Clinton Mulls Medicare Rx Plan

Like many seniors on fixed incomes, Vivian Mendelsohn takes a lot of prescription medicine, and worries with every dose about how much it costs. "It's a priority, and so I have to cut back in other ways," Mendelsohn said.

Mendelsohn already buys so-called "Medigap" insurance, which covers expenses over what Medicare pays. But there's a cap on that policy, so she still pays about $1500 for drugs each year. And she's one of the lucky ones, reports CBS News Correspondent Bill Plante.

"About half of all seniors have no prescription drug coverage at all," according to Diane Archer of the Medicare Rights Center. "The other half often have only limited coverage. Projections are that by 2000, less than one quarter of all seniors are going to have any prescription drug coverage."

This month, the president will offer a Medicare overhaul plan that will include prescription drug coverage for all Medicare recipients. Beneficiaries would pay for it -- probably under $50 a month. But, White House officials admit, that money alone can't begin to pay the billions the drug program will cost.

"This will be part of an overall package which will include savings from modernizing the program and making it more efficient," said Gene Sperling, the White House Economic Advisor.

"We are working on a benefit that is both meaningful and affordable to both the beneficiaries and the program," said White House domestic policy adviser Chris Jennings.

The President's plan is an alternative to one proposed in March by an advisory commission. Jennings said Mr. Clinton's proposal, first mentioned in his State of the Union message in January, has yet to be finalized.

Administration officials are looking for ways to make the new benefit affordable without imposing government price controls on drugs, possibly by hiring private companies to help negotiate the best prices and manage the program.

Under the plan President Clinton is considering:

  • Employers who now offer drug benefits to retirees would be allowed to buy Medicare drug coverage.
  • The government would encourage competition among private health maintenance organizations by requiring them to bid for the right to enroll Medicare beneficiaries.
President Clinton, as well as many Republicans and Democrats, has voiced support for Medicare drug benefits. But the costs are daunting, especially since Medicare is expected to run short of cash when the first wave of baby boomers retire around 2010.

One government estimate found that adding even a modest benefit -- having Medicare pay, for example, 75 percent of their drug bills -- would cost at least $20 billion a year.

President Clinton has proposed using about $700 billion in income tax surpluses expected over the next 15 years to boost Medicare's finances and help pay for the drug coverage. The administration also is contending that adding a prescription drug benefit could save Medicare moey by reducing the need for hospital stays and nursing home care.

Still some skeptics in Washington say there's no way to pay for drug coverage without cuts in Medicare services and provider fees.