New EBRI Research: As Medicare Drug Discount Cards Debut, Questions Remain About 2006 Insurance Program

6/15/2004

From: Jim Jaffe of the Employee Benefit Research Institute, 202-775-6353; jaffe@ebri.org

WASHINGTON, June 15 -- The enactment of a Medicare drug benefit late last year raised a series of questions that remain unanswered about how the drug insurance plan will function when it begins in 2006, according to a new analysis by the Employee Benefit Research Institute. The first phase of the program, which offers seniors the option of purchasing drug discount cards, begins this month. A more complex and comprehensive program, which will allow the purchase of insurance to help pay pharmaceutical costs, will start in 2006.

The insurance program relies on a product that doesn't exist yet and will be defined largely by the Centers for Medicare & Medicaid Services, within the U.S. Department of Health and Human Services. Interested seniors are promised a plan that will allow them to buy drug insurance for a monthly premium in the $40 range. But precisely which drugs will be offered by such health plans remains a key unanswered question. Another is whether the states, which are relieved of much of their current responsibility to provide drugs for Medicaid beneficiaries and lose federal reimbursement for those costs will be winners or losers as a result of these changes.

The EBRI report is based on presentations by various experts at the National Medicare Prescription Drug Congress held in Washington earlier this year. The report, "Medicare Prescription Drugs: Making the New Program Work," is published in the June EBRI Issue Brief.

"The excitement about this new program is matched by confusion about specifics," said EBRI President and CEO Dallas Salisbury. "This is a complicated program that has yet to be fully established. It remains to be seen how it will work in practice and whether seniors ultimately will consider this to be a positive change."

President Bush signed the new program into law in December 2003. All Medicare beneficiaries currently have the right to select a drug discount card. Medicare beneficiaries who participate in the Medicare Part B plan will be able to buy drug coverage (known as Part D) at the start of 2006.