Report disputes drug cost estimates

October 13, 2006|By Ricardo Alonso-Zaldivar | Ricardo Alonso-Zaldivar,Los Angeles Times

WASHINGTON -- Two weeks after the Bush administration announced that Medicare prescription premiums would stay about the same next year, a new analysis by congressional Democrats indicates that for a majority of middle-class seniors, rates will jump 13 percent - well above the overall inflation rate.

In a sternly worded letter to Health and Human Services Secretary Michael O. Leavitt, Rep. Henry A. Waxman, a California Democrat, accused the administration of "deceptive advertising."

Medicare Administrator Mark B. McClellan fired back with a statement calling the analysis by Waxman's Government Reform Committee staff "inaccurate and misleading."

But several independent experts said it is true that seniors using the most popular type of Medicare prescription coverage - a stand-alone drug plan - will face significant premium increases next year unless they switch to more economical plans that often come with more restrictions. The prescription drug benefit is overseen by the government but delivered by private insurance companies that offer a variety of plans with differing features and premiums.

"If you look at the plans where most seniors are now enrolled, many are increasing premiums," said Tricia Neuman of the Kaiser Family Foundation, who oversees Medicare policy for the nonpartisan research group.

"What was the best deal last year may not be the best deal next year," said James Firman, president of the National Council on the Aging.

The argument over how much seniors will pay for prescription drug insurance next year comes in the home stretch of a close election campaign in which Republicans and Democrats are working hard to attract the votes of elderly Americans. The announcement that premiums would remain essentially unchanged might have been welcome news to many seniors, but Waxman argued that Medicare officials based that claim on "three-card Monte," a reference to a card game favored by con artists.

The claim that premiums would stay flat was based on the expected average of costs for all Medicare participants, including about 6 million who get coverage through managed care plans that are heavily subsidized by the government and generally do not charge a separate monthly premium for their prescription benefits.

Waxman, however, excluded the managed care beneficiaries and focused on the much larger group of 16 million seniors with traditional, fee-for-service Medicare, who have enrolled in stand-alone drug plans. These plans offer prescriptions only, unlike the managed care plans that also provide hospital and doctors' care. Premiums for the stand-alone plans are projected to rise significantly.

For example, monthly premiums for Humana's popular low-price plan will rise from an average of about $10 to about $15, the company confirmed - an increase of 50 percent.

"The dollar amounts may not be so great, but premiums are nonetheless on the rise," said Neuman.

Even with the increases, Humana expects to have the lowest-cost plan in 38 states. "We still feel like we're the low-cost plan overall," said spokesman Dick Brown.

Ricardo Alonso-Zaldivar writes for the Los Angeles Times.

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