Democrats Take Aim for Mid-Term Gains, Complicated Medicare Plan is a Prime Target

By Our Correspondent

President Bush is making a big push this week to win popular support for this new prescription drugs Medicare Part D benefit, but the issue is going to be on the front burner throughout this critical mid-term election year, with the Democrats taking dead aim against it.

For many Americans, the topic of Medicare evokes more glassy eyed stares and casual yawns than inflamed tempers. This complacency is beginning to transform, however, with the implementation of this new program which is drawing both acclaim and ire across the country.

While the “Medicare Prescription Drug Improvement and Modernization Act” was signed into law on December 8, 2003, enrollment didn’t begin until this past November, and benefits to seniors began to take effect on January 1 st. Both enrollment and coverage procedures have caused significant difficulties—predominantly for those entities centrally affected by the change, which include seniors, pharmacists, and drug and insurance companies.

But because Part D is the first attempt at a federally-financed prescription drug benefit for seniors, there is ample reason to question the merits of the program. This is particularly true because of the partisan circumstances under which the bill passed the House and Senate, with Republicans voting for and Democrats against the measure largely on party lines, and with accusations that the Bush Administration concealed data about the projected costs of the program.

With the debate continually escalating in scale and intensity—likely all the way up to and beyond the November elections—the general public is becoming increasingly knowledgeable about the many facets of the prescription drug issue. This is not limited to the seniors whom the bill primarily affects, but to all taxpayers whose income helps to fund the program, and those forward-looking individuals who hope to sometime reap its benefits in the future.

There are several major reasons why proponents of the Part D program regard it highly, not the least of which is that it is the first prescription drug benefit offered to Medicare recipients.

The virtue of using private insurers and a voluntary mechanism to regulate the program, the logic goes, is that corporations will inevitably offer more program choices (in the case of Part D this refers to “formularies,” or lists of drugs and dosage sizes offered through each individual program) through a variety of different insurance providers at a wide range of cost levels.

As an example, at the beginning of enrollment, Virginia offered 41 programs from 17 different companies at a cost varying from $8.81 a month to $68.61 a month (with an average cost of $34.19 per month). Some seniors, at these rates, could save $700 a year.

Advocates also point to the fact that about one out of every three beneficiaries qualifies for lower premiums due to income level ($14,355 or below for singles and $19,245 or below for couples) or prior enrollment in Medicaid or the Medicare Advantage programs.

While few would deny that the rollout of the Part D program was plagued with various issues—confusion amongst seniors and pharmacists, incorrect automatic enrollment and computer glitches—a huge effort has been made to educate the public and fix the systems infrastructure. At this point, some say as many as 25 million of the 42 million qualifying seniors have enrolled.

There is a large and seemingly growing contingent, however, that view the Part D program as a disaster. This is not only because of its initial problems in implementation, but also because many view the idea of privatizing even just the prescription drug portion of Medicare as a sellout to corporate interests.

In addition to the many scandals plaguing Washington, there is little doubt about the significant role of drug and insurance companies in helping to write the Part D legislation. Some estimates place the profit growth of the insurance industry over the next five years at upwards of 500% due to the new program.

Former House Rep. Billy Tauzin (R-La) has been widely criticized for leaving the House to take a $2 million annual salary as President and CEO of the Pharmaceutical Research and Manufacturing Association, a position he began only a month after working to write and pass the Part D bill.

Additionally, there is skepticism about the figures the Bush administration used to gain support for the bill. It was originally believed the government would pay $400 billion in federal expenditures in the first 10 years of the program. Currently, subsidies are estimated at nearly $720 billion over that period.

The most compelling argument made by critics that the new policy eliminates drug benefit coming directly from Medicare. Not only is Medicare a trusted name for seniors, but other organizations, such as the Veterans Administration, are able to negotiate prices directly with providers. Allowing the government to buy prescription drugs in bulk and negotiate costs, as the V.A. currently does, could cut drug costs in half.

The effects of this method have been evident for years, as many seniors have, in the past and at present, chosen to purchase their drugs, both legally and illegally, from Canadian pharmacists who benefit from prices negotiated by the Canadian government.

It is also important to note that the wealth and breadth of choices in Part D is not viewed by all as a boon. This is particularly true for the seniors who are confused and frustrated by having to wade through dozens of programs to find one that fits. Supporters of the program have conceded that 2007 will likely see the number of options decreased in an effort to avoid the enrollment delays experienced at its implementation.

Another oft-cited criticism is the program’s “donut hole”—also referred to as a “second deductible” or “coverage gap”—which affects many enrolled seniors. Most plans are formulated in tiers, each of which requires a different cost to the consumer. Subscribers pay a $250 deductible for drugs at the outset of the yearly cycle, then 75% of the next $2,000 in cost is paid through Part D.

Once the yearly cost hits $2,251, however, the subscriber must pay 100% of the drug costs up to $5,100. After this tier the subscriber is considered in the “catastrophic coverage” group, and is responsible only for 5% of drug costs through the end of the year.

For example, a Medicare beneficiary who formerly paid $5,000 yearly in prescription drugs would still be responsible for $3,500 of this amount. It is up to states to form complimentary programs to cover or reduce these “gap” costs.

Part D coverage also restricts subscribers from changing plans in the midst of a coverage year. If a patient’s prescription regimen changes, it is possible their plan—particularly if it is a plan with a low deductible—will not cover every drug in their formulary. Furthermore, providers are allowed to remove drugs from the approved coverage list despite the fact that subscribers are locked in, opening the door for increased costs.

Further conflict occurs from an overlap in coverage. Retirees with drug plans from former employers may be dropped from their current plans by enrolling in Part D. This also applies to all automatic enrollment subscribers (which account for at least 40%, or 10 million, of the 25 million subscribers). Automatic enrollment due to dual eligibility through Medicaid or low-income involves placing these individuals, if they do not opt for a particular plan, in a randomly selected plan which may or may not cover their drug needs.

This makes it possible that seniors may be enrolled in a deficient Medicare Part D plan, even as they are subsequently dropped from the benefits of their longstanding retiree plan. For many seniors in this category, the next trip to the drug store may present an unwelcome surprise. Those who desire not to auto-enroll in the future must contact Medicare to opt out.

A final facet of Part D that has many up in arms is the penalty which can be accrued for not enrolling in the program. Whether or not the program benefits a particular person’s situation and prescription regimen, he or she will receive a 1% penalty for every unenrolled month after the upcoming May 15, 2006 enrollment deadline. Therefore, if the health of a beneficiary worsens in the fifth year of the program and he or she requires extra medication, the beneficiary will be charged as much as 60% on top of the current prescription drug costs. Many legislators are asking, at a minimum, for an extension of this deadline.

While the debate continues as to how to best handle the Part D program—whether to scrap it, amend it, or let it mend itself—the time is fast approaching for seniors to make a decision without penalty. Whether making the choice themselves, looking towards the future, assisting someone else in making that decision, or wondering about the program’s implications, this is one significant issue for all—including voters and politicians of both parties in the fall elections.