AARP really put the "blocks" to the Democrats with this decision. Makes it almost impossible for them to vote against it, and allows the Republicans to pass it with the privatizing parts in it. From what I read, I would lose money on it now, but make out if I got an illness that required a lot of medication. It will depend on how Kaiser structures it. One of the potential benefits for me will be that they are allowed to fit it in with their present program.
Confusion abounds, but AARP likes new Medicare drug plan
By Jill Zuckman
Washington Bureau
Chicago Tribune
November 18, 2003
WASHINGTON -- AARP, the nation's leading voice for seniors, gave its blessing Monday to the Medicare prescription drug plan proposed by the Republican congressional leadership, even as consumers struggled to understand exactly how they would benefit from the new program.
The AARP endorsement, along with a planned three-day advertising blitz, is a boon to Republican leaders as they work to secure passage in the House and Senate later this week. House Speaker Dennis Hastert (R-Ill.) called the AARP thumbs-up "the Good Housekeeping seal of approval when it comes to seniors' issues."
The 35-million-member organization said the plan is "far from perfect" but represents "an historic breakthrough and important milestone." Senate Minority Leader Tom Daschle (D-S.D.) said AARP would come to regret its decision when seniors learn the details of the plan.
Seniors' advocates and health policy analysts said there are numerous variables that would affect individuals' benefits, including their incomes, annual prescription drug costs, where they live and which company provides the benefits.
How much they spend on drugs would be a major factor. According to one analysis of the plan, a person with annual drug costs of $500 would end up paying more than that in premiums and other out-of-pocket expenses: about $751. A person with $1,500 in drug costs would face out-of-pocket expenses of $1,001. With $4,000 in drug costs, the out-of-pocket costs would be $2,976. Most such costs would be waived for low-income seniors.
David Certner, director of federal affairs for AARP, said retirees who already are enrolled in a generous corporate program may opt out.
"If you have very low drug costs and have coverage from a former employer, this bill is not going to do much for you," Certner said. "If you have high drug costs and no coverage, this bill is going to do a lot for you."
But many senior citizens already are complaining that the program is too complicated.
Beginning in 2006, seniors could sign up for prescription drug coverage, agreeing to a $275 deductible and premiums roughly averaging $35 per month. Medicare would cover 75 percent of the cost of medicines and seniors would pay 25 percent of the cost, up to $2,200.
The plan would provide no further coverage until the individual had spent $3,600 out-of-pocket, a coverage gap that lawmakers refer to as a "donut hole." The coverage would kick back in after the consumer has spent the $3,600, with the plan covering 95 percent of all remaining drug costs.
But those numbers could be different for different people because the benefits would be provided by a variety of private pharmaceutical management plans that could structure the payments and the benefits as they choose. For example, the companies could decide to charge higher premiums but minimize the gap in coverage. Or the plans could decide to cover some drugs but not others.
"How is any senior going to understand? When I explain it to people, they just shake their head in bewilderment," said Ron Pollack, president of Families USA, a national organization for health-care consumers, which opposes the plan.
Certner said the gap in coverage is unnecessarily complicated.
"We know our members don't like it," he said. "Can you think of any other form of insurance that stops coverage for a while and then starts back up?"
Robert Reischauer, president of the Urban Institute, said the drug coverage is likely to fall short of expectations for many older Americans who were accustomed to low deductibles, low premiums and low co-payments when they were in the working world.
"In and of itself, it's pretty skimpy," Reischauer said. But, he added, "If they don't have coverage right now, it's definitely worth their while, there's no question about that at all."
Democratic leaders irate
The AARP's endorsement, which came after frequent consultation with Republican leaders crafting the bill, is likely to persuade many lawmakers to vote for the legislation despite concerns about some of the details. It angered Democratic leaders, who argued that the legislation would undermine the traditional Medicare health coverage for senior citizens.
"I strongly disagree with the decision of the AARP leadership in Washington to support the bill," Daschle said. "Like the AARP's previous decision to support the 1988 catastrophic health bill, this is a mistake that does not serve the interests of its members."
In 1988, Congress passed a plan to provide coverage to seniors in case of medical catastrophe, requiring them to pay into the plan. That angered seniors who either already had coverage or didn't want to spend the extra money, prompting a backlash that forced Congress to repeal the legislation.
President Bush, meeting Monday in the Cabinet room with congressional leaders, pressured members of the House and Senate to pass the new Medicare bill so he can sign it into law.
"I urge members of both political parties to study the legislation, to remember the promise we have made to America's seniors and to vote yes for this legislation," Bush said.
As health policy analysts reviewed the legislation, there was disagreement over how the plan would affect the poor.
For low-income seniors, the cost of all premiums and deductibles would be waived if their earnings do not exceed $12,123 a year. Also, the coverage gap, or donut hole, would be eliminated. Medicaid recipients with incomes at the poverty level would obtain their prescription drugs through the new Medicare program, paying $1 for generic drugs and $3 for brand-name medicines.
Henry Aaron, a Brookings Institution economist, said the poor and disabled who get their drugs through Medicaid may find they cannot get the same medicines and would pay more through the new program. Medicaid generally does not require recipients to make co-payments for their prescription drugs, though that can vary by state.
Who benefits; who loses
"From a narrow standpoint, it would be good for middle-income elderly or disabled, and even upper-income elderly or disabled, but it isn't good news for the poor," Aaron said.
"You could see low-income people switching from Medicaid to Medicare being made worse off by this bill," agreed Edwin Park, senior health policy analyst at the Center on Budget and Policy Priorities, a Washington think tank. Park said nursing home patients on Medicaid are also in a precarious position. Any income those patients receive goes straight to the nursing home. That means that either the patients wouldn't be able to afford their drugs, or the nursing homes would have to pay for them, he said.
But Tom Scully, administrator of the federal Centers for Medicare and Medicaid Services, insisted that the only people who might lose are healthy seniors who pay the roughly $400 a year in premiums but don't use that amount in drug costs.
"This is a spectacular, spectacular benefit for low-income people and a giant, giant subsidy for everyone else," Scully said. "There's not a single senior in America who's not going to do substantially better than current law."
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