Many liberal Democrats claimed that Medicare reform and the drug benefit was "the end of Medicare as we know it." Many conservative Republicans claimed "we are massively increasing an entitlement program that costs too much." Fortunately, the middle in both the House and Senate narrowly disagreed and did the right thing-giving low-income seniors a tremendous benefit and starting a very gradual modernization of Medicare.
Having worked on Medicare reform since I started as a Senate aide in 1980, I have seen dozens of prior efforts to change the system fall far short. It's my job to be optimistic, but the reality is that all year I thought this was a long shot, and I am amazed and excited that it actually happened.
Rep. Bill Thomas (R-Calif.), chairman of the House-Senate conference committee; Rep. Billy Tauzin (R-La.), chairman of the House Energy and Commerce Committee; and Sen. Chuck Grassley (R-Iowa), vice chair of the conference, were committed all year to the reform effort. Other legislators played key roles, but the true profiles in courage, for me, came from Sens. John Breaux (D-La.) and Max Baucus (D-Mont.). Even though Democrats understandably did not want a GOP Congress and administration to get credit for solving the puzzle, Breaux and Baucus also saw this as a once-in-a-lifetime opportunity for seniors, and sometimes doing the right thing is more important than worrying about the next election.
As a result, about 8 million low-income seniors and the disabled (those with income below 135% of the poverty level) will get a discount card, with a $600 cash draw for pur-chases, next spring. That will have an immediate effect on their lives. All seniors will see a 15% to 25% discount on their drugs, also a major help.
The bigger changes come in January 2006. Beginning that year, low-income seniors will pay just $1 for generic and $3 for name-brand drugs (to 100% of the poverty level). That is a benefit valued at more than $4,000 per year for each beneficiary. Near-poor seniors-those earning up to 135% of the poverty level-will pay just $2 and $5 respectively per prescription, with no other costs, a value of $3,900. There is a sliding premium from 135% of poverty to 150% of poverty-but there are still no "holes in coverage" and the value is more than $2,600 per senior per year. These are huge new benefits for more than 14 million low-income seniors that will revolutionize their lives.
All seniors, regardless of income, will get a new insurance plan for drug coverage worth more than $1,200 after premiums and deductibles are paid. You might argue that these subsidies are too high-but it is hard to argue it won't have a beneficial effect on seniors' lives.
On the reform side, Medicare beneficiaries finally will have the chance to buy integrated benefits through PPOs-the option that more than 70% of Americans below Medicare age choose. They can keep their Medicare benefits exactly as they are-and get a drug benefit. But they also can make what will often be a more efficient choice-a PPO with an integrated drug benefit, a choice that has not existed in the past.
No senior loses any options-they all get more benefits. There is no bad news for seniors-more choices, more benefits and a more modern health benefit.
Tom Scully was administrator of the CMS from the spring of 2001 until his departure last week.