Part D is just the beginning…
By Max Richtman, Executive Vice President, NCPSSM

Only six years ago President Clinton was expressing his optimism about the future of our country with his familiar refrain about “Building a bridge to the 21st Century.” By contrast, this Administration has reversed course on so many fronts it’s as though President Bush has laid a firm foundation for building another bridge … back to the 19th Century. At the end of this span you will be on your own and best of luck to you.

Nowhere has this turn of events been starker than President Bush’s retirement security agenda and nowhere has his administration had more success in advancing that agenda than in Medicare.

Today as we observe (as distinct from celebrate) “Donut Hole Day”, let’s be clear about what “Medicare Reform” means to this White House. It’s predicted that by September 22nd many of the estimated 6 million seniors who will hit the Part D coverage gap will be without coverage. These seniors are paying monthly premiums, full price for their prescriptions and receiving zero benefits in a coverage gap only an insurer could love. At scores of Town Hall meetings the National Committee attended around the county over the past two years, no aspect of the Medicare Modernization Act (MMA) has been the object of more outrage than the “donut hole” which caught many seniors off-guard. But that’s not the only surprise contained in this flawed law.

In January 2007, for the first time in Medicare’s history, Part B premiums will be subject to means testing. More than a million beneficiaries will pay significantly higher premiums than everyone else for their physician and outpatient hospital care, lab tests, medical supplies, home health, and preventative services. Within three years, these higher income seniors’ premiums are projected to double or triple the amount of a standard premium.

Congress says this is a money-saving strategy; however, the Congressional Budget office reports that means testing saves barely three-tenths of one percent of Medicare’s budget over the next ten years. Instead, losses will be incurred as wealthier and healthier seniors are driven out of traditional Medicare and into private plans. CMS itself predicts 30,000 seniors will leave over the next three years, alone. This exodus of younger, healthier and wealthier seniors from Medicare will increase overall costs, threaten public support for the program and not coincidentally, boost profits for private insurers.

Private insurance companies will also receive $10 billion taxpayer dollars from Medicare to create private “Medicare Advantage” plans. CMS claims these industry slush funds are needed to encourage insurer participation in this privatized program. But those funds could be used to help close the donut hole and provide seniors with reliable prescription drug coverage minus the gap. These new private plans will also receive 107% payments for each Medicare beneficiary they enroll--overpayments the Congressional Budget Office projects will cost $14 billion over the first decade alone. The new private plans will also receive 11% percent more in payments than the traditional Medicare program receives to cover the same beneficiaries. In other words, private plans are paid about $800 more a year per beneficiary than the traditional Medicare program.

The Medicare Trust Fund has already lost two full years of solvency largely due to the Part D drug benefit and overpayments to private plans. By any measure, the privatization of Medicare worsens the programs long-term fiscal wellbeing. It’s time to fix the mess that Congress and this administration have made by taking back the $10 billion dollar industry slush fund to close the doughnut hole and allowing Medicare to negotiate the lowest drug prices. Medicare was never intended to be a welfare program, yet this is exactly the course Congress and this administration has set for the program. When millions of middle class seniors reach the other side of President Bush’s bridge they will be on their own… assuming they can afford the gas to make that trip.