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Welcome to "Ask the White House" -- an online interactive forum where you can submit questions to Administration officials and friends of the White House. Visit the "Ask the White House" archives to read other discussions with White House officials.

Doug Badger
Senior Health Policy Advisor
February 4, 2004

Doug Badger
Hello everyone. Sorry about the technical problems we had the other day. Glad we got to reschedule and I'm looking forward to your questions.

Wayne, from Albany, OR writes:
Why does the Administration continue to oppose reimportation of prescription drugs from Canada when FDA health officials have said that they have no evidence Canadian drugs pose any danger?

Doug Badger
Thanks Wayne,

FDA health officials are gravely concerned about the health risks of importing drugs and, for that reason, oppose changing the law to permit this practice.

Last summer, FDA and the U.S. Customs and Border Protection conducted a series of spot examinations of mail shipments of foreign drugs to U.S. consumers.

These “blitz” examinations found that these shipments often contain dangerous unapproved or counterfeit drugs that pose potentially serious safety problems.

Approximately 100 parcels per day (many of which contained multiple drug products) were intercepted over 3-day periods at mail operations in New York, Miami, San Francisco and Carson, CA. Of the 1,153 imported drug products examined, the overwhelming majority, 1,019 (88%), contained unapproved drugs including:

• Drugs different from those approved by the FDA. The inspectors found shipments of a version of Warfarin – a drug used to prevent blood clotting – that has not been approved by the FDA. Because it can cause serious, life-threatening bleeding if not administered appropriately, it requires careful monitoring by a health care provider of a patient’s blood count during treatment.

• Drugs that FDA has withdrawn from the market for safety reasons. For example, an unapproved drug called Buscapina, appears to be the drug Dipyrone that was removed from the U.S. market in 1977 because of several reports of the development of severe blood disorders following the drug’s administration, some of which resulted in patient deaths.

• Drugs with inadequate labeling. Most of the drugs examined during this operation arrived without adequate labeling or instructions for proper, safe use. Some of the drug labeling was not in English and important information about matters such as proper dosage was missing.

• Drugs inappropriately packaged. In some cases, the drugs were packaged in baggies, tissue paper, or letter envelopes, and some arrived crushed or broken.

Commenting on the study, FDA Commissioner Dr. Mark McClellan said, “There is no evidence that unapproved imported drugs are becoming any safer or more reliable. Given FDA’s limited resources and authorities to detect and block potentially unsafe imports, we are concerned about any measures that would increase the flow of these unapproved drugs, or provide easier channels for them to enter the US.”

Richard, from Orono, ME writes:
Two questions: 1. Why cant Medicare negotiate with pharmaceutical companies for the best price for seniors prescription drugs? 2. Why cant seniors reimport prescription drugs from Canada?

Doug Badger
Hello Richard,

1. The Medicare bill that the President signed into law relies on private pharmacy benefit managers, using the purchasing power of millions of seniors, to negotiate the best prices for beneficiaries. Seniors will be able to choose the private plan that offers them the best value and the highest quality.

This is the same competitive model that delivers affordable prescription drug coverage to the nearly 200 million Americans who are enrolled in private health plans, including seniors who have retiree health benefits through their former employers.

This is also the model used to provide drug benefits to federal workers and Members of Congress. The government doesn’t interfere in setting drug prices or picking preferred lists of drugs for Members of Congress, and we believe that it is inappropriate for the government to interfere in these negotiations in the Medicare program.

The last thing we need is for the federal government to pick and choose which drugs Medicare will pay for.

Some people say that we need a different system for Medicare, one in which the government negotiates drug prices directly. They think it would save seniors money.

The nonpartisan Congressional Budget Office has examined this issue thoroughly and disagrees. In a recent letter to Senator Frist, CBO Director Doug Holtz-Eakin wrote: “CBO estimates that substantial savings will be obtained by the private plans and that the Secretary would not be able to negotiate prices that further reduce federal spending to a significant degree.”

2. The FDA, the federal agency responsible for assuring that the medicines you buy are safe and effective, cannot guarantee the safety of drugs imported from outside the U.S.

If you buy foreign medicine from an Internet site, from a storefront business that offers to order foreign medicines for you, or during visits outside the U.S., you are taking chances with your health.

