Seniors have choices regarding Medicare drug benefits

Everywhere seniors turn, they find newspapers filled with warnings that the new Medicare drug benefit is overwhelmingly confusing—certainly discouraging words for seniors who both want and need this new benefit.

But seniors shouldn’t give up because they have more and better choices than anyone anticipated when the drug benefit was being crafted by Congress.

For example, one prescription drug plan costs as little as $1.87 a month in premiums. Others are providing drug coverage in the dreaded “doughnut hole,” the gap in the standard plan where insurance coverage is interrupted between low and high drug expenses.

Congress expected that seniors would have to pay about $35 a month in premiums for their Medicare drug coverage, but the average premium is lower, about $32 a month. And almost every state has a plan with premiums of no more than $20 a month.

The trade off for seniors in having choices of drug benefits is having to make choices.

It could have been simple. The government could have told seniors what they would pay and which drugs they would get. Maybe their drugs would be on the drug list, and maybe not. As it is, the choices available require them to pick the best plan.

The reason for these surprisingly better choices is competition: 65 different sponsors are competing to provide the most attractive benefits at the lowest prices.

And, surprisingly, seniors actually know what their options are in each of the different plans.

Seniors will have to narrow down their decisions to pick the plan that provides them the lowest premium and the best selection where they live.

The (800) MEDICARE phone lines are swamped with seniors anxious to learn more and sign up. The Medicare website, www. medicare.gov, also has been inundated with visitors.

Seniors have until May to sign up, so there’s time.

The plans offering coverage are competing intensely for beneficiaries to sign up, and they’re making the drug benefit even more attractive than the one outlined by Congress:

•Zero premiums: Seniors in 44 states can pick a comprehensive “Medicare Advantage” medical/ hospital/drug plan with no additional drug premium, instead of the $35 monthly fee estimated by Congress. Humana gets the prize for the lowest-priced free-standing drug plan, coming in at $1.87 a month in Iowa.

•No deductibles: 58 percent of plans will have no deductible, instead of the $250 in the standard plan designed by Congress.

•Filling the doughnut hole: One-fourth of the Medicare Advantage plans and one-sixth of all drug plans offer coverage in the dreaded doughnut hole. The standard plan doesn’t cover drug spending between $2,250 and $5,100. It’s hard to deny that private sector competition has come up with better options than the standard benefit plan Congress designed.

How could the plans do this? Tough negotiations over drug prices, for starters.

Some major drug companies are very upset because they’ve been shut out by drug plans because they wouldn’t or couldn’t offer low enough prices.

In all parts of life, choice can be confusing. But all of the drug plans in the mix are approved by the Medicare agency to provide coverage at least as good as that specified by Congress. And if seniors don’t like the plan they selected, they can switch again next November.

At this point, the only bad choice is likely to be not making any choice at all.

Grace-Marie Turner is president of the Galen Institute, a nonprofit research organization that focuses on free-market ideas for health reform. She can be reached at P. O. Box 19080, Alexandria, VA 22320 or at galen@galen.org.