Medicare prescription drug legislation: how would it affect beneficiaries?

T he probability that Medicare reform legislation will pass in 2003 seems as volatile as the stock market. After rapid passage of bills in the Senate and House in June, hopes that differences would be quickly reconciled have given way to concerns about the tough issues that still need to be resolved. Clearly, the commitment of $400 billion for prescription drug coverage would be a major step forward for the Medicare program, especially as the budget deficit has grown and this represents a substantial share of new federal spending. Even if a bill emerges from conference, however, it will include a number of contentious issues that will affect whether legislation is enacted this year.Three issues have dominated the discussion: the amount of new resources that will be devoted to a drug benefit, the details of the benefit, and the degree to which legislation would shift Medicare toward privatization.This period of uncertainty offers an opportunity to consider how these issues would affect Medicare beneficiaries. The size of the drug benefit per se is not an issue in the conference discussion, since both the House and Senate have pledged $400 billion over 10 years. Nonetheless, limiting it to $400 billion has resulted in a number of provisions that cause concern, particularly the creation under both bills of a gap in coverage for persons in the middle range of spending and limits on protections for people with low incomes. An earlier paper examined how limited resources would constrain a prescription drug benefit. Here, I focus on what this means for particular beneficiaries. The details of the drug benefit and other reforms still leave much to be reconciled in conference. Although in many cases these issues seem to OCTOBER 2003