Senate Kills Medicare Drug Coverage Amendment

June 24, 2003 ( - A move that might have helped ease concerns that Medicare reform measures would spur employers to drop retiree drug coverage died in the United States Senate.

>Senators killed an amendment on a 52-43 vote sponsored by Senator Jay Rockefeller (D-West Virginia) that would have counted employer contributions toward the money seniors must spend before a government prescription-drug benefit would kick in, the Associated Press reported. The Medicare prescription-drug bill now moving through Congress would require seniors to spend a certain amount of their own money before they qualify for government aid for very high drug costs.

>Under the current bill, if employer retirement  plans pay seniors’ drug tabs, the senior would never qualify for the government help. Rockefeller’s amendment would have changed that. Because of this dynamic, the Congressional Budget Office estimates that 37% of employers will drop some of their drug coverage for retirees (See  Medicare Reforms Could Prompt Retiree Health Coverage Exodus ).

“Employer-sponsored retiree health benefits are the single greatest source of coverage for retirees, providing drug coverage for one out of every three Medicare recipients,” Rockefeller said, according to the AP. “But, this legislation spurs employers to drop the coverage they provide by making their contribution on their retirees’ behalf meaningless.”

The Senate bill would require seniors to spend $275 before they get any coverage. The government then pays half their drug costs until they reach $4,500. Then there is a coverage gap, where the senior is responsible for drug spending between $4,500 and $5,800. If the senior’s drug costs are higher than that, then the government would pay 90% of the rest.