Retirement Insights -- Desperately Seeking Prescription Coverage
Pharmaceutical costs keep rising, but Medicare doesn't cover them. How can we make sure seniors get the medicines they need?
Prescription medications are among the most widely used and most cost-effective medical aids in the health care system. Doctors write billions of prescriptions each year to cure infections, relieve disease and treat long-term chronic conditions. But those who need them most, older Americans, are too frequently made to choose between filling their prescriptions and buying food or paying utility bills.
Medicare does not cover outpatient prescription drugs, which account for the largest single source of out-of-pocket health costs for Medicare beneficiaries.
Older Americans without employer-sponsored insurance can look for Medigap insurance with prescription coverage — which is very expensive — or a Medicare managed care plan with a drug benefit.
WHO SUFFERS MOST. It is the moderate-income retirees — not poor enough to qualify for state-run Medicaid but unable to afford deluxe Medigap plans — who are hurt most. And, to make matters worse, their lack of drug insurance means they not only pay the full cost of prescriptions, but that those costs are higher than the costs charged to insurers.
The reason is that Medicaid and employer-sponsored and managed care plans negotiate with drug companies for low costs. A recent Standard and Poor’s report on the pharmaceutical industry notes, “[d]rugmakers have historically raised prices to private customers to compensate for the discounts they grant to managed care consumers.”
Medicare beneficiaries without drug coverage are among the last purchasers who pay full price. Recent studies indicate that they pay anywhere from two times to 10 times as much for their prescriptions as drug companies’ most favored customers.
Rx FROM CAPITOL HILL. Recently Washington policy makers have started taking a serious look at the problem. In his State of the Union address, President Clinton pledged Administration support for a Medicare prescription drug benefit.
A plan is expected from the White House by early summer. Meanwhile, Congress is considering some innovative ways to reduce the cost of prescriptions for retirees and provide them with coverage under Medicare.
In February, Representative Tom Allen (D-Maine) introduced H.R. 664, The Prescription Drug Fairness for Seniors Act of 1999. It would allow pharmacies to buy prescription drugs for Medicare beneficiaries at the low prices available to the federal government and other favored pharmaceutical customers. Cost savings could be passed to senior citizens.
S. 841, The Access to Rx Medications in Medicare Act of 1999, was introduced in April by Senators Edward M. Kennedy (D-Mass.) and John D. Rockefeller (D-W.Va.) and Representatives Henry Waxman (D-Calif.) and Pete Stark (D-Calif.). It would extend $1,700 worth of prescription drug coverage each year to Medicare beneficiaries — with a $200 deductible and a 20 percent prescription co-payment.
Most AFSCME members — working and retired — currently have prescription drug coverage, but many of their friends and family must struggle to afford medicines that would help them lead healthier, more fulfilling lives. And, while AFSCME retirees have coverage now, rising employer costs may pose a threat down the road. Clearly, the time has come to tackle the twin issues of prescription drug costs and coverage for senior citizens.
