No Action on Medicare Drug Benefit Required

Although the recent enactment of a prescription drug benefit in the Medicare program has drawn widespread interest among federal retirees-most of whom enroll in Medicare when they become eligible, typically at age 65, even though they continue to carry FEHB coverage-the new Medicare benefit has no practical effect on them, at least in the short run. For 2004 and 2005, the only Medicare prescription drug benefit available will be a discount card that will save an estimated 15-25 percent on prescriptions for those who otherwise don’t have prescription drug coverage. That card, which will be voluntary, probably won’t be of interest to anyone with FEHB and its more generous prescription drug coverage. In 2006 and afterward, a fuller Medicare prescription drug benefit kicks in, but participation in that also will be voluntary and because of its cost-sharing formula also probably would not be of interest to anyone with FEHB coverage. Longer-run, there is concern about the government cutting back the drug benefit under FEHB because the Medicare benefit will be in place, but no such changes can be made for 2004 because FEHB benefits for next year already are locked in, and legislative efforts are underway to prevent any future cutbacks in retiree drug benefits.