FOR IMMEDIATE RELEASE
Thursday, May 16, 2002CONTACT: Jennifer Laudano
Kati Anderson
(202) 628-3030
HOUSE REPUBLICAN DRUG PLAN'S RELIANCE ON PRIVATE INSURANCE, NOT MEDICARE, LIKELY TO FAIL SENIORSNew Report Documents Failures of Private Insurance in Providing Drug Coverage
WASHINGTON, D.C. - As leaders of the Republican House of Representatives prepare to introduce a bill offering prescription drug coverage for seniors, a new report released today criticizes the GOP's reliance on private insurance companies, and not Medicare, in offering such coverage.
The report, by the national consumer health organization Families USA, documents that private health plans serving seniors are very costly, are unevenly available from place to place, and have diminished in value over time.
According to the report, the House Republicans' proposal to induce private insurance companies to offer coverage for seniors' prescription drugs-which the insurance industry has said they do not want to offer-is likely to fail seniors. Unlike the Medicare program, private insurance companies' experiences in providing health care for seniors show that they are an unreliable source of prescription drug coverage.
"It is baffling that House Republicans would go out of their way to bypass the Medicare program and, instead, seek to induce insurance companies to offer prescription drug coverage," said Ron Pollack, executive director of Families USA. "Those insurance companies neither want to offer such coverage nor have a good record in providing it."
The Families USA report findings are based on public information on private insurance plans offered through the Medicare+Choice program (which offer managed care plans to beneficiaries) and Medigap policies (which provide private supplemental coverage in the traditional Medicare program). The key findings are as follows:
Drug coverage in Medicare+Choice is available in fewer places. In 2002, there are 15 states where there is no Medicare+Choice plan at all that offers prescription drug coverage compared to nine states that did not offer coverage in 1999.
In seven other states there is only one Medicare+Choice plan with prescription drug coverage, but that plan does not serve all areas within those states.
Medicare+Choice drug coverage is becoming more expensive, and is providing fewer benefits. Among the 33 states that had Medicare+Choice plans with drug coverage both in 1999 and 2002, beneficiary premiums and copayments rose dramatically during that three-year period. For example, in almost half of those states, the average premium rose by more than 100 percent. In 10 states, the average premium increased by more than 300 percent.
In the vast majority of states, drug coverage in Medicare+Choice plans is capped, and those caps are getting lower over time. According to the report, in 1999, 13 states had plans with no cap on coverage. By the year 2002, there were only five states with no dollar limit on drug benefits. In all but 10 states, average annual caps are now $750 or less.
Medigap drug coverage is expensive, and the cost varies widely. In 1999, only 6 percent of Medicare beneficiaries (approximately 2.3 million people) had Medigap policies with drug coverage. These policies are very expensive for the coverage offered and differ considerably in premium costs from one geographic area to another. This results in Medicare beneficiaries paying very different prices for the same coverage depending on where they live.
For example, the report shows that for one of the three plans that offer drug coverage, the lowest premium available in Oregon is $2,086, but the same plan is $3,603 in both Illinois and Nevada.
"Private insurance plans have a bad record of serving seniors' health and drug needs," said Pollack. "Compared to Medicare, private insurance is unreliable, very expensive, and provides inadequate benefits-and, over time, is getting worse. It makes little sense, therefore, for House Republicans to shun Medicare for prescription drug coverage."
The report, "Failing America's Seniors: Private Health Plans Provide Inadequate Rx Drug Coverage," is available on the Families USA Web site at http://www.familiesusa.org/.
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Families USA is the national organization for health care consumers. It is nonprofit, nonpartisan, and advocates for high-quality, affordable health care for all Americans.
