Medicare Part D

The new Medicare prescription drug benefit is a trainwreck waiting to happen. Last night, I reviewed the health insurance information that my husband receives so that he can make decisions about our health plan for the coming fiscal year. He is a retired employee of a state agency. I was much relieved to see that the information provided about Medicare Part D boiled down to: Don't sign up!

As a retired state employee, his insurance (and, thankfully, mine) provides better prescription coverage than Medicare Part D. What is even better is the commitment expressed by the agency that they will not seek to capitalize on the availability of Medicare Part D to reduce their costs. This is gold.

Here's why.

Medicare Part D will provide prescription drug coverage for eligible persons (seniors over age 65 and eligible disabled persons) effective January 1, 2006. The benefit requires that the participant pay first for Medicare Part B premiums ($78.20 in 2005) and then for Medicare Part D premiums ("about" $37 in 2006). This is all before receiving any medications. Then there is a $250 deductible. After that, the benefit is 75 percent of the cost of medications up to a certain point, i.e., when the participant has spent $2000 on the 25 percent of remaining cost. The initial cost is therefore, considerably higher than the $2250 usually discussed as the price of the benefit.

Once this point has been reached, the participant falls into what is called "the doughnut hole." While still paying premiums for Medicare Parts B and D, the participant must also pay 100 percent of the cost of medications until he/she has paid a total of $5100 (not counting the continuing premiums) in "true out of pocket costs."

After reaching the point of "catastrophic coverage," Medicare Part D will pick up 95 percent of the costs of medications.

This means that anyone needing serious amounts of medications will pay more like $7000 before receiving substantial help from Medicare. And this is all for medications for which Medicare is pretty much paying full retail price, no price-lowering negotiations allowed.

Somehow I'm not seeing Medicare Part D keeping a whole of folks from thinking about buying their medications in Canada.