REMARKS BY:
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TOMMY G. THOMPSON, SECRETARY OF HEALTH AND HUMAN SERVICES
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PLACE:
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Four Seasons Hotel, Washington, D.C.
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DATE:
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February 17, 2004
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Address to the Blank Rome Health Leadership Forum
Thank you, David, for that kind introduction.
Ladies and gentlemen, the greatest health care system the world has
ever known operates right here in America, and the people in this
room are a part of it. Our system is great because doctors
and nurses, hospitals and clinics, manufacturers and researchers,
investors and pharmacists have the freedom to compete to offer the
best choices possible.
My job as Secretary is to do everything I can to make Americans
strong, healthy, and independent. And we’ve done that
in countless ways—from increasing organ donation to
expediting the FDA approval of new drugs so they can save more
lives more quickly.
Over the past three years, we have approved Medicaid waivers and
state plan amendments to allow state governments to expand access
to health coverage for more than 2.6 million people, and to expand
the range of benefits offered to 6.7 million other Americans.
And the care provided by our system continues to improve.
Private investors spend $32 billion every year on health care
research, and taxpayers spend another $32 billion. Their
research yields new drugs that are replacing surgeries and
hospitalizations. They also produce better screenings and
more advanced preventive care.
Naturally, private health insurance plans have competed to cover
recent advances in medicine. But until recently, Medicare
didn’t. Seniors who saw others taking advantage of
modern medicine naturally wanted it, too, and they wanted it
through Medicare. That’s why President Bush recently
signed into law the most significant improvements to Medicare since
it was created in 1965. The new law will save seniors money
on prescription drugs, make more preventive benefits available, and
improve access to care in rural areas.
In many cases, benefits will be enhanced immediately. We are
already reviewing the new benefit proposals submitted by Medicare
Advantage plans. It appears that more than half of current
enrollees will see better benefits and that almost as many will see
reduced premiums or out-of-pocket savings. The average premium may
shrink by as much as a third.
Let me give you a few examples. Independent Health and
Univera Healthcare will reduce premiums for Medicare Advantage
plans in New York by 13 to 50 percent. Independent Health also
expects to enhance benefits. Plans in Colorado are planning
to cut premiums by 50%. In Massachusetts, Tufts is cutting
premiums from $147 to $80. And members of the Medicare Blue Value
plan of Horizon Blue Cross Blue Shield of New Jersey will no longer
pay the $52 premium.
Over all, we expect that 2 million Medicare Advantage beneficiaries
will pay lower premiums, 2 million will save money on cost sharing,
and 3.4 million will get enhanced benefits. For example, 32 percent
of beneficiaries today have coverage that includes brand name
drugs. We project this number to rise to 45 percent. The
bottom line is that the increased payments to insurance plans have
resulted in better benefits and reduced premiums for seniors.
Congress and the President have an ambitious timeline for
implementing the Medicare-endorsed drug discount card. Our
Centers for Medicare and Medicaid Services have been working with
State governments, the Social Security Administration, and other
partners to identify people eligible for the card, set up
communications systems for information sharing, create a price
comparison web site, and review the card provider applications.
We received 106 applications. 57 of these would serve the
general Medicare population, nationally or regionally, while 48
applications are from Medicare Advantage plans that want to provide
cards to their enrollees. Many types of entities applied,
including insurers, wholesalers, PBMs, pharmacy chains, and
manufacturers. We are reviewing these applications to see
which ones meet our requirements.
Seniors can begin enrolling in the card by May of this year.
We will add transparency to the prescription drug market by making
public the price of each drug under each card. Competition
among the cards will drive down drug prices, probably very
significantly, as people compare the prices each card offers for
the drugs they typically take.
So, a senior citizen, let’s call her Mrs. Jones, can sit down
with all of her prescriptions in front of her and call
1-800-MEDICARE. Our representative will review with Mrs.
Jones the discount cards in her area, and tell her the price she
will pay for her prescriptions under each card. Mrs. Jones
can choose the card that will give her the best deal for the
prescriptions she’s taking. If Mrs. Jones has a
computer, she will be able to go to our web site and get the exact
same information.
And it’s not only the law and our advisors that are making
medicine more affordable. We’re also delighted by the
news that some drug manufacturers will be generously providing
drugs to low-income seniors with deep discounts or outright gifts.
We’ll include these discounts in our prescription drug
assistance tool on medicare.gov. So when Mrs. Jones calls,
we’ll be able to quote drug prices that include both the drug
card discounts and any manufacturer discounts that apply to
her.
Here’s how the card will roll out. We have the
applications. We’ll announce which cards we’ve
approved in March. Sponsors will market the cards in
April. Beneficiaries can sign up for cards in May. And
the discounts will begin in June.
In addition to the discount card, the law also provides $600
Transitional Assistance to low-income Americans. We are working
with the Social Security Administration, SHIPS, safety net
providers, and pharmacists to find and enroll as many eligible
Americans in the program as possible. Of course, we’ll
also make it easy for people to identify themselves. Those
who are interested in receiving the assistance will fill out an
enrollment form that we will use to determine eligibility and the
appropriate level of co-payments. The companies will keep
track of the $600 on each card.
State governments have great latitude in how they interact with the
new benefit, and CMS has been working with them to ensure that the
both the drug card and the drug benefit are coordinated with state
Medicaid programs. For example, the $600 Transitional
Assistance is not available to dual eligibles because they already
receive a generous drug benefit from Medicaid. CMS is
focusing on those states with state pharmaceutical assistance
programs (SPAPs).
As you know, I’m a big proponent of improving the efficiency
of our health care system by improving information
technology. That’s why we provided a computer language,
SNOMED, to providers at no charge. That’s why
we’re leading the way in developing standards for electronic
medical records.
And Medicare is no exception. We are going to make sure we
fulfill all the new requirements as we implement the legislation.
CMS has developed an entire modernization plan, which is even more
important with the MMA’s addition of the drug card, the drug
benefit, chronic disease management, and contractor reform.
On January 1st, 2005, the “Welcome to Medicare
Physical” benefit will begin. For the first time,
seniors entering into Medicare will be offered the physical and a
number of preventive services.
Finally, to make all the new programs as effective as they can be,
we must help seniors to understand them. The Medicare
Modernization Act requires the Social Security Administration to
send letters explaining the drug card and the Transitional
Assistance program to 18 million lower-income people with
Medicare. At about the same time, CMS will send letters to 36
million Medicare households to introduce the card and the TA
program. These letters will be complemented by a TV ad
campaign on the card.
The press has charged some companies with marketing a
Medicare-approved card well before we’ve authorized any
cards. I want to assure you that Federal officials are on the
case, and we’ll clear up any misimpressions created by
deceptive marketing. This is yet another reason why our
education campaign is so important.
All of these efforts, from enrolling people in Transitional
Assistance to mailing out letters, will help seniors understand
their choices in preparation for the full benefit in 2006. Starting
this dialogue now will help them learn about formularies, branded
drugs vs. generic drugs, and other important concepts.
Adding significant benefits to a very large government program is a
major task, and we expect there will be bumps along the way.
But the response so far—in drug card applications, in reduced
premiums, in drug manufacturer discounts—has been gratifying
to us, and, most important, very helpful to seniors.
We’ve started running our first ad to prepare seniors for the
new Medicare benefits. Some on Capitol Hill have charged that
this ad is too political. I thought I would play it for you
and let you make up your own minds.
Last Revised: February 17, 2004
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