New Medicare Bill Bars Extra Insurance for Drugs

Medicare beneficiaries will not be allowed to buy insurance to cover their share of prescription drug costs under the new Medicare bill to be signed on Monday by President Bush, the legislation says.

Millions of Medicare beneficiaries have bought private insurance to fill gaps in Medicare. But a little-noticed provision of the legislation prohibits the sale of any Medigap policy that would help pay drug costs after Jan. 1, 2006, when the new Medicare drug benefit becomes available.

This is one of many surprises awaiting beneficiaries, who will find big gaps in the drug benefit and might want private insurance to plug the holes — just as they buy insurance to supplement Medicare coverage of doctors' services and hospital care.

Congress cited two reasons for banning the sale of Medigap drug policies. Lawmakers wanted to prevent duplication of the new Medicare benefit. They also wanted to be sure that beneficiaries would bear some of the cost. Health economists have long asserted that when beneficiaries are insulated from the costs, they tend to overuse medical services.

Gail E. Shearer, a health policy analyst at Consumers Union, said she had mixed feelings about the prohibition.

"I don't want a return to abuses of 1970's and 80's, when lots of confusing Medigap policies were sold to vulnerable seniors," Ms. Shearer said. But she added: "Many seniors and disabled people will face a huge gap in drug coverage. In a bill that's marketed as providing choice to consumers, comprehensive drug coverage is not really an option. That's a disappointment."

The new drug benefit would be the biggest expansion of Medicare since creation of the program in 1965. But patients would still face substantial costs.

Under the standard Medicare drug benefit, the beneficiary would be responsible for a $250 deductible, 25 percent of drug costs from $251 to $2,250 and all of the next $2,850 in drug costs. Private Medigap policies could not cover any of those costs.

A Medicare drug plan could further limit coverage by establishing a list of preferred medicines known as a formulary. The list must include drugs in each "therapeutic category and class" — antihistamines, antidepressants and cholesterol-lowering agents, for example.

But Medicare would not have to pay anything for drugs left off the list. While patients could appeal a denial of coverage, they could not buy private insurance to cover the costs of such drugs.

Under the standard benefit, a Medicare recipient would pay $3,600 of the first $5,100 of drug costs. After that, Medicare would pay 95 percent of the cost of each prescription. In theory, the bill establishes a limit of $3,600 a year on out-of-pocket costs.

But if a beneficiary bought drugs not listed on the formulary, the bill says, those costs would not be counted toward the $3,600 limit.

Congress began regulating the Medigap market in 1990, as a way to protect consumers, many of whom had bought duplicative policies. The federal government and state insurance commissioners developed 10 standard policies, to replace thousands then on the market.

Three of the 10 Medigap policies cover drugs. Under the legislation, an old policy with drug benefits could be renewed — but only by a person who chose to forgo the new Medicare drug benefit. A person who enrolls in the new program could not buy or renew a Medigap policy to help defray drug costs.

Nearly 12 million retirees have drug coverage and other health benefits from former employers. If those retirees sign up for the Medicare benefit, the employers can help pay the beneficiaries' share of drug costs. But those payments would not count toward the $3,600 limit on out-of-pocket spending.

Under the bill, low-income elderly people eligible for both Medicare and Medicaid, the federal-state program for low-income people, would receive their drugs through Medicare. Medicare drug plans will almost certainly cover fewer drugs than Medicaid now covers, state officials say. But the bill generally prohibits Medicaid programs from supplementing the Medicare drug benefit.

If state officials wanted to supplement the new Medicare drug benefit, they would have to pick up the entire cost of the extra coverage. States would not get the discounts and rebates they now receive from manufacturers under Medicaid.

Dr. Lynn V. Mitchell, the Medicaid director in Oklahoma, said she expected Medicare formularies to be "more restrictive" than the drug coverage policies of state Medicaid programs.

"If patients do not get optimal drug therapy," Dr. Mitchell said, "costs will balloon in other areas. Patients may need more inpatient hospital care."

House and Senate negotiators who worked on the Medicare bill encouraged the National Association of Insurance Commissioners to study the Medigap market, with a view to making major changes.

In a report accompanying the bill, the conference committee said Medigap policies should be revised to provide less upfront coverage and to require beneficiaries to pay more of the initial costs of hospital and physician services.

This, it said, "drives up costs for everyone — premiums of Medicare beneficiaries without Medigap coverage and costs to taxpayers."

"Numerous studies have demonstrated that covering deductibles and coinsurance has led to higher Medicare spending because beneficiaries become insensitive to costs," the report said. "Beneficiaries with Medigap consume $1,400 more in Medicare services than beneficiaries without supplemental coverage."

No where here does it say the increase in services was not needed.
Is it insensitive to costs ? or can I now afford to have needed services that I couldn't before ?

I just don't understand how government funding of a drug plan is a good thing, especially this plan.

There are drug discount programs, that, for less than $50.00 year, offer 50% disccount on generic drugs & 25% discount on brand name drugs.
If the rats & rinos are hell-bent on pushing money down a sinkhole, it seems the feds springing for some programs like this would save everyone a whole bunch of money.

Answers my question about my father's medication costs. I'll have to tell him not to sign up for this plan. As part of his retirement package, the company he worked for pays 90%.

It takes half way through the article before I find out that people can CHOOSE whether to remain under their old Medigap policies or enroll in this one.

My mother will stay with her old policy.

Is there a reporter out there, after years of schooling, that can do math? If you continue to pay 5% of everything after the $5100, how can there a limit on out-of-pocket expenses?

This is the plan the keeps on costing!

When anything is "free", people will want more of it. Doctors will give away more of it and seniors will either stockpile it or sell it to non-seniors for pure profit and greed. This will help keep the fraud and greed to a minimum. There is also a thing called "over medicated". Just because a doctor gives you a drug does not mean it will help you. Some actually do more harm when there are interactions with other drugs you are on. Too much of a good thing can kill you. Seniors are also the wealthiest segment of the population. It should be means tested. Let's also not forget, IT'S VOLUNTARY.

Socialized medicine requires the expropriation of existing businesses, and then the creation of "economic crimes against the state".

Hillarycare contained a $50 000 fine and five years in prison for doctors who made a private contract with a patient.

Medicare cannot compete with the private sector-so the private sector has to go.

When anything is "free", people will want more of it.

And up until now, research into anti-aging drugs has been constrained by economic reality.

If you thought you could slow aging by five years with an IV infusion once a week that cost $50 000 to produce, you would not start the research-because there would be no market at that price.

Now that it's "free"-the sky's the limit.

Why would the government want to outlaw those policies, so that more people have to use the government program? As a matter of fact, the bill has incentives for companies to keep offering private prescriptioin coverage.

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