Jul 17, 2003 4 min read

HARRISBURG, Pa. (AP) – A complex federal Medicare prescription drug bill currently under construction in Congress could either expand Pennsylvania’s existing drug plan for low-income seniors or prompt a radical overhaul. Pennsylvania’s two Republican U.S. senators have cast conflicting votes on the subject, while uncertainty over the bill’s future is holding up a separate bill in the state legislature to expand the state’s drug plan to cover more low-income seniors.

One question that could affect the 224,000 Pennsylvanians currently in the state plan – it comprises the Pharmaceutical Assistance Contract for the Elderly and a companion program called PACENET – is whether a federal money will complement the existing state program, or whether state money will complement a new federal program.

The $400 million currently spent on PACE and PACENET could be used instead to “wrap around” and fill holes in a new federal drug program that replaces it. Or, if the state program remains intact, Pennsylvania could use a federal subsidy to expand the income limits to allow more people into the program.

A joint congressional committee is trying to work out differences between House and Senate bills that passed last month. Both would create broad Medicare prescription drug plans on top of privately managed health-care plans, but it’s anyone’s guess how a unified bill will look if and when it emerges.

U.S. Sen. Rick Santorum voted against the Senate bill because he said the federal subsidy that Pennsylvania and certain other states would have received to expand their state programs would “compete” with Medicare’s new managed health plans, which would also offer drug coverage. State officials estimated that the federal subsidy provided in the Senate bill would be $250 million.

The proposed low-income Medicare drug program, without any special subsidy, “is better financially for Pennsylvania, and with the option of seniors being able to participate in the Medicare Advantage (managed health care) program, it’s better for seniors,” Santorum said.

U.S. Sen. Arlen Specter voted for the Senate bill – in part at the urging of Gov. Ed Rendell – saying that the many seniors in the program could be confused by the complex federal system to which they would have to switch.

“In a situation where you have an existing program in Pennsylvania, it makes sense that you try to work it out with Pennsylvania,” Specter said.

Most of the proposed low-income Medicare plans, like the basic PACE program, would have no premiums or deductibles, although the Medicare plans lay out a more complex cost-sharing arrangement than PACE’s simple $6 copay.

To participate in PACE, seniors must meet income limits. But to participate in the low-income Medicare program, seniors also would face an “asset test” that PACE advocates say could bump those with savings of a few thousand dollars or more to a less affordable drug plan.

For now, a state bill expanding the income limits for PACE and PACENET is being held up in the Senate by Republican Leader David J. Brightbill while the ramifications of the pending federal Medicare bill are studied.

Under that bill, the income limits to participate in PACE would increase from $14,000 to $14,500 for individuals and from $17,200 to $17,700 for married couples.

The income limits for PACENET, a related program for seniors with higher incomes that kicks in after participants pay the first $500 of their drug costs each year, would change from $17,000 to $22,500 for individuals and from $20,200 to $30,500 for couples. The PACENET deductible would be changed from $500 annually to $40 a month while PACE enrollees would see their copay rise from $6 to $8.

State officials estimate that 100,000 more seniors would enroll under the new guidelines.

AP-ES-07-16-03 1915EDT