The New Medicare (Part D) Drug “Benefit”

The Outrage of the Month, if not the year, is the flawed Part D Medicare Prescription Drug Benefit that goes into effect this month. Voting with their feet, the overwhelming majority of those Medicare enrollees with the option of signing up for the program had chosen not to join as of December 22, shortly before the program was to begin on January 1, 2006. As of then, only one million people had voluntarily signed up. This is  in addition to the 10.6 million who were enrolled automatically by the federal government or by health maintenance organizations and 5.9 million retirees to whose drug benefit-providing employers Medicare will pay subsidies. This means that of the 25 million people not in these other programs and who are therefore able to choose whether they are in or out, only one million (4%) decided to join. Despite this, the delusional Secretary of Health and Human Services, Michael O. Leavitt, said the data showed that “the new prescription drug benefit is off to a strong start.” 

After waiting more than 40 years for prescription drug coverage to be added to the other services provided by the program, the 42 million Medicare enrollees deserve something far better — simpler and less costly — than the complex and expensive disaster that characterizes this market-based program. It need not have been this way.

Approximately 10 million people on active duty in the military or covered by the Veterans’ Administration receive low-cost, excellent, and relatively uncomplicated prescription drug benefits. This is possible because these government programs are run on the principle that there must be government-negotiated prices with drug companies in order to be able to provide excellent drug coverage at an affordable price. Why were the 42 million Medicare beneficiaries not important enough for the government to provide the same kind of benefits for them?

The answer is simple: A corruption of the political process, aided and abetted by the largest and most powerful voice allegedly representing seniors, the American Association of Retired Persons (AARP), acquiescing to the drug industry’s wishes and supporting the Part D benefit as it is now structured. With more than 800 lobbyists in Washington and with more than $100 million in campaign contributions in 2003, the industry was able to insert language into the Part D legislation that essentially said there will be no government negotiated prices or price controls. Thus, the end of the story about the way it could have been and the beginning of the story of why tens of millions of Medicare recipients are so bewildered and confused by the market-based, competition-is-king solution that they have not decided to participate.

Just as the ill-thought-out catastrophic coverage legislation for Medicare recipients was passed in 1988 and then repealed in 1989, as soon as enough people became aware of the dire consequences, this Medicare Part D legislation should be promptly repealed and replaced with a real Medicare drug benefit with price controls that is both affordable and understandable. Then, like Part B of Medicare, the outpatient services benefit, almost everyone will join instead of most people staying out.