Medicare Card May Not Cut Cost

December 1, 2003
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GRAND RAPIDS — Despite the passage of a Medicare prescription drug benefit last week that takes effect in 2006, some Kent County seniors might save more money with the Kent Health Plan Senior Discount Prescription Program.

The KHP-SDPP card is for county residents 65 and older and it carries savings that range from 5 percent to 70 percent. The actual discount depends on the medication and where the prescription is filled. Savings from the local card have averaged 20 percent since its inception in September 2001.

Roughly 7,500 seniors carry the KHP-SDPP card and the not-for-profit firm has added about 100 new members to the program over the last several months.

Those who choose the Medicare prescription drug benefit in 2006  will pay a premium of $420 a year to participate and have a deductible of $250. So right off the top, these seniors will have to spend $670 annually out-of-pocket before receiving any benefits.

But they will get a 75 percent discount on drug costs that run from $251 to $2,200 a year, no discount from $2,201 to $3,600 and a 95 percent reduction on charges over $3,601.

In contrast, the KHP-SDPP card doesn’t have an annual fee or a deductible, which frees up $670 that can be spent on drugs. So seniors that don’t spend a lot on prescriptions would likely save money by using Kent Health Plan and not going the Medicare route.

For instance, seniors who spend $1,000 a year on prescriptions would pay $800 for those drugs with the KHP-SDPP card — based on an average discount of 20 percent. Under the Medicare benefit, however, seniors would pay $857.50 for the same drugs. (See chart.)

But for seniors who have yearly prescription costs above $1,000, the Medicare plan may be cheaper, even with the yearly premium and deductible. That depends on which drugs they purchase.

Still for some, the KHP-SDPP card could result in lower costs than Medicare even at higher spending levels. Why? Because the card offers its largest discounts on the costliest drugs. If a senior gets a 50 percent reduction on prescriptions with the card, then that changes the entire equation.

So the advice for local seniors is to do the math before signing up with Medicare.

Kent Health President Chuck Zech told the Business Journal last week that he hopes the Medicare prescription drug benefit works well for all county seniors.

“Frankly, the best outcome would be if the Medicare program was so excellent that it obviated the need for the Senior Discount Prescription Program and it could be eliminated. Our sole interest is to help improve access to health care, and if the Medicare program were to do that in the way of drugs for seniors, our mission would be accomplished,” he said.

“We’re not at all concerned. If there is a better program available to seniors, excellent.”

Medicare will issue a drug discount card for 2004 and 2005. The card is expected to carry an annual premium and the discount should be from 15 percent to 25 percent — the same reduction the free KHP-SDPP card averages now.

“I don’t think you can say one is better than the other because which of the 10,000 patients are we talking about, and how many days, how many years, and what drugs?” said Zech of his program and the one coming from Medicare.

The Medicare bill will cost $400 billion over the next decade. House Ways and Means Committee Chairman and California Republican Bill Thomas, a major designer of the bill, has said the drug benefit will have to be balanced by cuts in other areas of the program.

“What will happen between now and then is subject to a lot of speculation, at least to how that Medicare thing will finally roll out,” said Zech, who worked in health care insurance for 33 years. “But I do think there will be a Medicare program and I hope there is.”    

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