POLICY/PHARMA: Yup some do benefit from Part D. This is not news! And politically it won’t matter. with UPDATE

After all the yarling and snapping of the introduction of Part D, there was a curious article in the New York Times on Sunday suggesting that "For Some Who Solve Puzzle, Medicare Drug Plan Pays Off." Of course this is not exactly news. Several of us said at the time that the plan would improve the financial well being of lower-income people not poor enough to Medicare who were heavy Rx users and would now have catastrophic coverage. A real study funded by Kaiser FF said exactly that in 2004. In fact it’s headline was


And that report’s summary said:

Low-income people with Medicare
who sign up for new Part D drug plans and receive the additional subsidies – an
estimated 8.7 million people – are projected to pay 83 percent less for
prescription drugs in 2006 than they would have spent if the Medicare drug law
had not been enacted, according to a new report released today by the Kaiser
Family Foundation. Those who enroll in the new drug benefit but do not receive
the low-income subsidies – an estimated 20.3 million people — are projected to
pay on average 28 percent less out of pocket for their prescription drugs as a
result of the new law, the analysis finds.

Of course that all was based on a higher forecast of enrollment than it looks like we’re currently seeing.  But that means that if you enrolled and you fit into that category, then you will be paying less. In fact an independent pharmacist quoted in the NY Times article gets it basically right.

Todd E. Pendergraft, owner of a Medicine Shoppe pharmacy in Broken
Arrow, Okla., outside Tulsa, said the new drug coverage was
"significantly beneficial" to one-third of his 750 Medicare patients,
"marginally beneficial" to half the patients and "no benefit at all" to
the remainder.

Because it’s of no benefit to most, and will eventually mean a reduction in employer retiree benefits, on a purely political basis I advocated Kerry running heavily against the bill in 2004. While he never really mentioned it (and my meager attempts at the time to get Democrats to pick up on it were ignored), it’s still a hot issue in 2006, and one that now will be picked up on politically. Of course because of the incompetence shown during the transition to the new program, it’ll be run on in the Katrina/Iraq incompetence meme, rather than the "destruction of Medicare" meme.

But the flat answer is that, yet again, because not everyone is put in the same pool (i.e. seniors are not forced to buy into Part D) there will be adverse selection amongst those who do. That adverse selection is coming from the people who are now better off (because they wouldn’t have bought it if they didn’t think they would be). Eventually in a couple of years the PDPs will start losing money, jacking up their rates and upsetting their senior customers — and the  subsidies hidden in the bill for those PDPs start reducing at around the same time. Just as happened with Medicare HMOs in the late-1990s.

If you really wanted to run a proper drug benefit using private plans, you ought to force everyone to join so that you have a universal risk pool. But of course Congress would never dare have done that politically after the experience of Medicare Catastrophic in 1988 nor would they have forced the employers to pay into the pool for their retirees. So we get the hodge-pot we’ve got, with all the confusion and angst it’s caused amongst seniors.

And of course we’ve got two calendar issues coming up. The first formulary switch and the first donut hole "approachees".

Beneficiaries could face new problems in coming months. Insurers can
impose stricter limits on access to certain drugs after March 31, when
a 90-day transition period ends. In addition, some beneficiaries will
have to pay more at the pharmacy counter, because most drug plans have
a gap in coverage after a person’s total drug costs reach $2,250. The
gap lasts until the beneficiary incurs total drug costs of $5,100.
Beyond that point, Medicare pays about 95 percent of the cost of each

The argument in favor of the formularies is that this is how private sector drug plans work. But CMS isn’t going to make much headway with the line that "formulary restrictions are how the private sector PBMs work" because seniors are rather more interested in their health care than working-age Americans. Somewhere at the end of this calendar is an election, I recall. And I can see the Ad now "Part D is worse than Medicare and those Republican bastards forced me into it."

And did you know that the very law creating Part D bans Medicare from negotiating with those evil bloodsucking pharma companies, even though the VA is allowed to? I suspect you did, and if you don’t you will by November!

CODA: You might want to see my other post this morning for a link to much more discussion about Part D.

UPDATE: And then there’s the power of the headline. Of course the entirely disinterested AHIP Solutions SmartBrief newsletter puts a slightly different spin on the story:

More praise from Medicare drug program
Despite reports of some problems with the Medicare prescription drug
program, some customers say the benefit was worth the sometimes confusing and
complex process of enrolling. People in places such as Tulsa, Okla., who were
more removed from the political debate about the program, say friends and family
helped them with the choices and the outcome is satisfying.

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3 replies »

  1. Compound Pharmacy has gained much popularity in the field of medicine. The medications are equally effective and safe for sick patients who cannot take the actual medications due to their personal allergies.

  2. Medicare Drug Plan Helps Patients Fight Cancer
    By Steven Reinberg
    HealthDay Reporter
    A National Coalition for Cancer Survivorship (NCCS) poll found that 89% of Americans said that the distinction between oral and intravenous applications should be abolished so that Medicare beneficiaries can have access to the best drugs to treat their form of cancer.
    Apparently, Medicare has gone far in accomplishing that task. Nearly all generic cancer drugs and 70% of brand-name cancer drugs are covered by the Part D plans. Most of the brand-name drugs not covered had generic equivalents that are covered. And a number of trusted, old (generic) agents have been found to be just as effacious as the more expensive brand name ones.
    Many infusional therapies are typically biotechnology drugs made of complicated proteins that are injected. This makes them several times more expensive than traditional pill-form pharmaceuticals.
    More chemotherapy is given for breast cancer than for any other form of cancer and there have been more published reports of clinical trials for breast cancer than for any other form of cancer. So, according to NCI’s March 31, 2006 official cancer information website on “state of the art” chemotherapy for recurrent or metastatic breast cancer, it is unclear whether single-agent chemotherapy or combination chemotherapy is preferable for first-line treatment.
    At this time, no data support the superiority of any particular regimen. So, it would appear that published reports of clinical trials provide precious little in the way of guidance. There are many cancer drug regimens, all of which have approximately the same probability of working. The tumors of different patients have different responses to chemotherapy. It requires individualized treatment based on testing the individual properties of each patient’s cancer.
    Cancers that can be treated with oral chemotherapy include, breast cancer, colon and colorectal cancer, Leukemia, chronic myeloid leukemia, chronic lymphocytic leukemia, acute promyelocytic leukemia, acute non-lymphocytic leukemia, Lymphoma, cutaneous T-cell lymphoma, small cell lung cancer, non-small cell lung cancer, Kaposi’s sarcoma, prostate cancer, multiple myeloma, ovarian cancer, brain tumours.
    Oral chemotherapeutic agents are easy to use and offer the promise of less frequent visits to oncology-based offices and their infusion rooms. This promise is not trivial, especially as we have come to realize that many forms of cancer may be managed with these drugs, especially when they offer the equivalent outcome as intravenous drugs.

  3. I view the introduction of Part D as just another tax giveaway to Republican connected corporations who could no longer hold onto any moral justifcation for drug prices and needed a political way out. The Bush administration designed the plan with 40-60 providers per state in order to turn tax dollars into campaign donations. That’s also behind the inability for Medicare to negotiate price. The drug companies continue to make their profits, although I’ve heard druggists are making less, and the politcal storm over seniors having to travel to Canada for drugs has been quieted.