What Medicare reform means to you

Currently, Medicare does not cover the cost of prescription medicines RELATED VIDEOS CNN's Brook Jackson reports on how Medicare recipients pay for prescriptions Windows Media 28K 80K CNN's Chris Black reports on President Clinton's Medicare plan Real 28K 80K Windows Media 28K 80K CNN's Don Knapp reports on how one retiree could pay more for medicare, but wants to get her money's worth. Real 28K 80K Windows Media 28K 80K CNN's Don Knapp reports on new legislation affecting medical students' compensation. Real 28K 80K Windows Media 28K 80K RELATED AUDIO: Listen to a counselor from the Medicare Rights Center hot line talking to a caller. Click Here! INTERACTIVE: Medicare Facts Click Here!  ALSO: Prescription drug aid for elderly poor

June 29, 1999
Web posted at: 12:51 p.m. EDT (1651 GMT)

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NEW YORK (CNN) -- While Medicare provides many medical benefits for the elderly, it does not include prescription drug coverage, a fact that puts Anna Egan, and millions of aging Americans like her, in a bind -- their limited budgets squeezed to pay health care expenses.

The predicament will take center stage in Washington in coming weeks as President Clinton and the Republican-led Congress look for a compromise on the administration's proposed overhaul of the 34-year-old Medicare program.

"Drugs are critical to modern health care," said Health and Human Services Secretary Donna Shalala. "We now substitute drugs for hospital stays.... The drug benefit is important to improving health care in this country for our seniors," she told CNN on Tuesday.

Congressional Republicans, who want to reserve some government surpluses for income tax cuts, have been skeptical about how Clinton will come up with money to add an expensive new prescription drug benefit to the already cash-strapped Medicare program.

Change won't be cheap. The Congressional Budget Office estimates that adding even a modest drug benefit to Medicare will cost $30 billion.

The subject of expensive drugs is already a familiar one to Egan. Like many retirees, the New Yorker has several prescriptions, in her case for cancer, diabetes and high blood pressure. None of them are covered by Medicare.

Egan is among the fortunate Medicare recipients who have other insurance for drugs, but she still pays $107 a month in premiums and $5 to $10 for each prescription. That coverage, however, ends next year.

It's a national trend -- medical expenses for Medicare recipients that exceed what Medicare will cover. Surveys show that the people least likely to have prescription drug coverage are the poor and the sick.

Congress and the Clinton Administration are to battle over the 34-year-old Medicare program in the next several weeks

"We hear every kind of story," says Diane Archer of the Medicare Rights Center, a non-profit organization which operates a telephone hot line to counsel Medicare beneficiaries who cannot afford private assistance.

Some callers "aren't paying their electric (bill) in order to get their medicine," Archer told CNN, while others "aren't getting their medicine in order to pay their electric."

Mollie Bersin doesn't have to make such a drastic choice. Even so, the California retiree sees more and more of her income going toward health care.

Like everyone else with Medicare insurance, she pays the standard $45.50 monthly premium. Bersin could probably pay more, if she had to, but "I wouldn't like it."

Charging a higher Medicare premium to those who can afford it -- the so-called "means test" -- is so controversial, however, that it's not expected to be included in whatever Medicare reform is eventually adopted.

That troubles Robert Moffett of the Heritage Foundation, an organization that says it is "committed to rolling back the liberal welfare state."

"Right now, today, all Medicare beneficiaries, regardless of their income, get heavy subsidies from the government," Moffett said. "For every dollar that the elderly pay for Medicare benefits, the taxpayer subsidizes them by about five dollars."

Egan's supplemental insurance that helps pay for expensive prescription medicine ends next year

Moffett argues that lower-income working people end up subsidizing the health care costs of higher income retirees.

But Patricia Smith of the American Association of Retired Persons says younger, working people already get a break.

"They get substantial employee and consumer tax deductions and exclusions," Smith told CNN. "Those are, in fact, subsidies from the federal government for their health care (that) apply whether you are higher income or not."

Meantime, if Washington decides Bersin must pay more for her Medicare coverage, she'll do it. But she'll also expect the government to give her more benefits.

Correspondents Chris Black, Brooks Jackson and Don Knapp contributed to this report, which was written by Jim Morris.