Foreign dealers – who are not always pharmacists – can give you the wrong medicine, wrong strength or wrong directions. The medicine can be old, fake, or contain dangerous ingredients. The FDA cannot guarantee the safety of medicine bought from outside the U.S.

Norma, from IN writes:
Why are you giving so much money to the insurance and pharmaceutical companies instead of using the money directly for prescription drugs? Why not a one pay system? Is the Administration trying to privatize Medicare?

Doug Badger
The Medicare bill that the President signed into law last December invests in seniors – not drug companies. After years of talk and promises, seniors now have access to a comprehensive new health benefit: prescription drug coverage and a discount drug card to provide immediate savings.

The new drug benefit will use the previously untapped buying power of millions of seniors to keep drug prices affordable. Pharmacy benefit managers will negotiate on behalf of these seniors to get the best prices from manufacturers and pharmacies.

Experts who have looked into this – including the non-partisan Congressional Budget Office – have concluded that this will result in substantial savings to seniors and that allowing the government to interfere in these negotiations won’t make the medicines more affordable.

The President has strengthened and improved the Medicare program. It’s the same Medicare you’ve always counted on, only now with more benefits – prescription drug coverage, preventive health screenings, disease management, protection against high out-of-pocket costs, and more choices in the health care they receive.

Instead of privatizing Medicare, the bill gives beneficiaries the option to keep the Medicare coverage exactly the same.

Cynthia, from Oceanside, California writes:
My husband is a self-employed paint contractor. Our health ins. just increased for a family of 3 to over $700 a month. We cannot afford this monthly payment. I have shopped around to find more affordable ins. with some of the same benefits and the premiums are outragious. We have a young teen who is in sports at school, we cannot afford to be without ins. What are we to do? Is anything happening to reduce these premiums? Please send some infomation or at least some encouragment.

Sincerely, Cynthia Alardo

Doug Badger
Thanks for your question, Cynthia.

The President is working hard to make health care more affordable to families like yours. The Medicare bill that the President signed into law last December creates an exciting new product called a health savings account (HSA). This account lets you:

1) Buy an insurance policy with a high deductible (e.g., $2000 for family coverage. Policies like this generally offer lower premiums than more standard health insurance policies. Since your husband is self-employed, this premium is tax deductible.

2) Establish a health savings account. You can put the money you save on premiums and the money that you would ordinarily spend out of your own pocket for health care into this HSA. This money also is deductible from your taxes, whether or not you itemize other deductions (e.g., mortgage, charitable contributions, etc.). You can deposit up to the full amount of your insurance policy's deductible into this account every year. You can use money from this account to pay expenses below your deductible.

3) Save any money that remains in your account for future medical expenses. The money is tax free going in to your account, tax free when you take it out to pay doctor bills and other medical costs and money that you don't spend earns interest tax free.

HSAs may not be right for your family. Different families have different needs. But it gives you one more option to make your health care more affordable that you might want to look into.

Christina, from Madison, NJ writes:
How much money will I have to put into my Health Savings Account every year, and when will I have to use the money by, in order to keep my account active?

Doug Badger
Lots of people are asking about health savings accounts (HSAs), a new, more affordable health insurance product that became available this past January 1 as part of the Medicare bill that the President signed into law last December.

Here’s how HSAs work. Let’s say that your employer provides you with a policy that covers most of your routine medical expenses. That policy might cost about $6,000 per year for a typical family. Your employer will send $5,000 off to the insurance company and will deduct $1,000 from your paycheck over the course of the year.

With a new Health Savings Account, your employer will buy you a policy that covers major medical expenses – like a hospitalization, a pregnancy or an operation – but does not cover routine medical costs. A policy like this might require you to pay the first $2,000 in medical expenses every year.

The premium for this kind of coverage will be much less than for the policy that you now have. Instead of $6,000, the policy might cost only $4,000. So you and your employer will save money on your coverage. But what happens to these savings?

Instead of sending that money off to an insurance company, the money that you and your employer save can go into your Health Savings Account. That account is yours to keep. It doesn’t belong to the insurance company or your employer. It belongs to you. It’s there to help you pay for doctor visits, medicines and other routine health care needs that your new insurance policy won’t cover.

