Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Saturday, August 12, 2006

The Medicare Drug Benefit is Working According to Plan

The Medicare drug Pharmaceutical company benefit is working according to plan. Few things these days annoy me more than claims that Bush's Medicare drug benefit was "what the Democrats wanted to do."

Via Mark Thoma:

Economist's View: The Medicare Drug Benefit is Working According to Plan: No surprise here. The Medicare prescription drug plan is providing large benefits to the group targeted by the legislation - health insurance companies. It's unsurprising because the insurance companies played a large role in writing the new rules. However the other intended beneficiaries, legislators hoping to win votes, may not fare as well. And many seniors, especially the poor who are most in need of help, have seen their drug costs go up:

Inside Job How Humana and other insurance companies rigged the Medicare prescription drug plan, by Barbara T. Dreyfuss, American Prospect: Last week saw the news that Humana, one of the country's largest health insurance companies, experienced much better second-quarter earnings than had been expected. The announcement amounted to confirmation that the Medicare drug benefit is working exactly as planned -- not for the people enrolled in it, but for the insurers who drafted it.

Humana's profits jumped 10 percent, much better than Wall Street had anticipated, helped by a surge in seniors enrolling in Humana's Medicare drug and HMO plans.... Humana has also doubled its Medicare HMO membership in the past year...

Simply put, the Medicare drug program has been good news for Humana. But for seniors who had hoped that the Medicare drug plan, which began in January, would relieve them of worries about drug costs, things are not so rosy. About one- fifth of seniors in the Medicare program, concentrated especially among the poor who had been on Medicaid, report that they now pay more for their medicines than they had before. Since insurers can decide which drugs they cover and which they won't, many seniors are finding that new medicines they need are not paid for by their plan. And millions of enrollees are now approaching the level of total drug expenses that will provoke a cutoff from any further Medicare help with costs -- the now-infamous "donut hole"...

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