Article

One of the few statements accepted across the political spectrum is that the implications of the new Medicare law are enormous. Clearly, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) is important because it adds a long-overdue drug benefit to the program that costs between $400 and $535 billion over ten years. Beyond this, the delivery system and design of the drug benefit; its interactions with the renamed and reinvigorated Medicare Advantage (formerly the Medicare + Choice program); and other changes have similarly profound implications. Many of the changes are clear in the structure of the legislation, [i] but others are in its details and their impact depends on their implementation.

This paper aims to both catalogue the important issues associated with the new law and suggest how they could be addressed. The 50 highlighted issues are both serious and solvable. They focus on concerns of beneficiaries — particularly those with low income or high health care needs [ii] — rather than those of health care providers, health plans, potential drug insurers, or drug manufacturers. Each is described succinctly, including references to both the section of the law where the issue arises and the page number in the Conference Report to Accompany H.R. 1. [iii] The regulatory and legislative fixes are brief suggestions rather than full-blown proposals. Some require further policy development and involve tradeoffs. For example, increasing consumer protections may discourage private plan participation; limiting potentially overly-aggressive cost management tools may increase Federal costs. The intent is to encourage discussion and debate about policies to ensure affordable, meaningful drug coverage, and basic benefits, for the Medicare population.

This paper places a special emphasis on potential regulatory changes to the new Medicare law. The law delegates numerous and significant policy decisions to the regulatory process and the Secretary of Health and Human Services. For example, the regulations could create a simplified appeals process for beneficiaries who lose access to preferred drugs when a plan changes its formulary midyear; they could create standards the limit employer "dropping" of their contributions to retiree drug coverage. These regulatory improvements are especially important since the odds are low that legislative changes can be enacted in the near term. The President has indicated that he will veto major legislative changes, [iv]and has declined to send to Congress a list of technical corrections as required by law. [v] As such, the forthcoming proposed regulations represent an important moment in Medicare policy making.

Jeanne M. Lambrew is a senior fellow at the Center for American Progress and associate professor in the Department of Health Policy at The George Washington University School of Public Health and Health Services.


[i] For an overview, see Moon M. (June 2004). How Beneficiaries Fare Under the New Medicare Drug Bill. New York: The Commonwealth Fund.
[ii] For a fuller description of the consumer issues in the new law, see Dallek G. (July 2004). Consumer Protection Issues Raised by The Medicare Prescription Drug, Modernization, and Improvement Act of 2004. Menlo Park, CA: The Henry J. Kaiser Family Foundation.
[iii] U.S. House of Representatives, Committee on Ways and Means. (November 21, 2003). Medicare Prescription Drug, Improvement, and Modernization Act of 2003: Conference Report to Accompany H.R. 1. Washington, D.c=: U.S. Government Printing Office.
[iv] Bush GW. (January 20, 2004). The State of the Union Address. Washington, DC: The White House.
[v] Marre K. (June 2, 2004). "Administration: No technical Medicare bill is necessary," The Hill, p. 16.

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