Since your policy will require you to pay for the first $2,000 of your annual medical expenses, you will use the account to pay for these services. Once you’ve spent that $2,000 in any year, your insurance coverage will pay for your additional medical bills.

Basically, your health savings account will pay for your routine health expenses – like doctor visits and prescriptions -- and your insurance will cover any medical bills above your deductible.

But what if you don’t spend that $2,000? In that case, the money remains in your account. It’s yours to keep. It does not expire at the end of the year. The interest you earn on that money is tax-free. The following year, you and your employer can put another $2,000 into the account.

You will not pay taxes on any money that you or your employer put into your Health Savings Account. So long as you use the account to pay for your family’s medical care, you will not pay taxes on any withdrawals. And interest that you earn on money that is in the account also is tax-free.

Your Health Savings Accounts is fully portable, just like a 401(k) retirement account. It belongs to you, not to your employer or to an insurance company. When you change jobs, you take your account with you. And if you have a period of time between jobs, you can use your account to pay your medical bills.

There are limits on how much you and your employer can put into your account in any year. Together you can deposit the full amount of your insurance policy’s deductible up to $2,600 for an individual or $5,150 for a family.

But there is no limit on how big your account can grow. The money you keep in the account will grow over the years tax-free. You can save it for future medical needs, including your medical needs after you retire, like long-term care costs. You can also use your account to pay for things that your insurance doesn’t cover, like contact lenses, over-the-counter medicines and braces for your children.

Health Savings Accounts aren’t for everybody. Many people are happy with the coverage they now have and want to keep it. But for millions of Americans who are struggling to keep up with rising health costs, HSAs might be the right prescription.

Betts499 writes:
How is it the older you get, the more you pay out on drugs? How do they expect the older to pay when they have very little to live on?

Doug Badger
This is why the President worked so hard to deliver on his promise to add prescription drug coverage to Medicare. As we grow older, our medical needs increase.

Prescription drugs are part of today’s medical system. They weren’t as important in 1965, when the Medicare program has created. Since then, investments by pharmaceutical companies in research and development have brought scores of new medicines to the market place that can keep us healthy, treat our diseases, and avoid major surgeries. Medicine has changed; Medicare had not.

The President pushed Congress to change Medicare so that it will cover the medicines that seniors and people with disabilities need.

Emily, from Nahunt, MA writes:
Why did President Bush say Tuesday that medical malpractice lawsuits were one of the major cost drivers in the delivery of health care when a recent Congressional Budget Office study found that malpractice costs account for less than 2 percent of health care spending?

Doug Badger
Hi Emily

Great question. Medical malpractice is driving up the cost of care for everyone and driving good doctors out of the medical profession.

While some academic studies have found that the cost of “defensive medicines” – the tests and procedures that your doctor in order to avoid lawsuits – are higher than 2 percent, this is still an awful lot of money.

We spent $1.6 trillion on health care in 2002. Two percent of that is around $32 billion per year. Those are pretty substantial savings.

The President believes that we’ve got to get rid of “junk lawsuits” and move to a system where victims of bad care are properly compensated.

Carol, from TX writes:
Why is this administration willing to allow a prescription drug plan that gives Americans no supplemental insurance provisions to meet gaps in the new plan? Why is this Administration not allowing the government to negotiate cheaper prices with pharmaceutical companies?

Doug Badger
Actually, the Medicare prescription drug bill that the President signed into law DOES permit beneficiaries to buy coverage that fills the gap. The law adds a new section to the Medicare law that states – in all capital letters, by the way – “PERMITTING SUPPLEMENTAL PRESCRIPTION DRUG COVERAGE.”

The bill goes on to say that the company from which you buy your Medicare-approved prescription drug coverage can also sell you coverage that improves the benefit.

As far as drug prices go, the bill relies on the pooled buying power of millions of seniors to negotiate discounts from manufacturers and pharmacists.

The non-partisan Congressional Budget Office has concluded that the combination of negotiated discounts and other cost management tools will result in substantial savings to seniors that will not be improved by having the government involved in these negotiations.

