Medicare Law Is Seen Leading to Cuts in Drug Benefits for Retirees | NYT | 7.14.04
WASHINGTON, July 13 – New government estimates suggest that employers will reduce or eliminate prescription drug benefits for 3.8 million retirees when Medicare offers such coverage in 2006.
That represents one-third of all the retirees with employer-sponsored drug coverage, according to documents from the Department of Health and Human Services.
No aspect of the new Medicare law causes more concern among retirees than the possibility that they might lose benefits they already have. …
Senior officials at the department have been saying for weeks that they believe federal subsidies will induce more employers to continue providing drug benefits to retirees. Under the new Medicare law, the government expects to spend $71 billion on subsidies to employers from 2006 to 2013. To qualify for assistance, an employer must certify that its retiree drug benefits are worth at least as much as the standard Medicare drug benefit. …
Under the law, according to the documents from the Department of Health and Human Services, 7.6 million of those retirees are expected to receive drug benefits through employer plans subsidized by the government, and 3.8 million are expected to receive their primary drug coverage from Medicare. This number is expected to grow to 4.1 million by 2010. …
Under the Medicare law, the government will pay a subsidy equal to 28 percent of drug costs from $250 to $5,000 a year for any retiree who has employer-sponsored drug coverage as generous as the standard Medicare drug benefit. The subsidies will be tax-free to employers, who can still take tax deductions for the cost of retiree health benefits. …
Status of the Social Security and Medicare Programs (Report, Summary) | SSA | 3.24.04
Medicare Expenditures and Non-Interest Income by Source as a Percent of GDP
The conundrum of Medicare financing is even more perplexing because Americans are taking advantage of continuing medical advances in diagnostic and treatment capabilities and living longer and more productive lives. But the result of these (very happy) trends, unfortunately, is a rate of growth of medical costs that will continue to far outstrip that of the economy. As Public Trustees we are compelled to point out the inadequacy of the Medicare financing arrangements in current law to meet the projected cost of the benefits promised by law.
Will drug benefits be played as a zero-sum game or a fiscal example of Newton’s third law?
