Medicare Drug Improvement Act – What’s Improving?

February 16, 2005

Late in 2004, the largest increase in Medicare insurance premiums in 15 years was announced. Most enrollees will pay a Part B premium of $78.20 per month beginning in January 2005, up from $66.60 in 2004. This represents a 17.5% increase in premiums. In addition, the the Part A deductible will increase from $876.00 to $912.00 as will several Medicare co-insurance payments.

Hidden in the Bush administration supported 700+ page Medicare Prescription Drug Improvement and Modernization Act of 2003 were provisions mandating these increased out-of-pocket payments for elderly beneficiaries and those with disabilities. The Act also increased payments to physicians, HMO’s (and other managed cost plans now called “Medicare Advantage Plans”), hospitals, pharmaceutical companies and drug distribution companies.

Although the Act provides some coverage for prescription drugs, it prohibits the governement from using its buying power to negotiate drug prices with the manufacturers or from importing less expensive drugs from Canada or Mexico. Robert M. Hayes, president of the Medicare Rights Center, said the increase in out-of-pocket costs will be especially painful to thoe on fixed incomes because Social Security payments are expected to rise only 3%.

“Older Americans already are staggering from the relentless increases in the cost of presciption drugs,” he said. “More older Americans will face harsh choices in meeting basic human needs – health, food and housing.”

When the Medicare Act’s prescription drug plan in implemented in 2006, enrollees in the drug coverage plan will be paying an additional $35 per month in premiums. By then, the typical retiree will be paying more than $115 per month in Medicare premiums in addition to the cost of any Medigap/private supplemental insurance premiums.

There is some good news: low income enrollees who are not on AHCCS, TRICARE for Life, private group or employer group plan with prescription drug coverage or an FEHBP (Federal Employees Health Benefit Plan), may be able to apply for a $600 credit on their Medicare Rx card for 2004 if they applied before 12/31/04 and another $600 credit for 2005.

Source: Never Too Late, November 2004.