Bad Medicine for Seniors
Social Work Today
Vol. 4 No. 1 p. 8
By William H. Simpson Whitaker, PhD, ACSW

The need for a Medicare prescription drug benefit program is indisputable. Unfortunately, the legislation passed by Congress is little cause for celebration by the nation’s seniors. With a presidential election on the horizon, congressional Republicans and Democrats alike were eager to pass legislation demonstrating their commitment to the needs of elder constituents. In late November 2003, after massive arm-twisting by Republican leaders, the House approved the conference committee report on S.1/H.R.1. The Senate followed suit one week later.

When the law becomes effective in 2006, seniors will discover its shortcomings and false promises. Medicare participants will join stand-alone prescription plans or private health plans that offer prescription benefits. Each year, seniors will pay a $420 insurance fee plus a $250 deductible. After the deductible is met, insurance will pay 75% of prescription costs up to $2,250. The next $3,600 in prescription costs will be the sole responsibility of participants. Only after seniors have paid a total of $4,270 will catastrophic coverage kick in paying 95% of additional costs.

The law is a good deal for seniors with very low incomes—less than $12,123 per year and no more than $6,000 in accessible assets. They will not be required to pay premiums, deductibles, and gap costs. Seniors with higher incomes will fare poorly, being responsible for 79% of the first $5,044 of their prescription costs.

The proposed legislation falls short in several regards. First, many low- and moderate-income seniors will be unable to afford the $3,995 they will be required to pay before insurance kicks in again beyond the gap. Interestingly, no gap exists in the prescription drug coverage currently provided to members of Congress. The new legislation is so bad that the legislators who wrote it decided not to participate. Congress will keep its own far better coverage. A program appropriate for our congregational delegation would also be appropriate for us—their constituents. The gap in prescription coverage should be eliminated.

Second, the law may actually reduce prescription coverage for millions of Medicare beneficiaries. Consumers Union estimates that by 2007, the average Medicare beneficiary will pay more out-of-pocket for prescriptions, premiums, deductibles, copayments, and coverage gap than they spend today. U.S. Action estimates that 2 million to 3 million retirees are likely to lose coverage now provided by their former employers, even after the $86 billion subsidy to employers provided by the new legislation.

Third and most important, the legislation threatens the survival of Medicare as a universal social insurance program. By paying private insurers 10% more than the cost of traditional Medicare and providing an additional $12 billion in incentives to private insurers, the legislation creates an uneven playing field in which private insurers have marked advantages over the current public Medicare program.

By capping government funding of both private programs and traditional Medicare so that beneficiaries must pay any additional costs through increased premiums, the legislation is a Trojan horse designed to force seniors into privatized, for-profit HMOs that will limit their choice of doctors.

After private insurers have skimmed off the most healthy (least expensive) seniors with promises of less expensive, improved albeit largely unused benefits, the remaining traditional Medicare program will be left holding the bag serving the least healthy (most expensive) participants. It will then have to reduce services or drastically increase premiums.

As a final insult, the legislation rejects private sector best practices such as pooled purchasing for negotiated prices and prohibits the purchasing of less expensive prescriptions abroad. The result is a give-away program that protects the highest possible profits for the pharmaceutical industry while doing little to contain the runaway costs of prescription drugs. This result should be no surprise since drug companies have spent a whopping $650 million to influence politicians with approximately 80% of direct campaign contributions going to Republicans since 1997.

— William H. Simpson Whitaker, PhD, ACSW, is a professor at the Boise State University School of Social Work.