Our new Medicare bill

Today Bush signed the Medicare bill into law.

The Washington Post writes: “The oft-told story of the elderly gentleman who urged his congressman to “keep the government out of my Medicare” is telling.”

Hardly anyone can understand the new legislation. Again here is the Post, hardly a bastion of anti-regulatory and antibureaucratic sentiment:

Walk with me through a scenario that will have senior citizens scratching their heads when it comes time to figure out how this system functions. After the program begins in 2006, Medicare beneficiaries who decide to purchase a drug plan will pay a $250 deductible and then 25 percent of their drug costs up to $2,250. Once the $2,250 spending cap is reached, they will get no help until they have spent an additional $1,350 of their own money on prescription drugs…

Older and disabled Americans will have to decide whether to opt into the system in the first place, and if so, which drug plan to buy. In 2006, premiums are expected to be $35 a month ($420 a year) but they could be a lot more. Many older people have incomes of less than $20,000 a year; buying insurance that will cost them more than they get back in coverage could be a major sacrifice. Indeed, only people with incomes below $13,470, whose costs will be largely or entirely covered by the government, or people with catastrophic drugs costs, can be sure the coverage is worth the cost. For others, trying to determine that fact will be a painfully complicated calculation…

Plans will also differ in the drugs they offer, and the coverage and charges for drugs not on the “preferred” list. Even if beneficiaries can easily find out which drugs are covered by the different plans (not a sure thing), they are unlikely to know what the drugs will cost. People will be hard-pressed to know whether the plan they choose will cover medications that their doctors prescribe them after they sign up, or whether a plan will drop one of their prescriptions during the year.

If a Medicare beneficiary decides to choose an HMO or PPO to obtain drug coverage, the decision gets even more convoluted. By making this choice, those on Medicare agree to receive all their health care through these groups, with varying expenditures for all medical care.

The whole point of health care reform is to introduce more transparency into choice and costs, that is hardly what we will get. Moreover, the new system relies heavily on penalizing people who make mistakes in once-and-for-all decisions, this is rarely politically stable. The aggrieved elderly will feel they are being treated unfairly, I will predict that the legislation will be rewritten to extend benefits in a simpler but costlier and less responsible form, with few beneficial incentives at all.

And maybe you were thinking that you, or your parents, might buy private insurance to cover some of those gaps in the new Medicare coverage? Think again.

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.

Score yet another blow against freedom of choice.


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