The Medicare Disaster
During the first weeks of the new Medicare Part D program, the many people who were supposed to benefit–low-income seniors and disabled individuals–were left out in the cold, unable to receive the promised coverage.
Last week in Rhode Island, there were over 2,000 claims, valued at $125,000, where the federal coverage process failed. After pharmacists found "no coverage-rejected" on their computer screens, and people had to pay the full amount with their own funds–or do without–the state stepped in with an emergency order by the governor.
Those whose coverage was rejected got their prescriptions. Now the state must find a way to recoup the money. The same emergency measures were taken in other states. Meanwhile, the Bush administration ordered Medicare drug plan insurers to cover 30-day refills of medications for seniors, with co-pays of no more than $5.
This step was needed to bail out a program that the federal government and the insurance industry had more than two years to plan for. In any other industry, people would have lost their jobs over such a massive failure.
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MEDICARE PART D is now part of the federal health insurance program for seniors over 65 and individuals who are disabled.
Prior to 2006, Medicare consisted of Part A and Part B. Part A covers inpatient hospital care, skilled nursing facilities and hospice care. Part B covers services provided by doctors, outpatient hospital services, home health and other medical and hospital services.
Part D was supposedly created by the 2003 law to offset rising prescription costs and the increase in out-of-pocket spending by recipients. But the most important problem with the plan is that drug costs aren’t covered through the Medicare program.
Instead, recipients have to sign up with private plans offered by insurance companies. As one 82-year-old rightly put it in the Nation magazine, "The purpose of the plan is to bring more customers to the drug company trough, at top-dollar prices."
A participant in Med D must pay a $250 deductible, and then 25 percent of costs up to $2,250 in total drug costs for a year. That’s $750 in out-of-pocket spending to this point. Then the dreaded "donut hole" kicks in, and there is a $2,850 gap where recipients must pay everything. There is no coverage at all until out-of-pocket expenses reach $3,600.
Medicare Part D covers 95 percent of further expenses. But by this point, seniors living at a poverty-level income will be spending 41 percent of their income on prescription drugs, according to an analysis by Families USA, a health care watchdog group.
Before the New Year, my office was bombarded with phone calls, and colleagues were asked to provide answers to a myriad of questions. "Why should I sign up for this program if I’m healthy now?" was one. I would explain that you have until May 15 to sign up for this "voluntary" program, or else you face a 1 percent compounding penalty for every month you are not signed up (unless you somehow had a private pension coverage which no one coming to us had).
Seniors complained that they shouldn’t face a penalty and couldn’t comprehend why this was a part of the program. I couldn’t either–it seemed like late charges by an overzealous credit card company.
Prior to the launch on January 1, front-line providers were told many things about Medicare Part D, but the people doing the explaining didn’t fully understand the plan, and so neither did the pharmacies. As one senior put it to me, "If CVS, which is dealing with dozens of people daily on this, is confused, how is anyone supposed to know what is going on?"
Because Medicare Part D sends seniors to private insurers, there are more than 40 plans to choose from, with price ranging from $5 to $70 a month depending on the company, the extent of coverage and the state. To learn which plan is the right one for the individual can be a daunting task, especially when over half of all senior citizens haven’t been on the Internet, and people who called drug or insurance companies often got placed on hold and then disconnected after holding for 15 minutes.
After January 1, when seniors went to pharmacies expecting to be covered, tens of thousands discovered that they weren’t. The insurance companies were late in getting people on the list of those who were covered under new plans.
For many seniors and disabled individuals, this meant having to choose between food, paying their rent and purchasing their prescriptions.
One woman whose father had to pay close to $200 for a prescription the other day that he didn’t even use broke down crying because the last few weeks had been so stressful. Her father didn’t speak English, and dealing with Medicare Part D and other state and local pharmaceutical assistance programs was too much.
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IN MY opinion, the people reaping the benefits on this are the pharmaceutical companies, the HMOs, big corporations, members of Congress–all sorts of people other than those the law was supposedly designed for: senior citizens and disabled individuals.
The drug companies are making money in all sorts of ways.
One of the worst aspects of Medicare Part D is that the law directly prohibits negotiating group purchasing agreements and volume discounts with the drug companies. This prohibition will add billions to the drug company profits. Currently, the Veterans Administration and the Department of Defense save over 40 percent because they negotiate wholesale prices for drugs.
Then there are the ways that the plan supports name-brand drugs. Say that Company X makes a medication and sells it for $100–10 times the cost of a generic drug, which would be just as effective for most people. Normally, someone would choose the cheaper generic for $10. This would leave them paying a $2.50 co-payment, and the balance paid by the Medicare drug plan.
But if Company X kicks in the 25 percent co-payment, the more expensive brand name becomes free to the patient–but with Medicare paying a $75 bill. Since it can cost as little as a $1 to make the drug, paying the $25 co-payment is well worth it, since Company X makes a profit of $74.
Drug companies aren’t the only part of Corporate America benefiting. According to the Boston Globe, defense contractor Raytheon will save more than $170 million by using Med D to shift prescription costs previously paid for retirees onto the taxpayers.
The cost to the federal government will be huge. In fact, Richard Foster, Medicare’s chief actuary, apparently lied to Congress about how much Medicare Part D would cost–because he was threatened with firing if he told the truth that the real projections were hundreds of billions more than his agency admitted at the time.
The other day, a woman asked me about signing up for Medicare Part D. She didn’t understand her card or what was sent to her because she had already signed up for the program. It makes me wonder how a homebound individual–with no Internet access, who may or may not be receiving all their mail, who may have mental health issues, and with little or no support system–is supposed to use this program.
I let people know if they complain about this program that it is the result of capitalism, and under socialism, everyone would have universal health care.
CHRIS MURPHY is a social worker in Rhode Island who aids senior citizens and low-income families in accessing federal and state pharmaceutical assistance programs, as well as volunteer opportunities, entitlements and other social service programs. He wrote this frontline report for the Socialist Worker.