Seniors seethe at Medifarce...Just who stands to gain? The insurance companies, for one

By RUTH KELTON

Part D was created when Congress voted the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) into lumbering life. Ostensibly, it enabled seniors, the disabled and low-income people, to buy prescription drugs cheaply. Actually, it doesn’t cover that much, and Part D has essentially turned over what it does cover to private insurers.

The Panthers were restive. They and I had threaded a maze of dark hallways in the bottom of a New York City housing project on a recent October afternoon to find a small meeting room. We crowded into folding chairs, waiting for an expert from an Albany-based senior action organization to explain the labyrinthine ins and outs of the new Part D Medicare brand-name drug program.

The Gray Panthers around me, a mix of old, not-so-old and relatively young, belonged to the activist group founded in the late 1970s for elders with a gripe against unfair treatment of the old. Today’s Panthers have broadened that mandate to include all ages.

Right now they were concerned with the danger they saw looming for over-65s, the disabled, people with low incomes and, ultimately, anyone eligible for Medicare. They took issue with much of the Part D program, regarding it as an open invitation to a corporate takeover of Medicare. Comments round the room ranged from “Confusing!” through “Irresponsible” to “Idiotic!”

Part D was created when Congress voted the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) into lumbering life. Ostensibly, it enabled seniors, the disabled and low-income people, to buy prescription drugs cheaply. Actually, it doesn’t cover that much, and Part D has essentially turned over what it does cover to private insurers. The insurers will administer the program for a per-member fee paid by Medicare. The options include relatively comprehensive Health Maintenance Organizations (HMOs) and “stand-alone” drugs-only plans (large areas of the country are not covered by HMOs).

If this handover to private firms weren’t enough to rile a Panther, the MMA makes it absurdly complex to choose a plan, so confusing are the feds’ rules and the insurers’ hedges and restrictions. There is no uniformity among private plans and an aspiring Part D member has to wade through a morass of rules and lists even to begin to understand what each plan offers and how to enroll.

THE HURDLES AND HAZARDS OF PART D PENALTIES

Take Alice, a hypothetical Part D candidate. She spends little on drugs, and the $32 monthly Medicare premium is more than she pays for meds, so she doesn’t enroll during the brief sign-up “window” (November 15, 2005 to May 15, 2006). A year later, Alice gets pneumonia and is prescribed a bunch of expensive drugs. Chastened, Alice
signs up, only to learn that she has to pay an extra one percent for every month she delayed, and she’ll pay that jacked-up premium for as long as she gets Medicare.

IT’S COMMERCIAL INSURERS OR NOTHIN’

George, a potential Part D enrollee, doesn’t want a big insurance company breathing down his neck, but it turns out the only way he can get Medicare drug coverage is by enlisting in a Medicare Advantage HMO or a stand-alone program, both run by commercial insurers, a group not known for its philanthropic approach to medicine.

BAIT AND SWITCH

Part D enrollees are “locked in” to their plans. Carlos signs up with a Medicare Advantage HMO that promises no fees, no premiums, and no charges above specified percentages for drugs. Two months later his HMO cheerily tells him he’ll have to pay more for his prescriptions (drug prices have risen), and incidentally, he’ll be charged $15 for doctor visits and his monthly premium will be $40. Carlos is stuck – he can’t leave the HMO and keep his coverage for the rest of the year. Meanwhile, Elvis, already an HMO member, is given an arm-lock ultimatum: “Get Part D through us or lose all your coverage for the rest of the year!”

NO PRICE CAPS

The pharmaceutical industry, even more than insurers, can raise its prices as much as it likes, whenever it likes. This means that Alice, Carlos, and an army of Medicare enrollees are completely unprotected from sudden drug price jumps.

NO PRIVACY

The feds can also waive some privacy protections (just which ones is still not clear). Marsha, who has Hepatitis C (and spends a bundle on drugs) is not enthusiastic about sharing her medical history with big insurance, but she needs the meds.

GAPS IN COVERAGE

Aimee, who has multiple sclerosis, pays the Part D deductible of $250, then 25 percent of her drug costs up to $2,250. After that Medicare snaps its purse shut and she has on her own until she’s racked up $5,000 in drugs. That’s a $2,750 gap for which she’s wholly responsible. Granted, Medicare covers all amounts above $5,000 generously. Still, Aimee lives on a limited income, and wonders where the $2,750 will come from.

WRITTEN TO CONFUSE

The framing of the MMA makes it so difficult to follow, its instructions so complicated, that even experts disagree about it. No wonder, Elvis, Aimee, et al. are dazed and worried. There are dim rays of light. Help is available for low-income clients, but the basic $600 break offered them won’t go far with expensive drugs needed for chronic illnesses. Additional help is available for low- and moderate-income people (see box), but it takes some searching among myriad services, government agencies and private organizations.

Just who stands to gain? The insurance companies, for one. My HMO – pretty typical – received $72 a month this year from Medicare just for keeping me on its books. Next year they’ll get $88, plus whatever they and Medicare agree on for Part D. That multiplied by, say, 3,000 members comes to a nice piece of change.

Who else wins? The pharmaceutical companies. With no government cap on drug prices, they will likely show enormous profits next year, at least in part because of an increase in part D customers. “Just thinking about it makes me physically ill,” says lobbyist Lani Sanjek of the New York State Wide Senior Action Council, the speaker at the Panther meeting.

How did a plan touted as a boon to the old, the poor and the disabled morph into a hand-out to the insurance and pharmaceutical industries? Sanjek thought she knew: “MMA was framed by insurance companies, pharmaceutical companies and conservatives, all of whom either had representatives, or sat, as industry-connected legislators, on the committee. These people wrote the bill. It was designed to hand over more of Medicare to private interests.”

Sanjek, who lobbied in Washington against MMA, also claims its complexity was intentional. Conservatives believed that it would discourage potential enrollees from
supporting future social legislation. It was no surprise, then, to find the Gray Panthers stunned and furious. Joan Davis, a Panther NGO representative to the United Nations, put it succinctly: “Part D is convoluted, ill conceived and inefficient... We want the corporations OUT of the government.”