Medicare drug plan locks in high prices
Published Dec 22, 2005 8:59 PM
An incredibly complex Medicare drug plan is
due to go into effect on Jan. 1. More than 60 percent of seniors polled say they
can’t make head or tail of it. Only 20 percent say they’ll enroll by
the first of the year, despite the high-volume scare campaign by the government
and the insurance companies warning that they will pay a penalty for enrolling
later. “I have a Ph.D., and it’s too complicated for me,” says
William Beard, 73, a retired chemist in Wichita, Kan.
NYC march and rally for universal
health care, Nov. 12.
And no wonder there
is confusion. The plan contains few specifics about what it will cost the
consumer. Those “details” can only be ascertained by investigating
the many different private plans that may be available in your area—and
In fact, if this can be called a government benefit plan, the
benefit is not going to seniors and disabled people covered under Medicare. The
legislation setting it up—the Medicare Modern ization Act of
2003—was crafted by the drug companies and their flacks in Congress. It
ensures that the benefits go to them: the owners of the pharmaceuticals, already
the most profitable sector of the capitalist economy, with sales in the hundreds
of billions of dollars each year. Also on the gravy train, of course, are the
insurance companies that will be selling coverage to Medicare recipients under
These super-rich corporations have contributed millions to the
political campaigns of key congressional leaders, as well as the president. Now,
in their view, it’s payback time.
The amount people in the U.S.
spend on prescription drugs has been rising at a steep rate for
years—especially since the pharmaceuticals got the laws changed to enable
them to advertise their pills on television. By 2000, the drug companies had
increased their spending on promotion to $15.7 billion a year. In 2001, the
pharmaceuticals took in $132 billion in sales—20 percent more than a year
earlier. About 20 drugs accounted for half the increase—reflecting the
effectiveness of advertising to boost these companies’ revenues. In this
period, the rate at which drug prices increased tripled the rate of
By 2002, the average senior on Medi care spent $860 a year
out-of-pocket for prescription drugs, according to the Congressional Budget
Office—more than what they spent on physician care, vision services and
medical supplies combined.
But the drug companies wanted even more.
Losing business to Canada
As the prices of drugs soared and
demand increased, more and more people began looking elsewhere for their
medicines. The same companies that sell prescription drugs in the U.S. also sell
them in other countries around the world, including Canada. The U.S. is the only
industrialized country with no regulations limiting drug prices, so the same
pills are much more expensive here. As a result, by the summer of 2004, at least
1 million people living in the U.S. were filling their prescriptions in
neighboring Canada, at a considerable saving.
Even though Washington was
threatening to make it illegal, and even though the U.S. drug companies were
threatening to cut off their Canadian distributors, senior groups started
chartering buses to go buy their medicines in Canada. Even with the cost of the
trip factored in, it was still considerably cheaper.
Soon cities, towns
and even states were trying to make arrangements for their residents to buy
cheaper medicines from Canada.
The city of Springfield, Mass., for
example, arranged for its 3,000 public employees to get cheaper drugs from
Canada. “We can save anywhere from $4 million to $9 million on an annual
basis if I get everybody enrolled and everybody goes to Canada,”
Springfield Mayor Michael Albano told Morley Safer of NBC-TV. (“60
Minutes,” Aug. 22, 2004) The mayor said this would keep Springfield from
having to lay off essential workers in a budget crunch.
But when the state
of Vermont in the summer of 2004 tried to import prescription drugs for its
residents, the Food and Drug Administration barred the way. The state announced
it would go to court.
Locking people into high-priced
Now the drug plan part of the Medicare reform act is about
to go into effect. It will lock seniors and the disabled into plans based on the
extortionate prices charged here by the drug companies. And under this act, the
federal government is specifically prohibited from negotiating with drug
companies to lower their prices.
In November 2005, according to the Social
Security Administration, the average monthly check for all types of
beneficiaries—retirees, their survivors and the disabled—was $879.
Seniors covered by Medicare Part B would pay a $78 premium, leaving them $801,
or about $9,600 per year.
If they choose a Medicare drug plan, they will
pay an additional $35 a month premium—reducing their Social Security check
to $766, or $9,192 a year. There is a deductible of $250 before the plan kicks
in. After that, they pay 25 percent of all covered drug expenses up to $2,250.
But what drugs are covered? It all depends on each individual private
plan in each area. So does the price of the drugs. That’s why it’s
so hard to know what all this will really cost each person
Let’s assume that someone receiving the average
yearly Social Security payout—$9,192—is lucky enough to get a drug
plan that covers the medicines they need, and that the total cost for the year
comes to $2,250. They pay $250 for the deductible plus $500 (25 percent of the
next $2,000), leaving them with a yearly income of $8,442.
But what if
their drugs cost more than that? It’s not uncommon for someone with a
heart condition or some other chronic ailment to spend $300 a month on drugs
Here’s where the infamous “donut hole” comes
in. With the next $1,350 worth of medicines required, the Medicare drug plan
The plan is supposed to provide assistance for
very low-income people. But they can’t have more than a few thousand
dollars in assets. By the end of November, only one in nine of the 5.7 million
low-income seniors not covered by Medicaid had been approved for
So it’s obvious that the average person on Social
Security who requires a significant amount of medications will not be able to
survive on this drug plan, unless they have substantial other income.
will do nothing to lift anyone out of poverty—it may even help put them
The lawmakers from both big capitalist parties voted this act into
existence under the pressure of the pharmaceuticals. Even the organization that
supposedly lobbies in the interests of the elderly—the American
Association of Retired Persons (AARP)—capitulated to the pressure and
endorsed it. It is now in the business of selling drug coverage to its
members—the AARP MedicareRX Plan.
Paying more and dying
People in the U.S. now pay way more for health care than in
any other country in the world, but our health statistics are far down the
In its World Health Report for 2000, the World Health Organization
ranked the U.S. health system 37th in the world—worse than those of much
poorer, smaller countries like Malta, Cyprus, Dominica and Costa Rica. In life
expectancy, the U.S. was 53rd out of 219 countries.
These are shocking
figures for a country that has for years been on the cutting edge of technology.
But they also reflect political priorities: the U.S. spends as much on its
military as the rest of the world combined.
They also reflect the great
inequality in this country, where tens of millions of people are subject to
racial and national oppression and discrimination that degrades their health in
a thousand different ways.
The problem is not general underdevelopment. It
is not a lack of resources. It is capitalism taken to its extremes, driven in
every area of life by nothing but the profit motive and with few restraints
coming from a government that has been thoroughly housebroken by the big moneyed
Interns, medical students and other health care workers
recently demonstrated in New York for a national health care system, free and
available to all. This is a sea change for these professionals. Every
progressive and working class organi zation must put the demand for socialized
medicine on its agenda.
Health care is a right, not a privilege. It must
be totally restructured to remove the profit motive from every level of health
care while making quality preventive as well as curative medicine available to
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