New Medicare Bill summary of facts

Posted on Sun, Nov. 16, 2003
Medicare facts
By James Kuhnhenn - Knight Ridder Newspapers
The main aspects of the bill:


-The standard drug benefit would begin in 2006. Seniors would pay a $275 deductible and a $35 monthly premium. The program would cover 75 percent of the costs of prescriptions up to a total of $2,200 in drug expenses. Ninety-five percent of out-of-pocket expenses greater than $3,600 would be covered. Low income seniors below 135 percent of poverty would get full coverage.

-Generic drugs would have an easier time making their way to the market. The bill tightens up loopholes that permit drug companies to extend patents beyond their expirations. It also would permit purchases of drugs from Canada, but only if they are certified as safe by the federal government.

-For the first time, overall Medicare premiums would be based on income. Seniors with incomes above $80,000 would pay higher premiums under a sliding scale. A study by Congressional Research Service predicted that about 2 million seniors would pay higher premiums under the plan.

-Employers who already provide prescription drug coverage to seniors though employer plans would receive federal subsidies equal to about two thirds of Medicare's costs. By some estimates, that subsidy could amount to nearly $100 billion over 10 years. Congressional aides said the money would encourage employers to not drop retirees from their plans, though they estimated about 2.6 million could still lose their current coverage and be forced to take Medicare.

-Starting in 2010, Medicare would have to compete with private plans in six undetermined metropolitan areas as part of a pilot project. The plan, one of the most controversial in the bill, is designed to test whether competition will help drive down the costs of Medicare. Democrats believe it will drive healthy seniors into private plans, leave sicker and older seniors in traditional Medicare and drive up premiums. The bill places a 5 percent annual cap on such increases.

-Rural hospitals would get a significant boost in the bill under provisions that set aside about $25 billion to rural regions.

-Seniors will be able to put money into health savings accounts, similar to an IRA but meant only to defray health costs.