Medicare Rx Bill—Is it good for you? Is it good for older Americans?

The answers to these two questions may be very different depending on your income, current insurance coverage, and health. Clearly, the Medicare prescription drug bill currently being debated in Congress would provide certain advantages and benefits. If you have a very low income (up to $8,980 per year) and have few or no assets (less than $6,000) and no coverage, the new bill could be a good deal for you. If you have a variety of health conditions that require high cost prescriptions (over $3,600 per year out of pocket) and no insurance coverage, then again you will be in favor of the bill. However, if you have access to a prescription drug insurance plan, have a moderate income (over $8,980) and have very modest assets (more than $6,000), your likely benefits from the bill will be negligible at best.

The numbers and variables are confusing. But, for the moment, we should put aside self interest and ask if this bill is good for most older Americans and for those of us who hope to be older Americans. In the short run (until 2006), the plan offers very little to anyone in the way of comprehensive prescription coverage. If the plan is enacted in the coming weeks, older people would be eligible for a moderate 15-25% discount on drugs purchased in 2004 and 2005 with a Medicare card. Although a discount, this percentage will still leave elders with sizeable prescription costs. It is also important to remember that, regardless of the pending bill, most elders who are currently covered under the Medicaid program (very low-income elders) have prescription coverage already.

In 2006, when the benefits are slated to be widely available, will most older Americans actually benefit? It depends. “A typical senior without drug coverage will spend $1,356 on drugs this year, according to the Kaiser Family Foundation. The new Medicare benefit could save that senior $391, or 29 percent. For those with drug coverage, whose insurance and out-of-pocket drug cost will average $2,322 this year, the discount would be $824, or 35 percent.” (Boston Globe, November 18, 2003, Alice Dembner). Although discounts are welcome news, the catch may be that retirees with health insurance may be at risk of losing their coverage as employers may drop or scale back their private plans as they view the federal program as a cost-effective replacement to their own more comprehensive private programs.

Included in the bill are provisions ($12 billion) to privatize aspects of the Medicare program by encouraging competition between Medicare and private insurers. And, the bill seeks to impose for the first time an income test that would require older people with incomes higher than $80,000 per year to pay higher premiums for their Medicare Part B coverage. At first glance, this may not seem unreasonable. However, the proposal fundamentally changes the “we are all equal and in this together” principle that Medicare is based on. Means testing the program will create a situation whereby income is introduced into what has always been an insurance program based on need for the benefit. Any affordable insurance program spreads its risk across as wide a landscape as possible. By fracturing the core base of Medicare participants with competition, truly affordable coverage may slip further away. The question that must be asked is will changing the philosophical principles—and the economic underpinnings—of the Medicare program be in the best interests of all Americans in the long-term?

In the final analysis, each of us should take the time to read and research the “facts” and opinions on this watershed subject. The outcome of the debate will not be the last word on this subject but it will set the direction and destination for what will be our nation’s health insurance system for older Americans in the 21st century. Make sure that you have weighed in with your opinion to your member of Congress as well as Senators Kennedy and Kerry here in Massachusetts. Personally, I am fairly certain that the current bill isn’t economically sound for most older Americans.

I believe that we can do better. We can add a meaningful prescription drug benefit to the Medicare program, a program that has served us well for some 40 years and will serve us well for at least 40 more. The bill should reinforce Medicare’s fundamental principles of universal coverage with universal participation. We should not be separating beneficiaries by their income, spending our money to give private insurers access to the healthiest elders, paying employers so they won’t drop their drug coverage, or restricting Medicare’s ability to negotiate the lowest drug rates—all things proposed in the bill. Any legislation passed should have citizens’ good health as its primary objective.