Obert, from Swannnanoa, NC writes:
Why is so much money going to HMOs and private health plans? How can Medicare compete with them under these conditions?

Doug Badger
Thanks for your question Obert,

The new money in the Medicare bill will be spent on seniors and people with disabilities that rely on the program for their health care needs. It will strengthen and improve Medicare, by giving people better benefits and more choices.

One of the choices that people will have will be to choose to get their coverage through Medicare-approved private health plans. Millions of seniors already belong to such plans, which provide Medicare benefits with less cost-sharing. These plans often provide extra benefits that the standard Medicare plan doesn’t cover, like prescription drugs.

The government has cut back on those payments in recent years, and beneficiaries have suffered the consequences. The new law would restore those payments to where they were BUT ONLY IF THE HEALTH PLAN USES ALL OF THIS INCREASE TO PROVIDE LOWER PREMIUMS AND BETTER BENEFITS TO SENIORS AND PEOPLE WITH DISABILITIES.

These payments to plans will be increased on March 1. Plans had until last Friday to tell us how they were going to use the extra money to help beneficiaries. We are still looking over these applications for the higher payments and deciding which to approve. But the New York Times this morning gave a sample of the kinds of improvements that beneficiaries will see, effective March 1:

• Aetna said it was lowering premiums and enhancing benefits, including drug coverage, for many Medicare recipients in New York, New Jersey, Pennsylvania and California.

• In Massachusetts, several plans said that they were reducing premiums.

• Independent Health is cutting its premiums by half – to $21 per month.

• Pacificare is eliminating its $25 monthly premium and reducing the copayment for a doctor’s office visit to $5, from $15.

If you’re interested in finding out whether such plans are available in your area, call 1-800-MEDICARE.

Lawrence, from Johnson City, NY writes:
I recently had to cancel my insurance for prescription medications because I could no longer afford it on my diminishing pension. Why would you feel that it is the best interest of your constituents to not allow us to buy the drugs we need from the cheapest source?

Doug Badger
The President is doing something for the millions of seniors like you who are struggling to pay for your medicines. The bill he signed into law in December will deliver on a long overdue promise that many have made but none – until now – have kept: to provide prescription drug coverage as part of the Medicare program.

You will see the results of this legislation beginning in June, when Medicare-approved prescription drug discount cards become available.

These cards will save you 10-25 percent off the retail price of most medicines. People whose incomes in 2003 was no more than $12,123 ($16,362 for a couple) will be eligible to receive $600 in each of the next two years to provide a little extra help in paying for their medicines.

To learn how to obtain one of this cards and if you qualify for the $600, call 1-800-MEDICARE.

Beginning in 2006, you will be able to enroll in the new prescription drug benefit. People who have no coverage now can expect the standard coverage to cut their drug spending by about half, in exchange for a monthly premium, that government estimators say will be about $35. Supplemental coverage also will be available at an additional premium to improve this coverage.

People with lower incomes will get more help. They will pay reduced premiums or no premiums at all and pay as little as $2 for their prescription medicines. Millions of seniors will benefit from this extra coverage.

Dennis, from Nashville, TN writes:
I believe one of the most serious problems we face with the economy is the lack of affordable health care coverage. Many have lost coverage due to layoffs. Many small businesses can't afford health coverage for employees. And HCA just announced lower profits due in part to unpaid bills from a growing number of uninsured. How will the President's proposals make coverage available to ALL Americans, and help contain spiraling costs?

Doug Badger
The President is working to make quality health care more affordable for all Americans. He has attacked prescription drug costs in a number of ways.

First, the FDA issued a regulation last year that will make safe and effective generic drugs more broadly available in the marketplace. This regulation closed a loophole that some companies were using to prevent generic competitors from making their product available to seniors.

This change alone is estimated to save consumers $35 billion over ten years.

The Medicare bill that the President signed into law last December went further, making the biggest changes in twenty years to the law that facilitates generic drug entry into the marketplace.

Because paying for medicines is a particular hardship for many seniors and people with disabilities, the law the President signed will make Medicare-approved prescription drug discount cards available this June.

