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Bringing Drug Coverage to America's Seniors

Bringing Drug Coverage to America's Seniors

When it comes to prescription drug coverage for seniors, there's yet more good news to report.
Just last month, the University of Michigan Institute for Social Research reported that Medicare Part D - the federal government's prescription drug benefit - has helped increase prescription drug coverage among Americans aged 65 and older from 75% in 2004 to more than 90% in 2006.
In other words, it's taken just two years to bring prescription drug coverage to almost every senior in America - rich and poor alike - thanks largely to Part D.
Part D provides federal subsidies to allow private plan managers to compete for the best bargains from drug manufacturers. This creates incentives for providers to offer a variety of plan options. Seniors can shop around for the plans that best fit their needs. And no law limits the number of drugs each plan can offer.
Thanks to this structure, the drug benefit offers more and better choices of both drugs and prices than anyone imagined. Some plans, for example, cost as little as $10 a month. Others have eliminated deductibles before coverage kicks in. And some provide partial or full coverage in the infamous "donut hole" so that seniors don't experience a gap in coverage between moderate and high drug expenses.
When it comes to saving money, Part D has exceeded expectations. The average plan now costs less than $24 a month - significantly lower than the $37 average that Congress anticipated when the program was introduced.
Part D is the first significant federal program to rein in runaway medical spending. It did this by restoring savings incentives and personal responsibility to Medicare. Also, by leveraging the power of private-sector competition, Part D provides more prescription drug choices than the much-vaunted Department of Veterans Affairs (VA) plan.
The VA plan is often compared to Part D because they're both federally funded drug programs - one is for military veterans; the other is for seniors.
But the real difference is that under the VA plan, which is a more traditional government program, there's only one type of coverage - a narrowly defined insurance package with no choice whatsoever. The VA controls costs by limiting the number of drugs available to seniors - so the formulary includes just 19 percent of medicines approved by the Food and Drug Administration since 2000.
By contrast, Part D allows members to choose from a broad array of private health plans. Seniors have access to virtually all FDA-approved medicines. And prices stay low because the private insurance providers compete fiercely.
According to a survey by the Medicare Rx Education Network, 78% of the 29 million seniors enrolled in Part D are satisfied with the plan.
More importantly, 20 percent of polled enrollees say the new benefit has enabled them to stop skipping or reducing the medications their doctors have prescribed. And according to the Michigan study, the vast majority of the 10,175 seniors interviewed said they were confident that they made a good decision and would sign up for Part D again the following year.
The results from the University of Michigan validate what seniors have been saying for two years - that Part D works.

Grace-Marie Turner is president of the Galen Institute, a non-profit research organization focusing on free-market solutions to health reform. She can be reached at P.O. Box 19080, Alexandria, VA, or at

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