Bush’s Drug Discount Card confuses seniors

By DON McINTOSH, Associate Editor

May 1 was the start date — the first taste of the Bush Administration’s solution to the crisis of prescription drug prices: The “Prescription Drug Discount Card.”

Here’s how it works: If you’re a Medicare beneficiary who doesn’t have any other prescription drug benefit, you may purchase — at a cost of up to $30 a year — a Medicare-approved Prescription Drug Discount Card.

There are as many as 73 cards to choose from, offered by as many as 39 entities. The card entitles you to buy, at specified pharmacies, certain specified drugs, at a price that is supposed to be less than the retail price. The discounted prices become available starting June 1.

The list of drugs covered — and the price charged — and the list of participating pharmacies — can be changed at any time.

But you may only be enrolled with one card at a time, and may only change cards once, during a six-week period from Nov. 15 and Dec. 31, 2004. The whole discount card program expires in January 2006.

Did you get all that?

If not, there’s a number to call, 1-800-MEDICARE, for questions. But expect a wait. Lots of others are confused as well. In one week, there were at least 1.6 million calls and more than 7 million Internet visits. Calls were so heavy that the Centers for Medicare and Medicaid Services announced they were adding 400 more customer service representatives, bringing the total to more than 1,800.

Alternately, if you’re a Medicare recipient with eyesight and Internet access, you can compare prices offered by different cards on a Web site maintained by Medicare: www.medicare.gov. And the site allows you to download a 36-page guide to choosing the right drug discount card.


Too Much Choice?

“How do you get a 75-year-old to wade through all these booklets?” asks Michael Arken, president of the Oregon Alliance for Retired Americans, an AFL-CIO-sponsored group of union retirees. “We’re asking people to jump through a ton of hoops, and they’re the ones that are least able to do it.”

“There’s such a thing as too much choice,” says Bill Vaughan, director of government affairs for the health care public interest group Families USA. “A lot of seniors are saying, ‘Screw it. I can’t handle this.’”

To inform seniors about the changes to Medicare, Families USA conducted a nationwide “Medicare Road Show” in April, an hour-and-a-half presentation, with questions and answers and a video narrated by Walter Cronkite.

“We’re dealing with a population that’s 23 percent cognitively impaired,” Vaughan said.

“It’s a scam,” said Maribeth Healey, director of Oregonians for Health Security, a coalition of unions and other groups that advocates for affordable health care. “A senior would be very lucky to find all their medications on one card. And it’s going to be very difficult to determine which card to use.”

In Oregon, there at least 39 such cards to choose from.

For example, the Pharmacy Care Alliance, a subsidiary of Kroger, explains in a text-heavy 20-page booklet that their card comes with two options, with different fees and different sets of prices: Option 1, for a $30 annual enrollment fee, gets bigger discounts for people that buy two or more prescription drugs a month; Option 2, for a $19 annual enrollment fee, is for people who buy fewer than two.

“ ‘Discount off of what?’ is the question you have to ask,” Healey said.

At the request of Representative Henry Waxman (D-Calif.), the General Accounting Office, the research arm of Congress, did a price comparison for the 10 most common drugs used by seniors. They found that “discount” prices obtained through the cards were higher, in many cases, than the prices for the same drugs when bought from existing mail-order pharmacies. And in all cases, prices were higher than prices paid in Canada or by the U.S. government when it buys prescription drugs for veterans.

“Most of my members say they’re still getting a better deal at Costco,” Arken said. “Costco is able to sell cheaper because it buys in bulk, something this law specifically forbids the government from doing.”

Arken, a retiree of AFSCME Local 189, says the thing he dislikes most about the discount card program is “the fact that the sponsors can change the formulary and price on a daily basis, but you’re locked in for a year. That’s the worst thing — nobody knows for sure what price your going to get the next time you go to the pharmacy.”


A $600 Subsidy For The Poorest

There is at least one group of Medicare beneficiaries who will benefit from the card: Individuals with incomes below $12,569 per year or couples earning less than $16,862 per year. If these folks don’t have any other drug coverage (such as the coverage offered low-income seniors under the Oregon Health Plan), they may qualify for a $600 credit this year and next. The credit comes embedded in the card, and applies after a co-payment for each prescription.

Unfortunately, Healey says, the law that created this subsidy was intended to help pharmaceutical companies, not seniors. Take as a hypothetical example a senior who is taking the blood cholesterol drug Lipitor and the acid reflux drug Prevacid. for example. With the Pharmacy Care Alliance card, the price for a month’s supply of the two drugs would be $71.19 and $130.68, respectively. Thus, that $600 federal subsidy would buy a three-month supply of the two drugs. If the government used the same buying power it now uses for veterans, it would have paid $36.48 and $53.90, respectively, and therefore would have been able to buy six months of the two drugs for the same senior.

But the law was written by pharmaceutical industry lobbyists.


The Law In Its Wisdom

The Medicare Prescription Drug and Modernization Act of 2003, the law that created the prescription drug benefit, is some 425 pages long, and its makers appear to have wanted to make it as complex as possible. [The law that created Medicare in the first place, after 38 years of amendment, equalled only 523 pages.]

The prescription drug discount card is only the first phase of the new law.

