At a time when most Americans are busy with last-minute Christmas shopping and fretting over holiday-induced debt, millions of seniors like Jerry B. are preoccupied with more pressing concerns, like trying to figure out how they’re going to pay for their drugs.
Jerry is a lean, 71-year-old Missoulian with thick-framed bifocals and neatly slicked-back black hair. He’s dressed in a tucked-in red-and-black flannel lumberjack shirt, crisp blue jeans and worn but shiny black loafers. He talks with the gravelly rasp of a longtime smoker and he’s simultaneously friendly and a bit reticent about talking to strangers about his prescription health-care coverage. But Jerry wants people to know how difficult it is for those on Medicare to navigate the Part D prescription drug benefit, so he’s let us in on his appointment at Missoula Aging Services (MAS), where he’s turned for help before the enrollment period ends Dec. 31.
Prior to the passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Jerry got the drugs he needed with the help of Senior Assist, a private company connecting poor seniors with low-income medication assistance. Jerry chose to switch to the Part D plan last year, realizing that the low-income programs could dry up, in which case he’d be forced to enroll in Part D and pay late-enrollment penalties.
A year later, Jerry isn’t quite sure what his options are. He takes six prescription drugs on a regular basis. There are 53 Part D plans to choose from.
“It’s totally confusing,” he says. “Nobody really understands it, including the pharmacists.”
Passed in 2003 by a Republican-controlled Congress with the help of a handful of Democrats—including Sen. Max Baucus, then the ranking member on the Senate Finance Committee—MMA created Medicare Part D, now entering its second year of implementation.
The program is voluntary for Medicare enrollees, who become eligible at 65 (or sooner if they receive Social Security disability payments). Medicare recipients can choose to enroll in a Part D plan, stick with their existing coverage or pay out of pocket. But for millions of Medicare recipients who previously had no drug coverage, Part D represents their best opportunity to seek relief from the high cost of prescription drugs. For others, Part D replaced the drug coverage they had under Medicare HMOs, Medigap supplemental Medicare insurance or state Medicaid programs.
Jerry and 63,809 of his fellow Montanans signed up for one of the 41 drug plans offered in 2005 by private insurance companies through Part D (an additional 12 plans have been added for 2006). Nearly 23 million Americans signed up nationwide, and Part D’s supporters laud the program as a success.
But consumer advocates and many seniors don’t quite see it that way.
“I don’t know what to think about anything anymore,” Jerry tells his enrollment counselor, Mary Dalton, as he places a list of his prescriptions on her desk. “They send me all this stuff in the mail and I get all these phone calls and it’s all just so darn confusing.”
In Montana, nine private insurance companies, including Humana and Blue Cross Blue Shield, offer 53 different prescription drug plans for sale to Part D enrollees. Each plan has a different formulary, or lists of drugs it will cover.
Dalton, an information specialist and State Health Insurance Program (SHIP) counselor for MAS, is helping Jerry sort through them all.
In 2005 Jerry purchased a Humana plan, which covered most of the medications he takes to control his high cholesterol, asthma, acid reflux and anxiety. But he’s heard costs are going up, and he needs to determine whether he can afford his existing plan on the $12,000 in Social Security payments he lives on, or if he should consider a different plan this year.
Dalton takes Jerry’s Medicare card and the list of medications he’s taking and opens her computer’s Web browser to Medicare.gov, the website set up by the Centers for Medicare and Medicaid Services (CMS) to help seniors compare the thousand-plus plans available nationwide.
But the website won’t load.
Medicare.gov is “Temporarily Unavailable.”
Heavy traffic has jammed CMS’s online “Plan Finder,” so Dalton isn’t immediately able to log on.
Dalton warns Jerry that he might need to reschedule.
Jerry’s eyebrows furrow behind his glasses, but then he smiles and says, “Well I guess we’ll have to get back and get it done before the 31st.”
Jerry doesn’t have a computer (or the skills to use one), so rescheduling is another complication in an already complicated process.
