Medicare Drug Plan—“D” Is for “Disaster”

Nov 21, 2005

George Bush just called the new Medicare drug plan, “The greatest advance in health care for seniors and Americans with disabilities since the creation of Medicare 40 years ago.”

What a joke! The plan, called Medicare Part D, is a real attack on senior citizens and the disabled, including, especially, the poorest among them. The plan has high monthly premiums, a high deductible and astronomical co-pays.

The average premium people will pay under the plan is $32 per month and the deductible is $250. In other words, people will pay out $634 before they ever see one penny.

Then as their drug bills increase, they will pay a 25% co-pay for a period and 100% for a period after that. Compare that to the $5 or $10 co-pays active workers pay for prescriptions and you get an idea of how little this plan looks like any “normal” insurance plan.

After people have paid their premiums and the deductible, they will pay 25% of the costs until they reach $2,250 in drug charges. People paying average premiums must have drug bills of $1,518 before they even get back the same amount they’ve paid in.

In other words, anyone currently paying less than $1,500 for drug coverage might as well stay out of this plan. And this amount will go up every year as co-pays and deductibles increase.

Above this level, they will finally begin to get back more than they’ve paid in. At $2,250 in bills, the average person will get $549 more than they’ve paid. But then there’s a big gap in coverage between $2,250 and $5,100, where the plan pays nothing. So even if people apply that $549 to their drug bills, a person with average premiums will wind up footing the entire bill for anything between $2,799 and $5,100.

Even those with more than $5,100 in bills, considered the “catastrophic level,” will still have to pay 5% of the rest. The average person will have paid $3,984 out-of-pocket before reaching this level. The bottom of the “catastrophic” level will also go up every year with inflation.

Low-income people with drug coverage under Medicaid, who are eligible for Medicare, will automatically be switched to the new plan. Many of these people currently pay nothing for prescriptions under Medicaid. Under the new plan, low-income seniors will pay between $1 and $5 for every prescription they fill, depending on their income and what drugs they need.

The plan is designed to push people to enroll. Seniors have until May 15 to do so. Those who don’t will be penalized an additional one% on their premiums for every month they delay. They will then pay the higher premiums forever.

Medicare Part D may be a big “advance” for Bush’s friends in the pharmaceutical and insurance industries, but for seniors and the disabled it’s a huge step backwards.