Almost 40 years ago, when Medicare was brought into existence under President Lyndon Johnson, our country's health care system was vastly different than today. House calls by doctors were still commonplace. The terms HMO, PPO, pre-existing conditions, and preventative medicine weren't really found in our vocabulary for health care. Many people had a much more direct connection to their doctor than they do today.
Medicare, though, has been stuck in this 1960s world, while the world of health care has evolved into the 21st century. One of the biggest advances over the past 40 years has been in the area of prescription drugs. Many of the drugs available today are truly lifesavers for many people. New drugs are coming on the market every day that help people live healthier and longer lives. And while Medicare continues to be a vital program to help protect the health of our nation's senior citizens, the program hasn't helped to provide those life-saving drugs to the people who need them the most.
The Medicare prescription drug bill passed by Congress in November helps modernize the program to meet the needs of today's seniors by offering a voluntary benefit under the program. Let me stress that again: This is a voluntary program. The bill also helps prepare Medicare for the major demo graphic shift that will take place over the next 20 years: the movement of baby boomers into the program.
There's no denying the fact that, as every year passes, fewer and fewer seniors are covered under a prescription drug plan through a private company. A decade ago, 40 percent of firms offered this coverage to retirees. Today that percentage is 30 percent. This bill tackles that problem head on by providing incentives to employers to continue offering prescription drug coverage to retirees.
By creating a drug benefit under Medicare, this bill also addresses the problem faced by the one-third of all people age 65 and over-almost half a million people in Illinois-who currently don't have drug coverage. They now will have coverage under Medicare.
This is a good bill that will have tangible benefits for our seniors. To have enough time to make sure the program is set up and run efficiently and properly, the guaranteed benefit of prescription drugs takes effect in 2006. Leading up to that date, seniors will have access to immediate savings through a prescription drug discount card that will be available by this spring. Seniors will be able to use this card at the point of purchase to obtain significant, immediate savings of up to 25 percent on prescription drugs.
The prescription drug program is fully voluntary. If you currently have a prescription drug plan, you aren't required to participate in the Medicare drug plan. It will provide an option to seniors to simply add drug coverage to traditional fee-for-service Medicare without any loss of current benefits. The drug benefit will have a $35 monthly premium and a $275 annual deductible. Medicare will pay 75 percent of drug costs up to $2,200 annually and 95 percent of costs over $3,600 a year. Comprehensive coverage will be provided under the plan for seniors who are low-income.
One aspect of the bill I was particularly pleased with is the help it provides to rural hospitals. There are many rural hospitals throughout the 20 counties of the 18th District, and the continued viability of these facilities is extremely important to the patients they serve. Since 1983, urban hospitals have been paid at a higher reimbursement rate than other hospitals. This bill equalizes those payments so rural hospitals will receive billions in much-needed relief over the next decade.
This bill will also help the State of Illinois climb out of the budget deficit it now faces. More than 160,000 Illinoisans who currently get prescription drugs under Medicaid will now have those costs paid by Medicare, saving the state $785 million over eight years on Medicaid drug costs.
The issue of a prescription drug benefit under Medicare has been discussed for many years. After a long struggle, we've finally succeeded in getting a plan into law. I believe this is a good plan. Critics of this bill are only trying to score partisan points for political gain, instead of hailing a major achievement in improving the well being of our nation's seniors.
I believe this new benefit will modernize the 40-year-old Medicare program and help our seniors take advantage of prescription drugs that will let them live longer and healthier lives. IBI