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New Medicare Benefit Helps Only Drug Companies

Why are so few elderly people signing up for the new Medicare drug benefit? It's cumbersome, costly and totally confusing.

Dr. Marc Siegel

November 16, 2005

Enrollment begins this week for the Bush Administration’s shiny new Medicare drug plan. But very few of my patients are enrolling or even asking about it. Why?

One 82-year-old man explains it to me this way: “The purpose of the plan is to bring more customers to the drug company trough at top- dollar prices.”

This man, my father, is certainly correct that there is no bargaining chip; no negotiating lower prices, no buying in bulk. Plus, with forty plans to choose from, it is difficult for the 43 million elderly to make any sense of an array of premiums, formularies, co-payments, deductibles and pharmacy networks.

A survey released last week by the Kaiser Family Foundation in Washington, DC, found that only 20 percent of seniors say they will enroll in a plan and 37 percent say they won’t. The remaining 43 percent are confused and don’t know what to do.

For those in the government who point to the Medicare website to answer seniors’ questions, there is the pathetic fact that less than one-third of seniors know how to use the Internet. And for those who do, what they find is bound to make them unhappy.

Money will be funneled to the drug companies from the fresh clients who do enroll, not to local pharmacies. An estimated $720 billion over the next ten years will subsidize prescription coverage through private insurance companies, but because of all the gaps in coverage, there will be plenty of out-of-pocket payments.

My father, with a fixed income from Social Security and a small pension, would seem to be a perfect candidate for prescription drug coverage. Yet under the new Medicare plan, according to our calculations, he is faced with high deductibles, $420 in yearly co-pays and the prospect of $3,600 coming out of his pocket at top-dollar prices just to receive $1,500 in coverage before a more complete coverage kicks in.

He, like many others, isn’t interested in this option at all. I supply many of my elderly patients with drug samples from my supply closet. But for most of our country’s elderly in the lower- and middle-income ranges, access to even this limited supply of free medications isn’t possible. Instead, they are faced with two options: Continue to do without essential medications, or pony up most of their savings to match what the government provides. The plan really only provides comprehensive coverage for those who make less than $12,000 yearly.

Ironically, this is practically the same group that already qualifies for complete coverage under Medicaid, if they only knew about it.

If you’re looking for a way to understand the new Medicare prescription drug plan, consider it as a way to help the private sector: The only elderly and disabled who will profit from it are those who are lucky enough to own shares in the companies that supply the drugs.

Dr. Marc SiegelDr. Marc Siegel is a practicing internist and an associate professor of medicine and a fellow in the Master Scholars Society at New York University School of Medicine. He is a weekly columnist for the New York Daily News, a frequent contributor to the Los Angeles Times, the Washington Post and The Nation. He is a member of the board of contributors at USA Today. He appears frequently on CNN, the Fox News Channel, and the NBC Today Show. He is the author of False Alarm: the Truth About the Epidemic of Fear and most recently, Bird Flu: Everything You Need to Know about the Next Pandemic (Wiley).


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