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Medicare Prescription Drug, Improvement, and Modernization Act

The Medicare Prescription Drug, Improvement, and Modernization Act (Public Law 108-173) is a law of the United Stateswhich was passed in 2003. It produced the largest overhaulof Medicarein its 38-year history. It calls for spending $395 billion in its first decade. Its passage, after nearly six years of debate and negotiaton in Congress, came after crucial support from the AARP. It was signed by President George W. Bushon December 8, 2003, after barely passing in Congress.


  • 1 Legislative process
  • 2 Prescription drug benefit
  • 3 Basic Prescription Drug Coverage
  • 4 Medicare Advantage Plans
  • 5 Other changes
  • 6 See also
  • 7 External links

Legislative process

The passage of this bill (H.R. 1) was one of the most dramatic events in recent American history. Several times in the legislative process the bill had appeared to have failed, but each time was saved when a couple of Congressmen and Senators switched positions on the bill.

The bill was introduced early on June 25as H.R. 1, sponsored by SpeakerDennis Hastert. All that day and the next the bill was debated, and it was apparent that the bill would be very divisive. In the early morning hours of June 27, the bill came down to a floor vote. After the initial electronic vote the count stood at 214 ayes, 218 noes. Ernest J. Istook, Jr.(R-OK-5), who was against the bill, changed his vote to "present" on hearing that C.W. Bill Young(R-FL-10), who was absent due to a death in the family, would have voted "aye" if he had been present. Next, Republicans Butch Otter(ID-1) and Jo Ann Emerson(MO-8) switched their vote to "aye" under pressure from the party leadership. The bill passed by one vote, 216-215.

On June 26, the Senate leadership passed their version of the bill 76-21. When H.R. 1 reached the Senate, the amendments were made to it to confirm to the Senate agreement. A conference was held to unify the versions, and on November 21came back to the House for approval.

At three the next morning a vote was held to concur in the conference report. After 45 minutes the bill was losing, 219-215, with David Wu(D-OR-1) not voting. Speaker Dennis Hastertand Majority Leader Tom DeLay, looking for a way to pass the bill, decided to try and convince some of their dissenting members to switch back to the party line, as they had done at the previous vote. Istook, who had always been a wavering vote, consented quickly, producing a 218-216 margin. The vote dragged on for hours as the Republican leadership struggled to find the two votes it required to pass the bill. Some of the dissenters brought forth allegations that they had even been bribed to switch their votes, a charge which the Speaker readily denied.

At ten minutes before six, the leadership finally found the two votes that were needed. Otter and Trent Franks(AZ-2) switched sides. Seeing the bill was destined to pass anyways, Wu then voted yea as well. Democrats Calvin M. Dooley(CA-20), Jim Marshall(GA-3) and David Scott(GA-13) followed suit by changing their votes. Brad Miller(D-NC-13) reversed his vote from "yea" to "nay", and Republican John Culberson(TX-7) followed suit. After all the vote changes, the bill passed 220-215.

The Democrats cried foul, prompting Bill Thomas, the Republican chairman of the Ways and Means committee, to challenge the result. Thomas, as expected, had no real reason to actually do so, and was merely satisfying the minority. He voted to table his own challenge in a 210 ayes, 193 noes, vote.

The Senate's consideration of the conference report was somewhat less heated, as clotureon it was invoked by a vote of 70-29 [1]. However, a budget point of order raised by Tom Daschle, and voted on. As 60 votes were necessary to override it, the challenge was actually considered to have a credible chance of passing.

For several minutes, the vote total was stuck at 58-39, until Senators Lindsey Graham(R-SC), Trent Lott(R-MS), and Ron Wyden(D-OR) voted in quick succession in favour to pass the vote 61-39[2]. The bill itself was finally passed 54-44 [3]on November 25, 2003, and was signed into law by the President on December 8.

Prescription drug benefit

Its most touted change is the introduction of an entitlementbenefit for prescription drugs, through tax breaks and subsidies.

In the years since Medicare's creation in 1965, the role of prescription drugsin U.S.patient care has significantly increased. As new and expensive drugs have come into use, patients, particularly senior citizensfor whom Medicare was designed, have found prescriptions harder to afford. The Medicare Prescription Drug, Improvement, and Modernization Act, is meant to address this problem.

