Medicare drug card: Looking beyond a discount

A Medicare discount card provides some immediate relief for a prescription payment problem that requires solutions designed for the long run.

Editorial. Aug. 6, 2001.

The senior citizen discount is a pleasant perk of age. President Bush wants to apply it to an unpleasant reality of Medicare -- how to pay for often costly outpatient prescription drugs. Bush recently announced the plan, intended as short-term relief, while pledging his broad support for an overall Medicare restructuring that included a drug benefit. But by singling out prescription drug costs, he underscored what a hot-button issue this is among beneficiaries. The discount plan was praised by the AMA as an effort to "bring tangible improvements to seniors quickly" by giving "Medicare patients the market clout that they deserve." Under the discount plan, beneficiaries will enroll in one of five purchasing clubs operated by pharmacy benefit management companies. The resulting combined purchasing power will be employed to obtain the discounts, anticipated to be 15% or more, starting early next year and at no significant cost to the government. The discount card plan is well worth a try. Nevertheless, these discount clubs won't deflate the steadily growing pressure to add Medicare outpatient prescription drug coverage. The AMA has advocated that Congress address the issue of a pharmaceutical benefit as a part of broad Medicare restructuring designed to ensure the solvency of the entire program -- a concept echoed by Bush. But last year the AMA also recognized that lawmakers might take up the drug benefit separately, and the Association presented specific guidelines by which to evaluate such a proposal. First and foremost, this new part of the Medicare program should be fully funded. Problems with Medicare's financial future already are well known. A new commitment for many billions of dollars in prescription drugs can't responsibly be added until the money is found. Once funding is in place, specific accounting of where it goes will be required so that spending growth in the drug program doesn't get confused with other elements of Medicare. Such steps are fundamental for sound financial stewardship, and they also reflect a legitimate physician concern. Doctors have every right to be suspicious that if the drug benefit is simply folded into Medicare Part B, their already low pay will be cut to subsidize lawmakers' good intentions. Another element of a prudent financial approach is to target the program to those recipients who really need it -- those with low incomes or who are facing catastrophic expenses. Many Medicare beneficiaries -- more than half, according to 1996 data -- already have drug coverage under either private- or public-sector plans. Too broad a drug benefit would shift much of that liability directly onto Medicare. While 43% of beneficiaries in that study paid more than $500 for medication, only 22% paid more than $1,000. And just 7% paid more than $2,000. Among other AMA suggestions are to implement a deductible and co-pay structure to encourage responsible use of the benefit, and to ensure that the benefit is equal across geographic regions. President Bush's discount card plan is simple, comes at little cost to taxpayers and is offered as an interim step. The reality of a comprehensive Medicare prescription benefit is exactly the opposite on each of those counts. Lawmakers, who are expected to debate the matter in earnest later this year, would do well to take the AMA's suggestions into account. Back to top