The Medicare Drug Benefit Law

The Medicare drug benefit law is one of the most repugnant and corrupt laws ever passed by Congress. By enacting it, the Republicans sold out to the powerful and wealthy pharmaceutical and insurance industries in return for huge contributions to their campaigns. Senior citizens were shafted.

Last year Senior citizens received a shock. They realized that although they paid deductibles and had been paying insurance premiums and co-pays for their prescriptions, their coverage under the Medicare Part D drug law would expire about halfway through the year. According to USA Today, an estimated 3.4 million people covered by the law fell into a “coverage gap” under which they had to pay the full cost of their medications for the remainder of the year. The gap, which Congress calls the “doughnut hole,” begins when drug expenses, including the amount paid by insurance, total $2,250. There is no further coverage until expenses reach $3,600, an amount which most seniors would not reach by December 31. Nevertheless, seniors were required to go on paying premiums to insurance companies or be expelled from the plans.

The “coverage gap” is hardest on people not poor enough to qualify for extra financial help under the program but who still cannot afford $3,600 or more for their drugs. Many people with multiple prescriptions and people with expensive medical conditions, such as cancer, multiple sclerosis, diabetes, and heart disease, reach the gap early in the year and are going into debt in order to pay the full cost of their medications. Senator Byron Dorgon of North Dakota said: “under the Medicare prescription plan, the pharmaceutical companies got the doughnut and seniors got the hole.”

The Medicare Prescription Drug Law, which was narrowly passed in 2003 by Republicans, and was opposed by most Democrats, was dictated by the pharmaceutical and insurance industries. Between 2000 and 2004 those industries contributed over $68 million to Republican candidates for public office.

In return, the Republicans made sure that the prescription drug law would be taken out of the hands of the government and put into the greedy hands of private industry. In their zeal to destroy Medicare and Social Security, the Republicans created a confusing web of competing and inefficient plans run by private insurers who receive huge subsidies from the federal government. Seniors were required to choose from a maze of differing plans by May 15 or suffer serious penalties.

Republicans repaid their corporate sponsors by insuring that the federal government could not negotiate the price of drugs with manufacturers. They further prohibited the importing of less expensive drugs from other countries such as Canada.

If you are a senior citizen who has now reached the “coverage gap” and must now pay the full cost of your prescriptions, consider the fact that if the Congress had simply established the drug program as an add-on to basic Medicare, there would be no coverage gap and all of your medications would be paid for the rest of the year directly by the government. It would cost far less than the government pays for the present program.

It is estimated that the waste and inefficiency of the present program will cost the government $800 billion more over the next eight years than it would have cost by making the program an added benefit under Medicare. That means that it costs the taxpayers $800 billion more under the present program to provide seniors with coverage of less than 25 percent of their drug costs than it would cost under Medicare to provide seniors with 100 percent of their drug costs.

The Congressional Budget Office has projected that the administrative costs, marketing, and profits of the insurance industry will add many billions more dollars to the cost of the current program than would be required if the program were purely governmental under Medicare. Moreover, if the government were allowed to negotiate the prices of drugs with pharmaceutical companies, as it now does for the Veterans Administration, it could save almost $560 billion over the next eight years.

Virtually every other country in the industrialized world imposes constraint on drug prices, either through formal price controls or governmentally negotiated prices. As a result, people in other countries pay much lower prices for medications than do people in the United States.