Posted on 01/21/2006 10:26:32 AM PST by NormsRevenge
SACRAMENTO – The new Medicare prescription drug program was supposed to save California $120 million this year.
Instead, the state has had to earmark $150 million to help low-income Californians pay for drugs they've been denied as a result of bureaucratic foul-ups.
Even if the Medicare drug program begins operating smoothly, it is projected to cost the state an additional $59 million this fiscal year and more money each subsequent year because of flaws in the federal funding formula.
"We don't think it's fair," said Stan Rosenstein, deputy director of medical care services for the state Department of Health Services. "The state should be getting a 10 percent savings. That's what Congress said when it passed the program and the president said when he signed the bill."
Assemblyman Dario Frommer, D-Glendale, said he's outraged at the administrative and financial problems of the program, known as Medicare Part D.
"It's a double whammy," he said. "Not only is the program seriously flawed, but we're paying more to administer it than we would to run our own program."
Frommer said he might sponsor legislation that would prevent California from contributing any money to Medicare Part D until the federal funding formula is changed.
California isn't alone in its protests. Other states, including Kentucky, Texas and Ohio, might sue the federal government over the required state contributions.
The new program offers people 65 and older a prescription drug benefit from commercial plans. There are 19 such plans in California.
But for seniors and the disabled who are poor enough to qualify for Medicaid, called Medi-Cal in California, the program doesn't offer any advantages.
These 1 million Medi-Cal beneficiaries already received their drugs for free. They are among the 7.2 million "dual eligibles" nationwide who get Medicare as well as Medicaid benefits.
Under federal law, the Medi-Cal patients were forced to switch Jan. 1 to one of the commercial drug plans available under Part D.
In many cases, these beneficiaries now have payments of $1 to $5 per prescription and new limits on the drugs they can choose.
Many dual eligibles, including some of the 66,000 in San Diego County, have run into serious problems getting medications because their names haven't shown up on eligibility lists or they haven't been able to choose the right plan.
In response to these problems, Gov. Arnold Schwarzenegger and the state Legislature authorized $150 million in state funds to make sure patients' prescriptions get filled.
Yesterday, the governor signed a bill providing the emergency money, which will help Medi-Cal beneficiaries pay for their drugs until Feb. 11.
Schwarzenegger said the legislation ensures that California's low-income seniors and disabled people will get life-saving medications.
"This is a federal program and it is the responsibility of the federal government to reimburse California for 100 percent of the cost," he said in a statement.
On Thursday, Schwarzenegger met with U.S. Health and Human Services Secretary Mike Leavitt to urge the federal government to help solve Medicare Part D's problems.
Leavitt said the federal government would help California recover the $150 million in emergency funds, but that such money would have to come from the 19 for-profit plans providing service to Medicare recipients in the state.
Leavitt didn't take any immediate action on the long-term funding formula, saying instead that the issue should be discussed later, according to California Health and Human Services Secretary Kim Belshe.
Belshe, who was at the meeting, said California would consider a lawsuit if the federal government doesn't change its formula for determining states' contributions.
Under Medicare Part D, the federal government assumes that all states will save billions of dollars because Medicare is taking on the financial responsibility of buying prescription drugs for low-income seniors. In the past, that responsibility was handled by Medi-Cal, which is funded jointly by California and the federal government.
However, the funding formula forces states to give back most of their anticipated billions in savings to the federal coffers. Still, each state is supposed to end up with significant savings. California's net gain was supposed to be about $120 million, state officials said.
However, the projected savings have turned into a loss, Belshe said, because the amount of money that Washington wants the state to contribute is far too high. Federal officials don't adequately take into account the rebates that California demands from drug makers and the other cost-saving measures it has implemented for Medi-Cal, she said.
Gary Karr, a spokesman for Medicare, said the formula is set in law, making the federal government powerless to change it without further legislation.
Karr said California eventually should save money, particularly because Medicare Part D pays a subsidy to retired workers covered by Cal-PERS, the state's huge retirement system for public employees.
Cal-PERS spokeswoman Karen Perkins said Cal-PERS is entitled to a $50 million subsidy. However, she said, the Cal-PERS board wants the money to go toward reducing premiums for retirees, not for aiding the state budget.
Some health-care advocates said the funding formula puts the state at a disadvantage for keeping drug prices low.
For years, California has used its bulk purchasing as leverage to demand rebates from drug manufacturers.
"It penalizes California for doing such a good job of negotiating drug prices," said Anthony Wright, executive director of Health Access, a statewide coalition that pushes for expanded health-care coverage. "It was supposed to be a boon for California. Now it's created a . . . budget hole."
Wright also worries that the switch of 1 million dual-eligible patients from Medi-Cal to Medicare will reduce the state's power to negotiate rebates for the 6 million Medi-Cal beneficiaries left in the program.
Dual eligibles tend to be older and sicker, he noted. They account for about half of Medi-Cal's drug purchases.
Wright said California's budget and the state's low-income seniors and disabled patients would be better off without Medicare Part D.
"They've created something that's most costly, more complex, less comprehensive and more confusing than what we have now," he said.
Glitches in Medicare's Part D drug plan have forced California to authorize $150 million in emergency drug coverage.
The program is expected to cost the state:
$59 million more this fiscal year.
$84 million in 2006-07.
$376 million in 2007-08.
$399 million in 2008-09.
Source: Legislative Analyst's Office
more on Part D and Medicare funding shortage in California
CA: Lawmakers, beneficiaries at rally say new system should be scrapped ^
http://www.freerepublic.com/focus/f-news/1562284/posts
CA: Governor strongly bipartisan in bill's signing ceremony ^
http://www.freerepublic.com/focus/f-news/1562283/posts
Well what do you know, free isn't free after all.
Part D, for the (D)eath of us all.
The $500 billion plan that will cost trillians...
Thanks for nutin!
Anyone who considered for a second that Part D would cost less than 3 trillion PER YEAR is too stupid to be in Congress.
IMO, Bush will be as famous as Johnson for implementing still more great society gobble-de-gook that will be tragging this nation under for decades, "IF" we haven't gone bust by then.
Sounds like it would be cheaper for California to start manufacturing drugs itself and just cut out the middlemen.
The maintenance of the elderly population on multi-drug lifestyle improvment therapy is going to cost trillions and trillions of dollars no matter who makes the drugs.
My thoughts exactly.
Could these possibly be illegals who have no valid SS number and who should not have been receiving Medicaid all these years? Just a thought...
Thanks. There are times when it sucks to be right.
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