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Medicare Drug Plan Proves a Bitter Pill for Seniors

by Pamela Leavey

Last Friday’s Boston Herald featured a very informative OP/ED on the controversial Medicare Drug Plan, by Teresa Heinz Kerry and Jeffrey Lewis. Ron has some coverage on the Medicare Drug Plan today here.

Drug plan proves a bitter pill for seniors
By Teresa Heinz Kerry and Jeffrey Lewis
Friday, February 24, 2006

Even for Washington, this has to be a record. In the six weeks since the Medicare Part D drug benefit was unveiled, it has proven to be even more confusing and more inefficient than its critics predicted. And even seniors who have been able to register for the program must still struggle with a massive $3,000 gap – the “doughnut hole” – in benefits coverage and a hefty monthly premium.

Already the government has had to change the program: The Centers for Medicaid and Medicare Services reversed an earlier decision prohibiting new Medicare prescription drug plan recipients from participating in free or subsidized drug programs sponsored by pharmaceutical manufacturers. But we can’t stop there. The reversal fails to count the full value of these prescriptions toward seniors’ $3,000 obligation, an expense that could put many in the poor house.

The Part D drug benefit plan was foisted on America’s taxpayers with a false promise that it would benefit older Americans. But it is the insurers and Pharmacy Benefit Managers (PBMs) who are benefiting. This plan is unnecessarily expensive, increases costs for seniors and the health care system, cuts care and gives most of the savings to private businesses.

It’s easy to see why: Funneling benefits through dozens of private companies makes the new drug plan needlessly confusing. And since private firms are profit-driven, they have no incentive to help seniors get the help and coverage they deserve. Increasing the number of plans and people that seniors need to go through to get covered has made the system more expensive, more confusing and less transparent. We are learning again that outsourcing bureaucracy to the private sector is not a panacea for high costs and structural inefficiencies.

The administration claims that its new benefit is a good deal for people who are not eligible for Medicaid. Yet most individuals will pay not only a $250 deductible, but also 25 percent co-insurance on the next $2,000 in covered drug costs. And add roughly $32 a month (some may be higher or lower) per person for a monthly premium.

In addition, the new Medicare plan requires each senior to cover 100 percent of the costs over $2,000, until catastrophic coverage kicks in at $5,100. That’s a huge gap.

We can and must close the holes that may ruin seniors’ fiscal health as they try to preserve their physical health.

Private companies are already taking action. A group of pharmaceutical companies announced a plan called “Bridge Rx,” which will help seniors trapped in the $3,000 hole afford their medication. Seniors will get drug discounts of at least 50 percent in exchange for a 15 percent co-pay, while drug companies will get a new market by helping seniors who might not otherwise be able to afford their prescriptions.

Washington should also act by letting those who qualify for subsidized pharmaceutical manufacturer programs like Bridge Rx, but who concurrently pay a monthly Part D premium, count the full value of their medication’s formulary price toward the $3,000 gap.

Those who fall into this $3,000 hole need, and are often desperate for, help. The purpose of the Medicare prescription drug program was to help seniors, not generate revenue for insurers and PMBs. It’s time to deliver on the promises that were made.

Teresa Heinz Kerry is chairman and Jeffrey Lewis is president of the Heinz Family Philanthropies.

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