But Jerry lucks out: After 15 minutes of loading and reloading the Web page, Dalton is able to begin comparing his current coverage with other drug plans.
Every year, during the open Medicare Part D enrollment period from Nov. 15 to Dec. 31, eligible seniors are told to log on to Medicare.gov and compare Part D plans. Those who weren’t eligible during the prior enrollment can enroll now without penalty. Those who were eligible but chose not to enroll during the last enrollment period can do so now and pay a 1 percent per month penalty for as long as they are enrolled in the program.
Changes to individual plan formularies, co-payments and premiums have made it too expensive or otherwise disadvantageous for some seniors to stay with the plans they purchased in 2005, so they start from scratch in 2006.
Adding to enrollees’ confusion and uncertainty is the coverage gap, known as the “doughnut hole.”
Beneficiaries pay 25 percent of the cost of their covered Part D prescription drugs up to an initial coverage limit of $2,250. Once that limit is reached, beneficiaries are subject to the doughnut hole, within which they must pay the full cost of their medicines out of their own pocket, while continuing to pay their full monthly premiums. When total out-of-pocket expenses, including deductibles and initial coinsurance, reach $3,600, the beneficiary then enters the realm of catastrophic coverage, for which he or she pays $2 for a generic or preferred drug and $5 for other drugs, or 5 percent coinsurance, whichever is greater.
Imagine trying to hit all these moving targets year after year. That’s the season’s task for millions of seniors who have limited computer know-how and would rather be writing Christmas cards than trying to figure out how to pay for their prescriptions. It’s a complex system that may be better than nothing in terms of helping seniors pay for drugs, but demands major reform, critics of the current plan and consumer advocates say.
And they aren’t the only ones. Congressional Democrats, many of whom ran their midterm races in large part on promises to reform Part D, are now in a position to try to fix it. For the first time in 12 years, Republicans, who have received the bulk of the health-care and pharmaceutical industries’ campaign contributions, are no longer running the show. Democrats who promised seniors to make Part D cheaper and simpler are about to get their chance to follow through.
When the federal government passed the Medicare prescription drug benefit in 2003, the legislation was written to explicitly guarantee drug companies that the government won’t use its enormous bargaining leverage to negotiate for lower prices. The law allows only private insurers to offer the drug benefit, and it bars Medicare from offering its own competing plan.
That, critics say, is Part D’s biggest problem, and the one most likely to be addressed first when Congress convenes in January.
“By prohibiting Medicare from negotiating for lower drug prices, the costs of the program and the costs to taxpayers and beneficiaries are higher than they should be,” says Marc Steinberg, deputy director of health policy at Families USA, a Washington, D.C.-based health-care advocacy group. “If the cost of the program were lower, then the savings could be used to fill the doughnut hole.”
Robert Reich, former secretary of labor under President Clinton and now a professor of public policy at the University of California-Berkeley, says the current legislation’s ban on negotiation amounts to “corporate welfare.”
The pharmaceutical industry, known as “Big Pharma” in Washington, D.C., maintains that negotiations would result in government-imposed price caps that would stifle the innovation of new medicines.
Reich says that’s absurd.
“Bargaining is bargaining. The Veterans Administration already negotiates drug prices on behalf of its 4.4 million enrollees. Medicaid negotiates on behalf of millions of Medicaid recipients. Why shouldn’t Medicare use its even bigger bargaining clout to get good deals for its nearly 23 million enrollees?” Reich recently wrote on his blog, robertreich.blogspot.com.
In an interview with the Independent, Reich pointed out that while drug companies spend a considerable amount of money on developing new drugs, the argument that lower drug prices would stifle innovation is disingenuous given Big Pharma’s astronomical advertising expenditures. According to a report by the Consumers Union, pharmaceutical companies spent more than $7 billion—not including drug samples—in 2003 on one-on-one marketing to doctors. That’s a 78-percent increase from 1999 levels.
