**President Clinton and Senate Democrats Unified in Vision for New
Medicare Prescription Drug Benefit**

###  THE WHITE HOUSE Office of the Press Secretary 

### 

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  For Immediate Release                              March 9, 2000

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PRESIDENT CLINTON AND SENATE DEMOCRATS UNIFIED IN VISION FOR NEW
MEDICARE PRESCRIPTION DRUG BENEFIT

President Clinton today will receive and endorse a set of \"Prescription
Drug Principles\" from Senate Democratic Leader Tom Daschle, which will
be used by the Senate Democratic Caucus to evaluate any Medicare
prescription drug benefit proposal developed in Congress. These
principles affirm that drug benefits targeted only to low-income
Americans through block grants, or primarily to high-income
beneficiaries through tax incentives, would be unworkable and
unacceptable. The \"Prescription Drug Principles\" state that any drug
benefit should be: voluntary; accessible to all beneficiaries; designed
to provide meaningful protection and bargaining power for seniors;
affordable for all beneficiaries and for the program; administered using
competitive purchasing techniques; and consistent with broader Medicare
reform. Senator Daschle will inform the President that the
Administration's proposal meets all these principles and that he will
work to ensure that any plan emerging from Congress will be guided by
them.

**MILLIONS OF MEDICARE BENEFICIARIES NEED PRESCRIPTION DRUG COVERAGE.**
Approximately three out of five Medicare beneficiaries lack decent,
dependable prescription drug coverage.

**Millions of beneficiaries have no prescription drug coverage and
millions more are at risk of losing coverage.** Thirteen million
Medicare beneficiaries have no prescription drug coverage. Millions more
are at risk of losing coverage or have inadequate, expensive benefits.
Nearly half of rural beneficiaries, and a disproportionate number of
seniors over 85, do not have prescription drug coverage.

**Current drug coverage is unstable and declining.** Only about one in
four beneficiaries has retiree health insurance \-- and the proportion
of firms offering such coverage has dropped 25 percent in the last four
years. Even fewer beneficiaries have Medigap insurance for prescription
drugs. This coverage is often expensive, and many insurers \"age rate\"
(increase premiums as people get older), making it more expensive when
seniors can least afford it.

**Most seniors are middle-income and would not benefit from a low-income
prescription drug benefit.** About 15.6 million, or 49 percent, of all
elderly Americans have incomes between \$15,000 and \$50,000. And over
half of beneficiaries without drug coverage have incomes above 150
percent of poverty (\$12,750 for a single earner, \$15,000 for a
couple). Thus, a benefit targeted to the low-income will simply not help
most seniors.

**Only about half of all seniors have high enough income to benefit from
a tax scheme.** Not only is it impossible to target needy Medicare
beneficiaries through a tax deduction, but studies have repeatedly
concluded that the tax code is an extremely expensive and inefficient
way to expand insurance coverage for anyone, let alone seniors.

**SENATE DEMOCRATS AGREE ON PRINCIPLES FOR A NEW MEDICARE PRESCRIPTION
DRUG BENEFIT.** Today, Senator Daschle and the Senate Democratic Caucus
released a set of \"Prescription Drug Principles\" that will guide the
current Congressional debate over the provision of a new Medicare
prescription drug benefit to millions of seniors. These principles state
that any new benefit should be:

**Voluntary.** Medicare beneficiaries who now have dependable,
affordable coverage should have the option of keeping that coverage.

**Accessible to all beneficiaries.** All seniors and individuals with
disabilities, including those in traditional Medicare, should have
access to a reliable benefit.

**Designed to give beneficiaries meaningful protection and bargaining
power.** A Medicare drug benefit should help seniors and the disabled
with the high cost of prescription drugs and protect against excessive
out-of-pocket costs. It should give beneficiaries bargaining power they
lack today and include a defined benefit assuring access to medically
necessary drugs.

**Affordable to all beneficiaries and the program.** Medicare should
contribute enough towards the prescription drug premium to make it
affordable for all beneficiaries. While subsidies should be provided to
all to assure the benefit is affordable, low-income beneficiaries should
receive extra help with the cost of premiums and cost sharing.

**Administered using private sector entities and competitive purchasing
techniques.** [Discounts should be achieved through competition, not
regulation or price controls, and should mirror practices employed by
private insurers in delivering prescription drugs. Private organizations
should negotiate prices with drug manufacturers and handle the
day-to-day administrative responsibilities of the benefit.]{.mark}

**Consistent with broader reform.** The addition of a Medicare drug
benefit should be considered as part of an overall plan to strengthen
and modernize Medicare. Medicare will face the same demographic strain
as Social Security when the baby boom generation retires. Improving
benefits is only one step in preparing Medicare for this new century's
challenges.

**PRESIDENT URGES CONGRESS TO ACT NOW.** The President will urge
Congress to act this year to strengthen and improve Medicare. His FY
2001 budget includes a comprehensive plan that makes Medicare more
competitive and efficient and dedicates part of the surplus to improve
Medicare solvency and to add a long-overdue prescription drug benefit.
This plan:

**Establishes a new voluntary Medicare drug benefit that is affordable
-- to all beneficiaries and to the program.** The benefit, at \$160
billion over 10 years, would be:

*[Accessible and voluntary.]{.underline}* Optional for all
beneficiaries. Provides financial incentives for employers to develop
and retain their retiree health coverage.

*[Affordable for beneficiaries and the program.]{.underline}* Premiums
of \$26 per month in the first year with lower or no premiums for
low-income beneficiaries. Provides privately-negotiated discounts,
gained by pooling beneficiaries' purchasing power, for all drug
expenses. Has no deductible and pays for half of each beneficiary's drug
costs from the first prescription filled each year up to \$5,000 in
spending when fully phased in.

*[Competitively and efficiently administered.]{.underline}*
Competitively selects private benefit manager to deliver benefit to
enrollees in traditional program. No price controls, no new bureaucracy.
Integrated into current eligibility and enrollment systems.

*[High-quality and provide necessary medications.]{.underline}* Private
entities that use formularies must ensure access to medications off
formulary if physician deems medically necessary. Requires use of
state-of-the-art quality improvement tools.

**Creates a Medicare reserve fund to add protections for catastrophic
drug costs.** To build on the President's prescription drug benefit, the
budget also includes a reserve fund of \$35 billion, available to offer
protections for beneficiaries with extremely high drug spending. This
reserve will permit the Administration to work in collaboration with
Congress to design such an enhanced prescription drug benefit. If no
consensus emerges, the reserve would be used for debt reduction.