Drug benefit urged in health reform

Big-time health reform may be high on the Democratic agenda, but advocates for expansions of Medicare’s prescription-drug benefit are scaling back their expectations.

The Holy Grail for liberals and seniors’ advocates since the creation of the Medicare Part D drug benefit in 2003 has been closing off a gap in coverage, called the “doughnut hole,” during which enrollees are on the hook for 100 percent of the costs of their medicines even while they continue to pay monthly premiums.

But with President Obama and his allies in Congress poised to spend at least $634 billion — and possibly more than $1 trillion — the costly priority of eliminating that doughnut hole may be out of reach.

Obama’s budget outline, released last month, is silent on the doughnut hole and other drug benefit reforms sought by congressional Democrats and advocacy groups, such as granting the federal government the authority to negotiate drug prices under Medicare and offering the generous low-income subsidy for Part D to more people.

“There is nothing in the budget or anything from the administration that talks about fixing Part D,” said Vikki Gottlich, a senior policy attorney at the Center for Medicare Advocacy.

What’s more, the White House Office of Management and Budget has indicated that the forthcoming full budget will not spell out details on what the Obama administration wants to see on Part D. During his Senate career and on the presidential campaign trail, Obama supported these changes to the drug benefit, as do most congressional Democrats.

All of this has some wondering where Medicare fits into the larger debate on health reform. “We think it should fit in. I don’t know why it’s not in the president’s budget,” said Paul Precht, the director of policy for the Medicare Rights Center.

Another Medicare advocate, however, downplayed the administration’s lack of focus on the Medicare drug benefit. “

To be honest, I didn’t think there was anything noteworthy about it,” said Maria Freese, the director of government relations and policy at the National Committee to Preserve Social Security and Medicare. “It was supposed to be [the] broad brush of the president’s priorities.

“We would still hope that there would be some changes to the doughnut hole,” Freese said. But, she acknowledged, completely eliminating it might be not be feasible this year.

One of the main roadblocks is the cost. The Congressional Budget Office has estimated that getting rid of the coverage gap would cost $134 billion over 10 years. That amount of new spending would eat up a considerable portion of Obama’s $634 billion “down payment” for health reform.

Under the standard benefit required by the Medicare prescription drug law ushered in by President George W. Bush, Part D beneficiaries are responsible for the full cost of medicines when their expenses tally $2,250 in a year.

At the beginning of the year, beneficiaries have to meet a $250 deductible, then cover 25 percent of the costs between $250 and $2,250, then they reach the gap. When the total surpasses $5,100, beneficiaries pay only 5 percent. Though the private health insurance companies that administer Part D offer a variety of benefit plans, most include some gap in coverage.

Lawmakers and staffs working on health reform are concentrating their efforts on the big package, which may be detracting attention from other priorities.

“A lot of the initial discussions we’ve had with folks on the Hill on health reform, their attention is so focused on covering the uninsured,” a population that does not include Medicare beneficiaries, Precht said.

These groups, however, are not conceding defeat. “The advocacy community is stilling talking about improvements to Part D,” Gottlich said.

Instead, they are concentrating their efforts on changes they say can improve the program for beneficiaries and expose fewer of them to the doughnut hole every year, even if they do not eliminate the coverage gap itself.

“It’s hugely expensive to get rid of it,” Precht said. “But there are ways of starting to chip away at it.”

Groups such as these seeking to expand Part D have some heavyweight legislative champions.

Senate Majority Whip Dick Durbin (D-Ill.) and Reps. Marion Berry (D-Ark.) and Jan Schakowsky (D-Ill.) have a bill that would create a government-run drug plan that would operate alongside the private Part D plans. A bipartisan group of senators led by Sens. Bill Nelson (D-Fla.) and Susan Collins (R-Maine) introduced legislation that would allow bulk negotiations of drug prices, then divert any savings to reducing the coverage gap.

Another key change, Medicare beneficiary advocates say, would be to expand the low-income subsidy for Part D, under which enrollees have negligible out-of-pocket costs, by raising the income and assets tests that limit eligibility for the subsidy.

“That might be one area where [to] get improvements to Part D,” Gottlich said.

These groups can claim the support of lawmakers at the center of the health reform debate, such as Rep. Pete Stark (D-Calif.), who chairs the Health subcommittee under the Ways and Means Committee.

The House, for one, has passed several significant updates to the Medicare drug benefit. They have not gained much traction in the upper chamber, however. “I don’t think those ideas have been tested in the Senate,” Freese said.

More broadly, Medicare advocacy groups want Congress to understand that the program should not be forgotten during health reform.

“I think it’s important to tell the folks with Medicare that we are addressing problems with Medicare coverage, particularly for the moderate- and low-income,” Precht said.

Obama’s budget would pay for a large portion of his health reform plan with money currently in the Medicare program, highlighted by the $175 billion he would cut from private Medicare Advantage plans.

Though all of these organizations support the Medicare Advantage cuts, they are intent that money leaving Medicare not be used to provide coverage to other people.

“To us, that means they need to pump at least some of that money — a significant amount of that money — back into the Medicare program,” Freese said. Medicare must offer benefits at least as good as what people would be able to receive under a reformed healthcare system, she said.