Big Pharma also drastically upped its political contributions in recent years. In 1990 the pharmaceutical/ health products industry ranked 27th in overall campaign giving with contributions totaling $3.2 million (54 percent of which went to Republican candidates). During the 2002 election cycle, contributions skyrocketed to almost $30 million (number 10 in contributions). Nearly 74 percent of that largesse went into Republican war chests.
In the five years leading up to the 2003 vote on Medicare, the health-care industry gave some of its largest campaign gifts to lawmakers who wrote key parts of the MMA legislation or led committees responsible for passing it, according to the Center for Responsive Politics. For instance, former chairman of the House Energy and Commerce Committee—and current president of the Pharmaceutical Research and Manufacturers of America (PhRMA)—Rep. Billy Tauzin, R-La., got $274,500; former chairman of the House Ways and Means Committee Rep. Bill Thomas, R-Calif., received more than $432,000; and Sen. Orrin Hatch, R-Utah, as former member of the Senate Special Aging committee, took almost $427,000. During that same period, Sen. Max Baucus, the ranking Democrat on the Senate Finance Committee, received $271,649 in health-care industry contributions. In 2002, during his most recent campaign, Baucus received $131,000 from Big Pharma alone, the sixth-largest amount the industry gave to any legislator that year, according to OpenSecrets.org.
Baucus’ support of President Bush’s controversial Medicare plan in 2003 played a key role in the bill’s passage. Baucus himself acknowledged the bill’s flaws, but vowed to improve the program as it went along. Now that Democrats have regained control of the Senate, Baucus is poised to take over chairmanship of the finance committee, where he’ll be positioned to deliver on that promise. Baucus is also likely to face pressure to do just that from newly elected Democrats who campaigned on reforming Part D, including Montana’s new junior Senator Jon Tester, about whose surprise November victory Big Pharma is less than happy.
An internal memo sent to top executives at drug-maker GlaxoSmithKline and obtained by The Washington Post stated, “We now have fewer allies in the Senate,” adding that Tester “is expected to be a problem.”
That’s because Tester made a campaign promise to “stand up to big drug companies and support legislation allowing the government to negotiate lower drug prices for Medicare Part D,” according to his campaign website.
Incoming Speaker of the House Rep. Nanci Pelosi, D.-Calif., has vowed to make Medicare negotiation a primary issue in the session’s “first 100 hours.”
“The leadership in the House has been very clear they are going to bring something on negotiations…and I think they will. I think that’s going to be the start of the process,” says Families USA’s Steinberg.
But with the elections more than five weeks behind them, Democrats are finding that acting quickly on their promises may be more difficult than they thought. According to the Post, House and Senate leaders have yet to settle on a clear plan or strategy for funding any changes to the program.
Sen. Baucus’ office didn’t respond to repeated requests for comment, but according to a Post news report, Baucus is “cool to the idea of government negotiations” and has called for hearings on the issue.
But not all observers believe Baucus’ heart is in it. Dean Baker, co-director of the Center for Economic and Policy Research, a nonpartisan Washington, D.C. think thank, recently wrote that Baucus holding hearings on how to best deal with Medicare Part D is “comparable to holding hearings after Dec. 7, 1941 to determine who had attacked the United States at Pearl Harbor.”
Tester spokesman Matt McKenna says Tester stands behind his campaign promises.
“He supports giving the government the power to negotiate on drug prices. That hasn’t changed,” McKenna says.
Tomas Mann, a senior fellow at the Brookings Institution, a Washington, D.C.-based nonprofit public policy think tank, says House Democrats have three options for forwarding a reform proposal: 1) remove the sentence in the current bill that prohibits the Department of Health and Human Services from negotiating price with drug companies, 2) change the language of the bill so that it explicitly allows DHHS to negotiate, or 3) explicitly order DHHS to negotiate with drug companies. Given that Republicans control the White House and Democrats hold only a slim margin in the Senate, Mann expects the House to pass one of the first two “symbolic” measures.
“If the latter were to move out of House, it would either die in the Senate or be vetoed by the President,” Mann predicts, noting that Bush administration officials and many congressional Republicans have said they are prepared to kill such a bill.
