Many Medicare+Choice Plans Dropping Rx Drug Benefits

Responding to "soaring drug costs," many Medicare+Choice plans are eliminating drug coverage or charging "sharply higher" copayments, the New York Times reports. Several of the nation's largest health insurers had "recruited" seniors to join their Medicare+Choice plans by "dangling offers of free" prescription medications. But now, the health plans say that they need to raise premiums and reduce coverage as "a matter of survival." Such action means that "the companies provid[e] insurance to their healthy members, while tens of thousands of elderly patients with serious diseases ... have no affordable insurance coverage for their basic medical needs." In 1997, as part of the Balanced Budget Act, Congress limited the annual payment increases the government gives Medicare+Choice plans to 2% to 3%; at the same time, drug costs began increasing 20% a year. Kathy Feeny, a senior vice president with PacifiCare Health Systems, said, "Congress put us into a death spiral." Because health plans are expecting "an influx" of beneficiaries as the population ages, many "prefer" to remain in the Medicare+Choice market, but are "undertaking a brutal shifting of costs" to seniors. Feeny added that health plans had three ways of handling the increase in drug costs: "adding the new charges, driving away members by raising premiums steeply across the board, or closing up shop in some communities." She said, "If we think this is bad, it is going to get more dramatic in 2003." PacifiCare's Medicare HMO, Secure Horizons, is raising copayments for prescription drugs in the eight states in which it operates. Other health plans are also imposing limits.

• Kaiser Permanente has created "ceilings" on drug payments;
  
• Aetna U.S. Healthcare has dropped drug coverage in New York;
  
• Health Net has set an annual limit on drug costs at $750 per member in Brooklyn and Queens.

Complaining about the cuts in drug coverage, eight senior advocacy groups wrote a letter to CMS Administrator Thomas Scully last month saying that health plans' recent actions "clearly discriminate against particular elderly and disabled men and women based on their health status." Robert Hayes, president of the Medicare Rights Center, said, "Medicare HMOs are withering on the vine" and that the higher drug copayments are "just one more piece of evidence that this experiment, no matter how noble, is an abject failure" (New York Times, 1/25). Sidney Wolfe, with the patient advocacy group Public Citizen, said the higher costs are a "symptom" of a problem that will not be solved until drug companies cut their prices, or traditional Medicare begins covering drugs (NPR, "All Things Considered," 1/24).