Skip to main content
Resolutions & Amendments

37th International Convention - Chicago, IL (2006)

Fix Medicare’s Part D Prescription Drug Benefit

Resolution No. 3
37th International Convention
August 7-11, 2006
Chicago, IL

AFSCME has fought for two decades to add a prescription drug benefit to Medicare; and

The Medicare Modernization Act of 2003 (MMA) established a voluntary prescription drug benefit for Medicare beneficiaries that went into effect in January 2006; and

AFSCME opposed enactment of the MMA for many reasons: The law could lead to privatization of the entire Medicare program.  The drug benefit has big gaps in coverage, and is available only through competing private plans rather than Medicare itself, which segments the market and makes it difficult to hold down costs.  The MMA bars Medicare from using its enormous buying power to negotiate directly with drug manufacturers for lower prices and is essentially a huge giveaway to insurance and drug companies – taking away funds that should be used to improve the benefits and lower costs for seniors; and

Many Medicare-eligible AFSCME retirees won’t need a Part D plan because they enjoy comprehensive employer-paid drug coverage – although this coverage has been plagued by soaring costs and continuous cost-shifting to retirees; and

To help employers meet rising costs and keep providing good retiree benefits, AFSCME succeeded in winning an employer subsidy in the MMA, although the subsidy is smaller than AFSCME believed necessary to maintain retiree benefits over time; and

The initial enrollment period for Part D caused enormous confusion among seniors and the disabled because they had to compare premiums, deductibles and co-pays in dozens of  private plans while Medicare’s hotline and state health insurance assistance programs were overwhelmed with calls and unable to provide information and guidance to everyone; and
Drug lists – known as formularies – also vary from plan to plan and tend to have limited choices,  making it difficult for people who use multiple prescriptions to find a plan that covers all their prescribed medicines; and

Despite the confusion, Congressional leaders and the White House refused to extend the May 15 enrollment deadline and fought efforts to waive the 2006 penalty for those who missed the deadline:  a permanent 1 percent in additional premiums for every month a person delays signing up for a plan; and

Nearly half the Medicare beneficiaries who lacked drug coverage before Part D have responded to the complexities of the program by not signing up, leaving millions of seniors and disabled out in the cold for 2006 and subject to hefty penalties if they decide to sign up for Part D next year.

That AFSCME will support legislation that will do the following:  ensure effective cost-containment by repealing the MMA’s prohibition on Medicare negotiating drug prices and requiring the Secretary of Health and Human Services to bargain directly with pharmaceutical companies; provide that the savings from this process – estimated to be as much as 50 percent of the price of prescription drugs –  is used to reduce the coverage gap as well as other Part D out-of-pocket costs; extend the 2006 open enrollment period until the end of the year and waive the penalty for 2006 as well; improve the employer subsidy and guarantee that retirees with employer paid coverage who sign up for Part D cannot be barred from returning to their employer’s plan if they wish; and establish a prescription drug plan in Medicare itself for beneficiaries who prefer to get their drug coverage in the same way they get hospital benefits (Part A) and medical benefits (Part B).
SUBMITTED BY: Jerry LaPoint, President and Delegate
Retiree Chapter 7