Copy of a letter to parents about Medicare

Copy of an email I received about the Medicare drug legislation President Bush signed into law:

I have summarized some of the most important parts of the Medicare Act for you, and have provided the ACTUAL CONGRESSIONAL BILL THAT WAS SIGNED INTO LAW, complete with highlights and references to the pertinent text for you to peruse.

The TV keeps telling you that this bill does nothing for you. That is a lie. It does a lot. It might not go far enough in a lot of peoples eyes, but, as presented by the AARP, the President and Congress (before it became a new election issue), it IS A START in the right direction, if you happen to agree that the government should pay these types of benefits. Where Medicare offered 0% coverage of drugs before, now there is coverage.

Below is my summary of what the drug benefit portion of the bill does. Please take the time to look it over. The truth is important to me, as your son, AND as a taxpayer; and you deserve to know the truth, same as all the seniors covered by this new Medicare package. Maybe you don't think it begins early enough (2006), or you don't think it offers enough of a price reduction in your drug costs, but it had to start somewhere, and even a 1% reduction in cost is STILL a reduction (and this bill offers much more than a 1% reduction).

There is a $250 dollar deductible [see Title 1 Section 101 Part D Subpart 1 Section 1860D-2 (b) (1) (A) ( i )] the first year (2006), this will go up each year thereafter.

For all future references "Title 1 Section 101 Part D subpart 1" will be omitted, only the pertinent section of subpart 1 and the relevant paragraphs and subparagraphs will be shown.

You pay 75% of the $2,250 coverage limit for the first year (which includes the deductible) [Section 1862D-2 (b) (2) (A) ( i ) AND Section 1862D-2 (b) (3) (A) ( i )] for a total of $1750, and 100% of your drug costs after that limit is reached, HOWEVER

Once you have paid a total of $3,600 dollars of your drug expenses out-of-pocket (this includes your original deductible and all your 75% payments for drugs), the NEXT benefit kicks in, the OUT OF POCKET THRESHOLD [see Section 1862D-2 (b) (4) (B) ( i ) ( I )]. Once you have paid up to this $3600, you pay EITHER a $2 co-pay for your drugs OR a 5% co-payment for your drugs, whichever is greater. [ see Section 1862D-2 (4) (A) ( i ) ( I ) and ( II )]

Companies that offer Prescription drug plans under Medicare ARE allowed to reduce to ZERO your cost sharing [see Section 1862D-2 (b) (4) (D) ( ii ) (5)]

Prescription Drug Plan providers can customize the plans they offer, so long as they meet the minimum requirements of the bill [see Section 1862D-2 (c) (1) (A) and (B)]

The FEDERAL GOVERNMENT is forbidden from negotiating lower prices, YOUR PRESCRIPTION DRUG PLAN IS NOT. (I think this is probably due to the fact that if the government got discounts, you might not—Congress might be tempted to keep the surplus, just like always).

Your PDP is allowed to negotiate the lowest price for drugs they can get for you (see Section 1862D-2 (d) (1) (A) and (B) and (C)] so long as they tell Medicare what kind of discount they get [see Section 1862D-2 (d) (2)]

ALL prescription drugs [see Section 1862D-2 (e) (1) (A)] not already covered under Medicare parts A or B [see Section 1862D-2 (e) (2) (B)].

The same companies that provide Medicare coverage now, and PDP’s who before could not provide coverage under Medicare may now do so. Medicare MUST provide at least TWO drug plan companies to EVERY person who is enrolled in the prescription drug plan. [see Section 1862D-3 (a) (1) and (3) (A) and Section 1862D-3 (a) (3) (B) ( i ) and ( ii )]

The law also states that your PDP must give you clear, accurate information about your benefits, how they charge your co-pays, what drugs are covered, etc., and how no STATE may write law that over rides this Medicare Bill.

Now, mom and dad, I didn't send a copy of the entire bill, only the areas I felt were pertinent to the drug coverage portions. I think this bill kicks in 2006 because its probably going to take that long for PDP insurance companies to get all the infrastructure in place.

