Medicare drug plan
The Californian posed the following questions to Rep. Bill Thomas, R-Bakersfield. Thomas, chairman of the powerful House Ways and Means Committee, is considered one of the primary architects of the Medicare prescription drug plan known as Part D.
QUESTION:
On Jan. 1, people receiving both Medicare and Medicaid (or Medi-Cal) benefits were switched to the new Medicare prescription drug plan. For many, the mandatory switch was chaotic. Critics are calling the program's startup a disaster and equating it to the federal government's response to Hurricane Katrina. How would you characterize the first days of the new prescription drug plan?
ANSWER:
Beginning on Jan. 1, the Medicare program underwent a seismic shift, by making a new voluntary prescription drug benefit available to more than 40 million Medicare beneficiaries. During the first couple days of the program, more than 20 million beneficiaries began to receive prescription drug benefits covered through Medicare, saving real people real money.
During the transition, administrative problems arose, especially for dual-eligible beneficiaries whose coverage was transferred from Medi-Cal to a Medicare drug plan. Those problems have been identified and have been quickly addressed.
For those who ran into problems, Gov. Schwarzenegger acted to temporarily provide dual-eligible beneficiaries with continuous prescription drug coverage while administrative problems are worked out. The Department of Health and Human Services announced it would work with California and all states to ensure that state-incurred costs are reimbursed.
QUESTION:
What went wrong?
ANSWER:
What went right is that for the first time in Medicare's history, seniors can pick a prescription drug plan through Medicare that best fits their individual health needs. Almost 3 million California Medicare beneficiaries currently have prescription drug coverage through Medicare. Medicare recently released data indicating that pharmacists around the country are filling more than 1 million prescriptions a day.
There were administrative errors that unfortunately affected and delayed benefits for some seniors; these errors are clearly unacceptable and the underlying problems are being addressed.
QUESTION:
What, if anything, must Congress do to change the program?
ANSWER:
Congress must and will monitor the program continuously. With real seniors saving real money, and with seniors continuing to enroll for coverage until the open enrollment period ends on May 15, it is premature for the Congress to legislate changes in this area. The Department of Health and Human Services has the power it needs to make administrative corrections as problems arise, and the Congress will continue to do oversight work to ensure that seniors have access to affordable prescription drug coverage.
QUESTION:
California is among more than 25 states that stepped in to assure payment so these elderly and poor people would continue to receive their drugs. California has allocated $150 million for this use. Should California be repaid and who should repay the state? The federal government, drug companies, Medicare?
ANSWER:
As referenced above, the Department of Health and Human Services has already announced that it will help states, like California, recoup state spending on prescription drugs for dual-eligible beneficiaries from Medicare drug plans, and also help pay for additional costs, such as administrative costs.
QUESTION:
About 1 million dual recipients (Medicare and Medi-Cal) live in California and about 7.2 million nationwide. The federal government estimated California would save about $120 million this year through the Medicare prescription drug plan. But state officials now say the federal estimates are wrong. The plan actually will cost California $59 million more than if no plan existed. What is your response to calls for California to withdraw from the plan?
ANSWER:
California and many other states were strong proponents for a Medicare prescription drug benefit. The states understood prescription drug benefits should be part of the Medicare program (wholly a federal program that covers health benefits for seniors and the disabled), rather than the Medicaid program (a federal/state partnership).
States were eager to see a Medicare prescription drug benefit, especially since prescription drug costs have annually risen by double digit percentages during the past several years. I am pleased that just this past week Medicare responded to the concerns of California and other states. Because the competitive structure in the Medicare drug program is working, Medicare announced the overall cost to provide Medicare prescription drug coverage in 2006 will be 20 percent less than previous estimates. The savings will be shared with the states. This amounts to around $700 million in savings for all 50 states, and specifically, $113 million in savings for California.
QUESTION:
California negotiates a discount with firms providing medications for Medi-Cal recipients. State officials fear California will lose the negotiating leverage because the Medicare prescription plan bans using government and volume-purchasing clout to demand similar discount arrangements. Is this a reasonable concern?
ANSWER:
State Medicaid programs are still able to negotiate low prices from drug manufacturers, thanks to a previous law granting them "best-price" provisions. However, in order to ensure that Medicare seniors can also benefit from group purchasing power to get competitive prices for their prescription drugs, the Medicare law allows prescription drug plans to negotiate directly with the drug manufacturers (like the plans do in the private-sector health insurance market).
Some have questioned whether the federal government, rather than prescription drug plans, should negotiate Medicare drug pricing with drug manufacturers. But when the federal government negotiates, it ends up fixing a price. And with those fixed prices come other restrictions, like limited choice of drugs or reduced access to pharmacies.
The Veterans Administration program sets prices. Many point to it as a model for Medicare. But the VA also has a very restrictive formulary and operates primarily through mail-order pharmacies. Those conditions might work for the VA population and the VA's health system, but would be very restrictive to a senior population that takes a wide array of prescriptions and often prefers to fill those medications at their local pharmacies.
By using competition among prescription drug plans, seniors gain access to low prices on a wide range of drugs that they can obtain at their preferred location.
Competitive pricing among prescription drug plans benefits Medicare beneficiaries and American taxpayers. Just a few days ago, Medicare confirmed this. Premiums for Medicare Part D beneficiaries are expected to average $25 per month, down from last year's projected $37 per month. As a result, the overall cost of the program to taxpayers in 2006 will drop 20 percent from the estimates in July 2005.
QUESTION:
The deadline for the remaining seniors - not dual recipients - to sign up for the prescription drug plan is May 15. After that, seniors will be subjected to financial penalties. There are so many choices of private plans. The options are confusing. Health care providers, and consumer and senior advocates are pressing to extend the deadline beyond May 15. Would you support an extension?
ANSWER:
No.
QUESTION:
Less than 4 million of the eligible 23 million seniors have so far signed up for the prescription program. Can we expect the problems experienced in the first weeks to continue, increase or decrease as more seniors come onto the rolls?
ANSWER:
More than half of the 42 million Medicare beneficiaries are accessing the new Medicare benefit, and more are signing up each day. Many beneficiaries are still comparing the different plans during this open enrollment period, and others may have looked at the options and found that Medicare prescription drug coverage is not for them.
Ultimately, that was the intent of Congress: to ensure that all Medicare beneficiaries had a choice about their prescription drug coverage and were not forced to accept drug benefits from the federal government, where bureaucrats decide which drugs are covered and which are not.
A voluntary benefit with different plan choices empowers individual seniors.
