How Would Elsie Blanton Fare Under the Medicare Prescription Drug Benefit?

President Bush invited Elsie Blanton, a senior from Apopka, Florida, to sit in the gallery for his State of the Union address. His aides described Ms. Blanton as follows: “Ms. Blanton is on Medicare with a supplemental policy that does not include prescription drug coverage. Ms. Blanton spends approximately $900 per month on prescription drugs when unable to obtain free samples from her doctors or the pharmaceutical companies. Ms. Blanton's prescription drug costs account for three quarters of her monthly income ($1,190 in social security benefits). Ms. Blanton's income is just above 150 percent of the Federal poverty level for 2003.”

Clearly Ms. Blanton needs and deserves help with her prescription drug costs. But how would she fare under the new Medicare law?

No assistance for years. The new prescription drug benefit won’t begin until 2006. Ms. Blanton does not qualify for the $600 of interim assistance. So Ms. Blanton will continue to have to spend at least three quarters of her monthly income on prescription drugs for the next two years. In fact, because prescription drug costs rise faster than social security benefits, she will probably have to spend even more of her income on her medicines.

Higher costs next year. Ms. Blanton will have to pay more for her Medicare benefits next year. Higher payments to private plans and other changes will cause everyone’s Medicare premium to go up. The new law also raises the Medicare deductible.

Potentially much higher cost when benefit begins. Ms. Blanton could save much less than promised once the new prescription drug benefit begins, because premiums and the benefit design are largely left to private health insurers’ and pharmaceutical companies’ discretion.

• Higher premiums. President Bush assumes that Ms. Blanton will be able to get her drug benefit for a premium of $35 per month. In fact, private insurers set their own premiums and they could be much higher.
• Higher cost sharing. President Bush assumes that all of Ms. Blanton’s medicines will be covered under the new benefit. In fact, there is no way to know or guarantee that result either. Private insurance companies decide which drugs to cover. Even if the medicines that Ms. Blanton needs are covered when she signs up for the plan, private insurers can change their list of covered drugs at any time. And if the medicines she needs aren’t covered, any money she spends out of her own pocket for those medicines won’t count toward the benefit’s out-of-pocket limit.
• Months without assistance. With monthly drug spending of $900 per year (assuming all of her drugs are covered), Ms. Blanton will receive no assistance beginning in March through some time in June as her spending hits the “donut hole” or benefit gap. During this time, she has to continue to pay premiums for no benefits.