Effect of drug plan in doubt

Medicare program may cut coverage, raise cost for some

November 13, 2005|By DAVID KOHN | DAVID KOHN,SUN REPORTER

Like many older people, Nanna Harper depends on medication to keep her healthy. She takes pills for high blood pressure, diabetes, dizziness and other conditions. She has health insurance through the state, but it pays only part of the cost of her pills.

The 71-year-old retired seamstress from Middle River spends between $200 and $300 a month on medicine - about half of her income. To save money, she often takes only half the required dose.

Harper hopes that her pill-cutting days will end on Jan. 1 when the federal government begins offering drug prescription coverage for the nation's 42 million Medicare recipients. Starting Tuesday, they will begin making their choices among a wide range of plans being offered.

But for all the money the government will spend on this program - probably between $725 billion and $1 trillion over the next decade - strong doubts remain about its impact, including on the health of the elderly.

Many experts warn that the plan, known as Medicare Part D, has significant flaws. Some people may still find drugs unaffordable, and others, including the very poor, may end up with less coverage.

Even supporters acknowledge that the complexity of the program, which requires seniors to choose among dozens of competing options, may discourage people from signing up.

Whatever the program's benefits, critics say, billions of dollars will be wasted on inflated drug costs - funds that could be better spent on more comprehensive prescription drug coverage.

"This will do relatively little to enhance the well-being of Medicare recipients, far less than it should," Boston University professor Alan Sager, an expert on health care policy, said of the program.

But federal officials and groups that lobbied for the program say it will help older people.

Dr. Mark McClellan, director of the federal Centers for Medicare and Medicaid Services, which oversees the new plan, sees it as a preventative medicine program.

"Medicare has traditionally paid for treating complications after they happened," he said. "Now we are paying just as much attention to treatments that keep people from having complications in the first place."

Those most likely to benefit are the 8 million to 14 million seniors who have no prescription drug coverage. The group consists primarily of seniors who are not quite poor enough to qualify for Medicaid, the federal program that provides health care for the poorest citizens.

The maximum allowable income varies from state to state, but it is generally so low that many needy seniors aren't eligible. In Maryland, for example, a senior citizen must have an income below $7,081 to qualify for Medicaid.

Beyond this group, there are millions of seniors, such as Harper, who have skimpy drug coverage.

Although statistics are hard to calculate, researchers say that hundreds of thousands, perhaps millions, of elderly Americans must decide between eating, paying rent and buying medicine.

"There's lots of evidence that when senior citizens have problems in getting drugs, their health deteriorates," said Leighton Ku of the Center on Budget and Policy Priorities, a nonpartisan think tank in Washington, D.C. "The new plan will beef up coverage for a large number of people."

Yet doubts persist.

"You're not going to see longevity go up by even a 10th of a year [because of Part D]," said Johns Hopkins University professor Gerard Anderson. Overall coverage rates for seniors will remain essentially unchanged, even after Part D goes into effect, he says. Anderson believes the plan's primary effect will be financial: shifting the cost of buying medicine from private citizens to the federal government.

Many critics say that Part D could have done much more.

The chief complaint: the new plan is legally prohibited from negotiating with pharmaceutical companies to get lower drug prices. As a result, the federal government - and seniors - will pay billions of dollars more than they otherwise would have to for medicine.

"Given the taxpayer costs, the benefits of this are meager," said Robert Hayes, president of the Medicare Rights Center, a nonprofit group that analyzes Medicare and provides information to beneficiaries. "So much of the money is going to inflated drug costs and excessive corporate profits."

Critics also point out that most seniors who join Part D will still likely spend a significant amount of money on medicine. Costs will include monthly premiums, co-pays and deductibles.

The plan also includes a large gap in coverage, known as the "doughnut hole." Once total drug expenses reach $2,250 for the year, beneficiaries must pay the next $2,850 that they spend on drugs. Above that amount, the plan covers 95% of costs. A study by Anderson found that allowing the government to negotiate lower drug prices would save enough money to close this gap.

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