The benefit is funded in a complex way, reflecting the diverse priorities of the lobbyistsand constituencies whose support was needed:

  • it provides a subsidy for large employers to discourage them from eliminating private prescription coverage to retired workers (a key AARP goal);
  • it prohibits the Federal government from negotiating discounts with drug companies (unlike the practice in most other countries);
  • it prevents the government from establishing a formulary, though does not prevent private providers such as HMOsfrom doing so.

Basic Prescription Drug Coverage

Beginning 2006, a complicated prescription drug benefit, called Medicare Part D, will be available though with substantial out-of-pocket costs. Coverage will be available only through insurance companies and HMOs. Though enrollment will be ?voluntary,? there will be considerable financial pressure to enroll at once. (It will be costly to enroll at a later time.)

Benefit: Enrollees will pay the following initial costs for the initial benefits described herein. A minimum monthly premium of $37.23 ($446.76 per year) (premiums may vary), a $250 annual deductible, 25% of costs up to $2,250, 100% of costs up to $5,100 (a gap of $2,850) commonly referred to as doughnut hole, and 5% of costs above $5,100.

Medicare Advantage Plans

The Medicare Modernization Act improves compensation and business practices for insurers to offer programs to compete against Medicare. For the last 20 years, the Federal government has been trying to encourage private health insurance competition with Medicare to realize some of the cost savings that come from commercial competition and privatization. Initial plans, generally called Medicare + Choice, were established by several major health care insurers including Humana, Aetna, and the Blue Cross/Blue Shield plans. The initial plans were organized along traditional HMO (Health Maintenance Organization) business plans but they lacked the ability to truly manage care, as patients could freely switch back to traditional Medicare insurance. Most of the plans quickly cut back their service areas and stopped enrolling new patients. With the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, new Medicare Advantage plans were established with several advantages over the previous Medicare + Choice plans:

  • enrollees sign on for a whole year
  • care can be restricted to networks of providers
  • formularies can be used to restrict prescription drug choices
  • prescription coverage can be deferred to the patient or a Medicare Part D prescription plan
  • care other than emergency care can be restricted to a particular region
  • federal reimbursement can be adjusted according to the health risk of the enrollees

The attraction for health insurers is the incredible difference between normal healthcare premiums and the federal Medicare premium. Normal health insurance premiums (for someone working or healthy enough to be allowed to enroll) are generally $150 to $350 a month, depending on the level of service desired, health status, and deductibles. For a Medicare eligible enrollee, the health insurer can receive around $800 a month, more than double the premium for younger, healthier citizens. These plans are being aggressively marketed. Among other benefits, the senior gets an immediate financial boost, as many plans let them skip paying Part B and Part D premiums, waive usual deductibles, and waive copays, all while covering preventive physicals and providing a prescription drug benefit. While the insurance plan can realize immense initial profits, every single Medicare enrollee, no matter their underlying health status, can be expected to undergo between 1 and 6 life threatening major illnesses before they die. The pathology and illnesses associated with aging are innumerable and ultimately unbeatable. A comparable insurance concept would be a comprehensive policy for newly diagnosed advanced cancer patients. The ultimate economic viability of a Medicare Advantage plan will not be known for 10 to 15 years. For seniors, the initial cost savings is balanced against insurance companies? healthcare rationing through restrictive prescription drug formularies, requiring documentation of medical necessity for imaging studies such as CT scans and MRIs, decreasing physician access, and rationing of lab tests, and ancillary care.

Other changes

While nearly all agreed that some form of prescription drug benefit would be included, other provisions were the subject of prolonged debate in Congress. The complex legislation also changes Medicare in the following ways:

  • it mandates a six-city trial of a partly-privatized Medicare system (by 2010);
  • it gives an extra $25 billion to rural hospitals (at the request of congressional representatives in the rural West);
  • it requires higher fees from wealthier seniors; and
  • it adds a pretax health savings accountfor working people.

See also

  • Prescription drug prices
  • Pharmaceutical company
  • Pharmacology
  • Medicare (United States)
  • Medicare Part D
  • Medicaid
  • Biotechnology
  • National pharmaceuticals policy

External links

  • Centers for Medicare & Medicaid Services: Medicare Mordernization Act~ includes PDF file of the actual text of the law.
  • Centers for Medicare & Medicaid Services (CMS)ca:Indústria farmacèutica


fr:Industrie pharmaceutique

Retrieved from "http://en.wikipedia.org/Medicare_Prescription_Drug%2C_Improvement%2C_and_Modernization_Act"

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