House Passes Medicare Modernization Act

June 28, 2002 ( - In what has been heralded as the biggest change in Medicare since the program's inception in 1965, the House of Representatives passed the Medicare Modernization & Prescription Drug Act of 2002.

Meanwhile, the Senate is working through its own version of the bill, which will mean a massive change in prescription drug coverage for some 40 million elderly and disabled Americans covered under the program

House Rules

According to CCH INCORPORATED (CCH), a provider of healthcare law information and software, the House bill, HR 4954, carries a price tag of $350 billion over 10 years.

Under this legislation, seniors would be charged a monthly premium of $33, based on insurance company estimates and an annual deductible of $250.

The Medicare program would then pay 80% of the costs up to the first $1,000 spent on prescription drugs and 50% on the next $1,000. Seniors would be responsible for picking up costs after that up to $3,700. Medicare would pay any amount a senior spent on prescription drugs beyond this, each year.

Senate Bill

In comparison, CHH notes, the Senate’s Medicare Rx Drug Benefit and Discount Act has an expected cost of $700 to $800 billion over a decade. Seniors would pay a $25 monthly premium and a $100 deductible. After that, Medicare would pay 80% of the cost. Annual out-of-pocket expenses would top out at $2,000.

CHH points out that figures from the Congressional Budget Office show that the average senior will spend $3,059 on prescription drugs in 2005, putting seniors in the $2,001 to $3,700 range, where the House bill calls for seniors to pick up 100% of the costs for their prescription drugs.

Both bills propose additional assistance to help low-income beneficiaries at or near the federal poverty line, which is $8,860.