U.S. to Drop Benefit Cuts Linked to Drug Discounts
Sunday, June 13, 2004
WASHINGTON, June 12 - The Bush administration said Saturday that it would rescind a federal policy that threatened to cut food stamp benefits for several million low-income elderly and disabled people who save money on their medicines by using the new Medicare drug discount cards. The administration's reversal came two days before President Bush was scheduled to visit Missouri to promote use of the cards, which have received a tepid reaction from many Medicare beneficiaries. In interviews this week, state officials across the country said low-income people who used the cards could find their food stamp benefits reduced as a result. The cuts, they said, were a direct result of federal regulations and a policy statement issued by the Agriculture Department on March 10. The purpose of the discount cards is to reduce out-of-pocket drug costs. But when a person's drug expenses go down, state officials said, the food stamp program assumes that the person has more money available to spend on other needs, including food. So the person may receive a smaller food stamp allotment, they said. Judy K. Toelle, the food stamp director in South Dakota, confirmed that such cuts would occur under the federal rules. For example, she said, a woman with monthly income of $1,060, shelter expenses of $555 and drug costs of $325 now receives $51 a month in food stamps. But, she said, if the card reduced her out-of-pocket drug costs by $100, the woman would get $41 less in food stamps, so the net saving would be $59. Food stamp officials in California, Colorado, Missouri , New Mexico and Washington State said they were simply following federal rules in reducing food stamp benefits to take account of the fact that people with discount cards spent less on prescription drugs. Those regulations have not been changed. But after inquiries from The New York Times, Eric M. Bost, an under secretary of agriculture, said, "We will immediately be clarifying policy guidance to ensure that food stamp applicants or recipients who use the new Medicare discount card will experience no impact on their eligibility or benefits." The abrupt shift highlights the confusion between federal and state officials, and between the two federal agencies that administer Medicare and food stamps. Medicare officials said on Tuesday that they were unaware of the Agriculture Department policy. Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said the drug card, which carries a $600 subsidy for low-income people, was not supposed to "take away any existing federal benefits." The Senate Democratic leader, Tom Daschle of South Dakota, welcomed the promise to avoid any cuts in benefits. "This reversal in policy by the administration means that seniors will no longer have to worry about making a painful decision between their food stamp assistance and getting this help with their prescriptions," he said. Still, Mr. Daschle said, the discount card "is hopelessly confusing and does not meaningfully lower drug costs," a view expressed by substantial numbers of the elderly. Senator Charles E. Grassley, Republican of Iowa, said, "The drug discount card program has been the target of a deliberate campaign to discredit it and confuse seniors." Medicare beneficiaries began signing up for the cards on May 3 and have used them since June 1. Dr. McClellan said 3 million of the 41 million Medicare beneficiaries had cards. Federal officials said the cards would reduce retail drug prices by 10 percent to 25 percent, with savings as high as 65 percent on some generic drugs. In addition, individuals with annual incomes of $12,569 or less and couples with incomes of $16,862 or less are eligible for the credit of $600 a year in 2004 and 2005. Sharon Regensberg, the food stamp policy chief at the New Mexico Department of Human Services, said it was clear that the $600 subsidy should not be counted as income in determining eligibility for food stamps. But she added: "Will the discount card affect food stamp benefits? Yes, it could. It could reduce the client's out-of-pocket medical expenses, the medical deduction and the amount of benefits." Bush administration officials said they had not decided how to avert such cuts. The government may have to allow Medicare beneficiaries to take a deduction for medical expenses they do not actually incur.