Seniors face dizzying array of drug plans

By The Associated Press and Gannett News Service

	GETTY IMAGES Gordon Allen, 84, of Gaithersburg, Md., protests the Medicare bill yesterday at a Capitol Hill rally of senior citizens.
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WASHINGTON — President Bush signed a new prescription-drug benefit into law yesterday as part of historic Medicare changes that also will confront seniors with numerous, sometimes-difficult choices on their health-care coverage.

Bush said the new drug insurance "will save our seniors from a lot of worry." But the bill's critics said the worries have just begun for Medicare's 40 million older and disabled Americans.

The government will spend nearly $400 billion over the next 10 years to subsidize prescription-drug coverage, which begins in January 2006. At the same time, the government will encourage insurance companies to offer private plans to millions of older Americans who now receive health-care benefits under terms fixed by the federal government.

The first tangible result of the Medicare law will be prescription-drug discount cards that the president said would take effect in June. He said seniors will receive a mailing in the spring to explain the card, which will cost no more than $30 a year. It will offer discounts that Bush said will range from 10 to 25 percent off retail prices. Critics say the promise of savings is wildly inflated.

Drug-benefit issues Key issues regarding the prescription-drug benefit in the Medicare bill signed by President Bush yesterday: Uncertainty . Seniors won't know until late 2005 what types of drug-benefit plans will be available where they live. Private insurers or other businesses will receive financial incentives from the government to offer drug-only policies. There also will be incentives for managed-care insurers, such as HMOs, to offer alternatives to traditional Medicare coverage for medical care including drugs. These will vary by state, region and city. Backers of the plan estimate the premium at $35 a month, but private plans could structure their prices and benefits differently. Seniors might find that their heart medication isn't covered by a particular plan; those policyholders will be steered to a similar drug, go through an appeals process or pay for the drug themselves. Plans can change the list of drugs they cover at any time, but seniors can change plans only once a year. Timing . Seniors on Medicare will have to wait until 2006 to see a drug benefit. Until then, seniors can buy a card for $30 that sponsors say will bring discounts of 10 percent, 15 percent or perhaps more at retail pharmacies. Pressure . The drug benefit is voluntary and will be known as Medicare "Part D." But seniors may feel pressure to sign up, even if their current drug needs don't justify premiums that could be as high as $420 a year. To encourage participation, there is a financial penalty for those who decline the program when it first becomes available but try to enroll later. "Medigap." Many seniors now buy "Medigap" insurance that covers what Medicare doesn't; some of those policies cover part of their drug costs. Once the new benefit takes effect, the law will prohibit sale of gap policies that cover out-of-pocket drug expenses on the theory that seniors need to pay part of their own drug costs in order to hold down consumption. Complexity. The drug benefit is difficult to understand and does not resemble anything offered today by private insurers. This benefit is less generous and more complex. A senior will pay the first $250 of drug costs in one year, then pay 25 percent of costs until the bill reaches $2,250. The plan will pay none of the senior's next $2,850 in drug costs. When a person's drug bill reaches $5,100 in one year, the benefit kicks in again and the program pays 95 percent of additional costs. Pricing information will be posted and updated on the Medicare Web site and also will be available from the Medicare help line, 1-800-Medicare. The Associated Press

The president sought to reassure seniors yesterday that their choices will be explained to them in detail and that they can keep the health care they have.

"If you don't want to change your current coverage, you don't have to change," Bush said.

But that option may not exist for some seniors. The Congressional Budget Office estimates that 2.7 million retirees will lose the drug coverage they now receive from former employers, although other projections are much smaller.

Some Medicaid beneficiaries, among the poorest of seniors, also could see restrictions placed on their drug coverage, several health analysts said.

Whether to sign up for the drug benefit or switch from traditional Medicare to an HMO or preferred-provider organization will be a decision that for many seniors will depend on their current or anticipated future spending on drugs.

It likely will become commonplace for elderly Medicare recipients to present themselves at the drug counter with several discount cards and ask the pharmacist to determine which combination offers the best price, said Susan Winckler of the American Pharmacists Association.

"I think we will have some painful conversations with beneficiaries who say it is not enough," she said.

The president said the average senior will see today's drug bill cut roughly in half, but his calculation includes a savings of 20 percent that is not found in the law. Instead, the administration assumes that insurers will take advantage of seniors' aggregate purchasing power to negotiate drug prices that are on average 20 percent less than today's retail prices.

The discount-drug card will offer the administration a test run of how well it can explain seniors' choices.

In keeping with the legislation's reliance on the private sector, the cards will be offered to elderly and disabled beneficiaries through sponsors, which can be drugmakers, pharmacy-benefit-management companies, or membership organizations such as AARP or the American Automobile Association.

Card sponsors would have to meet certain requirements and could charge up to a $30 annual enrollment fee.

Beneficiaries could enroll in only one Medicare-sponsored card at a time and would have to stay with that card for at least a year. However, Medicare participants could continue to use any one of the many discount prescription-drug cards that are currently on the market.

An estimated 18 million Americans — many of them elderly — already are enrolled in discount programs offered by pharmacy-benefit managers like Express Scripts and WellPoint Health and drugmakers like Pfizer and Eli Lilly.

There is no guarantee the Medicare cards will offer a better deal or be more popular with seniors than current discount cards, according to pharmaceutical-industry officials.

"Seniors told us they don't want to calculate anything," said Forrest Harper, an executive with Pfizer. "They want to come in, present their card, get their discount, get their medicine and take them."

Pfizer's discount card gives low-income seniors access to any Pfizer-manufactured drug for a flat fee of $15 with no annual enrollment fee.

Pfizer makes nine of the top 50 drugs most prescribed for older Americans, including Celebrex for arthritis and Lipitor for cholesterol, Harper said.

Some discount-drug-card managers said their companies have yet to declare whether they will enter the Medicare market.

"We are looking at it," said Julia Alexis, director of marketing and business development for AARP Services, the business side of the 35 million-member organization for Americans 50 years and older.

Whether the new Medicare-endorsed discount-drug cards will offer beneficiaries great discounts depends on the behind-the-scenes negotiations that will go on between the card sponsors and the drugmakers, said Tom Mahowald, an executive with Express Scripts, one of the nation's largest pharmacy-benefit management companies.

"These arguments that this offers more choice are simply a crock, because you can't do that unless you understand it," says Judy Feder, a professor of health policy at Georgetown University in Washington who is a harsh critic of the new law.

Those who pushed for reliance on private insurers to deliver the new benefit say it will take time to sort out.

Joseph Antos, health economist at the American Enterprise Institute, a think tank, says, "The bill is neither as bad nor as good as many people have told us."

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