April 24,2001

Grassley: New Prescription Drug Benefit Must Complement Existing Coverage

WASHINGTON – Congress must take care to craft a Medicare prescription drug benefit thatwon’t hurt the existing prescription drug coverage that millions of older Americans already enjoy,Sen. Chuck Grassley, chairman of the Committee on Finance, said today.

“Millions of older Americans don’t have any prescription drug coverage, and they needhelp,” Grassley said. “But many people with Medicare already have prescription drug coverage thatthey want to keep. They’re worried that Congress will ruin a good thing for them. We have to makesure that doesn’t happen. This is a two-sided coin.”

Grassley’s comments came after a hearing at which witnesses testified that more Medicarebeneficiaries have access to prescription drug coverage than popular perception holds. Medicareitself does not provide a complete prescription drug benefit. However, 73 percent of Medicarebeneficiaries had prescription drug coverage for some portion of the year in 1998, witnesses said.While some coverage may be limited, other coverage is much more comprehensive.

Grassley said he has heard from Iowans in both camps. While some need additionalassistance for prescription drug costs, many others are terrified at the prospect of losing their currentcoverage as a result of a new federally-mandated benefit, he said.

The most common source of prescription drug coverage for the Medicare population isthrough employer-sponsored health plans for retirees. Of all Medicare beneficiaries that have drugcoverage, close to 45 percent have it through employer-sponsored retiree plans, Grassley said.Through these retiree plans, beneficiaries pay as little as $5 for generic drugs, $10 to $14 forbrand-name pharmaceuticals, experience modest deductibles, and generally have no limit on annualdrug expenditures. Given these appealing benefits, Grassley said, it’s easy to understand why olderAmericans want to maintain this kind of coverage, and why it’s important for Congress to considerthese facts as it crafts Medicare legislation this year.

In addition to retiree health plan options, nearly 6 million Medicare beneficiaries receiveprescription drug benefits through Medicare+Choice plans, Grassley said. Under these plans,beneficiaries enjoy the benefits of a coordinated approach to wellness and treatment. Benefits suchas disease management and home delivery are just a few of the additional pharmaceutical benefitsavailable through a managed care approach. Still other beneficiaries access prescription drugbenefits through “Medigap” plans, Medicaid programs, and State Pharmacy Assistance Programs.

Expert witnesses made clear that a prescription drug benefit guided by the federalgovernment will impact current programs and that Congress should proceed carefully andthoughtfully to ensure any new federal benefit is coordinated with existing coverage options.

“Prescription drug coverage is a precious commodity,” Grassley said. “If we’re giving it, wehave to be sure we’re not inadvertently taking it away. The more a new drug benefit can complementcurrent coverage, and not replace it, the more we can assure broader access to prescription drugs, andthat those older Americans with drug benefits can keep the coverage they really like.”