Principles for Medicare Reform


Because Medicare is a federal program, action to modernize and improve it must come from Washington. But state and local officials are closer to the problems that this antiquated program is creating – problems like a lack of prescription drug coverage.

Good bi-partisan solutions have been developed to reform Medicare, but Washington needs incentives to move forward.

State and local governments and membership organizations can encourage Washington to act by passing resolutions based upon a set of principles that will get the attention of Congress and the White House and guide sound policy decisions.

Principles for a Drug Benefit Resolution

Whereas: The Medicare program covers only half of the health costs of America’s seniors and is increasingly out of step with modern medicine.

Whereas: Medicare does not cover outpatient prescription drugs, even though ninety-nine percent of private health plans provide such coverage.

Whereas: Millions of seniors do not have insurance coverage for prescription drug therapies that are increasingly important to promote and maintain good health.

Whereas: Low-income elderly are particularly at risk of not being able to afford life-saving drug therapies.

Whereas: Adding universal drug coverage to Medicare in its current structure would dramatically increase the program’s cost and accelerate its financial insolvency.

Whereas: Adding universal drug coverage to Medicare in its current structure would dramatically increase the program’s cost and accelerate its financial insolvency.

Therefore be it resolved that: Congress should be guided by the following principles in taking action on a prescription drug benefit for Medicare.

  • Progress toward reform: As an interim measure, Congress should target drug coverage to low-income Medicare beneficiaries who are most likely to be without coverage. The short-term program should be structured to put in place the foundations for long-term Medicare reform.
  • Choice: Beneficiaries should have a choice of private plans with different types of coverage and should not be forced or enticed by subsidies into a monolithic government plan. Government assistance should not crowd out existing private arrangements for drug coverage.
  • No controls: Government should not use its purchasing and law-making power to place controls on prices or ration access to medicines, actions that also would jeopardize long-range innovation and development of new drugs. The Health Care Financing Administration, whose tools are regulation and price controls, should not administer the drug benefit.
  • State authority. New federal programs should not penalize states that already have programs to assist the needy in obtaining prescription drugs. If states are to assist in administering a drug benefit for Medicare beneficiaries, they should have maximum flexibility and ample time to develop programs.

These principles point toward market-based reforms that will result in greater access to quality health care, including affordable coverage for prescription drugs, for today’s and tomorrow’s beneficiaries.

But while we offer these recommendations, we believe there is no substitute for overall Medicare reform that gives beneficiaries the ability to choose private, integrated coverage in a competitive market. Therefore, we strongly encourage the Congress to proceed with overall Medicare reform.


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