Bush Rx Plan Would Give Responsibility To States

One of the central issues of this year’s presidential election campaign is how to provide prescription drug benefits for the elderly. Al Gore and George Bush both have plans to address the issue. But evidence suggests states are not eager to take on this responsibility.

As part of a sweeping overhaul of the federal health insurance plan for the elderly, Texas Gov. George W. Bush has proposed that states take the lead in providing prescription drug coverage to low-income seniors, at least for the short term.

The state role would be temporary, Bush aides insist, a stop-gap measure to provide immediate relief for seniors during the four years it would take a Bush administration and Congress to revamp the Medicare program.

Medicare, which serves about 39 million elderly at a cost of more than $200 billion a year, is funded and administered by the federal government. About one third of Medicare beneficiaries have no coverage for prescription drugs.

In contrast to the Bush plan, Vice President Al Gore has proposed expanding the federal government’s roll by including pharmaceutical coverage under Medicare. Rather than overhaul the system to reduce cost as Bush would, Gore prefers to shore up Medicare’s budget in preparation for the wave of retiring baby boomers that will soon flood into it.

In a speech at an Allentown, Pennsylvania senior center, Bush acknowledged that the states are already well ahead of the federal government in offering some prescription drug coverage for seniors. In fact, 23 states have adopted plans, which for the most part restrict relief to low-income Medicare beneficiaries.

Still, Bush’s fellow governors are not likely to immediately endorse the idea that all the states — including the 27 that currently lack plans — take on this responsibility. The National Governors’ Association has previously voiced its opposition to similar proposals.

“The ‘devil-is-in-the-details’ is a very big issue here. I think we still have to see a little more flesh on the bone,” said Joy Johnson Wilson of the National Conference of State Legislatures. “There is not enough detail out there for most states to decide.”

The high cost of prescription drugs has become one of the most prominent issues in federal elections this year. As the growth in other health care expenses has slowed, the media spotlight has turned to spiraling pharmaceutical costs. In 1999 alone, the nation spent 18 percent more on prescription drugs than in the previous year, according to NCSL.

The Clinton administration has long advocated expanding Medicare to cover prescription drugs. Vice President Gore adopted that position and for many weeks has touted the specifics of his plan on the campaign trail.

The Gore plan would pay for all prescriptions for seniors with incomes up to $11,300 a year, or 135 percent of the federal poverty level. For seniors with incomes up to 150 percent of poverty, the government would pay part of the premiums. Every Medicare beneficiary, for a modest premium, would receive complete relief after spending $4,000 a year. Gore estimates his plan will cost $253 billion over ten years.

While Gore accuses Bush of skimping on coverage to middle-class seniors, the Bush plan would offer coverage to more low-income people, at least during the first four years. Like Gore, Bush proposes paying the drug expenses of all seniors at or below 135 percent of poverty, but his plan would pay part of the premiums for seniors earning up to $14,600 a year, or 175 percent of poverty. In the first four years, seniors would receive full coverage after they spend $6,000 a year on drugs.

Bush estimates this insurance would cost $12 billion a year, for a total of $48 billion over four years. Unlike the Gore plan, that money would be funneled through existing and yet-to-be-established state programs.

In the interim, Bush would work with Congress to induce private insurers to offer competitive health plans from which Medicare beneficiaries would chose. At least some of the plans that would emerge from those proposed reforms would offer prescription drug coverage, Bush has said, although insurance would not be guaranteed.

Including the interim pharmaceutical plan, Bush estimates his Medicare overhaul will cost an additional $158 billion over ten years, significantly less than the Gore plan.While Bush’s idea would involve a formal expansion of the role of the states, it builds on what many states are already doing. With the issue stalled in Congress, more and more states have stepped in to help low-income seniors made poorer by huge drug bills.

In 1975, Maine and New Jersey became the first to adopt what are now called pharmaceutical aid programs.

“The states have been involved in this area for quite some time,” said Richard Cauchi of NCSL. “By the end of the 1980s, there were at least a dozen in operation.”

This year alone, four states created programs — Indiana, Kansas, Florida and South Carolina. Another four states — Illinois, Massachusetts, New York and Rhode Island — expanded existing programs to cover more people.

Like both Bush and Gore, most states are not offering coverage for all seniors regardless of income. They have instituted eligibility cutoffs and co-payments to keep costs down.

According Joy Johnson Wilson, a lobbyist for NCSL, many of 23 states with plans will likely welcome a federal offer to share the expense.

But Bush has given no indication how his program, which would be voluntary, would help seniors in the states without subsidy plans, including his home state of Texas.

According to Bush aides, the governor is making an offer the states cannot refuse. “We expect the 27 states that do not currently have prescription drug programs to take advantage of this significant pot of free federal money,” said Bush spokesman Ray Sullivan.

Some critics question that assumption, and those who promote a more universal, federal health care system are harshly critical of the devolution idea.

“Forty-eight billion sounds like a lot of money. Twelve billion a year, that ain’t a lot of money,” said John Fairbanks, spokesman for Families USA, a consumer advocacy group. “Coverage is going to vary state to state,” he said. “There isn’t a reliable benefit. It’s this patchwork quilt of benefits.”

While Bush says his interim plan will help nine million seniors, critics point out that state plans currently reach only one million. And it may well take more than four years for many states to make use of a pool of federal funds and launch new programs.

In Texas, officials just began this spring to enroll kids in the new Children’s Health Insurance Program (CHIP), although Congress created the program in 1997. CHIP is a national health care initiative run by the states but funded largely by the federal government.

And, of course, any devolution initiative is always a top concern for the nation’s governors.

This week, the lobbyists of the National Governors’ Association refused to comment on the specifics of the Bush proposal. But at their biannual meeting in February, the governors issued a statement opposing the devolution of a prescription drug plan to the states.

“If Congress decides to expand prescription drug coverage to seniors, it should not shift that responsibility or its costs to the states,” the NGA statement reads.

Calls to three governors of states that lack prescription drug plans, Jane Dee Hull of Arizona, Tom Vilsack of Iowa and Robert Taft of Ohio, were not returned.

The NGA has often accused Congress of trying to fob off Medicare patients onto the states by forcing them to expand their Medicaid programs without paying them for it. While the joint federal-state Medicaid program covers seniors, children and some working-age adults under the federal poverty level, the elderly who earn more receive health insurance through Medicare.

“Gov. Bush, as chief executive officer of a state, fully understands the relationship between the federal government and the states and the problem states have with heavy handed government bureaucracies,” said Ray Sullivan of the Bush campaign. The federal money will not come with excessive strings, he said.

EDITOR’S NOTE: The 23 states which currently or will soon offer prescription drug coverage for some seniors are: California, Connecticut, Delaware, Florida, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, New Hampshire, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont and Wyoming.