Foes of Medicare Drug Plan Cite New Costs, Ask Repeal

A new trust fund set up to pay some prescription drug costs of Medicare recipients will be $4.5 billion in the red by the end of 1993, according to projections by actuaries in the Department of Health and Human Services.

The estimate was made public by Rep. Harris W. Fawell (R-Ill.) as he introduced legislation to repeal a law enacted last year to protect elderly persons against the cost of “catastrophic” illness and prescription drug expenses.

Congressional aides familiar with the program, however, dismissed the recent HHS figures as “the same old stuff” that the Reagan Administration used in arguments against some aspects of the legislation while it was under consideration. Congressional Budget Office analysts challenged those assumptions and nothing has happened to change the underlying cost calculations for the program, the aides said.

Sees Big Mistake

Fawell, joined by 10 other Republican lawmakers, said that the measure passed overwhelmingly by Congress and signed by President Reagan was a big mistake that should be corrected this year.

He predicted that a “groundswell of indignation” would persuade proponents of the new law, the largest expansion of Medicare ever enacted, to reverse themselves and establish a commission to recommend a better approach to dealing with costly medical care for older people.

Under the new law, Fawell said, a surtax on better-off elderly citizens will pay 63% of the cost of the entire program, starting this year.

Democratic leaders of Congress have opposed any change in the new law, and Fawell’s allies acknowledged that they will have to overcome resistance from the House Ways and Means Committee as well as from the Senate Finance Committee.

“It’s an uphill battle, but it’s a battle that should be fought,” said Rep. Herbert H. Bateman (R-Va.), a co-sponsor of Fawell’s repeal bill.

The new law provides for insurance coverage for the cost of some specialized drugs starting in 1990 and extends it to all prescription drugs, including insulin, starting in 1991. A deductible of $550 would apply in 1990, rising to $600 in 1991 and $652 in 1992. In addition, recipients would pay 20% of the cost as a co-insurance feature.

An HHS memo, obtained by The Times, said that the projected deficit in the drug insurance trust fund would become obvious when President Reagan submits his final budget to Congress next week.

Predicts Big Backlog

“To account for what would happen once the trust fund is depleted, the submission (to the Office of Management and Budget) assumes we would hold claims until more money was available,” the HHS memo said. “The resulting backlog of claims would quickly become substantial.”

Discussing possible courses of action, the HHS memo said: “Submitting a (legislative) proposal now allows us to seize the high ground by advancing a solution at the same time we are revealing the problem. . . . It would give us more influence over the terms of the congressional debate and would also dramatize the magnitude of the problem.”

But delaying a recommendation to Congress on how to avoid a deficit in the drug insurance trust fund would allow more evidence to be gathered and would “give more credibility to our estimates,” the HHS memo said.

It noted that estimates by the Congressional Budget Office differed sharply from those of the Health Care Financing Administration of HHS. While CBO believes that only 16.8% of Medicare beneficiaries will receive benefits from the drug insurance program in 1991 and 1992, HCFA estimated that one-fourth of the recipients would get benefits in both years.

“According to the latest estimates from HCFA’s actuaries, not only will the program come nowhere near to meeting the required contingency margins but income will be insufficient to provide the necessary benefits,” the HHS memo said.