what I tried to do first was to isolate the efficiencies that a premium support model could yield and then look at ways to address any remaining shortfalls in the program. I think there is widespread agreement that we can’t add revenues without looking at fundamental reforms.

The analyses we will review today looks at one premium support option and suggest various levels of savings that will result depending on certain design details. The design details that affect the level of savings can also have an impact on beneficiaries, and that needs to be carefully considered, as well.

I am very encouraged by the fact that there is bipartisan interest in this premium support concept and that analyses from both public and private sector sources say that a competitively-based premium support produces savings for the Medicare program.

After Bobby’s presentation, the Commission staff will be available to answer additional questions.

Let me also say at this point that I am in the process of preparing a modified proposal addressing the prescription drug issue. This is obviously a very sensitive issue, both from a policy and political standpoint but the goal should be to make a viable prescription drug benefit available to all beneficiaries. To that end, I am working to construct a scenario that builds around what I think are four fundamental principles.

1. Public spending should not crowd out private spending. The point has been made many times that 65% of Medicare beneficiaries currently have a drug benefit (whether through Medigap, former employers, Medicaid or an HMO) and we should try to minimize any displacement of those existing dollars.

2. We should avoid creating a buyer with monopoly powers.

3. We need to minimize the need for new revenues while recognizing that new revenues will be needed.

4. All Medicare beneficiaries should have access to an affordable drug benefit.

To that end I am exploring the possibility of expanding drug coverage to Medicare beneficiaries in the following ways:

1) I would like to see drug coverage provided to the current QMB and SLMB population through the Medicaid program. This would for the first time provide a drug benefit for all beneficiaries up to 135% of poverty (about $11,000 for an individual). Currently, only those beneficiaries who are dually eligible for Medicare and Medicaid have access to a drug benefit. This provision would help focus on those beneficiaries who don’t have a drug benefit and who need it most--those who aren’t poor enough to be dually eligible for Medicaid but can’t afford prescription drugs. I’ve asked Commission staff to analyze this proposal to determine how much it would cost (assuming Medicare picks up the additional cost), and how many beneficiaries would benefit from this expansion.

2) Another way of increasing access to a drug benefit for fee-for-service beneficiaries is to require that all Medigap plans offer a prescription drug benefit--this would hopefully reduce adverse selection against those Medigap plans that offer prescription drugs. The reason those plans are so expensive is that only beneficiaries who need a drug benefit buy them.

3) I would like to pursue the idea of giving fee-for-service beneficiaries who don’t qualify for low-income subsidies access to a privately-run drug benefit option and requiring private plans to offer an option that includes prescription drugs. There is still a great deal of work that needs to be done on this last provision and there are many different ways this could be structured. I will be putting some details together over the next few days after hearing more from commissioners.

Let me underscore AGAIN that this is still very much a work in progress and nothing I’ve said today represents a final recommendation or a line in the sand in any respect--what I’ve tried to do is explore every option in an attempt to find a middle ground is on this very difficult issue.

I am very encouraged by the willingness of the members of this Commission to discuss the best way to design a premium support model. With all of these analyses just coming out in the past week, I realize that it might take additional time to conclude our deliberations. If members are willing to work together in good faith, I am open to possibly extending our deadline by a few weeks to allow us to review and digest these analyses and to try to reach a bipartisan consensus that goes beyond Commission members.

I will now turn it over to Congressman Thomas to make his opening remarks.