The Best Medicine:

1
The Best Medicine

• A Drug Coverage Option Under Original Medicare

2
Original Medicare is Social Insurance

• Under Original Medicare, there is
• One Premium
• One Benefit Package
• One Risk Pool
• All share the cost of caring for the sick.

3
Original Medicare is Social Insurance

• Because most medical providers accept Medicare,
  enrollees can go to almost any doctor or hospital
  in the country for medical services using their
  red, white, and blue Medicare card.

4
Part D is Different

• People with Medicare purchase coverage from
  private companies.
• Each plan has
• Different Premiums
• Different Benefit Packages
• Segmented Risk
• Enrollees in other plans have access to different
  drugs at different costs, available at multiple
  pharmacies.

5
Part D is Different The Doughnut Hole
Part D has a Coverage Gap (Doughnut
Hole) Begins at 2,510 in total drug costs Ends
at 4,050 in out-of-pocket drug costs (Source
Kaiser Family Foundation)
6
Problems with the Privatized Benefit

• Higher Costs for All Americans
• Taxpayers Pay More
• Part D plans have failed to negotiate drug prices
  on par with the VA, Medicaid, or Canadian
  government.
• Drug coverage through private plans carries
  higher administrative costs than the provision of
  medical coverage under Original Medicare.
• Enrollees Pay More
• In the coverage gap, enrollees generally pay full
  price for covered drugs. Prices do not reflect
  manufacturer rebates or discounts negotiated by
  their Part D plans.
• Part D plans pass on manufacturer price increases
  directly to consumers.

7
Problems with the Privatized Benefit

• Coverage Gaps Access to Medically Necessary
  Drugs Is Not Guaranteed.
• Drug plans save money by reducing drug costs and
  limiting access to drugs, not by improving
  health.
• Formularies (lists of covered drugs) vary widely
  and are subject to change, making it hard for
  prescribing doctors to comply and ultimately
  harming patients.
• Formulary exclusions and restrictions interrupt
  patients' drug regimens, reduce compliance and
  can result in patients taking less effective
  drugs.
• Enrollees often need to appeal for exceptions to
  coverage, a cumbersome process that is often
  obstructed by private drug plans themselves.

8
Problems with the Privatized Benefit

• Instability
• Plans can change formularies, cost sharing and
  premiums throughout the year.
• Every year the coverage gap widens.
• Drug prices go up all the time.
• Low-income people with Medicare are randomly
  reassigned to different plans every year (1.15
  million reassigned in 2008).

9
Problems with the Privatized Benefit

• Consumer Confusion and Marketing Fraud
• Every Part D enrollee is a marketing lead for
  insurers selling private Medicare health plans.
• A confusing and unstable benefit makes consumers
  particularly limited English speakers or those
  with dementia or cognitive impairments
  vulnerable to abusive and deceptive marketing.
• Consumers do not have the option of enrolling in
  a standardized benefit.

10
Proposed Solution Part D Under Original Medicare

• S.2219/H.R. 3932 Medicare Prescription Drug
  Savings and Choice Act of 2007.
• The bill creates public option to compete in Part
  D marketplace and would
• Improve Access to Necessary Drugs. The formulary
  (list of covered drugs) would be based on
  clinical evidence and provide a channel for
  consumer friendly appeals.
• Lower Prices. Medicare would use broad leverage
  to negotiate lower drug prices with
  pharmaceutical companies.
• Stabilize Coverage. With a stable year-to-year
  choice, consumers could stick to the public
  option for years without seeing their benefit
  change.
• Eliminate (Reduce?) the Coverage Gap

11
Passage as part of Comprehensive Health Reform in
2009

• Medicare reforms must be part of the
  comprehensive health reform.
• The Public Option under Democratic health
  proposals is modelled on Medicare. The model
  needs fixing Medicare must become an integrated
  benefit (including drug coverage).