December 1, 2003

      Passage of the Medicare prescription drug bill recently has been touted as the largest expansion of the Medicare program in its history.  While that’s certainly true, like everything else, the devil is in the details.  And one look at the details tells you that this legislation falls far short of the mark.  The benefit is insufficient, the bill does nothing to hold down the costs of prescription drugs, and it includes an unproven privatization and costly scheme. 

 

      There is a definite need to cover prescription drugs under Medicare.  If we were recreating Medicare today prescriptions, doctors, and hospitals would be included.  The private sector recognized this years ago. This Congress did not learn from private sector experience and created a half baked plan that will have seniors fall through a doughnut hole when they most need the help.  It could also, in the words of one of its supporters, “End Medicare as we know it.”  Medicare has worked for seniors for 38 years and to use a false prescription drug benefit to mask subsidies to insurance companies and drug makers is outrageous.

 

      The benefit in this bill is far less than seniors expect or need.  After paying a $35 monthly premium, a $250 deductible, and 25 percent coinsurance, for a total of $1120 out of pocket, seniors will only get coverage up to $2250.  After that, they’ll have to pay 100 percent of their costs until their drug costs exceed $5100.  Under this scenario, if you have drugs costs averaging $350 per month, you will only get coverage for the first six months of the year – after that, you’ll have to keep paying premiums, but will get nothing for them.  Almost 40 percent of seniors will fall into this hole.

 

      Additionally, this legislation does nothing to drive down the costs of prescription drugs.  Countries like Canada, France, Great Britain, Germany, and countries get cheaper drugs because they negotiate for better deals.  The federal government also does this for the Department of Veterans Affairs and the Medicaid program.  But instead of harnessing the purchasing power of 40 million seniors, this legislation expressly prohibits the government from demanding lower prices for our nation’s seniors.  Even the simple solution of letting seniors import their drugs from Canada – which have been proven just as safe, if not safer than drugs sold in the United States – is prohibited by this legislation.

 

      But perhaps the most troubling aspect of the bill is its insistence on forcing a voucher demonstration project on our nation’s seniors.  This wolf in sheep’s clothing could be the end of Medicare as we know it.  Under this unproven experiment, seniors would get a voucher to buy insurance in the private market.  But as learned from Medicare+Choice, private insurers are not very good at covering the Medicare population.  Some studies estimate that it costs Medicare 20 percent more per beneficiary to cover seniors through private plans than through traditional fee-for-service.  As costs go up, the value of that voucher will go down, shifting an even larger financial burden onto the shoulders of seniors.  This proposal could also deny seniors their choice of physicians and hospitals and leave the frailest and sickest seniors at the mercy of HMOs. 

 

      There are a number of other troubling provisions of this bill.  This bill also leaves some of our frailest low-income seniors worse off forcing them to pay more out of pocket than they currently do.  Some estimates indicate that it could also cause as many as 2 million seniors to lose their employer sponsored coverage. 

 

      Supporters of this bill argue that it’s a beginning.  But the reality is that it could be the beginning of the end for Medicare.  The details will see to that.

 

 

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