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July 2, 2002


Retiree Drug Costs Will Remain Steep Under House Plan, Emory Study Shows

EDITORS NOTE: For full text of study see

Contrary to widespread expectations of substantial relief in the offing, Medicare beneficiaries, overall, will still have to pay 70 percent of the costs of their prescription drugs under the terms of the Medicare drug plan passed by the House of Representatives on June 28.

Moreover, 6.8 million of the elderly and disabled Americans who receive Medicare benefits will have to pay the full catastrophic limit of $3,700 a year for prescription drugs, according to an analysis by Kenneth E. Thorpe, PhD, chairman of Health Policy and Management in the Rollins School of Public Health at Emory University.

Additionally, 11.7 million Medicare recipients will have to pay an average of $2,200, says Dr. Thorpe, using Congressional Budget Office projections for the year 2005, when the House-approved plan would go into effect. The scale of those out-of-pocket expenses may be surprising to some retirees who assume from the headlines that Congress has moved half-way toward relief of their prescription drug cost burden, one of the dominant issues in the year 2000 Presidential campaign.

"Much of the debate and rhetoric over the Medicare drug legislation has led many seniors to expect substantial financial relief from the high out-of-pocket expenses for their prescription drugs," says Dr. Thorpe. "For many, the reality of the House prescription drug bill may indeed constitute a major shock. Indeed, many Medicare beneficiaries who incur high drug expenses may expect that the House-passed bill will reduce substantially their out-of-pocket spending. Yet, as the analysis reveals, this is not likely to be the case. Indeed, nearly 50 percent of Medicare beneficiaries will still face annual out-of-pocket liabilities that average over $2,750 per year."

The Senate is currently considering its own approach to the issue. Whatever bill it passes will have to be reconciled with the House version in conference committee.

Dr. Thorpe is an experienced health policy analyst who served from 1993 to 1995 as deputy assistant secretary for health policy in the U.S. Department of Health and Human Services.

In this capacity, he coordinated all financial estimates and program impacts of President Clinton's health care reform proposals for the White House. He also directed the administration's estimation efforts in dealing with Congressional health care reform proposals during the 103rd and 104th sessions of Congress. He has held faculty appointments at the University of North Carolina at Chapel Hill, Harvard University, and Columbia University.

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