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 New Medicare Prescription Drug Card - Benefit or Burden?

by Betty Soldz

"Only in this administration would the words Discount Card mean seniors get the card while corporations get the discounts." Senator Edward Kennedy (D- MA).

The new Medicare legislation passed by Congress in November 2003 contained a provision allowing private companies to sell "Medicare approved discount drug cards" to seniors and disabled individuals on Medicare.

As seniors watched hopefully for relief from their huge prescription drug bills, they trusted that their government was going to pass legislation to relieve them of their fast-increasing drug burden. Out-of-pocket spending on prescription drugs has increased 77% from five years ago. For those with a very low income, there will be some help. For the middle class, this bill is once again a farce perpetrated on those who thought they might finally receive some needed assistance.

Effective this past May 3rd those covered by Medicare can now purchase a Medicare endorsed drug discount card which is supposed to save 10-25% on prescription drugs. However, those who are selling these cards claim the cards are likely to give you an average savings of 17%. The General Accounting Office, the investigative arm of Congress, found that "savings will be extremely small."

The cards must be purchased during the month of May to be activated June 1st. The companies allowed to sell these cards are not required to offer you any minimum discount so it is hard to know what you will actually save since each seller can have its own formulary and set its own prices. Since there are no government price controls on prescription drugs, it may be almost impossible to figure out if you should purchase a card and, if so, which one. Other problems need to be considered.

One problem is how to decide if you should purchase a Medicare discount card. If you already have a non-medicare drug discount card, which you may have purchased over the last few years, you may get a larger discount than you will receive with the new Medicare drug card.

In addition to the new Medicare approved discount cards, which can be obtained by all beneficiaries, the legislation also provides a $600 subsidy for low income beneficiaries, those who have limited incomes ($12,569 for a single person or $16,862 for a couple) and who do not have Medicaid coverage. To those entitled to this subsidy the card is free. These cards will benefit low-income people but they will have the same problem others may have in deciding which card will work best. What are some of the other problems with these cards?

There are approximately 70 different companies being allowed to sell these cards with each one offering different prices for 209 drugs. For people with poor reading skills, poor vision, limited proficiency in English, or even those who are not proficient in the use of computers choosing whether to purchase a drug discount card is daunting. Since only one-fourth of seniors use the Internet and many are not really proficient in its use, this may not be an option. In researching for this article, I tried the Medicare phone number (1-800 Medicare). Most days the wait was excruciatingly long.

If you order a 90 day supply of your prescriptions by mail you may already be paying less than you would with a drug card. If you are one of the many people ordering your drugs from Canada, you will probably be paying quite a bit less than you would be paying with the card. (A warning: you need to check the price you will pay in Canada and the cost of postage. If you order several prescriptions, you may have several charges for postage. The charge for postage needs to be figured into the cost of the drug.) Some people feel uncomfortable ordering drugs from Canada because Congress made it illegal. You will be happy to know that there are legislators with plans to make re-importation of prescription drugs legal.

Another problem with Medicare approved drug cards is that there are no government price controls. Drug prices will probably continue to soar. The companies selling the cards are allowed to change the price of a drug weekly or even change their formulary. Since the card holder will be locked in to the company they choose for one year, they may not be able to get any discount on the prescriptions they need. Do remember that the card will cost you up to $30.00.

There are several ways to save on the cost of your medicines. First, my favorite: ask your doctor for samples of any drugs he/she prescribes. Ask them each time you go to their office. It is surprising how many times they are able to give you samples provided to them by the drug companies. Another way to save money is by ordering your drugs from Canada. The prices the consumer pays in Canada is usually far less than the price the consumer will pay with the Medicare discount card. You do have to order a three month supply.

The next idea is to order your drugs from a mail order drug company such as Walgreens.com. among others. (This is only good however, for ordering ongoing medications as you must order a 90 day supply.) Drugs ordered by mail will save you money both with or without a card. You should also check out the drugstores in your area where prices may differ from store to store. Lastly, ask your doctor if there is a generic drug that will work as well as the newer drug he/she prescribed for you.

California Congressman Pete Stark, warns that "there are so many cards and so much price variation it will take most beneficiaries weeks just to gather all the information they need." "Since most seniors are on multiple medications, it is almost impossible to envision a single card that will provide measurable savings for all their drugs." Despite this, the new Medicare law only allows Medicare beneficiaries to own one of the cards.

If you do not take a lot of prescription drugs, purchasing a drug discount card may be more of a burden than a benefit. House Minority leader Nancy Pelosi says saving are illusory. "Drug companies are already raising prices so they can offer discounts without losing a dime in profits."

The discount program expires at the end of 2005. That's when the permanent Medicare prescription drug benefit takes over. Unless Congress makes changes to it, you can expect a program that's even more complicated.

Betty Soldz is an author, educator and consultant in the field of aging. She facilitated workshops and discussion groups for the University of California Berkeley Retirement Center. Betty is one of the co-authors of Wise Choices Beyond Midlife: Women Mapping the Journey Ahead.  She is Past-President of OWL/CA (Voices of Mid-life and Older Women) and is Past-Chairperson of 50+ and Strong: An Alliance for Women's Health. For 11 years, Betty volunteered with the California Health Insurance Counseling and Advocacy Program (HICAP) of Legal Assistance for Seniors and is active in the struggle to protect Medicare and Social Security. She is now Coordinating Committee Facilitator and Newsletter Editor of Greater Boston OWL. Betty can be contacted at:Milbet@aol.com.