A Drug Benefit Should Not Force 41 Million Americans

To Choose Between the Security of Medicare and the Medications They Need

	A Prescription Drug Benefit in Medicare Helps Everyone Who Needs Help	A Good Prescription Drug Benefit Only for People who Join Private Plans Fails to Address the Needs of Millions with Medicare	Limited Stand-Alone Prescription Drug Coverage For People in Traditional Medicare Fails to Address their Needs
Universal:	Medicare enrolls virtually all eligible individuals and guarantees the same benefits to everyone regardless of their health plan choice.	Most people enroll in traditional Medicare because of its dependability, choice of doctors, and because Medicare private plans prove unreliable, unavailable or unaffordable.	Private insurers have never offered good stand-alone drug coverage for an affordable price to even the healthiest people with Medicare. There is no evidence that they would offer affordable drug coverage—even with a government subsidy—to people with high-cost drug needs.
Equitable:	All working Americans pay into Medicare, and all eligible Americans get the same Medicare benefits, regardless of income, where they live or their health condition.	All working Americans pay into Medicare, but only those who are willing and able to give up traditional Medicare for a private plan would have a good prescription drug benefit.	All working Americans pay into Medicare, but only those who are willing and able to pay for a prescription drug stand-alone policy would get it; they would pay higher prices for less coverage depending on where they live.
Accessible:	Medicare offers reliable coverage anywhere in the United States at a predictable cost to anyone in traditional Medicare.	A good prescription drug benefit offered only to people through Medicare private plans would force millions of people to give up their trusted doctors in exchange for their drugs.	History and recent experience suggest that stand-alone prescription drug coverage—if available—would likely be unaffordable, unreliable and unavailable for millions of people with Medicare.
Cost-effective:	Medicare contains costs better than the private sector in part because of its market leverage and its very low administrative costs.	The government pays more for persons enrolled in a private plan than it does for persons enrolled in traditional Medicare.	Because insurers would attract people with the highest prescription drug costs, stand-alone prescription drug coverage would be unavailable, or unreliable and unaffordable.

The Facts—

Universal: Approximately 4.6 million people with Medicare (11 percent) are enrolled in a Medicare+Choice plan, and 36 million are enrolled in traditional Medicare.[1] In 2002, only 61 percent of people with Medicare had a Medicare+Choice option.[2] And, more than 2.4 million people with Medicare have been terminated from their Medicare+Choice plans since 1999.[3] By contrast, traditional Medicare is a reliable option for everyone with Medicare.

Equitable: Only 13 percent of people with Medicare living in rural areas have the option of enrolling in a Medicare+Choice plan.[4] Between 1999 and 2003, the percentage of Medicare+Choice enrollees who pay a monthly premium of $50 or more (in addition to the Medicare Part B premium) rose from 3 percent to 35 percent.[5]

Accessible: Privatization of Medicare reduces patient choice of doctors and undermines access to[6] and continuity of care.[7] The number of Medicare+Choice plans that do not require monthly premiums declined from 80 to 39 percent between 1999 and 2002.[8]

Cost-Effective: While the Medicare program spends only 2 percent on administrative costs, Medicare HMOs spend an average of 15 percent.[9] The government pays 13.2 percent more for persons enrolled in private plans than it does for persons enrolled in traditional Medicare.[10] Stand-alone prescription drug coverage would be unaffordable even if available, because stand-alone policies would attract a high percentage of individuals with high drug costs.[11]

The People—

→Mr. and Mrs. W, a New York couple in their 70s, have been members of five Medicare HMOs over the last six years. Year after year their Medicare HMO plans left their county, leaving them to scramble for new health care coverage. The couple says they would “never go near an HMO again. We just couldn't afford it. And the service was terrible.” Today they have traditional Medicare and continue to use the doctor they saw in their last HMO. They depend on a state drug assistance program and Canadian mail order pharmacies for their medications.

→Mrs. T, a 69-year-old widow from Washington, D.C., with multiple health problems, left her Medicare HMO because the premium increased by 76 percent in 2003. She lives on an annual Social Security income of $10,080 and does not know how she will pay for her prescription drugs and Medicare coinsurance. Mrs. T’s cancer treatment and workup for a thyroid tumor were disrupted when she left her HMO. She hopes to get help for her thyroid tumor at a local medical center but does not feel well enough to find a new doctor or retrieve her medical records, nor can she afford the medical record fee.

---

[1] Medicare Fact Sheet: Medicare+Choice, Henry J. Kaiser Family Foundation, April 2003.

[2] Ibid.

[3] Centers for Medicare and Medicaid Services, September 2002.

[4] Supra, Note 1.

[5] Ibid.

[6] Ben Peck, Bush Plan to Privatize Medicare: Limiting Patient Choice of Doctors in Iowa, Public Citizen, May 2003.

[7] Karen Davis, Physicians’ Experiences with Managed Care: Warning Signs for Patient Care, The Commonwealth Fund, March 1997 (showing that between 1994 and 1997 one in four doctors seeking to join an HMO has been denied entry and one in five doctors left a managed care plan).

[8] Supra, Note 1.

[9] Inspector General, Department of Health and Human Services, Adequacy of Medicare’s Managed Care Payments After the Balanced Budget Act of 1997, September 2000.

[10] United States General Accounting Office, Medicare+Choice: Plan Withdrawals Indicate Difficulty of Providing Choice While Achieving Savings, GAO/HEHS-00-183. 

[11] Cori E. Uccello and Johan M. Bertko, Medicare Prescription Drug Plans: The Devil is in the Details, American Academy of Actuaries, April 2003.

_________________________________