Benefit Bulletin: May 2015

Benefit Bulletin: May 2015

Obama’s Medicare Proposals — What Obama Giveth, Obama Taketh Away

President Obama’s fiscal 2016 budget contains proposals that would cut Medicare spending by $423 billion over the next ten years. The cuts would come on top of $716 billion in Medicare reductions mandated by the 2010 Affordable Care Act, and billions more in automatic reductions contained in the 2011 deficit agreement.

At least one of the proposals is a needed change that TSCL supports —providing more savings to the low-income “Extra Help” program. Other provisions are troubling, with some shifting much greater costs to beneficiaries. Here are two highlights:

  • Prescription drug rebates. The biggest source of proposed savings (nearly 23%) would come from requiring manufacturers to provide Medicaid rebates on prescriptions for Part D “Extra Help.” This proposal makes sense because many, if not most, of the 11 million “Extra Help” enrollees are also Medicaid eligible. Beneficiaries and taxpayers should not be gauged with higher drug costs because Medicare doesn’t receive rebates like state Medicaid programs.
  • Higher Part D co-payments for Extra Help Enrollees. To encourage greater use of generic drugs, this proposal would double co-payments that low-income beneficiaries would have to pay for specified brand-name drugs that have a generic substitute. Beneficiaries would be required to successfully appeal coverage determinations to receive brand name coverage. TSCL feels strongly that this proposal is unnecessary and would force the poorest and sickest to pay the highest costs. Many (if not most) drug plans already effectively discourage the use of brand - name drugs by placing them on the most expensive formulary “tiers.” And an increasing number of plans only offer the generic equivalent instead of offering the brand name drug at all. There are, however, some individuals for whom the generic doesn’t work, so providing access to brand name drugs is critical. Currently if a drug plan doesn’t cover a brand name drug, Extra Help enrollees are required to get their doctor to request a formulary exemption to provide coverage from the plan.

A recent TSCL poll indicates that healthcare costs are the “most difficult costs” for about 40% of poll respondents. TSCL is meeting with Members of Congress to find other avenues of Medicare savings, particularly through combatting fraud and waste.


Sources: “Summary Of Medicare Provisions In The President’s Budget,” Kaiser Family Foundation, February 2015.