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Back To Vidyya Medicare Modernization Act of 2000


The President's Proposal


The Clinton Administration sent a draft bill entitled the "Medicare Modernization Act of 2000" to the Congress on 20-March-2000. This legislation contained reform elements of the detailed specifications released by the Administration in June of 1999. The paragraphs below are excerpts from the letter sent by the administration's office to the Congress. These paragraphs are for educational purposes only and are not meant to demonstrate support or disagreement with the proposal. The proposal can be read in its entirety by following the link at the bottom of this page. The proposal became available for public viewing the first week of May, 2000.

The proposal is the centerpiece of the Administration's efforts to modernize and strengthen the Medicare program to prepare it for the health, demographic, and financing challenges it faces in the 21st century. With this bill, the administration hopes to : (1) make Medicare more competitive and efficient; (2) modernize and reform Medicare's benefits, including the provision of a prescription drug benefit and the elimination of cost sharing for preventive benefits; and (3) make a long-term financing commitment to the program that would extend the life of the Medicare Trust Fund.

The proposed legislation is an attempt to make Medicare more competitive and efficient, by building upon recent administrative and legislative improvements, as well as demonstration projects conducted by the Department of Health and Human Services' Health Care Financing Administration (HCFA). The bill gives traditional Medicare new private sector purchasing power and quality improvement tools. It injects price competition into Medicare by establishing a "Competitive Defined Benefit" that lets beneficiaries reduce their premiums by choosing efficient health plans while maintaining a viable traditional program.

Second, the bill ensures that Medicare beneficiaries have access to affordable prescription drugs and preventive services that have become essential elements of high-quality medicine. The plan establishes a voluntary Medicare "Part D" prescription drug benefit that if implemented, will be affordable and available to all beneficiaries, while providing incentives to add or retain employer-sponsored retiree drug benefits. It gives beneficiaries a choice of coverage through managed care or competitively selected benefit managers who negotiate price discounts. It also provides a $35 billion reserve fund for new protections against catastrophic drug costs. The Administration will work with the Congress to enact these protections. The bill eliminates all cost sharing for all preventive benefits in Medicare to encourage beneficiaries to utilize these important services, and it updates Medicare cost sharing and Medigap policies.

Third, the bill strengthens the program's financing for the 21st century by dedicating a portion of the budget surplus to Medicare. Together with the rest of the President's proposal, this not only contributes toward extending the financial health of the Hospital Insurance Trust Fund and finances a portion of the costs of the new prescription drug benefit, but it will also lessen the need for future excessive cuts and radical restructuring that would be inevitable in the absence of the resources.

  • Section-by-Section Bill Summary HTML and PDF
  • The Bill PDF and WPD (240,942 bytes)

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Editor: Susan K. Boyer, RN
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