I have a prediction: as the year progresses there will be a lot of people that will look up from the abyss and be very upset at the unexpected costs, and every month you will hear from more of them.
It is now 2007 and we have the advantage of looking back. This story began back in 2005
An open letter to all concerned with the Medicare Coverage D Drug Plan
Let’s talk about the new Medicare drug coverage. The media is filled with ads where celebrities tout the new benefits and savings now available for seniors. They offer an 800 number that they promise will give you the information you need to choose a plan. I’m here to tell you it is a lie! I found even the Medicare dot gov site is inadequate in providing useful information.
Now, it is mid January ’06 and maybe things will change, but for the past month I have been making that phone call. I advise the representative that I’m looking into the plans available for my mother, who has assets but no prescription coverage. I add that I am a retired insurance agent who knows more about the issue than their average caller. I tell them after a lot of research, it is as clear as mud! Everyone except one person has laughed with me in agreement.
What everyone can easily understand is that by signing up, they will have a monthly premium and a co-payment for most prescriptions. With some plans, some generic prescriptions can be free and the $250 deductible is often waived. There is no doubt the first month will show most people savings. During the year, when the total cost of the drugs reaches $2,250, you get to the $3,100 “donut hole” and have to pay things yourself.
I know what I really need to compare plans (to each other and to what we pay now). I need to know the plan’s cost of the drugs (not the co-payment). I want to know when we will reach that hole and what the drugs will cost us then. Without this projection for the year, you are being asked to buy a Pig in a Poke!
I have a prediction: as the year progresses there will be a lot of people that will look up from the abyss and be very upset at the unexpected costs, and every month you will hear from more of them.
In December 2005 my first call was to PacifiCare where they told me this cost information would be available after new years. When I called back this year I was told this was not so and a supervisor told me they wouldn’t ever have it, but that another PacifiCare office could tell me. I really had the feeling I was starting over with the phone number I originally got off the TV, but this time I was to be surprised.
The representative told me, “Sir, most of us don’t have access to this data and we all have been trained NOT to give it out (!) but that she would”. She then gave me prices that might be helpful. I appreciate her forthrightness, but it was off the record and I can’t reach her again. Besides, I question the ethics of companies that refuse to divulge the prescription drug costs, information that they clearly must have in order to conduct business.
I received an email from Drugstore dot com, where in the past I’ve found the lowest prices. They will not be part of any Coverage D Plan but they had a radical suggestion. “You might find your total drug costs higher with a plan, than through them, without one!” For my mother, this year that may be so, but no one knows what the future holds. If you don’t sign up by May 2006, there will be the penalty of progressively higher premiums.
I understand they want people to sign up; if people weren’t encouraged to sign up, there would be adverse selection. It would seem if people knew this price information, more might sign up!
Still, a Pig in a Poke!
Let me tell you some scuttlebutt heard at a Coverage D seminar; all plans will pay the same for their prescriptions! There will be a rebate later (to the insurance company) based on volume and profitability!
Was there a deal made in some back room?
Maybe by the same person who said, “Don’t worry about the cost of the war; Iraq will pay for itself”!
With every company or agent I spoke with I experienced a problem obtaining the prices of the prescriptions. When the first few paragraphs of this document was published in Insurance & Financial Advisor Monthly, an agent from Humana contacted me to answer all my questions. He wanted to meet and give me the two hour presentation!
This is crazy and it's crazy that everyone needs to do this! There isn't enough time to do that and there isn't enough commission for the agent (this guy from Humana was on salary). I was fairly sure what I was going to do and I told him I didn't want to waste his time. We did, however have a good and lengthy conversation.
Post Script
For months, no one knew how to answer my questions. From the beginning of my research I feared that since the policy limited where you could fill prescriptions, you might be paying much more than you were before. I was hoping the mail order drug prices (with 3 months for the price of 2) would be similar to our past prices with drugstore.com.
My mother signed up mid-April with an effective date of May 1st to avoid the penalty. Like all those happy folks on TV, we saved a lot in May, the first month. We'll see when we look back in 8 months. And 2007 will be a new game.
But I must admit now there was a good answer to most of my questions about what to expect; it was (you would think) just a secret! We are now receiving monthly statements that clearly show what you paid, what the benefit amount was and an indication of when you will be paying it all yourself. If any company had made it clear we would have bought the policy sooner! So why did every company make it so hard to get the data?
Post Post Script
By the end of 2006, after ordering 3 month supplies of a half dozen drugs, the coverage ceased and we went into the aforementioned donut hole. With Rx prices that turned out to be similar to what we used to pay in 2005 by mail order, the value of that 1st $2,250 in 2006 prescriptions costs us $57.30 a month in premiums plus a few hundred in co-payments. The total premium for the 8 months coverage was $458. Adding $200 for the co-payments, the value was apparent. I don't lose that point when we paid the next $2,000 out of pocket.
It still was a measurable value. With all my consumer oriented perspective on this issue, I never lost track of the fact that this coverage was created out of nothing! No one has been paying premiums into a pool for years. The pharmaceutical companies may have gotten together with Congress and agreed to forbid price negotiation but in 2005 Medicare beneficiaries had no help with their ever rising prescription costs. This has been a help. Now let's get to work on lowering those prices.
The premium for our top tier went up to $70.10 a month in 2007. By May, the coverage limit was reached and we started paying for refills ourselves. It is obvious by the end of the year we will experience what most have only read about; coming out of the donut to 100% coverage.
Check back for an update.
