Medicare Drug Benefit

The Washington Post has an impressively informative piece on the new Medicare drug benefit–they numbers are detailed and useful. In fact, I hereby nominate the authors, Edward Walsh and Bill Brubaker, for the Bush Budget Beat through at least the 2004 elections. Had work like this been common throughout 1999 and 2000, the election could well have turned out differently. It was known, but not covered, at the time that Bush’s budget proposals didn’t add up. But I digress. Based on the numbers in the Walsh and Brubaker piece, I came up with a chart comparing total drug costs (on the X-axis) to total out of pocket costs (Y-axis). Note that where the line is flatter the portion covered by the government is higher; where the line is steeper, the portion covered is lower.

First, a few comments. The chart below shows the benefit starting in 2006; the interim plan consists of, well, coupons basically. Second, click on the graph below to open up a larger graph with more details and explanation. I may have more to say about this soon, but at first sight, it seems like a decent plan for the somewhat sick (drug costs between $800 and $2500) and the extremely sick (drug costs well over $5000), but for the elderly who fall in between those extremes, the plan will only cover 36% of drug costs (for an enrollee with $3000 in drug costs) to 21% (for an enrollee with $5100 in drug costs).

Also, the plan in the chart is for the 27.5 million seniors making more than 150% of the poverty line. The 6 million seniors below the poverty line who previously had drug coverage under Medicaid will continue to have coverage ($1 generic and $3 branded). The 4.5 million seniors not eligible for Medicaid but earning less than 135% of the poverty line will receive generous coverage ($2 for generics and $5 for branded). The 2 million seniors earning between 135% and 150% of the poverty line will have a $50 deductible and pay 15% of their drug costs thereafter. Again, all of this is for 2006 and after. In the meantime, the plan is to give billions in subsidies to insurance companies in exchange for discount cards (the aforementioned “coupons”).


UPDATE: I plan to comment on this a bit more (it’s boring but important), but in the meantime, Mark Kleiman has a good preliminary list here.

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