Part D is a disaster for patients but ducats for drug industry!

Under the new Medicare prescription drug benefit plan, pharmaceutical companies will reap close to $2 billion in extra profits this year because they are no longer required to discount drugs provided formerly by the government to the elderly poor and disabled. These profits come from a transfer in drug coverage of 6.4 million poor, elderly and disabled people from Medicaid to the new Medicare drug benefit. Medicaid required that private drug companies charge their lowest or "best price" for medications, but the Medicare administration is prohibited by the new law from seeking similar discounts.

According to Stephen Schondelmeyer, a pharmaceutical economics professor at the University of Minnesota, "the net effect over 10 years is probably close to $40 billion in extra profit." Tony Butler, managing director and pharmaceutical analyst at Lehman Bros., an investment bank in New York, agreed with the report that Medicare would probably have higher drug prices than Medicaid. He estimated the sales windfall for drug companies under Part D to be between $1.8 billion and $2 billion.

According to the progressive think tank Center for Economic Policy Research, Medicare could have secured substantial discounts from drug manufacturers had it been allowed by the Part D legislation because of the massive amount of business it would have brought to the industry - there are currently 42 million Medicare beneficiaries eligible for Part D. However, according to a separate study by the Minority Staff of the US House of Representatives' Committee on Government Reform, average drug prices offered by the ten leading Medicare Part D plans are "over 80 percent higher than the prices negotiated by the federal government, over 60% higher than the prices available to consumers

Most of the 14.3 million people out of 42 million eligible Medicare beneficiaries enrolled in Part D in the first 60 days were automatically enrolled as Medicaid or Medicare Advantage recipients. Only 3.6 million have signed up under the stand-alone prescription drug plans. According to the Alliance for Retired Americans (ARA), "seniors are just walking away from this in substantial numbers...the program is too confusing and...just inadequate."

Only a very cynical federal administration would use benefits for the most vulnerable in our communities to increase profits for their corporate buddies and weaken the Medicare administration, which has much lower administrative costs than private insurers and providers. Yet another reason to support single payer health care, where access to quality health care matters more than profits and the public has some say!

in Canada, over 3 percent higher than the prices available on Drugstore.com and almost 3 percent higher than the prices available at Costco."

Money is flowing in both directions - according to consumer interest group Public Citizen, the drug industry, HMOs and related interests spent nearly $141 million on Washington lobbying for their preferred version of Part D. 21 drug industry and HMO executives or lobbyists ranked among Bush's "Pioneers" and "Rangers" - honorary titles for those who have raised at least $100,000 or $200,000, respectively, for one of Bush's presidential campaigns.

Most of the 14.3 million people out of 42 million eligible Medicare beneficiaries enrolled in Part D in the first 60 days were automatically enrolled as Medicaid or Medicare Advantage recipients. Only 3.6 million have signed up under the stand-alone prescription drug plans. According to the Alliance for Retired Americans (ARA), "seniors are just walking away from this in substantial numbers...the program is too confusing and...just inadequate."

Only a very cynical federal administration would use benefits for the most vulnerable in our communities to increase profits for their corporate buddies and weaken the Medicare administration, which has much lower administrative costs than private insurers and providers. Yet another reason to support single payer health care, where access to quality health care matters more than profits and the public has some say!

The ARA is supporting several bills in Congress to postpone for one year the late enrollment penalty, and amend Part D to provide one comprehensive drug formulary benefit under Medicare and use its purchasing power to negotiate lower prices, as the VA does now.

State withholds funds from the Medical Center

The Alameda County Medical Center faces a financial crisis, precipitated by the state's refusal to release Disproportionate Share Hospital (DSH) funds to California's public hospitals. The state owes public hospitals about $650 million in DSH payments, including $32 million to ACMC.

The state Department of Health Services is withholding the DSH payments because the Bush Administration is withholding money it owes the state. The dispute goes back to last year's Medi-Cal waiver. Although the state legislature and the Governor's Office reached a compromise last September on Schwarzenegger's proposed waiver, which provides minimum funding levels for the state's public hospital, the feds have yet to agree to the waiver's provisions. The feds appear to be playing hardball, withholding federal funds to pressure California to settle the waiver dispute on terms less favorable to the state.

In the meantime, the Department of Health Services has all but told the public hospitals that the state expects county government to cover the shortfall in public hospital funding until an agreement is reached with the feds. Alameda County has told ACMC that it won't cover the shortfall because of the "loan cap" the county imposed on the Medical Center two years ago.

State Senator Don Perata and Assemblymember Wilma Chan, both former county supervisors, are pressuring the governor to release funds to ACMC and other public hospitals that are facing a fiscal meltdown.

Newsletter committee:
Jan Arnold, Bradley Cleveland, Kay Eisenhower and Jim Forsyth.
Our thanks to CA Nurses Association for their help in producing this newsletter.