June 27, 2002
Administration supports House passage of H.R. 4954. This bill is an
important first step toward providing a long-overdue prescription
drug benefit in Medicare and toward implementing many of the President's
principles for improving and strengthening Medicare. The Administration
supports a drug benefit that protects seniors against high expenses,
that allows them to choose a plan that provides the drugs they and
their doctors prefer, that lowers drug prices, and that strengthens
and complements the coverage from employers, unions, private plans,
and other sources that provide some prescription drug coverage to
almost three-fourths of Medicare beneficiaries today. The design of
the drug benefit in H.R. 4954 will continue to encourage the valuable
innovation in prescription drugs that holds so much promise for improving
the health of seniors in the 21st century. This design is far preferable
to some alternative proposals to create a very costly, unprecedented
government-run drug plan that would determine which drugs were "on
formulary" and impede innovation, that would increase drug prices,
and that would impose trillions of dollars in new obligations on a
Medicare program that already faces a funding shortfall for the Baby
Boom generation, threatening all of Medicare's benefits.
The Administration also strongly supports provisions in H.R. 4954 that will help Medicare provide affordable coverage options that keep up with modern medicine. The bill begins to address the chronic underfunding of private plans in Medicare, and takes important steps toward creating an effective system of private plan competition in Medicare. The bill creates more affordable Medigap options, provides regulatory relief and simplification, encourages innovative coverage options that will help beneficiaries with chronic diseases and special needs, improves the quality and reduces the costs of durable medical equipment and Medicare claims processing through competitive bidding, improves preventive coverage, and improves access to valuable new treatments. All of these steps will help beneficiaries get more value in terms of health improvements from the new drug benefit and all other Medicare benefits, and will enable them to do so at a lower cost.
The Administration is particularly pleased with the provisions included in the bill that will provide immediate relief for seniors who have already waited far too long for prescription drug assistance. This includes the bill's authorization of a Medicare-endorsed prescription drug card and temporary assistance for low-income seniors until a full drug benefit is available. These provisions will allow seniors to start receiving help with drug costs beginning next year, not two years from now or longer, and they will help the Medicare program work with seniors and drug benefit providers to implement the Medicare drug benefit effectively. We look forward to working with Congress to assure that this question is adequately addressed by this legislation.
The Administration looks forward to working with the Congress to produce a fiscally responsible bill and to further implement the President's goals for improving Medicare, including the creation of a broader range of reliable coverage options for seniors and protecting the financial security of Medicare's promised benefits. Specifically, the Administration will work with Congress to improve the bill to:
The Administration looks forward to continuing to work with the Congress to pass a fiscally responsible bill this year that the President can sign that strengthens Medicare, including a prescription drug provision.
Any law that would reduce receipts or increase direct spending is subject to the PAYGO requirements of the Balanced Budget and Emergency Deficit Control Act and could cause a sequester of mandatory programs in any fiscal year through 2006. The requirement to score PAYGO costs expires on September 30, 2002, and there are no discretionary caps beyond 2002. Preliminary CBO estimates indicate that the bill would increase direct spending by $340 billion over the next ten years. The Administration will work with Congress to ensure fiscal discipline consistent with the President's Budget and a quick return to a balanced budget. The Administration also will work with Congress to ensure that any unintended sequester of spending does not occur.