Monday, May 15, 2006
Republican Medicare Drug Plan: A $400 Billion Entitlement to the Pharmaceutical Industry.
Millions of seniors are expected to miss the enrollment deadline for Medicare Part D. What happens now?
By Jennifer Barrett
Updated: 11:22 a.m. ET May 15, 2006
May 15, 2006 - By last week, 37 million Americans had signed up for Medicare Part D, according to government figures. But an estimated 7 million eligible seniors or more without drug coverage had not yet enrolled in the Medicare prescription drug plan, even as tonight’s deadline loomed. Some may have simply been overwhelmed by the process. Enrollees have more than 30 programs from which to choose, depending on where they live. And a Government Accountability Office report released in early May found federal handbooks, Web sites—even the special 1-800-Medicare hotline—had failed to provide clear and usable information to those seeking help in picking the right plan. Minorities in particular have lagged behind in signing up. A report released earlier this month by the Campaign for America’s Future, a nonprofit group that promotes a progressive, left-leaning agenda, found that Latino seniors were at a higher risk of missing the deadline than other groups because of cultural, language and economic barriers—and estimated nearly a million might not sign up.
Those not yet signed up can still join. But they may be charged a 1 percent increase in premiums for each month they delay enrollment. And health officials are worried that seniors who haven’t signed up may be unaware of the penalties. An April poll by the Kaiser Family Foundation found that, despite public awareness efforts, only 55 percent of seniors realized the enrollment period ended at midnight on May 15—and even fewer knew that it would cost them money to miss it. Roger Hickey, codirector of the Campaign for America’s Future, says even those who have enrolled may be in for surprises, too, if their drug costs exceed the amount covered by the government subsidies. NEWSWEEK’s Jennifer Barrett spoke with Hickey about the confusion and controversy over the Medicare plan—and how it could affect this fall's midterm elections. Excerpts:
NEWSWEEK: More than 7 million eligible seniors had not yet signed up for the drug plan last week. How many of them will likely miss the cutoff?
Roger Hickey: There’s no telling, but probably a very large number. I would say about 7 million or more. The Medicare Rights Center thinks it’s closer to 10 million ... There will be some amount of rush, but I think there will be millions of people who are left with a penalty if they do sign up again.
Why have so many seniors not enrolled yet?
I think this is an incredibly confusing plan. There are 30 to 50 different plans in some areas. Some seniors are very aware of what they are taking in terms of drug needs and some just take two pills every few days and don’t keep track. To figure out which plan is right for them, which has copays, how much more it makes sense to pay for better plans—it is an incredibly daunting task. That’s a clear reason why it has been so difficult. People also have a real suspicion of these private providers. I think if they were signing up with Medicare, it would be much more within their frame of reference and could be much more automatic.
A recent report from your center found that Latinos are more likely not to enroll in time than other groups? Why?
It’s a language issue. And not enough institutions that they relate to that are plugged into the information system. There were a variety of reasons.
Do the 7 million to 10 million who had not signed up for a plan have any prescription drug coverage now?
No. Most people who had a public plan were automatically switched—those on Medicaid, for example. Most who had a private plan seemed to stick with their plans. Those without coverage had to choose whether they had a large enough drug cost to sign up or to hold out and hope for the best.
What happens to them now?
Millions will be left out or penalized if they sign up later. But I don’t think this is the end of the dissatisfaction. There will also be a period—probably around September—when, for a lot of people who did sign up, the subsidies they get run out. They’ll go to the pharmacist and be told that they have to suddenly pay hundreds [of dollars] for their drugs.
Most plans under the Medicare drug coverage plan cover prescription drug expenses up to $2,250 per year. Then the participants are still paying the same premiums but they have no coverage at all until their expenses reach $5,100. This will happen again every year.
Do you think seniors who have enrolled realize this?
I think there will be a mass [realization], probably in September, when millions in the program will be shocked to find their drugs are no longer covered.
Why the gap in coverage?
Congress wanted to keep the price tag of the program under $400 billion over 10 years. The plan is a bargain for those with a small amount of drug costs each year, but not if you hit that $2,250 or so in drug costs … We are eliminating some problems for some people, but when people hit that limit, they will be in for a shock.
I understand that the government can’t negotiate with drug companies to get lower prices for seniors under these plans. Why is that?
It’s because of the power of the drug industry in Washington. There’s a prohibition against the government having any role in determining those prices. We’ve created a $400 billion entitlement that puts government in the business of buying that much in drugs over the next decade. But they can’t negotiate the prices.
Seniors are very price sensitive. They see the price of drugs going up each month. That’s a big problem. When they find out there’s this prohibition, they realize that’s the reason this is so complicated.
What are your main concerns with the Medicare drug plan going forward?
If the program continues as written, it will continue to frustrate seniors and escalate costs and be a disaster. The real next steps are political ones. This midterm election [in the fall] will be in a sense a referendum on the Medicare drug program. The question to every candidate should be: are you going to stand by the drug companies or be in favor of a fix that will bring down prices and make these plans simpler?
Are there other proposals out there?
Sen. Dick Durbin of Illinois and Congressman Marion Berry of Arkansas [both Democrats] have a proposal that is not a complete junking of the Medicare drug plan but would create another drug benefit plan run by Medicare that would compete with all these others [run by insurance carriers]. So you’d have the option of signing up with a Medicare plan. It would be simpler, cover more drugs—and they’d be able to negotiate with the drug companies to lower prices.
Where does that stand now?
In limbo. There aren’t enough votes now. But after the election, maybe there will be enough votes. The Medicare prescription drug plan is a highly politicized thing. It was when it passed, and it still is now.