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Stronger Medicare with Improved Benefits

Having access to modern health care treatments that best meet their needs is particularly important for those with the greatest health care needs - the elderly and persons with disabilities. President Bush believes the Nation has a moral obligation to fulfill Medicare's promise of health care security for America's seniors and people with disabilities. Medicare has provided this security to millions of Americans since 1965.

However, as Medicare's lack of prescription drug coverage demonstrates, Medicare is not keeping up with the rapid advances in medical care. Medical care this century holds the promise of improving and extending life through countless innovations. To ensure that Medicare continues to provide a secure entitlement for access to modern health care, on July 12, 2001, President Bush proposed a framework to strengthen Medicare and address its financial security. The framework includes the following provisions (additional details are at

  • Medicare prescription drug coverage available to all seniors, including lower prices on all prescriptions and protection against high out-of-pocket drug costs. All of the new coverage options in Medicare, both an improved government plan and better private plans, would include prescription drug coverage.
  • An improved government plan with a prescription drug benefit, better preventive coverage, and better protection against high medical costs, with more affordable Medigap (supplemental insurance) options. These improvements would bring Medicare's required benefits up to date, and would help seniors avoid the need to buy very costly supplemental insurance policies to fill the large gaps in Medicare benefits.
  • Reliable private health care options for seniors who prefer them because of the innovative benefits that private plans provide - lower out-of-pocket costs, innovative preventive care, and "disease management" programs for persons with chronic illnesses like diabetes, heart failure, and asthma to help them avoid complications and hospitalizations. Seniors who choose more efficient plans would be able to use the savings to reduce their Medicare premiums.
  • Allowing seniors to keep the coverage that they have now, with no changes, if they wish to do so.

As the President continues to work with Congress to address the threats to our Nation's security, he will also work with Congress to enact legislation this year to address the problems facing Medicare. In his budget and State of the Union address, the President renewed his commitment to provide prescription drug coverage in Medicare, based on the framework for bipartisan legislation that he proposed in July 2001. The President's budget includes $190 billion in net additional spending for improving Medicare.

Many improvements in Medicare, such as full implementation of a prescription drug benefit, will take several years to set up. But some needed improvements in Medicare benefits can begin to take effect sooner, by building on existing programs. The President's budget will include proposals which can be implemented quickly as part of legislation to improve Medicare benefits. The proposals are based on ideas that have been proposed previously by Democrats and Republicans. They include:

  • Building on the proposed Medicare Rx Drug Card, by quickly putting in place the structure for a Medicare drug benefit that uses the best features of private drug coverage to get manufacturer discounts and other valuable pharmacy services for seniors.
  • Implementing a new "model waiver" program in Medicaid, Pharmacy Plus, which will give states more flexibility in their Medicaid programs to provide prescription drug coverage for seniors who need help the most.
  • Helping states implement comprehensive drug coverage for low-income beneficiaries as quickly as possible, as part of the Medicare drug benefit. The Federal government will pay 90 percent of the costs of comprehensive drug coverage for beneficiaries with incomes between 100 and 150 percent of poverty. This will provide drug coverage for up to 3 million additional low-income Medicare beneficiaries before the Medicare drug benefit can be set up, at a cost of $8 billion over 3 years. Low-income drug coverage would then be fully integrated with the new Medicare drug benefit.
  • Providing better private health plan options for Medicare beneficiaries who prefer them, by directing almost $4 billion to help correct chronic underpayments to Medicare's private plans and by providing incentives for new private plans to participate in Medicare.
  • Giving seniors access to two additional Medigap (supplemental coverage) plans, with updated benefits that provide better protection against high medical expenses and assistance with prescription drugs at a more affordable cost than the most popular Medigap plans today.