Winners and Losers in the Medicare Drug Lottery*

*(We the People, vs. Them the Large Insurance and Drug Companies)

Some of my readers have asked me to write about the Medicare Part D program. So here are my viewpoints.

The New York Times today wrote an article called A Windfall From Shifts to Medicare. The conclusion was simple.

"The pharmaceutical industry is beginning to reap a windfall from a surprisingly lucrative niche market: drugs for poor people."

"The windfall, which by some estimates could be $2 billion or more this year, is a result of the transfer of millions of low-income people into the new Medicare Part D drug program that went into effect in January. Under that program, as it turns out, the prices paid by insurers, and eventually the taxpayer, for the medications given to those transferred are likely to be higher than what was paid under the federal-state Medicaid programs for the poor. "

Anyone surprised that tax payers got the short end of the stick and drug companies the long end?

According to an April Washington Post/ABC News Poll, 86% of seniors currently take prescription drugs on a regular basis, but only 38% have signed up for the Medicare prescription drug program. This is a glaring disparity in numbers. 44% thought the cost was too high and more Americans disapprove of the program, 45%, than approve, 41% (14% had no opinion).

Here are some more facts:

Only about 25% of Medicare recipients have received coverage they previously lacked, according to Los Angeles Times: "Medicare announced that the prescription program is now helping 30 million beneficiaries. However, it is estimated that only about one-third of those had previously lacked drug coverage. The rest were enrolled in other government programs and in employer-backed retiree plans that are now receiving some Medicare subsidies. There are 43 million Medicare recipients."

The Washington Post states that "8 million -- and as many as 14 million by some estimates" eligible Americans have not signed up for the drug program.

The New York Times writes, "At least two dozen states have taken emergency action to help low-income people who could not get their medications under the program, which began Jan. 1. States are spending millions of dollars a day in such assistance."

And the Los Angeles Times claims that "a review by the Senior Action Network, a grass-roots advocacy group in San Francisco, found that Costco's prices on the top 100 drugs used by Medicare beat prices of all 48 plans in California in more than half the cases."

Meanwhile, "The net federal cost of the new benefit is projected to be $37.4 billion in 2006 and $724 billion from 2006 to 2015 (HHS, February 2005)."

Maybe the federal government should just have gone to Costco and saved taxpayers that huge bill?

But there are winners. According to the Wall Street Journal, the "early winners" include large health insurers, who "have snagged roughly 15 million new customers and healthy government subsidies" under the program. The WSJ concludes, "By far, the biggest winner in the race to sign up seniors is UnitedHealth Group Inc., which has used an alliance with AARP to help it grab more than 3.9 million new customers"

And the UnitedHealth Group is clearly a very needy organization. The UnitedHealth Group CEO, according to the Wall Street Journal, has "$1.6 billion in unrealized gains he holds in UnitedHealth stock options. He and in some years at least 10 other top executives of the company frequently received options just before big run-ups in the company's share price, which had the effect of making the options more profitable than they otherwise would have been. The Securities and Exchange Commission is conducting a broad inquiry to see whether options at many companies were backdated to benefit executives, which could be a violation of securities laws."

Meanwhile, the White House is conducting a dirty campaign to force seniors into the fold. According to the Boston Globe, "Thousands of Americans who order prescription drugs from Canada have received written notice that their medications have been seized, part of a US government crackdown on the cross-border discount trade."

The Globe continues: "US Senator Bill Nelson, a Florida Democrat and an opponent of the policy, said at least 13,000 packages containing pharmaceuticals were intercepted during the first months of the campaign. The seizures took place in a half-dozen mail inspection facilities across the country, including Seattle -- where Popkin's drugs were found -- Los Angeles, Miami, and New York.



Nelson is among a group of congressional critics from both parties who said they suspect the seizures are part of an effort by the administration to steer seniors to its new Medicare prescription drug plan, called Part D, which has generated confusion since it went into effect Jan. 1.

The enforcement policy began Nov. 17, two days after the enrollment period for the Medicare program opened."

''It would be devastating if someone gets sick or dies because someone's drugs were confiscated," said US Representative Gil Gutknecht, a Minnesota Republican who has been a staunch supporter of imported drugs.

''It is amazing that we have a government that can't control our borders to illegal immigration and literally tons of illegal narcotic drugs that are coming into this country every day, but by God they can stop Grandma from saving $50 on her prescription drugs," he said."

In conclusion, the current administration does what this administration does best. Funnel money to already fabulously rich executives. And American taxpayers do what they do best--pay the bill. Meanwhile, our poor and our elderly are suffering. In fact, in a Washington Post-ABC poll less than a third of respondents said they were saving a lot, and 26% said they had seen no savings.

Perhaps that shouldn't be surprising, considering that, according to U.S. Senator Herb Kohl, "those with drug costs below $810 a year will actually pay more than they do today if they sign up for the drug benefit. Seniors with drug costs of $5,000 will still pay almost $4000 themselves - almost 80% of the bill."

So just how much of a mess is the new Medicare Part D Drug Program?

Let's ask the guy who runs the program: Mike Leavitt, chief of the U.S. Department of Health and Human Services, the nation's top health official.

Of course you can expect someone like Mike Leavitt to help his parents sort through the dozens of private insurance plans offering coverage. The Leavitt parents joined the program last fall with lots of fanfare and help from their son. Anne Leavitt, 73, was quoted in the Salt Lake Tribune touting her enrollment as smooth, and a guaranteed money-saver.

Leavitt's father was in charge of a health insurance company, was a Utah state legislator and clearly has a son who knows the Medicare program better than most. In spite of this the elder Leavitt ended up dropping out of his first plan

According to The Salt Lake Tribune, the Leavitts disenrolled after discovering that their Medicare drug plan enrollment would jeopardize their entire medical insurance from their former employer, the state of Utah.

Oops.

Mark Leavitt's office confirmed that the couple then signed up for another Medicare plan through their insurer, Utah's Public Employee Health Plan.

Neither the talk-active Anne Leavitt nor Dixie, 76--who made his fortune in the insurance business--could be reached for comment.

Wonder why.

So, what is the good part in this mess?

The fact that many seniors will lose their coverage after summer . . . let me explain, and I'll quote BusinessWeek: "About 38% of Medicare beneficiaries are at risk, reckons Bruce Stuart, director of the Peter Lamy Center on Drug Therapy & Aging at the University of Maryland. This means 7 million to 10 million seniors and disabled could lose coverage for part of this year. Many will stumble into the gap in late summer or early fall -- just before the November elections. This could be bad news for Republicans, who pushed the Medicare drug law."