NCPA - National Center for Policy Analysis

Medicare Drug Benefit will Hurt Seniors

July 22, 2003

Millions of seniors could lose their private employer-based prescription drug coverage under new Medicare legislation that is being proposed by the House and the Senate, say analysts from the Heritage Foundation

Nearly one-third of Medicare-eligible retirees receive some form of health insurance through their former employer and another third purchase prescription drug coverage through supplemental Medigap policies or individual insurance. However, the proposed Medicare legislation includes a universal drug benefit for all seniors regardless of their current coverage.

  • The Senate bill will cost taxpayers nearly $400 billion, but millions of seniors would end up paying more out-of-pocket for their prescription drugs.
  • The Congressional Budget Office (CBO) estimates that 37 percent of Medicare-eligible seniors stand to lose their private drug coverage if the Senate bill is signed into law.
  • Under Senate legislation, the average Medicare beneficiary would pay about $1,678 in out-of-pocket costs for prescription drugs in 2006, an increase of nearly 60 percent over their existing drug coverage.

Congress needs to replace a costly universal drug benefit that many seniors don't even need with legislation that will give seniors a choice between traditional Medicare as it is today and private plans that offer comprehensive benefits, including full prescription drug coverage.

Source: Lanhee J. Chen, "How the Senate Medicare Drug Bill Would Raise Senior Citizens' Out-of-Pocket Drug Costs," WebMemo No. 312, July 15, 2003; Edmund F. Haislmaier, "How Congress's Medicare Drug Provisions Would Reduce Seniors' Existing Private Coverage," Executive Summary No. 668, July 17, 2003, Heritage Foundation.


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