Seniors don’t have it much better. Retiring couples are now projected to need $240,000 over the course of their golden years to pay for health care, according to Fidelity Investments. That’s a 50 percent increase since 2002.
For Georgia’s seniors and families alike, there appears to be little refuge from high health costs. But one program has bucked the trend — delivering high-quality care at lower-than-expected prices. It’s Medicare Part D, the prescription drug benefit that’s been available to seniors since 2006.
Unfortunately, some in Congress are looking to indiscriminately cut $600 million from the drug benefit. For the sake of Georgia seniors’ pocketbooks — not to mention their health — lawmakers in Washington should hold off on gutting Part D.
Before the drug benefit passed, roughly a third of seniors enrolled in Medicare lacked prescription drug coverage, and surveys showed that lots of seniors pinched pennies by skipping prescription medicines.
But after the benefit took effect, roughly 90 percent of seniors secured drug coverage. Seniors had access to more drugs at lower cost. Use of prescription drugs increased by as much as 12.8 percent. What did it cost them? Less than they’d been paying. Out-of-pocket spending on medication dropped by an estimated 13.1-15.6 percent. Part D has, on average, saved seniors $1,100 a year. And for the last three years, average premiums have held steady at just $30, according to the Department of Health and Human Services. Since 2006, plan prices have risen just 2.5 percent. That’s far lower than the rate of growth for the rest of Medicare.
Many of the seniors who have benefited live right here in Georgia. When the program passed, it marked the first time that all 975,000 of the state’s Medicare beneficiaries had access to drug coverage. And it offered special benefits to those in need of extra financial help. Some 352,000 beneficiaries in the state with limited means qualified for prescription drug coverage with no premium at all. Another 86,000 qualified for reduced coverage.
The program’s impact has only grown. Today, more than 1.2 million Georgians are eligible; about 85 percent have drug coverage.
But seniors haven’t been the only ones to come out ahead. Taxpayers have gotten a good deal, too. Earlier this year, the Congressional Budget Office reported that Part D’s total cost came in 42 percent below initial projections. Indeed, it’s the only part of Medicare costing less than expected.
But that hasn’t saved it from Congress’s cost-cutting crusade. Next year’s $600 million in scheduled cuts are only the beginning.
Some lawmakers would like to force drug companies to pay rebates to the federal government, as they do under the terms of the Medicaid program, which covers low-income Americans. But these so-called rebates wouldn’t deliver any savings for seniors. Former Congressional Budget Office director Douglas Holtz-Eakin has estimated that this legislative tweak would actually raise premiums by 20-40 percent.
Low-income seniors would be hit the hardest. The proposed rebates would have the perverse effect of encouraging insurers to avoid selling policies to seniors of limited means. They’d therefore have fewer coverage choices — and might even have to pay more for drugs they need, if the plans available do not offer them.
Medicare Part D has succeeded by leveraging the power of choice and competition. Georgia’s seniors can choose from 30 different plans. And because insurers compete with one another for seniors’ business, they have a strong incentive to give seniors what they want at an affordable price.
Georgia’s seniors have come to depend on those choices, and the affordable benefits such competition brings. Congress shouldn’t make changes that would threaten either.
Nellie Duke is the chair of the Georgia Commission on Women, President/CEO of Georgia Women’s Institute and President of Georgia Osteoporosis Initiative.