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The New Medicare Law: Claims and Realities
- March 29th, 2004
Forty-one million older people and people with disabilities have received or soon will receive a letter and fact sheet from Tommy Thompson, Secretary of Health and Human Services, about upcoming new Medicare benefits enacted as part of the Medicare Modernization Act of 2003. The letter promises more benefits, the preservation and strengthening of the current Medicare program, and, most importantly, that those who are happy with their current Medicare coverage can keep it.
But does the Medicare Act really do what Secretary Thompson says it does? The Center for Medicare Advocacy, which helps the elderly and people with disabilities obtain necessary health care, has carefully studied the fact sheet's claims. Here is its assessment:
The Fact Sheet Says: "The new law preserves and strengthens the current Medicare program..."
In Reality: The new law does not preserve the traditional Medicare program. Instead, it pays private health plans substantially more money, giving them an unfair advantage over traditional Medicare. In 2004 alone, private plans will be paid, on average, 7% more per beneficiary than Medicare pays for the majority of people who remain in the traditional program. Joining a private plan can be risky; over 2 million Americans lost their health plans when those plans decided to stop serving Medicare beneficiaries. Unfortunately, the new law does not strengthen protections for Medicare beneficiaries when private plans make future business decisions to pull out of Medicare.
The Fact Sheet Says: "If you are happy with the Medicare coverage you have, you can keep it."
In Reality: When the prescription drug benefit goes into effect in 2006, individuals who have prescription drug coverage through Medicare Supplemental (Medigap) policies H, I, & J will be forced to decide whether to keep the Medigap coverage they have or to enroll in a new prescription drug plan. If they keep the coverage they have and later decide to switch to a prescription drug plan, they will be penalized by having to pay a higher premium for late enrollment.
The Fact Sheet Says: "A discount drug card with Medicare's seal of approval can help you save 10-15% on prescription drugs."
In Reality: It's unclear how much an individual who enrolls in a Medicare-approved discount drug card will actually save. The General Accounting Office, in a report issued in September, determined that savings depend on the type of card sponsor, the pharmacy used, and the prescription. If a card sponsor has a formulary, then enrollees will receive no discount on the cost of non-formulary drugs.
The Fact Sheet Says: "New Preventive Benefits will be covered, including: A one-time initial wellness physical exam within 6 months of the day your first enroll in Medicare Part B. Screening blood tests for early detection of cardiovascular (heart) diseases. Diabetes screening tests for people with Medicare at risk of getting diabetes."
In Reality: The initial screening exam will not be available to people who have Medicare Part B before January 1, 2005, so people who currently have full Medicare will not get this new preventive benefit. For those who are eligible, the initial screening exam does not include lab tests. The only screening test for heart disease is a cholesterol test. Diabetes screening tests are not covered for all people at risk of getting diabetes, but only for people at high risk of getting the disease.
The Fact Sheet Says: "You will...pay a premium of about $35 a month."
In Reality: No one knows what the premium will be. The $35 a month figure is only an estimate; the premium amount is not required by the new law. Premiums will probably vary greatly, depending on the type of drug plan and the area of the country in which the plan is offered.
The Fact Sheet Says: "Medicare...will pay 75% of costs between $250 and $2,250 in drug spending. You will pay only 25% of these costs."
In Reality: Medicare will only pay 75% of the cost of drugs that a drug plan decides to include in its formulary. The beneficiary will pay the full cost of prescriptions that aren't on the formulary. In addition, the drug plan can require the beneficiary to pay more for brand name drugs or for more expensive or newer brand name drugs.
The Fact Sheet Says: "You will pay 100% of the drug costs above $2,250 until you reach $3,600 in out-of-pocket spending."
In Reality: The beneficiary will pay much more than $3,600. Payments for drugs that are not on the drug plan's formulary don't count towards the $3,600. Neither do contributions from a retiree health plan. The $3,600 out-of-pocket amount also does not include the monthly premium.
The Fact Sheet Says: "Extra help will be available for people with low incomes and limited assets."
In Reality: While many people with low incomes and limited assets will receive extra help with their prescriptions, some of the most needy Medicare beneficiaries may end up with less coverage. Medicaid will no longer pay for prescriptions for people with both Medicare and Medicaid (the "dually eligible"). Thus, if a drug is not on the Medicare drug plan's formulary, Medicaid will not cover the cost, as it does now for services for which Medicare does not pay. The individual will have to pay for the drug herself.
The Fact Sheet Says: "PPOs can help you save money by choosing from doctors and providers on a plan's 'preferred' list, but usually don't require you to get a referral."
In Reality: People may incur additional expenses, however, if they continue to see doctors and providers who are not on the PPO's preferred list. In addition, PPOs, like HMOs, are not required to remain in the Medicare program permanently. They can choose to leave every year.
(Reprinted with the permission of the Center for Medicare Advocacy.)
Visit the Web site of the Center for Medicare Advocacy at www.medicareadvocacy.org
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