A federal court decision this week means Medicare can move ahead with plans to offer beneficiaries a card that officials say will yield discounts of 10 percent to 25 percent on prescription drugs. But many questions remain. Chief among them:
• Will the cards be the first or last step on the road to a prescription drug benefit for Medicare beneficiaries?
• Will the card provide a meaningful benefit for Medicare beneficiaries?
• What is the role of private discount cards?
Trying to calm concerns that the administration will never go beyond its discount card proposal, Thomas Scully, the Medicare administrator, said: "We believe a drug discount plan is a first step to provide needed help to seniors - but not a substitute for a drug benefit."
John Rother, policy director for AARP, which represents Americans over age 50, agreed and said the discount card plan could serve as the foundation for crafting a comprehensive Medicare drug benefit. But Rother also expressed concern about the impact of the shrinking federal budget surplus on discussions in Congress next year over the size and cost of any drug benefit.
Congress this year tentatively set aside $300 billion for a drug benefit, which has not been enacted into law. But the slumping economy and the war on terrorism have left many experts wondering if federal lawmakers will be able to come up with the money for a benefit that would cover the 39 million Medicare participants.
As they work on the budget Bush will present next year, White House officials have made clear that paying for the war on terrorism will come first. "After that, in my judgment, everything is secondary," said Budget Director Mitch Daniels.
Rep. Nancy L. Johnson, R-6th District, who chairs a key House committee dealing with health care issues, said her top priority next year will be devising a prescription drug benefit. But she also said it should be part of a broader overhaul of Medicare, an issue on which members of Congress remain sharply divided.
Experts also are divided on how much of a break the Bush discount card actually will provide. Little independent research has been done on the question, leaving policy makers to rely on studies by people who have taken a position.
Rep. Henry A. Waxman, D-Calif., a Medicare expert, has issued a study that concludes the Bush discount card would provide a discount of less than 2 percent compared to other prices available to seniors.
"It's cruel to promise seniors that help is on the way and then not deliver the assistance," Waxman said. "If the Bush plan operates like current prescription drug cards, it will never make prescription drugs more affordable to most seniors."
Others see the cards differently. LaVarne Burton, president of the Pharmaceutical Care Management Association, said an analysis conducted for his organization showed discount card programs produce an average savings of 10 percent to 25 percent on brand-name drugs and 40 percent to 60 percent on generic drugs.
"These savings are very real for the 27 percent of seniors who must bear the full cost of their own prescriptions without assistance from health insurance or other third parties," said Burton, whose members represent organizations that sponsor discount cards.
Many experts said they are concerned discounts ultimately come out of the profits of small, locally owned drugstores, which range only from 3 percent to 5 percent. "I have little doubt [Medicare] has good intentions in trying to find ways to help our senior citizens reduce the costs of their prescription drugs," said Rep. Donald Manzullo, R-Ill., chairman of the House Small Business Committee. "However, that assistance should not come at the expense of America's small businesses."
In documents prepared to support Bush's plan, Medicare officials say: "Drug discount programs are increasingly available in the private market and consumers are finding them attractive when they cannot afford a drug benefit."
Recent evidence of that came from the announcements of two major international manufacturers - Novartis AG and GlaxoSmithKline - that they are starting up discount cards for drugs they sell in the United States. In Connecticut, Citizens Energy Corp. and ProHealth Physicians have announced they will offer discount cards to state residents starting next year.
Medicare officials estimate 10 large private organizations now offer discount cards to at least 2 million people each. There are also dozens of smaller plans, some of which have run into legal problems because they charged a fee but, in some cases, delivered no benefits.
In Iowa, for example, Attorney General Tom Miller took action to close down one small card sponsor and continues to urge consumers to be cautious because "some health discount cards promise more than they can deliver [and] some are outright frauds."
In the wake of U.S. District Judge Paul L. Friedman's decision Wednesday to lift an injunction he granted in September in the Medicare case, Craig Fuller, president of the National Association of Chain Drug Stores, said: "NACDS does not believe a myriad of discount cards are the right answer to the lack of prescription drug coverage for many of America's seniors." The association filed the suit seeking to stop the Bush plan, arguing Medicare did not clearly outline who would subsidize the lower prices and questioning whether federal officials have the authority to promote the cards without Congress' approval.
Medicare officials said Thursday the lawsuit will delay the government program past its original Jan. 1 startup date by at least three months.
Under the federal program, sponsors would have to comply with certain Medicare rules to participate. Beneficiaries would pay a one-time maximum $25 fee to cover enrollment costs. They could hold only one card at a time but could switch cards at specified intervals.
"We are committed to provide discounts that are available now to most other Americans to millions of seniors as soon as possible," said Scully, the Medicare chief. •
