"It takes a nuclear scientist to understand it." That's the reaction of a Washington senior after listening to a two-hour briefing on the new Medicare prescription drug benefit that starts January 1 next year. TREA Senior Citizens League has been following the introduction of the new drug benefit in news stories from around the nation. The reaction of Medicare beneficiaries and their advocates is almost the same as ours - "I'm not sure," said one 80 year old. "I'm still trying to figure it out."
The government, employers, insurers, and other providers will be mailing information about the new Medicare prescription drug benefit and drug plans in October. The new drug benefit will differ dramatically from what most seniors are used to under Medicare.
A majority of seniors currently receive their coverage under what the government calls "Original" Medicare. Under Original Medicare beneficiaries can go to any doctor or health care provider and are covered for a fairly comprehensive package of "medically necessary services." There are restrictions on what providers may charge and, as a rule of thumb, patients are generally responsible for about 20% of the Medicare-approved costs after satisfying the deductible.
The new Medicare prescription drug benefit operates very differently. Beneficiaries will have to first shop for and then enroll in a drug plan to receive the benefit, and they will only have a six-month Initial Enrollment period starting November 15, 2005 in which to make a decision in order to avoid a premium penalty for late enrollment. Medicare beneficiaries will need to choose from a "drug only" plan that can be used in conjunction with Original Medicare, or a managed care plan that also offers more comprehensive coverage for doctors, outpatient and other health care services in addition to prescription drugs. Premiums will vary. The drugs that plans may cover will vary. The costs of the drugs will vary.
"I can't see anyone initially understanding this," said Grace Hall, a senior activities director in the Seattle area. "People are going to need some help with all the different aspects," she said. "Everything must be personalized for each user."
Health policy analysts believe the new benefit will generally be a good deal for low-income seniors who are entitled to extra financial assistance, and for people with high drug costs exceeding $5,100 per year. The economics of the new program however, depend on large numbers of relatively healthy seniors enrolling and paying premiums to help defray the costs of those with high drug expenses. Insurers warn that the program cannot survive if the only people to sign up are those with high drug costs.
TSCL supports efforts to simplify the program and believes Congress should extend the Initial Enrollment over a longer period to allow seniors adequate time learn about and determine the most appropriate drug plan choice without fear of premium penalties.
Sources: "Drug Program Perplexes Seniors," Sharon Salyer, The Herald Everett, July 11, 2005. "Medicare Changes Expected to Cause Confusion," Christopher Schwarzen, The Seattle Times, July 13, 2005. "Officials' Pitch for Drug Plans Meets Skeptics," Robert Pear, The New York Times, July 17, 2005.
October 2005
