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By STEVE NOHLGRENMark your calendar and do your homework: Nov. 15 is fast approaching. You might need the next couple of weeks to make sense of Medicare's Part D.
November 15 will never rival July 4 or December 25, but it is definitely a date to remember. That's when Medicare finally enters the age of wellness and prevention.
When it started in 1965, Medicare was built around episodes of illness. If you developed cancer and needed surgery, Medicare would defray hospital bills. Flu? Broken hip? Medicare paid for doctors and nursing home rehab.
But prescription drugs never entered the picture - an omission that grew increasingly glaring as modern science proved more and more effective at keeping people well. It makes no sense to forgo a $30-a-month generic statin while shelling out $50,000 when a heart attack leads to hospitalization, surgery and rehabilitation.
Politically, drug coverage became a potent campaign issue among the coveted senior vote. The oft-repeated image of a poor widow choosing between food and Fosamax always energized a crowd.
On the other hand, Medicare already gobbled up a huge chunk of the federal budget. With 40-million younger Americans uninsured, could we really afford to beef up insurance benefits to everyone older than 65? Even for people who are healthy and wealthy?
Two years ago, the Bush Administration and Congress crafted an uneasy compromise with advocates like AARP:
Medicare would underwrite a portion of drug costs, but average beneficiaries would still have substantial out-of-pocket bills.
Low-income people would get a better deal than people of means.
The government would not dictate prices or even jawbone discounts out of the manufacturers, as it does with doctors, hospitals and nursing homes.
Instead, insurance companies would act as private drug brokers, setting up plans that would seek discounts and compete for customers.
All of which brings us to Nov. 15.
That's when people on Medicare can start choosing how to arrange their health care for 2006. The new drug benefit - Medicare's biggest transformation ever - complicates those decisions.
The drug program, called Part D, is not just new, it is all over the block. Nineteen companies are authorized to offer Medicare drug plans in Florida, many with two or three options.
Premiums range from $10.35 a month to $104.89. Formularies cover some drugs, but not others. Then there is the so-called "coverage gap," or more informally, the "doughnut hole," or "Krispy Kreme," a financial Bermuda Triangle that can swallow coverage when total drug costs are more than $2,250 and less than $5,100 a year.
How complicated is Part D? Medicare's Web site (www.medicare.gov) contains a list of "frequently asked" questions about the new drug benefit. Earlier this month, it listed 983 "frequently asked" questions.
Such complications aside, there is much to like about these drug provisions - at least from a beneficiary's standpoint.
Medicare is going to pay the insurance companies $700 a year for everyone who signs up for a drug plan. That underwrites a lot of drug-buying and still leaves room for profit. Unlike most insurance - where premiums and copayments cover the risk - the bulk of this benefit is financed by taxpayers as a whole, not by the contributions from individual Medicare beneficiaries.
Humana's Standard plan carries a premium of just $10.35 a month. Coventry Advantra, PacificCare and WellCare all have plans under $20. At those prices, even beneficiaries who take no drugs will benefit from signing up. If they suddenly have a illness, they will quickly earn back the premium. And if their health declines later in life, they can get cheap drugs without paying a stiff premium penalty.
Many low-income people who blanch at a $20 premium can qualify for what Medicare calls "special help." This subsidy reduces premiums, deductibles and copayments. Yearly out-of-pocket drug costs will average $130 for those people.
By adding hundreds of thousands of Medicare clients to their rolls, the drug plans can buy in bulk and can negotiate discounts from manufacturers. Discounts will come in handy when beneficiaries enter the "coverage gap," and have to pay 100 percent of costs.
The new Medicare also improves HMOs and PPOs.
Their clients cannot enroll in separate Part D drug plans, which are designed to supplement Medicare's traditional Parts A and B. However, Medicare is also beefing up payments to HMOs, to help them stay competitive. In return, the HMOs must enhance their drug coverage or other benefits.
That suits Pauline Policastri, 72, just fine. The Hudson resident and her husband, Salvatore, belong to a Humana HMO. She loves its Silver Sneakers wellness program, which pays for a YMCA membership so she can take dance and exercise classes three days a week.
Like other HMOs, the Policastris' plan charges no monthly premium and provides drugs with minimal copayments.
If the Policastris were to return to traditional Medicare, they would face copayments for doctors and hospitals and an extra Medicare premium if they wanted the new drug coverage.
"It's frightening," she says. "What little pension we have doesn't go up while everything else everything goes up around us. If you get sick and don't have something to protect you, you're in trouble."
Lastly, the Bush administration has a lot of political capital riding on Medicare Part D and has budgeted $100-million to inform people and guide them through the process. Among other things, administration officials swear that beneficiaries can get all the help they need by calling a toll-free 1-800-633-4227 hotline. A live person is supposed to answer, around the clock.
Advocates and state agencies figure the drug benefit is a good deal and are devoting a lot of energy to help as well. For example, a two-day senior expo scheduled for Nov. 16-17 at Tropicana Field will feature seminars and enrollment help for Medicare beneficiaries to assess plans, sign up for coverage or apply for low-income subsidies.
So pull up a chair and browse through this issue of Seniority. It is full of useful information about the new Medicare.
And mark Nov. 15 on the calendar. You can't sign up for anything until then. This is just the study phase.