These cards will save beneficiaries 10-25% off the retail price of most medicines and provide $600 in direct assistance over each of the next two years to low-income Medicare beneficiaries. Beginning in 2006, of course, all seniors will have access to more affordable drugs under Medicare.

The President also is working to make health insurance coverage more affordable for all Americans. He is fulfilling his commitment to create 1,200 new and expanded community health center sites to serve an additional 6.1 million people by 2006. These sites provide medical care to poor people who live in medically underserved areas.

Over the first three years of this Administration, HHS has issued thousands of waivers and approved changes to state plans that have made an additional 2.6 million low-income people eligible for health coverage under Medicaid and the State Child Health Insurance Program.

The President also has renewed his request to Congress to provide refundable tax credits to low-income workers that will enable them to purchase coverage for themselves and their families. These credits will be given out to individuals throughout the course of the year so that they can pay for their coverage.

He also continues to press Congress to allow association health plans, which will help small businesses provide affordable health insurance coverage to their workers. Many uninsured people work in small firms. By allowing these firms to pool together to increase their buying power, AHPs will help millions of people get coverage through their jobs.

The President also has also signed into law a bill that will make a new, more affordable insurance product available to individuals and to those who get their coverage through their employers. This product, known as health savings accounts (HSAs), lets people save on their health insurance premiums by buying insurance with high deductibles.

Your employer and you can put these premium savings into your health savings account to help you pay for your routine medical expenses. This account doesn’t belong to an insurer or your insurance company. It belongs to you. It is yours to keep even after you change jobs.

The President also has proposed to help relieve rising health care costs by cutting back on “junk lawsuits” against doctors, improving health care information technology, and reducing medical errors.

Jae, from Washington, DC writes:
Would you please explain why corporations might be interested in providing health savings accounts to their employees? Also, how would an individual not covered under a corporate insurance policy participate in HSAs?

Thank you.

Doug Badger
One reason that corporations might be interested in offering HSAs to their employees is that health insurance premiums have become so expensive. One reason is that most employer-sponsored plans cover lots of routine medical expenses. A trip to the doctor might cost you $15. A month’s supply of medicine your doctor prescribed might cost you $10.

Everybody knows that their doctor is getting paid more than $15 for an office visit and that their pharmacist is charging more than $10 for a prescription medication. Your insurance company is covering the difference between what you pay and what your doctor and pharmacist actually charge.

That makes health care appear less expensive than it really is. But these expenses eventually show up as higher premiums. Your employer sends more money off to the insurance company the following year and withholds more money from your paycheck to help cover these premium increases.

Many employees might be interested in helping to break this cycle through health savings accounts. Since premiums for high deductible policies – coverage that kicks in only after you’ve spent $1,000 or more in a year on medical care – are far lower than for standard medical coverage, employers and employees can save.

What happens to these savings? They can be deposited – tax-free – into a worker’s health savings account, where it’s available to pay for expenses below the insurance policy’s deductible amount.

The account belongs to the worker and can be used – tax-free – for medical expenses. Money that isn’t spent stays in the account, so that you can save for future medical needs. And since the account doesn’t belong to an insurance company or to your employer, you can take it with you when you change jobs.

Angela, from California writes:
Doug, What made you decide to move from theological studies into politics? What role, if any, does your theological background play in your role as an economic advisor to the President?

Doug Badger
Thanks, Angela. Lots of people have asked me that. Christianity, I believe, teaches that we all have fallen short of God's perfect standards and that we're all in need of His grace. If I know that I need God's grace and forgiveness, then I need to be a lot more forgiving of others. Put another way, I need to take responsibility for my many failings and I need to be a lot more compassionate toward others.

I think that's what the President means by "compassionate conservatism." Government needs to treat people as adults. People should be expected to earn a living, support their families and not make themselves a burden on others. But all of us at one point or other will need someone's help. Lots of times that help comes from families, civic organizations or from a church or other faith-based organization. Sometimes it's appropriate that help comes from the government, whether it's providing cash assistance and job training to help a young mother get back on her feet or helping a senior citizen pay for prescription medicines.

It is a real privilege for me to work for President Bush. I never imagined that I would have such an opportunity.

Doug Badger
Sorry all, gotta get back to work. It was great chatting with you. Hopefully we can do this again soon.

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