New Medicare Bill Bars Extra Insurance for Drugs

December 8, 2003 4:48 AM

New Medicare Bill Bars Extra Insurance for Drugs
"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." [warning: NY Times link]
posted by Irontom (16 comments total)

What do you expect for nothing - rubber biscuit?
posted by mischief at 5:08 AM on December 8, 2003

GoogleNews link with selection of alternatives and sub-free NYT link.
posted by Blue Stone at 5:26 AM on December 8, 2003

Okay mischief, I'll bite. What exactly were you trying to say? Do you think it's okay to prevent people from purchasing, with their own money, insurance to cover the gaps in this new program? Or were you trying to make some other point?
posted by Irontom at 5:38 AM on December 8, 2003

I understand that AARP derives a significant amount of it's income from "Medigap" policies sold to the members.

Does this mean the AARP shot itself by supporting this policy?

Perhaps I should rephrase, has the head of the AARP (a well known political partisan) intentionally dealt a severe blow to the organization?

This bill looks like a fine poison pill for yet another evil socialist "Great Society" federal program.

All last week Bush declared (during his fund raising whirlwind tour) "Social Security reform" to be next on his agenda. I suppose he will want to privatize it.

I bet those mutual fund companies and CEOs are ponying up lots of "campaign" money to GWB for privatization! Bankrupting goverment in order to end government programs is the play of the day for the borrow and spend party.
posted by nofundy at 6:06 AM on December 8, 2003

It also bars the government from ever price-negotiating for drugs through a bulk purchasing scheme, like almost every other industrialized country does. (Outside of the VA and Department of Defense, which already do this for their health plans.)

Give it 15 or 20 years, and if this bill is still in place, Medicare will be nice and ripe for complete gutting and dismantling, since private plans will have attracted most of the healthy elderly, leaving Medicare to take care of all the expensive, unhealthy people. I heart capitalism and fair competition!
posted by gramcracker at 6:44 AM on December 8, 2003

It seems to me on first glance that this is about keeping insurance companies from negotiating better prices for drugs where the government can't. Basically, the drug companies have bought themselves a free ride. The government can't negotiate the prices paid for drugs covered by Medicare and people can't buy insurance to cover the gaps, which prevents private insurance from negotiating the prices as well (for Medicare coverage only).
posted by PigAlien at 9:10 AM on December 8, 2003

Boy, I'd love for people to give me examples of how this is not the single-most disgusting and blatant handout to corporations ever.
posted by PigAlien at 9:11 AM on December 8, 2003

Bush fucks americans in order to give spoils to big, bad companies--News at Eleven. at metafilter, everyday.
posted by zpousman at 12:13 PM on December 8, 2003

And just think. This is only one provision in a thousand page law.

How did they manage to turn something that should have been as simple as "$X premium, $Y deductible, $Z co-pay" into a disaster waiting to happen? Don't be under any delusions that this will help Granny afford her meds. Furthermore, don't be overly surprised if a schizm in the AARP opens up; after all, their leadership supported this garbage.
posted by ilsa at 12:24 PM on December 8, 2003

Why would Republicans destroy the AARP? Old people vote Republican. This would be like Dems trying to cut up the AFL-CIO. Something is definitely fishy here, but I don't think we've got a finger on it yet.
posted by Ptrin at 12:30 PM on December 8, 2003

Although there are a lot of really bad things about this Medicare bill, I'm not so sure that this is one of them. Medigap has never been that great of a value to the elderly and insurance companies are very careful to offer the policies in a way that weeds out potential high-cost beneficiaries. Congress actually had to standardize the policies in the early 90s because of rampant fraud by the insurance companies. Currently, the categories of Medigap plans that actually offer drug benefits tend to be very expensive (usually well over $1000 a year I believe), so they aren't really aimed at the people that are really desperate for a drug benefit. If you can afford to pay for a Medigap policy with drug coverage, chances are that you have the financial resources to survive with only the new Medicare drug benefit.

Also, as the article suggests, there may be some truth the notion that some level of cost sharing will reduce overutilization. There is some empirical evidence to suggest that cost sharing can reduce utilization while having little affect on health outcomes. However, the problem is that, to the extent that costs do affect outcomes, they will affect the poor disproportionately to everyone else.

However, even though I don't have a problem with this provision, there are some really nasty things about this bill though. Particularly screwed at the poorest of the poor, who are forced to exchange their current comprehensive drug benefits under Medicaid for a Medicare drug benefit that they'll never be able to afford. See here for details

Also, this report (also CBPP) gives a good overview of all the reasons this legislation screws pretty much everyone in the country except insurance companies and drug companies (and possibly Republicans running for reelection, so long as no one finds out how badly they shafted everyone).
posted by boltman at 12:45 PM on December 8, 2003

Also, w/r/t the AARP policies, they may have shot themselves in the foot slightly, but there will still be a market for Medigap policies after this bill takes effect. I could be wrong, but I'm pretty sure that the policies without drug coverage actually have higher enrollments than the ones with drug coverage because the premiums are so much cheaper.
posted by boltman at 1:24 PM on December 8, 2003

You people need a civilized medical system so badly.
posted by five fresh fish at 4:34 PM on December 8, 2003

The Medicare bill is a Washington-style mafia bustout
posted by homunculus at 4:59 PM on December 8, 2003

Why would Republicans destroy the AARP? Old people vote Republican. This would be like Dems trying to cut up the AFL-CIO. Something is definitely fishy here, but I don't think we've got a finger on it yet.

Although older people tend to be more socially conservative than the young (and hence vote Republican on that basis), you also have to consider generational cohorts. Most of today's seniors grew up during the New Deal and World War II, which makes them more comfortable with "big government" and an extensive social safety net. Needless to say, this gets some right-wing activists worried about how seniors vote.

For example, conservative activists have often attempted to develop seniors' organizations that serve as a counterbalance to what they see as an overly liberal AARP. Examples include the United Seniors Association and the 60 Plus Association, neither of whom are afraid to do a little lobbying for Big Pharma on the side.

Another truism from political science and comparative political economy is that universalistic entitlement programs are more politically sustainable than means-tested entitlements. Because Social Security and Medicare are not means-tested, you have a wide cross-class coalition of people who fight tenaciously to preserve these programs. Once you introduce means-testing or wean away the richer beneficiaries with privatized programs, the political support for the program collapses, because you only have people who are too poor to hire lobbyists or work on election campaigns that benefit from the entitlement. This is the reason why social democratic states like Sweden can get their citizens to accept higher taxes than would be possible in the United States, because the universalistic nature of government programs ensures that everybody gets a benefit. It's just a basic fact of politics. People vote for benefits that go to "us," not "them." The broader the "us" category, the stronger the support for government entitlements.
posted by jonp72 at 7:23 PM on December 8, 2003

Ptrin spake: Why would Republicans destroy the AARP? Old people vote Republican. This would be like Dems trying to cut up the AFL-CIO. Something is definitely fishy here, but I don't think we've got a finger on it yet.

Not fishy at all. My parents are members of AARP (for travel-related benefits, and not for medical coverage of any kind). According to literature they've received, and research they (and I) have done, AARP leadership supported this because they lose money hand over fist on their policies that cover prescription meds. Once such policies are no longer allowed, AARP will still rake in premiums from so-called MediGap policies, but will no longer suffer from the cost hemorrhage they now have due to Rx meds. Instead, the members will be on their own to cover such gaps.

Apparently, many AARP members have resigned because of this. Leadership=happy, membership=pissed.
posted by wdpeck at 2:30 AM on December 9, 2003