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| Category: Politics, Holistic |
Date published: August 19, 2004 |
New Medicare Prescription Drug Bill: What Happens in 2006?
by Evelyn Pringle
(Email: epringle05@yahoo.com)
In 2006, when the new Medicare prescription drug law goes into full effect, the average senior will have about $3,100 in annual prescription drug costs and will end up having to pay 66% of that amount, or $2,080. Most will have to pay a $420 annual premium, a yearly deductible of $250, and co-payments that will run about 25% on the first $2,250.
After that, seniors will have to pay 100% of prescription costs from $2,251 to $5,100. This gap in the benefit is referred to as the "doughnut hole" and it adds up to $2850 a year.
Thanks to Bush and his Republican allies in Congress, the undisputed benefactors of the new law are the pharmaceutical industry and HMOs. Drug makers will reap in at least $200 billion in additional prescription drug spending; and because the new program will be administered by private companies, hundreds of billions more will go to HMOs and private indemnity plans offering drug-only coverage.
The industry's preferred version of the bill was passed and it contains provisions that specifically bar the government from using its bargaining power to negotiate lower prices because Bush says negotiating for lowering drug costs like the VA does, might constitute a monopoly, and it prohibits the importation of prescription drugs from other countries because they might not be safe.
So how did the industry's ridiculous version of the bill get passed? One word answer: money. The drug industry and HMOs spent about $141 million on lobbying in Washington last year, unleashing a swarm of 952 lobbyists to do their bidding on the legislation.
And that figure only represents a portion of what was actually spent. The industry is only required to report money spent on lobbying Congress, Bush, and the executive branch. Millions of dollars more were spent on other forms of lobbying like print and TV advertising, campaign contributions, direct mailings, and state level lobbying.
Of course being the stakes were upward of $400 billion, not doubt about it, the industry's investment was money well spent.
This New Legislation May Be A Nightmare For Many Seniors
2006 may seem like a long way off, but people need to take a much closer look at the prescription drug law in its current form. They need to look at how they will be affected by the other harmful provision that Bush and his cronies forced into the bill.
For instance, there's not been much mention of the fact that the new law makes it illegal for insurance companies to provide coverage for the "$2850 doughnot hole" when Medicare pays nothing. This gap is alarming to many seniors when they realize they will not be allowed to buy any supplemental insurance to cover it. In fact, if seniors who sign up for the program already have a policy to cover the gap, they will not be allowed to renew it.
$2850 a year is a lot of money for people on fixed incomes. George Kourpias, president of the Alliance for Retired Americans, says seniors can't afford drugs under the Bush plan. "How can the average senior making little more than $14,000 annually afford double-digit price increases for drugs they need to survive? Seniors desperately need reforms that rein in an industry that will stop at nothing to protect their profits," he says.
Another little known fact is that low-income people will no longer be allowed to receive drug benefits from Medicaid (state welfare plans). State officials are worried because Medicare will now pay for far fewer drugs than the state plans and the new law will bar state agencies from supplementing coverage to close the gap.
How do Republicans justify these provisions? They claim seniors, as beneficiaries, should pay the $2850 themselves to keep Medicare costs down because, "when beneficiaries are insulated from the costs, they tend to overuse medical services."
I bet seniors didn't realize that the new law came with the added benefit of a lesson on how to budget their health care money so they don't "overuse" their drugs. And just think, this lesson only costs $2850 a year. What a deal.
Retirees Set To Lose Drug Coverage From Previous Employers
When debating on the new bill, Democrats voiced concerns that companies would cut retiree drug coverage benefits even faster than they already were, and they have. How serious is this problem? Very serious.
In the past two years, 13% of large employers terminated drug coverage benefits for future retirees, and 22% more say they are likely to. The Congressional Budget Office (CBO) estimates that 23% of the nearly 12 million retirees with employer drug coverage will lose it when the new Medicare program goes into effect in 2006.
But here again thanks to Bush, there is no incentive to provide coverage. According to the Wall Street Journal (WSJ), Bush and his allies in Congress added a provision to the bill that rewards companies with a tax subsidy even if they reduce retirees' drug coverage.
In effect, it creates a financial incentive to reduce retiree benefits. It allows some companies to get subsidies even if they shift part of the cost to retirees. Because of the way it is written, the subsidy is based on the cost of a company's entire drug program, including any part paid for by retirees.
The WSJ says the provision was pushed into the law by the industry front group, Employers' Coalition on Medicare, which coincidently (I'm sure) just happens to be made up of a group of corporations that gave Bush and the RNC more than $47 million since 2000.
Of the corporations that will profit from this provision, 10 have either tried in the past, or are trying to slash retiree benefits now. They include 3M, Verizon, AT&T, IBM, GM, DaimlerChrysler, Bank of America. These 10 companies alone gave more than $17 million to Bush and Republican members of Congress.
How much profit will these companies reap for the $17 million investment? Plenty. GM estimates the provision will save the company $4 billion on the cost of retiree care.
In March, SBC revealed that it would begin charging retirees monthly premiums and higher fees to save between $300 and $600 million a year. About 90,000 SBC retirees will now pay more for health insurance.
So how much did SBC spend to get the bill and the provision passed? $4,087,981 since 2000.
Verizon will also save a bundle. It expects retiree costs to fall by $1.3 billion. So how much did Verizon wager? Overall contributions totaled $3,882,181,
If the bill isn't changed, the future looks grim for retirees. A study by the Kaiser Family Foundation found that out of 408 companies surveyed, 71% now require retirees to pay more in premiums, nearly 10% have eliminated the benefit altogether, and 20% said they will probably eliminate it by 2007. The future definitely does not look good for retirees.
Is There Any Hope That Things Will Get Better?
Possibly. Corrective legislation has been introduced in Congress and according to the Wall Street Journal, AARP, the largest senior advocacy group in the country, has announced its endorsement for the bipartisan drug importation bill, "The Pharmaceutical Market Access and Drug Safety Act," (Market Access), which already has 23 co-sponsors, that include such heavy-weight US Senators, as Snowe, R-ME, Dorgan, D-ND, Kennedy, D-MA, McCain, R-Ariz, and Stabenow, D-Mich. The bill would legalize the importation of prescription drugs from other countries.
But it remains to be seen whether the drug industry will allow this bill to pass without a knock-down, drag-out fight. Newsday reports that Jeff Trewhitt, spokesperson for the trade association, Pharmaceutical Research and Manufacturers of America (Pharma), said, "We certainly believe that we have powerful arguments against importation and that we still have time to convey them to key lawmakers," Trewhitt said. He says that the AARP endorsement "certainly causes concern, but the battle is by no means over."
What does Trewhitt mean? Only that the drug industry will again swamp Washington with $100s of millions in attempt to defeat the legislation.
But on the other side, AARP CEO Novelli, says AARP is creating a large advertising campaign to support the bill, and that it plans to lobby for endorsement by members of Congress who have not signed on to it yet.
As it stands right now, if new legislation isn't passed, seniors will have a tough choice to make in 2006. They can either cough up the $420 annual premium, the $250 deductible, the 25% co-payments, and the $2850 to cover the gap, or they can quit taking their drugs cold turkey.
If that day comes, seniors must remember to be grateful to Bush for including the provisions that made sure that the government didn't enter into a monopoly by negotiating affordable drug prices and didn't allow the importation of unsafe drugs and made sure that seniors didn't frivolously "overuse" their medications high blood pressure, diabetes, and lowering cholesterol.
What a guy. Lets give him another 4 years and see what other helpful tricks he's got up his sleeve.
By Evelyn Pringle
e.pringle@sbcglobal.net
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