WASHINGTON, DC – U.S. Congressman Greg Walden (R-OR) authored the following op-ed on the passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (HR 1), which passed on November 22 in the House of Representatives.

By Congressman Greg Walden

November 24, 2003

When Medicare was created 38 years ago, Americans received most of their health care in hospitals. Today, prescription medications are an integral part of a wellness program to keep seniors out of the hospital and at home leading healthy, productive lives. Unfortunately, our Medicare program fails to provide prescription drug coverage for America’s seniors, which jeopardizes seniors’ health, wrecks seniors’ finances and simply makes no sense whatsoever. Medicare will pay huge sums of money for a senior’s heart surgery, but not a penny for prescriptions that might prevent heart disease in the first place. An ounce of prevention is worth a pound of cure, and we would be wise to make our Medicare system reflect the wisdom of that old adage.

On November 22 the House of Representatives passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (HR 1), a bill that will do more than just provide a prescription drug benefit for America’s seniors. The endorsement of this comprehensive health care measure by the American Association of Retired Persons (AARP), the American Medical Association (AMA) and the American Hospital Association – groups representing seniors, doctors and hospitals – demonstrates the broad-based support the legislation earned because of its ability to improve the delivery of health care, especially in rural areas. Consider what the bill means for Oregon.

The percentage of Oregonians who are covered by prescription drug insurance will increase from 60.4 percent to 96.6 percent. Some 54,000 low-income Oregonians who are not eligible for the Oregon Health Plan and who do not have any prescription drug coverage will be covered by the new prescription drug benefit. The average out-of-pocket expenditures, including premiums, by Medicare beneficiaries in Oregon for prescription drugs will decrease approximately 35 percent from $627 to $407 per year.

Within six months after the bill is signed, Oregonians will be eligible for Medicare-approved prescription drug discount cards, which will provide them with savings of between 10 and 25 percent off the retail price of most drugs. Seniors with incomes of less than $12,123 ($16,362 for couples) who lack prescription drug coverage will also receive up to $600 in annual assistance to help them afford their medicines. Beginning in 2006, in exchange for a monthly premium of about $35, seniors who are now paying the full retail price for prescription drugs will be able to cut their drug costs roughly in half. Seniors with incomes below $12,123 ($16,232 for couples) – more than 151,000 in Oregon – will pay no premium for their prescription drug coverage and will have to pay only a nominal co-payment of $2 for generic drugs and $5 for brand name prescriptions. Oregonians with incomes below $13,470 ($18,180 for couples) will qualify for reduced premiums, lower deductibles and coinsurance, and no gaps in coverage. And in a very important policy change, because Medicare will now cover the cost of prescription drugs for seniors, the Oregon Health Plan will save $279 million in the next 8 years. That’s a huge savings for the state’s landmark health plan, which has been forced to cut off some help to the poorest Oregonians.

The bill also makes the biggest improvement in rural health care in history, especially by increasing reimbursement rates for rural health providers. Under the current system, rural health care providers receive Medicare reimbursement rates that are often so low that they cannot afford to provide care to seniors. As a result, many physicians have been forced to refuse new seniors as patients. The legislation we passed increases these reimbursement rates, which will help ensure that rural Americans have access to quality health care. Additionally, the bill increases the reimbursement rate for home health services furnished in rural areas and increases Medicare payments to rural ambulance services. Finally, the measure provides a 5 percent bonus payment for physicians practicing in under-served areas.

In addition to the improvements to Medicare, our legislation creates personal, interest-bearing Health Savings Accounts (HSAs), which will grant individuals more control over their own health care dollars. Contributions to these accounts will be pre-tax. Earnings and withdraws will be tax-free. Individuals will be allowed annual tax-deductible contributions up to $2,500 for singles and $5,050 for families. Those 55 and older can make catch-up contributions up to $1,000. These tax-free HSAs will be portable, from job-to-job and into retirement. Money saved can be carried forward year to year to pay for qualified health expenses over one’s lifetime, such as insurance premiums, deductibles and prescription drugs, as well as long-term care services and insurance. And any remaining balance can be inherited by heirs.

As a member of the Energy and Commerce Committee, I worked hard to help craft this historic legislation. While it’s not the perfect bill, it does update Medicare in critical ways by providing seniors a prescription drug benefit, improving the delivery of health care in rural areas, and by creating new HSAs that will help all taxpayers better afford the cost of health care.

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