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.
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.
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.
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:
Give seniors access to reliable health care coverage options that
can reduce costs for them and for Medicare by further improving
the Medicare+Choice system. The current Medicare+Choice payment
formula is flawed, contributing to reduced benefits, dropped service,
and inadequate coverage options in many areas. Right away, Medicare's
payment system for Medicare+Choice plans should better reflect
medical cost increases and should target those organizations facing
the greatest disparity between current payments and rising health
care costs. Medicare's payment system should also do more to encourage
the entry of innovative plans like preferred provider organizations
which many seniors depended on prior to enrolling in Medicare.
Millions of seniors prefer Medicare+Choice plans, and all seniors
deserve the reliable coverage options and opportunities for reducing
their medical costs that would result from a fair and effective
system of health plan payment.
Target new spending to improving Medicare's benefits for seniors.
The Administration supports improvements in provider payment rules
to address unexpected reductions, such as those facing physicians.
However, Medicare fee-for-service payments to providers will amount
to nearly $220 billion in FY 2003 ($1.2 trillion from FY 2003-2007)
and will grow on average 5.3% annually from FY 2003-2007, which
is sufficient to provide adequate Medicare payments for all providers.
The Administration firmly believes that the first priority for
any new spending in Medicare is providing a responsible and effective
prescription drug benefit and improving coverage options for seniors.
Budget funds must be preserved for other critical priorities like
reducing the number of uninsured and making health care more affordable
for all Americans.
Address a number of other concerns about H.R. 4954, including:
(1) deleting provisions that could significantly delay implementation
of competitive bidding; (2) revising many of the appointment and
reporting processes for the offices, commissions, and boards created
by the bill to preserve executive branch prerogatives; and (3)
improving the workability of the inpatient technology pass-through
provisions and other hospital payment provisions that may complicate
the hospital prospective payment system.
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
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.