Question: It seems like everyone my age (I am 76) has been discussing the so-called Medicare Prescription Drug Program lately. I called my Congressman’s office to find out why the Medicare program doesn’t allow the negotiation of pricing like other federal prescription programs, and you would have thought I was speaking in a foreign language. After considerable personal investigation, I have decided that the whole program is nothing more than a political ploy in an election year to try to fool seniors into thinking that those who are seeking re-election are doing something for us. You don’t have to comment if you don’t want to, but I would like some answers from someone.

Answer: While the Medicare Prescription Drug program has been subject to a lot of debate, there seems to be no question but that the lowest prices seniors can ever hope to get through the current drug discount cards are significantly higher than those prices negotiated by the Department of Veterans Affairs for its program, and by other federal programs. For a chart of the comparisons, you can go to www.nextsteps.net and see the work product of FamiliesUSA, a non-profit, non-partisan organization (www.familiesusa.org).

In fact, one of the main complaints about the law is that, unlike the Federal Employees Health Benefits Program (FEHBP) – the same program used by the legislators who passed the Medicare Prescription Plan -- Health and Human Services is not allowed to use its clout to negotiate better prices with the drug companies.

But the real shocker will begin in 2006, two years after the upcoming election. At that time, the so-called “Medicare Prescription Drug, Improvement, and Modernization Act of 2003” will allow those Medicare beneficiaries who pay the initial $35 per month fee to have access to a limited prescription drug benefit by contracting with one of a number of private health plans throughout the country. These various plans will provide consumers with inconsistent “formulary” restrictions – that is, some brand medications will be covered under some plans, but not under others.

And each year, a beneficiary will be required to pay not only the monthly fees, but also a $250 deductible, co-insurance of 25 percent on covered medications up to $2,250, and all prescription costs between $2,251 and $5,100 each year. Should a beneficiary use prescriptions not covered by his or her drug plan formulary, those payments will be the beneficiary’s responsibility and will not count toward the out-of-pocket spending minimums.

This means that not only the types of medications available, but also the value of the benefit will differ among beneficiaries.

Once $3,600 in “countable” out-of-pocket expenses have been spent (excluding the monthly fees of $420), the beneficiary will receive catastrophic coverage and then pay the greater of 5 percent of the cost of a covered drug, or $2 per generic and $5 per brand-name prescription.

Grand total: Each beneficiary will pay a minimum of $4,040 of the first $5,100 in prescription drug expenses. And to cause even more unpredictability, the law calls for indexing of the monthly premiums, the deductibles, and the amount of non-covered expenses -- meaning that increases in each following year are more likely than not.

One of the main complaints of about the law is that, unlike the Federal Employees Health Benefits Program (FEHBP) – the same program used by the legislators who passed the Medicare Prescription Plan -- Health and Human Services is not allowed to use its clout to negotiate better prices with the drug companies. As a matter of fact, Congress and both our former and current Presidents ignored Medicare reform legislation proposed in 1997 by Senator John Breaux (D-LA) and Senator Connie Mack (R-FL). Under this proposal, like the provisions of FEHBP, bids and premiums would be submitted by each plan to Health and Human Services which, in turn, could better negotiate prices and save more money.

Taking the NextStep: Because those who are on fixed incomes cannot take chances, seniors must take the time to understand what is – and what is not – included in legislation that affects them. We believe that the Medicare prescription program is inexplicitly deficient. We question why the prescription programs that have been successfully used by the Veteran’s Administration and the program that covers the very legislators who passed the Medicare law have been ignored, and why Health and Human Services has been restrained from negotiating better prices. Election year ploy, indeed.

For more information about this topic, go to www.nextsteps.net and click “useful links.”