Tuesday, July 18, 2006

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.


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."


Anonymous said...

Yes! That is 10 million people now having drug coverage they previously did not have. Ten million people who might get to live, rather than die, or be crippled. Ten million people that is the total number of inhabitants of some countries.

The numbers would be better if more people participated. It works like insurance. You pay a premium, on a sliding scale, and you are covered, with a copayment.

All new economic models need to be tried out in practice and fine tuned.

I am one of the persons who benefits, and I am happy with the program. Sleep well!!

Anonymous said...

We were unabashed Canadian shoppers for Effexor before the wife decided to stop taking it. The cost was one third the US price.

Turns out that Effexor was extremely addictive, and a real bugger to kick. It took months to "clean her up". Seems the doctor failed to mention this one small side effect. Great product though. Once you try it, you're a customer for life.

All I can say is: HAMELIA PATENS, before it's too late.

Anonymous said...

Gary. Yes, medications should be taken with care, and only if you need it. Before you take it you should not only read the package insert, but also get information elsewhere, and if there are side effects you need to immediately take action, at least speak to your doctor. Your wife's doctor may have failed to mention one small side effect, as you say, and that happens all the time. Side effects do not apply to everyone, and doctors often do not know all the side effects either. As for addiction, some persons are more prone to it than others. If you have surgery you are prescribed addictive painkillers. Some people get addicted and others do not get addicted to those products. Some persons need painkillers for a longer period than do others. We do all have brains and can make judgements, can we not? I had two hip replacements and was off painkillers within three days. A person I know had a broken leg and became addicted to painkillers to the extent that he became an addict and had to go into a drug program. Not a stupid person either. I think you know when you have an addiction, and if you do, you should take action and seek help.

Almost all medications have side effects. And your point was, what, with respect to the Medicare part D program?

Anonymous said...

Dear Anonymous

Sometimes people don't pick up on my sarcasm. The point there is, the addictive nature of Effexor is a huge side effect. One that my wife's doctor should have stressed. These side effects were apparently well know by the manufacturer, but the Doc claimed she was unaware. Possibly because she was focused on fabulous prices instead of the drugs being pushed that day?

The point, regarding Medicare D was, had my wife choosen to stick with the program, or been unable to "kick the habit", we would have been screwed by the Feds "collection at the border" program initiated to encourage Medicare D participation. We simply can't afford US prices.

You see, Anonymous, may I call you Anon?, it all ties together. It's all about pay back for election support.

Now if you will excuse me, I'm going to throw up again on this autographed picture of Georgie.

shooter said...

I don't usually like to get involved in street brawls, but hey, what the hell.

First, Gary, please don't puke on our President's picture. Unless, of course, it's a slick trick to increase it's value.

And now, Mr. Anon. It is wonderful that you got some benefit from the Medicare program. However, you must know that any Ponzi scheme relies on "some" people benefiting. State run Gambling...."You gotta be in it to win it"....weeeeeeee!, as they show some jerk, eyes sparkling and drool pouring down his chin, counting his money. Never mind his kids eat peanut butter (no jelly). "Scam the Suckers" 101. If you liked the Medicare program, you were probably delirious dreaming about what you will do with the $10.00 "TAX CUT" you got. Just like the thousands of elderly Jewish voters in Florida were "too stupid" to figure out the "butterfly" ballot procedure, and voted for the Talmudic Hebrew Warrior, Pat Buchanan, Tens of millions of our senior citizens are babbling Idiots because they couldn't figure out the labtyrinthine Gordian knot known as Medicare part D. Of course Karl Rove only had their best interests at heart when he insisted that The largest purchaser of drugs in the world would be statutorialy forbidden from negotiating prices. Mr. "I'm the President of ALL the people," righteously proclaimed "Billionaires gotta eat too, right?"

Our treasury is being systematically raped, looted, and plundered. Our precious rights, who so many fought and died for,and what separated us from all others in history, a pile of shredded confetti. Throughout history, millions of people dreamed of someday coming to America. In the pile of rubble, that once was the Great City of Stalingrad, his entire family murdered, my father looked at my mother and us two babies, and said " If we have to swim, we're going to America."

How sad. And even more than sad, how many "useful idiots" the've recruited.

Anonymous said...


It just seems that Mr. Anon doesn't understand the title with "lottery" has something to do with the essence of the entry itself...

