News in brief - May 8, 2000

Political fight over Medicare prescription drugs continues

Washington -- Sparring over how to add outpatient prescription drug coverage to Medicare has heated up, with the Clinton administration criticizing the Republicans' outline of a proposal "as a Swiss cheese plan with more holes than substance."

"While it's good to hear the Republicans starting to talk about prescription drugs, they need to move from just the talk to walking the walk," said Gene Sperling, a Clinton economic adviser.

In mid-April, GOP leaders unveiled their vision of a Medicare prescription drug benefit, which relies on the private sector to develop drug coverage for beneficiaries. They anticipate that, faced with a pool of about 40 million potential purchasers, private plans would design several packages for seniors with lower rates.

Low-income seniors would get federal assistance, including full reimbursement for premiums, to help pay for the coverage. The government also would share the risk of insuring those with the highest drug costs. That would encourage insurers to cover the sickest seniors and lower premiums for all beneficiaries, the GOP maintains. It also calls for a cap above which Medicare would pay 100% of beneficiaries' drug costs. None of the details of the GOP plan had been disclosed at press time.

The GOP plan to use $40 billion over five years for drug coverage and other reforms is not enough, said Health and Human Services Secretary Donna Shalala, PhD.

Washington -- Medicare's future got a little brighter last month after the government announced that it had erred in its estimate of when the program would go bankrupt. The program's trustees had previously projected that the trust fund financing Medicare hospital services would run out of money in 2023. The new estimate is 2025.

The difference was caused by an error in the computation of the fund's future interest earnings. The fund is financed primarily by payroll taxes. Interest for 2000 was underestimated by about $2.1 billion, according to Health Care Financing Administration Chief Actuary Richard Foster. The underestimates of interest income in the government's projections grew each year, eventually reaching about $20 billion annually.

Washington -- Medicare is sponsoring a new pilot program aimed at making annual flu shots almost automatic in U.S. nursing homes.

Under the program, a permanent order will be entered into nursing home residents' medical charts to ensure that they get a personal reminder each fall when it is time for a flu shot. Residents could receive the shots from on-site health care professionals without a new doctor's order each year. The project also will encourage pneumonia immunization, which typically lasts a lifetime.

"We cannot rely solely on patient or doctor memory to ensure the delivery of preventive services," said Nancy-Ann DeParle, administrator of the Health Care Financing Administration. "We need to find ways to build prevention into routine medical care. We believe the standing orders project will do this."

Between 20,000 and 40,000 U.S. deaths are attributed to flu and pneumonia annually. More than 90% occur in people 65 and older.

Nearly two-thirds of Americans age 65 and older get flu shots, covered under Medicare since 1993. A government education effort encourages flu shots and pneumonia vaccinations through the use of public service announcements, posters and general mailings. But a Rand study conducted for HCFA concluded that the remaining 37% of seniors would require new approaches, such as standing orders.

The pilot project, a cooperative venture by HCFA and the Centers for Disease Control and Prevention, will be implemented in time for the 2000 fall flu season in the District of Columbia, Florida, Hawaii, Idaho, Kentucky, Massachusetts, Minnesota, Montana, New Mexico and Washington. Peer review organizations, HCFA's contractors for quality assurance, will handle the permanent orders. Alaska, Mississippi and Oregon are also conducting standing orders projects outside of the HCFA demonstration.