WASHINGTON, Dec. 6 Medicare beneficiaries will not be allowed to buy insurance to cover their share of prescription drug costs under the new Medicare bill to be signed on Monday by President Bush, the legislation says.
Millions of Medicare beneficiaries have bought private insurance to fill gaps in Medicare. But a little-noticed provision of the legislation prohibits the sale of any Medigap policy that would help pay drug costs after Jan. 1, 2006, when the new Medicare drug benefit becomes available.
This is one of many surprises awaiting beneficiaries, who will find big gaps in the drug benefit and might want private insurance to plug the holes just as they buy insurance to supplement Medicare coverage of doctors' services and hospital care.
Congress cited two reasons for banning the sale of Medigap drug policies. Lawmakers wanted to prevent duplication of the new Medicare benefit. They also wanted to be sure that beneficiaries would bear some of the cost. And how!
First of all, those with medigap insurance are bearing the cost. Insurance is about redistributing risks, not evading costs (incurred by the pool of insured).
Second, it means it's impossible to get coverage for the no-benefit-range when drug costs are between $2,200 and $4,800. Therefore, seniors will face the possibility of paying out-of-pocket amounts up to (and occasionally beyond) $3,600.
Third, there are some drugs that will be classified as "non reimbursable", which means if you are unlucky to need them, you will have to pay for them yourself (and these drugs cannot be covered by secondary insurance either).
Finally, the Medicare drug plan does have an insurance aspect to it - since seniors will be paying $420 annually in premiums. As Gregg Easterbrook has written:
... the $420 premium pays for the $1,444 reimbursement that a senior otherwise wouldn't get ...
But to compliment that, the 30% of seniors with drug costs under $830/yr will be paying more than if there were no drug plan at all.
You thought this bill was supposed to help all seniors with the cost of prescription drugs. It seems it will cost seniors more money once they lose their gap coverage which several seniors now buy. The big winners here are the drug manufacturers and large drug chains. It should be called the Obscene Drug Company Profits Protection Act.
I am dumbstruck by the assertion that buying gap insurance is a free ride for seniors because the cost of gap insurance is not free (in fact it is not cheap) and many cannot take on this extra burden. This is your classic (reverse Robin Hood) money grab by the rich, for the rich, because they think they are the only ones who deserve money. Besides as long as bush is in power, the GOP lets them steal legally.
