Enrollment is planned to begin November 15th of this year.  Low-income seniors will receive the greatest benefit because they won’t have to pay premiums or deductibles.  The new coverage, however, is not as generous as many private drug plans offered through former employers.  There’s a big gap in coverage or “doughnut hole.”   Enrollees will pay an average premium of $37 a month and a $250 deductible in 2006.  Altogether, seniors would pay $4,044 for the first $5,100 in drugs before catastrophic coverage would kick in — not a huge bargain. 

That’s not the only drawback.  Here are a few more: 

• Despite saying the new plans are voluntary, seniors who delay enrollment after the initial six-month enrollment period will face permanently higher premiums — the cost of which will escalate for every month delayed.
• Coverage will vary.  Seniors will have a formidable challenge researching whether prospective plans cover the drugs they need and how much the plan would save.
• The government will not be allowed to negotiate prices for the drugs as is currently done for the Veterans Administration, but importing drugs from other nations where the drugs may cost only half as much as in the US is still technically illegal.
• Many seniors who receive their drug coverage through former employers may pay a higher share of the costs.  New rules allow employers to collect billions of dollars in federal subsidies for prescription drug benefits that are less generous.

Congress almost didn’t enact the new prescription drug legislation because many Members feared it would exceed $400 billion over ten years.  Last year it became public that higher cost estimates were concealed from lawmakers at the time of the vote.  TSCL believes it is appropriate to amend the legislation in order to ensure both appropriate cost and funding as well as to protect seniors from paying a higher portion of their income in out-of-pocket costs.

Sources: “President Vows to Veto Any Changes to Medicare,” Peter Baker and Mike Allen, The Washington Post, Saturday, February 12, 2005. “Overview of the Medicare Prescription Drug Benefit,” CMS, January 21, 2005. “Employers Can Get Medicare Subsidies for Lower Benefits,” Robert Pear, The New York Times, January 31, 2005. “OMB Says Medicare Drug Law Could Cost Still More,” Ceci Connolly, The Washington Post, September 19, 2004.