Medicare Prescription Drug Coverage: Two Plans, One With Choices
November 7, 2000
Two-thirds of seniors enrolled in Medicare have prescription drug coverage through private insurers (called Medigap) or other public programs. One-third do not, and therefore pay the whole cost of nonhospital prescriptions out of pocket.
The lack of Medicare drug coverage wastes resources and endangers patient health, say experts. Another gap in coverage is the lack of protection against catastrophic costs.
The two major presidential candidates have proposed dramatically different solutions to these problems.
- Vice President Gore proposes to add a third insurance program for seniors covering prescription drugs; as a result, most seniors would have three plans with three premiums (Medicare Part B, Medigap and prescription drug coverage).
- Governor Bush, following the recommendation of the National Bipartisan Commission on the Future of Medicare, proposes allowing seniors to enroll in the same kind of comprehensive health plans available to the non-elderly, so seniors would have one plan with one premium.
A study by Milliman & Robertson for the NCPA found that for the average cost of Medicare and Medigap coverage, seniors could have comprehensive health insurance, including coverage for prescription drugs.
Thus the Bush proposal could theoretically fill gaps in coverage without increasing spending. By contrast, the Gore plan would add to current inefficiencies and require more spending.
Under Bush's plan, seniors would be protected from catastrophic expenses -- for drugs or hospital care; out-of-pocket drug costs would be limited. Under Gore's proposal, however, government would pay half the cost of drugs from the first dollar for a middle-income patient. After $2,000 of costs, the patient would pay the next $3,000 and the government would pay all drug costs above $5,000.
Price controls and limited choice are more likely under the Gore plan, while Bush would rely more on private sector competition and integrated health care delivery.
Source: Robert Goldberg (NCPA senior fellow), "Comparing Prescription Drug Proposals: Bush v. Gore," NCPA Policy Report No. 239, November 2000, National Center for Policy Analysis.
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