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The dizzying Medicare drug plan
The Providence Journal


September 09, 2005

In addition to being outlandishly expensive for America's taxpayers - albeit astonishingly profitable for the drug companies - the new Medicare drug benefit is very confusing. It offers Medicare's 43 million beneficiaries the opportunity to choose from two or more private plans - or to join a managed-care plan that includes drug coverage.

A Kaiser Family Foundation poll of potential enrollees shows that over half did not plan to join Medicare's drug-benefit program. Whether that's because they don't like it or they don't get it remains an open question.

There is such a thing as the tyranny of choice. Too many options can confuse people so much that they won't participate.

In choosing one of the Medicare drug plans, beneficiaries will first have to figure out which covers the drugs they use. Then they will have to calculate whether the premium charged makes the plan a good deal. Then they can compare these options with a Medicare Advantage plan, such as a health-maintenance organization that manages all Medicare benefits, including drugs.

Although the program doesn't start until Jan. 1, an advertising blitz is already in motion. Drug companies, drugstores and insurers know there's lots of money to be made from the drug-benefit program. They want some of it.

Technically, the businesses may not advertise until Oct. 10, but some are skirting the law by offering general information. The hope is that beneficiaries will think of them when it's time to sign up.

The drug benefit is voluntary, and participants will pay a monthly premium averaging $32 (the actual amount will vary by region). In any given year, beneficiaries will have to spend $250 on drugs before Medicare pays (except for poor people, who will not have a deductible). Once drug spending exceeds $2,250, the next $2,850 will have to be borne by the beneficiary; this is the "doughnut hole," and it will grow. After those $2,850 worth of drugs, catastrophic coverage kicks in.

Get it?

This is what happens when Washington won't do the simple thing. The simple thing is to have the federal government buy drugs in bulk for everyone in the Medicare drug-benefit program. As a major purchaser, the feds could negotiate lower prices and simply pass them on to the beneficiaries. The program would cost taxpayers a lot less money - and it would make the beneficiaries who are trying to figure it out a lot less dizzy.

But no: That would be "price controls" to the Bush administration and many so-called conservatives in Congress. That the Defense and Veterans Affairs departments have been buying drugs in bulk for decades seems to have escaped their notice.

A Medicare drug-benefit program that seeks to maximize profits for participating businesses needs to be complicated in order to hide this goal.

By the way, the prescription-drug benefit will be called Medicare Part D. As a refresher, Part A covers hospitalization; Part B, doctors' services and Part C, managed-care and health savings accounts. Any clever ideas out there for a Part E?


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