REPEAL AND REPLACE THE 2003 MEDICARE LAW

WHEREAS, because Medicare has served as a safety net for millions of senior citizens and people with disabilities by providing quality healthcare since its creation in 1965, it should be strengthened, not weakened, by the addition of prescription drug coverage at affordable rates; and

WHEREAS, the new Medicare law fails to provide affordable adequate prescription drug coverage and instead will result in high cost-sharing, gaps in coverage, increased risks and harm to existing retiree health plans, threats to state pharmaceutical assistance programs and ill effects for the most vulnerable beneficiaries, such as those covered by Medicaid; and

WHEREAS, the law promotes privatization of Medicare by providing drug coverage through enrollment in private insurance plans, by giving even greater overpayments and special advantages to private plans, by introducing means-testing and by designing false competition to do away with regular Medicare and replacing it with a "premium support" or voucher system—all resulting in unnecessary complications and difficulties that will hinder the ability of beneficiaries to access the drugs and other care they need; and

WHEREAS, the law sets an unprecedented budgetary limit on the use of general tax revenue in order to force Medicare to reduce its guaranteed benefits and further increase costs to beneficiaries; and

WHEREAS, runaway prescription drug costs are creating a major crisis for this country's healthcare consumers; and

WHEREAS, overall healthcare spending is projected to increase 10 percent per year in each of the next five years; and

WHEREAS, spending on drugs grew faster than any other personal health category during the last three years, averaging nearly 15 percent in each year, with projected increases of 15 percent for each of the next five years; and

WHEREAS, the United States has the highest drug prices in the world and is the only industrialized country not to have put in place some form of price controls on prescription drugs; and

WHEREAS, drug company profits are among the highest of all major corporations, averaging as much as three times that of the typical Fortune 500 company; and

WHEREAS, the 2003 Medicare law expressly forbids Medicare from establishing a national Medicare prescription drug program, using the power of its more than 40 million participants to negotiate drug prices, and instead relies exclusively on private insurance companies and HMOs; and

WHEREAS, in 2010, the federal government will provide a 25 percent subsidy for private providers to "compete" with Medicare, while supplying traditional fee-for-service Medicare no additional subsidy; and

WHEREAS, the law provides generous subsidies and favored tax treatment for health savings accounts, which encourage employers to drop traditional health coverage, forcing more of skyrocketing healthcare costs on individual workers and retirees; and

WHEREAS, the new law, when it becomes effective in 2006, will leave retirees with no coverage for drug spending between $2,251 and $5,100 that year, with the amount left uncovered likely to grow substantially in each succeeding year; and

WHEREAS, few, if any, retirees with employer coverage will ever qualify for catastrophic coverage under the terms of the law; and

WHEREAS, the new federal subsidy for employers providing prescription drug coverage to retirees is inadequate, leaving a $1,000 per retiree savings for employers who drop retiree drug coverage; and

WHEREAS, the U.S. Department of Health and Human Services projects that some 3.8 million retirees with employer-provided drug coverage will see that coverage eliminated or reduced as a result of the 2003 law; and

WHEREAS, public employers providing prescription drug coverage receive a significantly smaller subsidy than that of private employers; and

WHEREAS, employers continue to shift a growing portion of healthcare costs to employees and retirees in the form of higher premiums and co-payments; and

WHEREAS, older Americans have a greater need for prescription drugs than other age groups because they are more likely to suffer from chronic disease that requires drug therapy; and

WHEREAS, only about a third of seniors receive drug coverage through employer-sponsored retiree plans with these benefits subject to ever-increasing co-payments, and the percentage of large employers offering retiree prescription drug coverage fell from 40 percent to 28 percent between 1994 and 2002 and continues to decline:

RESOLVED, that the AFT, working with the AFL-CIO and Alliance for Retired Americans, continue to fight to replace the 2003 Medicare law with a law that makes prescription drugs available and affordable to all citizens on a voluntary basis, closes the coverage gap for prescription drugs, increases and equalizes the subsidy for employers who provide retiree drug coverage, establishes a national Medicare prescription drug plan to compete with private plans, grants Medicare the right to negotiate prescription drug prices, permits Americans to re-import U.S.-made and licensed drugs safely from Canada, Europe and other advanced industrial nations, ends preferential subsidies for HMOs and PPOs competing with Medicare; and

RESOLVED, that the AFT continue to educate members on issues that affect access to affordable prescription drugs and provide information on how rising drug prices are driving up the cost of employer-sponsored healthcare plans for workers and retirees; and

RESOLVED, that the AFT work with the AFL-CIO, Alliance for Retired Americans and other like-minded groups to promote an objective study of the feasibility of adding a long-term care benefit to Medicare; and

RESOLVED, that the AFT reject any attempt to privatize Medicare and strongly support efforts to expand the prescription drug benefit under Medicare and make it available and affordable for every senior and disabled person.