Yeah, President Bush's “buddies” in the drug companies still get a lot of benefit from the government, like not TELLING THEM WHAT PRICES TO CHARGE, but any PDP that is worth anything is going to get their members some pretty hefty discounts from the drug companies, or risk losing PAYING CUSTOMERS to another insurance company.

That's the real beauty of this plan, you pay your deductible and co-pays to the PDP you use, and so are therefore a paying customer that can switch companies, instead of another GOVERNMENT NUMBER that gets NOTHING from a bureaucracy that for too long has been used to giving nothing.

That's the AMERICAN way--competition, and market forces at work--people will get MUCH larger discounts using their own PDP's to negotiate than the government would EVER get for them. (Remember mom and dad, this is the same government that paid $20,000 for a hammer, and continues to give freeloading "artists" thousands of dollars to produce art that isn't art).

Since this letter was written so clearly, I thought I would share it here, for others to read and forward to clear up some of the nonsense being put on the TV and the internet about it. I have looked at the legislation it cites, and beleive the contents to be accurate. You may want to double check the legislation and the numbers before you copy, forward or post to another thread.

The evidence it cites is primarily correct, however, every single article I've seen written about the legislation also mentions that over $70 billion will be paid to companies currently providing retiree prescription benefits in order to encourage them NOT to drop their existing coverage. In other words, we are bribing companies to honor their existing retiree contracts.

It is widely believed the numbers crunchers will look at the $$ they receive from the government vs. the cost of their current coverage and will drop the coverage anyway.

MANY retirees have excellent prescription drug benefits, according to the articles, and they worry this benefit will actually cost them more $$ considering that Medicare coverage gets dropped after a certain level only to be picked up again after the individual pays thousands of dollars of out of pocket expenses.

The devil is in the details.

For average Seniors (those above the poverty level percentage adjustments--roughly around $13,000 for individual), the overall benefit from this boondoggle pig in a poke bill is that Seniors end up saving only about 25% of their drug bill. The monthly premium hasn't been determined yet--but "may" be around $35 per month. The yearly deductible is around $280. There is a gap in coverage for about $1500 which all comes out of pocket.

Considering that many prescriptions run well over $100 per month, that isn't a great savings. Also, the legislation prohibits negotiating with drug companies for better prices. Thus, the drug companies can raise prices at will to get back that 25%.

The final result is a convoluted bill that provides tremendous benefits to drug companies and insurance companies but provides little real relief to Seniors.

This bill has already exceeded cost estimates by almost 1/3. Ironically, some prescription drug cards already available to Seniors cost much less than the $35 per month and some provide 15 to 20% savings already.

No, this boondoggle bill was a pay-off to drugs and insurance companies. It does not provide any significant or substantial benefit to Seniors. But every one gets to pay the taxes to pay for the drug and insurance companies' support. They, the drug and insurance companies, like the bill; and why not? They wrote it in a closed conference that the Pubbie leadership barred the Democrats from attending. Interesting, huh?

$70 billion will be paid to companies currently providing retiree prescription benefits in order to encourage them NOT to drop their existing coverage.

I haven't gone back and re-read the legislation, but IIRC, the figure is closer to $140 billion handout to insurance companies. At least that was pre-budget that now says the initial bill will actually be about 1/3 higher than estimated in December when the bill was being debated and voted on.

Fact- the elderly comprise the wealthiest segment of the population.

This fact cannot be stressed enough! The wealthy are voting themselves all sorts of gub'ment money even though they've got plenty already.

We should help those who need help, not just those who reach a certain age...

This demonstrates a major flaw in our system. The "press" who claims to be the guardians of the truth don't spend time looking at anything but the headlines. I love Fox BUT fair and balanced seems to mean each side gets to spin their own propaganda and no one acts as a truth meter (with some notable exceptions). Therefore the public is left believing whichever side they are predisposed to believe. In the past month or so I have seen so many polls I want to scream. The punditry handicaps the race night after night. Why? It is easy to do this and requires no real digging or research! What the candidates' positions are do not get presented in the kind of detail required to make an informed judgement. My favorite example is where candidates want to keep the tax cuts for "the middle class." I ask anyone for me to define what income level defines middle class. Also, where I live 100k is a fortune and allows one to "live large." In New York, the same income defines middle class.

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