By The Honorable Bob Franks, President, HealthCare Institute of New Jersey
Hillside, NJ, June 16, 2003 — In a rare display of bipartisan resolve, Congress may finally be able to pass a landmark Medicare reform bill in the next few weeks, giving seniors a much needed prescription-drug benefit.
When that happens, its passage would mark the largest expansion of Medicare in the program’s 38-year history — placing affordable, life-enhancing medicines within reach of all senior citizens.
For nearly four decades, health insurance for the aged – popularly known as Medicare – has had a profound and sweeping impact on the lives of both young and old Americans.
Medicare, which directly aids our nation’s seniors and relieves millions of younger Americans from heavy financial responsibilities when a parent or grandparent becomes ill, has been a much-needed safety net for society.
However, when Medicare was created in 1965, no one could have imagined the proliferation of miracle drugs that now play an important role in health care. Many of the diseases that required hospitalization, surgery or other treatment when Medicare was created can now be treated more effectively and less expensively with medicines. In fact, older Americans and the disabled not only have access to life-saving drugs – they have access to medicines that provide a higher quality of life.
Unfortunately, Medicare has not been modernized to reflect the important role that medicines play in treating disease.
While seniors have the greatest need for prescription drugs, many elderly Americans do not have prescription drug coverage. In 2001, for instance, more than 15 million Medicare beneficiaries lacked any form of drug coverage. According to the Kaiser Family Foundation, Medicare beneficiaries account for 14 percent of the U.S. population, but 43 percent of the nation’s total drug expenditures.
That’s why a prescription drug plan is essential today.
Data collected by the HealthCare Institute of New Jersey reveals some startling figures about Medicare and older Americans:
- In 2001, a full 40 percent of Medicare beneficiaries lacked prescription drug coverage;
- Those who were covered, received drug coverage through supplementary insurance from one or more sources including HMOs, Medigap, Medicaid, state assistance programs and employer retiree benefits;
- Medicare beneficiaries without drug coverage use fewer prescriptions — including essential prescriptions for hypertension, heart failure and stroke — and were less likely to survive without them;
- Elderly have a greater need for prescription drug assistance since prescription drug use increases with age. In 1999, seniors spent an average of $706 annually on prescription drugs, which is almost double the average ($379) spent by other consumers;
- Compared to other living expenses, such as housing, transportation and food, prescription drugs represent a small part of total consumer spending for seniors — just 3 percent;
- Requiring high co-pays and imposing onerous cost-sharing arrangements lead to reduced medication use and more adverse health effects such as hospitalization and nursing home placements.
Prescription medicines are a vital component in health care and they are cost-effective; recent studies indicate that prescription medicines account for just nine cents out of every health care dollar and can help avoid more costly forms of care such as hospitalization and surgery.
Strengthening and improving Medicare to meet the needs of both consumers and taxpayers in the 21st century is long overdue. While Congress and the President have both named enactment of a Medicare Prescription Drug Benefit as the top healthcare priority this year, they must now put aside partisan bickering and find the political will to revamp this program that has revolutionized healthcare for the elderly.
There are many proposals before Congress which would create a prescription drug benefit and greater health options for seniors. In this day of remarkable innovation, modernizing Medicare to include a prescription drug benefit is essential. When that happens, we will all witness landmark legislation of historic proportions – almost as historic as the passage of Medicare itself.
Former New Jersey Congressman Bob Franks represented the 7th District of New Jersey from 1993-2001. He was a member of the New Jersey General Assembly for 13 years before that. For the past four years, he has served as the President of the HealthCare Institute of New Jersey, the Hillside-based trade group for the pharmaceutical and medical technology industry.