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CU analysis shows medicare drug benefit is bad for consumers

Monday, Nov. 17, 2003
Find the Medicare analysis here

Proposed drug benefit means consumers could pay more
out-of-pocket; threatens Medicare’s viablity

In-depth analysis shows only enough set aside to cover 22% of anticipated costs

(Washington, D.C.) – An indepth analysis performed by Consumers Union of the proposed Medicare prescription drug benefit reveals a plan that not only falls embarrassingly short of giving seniors a real drug benefit, it likely will threaten Medicare’s viability.
The analysis of the conference committee proposal found:

  • The funds set aside for this “benefit” — $400 billion over 10 years — covers just 22 percent of the anticipated drug costs, leaving consumers to foot the rest of the bill.
    ∙ Medicare is being moved down the road to privatization by requiring competition between private health plans and Medicare in up to six metro areas without requiring private plans to demonstrate cost savings that result from efficiency. Rather, the proposal provides additional subsidies to these private plans and allows them to benefit financially by cherry-picking the healthiest members.

  • Private Pharmacy Benefit Managers (PBMs) get to pick what drugs are covered under the plan, with no transparency, methodology or public accountability. This means patients who are sensitive to the choice of drug will be out of luck if their needed drug is not on the plan. It also means drug coverage will vary between different parts of the country.
  • And most important, a provision that actually prohibits the government from negotiating deep prescription drug discounts for consumers, meaning the average Medicare beneficiary will pay more out-of-pocket for drugs in 2007 when the benefit begins, then what they currently pay now without the “benefit.” Consider this: the average Medicare recipient in 2003 who spends $2,318 a year for drugs without prescription drug coverage will pay $2,911 out-of-pocket in four years under the plan if drug costs continue their historical increase.

“It is nothing short of tragic that legislation that was meant to offer relief from high prescription drug costs to seniors is laden down with so many dangerous provisions that it will harm Medicare beneficiaries and threaten the program’s long-term viability,” said Gail Shearer, senior health policy analyst for Consumers Union and author of the analysis.
“It is important that consumers — and Congress — understand what the real out-of-pocket costs will be under this proposal,” Shearer said. “We believe once consumers understand the negative impacts of this bill, they will ask their Senators and Representatives to take the time to examine the gaps in this plan and step up with a true drug benefit that puts consumers first. Short of that, Americans will be left with a weakened Medicare program.”
To access Consumers Union’s analysis, “Medicare prescription drugs: Conference committee agreement asks beneficiaries to pay too high a price for modest benefit,” click here.
For more information contact: Gail Shearer, 202-462-6262