June 30, 2003
By Derek Hunter
The Senate is poised to
add a prescription drug benefit to Medicare, the government program
that covers health care costs for 40 million elderly and disabled
While this is welcome
news to some seniors, there is one thing the 78 percent of seniors
who already have prescription drug coverage should know: If the
Prescription Drug and Medicare Improvement Act of 2003 becomes law,
there will be no reason for their former employers to continue to
offer prescription drug coverage.
The Wall Street Journal
noted this in a June 11 editorial. "Employers who still pay for
retiree drug coverage…will in turn be only too happy to pass
that burden onto taxpayers." The Journal referenced a General
Motors Corp. internal analysis showing GM would save $1.4 billion
by dropping retiree coverage.
Why would GM, or any
other company, invest in prescription drugs if it doesn't have to?
Companies will be only too happy to hand over the millions of
seniors they currently cover to the government. That's why the UAW
and the AFL-CIO issued statements opposing this bill.
In fact, the
Congressional Budget Office estimated that 37 percent of seniors
who are presently covered by their employer would lose their
coverage. That's 4.4 million seniors.
probably won't be affected. But for sick ones, it could become a
matter of life and death.
Consider the case of a
woman from Michigan. For years she has suffered from
arteriosclerosis (which took her right leg), osteoarthritis, high
cholesterol, high blood pressure, neuropathy and diabetes. She
takes 13 different medications a day. Her prescription drugs cost
roughly $30,000 a year. Her husband worked 30 years in a GM factory
and was a UAW member. They have had private insurance for years and
are happy with it. For prescriptions, they are required to pay only
the $5 co-payment per prescription. They have no monthly premiums
The woman's medications
cost $780 a year out-of-pocket. The couple live on the husband's
pension and their Social Security, so their current situation is
good, but not perfect. However, if the current Senate proposal were
to become law and GM were to drop retiree coverage, they would find
themselves in a world of trouble.
While the Senate plan
offers a generous benefit to seniors earning below 160 percent of
the Federal Poverty Level, those making above that amount ($14,368
for an individual and $19,392 per couple), if dropped from their
current plan, would be put in a plan that could dramatically reduce
Under the Senate plan
the Michigan couple's prescription drug costs would jump from $780
a year to $6,119, plus the $420 premium, a total increase of more
than 800 percent.
Of course, many seniors
take fewer and less expensive medications than this woman. But will
they always? Even seniors without health problems could face a
significant increase in the out-of-pocket expenses.
Under the proposed
Senate plan, someone making more than 160 percent of the poverty
level and needing $10,000 in prescription drugs would have to pay
$4,119 plus the premiums. Considering the cost of prescription
drugs and the speed at which new (more expensive) drugs are being
developed, $10,000 isn't that much money. Someone needing only
$5,000 in prescriptions would have to pay $2,888 plus
Isn't that more than your current plan's co-pays cost? Are you
willing to give up that plan? Odds are you won't be consulted when
decision time comes around; at least 4.4 million seniors will
simply be dropped into the new "safety net" that, for most, won't
be very safe at all.
What Congress should do
is design a benefit only for those who need it. Harming those who
already have coverage is not the way to help those who
Still don't think this
is real? Still don't believe this problem exists? Think the couple
mentioned above is simply an extreme case created to worry seniors
unnecessarily? Well, they are real.
They are, in fact, my
Could they also be your
parents, or grandparents, or you someday?
Originally appeared in the Detroit Free Press
There is one thing the 78 percent of seniors who already have prescription drug coverage should know: If the Prescription Drug and Medicare Improvement Act of 2003 becomes law, there will be no reason for their former employers to continue to offer prescription drug coverage.
Read More >>
Heritage's daily Morning Bell e-mail keeps you updated on the ongoing policy battles in Washington and around the country.
The subscription is free and delivers you the latest conservative policy perspectives on the news each weekday--straight from Heritage experts.
The Morning Bell is your daily wake-up call offering a fresh, conservative analysis of the news.
More than 450,000 Americans rely on Heritage's Morning Bell to stay up to date on the policy battles that affect them.
Rush Limbaugh says "The Heritage Foundation's Morning Bell is just terrific!"
Rep. Peter Roskam (R-IL) says it's "a great way to start the day for any conservative who wants to get America back on track."
Sign up to start your free subscription today!
The Heritage Foundation is the nation’s most broadly supported public policy research institute, with hundreds of thousands of individual, foundation and corporate donors. Heritage, founded in February 1973, has a staff of 275 and an annual expense budget of $82.4 million.
Our mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. Read More
© 2015, The Heritage Foundation Conservative policy research since 1973