The Best Medicine:

A Drug Coverage Option Under Original Medicare

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.

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.

Part D is Different

People with Medicare purchase coverage from private companies.

Each plan has: Different PremiumsDifferent Benefit PackagesSegmented Risk

Enrollees in other plans have access to different drugs at different costs, available at multiple pharmacies.

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)

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.

Problems with the Privatized BenefitCoverage 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.

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).

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.

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

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).

Passage as part of Comprehensive Health Reform in 2009