Healthcare costs are about to skyrocket for US senior citizens

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The cost of living

Healthcare costs are about to skyrocket for US senior citizens - thanks to a payment plan designed to profit insurance and pharmaceutical companies


http://commentisfree.guardian.co.uk/dean_baker/2008/01/the_cost_of_living.html

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Of course even this good news is relative. The program still leaves many seniors with hefty drug bills. A recent study by the Kaiser Family Foundation found that eight per cent of Part D beneficiaries had drug bills of more than $300 a month and nearly one-fifth reported either delaying or not a filling a prescription due to the cost. Among beneficiaries with three or more chronic conditions, nearly a quarter either delayed filling a prescription or did not fill it due to the cost. In other words, for a very substantial portion of the elderly, Medicare Part D is proving insufficient to allow them to get the drugs they need.

This is especially unfortunate, because the programme could have been far more efficient and effective if Congress had designed it to serve seniors instead of the insurance and pharmaceutical industries. The whole idea of stand-alone prescription drug insurance is an invention of Congress.

Stand alone prescription drug insurance is like rear-end accident collision auto insurance. Such policies don't exist in the private sector for an obvious reason: they create needless complications and waste. It was an historic oversight not to have Medicare include prescription drug coverage when it was created in 1965. Congress could rectified this mistake by simply adding the money appropriated for Part D to the existing program and have it now include prescription drugs. The private plans that operate within Medicare could have also received this additional payment.

However, instead of creating a simple efficient programme, Congress wanted to stack the deck in favor of the insurance industry. Therefore, they required tens of millions of seniors to buy stand-alone drug plans, which would only be offered by the insurance industry, if they wanted assistance in paying for their drugs. This fragmentation process also pleased the drug industry, since it prevented Medicare from using its bargaining power, like the Veterans Health Administration, to push down the cost of drugs. The unnecessary administrative costs, combined with high drug prices, are the reasons that so many seniors still have difficulty paying for their drugs.

And the situation is about to get worse. It seems that the insurers repeated the bait and switch approach from the mid-1990s. When the Republican Congress created the "Medicare Plus Choice" programme, many insurers entered the Medicare market with low prices in order to capture market share. They soon raised their prices to levels that allowed them to hit profit targets or left the market.