Compliance July 14, 2004

Cardin: Medicare Drug Law Needs Fixing

July 14, 2004 (PLANSPONSOR.com) - Jumping on a new Bush Administration report estimating that the new Medicare prescription drug law will effectively strip million of retirees of their drug coverage, an influential lawmaker denounced the law as hurting older Americans' health.
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US Representative Benjamin Cardin (D-Maryland), a long-time pension and benefits activist, said in a statement that the Medicare prescription law “clearly harm(s) retiree benefits and seriously jeopardize(s) the health care of millions of American retirees.”

Prompting Cardin’s ire was a report from the US Department of Health and Human Services (HHS) predicting that 3.8 million retirees could lose their prescription drug benefits when a new Medicare law provides drug coverage to Medicare beneficiaries in 2006. HHS also estimates that the number could grow to 4.1 million retirees by 2010 (See Medicare Bill has Implications for Plan Sponsors ).

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“Because the new Medicare law does not fully reimburse employers for the cost of the drug benefit and since the new drug benefit cannot be coordinated with retiree prescription drug coverage, it encourages companies to drop drug coverage for their retirees,” Cardin railed in the statement. “As a result, millions of retirees will see   their drug benefit reduced or completely eliminated.”

In January, Cardin introduced the Preserving Medicare for All Act, HR 3702, which he said will fix the “structural flaws” contained in the Medicare law. The measure would fully reimburse employers for the cost of their retiree drug coverage.  

It also would lower prescription drug costs by:

  • allowing HHS to use the purchasing power of 40 million Medicare beneficiaries to negotiate lower drug costs with pharmaceutical companies
  • provide a guaranteed, universally available drug benefit option through Medicare
  • repeal the provisions that will threaten traditional Medicare
  • eliminate excess payments to private health plans
  • repeal the expenditures cap that will result in harsh cuts to Medicare providers and patients.

Cardin said a ruling by the Equal Employment Opportunity Commission (EEOC)   that allows employers to reduce or eliminate retirees’ health benefits when they become eligible for Medicare at age 65 compounds the problem (See   EEOC Approves ‘Erie County’ Exemption ).

Cardin also released a research report on the potential extent of the drug coverage problem at  http://www.cardin.house.gov/SupportingFiles/documents/cardin_drug_card.pdf .

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