Medicare Law's Costs and Benefits Are Elusive [Archive]

pRIMrose

12-09-2003, 05:34 AM

ROBERT PEAR
New York Times.com
December 9, 2003

WASHINGTON, Dec. 8 — Now that President Bush has signed a land- mark bill adding drug benefits to Medicare, an overriding question re- mains: how well will it work?

Despite Mr. Bush's prediction that most elderly people would benefit from the new law, federal health officials said they faced immense challenges in meeting the high expectations of Medicare beneficiaries.

"In return for a monthly premium of about $35, most seniors without any prescription-drug coverage can now expect to see their current drug bills cut roughly in half," Mr. Bush said in signing the bill Monday.

But no one knows whether the legislation will work as intended.

The new drug benefit will be offered and managed by private insurers and health plans, under contract with the government. The legislation defines a standard drug benefit, but insurers could vary it.

So Medicare beneficiaries could face a dizzying array of options — or perhaps very few, depending on where they live. A major question is whether insurance companies will offer policies covering drug costs and nothing else. Such stand-alone drug coverage is virtually nonexistent.

The new law prohibits Medicare from using its purchasing power to negotiate with drug makers. Pharmaceutical companies, adamantly opposed to price controls, prefer to deal with dozens of private buyers rather than a single federal agency. (http://www.nytimes.com/2003/12/09/politics/09MEDI.html?th=&pagewanted=all&position=) http://www.gopusa.com/iB_html/non-cgi/emoticons/tqrolleyes.gif

IMNSHO, this is just another giant government program to be mismanaged and doomed to failure while drug and insurance companies reap the benefits. I won't be signing up. http://www.gopusa.com/iB_html/non-cgi/emoticons/no.gif

jonessa2

12-17-2003, 09:04 PM

Date: Tue, 16 Dec 2003 18:34:27 -0600
To: rboor@aol.com, txnarfe@aol.com, hhervet@comcast.net
From: "Herman J Ciha" <hermc@execpc.com> *Add to Address Book
Subject: New Medicare Law
* * *
WHAT THE NEW MEDICARE LAW MEANS
TO FEDERAL RETIREES WITH FEHBP COVERAGE
Immediate changes to FEHBP (Federal Employee Health Benefits Program) health plans (Blue Cross/Blue Shield is one example of these plans) with the new Medicare law:

There are no changes. You should not change/re-evaluate your FEHBP coverage at this time based on this new law. Nothing in the law makes any changes to FEHBP. (Note: health insurance with FEHBP is NOT a supplemental Medigap policy.)

Coming changes to the Medicare Program:
All of the new Medicare programs created are voluntary, meaning no beneficiary has to join them.

Discount Drug Cards:
Will begin to be available in April 2004, with a yet-to-to be-determined enrollment period. The cards will only be for 2004 and 2005. At this time, there are few details to provide, but multiple private vendors will be able to offer cards by region. No discount card provider can charge more than a $30/yr joiningfee. Certain low-incomebeneficiaries (under $12,123 in annual income for individuals, $16,362 for couples) will have the joining fee waived, and will receive a $600 credit in their card, with a 5 to 10% co-pay required per purchase.

In 2004, there is no reason why federal retirees, with full prescription drug coverage under FEHBP, would enroll in the discount card programs since they provide no value to them. However, if this changes in 2005 and there is some possible coordination between FEHBP and these discount cards, NARFE will alert you.

Part B (doctor-part of Medicare):

Beginning in 2006, multiple private Medicare HMO/PPO networks, will be able to offer Part B coverage by region (these private plans will include a prescription drug coverage component). These plans will be referred to as Medicare-Advantage. Again, all of these plans are voluntary. Most federal retirees will want to remain in traditional Medicare since it coordinates coverage with their FEHBP plan and private Medicare plans do not.

Starting in 2007, Part B premiums will be means-tested on a sliding scale. The law does not specify how the means-testing is to be done. The Department of Health and Human Services (HHS) is directed to set this criteria. All that is presently known are the income thresholds, but not what will constitute income.

