Monday, December 08, 2003

New Medicare Bill Bars Extra Insurance for Drugs:
"Medicare beneficiaries will not be allowed to buy insurance to cover their share of prescription drug costs under the new Medicare bill to be signed on Monday by President Bush, the legislation says.

Millions of Medicare beneficiaries have bought private insurance to fill gaps in Medicare. But a little-noticed provision of the legislation prohibits the sale of any Medigap policy that would help pay drug costs after Jan. 1, 2006, when the new Medicare drug benefit becomes available. "

This is one of many surprises awaiting beneficiaries, who will find big gaps in the drug benefit and might want private insurance to plug the holes — just as they buy insurance to supplement Medicare coverage of doctors' services and hospital care.

Congress cited two reasons for banning the sale of Medigap drug policies. Lawmakers wanted to prevent duplication of the new Medicare benefit. They also wanted to be sure that beneficiaries would bear some of the cost. Health economists have long asserted that when beneficiaries are insulated from the costs, they tend to overuse medical services.

Gail E. Shearer, a health policy analyst at Consumers Union, said she had mixed feelings about the prohibition.

"I don't want a return to abuses of 1970's and 80's, when lots of confusing Medigap policies were sold to vulnerable seniors," Ms. Shearer said. But she added: "Many seniors and disabled people will face a huge gap in drug coverage. In a bill that's marketed as providing choice to consumers, comprehensive drug coverage is not really an option. That's a disappointment."

The new drug benefit would be the biggest expansion of Medicare since creation of the program in 1965. But patients would still face substantial costs.

Under the standard Medicare drug benefit, the beneficiary would be responsible for a $250 deductible, 25 percent of drug costs from $251 to $2,250 and all of the next $2,850 in drug costs. Private Medigap policies could not cover any of those costs.

Congress began regulating the Medigap market in 1990, as a way to protect consumers, many of whom had bought duplicative policies. The federal government and state insurance commissioners developed 10 standard policies, to replace thousands then on the market.

Three of the 10 Medigap policies cover drugs. Under the legislation, an old policy with drug benefits could be renewed — but only by a person who chose to forgo the new Medicare drug benefit. A person who enrolls in the new program could not buy or renew a Medigap policy to help defray drug costs.

Nearly 12 million retirees have drug coverage and other health benefits from former employers. If those retirees sign up for the Medicare benefit, the employers can help pay the beneficiaries' share of drug costs. But those payments would not count toward the $3,600 limit on out-of-pocket spending.

Under the bill, low-income elderly people eligible for both Medicare and Medicaid, the federal-state program for low-income people, would receive their drugs through Medicare. Medicare drug plans will almost certainly cover fewer drugs than Medicaid now covers, state officials say. But the bill generally prohibits Medicaid programs from supplementing the Medicare drug benefit.

If state officials wanted to supplement the new Medicare drug benefit, they would have to pick up the entire cost of the extra coverage. States would not get the discounts and rebates they now receive from manufacturers under Medicaid.

http://www.nytimes.com/2003/12/07/politics/07MEDI.html

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