Carole & Thelma Watson, Executive Director  of Field Studies for the National Committee to  Preserve Social Security and Medicare

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Prescription Drug Coverage: What You Should Know
    Medicine relied on hospital inpatient, invasive procedures in 1965 when Medicare was created. Today, however, modern medicine increasingly relies on pharmaceuticals to treat and prevent illness; and Medicare must keep up with the trend toward prescription drug use. Prescription drug coverage, not common in health insurance in 1965, is now standard. Only Medicare has failed to keep pace with new developments in the practice of medicine.
    In 1965, Medicare was structured to spread insurance risk among a broad pool of participants, rely upon the tax system to ensure that the health insurance was affordable and universal, and administer the health insurance program by the federal government to ensure that all seniors would be served. A Medicare prescription drug benefit that is targeted by income or by a beneficiary's current health insurance status is further erosion of universality of Medicare.
    Prescription drugs are key to many breakthroughs in chronic illness, such as Alzheimer's, Parkinson's, cardio-vascular disease or diabetes. To get well or remain healthy longer, seniors must be able to afford the drugs they need.
    In congressional testimony in May, CBO Director Crippen said that Medicare could save funds if proper care were provided for conditions such as diabetes and asthma before the conditions progressed to the point of requiring acute care. Prescription drugs are an important part of any preventive health program.
    Approximately two-thirds of Medicare beneficiaries have prescription drug coverage from Medicare managed care, from Medigap or retiree health coverage, or from Medicaid. Each of these options has is own pricing structure and limits on the coverage.
    Approximately 35 percent of seniors do not have outpatient prescription coverage-even though three-fourths of Medicare beneficiaries have some chronic health problems that often require ongoing treatment with prescription drugs.
    About 85 percent of seniors use at least one prescription medication during a given year. The average senior takes more than four prescriptions daily and fills an average of 18 prescriptions each year.
    Although about 69 percent of Medicare Risk HMOs offered outpatient prescription coverage in 1997, these plans still represent a very small portion of the market and coverage is not offered in most areas of the country.
    According to the Congressional Budget Office, generic pharmaceuticals purchased through retail pharmacies saved consumers between $8 and $10 billion in 1994.
    The trend of employers dropping retiree health coverage threatens to dramatically increase the number of seniors with no prescription coverage. The number of employers offering retiree health insurance continues to dwindle, down from 37 percent in 1988 to 27 percent in 1994, according to the U.S. Department of Labor.
    Increased spending by Medicare beneficiaries is due largely to the lack of prescription drugs in the basic Medicare package. Medicare beneficiaries spent $2,065, 21 percent of their incomes, on out-of-pocket health care expenses in 1996-nearly three times more than what was spent by the under age-65 population.
    Martha A. McSteen is President of the National Committee to Preserve Social Security and Medicare, the nation's second largest senior advocacy group.
    She spent 39 years with the Social Security Administration, rising from claims representative to acting Commissioner. As one of the ten original members of the Regional Medicare Administration, Mrs. McSteen has an understanding of Medicare unique in the nation.