The National Institute on Health Policy (NIHP) at the University of St. Thomas, chaired by former Senator David Durenberger is releasing a policy paper on the impact of the Medicare Modernization Act on the upper Midwest.
“While congressional efforts originally focused on producing a long-awaited prescription drug benefit for the elderly, the final Act is a much broader piece of legislation that introduces new concepts which significantly change the nature of the program as it exists today” says the report in its final draft stage.
Consumers need to understand the huge changes the implementation of the provisions of this Act will have on all seniors beginning in 2005 but even more so in 2006 and beyond. In the coming weeks the Medicare Justice Coalition will address all aspects of the legislation and its impact, not only on beneficiaries but also providers, health plans and state government.
From the NIHP policy paper, there are five key impacts the new legislation will have on beneficiaries.
· For beneficiaries this means that those in the Midwest will see their Medicare B premiums increase by 17 percent next January. But at the same time seniors enrolled in Medicare Advantage plans in parts of the country with high-reimbursed counties will find Medicare funding some of or the entire Medicare B premium.
· In higher reimbursed communities, like St. Petersburg, Florida and San Antonio, Texas, their high Medicare reimbursement levels will in effect fund or help fund the cost of supplemental coverage including prescription drugs, medical travel, and more. Onerous Low-income Provisions
The New Medicare Drug Part D benefit has important provisions for low-income seniors (defined as those under 135 percent and 150 percent of poverty). The liquid asset limitations of $6,000 and $10,000 for eligibility will eliminate coverage for most low-income elders in need.
· It is anticipated with these low-income and asset limitations along with the complicated application process that these provisions will help very few beneficiaries.
· Based on enrollment in current Medicare subsidy programs (SLMB and QMB), which have higher asset limitations, Minnesota Senior Federation estimates that the act’s low-income provisions will assist less than 6 percent of beneficiaries in Minnesota.
Little or no control over Prescription Prices
NIHP report concludes, “The policy decision to not use the federal government as the price-setter to control prescription drug costs is at the center of a major political and philosophical disagreement.
· Proponents of this position argue that the federal government should not play the role of price-setter due to the magnitude of the Medicare program.
· However, the government has failed to articulate how prescription drugs differ from other services or benefits that the government continues to set prices for, including hospitals, physicians, skilled nursing facilities, home healthcare, and durable medical equipment (DME), etc.”
· “As prescription drugs continue to be a driver of increasing costs in the health care system, the decision to not use the power of the federal government to set prices for drugs could adversely impact all other service providers whose payments are set by the government. This is due to the budget neutrality provisions that exist in the Medicare program today and the possibility that, if drug costs continue to escalate, the government will use its price-setting authority to further cut payments to the providers and services whose reimbursement it does control,” the NIHP policy report concludes.
Negative Impact on those currently with Prescription Drug Coverage Benefits
Employer Paid Drug Coverage: While Medicare Part D has $71 billion in tax incentives for employers to continue to provide prescription drug coverage, it also has significant incentives for employers to reduce benefits for retirees by shifting the cost of any benefits that exceed the new Part D benefits to retirees.
· Under the MMA, most companies are entitled to the government subsidy as long as they provide the actuarial equivalent of the new prescription drug benefit. As a result, it encourages employers to shift more costs to retirees. Saving employers billions of dollars while shifting these costs onto retirees.
· US Department of Health and Human Services estimates that at least one-third of those currently receiving employer paid prescription drug coverage will see it reduced or eliminated in 2006.
Seniors Paying for Prescription Drug Coverage: The new law that jeopardizes seniors currently paying for better coverage (including MN Blue Cross -Senior Gold) as the act prohibits the sale of better Medigap coverage then is provided by Medicare Part “D” after January 1, 2006.
· An estimated 120,000 retirees in Minnesota, who currently pay for drug coverage, will see their coverage jeopardized in 2006.
Increasing Complexity for Consumers
The complexity of the Act (over 1,000 pages of legislation plus tens of thousands of pages of new regulations) makes it extraordinarily difficult for consumers as well as providers and payers to understand and implement the legislation.
· This already proven very unsettling for beneficiaries, as shown in the low enrollment in Medicare Approved Discount Card, which actually is much simpler programs than the wide-ranging changes that will occur when the full impact of the legislation goes into effect over the next few years.
Issues and Activism 
