Friday, November 14, 2008
Medicare drug plan needs a thorough review
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Ron Herring
Herring, of Roanoke, is the retired CEO of Lutheran Family Services of Virginia and Adjunct Faculty at Radford University.
Three years ago when the Medicare Part D program was being implemented, many raised concerns about options, benefits and other provisions. The concerns were ignored, and it has turned into a major public health initiative with major flaws.
We are now about to enter once more into the annual enrollment opportunity for a flawed piece of our health care system. If it comes to pass that the election of new national leadership is an opportunity to address our broken health care system with new vision and ideas consistent with the contemporary realities, then Part D should be part of that review with an opportunity to fix some of its major problems.
Part D works well for the poor who are eligible for subsidy of their costs for prescriptions, but beyond costs they also are subject to a number of the program's problems. For the rest of us, Part D represents a drug industry, insurance and politicians' marketing dream. For the politicians, they helped us with some of the issues surrounding the cost and availability of prescriptions, but not as much as you might think. The drug manufacturers and insurance premium providers created a marketing dream to sell multiple other instruments and provide them with marketplace advantages never before seen.
Part D was "sold" as a private, free-market initiative that would introduce competition that would either hold down rising costs or possibly reduce costs. Close examination demonstrates that this was a false claim and likely was known not to be true for most subscribers.
Lobbyists for the drug and insurance industries wrote the legislation, and Congress approved it.
Efforts by some, myself included, to change some of the unfair and flawed provisions of Part D were not effective. I wrote to my provider about cost increases and other provisions and they did not respond. I sought the help of my congressman who simply passed on my detailed and documented concerns to the provider and then simply passed back to me their bureaucratic response, obviously with no analysis by his office of the issues and their merits.
As an example of "cost-containment," my premiums for the same formulary increased 50 percent in two years with a 70 percent increase for the third year. These increases are far greater than any other increases in the health care field.
Observing the current marketing of many providers, I suspect that these costs explain the cost increases along with the maintenance of or improvement of the bottom line profit margin of the companies. If this is so, then I now believe that the observations of some who suggest that as long as our health care system operates on a free-market model we will be unable to alter the disastrous path we are now on.
Key issues that need to be addressed for Part D are:
n Voluntary entry and exit from a provider program. Currently when you sign up, you must stay with the plan and pay the premiums for one year even if the plan is not to your benefit or liking and you do not use it. I know of no other free-market service or program that operates this way. It sure reduces risk for the provider.
n Formulary change at the will of the provider. The provider can remove the drug and/or change the price any time during the premium year. This would not be an issue if voluntary exit from the plan was possible. Again, the advantage was given to the provider and manufacturer to lower or eliminate their risk.
n Transparency about cost and cost savings. Providers are required to provide quarterly statements on the cost and benefit status of a plan. Interestingly they report your savings by having the plan but not the cost of your premiums to belong to the plan. The subscriber costs and savings are part of the savings calculation.
The major limitations of Part D need review and revision. If we leave these provisions stand then let us be transparent about their impact and purpose so participants and stakeholders are completely and accurately informed about choices, costs and benefits. If we let these limitations stand, then I can think of two frequent quotes that apply: "Let the buyer beware," and "Be careful what you ask for, you may get it."
