Rep. Maloney: Democratic Fixes to Medicare Rx Program Will Save Seniors Big $$$

Oct 17, 2006
Press Release
NEW YORK, NY – Today, Congresswoman Carolyn B. Maloney (D-Manhattan, Queens) issued a report outlining the difficulties that Medicare prescription drug plan enrollees are facing and detailing how Democratic proposals would significantly lower out-of-pocket costs for participating New Yorkers.  New York Senator Liz Krueger, Robert Hayes, President of the Medicare Rights Center and New York seniors joined Maloney at Stein Senior Center in Manhattan to express their support for making the drug benefit simpler, fairer and less expensive.

“People say that the ‘D’ in Medicare Part D stands for ‘disaster’ and this report shows why,” said Rep. Maloney.  “Democratic reforms will simplify the drug plan, plug the ‘doughnut hole’ and put money in seniors’ pockets.”

“Medicare Part D may work for the drug companies, but it certainly isn’t working for my constituents, who are frustrated and confused by the complexities of the plan,” said Senator Krueger.  “Congresswoman Maloney’s proposals would help address these problems and create a more equitable prescription drug plan.”

“There are basic reforms to the prescription drug benefit that cry out to be enacted. We need a drug benefit within Medicare to ease the confusion and exploitation by the private marketplace. Medicare must be allowed to use its bargaining power to negotiate with drug companies for lower prices. It is unconscionable that the current Congressional leadership has refused to allow votes on these basic and sensible fixes,” said Robert M. Hayes, president of the Medicare Rights Center, a national consumer service organization.

The full text of Maloney’s report can be found at: .

Maloney’s report found that Medicare Part D program has been fraught with a variety of problems since its launch earlier this year, including:

High drug prices.  Drug prices under the Medicare drug plans are more than 80% higher than the prices negotiated by the federal government and more than 60% higher than prices in Canada.

Low enrollment.  Prior to the start of Medicare drug plan, the Administration estimated that over 29 million beneficiaries would sign up for the new program.  But by the end of the program’s enrollment period, only 22.5 million beneficiaries had enrolled. Millions of
beneficiaries without coverage missed the May 15 deadline and face large penalties if
they sign up next year for a Medicare drug plan.

Inadequate benefits. Under the current drug plan, beneficiaries enter a “donut hole” and lose drug coverage when they have used $2,250 worth of drugs. They do not regain coverage until they have spent more than $5,100.  Independent analysts have projected that this year, one of every three beneficiaries who do not receive low income subsidies -millions of beneficiaries- will enter the donut hole and lose drug coverage.

Drug denials. Even while they are eligible for drug coverage, many beneficiaries are
finding that needed drugs are not covered or that the Medicare insurers are establishing
barriers such as prior authorization, volume limits, or step therapy that cut off access to
critical drugs.

Inaccurate information. Two reports by the Government Accountability Office found
that neither the Medicare program nor the drug plans themselves provided accurate information to beneficiaries. GAO found that the 1-800-MEDICARE hotline provided inaccurate, inappropriate, or incomplete answers to one third of basic questions, while the Medicare drug plans failed to answer basic questions accurately and completely two-thirds of the time.

Unnecessary red tape. According to a recent report from the Office of Management and
Budget, the complexities of the Medicare drug benefit increased federal paperwork
burdens by 200 million hours annually.

In response to these problems, Rep. Maloney and her Democratic colleagues have proposed four reforms to improve the Medicare benefit: reduce drug prices by directing the federal Medicare program to negotiate with drug manufacturers on behalf of beneficiaries; use the drug price savings to eliminate the “donut hole”; extend the May 15 deadline to allow beneficiaries who missed the deadline a chance to sign up for the benefit without penalty; and simplify plan choices and designs by authorizing the federal Medicare program to offer a standard federal plan.

These much-needed reforms would have significant benefits for Maloney’s constituents:

  • 31,000 Medicare beneficiaries in Rep. Maloney’s congressional district would save more than $200 million in premiums, copays, and other out-of-pocket drug costs. These beneficiaries could expect average savings of almost $500 annually if Medicare negotiated for lower drug prices.
  • Over 10,000 Medicare beneficiaries in the district would avoid the “donut hole” and thousands of dollars in unreimbursed out-of-pocket costs.
  • Almost 5,000 of Maloney’s constituents would avoid hundreds of dollars in penalties and permanent increases in premiums that could cost them from $500 to more than $1,000 over the next decade.