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Ed-Insider December 3, 2003
Special Edition


Education Insider

Special Edition

A weekly review of progress on the Quality Public Schools Agenda and other legislation that impacts our students, classrooms, and public education.

December 3, 2003

The Medicare/Prescription Drug Bill - A Summing Up

The NEA-opposed Medicare/prescription drug bill will continue to play out in the months ahead and be an issue in the '04 election.

The House passed the bill, 220-215, after holding the vote open for an unprecedented two hours and 51 minutes - the longest roll call in its history - while the Leadership worked to convince enough Members to support the bill. The Senate, after more than three days of heated debate, passed the bill 54-44.

NEA believes the final Medicare/prescription drug agreement overall reflects poor public policy that will exacerbate, rather than fix, the current health care crisis.

  • Drug Costs Will Remain High

Medicare is prohibited from negotiating drug prices with the industry, so that the market power of more than 40 million beneficiaries cannot be used to lower their prescription drug costs.

The re-importation of less costly drugs from Canada and other countries is blocked.

Health Savings Accounts (HSAs) established for qualified medical expenses simply shift costs to the consumer, and do little to contain escalating drug costs.

  • A Glaring Gap in Coverage

    The benefit applies to drug expenditures up to $2,250. At that point, the coverage stops until beneficiaries have paid out-of-pocket the next $3,600.

  • Retiree Health Plans Undermined

Private employers receive favorable tax treatment for health care expenditures at the expense of public sector employers who are denied favorable treatment for contributions to retiree health care coverage. As a result, public sector employers facing budget constraints may be pressured to drop retiree prescription drug coverage.

The agreement drops Sec. 631 that would have clarified the coordination of employer-provided retiree medical benefits with Medicare (or a state plan) does not violate the Age Discrimination in Employment Act. Fewer pre-Medicare employees will be able to retire with the same employer-provided medical benefits they receive as active employees, and many may lose their employer-provided retiree medical benefits entirely.

  • The Move to Privatize Medicare
    In 2010, beneficiaries in "selected communities" will be given vouchers to purchase HMO/PPO or traditional Medicare coverage, in a test to determine whether private insurance plans are a viable alternative. The "demonstration plan," however, does not provide fair competition.

    HMOs and PPOs will be given additional money to provide benefits and lower the cost of their premiums. Medicare, however, will not get these subsidies.

    Medicare must accept all who wish to join. HMOs and PPOs, however, can choose not to market to the oldest and sickest, because they are a major expense, leaving Medicare with the costliest patients and driving up the cost of Medicare premiums.


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