What Is the Medicare Prescription Drug Benefit?
In January 2006, the Medicare prescription drug program became effective. The program, passed by Congress in November 2003, provides too little help for Medicare’s 37 million seniors and 7 million people with disabilities, does nothing to control drug prices and was written to benefit big drug companies instead of consumers.
Why Doesn’t Work Medicare Part D Work?
Unlike traditional Medicare benefits, prescription drug coverage is delivered only through private plans that have broad discretion to determine what coverage to offer, what prices to charge and which drugs to cover. And, what’s more, Medicare beneficiaries face a confusing array of choices. For example, in 2007, there were 1,875 stand-alone prescription drug plans (PDPs) offering benefits in various parts of the country. In most states, people must choose from among at least 50 stand-alone PDPs, as well as multiple Medicare Advantage plans with prescription drug coverage. (Kaiser Family Foundation, Medicare: A Primer, March 2007).
Medicare Part D forces millions of seniors and people with disabilities to pay more for their prescription drugs based on where they live because the private plans that run the program determine how much to charge and what drugs are covered. Under the program, seniors and people with disabilities face a huge gap in coverage: The program does not cover in 2007 out-of-pocket expenses up to $265 or between $2,400 and $5,451. Even though Medicare beneficiaries continue to pay monthly premiums, they must pay all drug costs—a total of $3,051 in 2007—out of their own pockets in the coverage gap (also known as the “donut hole”). In 2006, an estimated 4 million beneficiaries had drug spending that fell in the coverage gap. (Kaiser Family Foundation, Medicare: A Primer, March 2007).
In addition, the law prohibits Medicare from using the negotiating power of 44 million beneficiaries to negotiate lower drug prices as the Department of Veterans Affairs does successfully. A recent report by Families USA concluded that the Veterans Affairs prices for the top 20 drugs prescribed to seniors were substantially lower than the lowest prices charged by the five largest insurers providing Part D plans to Medicare beneficiaries. (Families USA, No Bargain: Medicare Drug Plans Deliver High Prices, January 2007). As stated in the report: “The median difference was 58 percent. In other words, for half of the 20 drugs, the lowest price charged by the largest Part D insurers is at least 58 percent higher.”
How Did the Bill Pass?
To gain support for the bill, the Bush administration misled Congress and the public about the program’s true cost, intimidating public officials and using taxpayer funds to distribute propaganda.
Congress passed the Medicare drug legislation by a slim margin—and several lawmakers likely would not have voted for the bill had they been told the true cost. While the Bush administration claimed the legislation would cost $400 million over 10 years, in February 2004 Congress learned that Medicare’s chief actuary had estimated the true cost of the program at $534 billion. In fact, the government’s chief analyst of Medicare costs said he was threatened with firing if he revealed the full cost of the legislation, and the inspector general of the U.S. Department of Health and Human Services confirmed his claim.
Using taxpayer money, the Bush administration distributed video “press releases” praising the drug program to TV stations around the country—actions the U.S. Government Accountability Office in Mary 2004 ruled constituted illegal covert propaganda.
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