BEGINNING THIS month, most seniors will have the opportunity to sign up for a Medicare-approved prescription discount drug card. As part of the new Medicare law enacted last fall, beneficiaries will be able to purchase privately sponsored discount cards that supposedly will save them between 10 percent and 15 percent on the cost of their medicines.
The discount cards, which have been billed as a transitional step until Medicare prescription drug coverage takes effect in January 2006, will provide meaningful relief for only about 4.7 million very low-income Medicare beneficiaries. The remaining 35.5 million Medicare beneficiaries will see fairly insignificant savings, if any, from these cards.
The U.S. Department of Health and Human Services (HHS) recently approved 39 discount cards that will operate nationwide. Pharmacy benefit managers, health insurers and other organizations will begin marketing the cards to beneficiaries this month, and the program will go into effect June 1.
These companies are eager to be in the discount card market because it will help them market their name or "brand" identification to Medicare beneficiaries. This will prove particularly beneficial in January 2006 if they choose to become one of the private plans offering the "new" prescription drug coverage.
Unfortunately, amid all the public relations hype surrounding the cards, HHS has neglected to explain several key facts.
First, the estimates of savings are only that -- estimates. HHS rules do not require card sponsors to provide a minimum discount level. In fact, at a House Ways and Means Committee hearing in April, an HHS representative testified that the discounts could be as low as 2 percent.
Beneficiaries may also find that the savings are largely illusionary and reduce costs less than the current discount cards and mail-order plans that are already available. Last year, prescription drug costs rose by 17 percent, and increases in the medicines taken primarily by elderly Americans were even sharper. The new Medicare-approved discount cards will do little to offset these escalating costs unless the federal government steps in to negotiate lower drug costs on behalf of 40.2 million Medicare beneficiaries.
