Included in Medicare Expansion Proposal : Plan to Cut Elderly’s Drug Bills Advances

A new Medicare benefit that would help pay costly prescription drug bills for elderly Americans with arthritis, heart disease and other ailments was formally approved Friday by a House-Senate task force.

About 5.8 million people--those who spend more than $600 a year for drugs--will receive financial help when the drug benefit begins in 1991.

“This will benefit millions of people faced with very high drug costs and keep many of them from being wiped out economically,” said Rep. Henry A. Waxman (D-Los Angeles), who played a key role in writing the legislation.

Thrash Out Details

The new drug benefit is contained in a major expansion of Medicare that has been approved in separate versions by the House and Senate and is now being put into final form by a House-Senate conference committee. A task force of eight members of the conference committee thrashed out the details of the drug benefit this week and reached final agreement Friday.

In the first year, 1991, the government would pay half of the cost of prescriptions after beneficiaries had spent $600. The deductible--the initial amount paid by patients--would rise to $652 in 1992 and $710 in 1993 to keep pace with expected inflation in the cost of drugs.

Once the deductible is satisfied for the year, the patient and government share additional costs. The government would pay 50% in 1991, 60% in the following year and 80% in 1993 and future years.

Senior citizens’ organizations “were very anxious to get a prescription drug benefit in this legislation,” Waxman said. Many people with chronic conditions, such as arthritis and diabetes, “require a steady use of a number of different drugs,” he said.

18% Will Qualify

An estimated 18% of the 32-million elderly and disabled Americans in the Medicare program spend enough on drugs each year to qualify for the new benefit. For those who will be helped by the new benefit, the average expenditure is $1,000 a year.

The benefit will be delayed until 1991 to allow all of the nation’s pharmacies to install computerized terminals for an efficient record-keeping system. This will enable Medicare beneficiaries to have all drug bills entered into a single account for calculating the deductible, regardless of the number of pharmacies.

The task force devised a system of strict cost controls. Pharmacists will not be allowed to charge Medicare patients more than anyone else for drugs.

Unlimited Stays

The drug benefit is part of a bill designed to protect Medicare beneficiaries from catastrophic health care costs. The bill also will include Medicare coverage for unlimited stays in the hospital.

To pay for these new benefits, the bill will impose both a flat premium of about $4 or $5 a month on all Medicare beneficiaries and surcharge ranging up to $1,000 a year on the income tax payments of all Medicare recipients who pay taxes. The House-Senate conference committee will set the precise levels of the premium and tax surcharge next week.