Summary: Concerns are growing about gaps in the Medicare program, most notably the lack of outpatient prescription drug coverage, which may leave the most vulnerable program beneficiaries with high out-of-pocket costs that they can ill afford. Nearly one-third of Medicare beneficiaries lacked prescription drug coverage in 1996. At the same time, however, the long-term cost pressures confronting the Medicare program are considerable. A consensus appears to be emerging that substantive financing and programmatic reforms are needed to put Medicare on a sound footing in the future. These reforms are vital to reducing the program's growth, which threatens to consume ever-larger shares of the nation's budgetary and economic resources. Continuing economic prosperity and projected federal surpluses provide an opportunity to address the structural imbalances in Medicare, Social Security, and other entitlement programs. Congress faces the difficult decision of how best to guarantee the Medicare program's sustainability while being mindful of the plight of many seniors who cannot afford the latest pharmaceutical breakthroughs. Congress and the President may ultimately decide to include some form of prescription drug coverage as part of Medicare reform. Care must be taken, however, to ensure that any expansion of the program is accompanied by other programmatic reforms that will sustain Medicare's long-term financial integrity. This testimony discusses (1) the factors contributing to the growth in prescription drug spending and efforts to control that growth and (2) the design and implementation issues associated with proposals to improve seniors' access to affordable prescription drugs.
