Medicare Prescription Drugs: Making the New Program Work

* This Issue Brief reports on the progress that has been made and questions that have been raised about the new Medicare prescription drug benefit that became law in late 2003. The focus is on issues raised during the National Medicare Prescription Drug Congress held in Washington, DC, in February

* The first phase of the program, the discount drug card, became effective on schedule in May and June 2004, but this initial step did not end the ongoing partisan debate about whether the new legislation is a significant positive development for seniors or whether it will work as intended.

* Most questions about the logistics and operation of the prescription drug program will remain unanswered until the second-and more expensive-phase of the program (government-subsidized prescription drug insurance) begins in 2006.

* There's disagreement about the impact the program will have on state budgets. Supporters of the new law say it relieves the states of current responsibilities of providing needed medicines to medically indigent Medicare beneficiaries. But states fear that residual responsibilities (not all drugs will be covered under the new programs), coupled with reductions in federal aid, will ultimately increase their costs.