Medicare plan with a miserly drug benefit

by Myrna Fichtenbaum

Prescription drugs for seniors is the elusive holy grail of political trophies. After much partisan bickering, attempts to add a prescription drug benefit to the Medicare system in recent years have inevitably ended in political gridlock. But while our elected officials collect points for trying, our seniors continue to suffer from exorbitant drug expenses.

In Missouri, there are 856,032 citizens on Medicare, of which 731,811 are seniors. Many of these people will pay premiums under the new plan and get no coverage at all, while others will pay for only meager coverage. A couple earning $20,000 with $3,000 in total drug costs would save less than $400.

Now, President Bush has promised to give senior citizens and disabled persons on Medicare the same prescription drug coverage that is available to members of Congress. But he has rushed a proposal through Congress that would give the 40 million Americans who rely on Medicare a miserly drug plan that pales in comparison to the generous benefits enjoyed by the lawmakers who engineered its passage.

The president’s prescription drug proposal is particularly troublesome for senior women, who tend to have less income, live longer, have more chronic conditions and spend 20% more than men on prescription drugs.

The president wants to quickly push through a plan that is a slap in the face to the millions of seniors who have been waiting for relief. Why the sudden rush? Because the plan’s backers believe that they can sneak their agenda through Congress before constituents can ask their elected leaders why the proposal falls drastically short.

But even more ominous than the lack of adequate benefits is the fact that the drug plan will be offered through private insurance companies, instead of Medicare. Indeed, the administration’s obsession with the private sector threatens to gut every mandatory federal benefit program created in the past 70 years.

Social safety net programs such as Medicare and Social Security were established to cover the private sector’s failure to provide many Americans with essential services. Social visionaries such as Presidents Roosevelt and Johnson realized that since it was not in the interests of the free market to provide expensive, unprofitable services such as health insurance and retirement checks to non-working seniors, it was the government’s responsibility to pick up the slack.

This theory is crucial when it comes to prescription drugs. Many seniors take several drugs at once, at such a high cost that it would be impractical for insurance companies to cover them.

Rates would need to be set at such a high mark to cover these high-cost enrollees that many seniors who only purchase one or two drugs would lose money in a private plan.

For instance, a senior earning $15,000 with $1,000 in drug costs would spend $1,057.50 under the current proposal.

Insurers know that only seniors with extremely high drug costs would sign on for such a plan.

That means that most companies won’t offer drug coverage to seniors at all — and if they do, many enrollees will be dropped when the company starts losing money. When profitability and the health needs of Americans come to blows, private companies will always choose the former.

The experiment with HMOs proves a telling example why privatization won’t work. More than two million seniors have been dumped by their Medicare HMOs in cost-cutting maneuvers. In Missouri, according to a September 2002 study by Public Citizen, 15,077 people have been dropped by their HMO’s. But no senior or person with disabilities has ever been dumped out of Medicare.

Medicare can also outstrip insurance companies in providing lower drug prices. Americans pay the highest prices for prescription drugs in the world. But one government organization provides the lowest drug prices in the country — the Veteran’s Administration. The VA uses its purchasing power to be a tough price negotiator with the drug companies, and Medicare can do the same. If the new prescription drug benefit were offered through Medicare, drug prices could be lowered by as much as 40%.

Furthermore, Medicare has already proven it does a better job of controlling health inflation than private insurance. Despite insuring the oldest, sickest and most disabled people in the country, Medicare has had lower health care inflation rates than private insurance for 30 years.

Despite all these factors, Congress insists on dangerously bypassing Medicare to dally with the private sector. Could it be that the President isn’t really interested in helping America’s seniors?

Senior citizens and people with disabilities deserve affordable prescription drugs through a system that puts their needs before drug and insurance company greed. If politicians were really interested in helping seniors, then they would do so under Medicare. Only then will their political trophy be worthy of our admiration.