6 Facts About the New Medicare Rx Drug Law

Fact #1:

While millions of seniors and disabled Americans will end up paying more for their prescription drugs, this new law allows drug companies to set their own prices, and does nothing to slow down skyrocketing drug prices.

Medicare sets the prices it will pay to doctors, hospitals, and for durable medical supplies.  Yet, under this new law, Medicare is prohibitedfrom negotiating lower drug prices or volume discounts (like Canada and even our own Veterans Administration).

The new law doles out billions to drug makers, private insurance and HMOs at taxpayer expense- while it prevents Medicare from using the negotiating power of its 40 million plus beneficiaries to help reduce prescription drug costs.    -- The Medicare Prescription Drug and Modernization Act of 2003, Section 301; Consumers Union; Alliance for Retired Americans

This new law prohibits Medicare from negotiating lower drug prices and Rx drug makers will reap $139 billion in new profits. The Medicare Prescription Drug and Modernization Act of 2003, Section 301; The Health Reform Program, Boston University School of Public Health

Fact #2

Under this new law it is still illegal to buy and re-import prescription drugs unless you are a drug company. The FDA is now considering taking action against Americans who buy less expensive prescription drugs from Canada. Although, the new law gives authority to the Secretary of Health and Human Services to certify safe procedures for re-importing prescription drugs, then Secretary Tommy Thompson refused to issue such certification.  Meanwhile, American drug makers have transferred much of their own production to their foreign factories, then they re-import the drugs to America for sale.  Our FDA inspects their foreign plants, and approves their procedures.

If American drug makers can safely and legally re-import prescription drugs why cant American seniors?-

Families USA; New York Times, 9/20/03

Bonus Fact

The pharmaceutical industry is the most profitable industry in America, and has spent about $650 million on lobbying and politicians since 1997. -Public Campaign,1/04

Fact #3

This new law forces millions of seniors and disabled Americans to pay year-round premiums, without providing year-round coverage. Costs for premiums, deductibles, and co-pays are tied to increases in drug costs, and can all rise each year.

Drug coverage will cost you $35 a month in premiums, plus a deductible of $250 a year. After that, the program pays for 75% of your drug costs up to $2250.  At that point the program then STOPS PAYING DRUG BENEFITS, even though you still pay monthly premiums.  This is called the doughnut hole. Supplemental policies that would cover this hole are prohibited. Coverage does not start up again, until after your drug costs total $5100 a year, then it pays 95%.  This means that a senior with prescription costs of $6000 a year ($500 a month) will end up paying $4065 a year in out-of-pocket expenses, and only get a total of $1935 in coverage-Families USA; New York Times, 12/7/03; Kaiser Family Foundation, Drug Benefit Calculator (www.kaisernetwork.org)

Fact #4

This new law provides billions in taxpayer-funded subsidies to employers, private insurance companies, and HMOs to entice them to offer coverage to seniors and disabled Americans; and to continue prescription drug benefits promised retirees

Millions of seniors and disabled Americans have been dumped by Medicare HMOs since 1997.  Florida was 4th highest in the nation for number of Medicare beneficiaries dropped by HMOs in 2003.

Out-of-pocket costs have doubled since 1999 for those in Medicare HMOs.  Yet, to get the new drug coverage, you must enroll in a private insurance drug only plan, OR move into an HMO for all your health care needs. You can choose to stay in traditional Medicare without prescription drug coverage.  Additionally, the new law provides over $80 billion in subsidies and tax breaks to encourage employers to continue retiree Rx benefits all funded at taxpayer expense

-Congressional Budget Office, USA Today 11/25/03; Centers for Medicare and Medicaid Services; New Commonwealth Fund Report, 8/03;  Campaign for Americas Future 

Florida Fact

2.7 million retirees nationwide,160,000 in Florida, will lose their more generous retirement drug coverage.    -Congressional Budget Office; Yale Daily News, 1/15/04

Fact #5

The new law requires taxpayers to pay for Medicare to compete with private insurance, beginning in 2010.  Medicare must accept all seniors and disabled Americans.  Private insurance and HMOs will lure younger healthy seniors into their heavily taxpayer-subsidized plans, and costs will be driven higher for those who stay in traditional Medicare. Medicares costs will rise to unaffordable levels, and more and more people will be forced into private plans and HMOs. Seniors and disabled Americans will need to choose their plans carefully, making sure to choose a plan that will cover the drugs they need.

Husbands and wives may need to choose different plans because they need different drugs -Alliance for Retired Americans; Campaign for Americas Future; Families USA

Covered drugs will vary from plan to plan so seniors must choose wisely. - Alliance for Retired Americans

Fact #6

This new law requires millions of low-income seniors pay more for their prescriptions, or go without drug coverage. It will also disqualify 2.8 million very low-income seniors from assistance. It will disqualify people living below 135% of the Federal Poverty Level who have assets over $6000 for 1 person, or $9000 for a couple.  It adds new prescription co-pays for low-income seniors, allowing yearly increases, now projected to be 10% (4 times faster than their income will rise).  The new law will also allow private insurance plans and HMOs to limit the drugs they will cover

-Congressional Budget Office, USA Today 11/25/03; Campaign for Americas Future

Several million of the nations poorest elderly and disabled beneficiaries will be made worse off by the new legislation, because they will have to pay more for drugs than they currently pay under Medicaid, will be denied coverage for some drugs they currently receive through Medicaid.-Center for Budget and Policy Priorities