Our Medicare Misery

[Guest guest]

http://www.alternet.org/story/30405/

 

Our Medicare Misery

 

By Robert Kuttner, The American Prospect. Posted January 5, 2006.

 

 

 

[Note: This article originally appeared in The American Prospect as

" Medicare Misery. " ]

 

The New Year brings with it Congressional mid-term elections. Here is

an issue that should be a real political gift to the opposition party

-- the colossal Medicare drug-benefit mess.

 

It was clear back in 2003, when the Bush administration rammed this

bill through the Republican Congress, that the purpose was not to

devise an affordable prescription drug program for seniors. Rather the

administration wanted to help two friendly industries, the

pharmaceutical companies and the HMO's; and to get bragging rights for

the 2004 election that Bush had helped seniors. Few voters would grasp

just how bad the law was, since its effective date was deliberately

put off until 2006.

 

Now, as the year of reckoning arrives, the true cynicism of Bush's

program is becoming evident to each senior citizen (or adult child of

senior citizen) who attempts to fathom what Bush and the industry

lobbyists wrought.

 

For starters, coverage is woefully inadequate. You pay a $250

deductible and then a 25 percent co-pay on the first $2,250 of drug

benefits each year, plus roughly another $450 a year in premiums. So

if your prescriptions cost $2,250 a year, or about $190 a month, for

prescriptions, you pay $1,200 a year all told and the plan pays just

$1050.

 

That's pretty shabby. But then, the truly bizarre feature of the plan

kicks in. Coverage simply disappears, until you have spent nearly

$3,100 out of pocket. This is the infamous " hole in the donut. "

Coverage kicks in again only after a total of $5,100 in prescription

costs.

 

A great many seniors will never get the coverage because the plan is a

bad bargain, and they just won't sign up. Of if they do sign up, they

will run out of the ability to pay enough out of pocket before

qualifying for needed benefits. Even with these disgracefully skimpy

benefits, the plan is expected to add over half a trillion to the

federal budget over the next decade.

 

Why would anyone have designed such an insane program?

 

Because the political purpose was never to deliver good benefits. One

administration goal, running the program through the private insurance

industry, conflicted with the imperative of a clear, cost-effective

plan. Seniors must evaluate innumerable competing private plans, each

with subtle differences in costs and benefits that make an

impenetrable program even less fathomable, and raise total costs

because each of these private plans tacks on a profit. This was a case

of privatizing something done far more efficiently through a direct

government program.

 

The second administration goal, fattening the drug industry, led to a

provision explicitly prohibiting the government from negotiating bulk

price discounts from drug companies, as the Veterans hospitals do. As

a result, according to a study by Families USA, drug prices obtained

by the VA are about 48 percent less on average than those expected to

be charged to people enrolled in the Medicare drug program. Among the

twenty most widely prescribed drugs for seniors, for instance, a

year's supply of Protonix (for ulcers) costs the VA $253, but the

seniors in the Bush Medicare program, which prohibits such bulk

discounts, pay a sticker price of $1,080. That by itself will give you

ulcers! A year of Zocor, the cholesterol-reducing drug, costs the VA

$251. Seniors in Bush's drug plan get whacked for $1,323.

 

It was these inflated costs that necessitated some gimmick to keep

down the overall cost to taxpaypers. Hence the notorious donut hole.

 

If the Democrats have the moxie and the wit, they should propose a

straightforward fix, take it to the country in the 2006 elections, and

dare Republicans to oppose it:

 

First, get rid of the costly crazy-quilt of private programs and bring

the " Medicare " drug program back into public Medicare.

 

Second, allow Medicare to negotiate bulk discounts the way the VA does.

 

Third, get rid of the donut hole, and design a simplified benefit

structure with modest co-pays and then 100 percent coverage after a

set annual cap on out-of-pocket costs.

 

Finally, if the savings from the bulk price discounts are not quite

sufficient to cover costs of filling in the donut hole, take back a

little of Bush's tax cuts to the richest one percent.

 

This debate will also remind voters of a useful meta-lesson. A party

whose mantra is " hate government, " and that sees government mainly as

a vehicle for rewarding special-interest allies rather than serving

ordinary citizens, can never be trusted to run government competently.

 

A happier New Year to all.

 

Robert Kuttner is co-editor of The American Prospect. This article is

available on The American Prospect's website.