NCPA - National Center for Policy Analysis

How Medicare Would Change

November 24, 2003

Congress is nearing passage of the biggest overhaul in Medicare since the health insurance program for seniors began in 1965. Some of the major changes and when they would take effect:

  • Starting Jan.1, pre-retirement age workers who have health insurance plans with high deductibles would be able to set aside up to $2,250 (for individuals) or $4,500 (for families) annually in tax-free accounts to cover health care costs (withdrawals for non-medical purposes would be taxed).
  • In the spring of 2004, seniors could pay up to $30 for a drug discount card which the Bush administration says could save them 15 to 25 percent per prescription; some very low-income seniors would also get up to $600 a year to help pay for drugs in 2004 and 2005.
  • Starting in 2006, seniors could join privately administered drug plans for an average $35 monthly premium, which could rise if drug costs increase.
  • In 2007, seniors with incomes of $80,000 or more would pay more than the standard 25 percent of the premium cost for coverage of doctors' visits -- up to 80 percent for those with incomes above $200,000.
  • In 2010, Medicare would test competition between private health plans and the government.
  • Medicare would be barred from negotiating lower drug prices for seniors. That would be left to private insurers.
  • Changes would speed generic drugs to market by limiting the ability of pharmaceutical companies to block cheaper equivalents.
  • About $25 billion would be spent to increase payments to rural hospitals and doctors. They traditionally get less than urban medical providers.
  • Employers who provided drug benefits to retirees would get tax subsidies as incentives to continue coverage.

Source: Karl Gelles, "How Medicare would change," USA Today, November 24, 2003.


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