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Rival propositions 78 and 79 battle over medical benefits
Posted October 26, 2005

On Nov. 8, many California residents will cast their votes in favor or against a number of propositions that will affect numerous health and medical programs, local and governmental areas and state and non-profit organizations.

Among the propositions are two fierce rivalries, one proposition backed by drug companies, the other backed by consumer and health groups: Proposition 78, called Cal-Rx and Proposition 79, called Cal-Rx Plus.

“It’s kind of a ‘whose side are you on?’ kind of thing,” said Richard Gelm, University of La Verne professor of political science. “One is pushed by drug companies; one is pushed by people that support (health) benefits.”

Both of these propositions affect prescription drug costs, one of the largest monthly expenses for many people, especially older people, who make up 14 percent of the population in California.

According to the American Association of Retired Persons, those over the age of 50 are making a smaller income today than this population was earning in the late 1990s. This population is also more dependent on social security and health care. In addition, prescription drug costs have grown to be the second largest expense for this group outside of housing costs.

“The older you get, the more likely you are to need (medication) for something,” Gelm said.

Henry Foreman, a Rancho Cucamonga resident, currently pays $100 a month for a prorated discount on his medication, along with a co-payment that is usually an additional $100 to $200. He estimates that if he were to lose his current coverage he would be paying close to $10,000 for his medication out-of-pocket every month.

“I just had to pay $78 for 30 pills,” Foreman said about his most recent medication purchase.

Despite the threat of losing his medication discounts, Foreman said that he will be voting against Proposition 79 this special election.

“I vote in every election and I just don’t care for (Proposition 79),” Foreman said. “I’m not worried about losing my coverage.”

Backed by AIDS awareness groups, labor and consumer groups and many senior groups in California, Proposition 79 was placed on the ballot this year in order to achieve cheaper drug prices for those who qualify.

Shortly after this proposition was included on the ballot, drug manufacturers unveiled Proposition 78, which favors the business end of the proposed initiative.

“They really are in competition,” Gelm said. “Prop. 79 was put on as an initiative and (the drug makers) scrambled to put one on too, so they produced a watered down version.”

The two propositions are closely related. The drug manufacturers produced an initiative very similar to that of Proposition 79, except the plan does not include many of the factors and programs in Proposition 79.

A major concern for consumers backing Proposition 79 is the noticeably larger budget that drug manufacturers are willing to spend to defeat their competition.

“Not only are they backing 78, but they are spending money against 79,” Gelm added.

Drug manufacturers and those is support of Proposition 78 have raised nearly $80 million dollars against Proposition 79, setting the record for the most expensive campaign in the nation’s history in comparison to those supporting Proposition 79 who have only raised $1.8 million.

Although both propositions attempt to win discounts for those who rely on their medical prescriptions, these competitors are quite different from one another.

Proposition 79 proposes to create a program that would provide medical and health benefits to uninsured or underinsured Californians. A single person who makes less than $38,000 annually or a family of four that makes less than $77,000 annually would qualify.

Other Californians would also be eligible for these discounts including those with high deductible plans, gaps in their drug coverage or health care expenses at or above five percent of their family’s income.

Under Proposition 79, a drug discount card would be available at pharmacies for eight to 10 million Californians, a vast majority of people who currently pay their medication expenses out-of-pocket, for a $10 fee that can be renewed annually.

On the other side of the ballot, the competing pharmaceutical company supported initiative, Proposition 78, would still offer prescription discounts to uninsured or underinsured Californians, but at a much smaller number than those who qualify under Proposition 79, roughly four to five million residents.

At first glance, it seems that it is easier to qualify for medication discounts under Proposition 78, which offers these discounts to individuals earning roughly $29,000 annually or families of four earning $58,000 annually.

However, unlike Proposition 79, Proposition 78 does not offer discounts to individuals with medical expenses that account for more than five percent of their total income.

Voters may be swayed by the difference in poverty levels for each proposition, noticing that Proposition 78 has a lower poverty level, assuming that it is the more people friendly initiative, Gelm said. However, Proposition 79 has wider eligibility for people because of the five percent eligibility factor, which must be taken into account.

Also under Proposition 79, a Prescription Drug Advisory Board would be implemented. This nine-member panel would be in charge of reviewing and accessing the pricing of prescription drugs.

Under this proposition, state law would be changed to make it illegal for drug makers to benefit from profiteering from the sale of drugs, thereby making many drug manufacturers a little more cautious and a bit more worried about the passing of this proposition. Consumers would be allowed to sue drug manufacturers that they feel have overcharged them for medication.

“In several respects, Proposition 79 is more consumer friendly,” Gelm said. “(Proposition) 79 has more of a provision to make sure that pharmaceutical companies are not making more than their fair share.”

Those backing Proposition 79 say that the drug discounts would be paid for through the use of negotiations between the state and drug manufacturers for the lowest prices and discounts on retail drugs for consumers.

“The main difference between 78 and 79 is negotiation,” Gelm said.

Negotiated payments will be made through insurance companies once a negotiated price has been reached between a pharmacy or drug manufacturer through the state and state government.

The “Medicaid best price” is the best price that the state government can get for prescription drugs. According to the Congressional Budget Office, this discount can reach nearly 50 percent or more. This is the level of discount that Proposition 79 supporters are hoping to reach.

If a drug manufacturer does not meet sufficient discount negotiations, the state will have the authority to remove that company’s drugs from the “preferred drug list” offered through Medi-cal. Doctors will be less likely to prescribe drugs that are not on the list, thereby reducing the amount of business for that manufacturer. Medi-cal currently purchases more than $4 billion of prescription drugs annually.

Although there is strong support for both propositions, there is the possibility that both of these propositions could be denied, mainly because of the disapproval for Governor Arnold Schwarzenegger and his propositions that are also on the ballot.

“Given the climate of this special election there are a lot of people opposed to this election as a whole,” Gelm said. “(Schwarzeneggar’s) approval rating is so low; people all want to vote ‘no.’ It is a distinct possibility that they could all go down as defeat because of people’s anger.”

Another concern is that voters will stay away from the polls because they do not understand the differences between the propositions.

 “When they are this complicated, people tend to vote ‘no,’” Gelm said.

“All propositions tend to be difficult because they are written in ‘legalese’ for governmental purposes. Other times, they are intentionally written to be confusing to confuse the voter,” he added.

The confusing word usage is indeed throwing a wrench into the plans of voters and making them second-guess exactly what they are casting their vote for.

“I am torn on whether I am (in favor of Proposition 79) or against it because of the way things are worded,” said Vickie Stevens, an administrative aide in the ULV Department of Public Health and Administration. “But if on face value it is what it says, I am going to vote ‘yes.’”

Whether or not these propositions are passed or defeated, the voters need to do their research and determine for themselves where the need for these discounts lie.

“From my research, I can see that there is a need for this. But it is my hope that people do their research as well,” Stevens said.

For more information on the propositions in the Nov. 8 election, visit http://www.ulv.edu/library/ that links to the Institute of Governmental Science Library at UC Berkeley.

Valerie Rojas can be reached at skalivornia@hotmail.com.