Big Savings Seen in Medicare Rx Drug Plan

Low-income seniors will save the most, analysis suggests

THURSDAY, Aug. 25, 2005 (HealthDayNews) -- Low-income seniors will see dramatic savings on out-of-pocket costs for prescription drugs under the incoming Medicare prescription drug plan, and most other seniors will benefit as well.

That's the conclusion of an upbeat analysis on the personal impact of the new plan, prepared by a coalition of health organizations and released Thursday.

According to the report, Medicare Tomorrow: Future Savings for Beneficiaries, people earning no more than $14,500 will see their out-of-pocket costs for prescription medications drop 90 percent, from $1,657 to $180 a year.

And, the analysis predicts, all Medicare beneficiaries could save an average of $700 a year in out-of-pocket spending.

According to the report, by Medicare Today, 97 percent of Medicare beneficiaries could have drug coverage under the new plan, compared with the 62 percent who currently have drug coverage.

The report was based on data from the U.S. Census Bureau, the Medicare Current Beneficiary Survey and other sources adjusted to reflect 2006 estimates by the Congressional Budget Office, the coalition said.

And it coincides with a new poll that found seniors were slowly warming up to the drug-plan concept as more of them began to understand it.

The poll results, released by the Kaiser Family Foundation, showed that 32 percent of those surveyed between Aug. 4 and 8 were favorably impressed by the new benefit, while another 32 percent viewed it negatively. The favorable percentage, however, has shifted upward from the foundation's last poll in April, when only 21 percent had a favorable impression.

In addition, the poll showed that 37 percent of seniors now say they understand the new benefit "very" or "somewhat" well, up from 29 percent in April.

However, 60 percent still say they don't understand the benefit well or at all.

Medicare will start signing people up for the drug-benefit program beginning in November. Under the program, which goes into effect in January 2006, seniors will pay approximately $32 a month for plans that will cover 75 percent of their annual drug costs up to $2,200, and almost all costs over $3,600.

"For people who are having trouble making ends meet, help is definitely on the way," said Mary Grealy, president of the Healthcare Leadership Counsel, in Washington, D.C., which founded Medicare Today.

Medicare Today is a partnership of more than 200 organizations including AARP, Easter Seals, the American Academy of Family Physicians and the National Rural Health Association.

"Millions of seniors can have brighter todays and tomorrows," Grealy told a news conference in announcing the report. "That is why we have created the Medicare Today campaign -- to ensure that no senior citizen goes without the assistance that can make such a difference in their everyday lives."

Grealy said the group's research shows that the new Medicare drug plan will help every senior, but especially the poorest.

"If you are one of the 12 million Medicare beneficiaries with no form of prescription drug coverage, you are likely going to save hundreds of dollars each year in out-of-pocket spending," she said.

In all 50 states, at least one in five seniors not receiving Medicaid is without prescription drug coverage, Grealy said. In seven states, more than half of the senior population has no prescription drug coverage.

"Never again will Medicare beneficiaries have to go to the pharmacy counter without financial assistance to pay for the medicines they need," Grealy said.

One expert thinks the Medicare drug plan is good, but wonders about the overall costs to health care and the nation.

"People covered by Medicare tend to have more health problems than younger people. But many of them can ill afford the medications they need," said Dr. David L. Katz, the director of the Prevention Research Center at the Yale University School of Medicine. "The result is that they may not take them, allowing readily controllable health problems to evolve into unmanaged crises."

"If this analysis is to be believed, much of this problem should evaporate under the newly implemented Medicare Prescription Drug plan," Katz said. "Drugs that may have been financially out of reach before should now be affordable to all."

This is clearly good news for the nation's seniors. But is it good news for health care in general, or the nation's health overall? Katz asked.

"That will depend on who bears the cost of this plan, and how. If it drives up other health-care costs, the net effects may be complicated," he said. "If, however, costs to the system come down because reliable use of prescribed medications prevents costly crises, we all win."

"Covering prescription drug costs for those in need is clearly the right thing to do," Katz added. "Whether the benefits in this policy come at low cost, high cost, no cost, or even savings we will now be able to evaluate."

More information

Medicare has complete details on the new prescription drug plan.

SOURCES: Aug. 24, 2005, teleconference with Mary Grealy, president, Healthcare Leadership Counsel, Washington, D.C.; David L. Katz, M.D., M.P.H., director, Prevention Research Center Yale University School of Medicine, New Haven, Conn.; Aug. 25, 2005, Medicare Today report, Medicare Tomorrow: Future Savings for Beneficiaries; Aug. 25, 2005, news release, Kaiser Family Foundation
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