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How Prescription Drug Law Works

Moran explains legislation at Senior Forum.

The new discount prescription drug program recently adopted by Congress that goes into effect on Jan. 1, 2006 will be of little financial benefit to the vast majority of Northern Virginians. They will still be paying for 80 percent of their prescription drug costs due to their level of affluence.

That was the prediction of U.S. Rep. James P. Moran (D-8) to the audience attending his 2004 Senior Issues Forum at Edison High School, Franconia Road, on Monday. "Discount drug costs are increasing so much that in the end this program will not be of much benefit," Moran said.

"I strongly opposed adding the prescription drug provision to Medicare and voted against it. The money for this program, for the most part, is not going to benefit seniors," he said. Instead, the real beneficiaries will be the pharmaceutical and insurance companies, according to Moran.

"Stock in the pharmaceutical companies skyrocketed the day after this legislation passed. They are going to be able to charge whatever they want because the legislation doesn't prohibit an increase in prescription drug costs," Moran said.

He also warned that the new legislation opens the door "for Medicare to be privatized. They [insurance industry] are going to target certain markets — the most wealthy and healthy. And, this will eventually diminish Medicare's money pool," Moran said. "I think prescription drugs are going to increase astronomically."

AS MORAN pointed out, "Generally, there is a direct correlation between wealth, health and age. The insurance companies know this and that's how they will target their coverage. This will leave the poorest and sickest to Medicare which will further deplete the trust fund. It is now predicted Medicare will run out of money by 2019 — seven years earlier than forecast."

He added, "Under this bill, we will, for the first time since the institution of Medicare, have people paying different premiums. I'd just as soon repeal the whole legislation." This brought forth applause from the audience of seniors.

Moran accused the Republican leadership in the U.S. House of Representatives of "buying" the votes necessary to pass the bill. "The first vote on this legislation came at 3 a.m. that Saturday morning. The majority of those present were against it. But, the Republicans held the vote open as they persuaded members to change their vote."

To buttress his accusation of vote buying, Moran cited the example of a retiring U.S. representative. "They promised him that if he changed his vote in favor they would see to it that $100,000 would be available to aid the campaign of his son who was running to succeed him," Moran said.

"Another vote was taken at 6 a.m. that morning. By then they had enough votes to pass the bill," he said. He further emphasized, that in his opinion, it was not a good bill. "It's too expensive and not that good in coverage," he said .

He also accused the GOP leadership of minimizing the total cost of the program. When the bill was being debated Congress was told the cost would be approximately $400 billion. After passage it was revealed that the cost was estimated at $539 billion, according to Moran.

As for the costs to individual seniors, Moran explained that the $35 monthly premium begins in 2006. "But, this is a conservative estimate," he warned. "For children born today, they will spent $1 out of every $7 earned on health care in the future."

According to a chart prepared by the Democratic staff of the House Budget Committee and reprinted in the Forum's program, the prescription drug program is based on the following cost analysis:

* Annual premium: $420 based on $35 per month per person

Deductible: $250

* Coinsurance: Beneficiaries pay 25 percent from $250 to $2,250 in drug costs

* Coverage gap: Beneficiaries pay 100 percent from $2,250 to $5,100 in drug costs

BASED ON THIS ANALYSIS, costs for prescription drugs under the new plan would breakdown as follows in the categories of what a senior would pay compared to what the plan covers for a given expenditure of prescription drugs.

After satisfying the $250 deductible a senior would pay $500, or 25 percent for the next $2,000 drug expenditure. The plan would cover the difference or $1,500.

From that expenditure plateau until costs reach $5,100 the senior would pay 100 percent of that $2,850 gap. When costs reach $5,100 in a given year the Prescription Drug Plan pays 100 percent above that, according to Moran's handout.

However, up to that threshold, the senior will be paying $4,020 while the plan will be paying $1,500. This accounts for the 80 percent cost to the individual, as outlined by Moran.

In order to control drugs costs, Moran has urged the prescription drug plan provide seniors with the same benefits as enforced by the Veterans Administration for their recipients. They have insisted on a cost containment based on paying only a fair profit for drug costs through direct negotiations with the pharmaceutical companies, according to Moran.

Regardless of its shortcomings, Moran urged those present to sign up for the program when available. He noted that those who delay signing up during the open season will pay a penalty for signing up later.

"There is a provision that calls for a one percent per month penalty for every month's delay after the open season closes. This can account for a 48 percent increase in the monthly premiums over a four year delay," he said.

"The real benefit of the program is to those faced with potential catastrophic drug costs," Moran said. "There will be $1.8 trillion spent on prescription drugs over the next eight years."

In the final analysis, Moran said, "This law does nothing to lower the actual costs of prescription drugs. In fact, the new Medicare law prohibits the Secretary of Health and Human Services from negotiating with the pharmaceutical industry to lower drug prices by using the bargaining power of Medicare's 40 million beneficiaries."

FOLLOWING HIS PRESENTATION, a workshop on the intricacies of the Prescription Drug Discount Card was conducted by Howard Houghton, Fairfax Area Agency on Aging. He walked the audience through the steps in choosing a discount card, which will be Part D under Medicare, and evaluating their individual circumstances.

Also include in the program was a presentation on the Library of Congress Veterans History Project. Denis T. O'Sullivan and John Marr, two local World War II veterans, described their wartime experiences and urged veterans in the audience to participate in the program.

The Veterans History Project's goal is to secure as many verbal accounts of veteran's wartime experience as possible to establish a living history library for future generations. They are concentrating on World War II veterans due to their age and the fact that as many as 1,000 are dying each day.

To encourage senior volunteerism, Don and Joan Burchell presented a session on "The Joys of Seniorhood." Both are active in activities geared primarily to non-profit organizations in Alexandria and throughout the region.

In recognition of their efforts, they received The Burke Award by the Alexandria Chapter of The American Red Cross. "All of our joys relate to all the things we are able to do with and for people," Joan Burchell said.

"The joy just happens and it takes on many faces," Don Burchell added.