NCPA - National Center for Policy Analysis

Drug Benefit Cards

November 27, 2003

In a small but potentially significant step, House and Senate negotiators voted September 9 to help elderly people buy prescription drugs with discount cards endorsed by the federal government.

The cards are similar to ones proposed by President Bush in July 2001. They would provide temporary assistance to most Medicare beneficiaries in 2004 and 2005, before Medicare itself would provide drug benefits in 2006.

The legislation does not specify the amount of the discount, but it could be 15 percent to 25 percent of retail prices. Democrats said it was likely to be much less.

These are details of the agreement:

  • Medicare would set standards for drug discount cards and give its approval to cards meeting those standards; beneficiaries would have a choice of at least two cards endorsed by Medicare, but could not have more than one such card at any time.
  • The card would be available to all Medicare beneficiaries except six million low-income people who are also enrolled in Medicaid and entitled to Medicaid drug coverage.
  • Discount cards could be issued by pharmaceutical benefit managers, insurance companies, drugstore chains and other entities; these companies could charge an enrollment fee up to $30 a year.
  • The federal government would provide up to $600 a year in assistance to low-income people who do not qualify for Medicaid; the money could be used, with the discount card, to buy medicines at reduced prices.

A person with income below the poverty level ($8,980 a year for an individual) would have to pay 5 percent of the discounted price for a drug. A person with income from 100 percent to 135 percent of the poverty level (up to $12,123) would pay 10 percent. People with higher incomes would not get any assistance beyond the discounts.

Source: Robert Pear, "Congressional Committee Agrees on Drug Benefits," New York Times, September 10, 2003.


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