Congresswoman urges repeal of 'flawed' medicare drug card law.

U.S. Rep. Nancy Pelosi, D-Calif., is no fan of the nation's new Medicare Modernization Act.

Speaking before many of her hometown constituents at the downtown Hilton in San Francisco, Pelosi--the House Minority Leader-told more than 2,500 medical industry professionals at the joint conference of the American Society on Aging and the National Council on the Aging that the Act is "fundamentally flawed" and "a huge step backward" for the elderly and the senior care industry.

Critics such as Pelosi maintain the bill will drive up the cost of prescription drugs for anyone who uses or provides them--such as seniors and long term care facilities--because it prohibits the government from negotiating lower drug prices.

The Medicare Modernization Act was passed by lawmakers in late November 2003 and signed by President Bush in early December. It creates a prescription drug benefit plan for the nation's 40 million seniors and allows them to buy medications at a reduced cost. Seniors can also choose to maintain traditional Medicare coverage or switch to a new Medicare-approved private plan with broader coverage.

The bill also provides incentives to employers to maintain health care benefits for retirees, and removes restrictions on health savings accounts. This will give Americans more control over their health care costs, according to the legislation's summary.

The legislation's supporters maintain that the bill will save seniors billions of dollars over a two-year period by allowing private health plans to compete for seniors' business by providing better coverage at affordable prices--in effect controlling Medicare costs via marketplace competition, not government price-setting.

Efforts to repeal the law are underway, Pelosi said. Conference moderator James Firman, NCOA's president and chief executive, asked how Pelosi "would respond to those who argue that repealing the Medicare law [instead of fixing it] would eliminate coverage for 7 million seniors."

Pelosi said the Act needs to be repealed because it "undermines Medicare." The true goal of the legislation, she said, is to privatize Medicare and push seniors into HMOs.

"All of this may sound a bit harsh," Pelosi told the crowd. "But the truth is, our seniors deserve better than this."

The conference's first speaker, Mark McClellan, told the audience they were getting a better Medicare plan, specifically in the area of a drug plan. McClellan, appointed as the new administrator of the Center for Medicare and Medicaid Services (CMS) a few weeks before the conference, replaced Thomas Scully, who resigned in December to return to private law practice.

McClellan, who left the conference before Pelosi began speaking, stressed the merits of Medicare's new prescription drug card program, which began in May. The cards, available to Medicare recipients, provide discounts of 10 percent to 25 percent for cash prescription drug purchases.

The program is a transition to the federal drug insurance plan, which begins in January 2006. An estimated 7.3 million Medicare recipients are expected to enroll in the drug card plan this year and save between $1.4 billion and $1.8 billion on their prescriptions, McClellan said.

In addition, another 4.7 million low-income seniors--those with annual incomes of less than $13,000 if single or $17,000 if married--are expected to enroll in Medicare's Traditional Assistance Program, McClellan said. Traditional Assistance provides a $600 credit for the purchase of prescription drugs in 2004 and up to a $600 credit in 2005 and could save seniors another $2.4 billion, according to McClellan.