This is Floyd Wynne with THE VIEW FROM HERE.

What does the new prescription drug bill do?

Most people applaud the effort of Congress to at least take some steps on the long road to provide some relief for seniors on prescription drugs, but also to provide an alternative to medicare that may save the program in the long run.

As far as I can understand this is the gist of the measure.

Beginning in July of 2004 and into 2005 those Seniors who have an income of more than 150 percent of the poverty level….which is currently $18,000 per couple per year…..they will be able to purchase a discount card that will save them from 15 to 25 percent of their drug costs. Those in the low income level will get a grant of $600 from the government to aid in defraying their drug costs.

The full measure goes into effect in 2006.

Then those with income above $18,000 per year per couple….will pay $35 a month. The first $250 of their drug costs would not be paid for, but after that point the government would pay 75 percent of their drugs

There would be a gap, however, in some cases. The 75 percent would apply up to $2,250 per year…...from then until drug costs reach $3600 out of pocket costs...there would be no coverage, but after that the government would pay 95 percent of the balance. Opponents are calling it a donut that should be eliminated….but it’s in the bill for now.

As for the low income seniors...the premium, deductible and coverage gap would be waived for those earning less than $12,123 per year.

To qualify, seniors would have to have no more than $6,000 in liquid assets.

The subsidies would be phased out between $12,123 and $13,500 per year income.

Now...the bill also provides some 70 billion to be provided to employers who maintain drug coverage for retirees after 2006.

It provides 12 billion in subsidies to private insurers that choose to offer basic health insurance. It would also authorize $25 billion to increase payments to rural doctors and hospitals.

Other provisions include a ban on Canadian drugs unless they are approved by the Health and Human Services department.

It would block planned cuts in doctor payments in 2004 and 2005 and provide a 1.5 percent increase.

As we understand it there would be a test, starting in the year 2010 to determine whether private managed care insurers in some metropolitan areas can provide cheaper coverage than traditional medicare. If that proves to be the case, those seniors choosing to stay with medicare will have to pay up to 5 percent more per year. Low income seniors would be excluded.

There are other provisions but the summary is that there is some temporary relief for seniors in 2004 and 2005 with the main assistance coming with the beginning of 2006, and perhaps later in 2010 if the tests prove the private sector can do the job cheaper than medicare.

There is no question but what this is a big change in medicare….but it will provide low income seniors with $600 for drug costs in 2004 and 2005, and big savings for these seniors beginning in 2006.

Already there are those preaching the doom and ruin of medicare as we know it….but in my book it is the beginning of some changes, particularly in the cost of drugs….that had to be made. Obviously in the long run, some additional controls are going to have to be put on the ever spiraling cost of drugs in this country. Hopefully that can be done without stopping the research and testing of new drugs in the future.

But for now….we think the changes are badly needed.

This is Floyd Wynne and that’s THE VIEW FROM HERE.