Medicare Part D

A few nights ago, I attended a meeting at a local retirement home providing information on the new Medicare Part D prescription drug benefit. Now, I've been aware for some time that this plan is an utter fiasco, a budgetary nightmare, and a boondoggle for the pharmaceutical companies and the health insurers. If the camel was designed by a committee, this was obviously designed by a Republican committee. Still, even I was amazed by the stupidity of this program.

First, of course, there are all the crazy things most of us already know;

• The ridiculous “dough nut” hole in the coverage. Drug costs from $250 a year to $2,250 a year are covered, as are costs above $5,100, but no coverage exists for the $2,250 to $5,100 gap. This was a device to lower the overall cost of the program, but why not just raise the initial deductible instead of this crazy structure?

• Coverage must be purchased from private health insurers, instead of from a single provider, thereby duplicating administrative costs for the plan many fold.

• Failure to purchase a plan within the enrollment “window” that closes May 1, 2006, results in a penalty of one percent of the premium cost a month for every month enrollment is delayed. The penalty, once incurred, lasts forever. I guess the purpose of this is to force healthy people to buy coverage in order to eliminate the adverse selection bias. But, it isn't going to work that way. The healthy people are going to buy the really cheepo plans to avoid the penalty at the lowest possible cost, leaving the really sick people to adverse select into the expensive plans (which, of course, will become even more expensive, once the insurers realize they have been saddled with only the ill).

• Medicare is prohibited from negotiating lower drug prices from the pharmaceutical companies, thereby taking the biggest player in the market out of the negotiations, and leaving the pharmaceutical companies free to pit the health insurers against each other.

Those were some of the crazy things I already knew about the plan. The other night, I learned a bit more:

• Many drugs commonly prescribed for the elderly cannot be covered by any Plan D insurer. One example is Lorazepan (also known as Ativan), which is commonly prescribed to reduce anxiety in Alzheimer’s patients who find themselves disoriented. Here we have a program designed (sic) for the elderly which deliberately excludes drugs commonly prescribed for the elderly. (I'm guessing that the reason for excluding Ativan is that it is also commonly prescribed for delusional alcoholics. Can't treat those guys, I guess. They're evil. What will Bush do, when he needs them? Oh yeah, I forgot, he's rich.)

• Each insurance company has its own formulary (list of covered drugs), which are by no means complete. Hence, each individual has to shop around to find a company that covers his or her specific drugs. Of course, if the person needs new drugs for an illness contracted after he signs up, they may not be covered. So, I guess each person has to guess what drugs he/she may or may not need in the future.

• The insurance companies are free to change their formularies more or less at will, but individuals may only change insurers once each year. So, if you sign up with one plan because it covers your drugs, you may find out a month or so later that they no longer cover those drugs, but you must continue to pay premiums to that company until your annual renewal.

• Each insurance company has its own list of pharmacies through which you can deal to purchase your drugs. Drugs purchased through pharmacies not on that company's list won't be covered. Once again, the individual has to choose a plan that works with the pharmacy he/she wishes to use. Once again, the insurer can change its list more or less at will, but the subscriber must wait till the end of each year to change insurers.

• The program is administered on a state by state basis, so each insurer must have a different plan for each state in which it seeks to operate. If you happen to live in more than one state, as many retirees do (winter in Florida and summer in Maine, for example), you can get covered drugs in one place but not the other. What do you suppose those people who live in RVs all year long, touring the country will do?

Well, what did you expect from a plan designed by Republicans?