Health Bill Might Reduce Drug Costs for Seniors on Medicare

Healthcare changes are being discussed at large in Washington by lawmakers and throughout the country by citizens. One of the huge issues is Medicare, Medicare premiums, prescription drugs and the like.

One of the ideas on Medicare which is being bounced around is that Medicare beneficiaries should pay higher premiums for prescription drug coverage, and many seniors – especially those on very low, fixed incomes – are worried. Somehow, the budget office seems to think that for many seniors, their total drug spending would decline. The Congressional Budget Office recently said in a report that as a result of these changes seniors’ overall spending on drugs would be lower. Many seniors are quite leery of this statement, as they have only seen the opposite in recent years.

It seems that premiums for drug coverage would increase about 5% in 2011. This is higher than the level that was expected. In addition, the budget office also said that by 2020, the increase could rise to 20%.

“However,” the budget office said, “beneficiaries’ spending on prescription drugs apart from those premiums would fall, on average, as would their overall prescription drug spending (including both premiums and cost-sharing).” The office also said that “the drug related provisions of the House bill could probably save the federal government $30 billion from 2010 to 2019.

Douglas W. Elmendorf, the director of the Congressional Budget Office, wrote the figures and estimates in a letter.

Republicans are certain that the proposed House bill would pay for the coverage for the uninsured, partially by cutting hundreds or billions of dollars from Medicare spending Democrats feel that the bill will help those on Medicare by closing the gap or “doughnut hole’ that is costing beneficiaries thousands upon thousands of dollars.

Nancy LeaMond, an executive vice president of AARP, said the report is proof that “health care reform will lower drug spending.”

“Opponents of reform may use today’s projections to try to stall reform,” Ms. LeaMond said, “but we hope they will look at all the facts before jumping to a false conclusion.”

The bill which is being worked on in the House would require drug companies to offer larger discounts, or rebates, on medications provided to low-income people enrolled in both Medicare and Medicaid. In addition, drug companies would be required to offer discounts of at least 50% for individuals who had hit the gap or donut hole, until the gap was eventually decrease. As a result, the budget office says that the premiums would have to increase in order to cover some costs that individuals pay themselves right now.

“In return for those higher premiums,” Mr. Elmendorf said, “enrollees would receive greater protection against incurring high drug costs. As a result, beneficiaries’ spending on prescription drugs apart from the premiums would decrease, on average. That reduction in cost-sharing would outweigh the increase in premiums, again on average.”

But, according to Mr. Elmendorf, things might not be exactly as they seem. For instance, if an individual doesn’t use prescription drugs a lot, they would pay more in additional premiums and save less, but those who use a lot of prescriptions “would gain more from lower cost-sharing than they would pay in higher premiums.

There were no estimates from the budget office as to how many Medicare beneficiaries would see an increase in spending for prescriptions and prescription drug coverage and how many would see reductions.

It’s a question of continuing to work on the bill and make it as good as it can be to help as many people as possible.