One More Reason To Hate the Medicare Prescription Drug Benefit


It's proving to be extremely popular with the elderly (odd how free or subsidized prescriptions become popular among beneficiaries, isn't it?). Reports the Wash Post:

Polls indicate that more than 80 percent of enrollees are satisfied, even though nearly half chose plans with no coverage in the doughnut hole, a gap that opens when a senior's drug costs reach $2,250 and closes when out-of-pocket expenses reach $3,600. By the latest estimates, 3 million to 4 million seniors will hit the doughnut hole this year and pay full price for drugs while also paying drug-plan premiums.

More here.

To gain some perspective on the plight of seniors and prescription drugs, dial the Wayback Machine to 2000, when current Reason Associate Editor Katherine Mangu-Ward was an intern and pointing out these surprising stats:

Senior citizens are America's most thoroughly insured group. They are all entitled to Medicare, which covers doctor visits and hospital care. While Medicare only covers prescription drugs consumed at a hospital, four in five seniors already have coverage for drugs, either through private insurance or a managed-care plan. House Democrats spent much of last year commissioning studies on the prices seniors pay for prescription drugs, an effective ploy that amassed press coverage back home and shined the spotlight on the high price of some prescription drugs. Yet seniors spend a surprisingly small portion of their total income–3.2 percent–on drugs, according to the Bureau of Labor Statistics. To put this figure in perspective, seniors spend, on average, 5.3 percent of their income on entertainment.

More here. So in 2000, 80 percent of seniors (4 out of 5) has drug coverage and the typical senior was spending a whopping 3.2 percent of their income on drugs. But thank god for the largest entitlement expansion since Medicare was itself created back in the '60s. It's the only thing between the elderly eating cat food on a daily basis, right? Few problems are easier to solve than those that weren't problems to begin with.


NEXT: SWAT Weekend

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  1. The really interesting thing about that WALPO article is that not only are people happy but the program is much cheaper than projected. Every lefty nitwit in American claimed that the program was a sap to the drug companies and without government price controls the cost was going to spiral out of control. Alas, as usual, the free market works and letting people choose their plans ended up costing less than government control. I still agree that the program was unnecessary and wish that it hadn’t been enacted, but the horror stories of it breaking the government and costing trillions have turned out not to be true.

  2. Give it time John, and every private arrangement will be cancelled. There is no way at all to contain costs here or really any incentive to do so. Soak the children!

  3. John,

    I remember that the administration decieved conservatives in the House about the cost of the program in order to get their votes for it.

    Are you saying that now there is evidence that it’s not going to be so expensive for the taxpayers?

  4. …Make that: “deceived conservatives”

    (i before e except…)

  5. Nice post, Nick. Good info and excellent comparison.

  6. I still agree that the program was unnecessary and wish that it hadn’t been enacted, but the horror stories of it breaking the government and costing trillions have turned out not to be true.

    I don’t know if the above is due to ignorance or a desire to deceive, but the projections of trillions in costs are over several decades not any given year or even the next several years. Medicare and Social Security projections for solvency usually have a 75 year time horizon.

  7. Those premiums are expected to go up about 30% next year. Besides, how often do insurance premiums decrease?

    I’m betting in less than five years those premiums will double what they are now.

    Since Wally World set a new low for generic drugs, some people may not need the Medicaid Part D program.

  8. In all seriousness, as someone who works with Medicare five days a week, I can tell you that the seniors who hit the ‘donut hole’ will never see it coming, and will be livid over such a gap in their (perceived) complete drug coverage plan.

    A lot of seniors just don’t _get_ the ins and outs of insurance, and are often confused, shocked, or angry when told they have to pay a copay for each office visit, or that if they don’t have a secondary insurance, then they owe the 20% that Medicare doesn’t cover.

    This isn’t _just_ a slam against elderly persons – I had to explain to a man in his 20’s a few weeks ago what a deductible was, and how he was liable for it. But the situation is far more common with those who really depend on insurance – the elderly and infirm.

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