Sep 27, 2004
A recent study by the U.S. Department of Health and Human Services found that at least four million people, or one-third of all retirees on pensions with drug coverage, will quickly lose some or all of their current drug coverage when the new Medicare drug program starts in 2006. Many companies are expected to either completely drop their own, private drug coverage for retirees, or else scale it back substantially.
Compared to the private pension drug plans, the government Medicare drug coverage will be very limited, not at all covering the same varieties of drugs, and it will also have very high out-of-pocket expenses, including very high premiums, co-payments, deductibles, etc.
As for those companies that decide to keep their drug coverage for retirees, the Medicare drug extension plan will provide them with a large outright subsidy, or government payout, at a cost estimated to start at about 10 billion dollars per year and go up from there. Under this plan, the government will cover about 28% of the drug costs for each retiree in a corporate pension plan. The subsidy will have the added advantage of also being tax free, and the government has also assured these companies that the subsidy will not reduce the substantial tax deductions they already get for providing drug benefits.
Who will pay for this new subsidy to these companies? The seniors themselves – through their higher Medicare drug coverage premiums, deductibles and co-payments.
All the opinion polls show that a big majority of seniors oppose this Medicare drug reform. They can do without a "benefit" that is not beneficial for anyone but the companies.