Yes, Mr. Anonymous, I do realize it would benefit some people. But seriously, look at the wider picture, does it benefit enough people to justify throwing our tax money to the participating Insurers? I don't know about you, but I'd personal say know.

It's the same logic with the current administrator's taxcut policies... sure, it'd benefit some people. My mother, who is a research technician at a university bio-lab, gets about 5~7 thousand in tax-returns each year. However, does this mean my mother agrees with the tax policy? No, she hates it. The fact that more percentage of the "tax-cut money" goes to the top-earners in relative to the percentage these people are paying in tax is enough to drive anyone mad enough. However, it is people like yourself who can't see the whole picture that are praising this administration for a "job well-done" when in reality they are screwing us in the long run.

Anonymous said...

God... I need to get some more sleep...

Typo again, meant to say "I'd personal say no" instead of "know".


shooter said...

O.k. maybe I was a little sarcastic in my response to Anon. Believe me, I know and appreciate capitalism and the free enterprise system. It doesn't have to be what it has become. It's not Socialism to believe in shared prosperity, or shared pain. Bill Clinton used to tell his aides, when they compiled economic statistics, to not just state raw numbers like "the economy grew at an annual rate of 5.3%." He insisted on the "breadth" of the advance. How many people participated in the the growth. He knew, as I learned in my lifetime in business, that the collective power of many smallfry crushes the power of a few elites. I had a very successful career and I'll tell you why:

When I finally got to the rarified altitude of "mahogony row," the executive suite, I told my staff, " boys and girls, I'm the laziest manager you're ever going to meet." I joked that "you're going to do all the work, and I'm going to get all the credit." So what did I mean by that? I meant that no executive would get a raise until every one down the ladder got a raise. After a short while times became good. Everyone participated, proportionaly, in our growth. The executives knew that if there was a downturn due to our mistakes, THEY would be laid off first, not the fork-lift operators. And the fork-lift operators knew that also. The productivity we enjoyed, was the envy of the industry. I called it my "silent supervisor," the knowledge that they were wanted, important, vital, and appreciated. I believe in the individual worth of each employee. They WANT to work, and be productive. They Want to feel free to innovate and try new things. It always got a laugh when I addressed the employees at some function and asked " who made mistakes today?" When no one answered I turned to my assistant and said, " get their names, they're not trying hard enough." In the end, my "lazy" joke was proven right. I had nothing to do, just watch, in wonder and gratitude, what ordinary people are capable of, if only given the chance.

And that's why what's happening in our country today is so very, very sad. When we grovel in gratitude that the dogshit these pigs feed us, may contain some some vitamin B1 and, don't forget, a little Niacin too....weeeeee!

Anonymous said...

Gee, practically everyone who bothered to pay attention realized Bush* was NEVER going to do anything to interfere with the profits of pharma in any way shape or form.


It is so difficult to believe that people would actually vote AGAINST their best interests by putting this moron BACK in office. IF, and this is a mighty big if, democrats have brain cell one, they will bring this up among other things, but for some strange reason (read either stupidity or being the HO's of corporate America) democrats can't come up with a coherent message that resonates with voters, and what's worse is it appears voters are going to put them in anyway.

NOT that I think that is a bad idea, it's just that democrats only want control of the purse strings because the majority party controls the committees and thus the money and thus THEIR special interests will have first shot at the U.S. Treasury Trough.

OH well at least I think they are better prepared to protect civil liberties.

I think.

Anonymous said...

Thanks for this wonderful post.
The real questions are "How much?" will drug prices rise and "How soon?" will they rise.
The "Best Guess" for "How soon?" is next year. The accounting cycle will take that long. It could come sooner if the Drug Companies panic.
"How much?" is guesstimated at 100% minimum over the next three years.
It is the classic "Bait and Switch" con game.
The funniest part is the Medicare people, those dedicated civil servants, who worked on this program expect to see drug prices go down.
This is based on their personal experience with the Government Employees Drug Plan, which is the best in the USA.
Because the Government uses free $$$$ taxpayer dollars to subsidize the drug plan.
That's out of one side of their mouth. Out of the other side they have nothing good to say about most of the Medicare Prescription Drug Plan Providers.
In particular AARP.
Warning! Danger, Will Robinson! Exterminate Dr. Who! The schizoid world is approaching!!! Beam me up, Kenny Boy!