Clinton, GOP Spar Over Drug Plans

Monday, July 3rd 2000, 12:00 am
By: News On 6

WASHINGTON (AP) — Competing Democratic and Republican approaches to providing prescription drug insurance for older Americans are full of trade-offs. President Clinton's plan appears more generous, but the congressional Republicans' proposal might lead to cheaper drugs.

``These pocketbook questions really do matter to (Medicare) beneficiaries,'' said Patricia Smith, senior health care lobbyist for AARP, the nation's largest organization of older people.

Republican legislation passed by the House last week would extend drug coverage through government-subsidized policies sold by private insurers. An alternative proposed by President Clinton and supported by most congressional Democrats would establish a standard, government-run Medicare benefit.

Prospects for compromise this year are uncertain, but polls show the issue is likely to be a priority for older voters in this fall's elections.

Each party says its formula would guarantee availability of new drug coverage nationwide, although insurance companies have expressed doubts about their ability to offer the private policies specified by the GOP plan.

Assuming availability, however, whether to purchase the new drug coverage would be up to retirees under both the Democrat and Republican approaches. Both parties tout their plans as the better buy.

``This provides more political coverage for the Republicans who voted for it than insurance coverage for the seniors who need to buy medicine,'' Clinton said last week as he blasted the GOP bill.

Rep. Dick Armey, the majority leader from Texas, predicted on ``Fox News Sunday'' that Clinton will sign the GOP plan despite repeated pledges to veto it. ``The fact is, this president will sign into law a measure ... that so thoroughly well relates to the needs of our seniors ... and makes him look good as if he's building a legacy,'' Armey said.

And on NBC's ``Meet the Press,'' Senate Judiciary Chairman Orrin Hatch, R-Utah, decried ``the constant Democrat approach,'' which he said ``is to just throw money at it, make it universal so that the taxpayers are stuck with it the rest of their lives.''

Who's right?

The Congressional Budget Office, which provides nonpartisan analysis of legislation, predicts that virtually all Medicare beneficiaries who lack drug insurance, an estimated 13 million people, could be expected to buy the policy offered under Clinton's plan. By comparison, only 46 percent would be likely to buy a private policy such as those offered under the GOP plan, the CBO has said in its written reports.

That assumption is based largely on the fact that Clinton's benefit offers retirees more for the price they would be charged. In other words, the government is picking up more of the tab.

Clinton's plan is estimated to cost the Treasury $253 billion over 10 years, compared to $159 billion for the Republican plan.

Looking at another factor that would hit senior citizens' wallets, CBO analysts estimated that under the GOP plan, competition among insurers would reduce drug costs by up to 25 percent compared to what an uninsured consumer spends. Savings under Clinton's plan would amount to only around 12.5 percent, they said.

It's unclear from the CBO analysis how much of the savings would reach consumers under either plan, but any discounts could help older people by lowering the price they pay even when a prescription is not covered by insurance.

The catch? The GOP plan gets bigger savings in part because it would allow insurers more flexibility not only to negotiate with drug companies and pharmacies, but also to restrict coverage to drugs on so-called formulary lists and impose graduated co-payments — for example, charging consumers more for brand names.

At the outset, Clinton's plan would cost retirees about $312 a year in premiums to get 50 percent off the cost of their prescriptions covered until they collected a maximum of $1,000 in basic benefits.

In contrast, typical drug coverage under the GOP plan would cost beneficiaries around $720 per year in premiums and deductibles to get 50 percent off their prescriptions paid for until they collected a maximum of $1,050 in basic benefits.

Catastrophic coverage to pay all drug costs would kick in if, in a single year, a retiree's drug spending topped $4,000 under Clinton's plan and $6,000 under the GOP plan.

Republicans argue the CBO's estimate of lower participation in their plan is based only on a sample policy. In practice, insurance companies would have freedom to design a variety of policies to meet different needs. For example, some plans might offer no-deductible policies with higher co-pays, which could be more attractive to some retirees.