Monday editorial: Choosing confusion on Medicare
Premiums for stand-alone Medicare prescription drug plans in Missouri and Illinois will jump by an average of 18 percent next year.
In Missouri, that means average monthly premiums will rise to a little more than $48 per month from the current $41. In Illinois, average monthly premiums will jump from $38 to $45.
And that’s the good news.
Nationwide, those premiums will rise even more — an average of 24 percent. And according to an analysis by Avalere Health, a consulting firm, premiums in the 10 most popular national Medicare drug plans will jump by more than 30 percent. Those 10 plans account for about 60 percent of Americans enrolled in Medicare’s stand-alone drug plans.
At a time when food and energy prices are rising rapidly, those staggering increases in medical premiums will force more and more elderly Americans to confront difficult choices in the coming months.
The existing Medicare prescription drug benefit was designed by a Republican-controlled Congress in 2003 to be available only through private insurance companies. The theory was that the more choices available, the greater the competition would be and, in turn, the lower the prices.
At first, things seemed to work that way. When the prescription benefit started operating in 2006, there were stand-alone drug plans available for less than $2 a month. Since then, however, prices have soared. For example, Avalere calculated that one national plan, Humana PDP Enhanced, has hiked its premiums by 329 percent.
Medicare’s open enrollment period, during which eligible Americans must choose a plan to cover them next year, began last week. It promises to be a daunting challenge.
Elderly and disabled people will have to choose from one of the 47 stand-alone drug plans offered in Missouri, somewhat fewer than the 53 available this year. In Illinois, they must select from the 49 available plans, down from 55 last year.
Each plan has a different list of drugs that it covers; a different schedule of deductibles and different coverage for the so-called doughnut hole — the coverage gap of $2,850 that is built into Medicare Part D.
Most Missouri plans offer no provisions to cover the doughnut hole gap. Some cover only “preferred” generic drugs. None covers brand-name drugs, yet some branded drugs are not available in generic form. That means some elderly Americans will discover that they’re paying for drug insurance that is useless when it comes to the drugs they must take to preserve their health.
To make the best possible choices among the available prescription drug insurance plans, eligible beneficiaries would need to know not only which drugs they use now, but also which other drugs their doctors are likely to prescribe for them in the coming year.
Another alternative is so-called Medicare Advantage plans — comprehensive health-insurance plans, some of which include prescription drug coverage. In Missouri, for example, each county has a different assortment of plans available. Add the various county options together, and you wind up with a total of 3,540 Medicare Advantage plans in Missouri, including 50 each in St. Louis and St. Louis County. Such a dizzying array can be overwhelming even to experienced consumers, to say nothing of people who may never have tackled such a task before.
It may sound heretical to say it, but there comes a point at which having too much choice actually is a bad thing.
drug benefit’s faulty design leaves the government unable to use the power of mass purchasing to get the best possible prices for the elderly and disabled — and save taxpayers money. It means that many people will end up in drug plans that don’t cover the drugs they need or cost more than they might have paid otherwise.
It also means that in a year in which group health insurance premiums are increasing by an average of 5 percent nationally, the elderly and infirm will be looking at premium increases averaging 24 percent nationwide and 18 percent in Missouri and Illinois.
That’s a great deal for private insurance companies, but it’s a terrible deal for the people Medicare is supposed to serve.
It would be nice for the Post-Dispatch Editorial Board to do some basic research on insurance pricing if they are going to demagogue prices. In both MO and IL, insurance companies are required to file a request with the state insurance commissioner if they want to raise their prices. They have to meet specific levels of cost per dollar of premium before they are allowed to raise their prices. Price increases of this magnitude occur because of the increases that they see in costs of the drugs that seniors are using. These costs would increase even if the federal government was administering the plan directly. Those increased costs would only be controlled in two ways (neither of which would solve the underlying problems):
1. A combination of increase taxes to pay for the higher costs and/or increase the federal deficit and borrow to pay increased costs (both have negatives for the overall economy)
2. Institute price controls. Just as with price controls on gas in the late 70s this will just lead to a decrease in the supply. Since prices can’t go up, wait lines will form. I’m sure you would be equally appalled that a senior wasn’t able to get critical heart medication because the drug isn’t produced in a significant enough quantity.
You are right to decry the rapidly increasing cost of insurance, but you place the blame squarely on the wrong shoulders. In an industry where the government (via traditional Medicare, Medicaid and the VA) is roughly half of the insurance market, the blame lies squarely on their shoulders. Government policy has led to the rising costs. Blame them.