Mann says that while Democrats’ furor over the existing plan wasn’t necessarily misguided or entirely politically driven, the facts driving the debate have changed over the last six months.
“A lot of providers are now effectively doing some of these things Democrats are talking about,” Mann says. “They are engaging in negotiations with pharmaceutical companies.”
(The current legislation prevents Medicare, i.e. the federal government, from offering a competing plan, but doesn’t prohibit individual plan providers from negotiating prices.)
As a result, many of the plans are cheaper than critics expected, he says.
But former Labor Secretary Reich still believes Democrats must take a strong stance and require the government to negotiate. Anything less would be caving in to the Big Pharma, he says.
“It can’t simply be a change in the law that allows the Medicare administrator to negotiate, because this administration has made it clear that it’s not willing to negotiate,” says Reich, who also wants to see a proposal directing Medicare to develop its own prescription drug plan, whereby the government would negotiate with drug companies and compete with existing private Part D providers.
“If Medicare were to set up a separate competing plan and use its buying power to negotiate lower prices, I think most seniors would gravitate toward that plan,” Reich says.
But Big Pharma seems prepared to stand its ground. As The Washington Post reports, the industry has been busy hiring former Democratic lawmakers to lobby their former colleagues in the House and Senate. PhRMA, the nation’s leading pharmaceutical trade association, has said it is ready to “aggressively defend” the current plan.
“Despite what critics say, the new Medicare prescription drug program is working,” says Ken Johnson, PhRMA’s senior vice president.
“More than 38 million seniors and other beneficiaries now have comprehensive prescription drug coverage to help them access life-saving medicines so that they can live longer, healthier lives.”
For Jerry B., the debate over who gets to negotiate with whom is secondary to his unease with the complexities of the existing system. He says he wants to understand how his prescription drug plan works, to feel confident that it will work, and he doesn’t want to worry about it year after year.
And Jerry’s concerns, along with those of other Medicare recipients across the country, are now putting a strain on the under-funded social-service infrastructure in place to help them. Without the assistance of people like Mary Dalton at MAS, he doesn’t know if he’d be able to figure any of it out.
“They’ve been extremely helpful,” Jerry says as Mary prints out page after page of drug plan comparisons. “It’d be real tough for me without them.”
Millions of other seniors rely on Area Agencies on Aging (AAAs) like MAS for help with everything from paying taxes to figuring out their prescription drug benefits. But AAAs don’t receive the funding they need to keep up with the sheer number of seniors turning to resources like MAS.
“We just simply could not handle the tsunami, we really couldn’t,” says Bernie O’Connor, elder services manager at MAS, of the wave of seniors who came to the agency in 2005 when the Part D plan first went into effect.
According to O’Connor, information specialists’ caseloads went up 30 percent between Nov. 15, 2005 and May 15, 2006, as compared to the same period a year ago, and those numbers don’t include volunteer hours or time counselors spent on the phone with seniors.
Susan Kohler, MAS’s executive director, says AAAs all over the country have been inundated with seniors looking for help with enrollment and administration problems with Part D.
“It was all-consuming [when the plan went into effect]. We had to pretty much forget whatever goals and other things we had for the year,” Kohler says.
Since the passage of Medicare Part D, the National Association of Area Agencies on Aging has been lobbying Congress to increase funding for senior services. Since 2005 the group has been urging House members to sign a letter to leaders of the House Appropriations Committee requesting at least $43 million in funding, or one dollar per Medicare beneficiary, be set aside—under the $453.3 million already allocated for Medicare Part D administration—for the AAAs, Title VI Native American aging programs and State Health Insurance Programs (SHIP).
“Regardless of how the benefit was originally structured, you want people to get the best coverage they can out of it,” Steinberg says of the need for increased for AAA funding. “Even though we’re talking about a significant amount of money to these agencies, it’s not an enormous amount of money when you look at the whole Medicare program.”