Phase two, a prescription drug benefit, is to begin in January 2006. To get the benefit, seniors have to enroll in an a private organization. That would entitle them to a prescription drug subsidy with a bizarre benefit structure termed the “doughnut hole.”

Here’s how the benefit program will work: Starting in 2006, seniors who are not covered by Medicaid can enroll in the program and pay a $420 a year premium. Then, after they pay a $250 deductible, the government pays 75 percent of the cost of prescription drugs — up to $2,250. Above that amount, the senior pays 100 percent of the drug cost, until they reach $5,100 a year, at which point the government subsidy kicks back in, paying up to 95 percent of the bill.

That’s just the first year of the program. In all subsequent years, according to the law, the deductible and co-payments will increase, and the doughnut hole (that amount in the middle where the senior pays 100 percent of the cost) will enlarge, based on increases in Medicare’s drug spending. By 2013, it’s estimated that the premium will be $696 a year, the deductible will be $445 a year, and the doughnut hole will be almost double.

The law explicitly prohibits re-importation of prescription drugs from Canada, unless authorized by the Secretary of Health and Human Services; Bush Administration HHS Secretary Tommy Thompson has said he has no intention of authorizing Canadian re-importation. Canadian drugs, though made by the same companies in the same factories, are cheaper in Canada because the Canadian government regulates drug prices in the public interest [something the U.S. government has shown no interest in doing.]

But again, the clincher for critics of the law is that it actually prohibits Medicare from using that gigantic buying power to negotiate better drug prices on behalf of its beneficiaries.

So, unless the law is changed, the government will spend more than half a trillion tax dollars in the next 10 years, but it won’t try to get the best deal for the money spent. Why? It’s elementary, say the critics: because it’s about helping already wealthy pharmaceutical companies, not about helping ordinary seniors.

“This appears to be another Bush Administration payback to the pharmaceutical industry,” Oregon Labor Commissioner Dan Gardner told seniors at the Families USA road show’s April 2 Portland stop.



Twisting Arms At 3 a.m. To Pass The bill

The bill was fiercely opposed by the Democratic leadership, but it passed the House Nov. 22, 2003 under highly irregular circumstances, with support from some Democrats, including Oregon Senator Ron Wyden and House Representative David Wu. Republican Senator Gordon Smith and Representative Greg Walden also voted in favor.

In the House, the vote count, which normally takes 15 minutes, began at 2:30 a.m. and was held open for three hours as GOP leaders roamed the aisles using every pressure tactic available to get members to switch their votes to pass the bill.

It ended up passing the House on a 220 to 215 vote, with support from 204 Republicans and 16 Democrats. Oregon Representatives Earl Blumenauer and Darlene Hooley voted against it.

Representative Wu was one of the last to cast his vote, in favor of the bill. Just weeks before, he had attended a rally organized by the Oregon ARA, at which he told the union retirees that he supported drug re-importation from Canada. Wu spokespeople declined to offer an explanation for the vote.

Arken was very unhappy about it. “I understand there was $400 million on the table. But if you can’t negotiate and you can’t stand up to the drug companies, then you’re not doing the people’s business.”

Actually, the $400 billion figure soon proved to be a Bush Administration budget deception. Congress was told the program would cost $400 billion over 10 years, but as later revealed in a Congressional investigation, a Medicare analyst who had come up with a more accurate estimate — $534 billion — had been told by agency higher-ups not to reveal this to Congress prior to the vote.

“Frankly, that information might have inspired members of Congress to work for better cost-containment,” Vaughan said. Instead, the deception sparked angry reactions from Republicans who voted for the bill.

To tout the new program, the Centers for Medicare and Medicaid Services is now spending millions of dollars in a series television ads. “Same Medicare. New benefits.” says the voiceover narrator in one such ad. Another one concludes, “You either have the power to save, or you don’t”

Some Democrats in Congress are charging that the agency’s ad campaign is an attempt by the Bush Administration to use public funds to support his re-election campaign.

The agency has been very sensitive to criticism of the new program, releasing its own information to contradict critics, hiring public relations professionals to talk to the press, and even tailing Families USA as the group made its way around the country in its “Medicare Road Show.”

Families USA didn’t invite CMS staff (nor did it exclude them), but the agency knew when the seminars were taking place, and in each case sent a staffperson to make sure information being presented was accurate. The staffperson at the Portland seminar, who declined to talk directly to the Labor Press, found no inaccuracies in Vaughan’s presentation.

That’s because the group takes pains to adopt a strictly non-partisan approach. Despite that, Families USA found they were trailed by Republican Party operatives.

Tucker Bounds, spokesperson for the Bush-Cheney campaign was at the Portland event to tell reporters that there’s another side. Bounds suggested a call to a Eugene “medical doctor” who disagrees with Families USA’s critique. The doctor, an anesthesiologist, is a Bush campaign volunteer.

Of the 41.8 million Americans enrolled in Medicare, about 36 million are eligible for the card because they’re not also receiving Medicaid. Of those, the White House has estimated 7.4 million will sign up for the drug discount. Independent health policy experts predict 4 million are likely to sign up.

The new drug benefit is likely to be a major topic in this year’s election campaign. Bush will present it as an example of “compassionate conservatism.” Democrats, on the other hand, hope that educating people about it’s ponderous complexity and paltry result will persuade voters that the program is more about helping Big Pharma than seniors.

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