All beneficiaries presently receive a 75% subsidy from Medicare for Part B, and the premiums beneficiaries pay represents 25% (for 2004: 25% equals $66.60/month). Individuals with the following incomes will receive a lower premium subsidy based on a sliding scale. Simply double the dollar amount for a couple.

A 65% subsidy for $80,000 to $100,000
A 50% subsidy for $100,000 to $150,000
A 35% subsidy for $150,000 to $200,000
A 20% subsidy for all over $200,000.

Starting in 2010, six metropolitan areas (Metropolitan Statistical Areas) that meet certain requirements will be selected by HHS as a demonstration project. In these areas, the traditional fee-for-service Medicare program will start competing directly with the private plans. Seniors in these areas can remain in fee-service, and their premiums cannot rise more than 5% per year. NARFE is concerned that this pilot program will give private plans an unfair competitive advantage over traditional Medicare. We also fear that private plans could drive up costs by siphoning off healthier beneficiaries from traditional Medicare.

New Part D
Also in 2006, private companies will be able offer prescription drug-only plans by region. These plans will constitute a new Part D of Medicare, and will be referred to as a PDP, Prescription Drug Plan. Again, these plans are all to be voluntary.

Estimated $35 average monthly premium for 2006. ($420/yr for 2006) A $250 annual deductible, meaning that the beneficiary pays 100% of the first $250 spent on drug costs each year.

After an individual meets the deductible, the plan will pay 75% of the individuals drug costs up to $2,250, with the individual responsible for 25% of the costs. When the individual reaches $2,250 in drug expenses, all coverage stops, and the individual is responsible for the next $2,850 of drug expenses. This is the so-called gapor doughnut hole.

At $5,100 of total drug expenditures catastrophic coverage kicks in, and for the rest of the year the individual pays 5% of all additional drug expenses, and the plan pays 95%. Certain low-incomeMedicare beneficiaries will pay co-pays instead of 5%----$2 for generics, $5 for brand-name. Federal retirees, and all individuals with employer-provided health care insurance, are excluded from the low-income provisions included in this new law. The deductible and the gapin coverage will increase each year based on increases in drug spending in the Medicare program.

The private plans can charge different premiums, different co-pays, and do not have to cover all drugs. Instead, the private plans have certain HHS guidelines they must follow, which include that their drug coverage be of equal total value (determined by actuaries) and that they cover some drugs (not all drugs), in all therapeutic classes.

POSSIBLE FUTURE CHANGES TO FEHBP:

NARFE remains concerned that the new Medicare law, could cause employers and insurance companies to change benefits and re-write policies. Specifically, we are worried that as an employer, the federal government might reduce or eliminate prescription drug coverage to Medicare-eligible federal retirees under FEHBP. Then federal retirees would have to join these new Medicare plans for drug coverage that is much inferior to what FEHBP now provides.

NARFE worked to have legislation introduced on Capitol Hill that would protect your current drug coverage under FEHBP. The legislation would require that FEHBP offer the same level of drug coverage to all of its participants----employees, retirees with no Medicare, or Medicare-eligible retirees. This would prohibit cuttingout Medicare-eligible federal retirees and eliminating or lessening their drug coverage, thereby requiring them to go to Medicare for drug benefits.

The House of Representatives passed this legislation, introduced as H.R. 2631 by Representative Tom Davis from Virginia, in June 2003. This same legislation was introduced in the Senate as S. 1369 by Senator Akaka from Hawaii. However, the Senate has not passed this legislation, and must do so if it is to become law. We continue to work with the Senate Government Affairs Committee, and ask all NARFE members to contact their two Senators to urge them to support and pass S.1369, to protect federal retiree drug coverage.

NARFE will continue to keep its members informed on the many Medicare changes as they develop, and on the status of S. 1369. Both the Legislative Department and the Retirement Benefits Department will provide continued information, and will alert our members to any future changes and risks to both Medicare and FEHBP.

NARFEs website (www.narfe.org) will keep its special alert on Medicare updated, and NARFE members can visit the Legislative Action Center on the website with its special alert to contact their Senators on S. 1369. Both the GEMS system (via e-mail) and the recorded Hotline # (703-838-7780) will continue be used for update purposes.

Developed by NARFEs Legislative Department
National Association of Retired Federal Employees
www.narfe.org