According to Debbie Lester, operations director for MAS, the agency devoted $50,000 in staff time to Part D enrollments in 2006. That amount barely covered the cost of paying six staff members and training six volunteers, who helped other volunteer agencies in Missoula and Ravalli counties enroll seniors, Lester says.
When it comes to enrolling in a drug plan, the importance of face-to-face assistance for seniors can’t be overstated, Stein says.
“If you’re expecting seniors to understand a very complicated program, you need to provide them with the resources, and particularly with unbiased resources that are human, and based in their neighborhood, as opposed to requiring people to talk to an operator on the telephone.”
The proposal for increased funding for AAAs would add no new dollars to the 2007 Labor, Health and Human Services and Education bill, but would direct CMS on how to spend a fraction of its existing appropriations.
Montana’s sole Representative in the House, Dennis Rehberg, declined to sign the letter supporting increased funding.
In an e-mail to Kohler, an aide stated that Rehberg sits on the appropriations committee, and that “he elects not to sign letters sent to his own committee to avoid a conflict of interest.” In a follow up e-mail the aide stated that “The Congressman will continue to ensure that Montana’s aging population is taken care of.”
But for agencies like the one Kohler directs, taking care of the aging population is the job they’re tasked with every day, and they’re running out of resources.
“If we don’t provide these services, the seniors will still come,” says Kohler. “And right now we’re stretched to the limit.”
Jerry B. can’t even begin to understand the nuances of the 53 drug plans he has to choose from this year, a 20-percent increase in options over last year. Critics say the abundance of choices can be a real problem for seniors.
“It’s just too much,” Jerry says, exasperated. “I can’t keep track of them all.”
Kohler says that’s the case for many Part D enrollees.
“The current population of elderly is by no means a homogenous group of individuals, but a good segment of the advanced-age people, people 80 and above, are either completely computer illiterate or e-mail is their only skill,” Kohler says.
Forcing them to log on to a government website or call a toll-free number and have an operator walk them through the dozens of different drug plans is beyond difficult, and it’s downright daunting for many seniors, Kohler says.
Without AAAs and SHIP programs, it would be difficult or impossible for many seniors to find accurate and unbiased help. The New York Times recently reported that a study by the Government Accountability Office found consumers got correct answers only one third of the time when calling privately run Plan D call centers for information about drug plans.
“No matter how hard Medicare tries to make their online and telephone services work—and I want to give them the credit, they certainly are improving and trying very hard—the senior and disabled population want someone who they can talk to,” says Families USA’s Steinberg. “They want to be able to look someone in the eye and say, ‘here are my concerns.’”
And concerns with the current system are numerous.
According to newspaper accounts from around the country, in the weeks and months after implementation of the plan, some low-income people were being overcharged, turned away from drugstores without their medications, and struggling to figure out complex appeals processes for getting their plans to pay for drugs their doctors said they needed.
Jerry says he gets tripped up by the volumes of letters and mailings he gets from competing drug plans, insurance companies and CMS.
“They’re trying to convince you to switch to their plan this time around,” Dalton explains after Jerry shows her some of the mail.
In a recent Associated Press interview, Sen. Baucus said that simplifying the system would be one of his top priorities as Finance Committee chairman.
“Medicare Part D is much too complicated, and I’m going to streamline that,” he said.
Baucus said seniors have too many plans to choose from.
“I think it should be down to…no more than 10,” he said.
After comparing several of the least-expensive Part D plans that cover the drugs he needs, it turns out Jerry is better off remaining with the plan he has. It will cost him slightly more than it did the year before, but the aggravation of switching to a new plan isn’t worth the $20 he stands to save.
Jerry is one of the lucky ones: he only had to spend an hour or so at MAS to learn that he’s getting a relatively good deal on a plan that will help pay for most of his prescriptions.
Most, but not all. None of the plans will help cover the Tranxene pills he takes to help control his anxiety. And unless congressional Democrats make good on their promises of Medicare reform, that anxiety is a holiday-season price that Jerry, along with millions of Medicare recipients, will have to bear alone.