Six Questions About The New Medicare Bill

Probably not. Republicans say the bill gives private insurers financial incentives to negotiate lower prices with drug companies. The bill also has a number of regulatory provisions that help cheaper generic drugs enter the market more quickly. But two of the most powerful weapons that could lower drug costs, which the pharmaceutical industry fought, aren't in the bill. The measure prohibits Medicare from using its immense bargaining power to reduce prices. And it maintains the ban on importing cheaper drugs from abroad. Drugs could be allowed in from Canada, but only if the Department of Health and Human Services certifies their safety, which so far it has refused to do. As a result, critics say, you can expect drug prices to go up. According to the Consumers Union, a senior who spent $2,318 a year for drugs before Medicare reform could end up paying $2,911 under the new plan by 2007.

5 Will seniors get new discounts on drugs?

Perhaps. Beginning in 2004, senior citizens will be able to buy a Medicare-subsidized prescription-drug discount card for about $30 a year. Although the Department of Health and Human Services estimates that the card will save the elderly perhaps as much as 25% when they buy prescription drugs, the General Accounting Office maintains that the savings will probably be closer to 10%. Furthermore, outside analysts believe that seniors will be able to save just as much by shopping around on their own rather than locking themselves in to a drug card.

6 Does the program benefit the rich or the poor?

It depends on whom you believe. Democrats like Senator Edward Kennedy say about 6 million of the poorest and sickest elderly receive better drug benefits under Medicaid, the state-administered federal program for the poor. Under the new Medicare plan, an elderly couple earning less than $16,362 will copay only $1 to $3 per prescription, and Kennedy has argued that even such a modest amount can be a burden. Ten states currently exempt their poorest seniors from paying for drugs at all. According to a report released by Kennedy's staff, these 6 million beneficiaries "will be worse off. Their out-of-pocket expenses will be higher, and their access to needed drugs will be reduced."

Meanwhile, the bill establishes a program to allow workers 64 and younger who buy insurance with high deductibles to shelter income from taxes by putting money in special savings accounts. Earnings can be withdrawn tax free as long as the money is used for health care. Republicans believe the accounts will help workers buy plans that better suit their individual needs and accumulate tax-free money to pay for health care in retirement. Democrats argue that the program is a boon to the wealthy who can afford to put money aside. --By Douglas Waller