The card game


BEGINNING THIS month, most seniors will have the opportunity to sign up for a Medicare-approved prescription discount drug card. As part of the new Medicare law enacted last fall, beneficiaries will be able to purchase privately sponsored discount cards that supposedly will save them between 10 percent and 15 percent on the cost of their medicines.

The discount cards, which have been billed as a transitional step until Medicare prescription drug coverage takes effect in January 2006, will provide meaningful relief for only about 4.7 million very low-income Medicare beneficiaries. The remaining 35.5 million Medicare beneficiaries will see fairly insignificant savings, if any, from these cards.

The U.S. Department of Health and Human Services (HHS) recently approved 39 discount cards that will operate nationwide. Pharmacy benefit managers, health insurers and other organizations will begin marketing the cards to beneficiaries this month, and the program will go into effect June 1.

These companies are eager to be in the discount card market because it will help them market their name or "brand" identification to Medicare beneficiaries. This will prove particularly beneficial in January 2006 if they choose to become one of the private plans offering the "new" prescription drug coverage.

Unfortunately, amid all the public relations hype surrounding the cards, HHS has neglected to explain several key facts.

First, the estimates of savings are only that -- estimates. HHS rules do not require card sponsors to provide a minimum discount level. In fact, at a House Ways and Means Committee hearing in April, an HHS representative testified that the discounts could be as low as 2 percent.

Beneficiaries may also find that the savings are largely illusionary and reduce costs less than the current discount cards and mail-order plans that are already available. Last year, prescription drug costs rose by 17 percent, and increases in the medicines taken primarily by elderly Americans were even sharper. The new Medicare-approved discount cards will do little to offset these escalating costs unless the federal government steps in to negotiate lower drug costs on behalf of 40.2 million Medicare beneficiaries.

Second, the rules permit card sponsors to change the drugs they offer and their prices every seven days. Medicare beneficiaries who select a card believing it will provide savings on most of their medicines will have to check weekly to determine if their medicines have been dropped from the list or whether the discount for their drugs has sharply increased. They also may find that a new medication later prescribed by their doctor is not offered through the card they have chosen.

HHS has justified giving card providers the "flexibility" to revise the terms of the contract by saying that it will encourage maximum participation by card sponsors. Their reasoning is that card sponsors must continually negotiate prices with pharmaceutical companies so they need "flexibility" to change drugs and prices as the market dictates.

However, the underlying problem is that the Medicare prescription drug law, which I voted against, expressly prohibits the government from negotiating lower drug prices. If the government could use the power of the marketplace to negotiate lower drug prices with pharmaceutical companies, it wouldn't need a discount card in the first place.

Beneficiaries will not appreciate paying up to $30 a year for a card that does not reduce costs on the drugs their doctor recommends. They also may be angry to discover that they are locked into their card while the card sponsors can change their terms weekly. Medicare beneficiaries who are dissatisfied with their discount card will have the opportunity to switch only once -- between Nov. 15 and Dec. 31, 2004.

The unfortunate irony is that even dissatisfied Medicare beneficiaries who do decide to switch cards during the enrollment period could find that their new card providers also change the terms of the contract weekly.

Third, seniors will find that not every pharmacy will accept every discount card. Medicare beneficiaries who prefer a particular pharmacy will need to check to see if it will honor the card they choose. Seniors, especially those in rural or underserved areas, may have difficulty finding a conveniently located pharmacy that accepts a card with real savings.

One group that may reap genuine benefits from the program is low-income seniors who do not qualify for Medicaid. Medicare beneficiaries with incomes under $12,569 a year ($16,862 for couples) will not have to pay enrollment fees and will receive a $600 yearly credit toward the cost of their medicines.

As Medicare beneficiaries weigh whether to participate in the Medicare-approved discount card program, they should remember the old adage -- "buyer beware." The uncertain nature of the program means that many seniors and disabled Americans may never see the savings they have been promised.

Benjamin L. Cardin, a Democrat, represents Maryland's 3rd Congressional District in the House of Representatives.

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