Seniors in U.S. can relax as official says Medicare drug benefit scheme will cost less

Aug 10 2005

Federal officials have said that Medicare's controversial new drug benefit for seniors, may in fact cost less than first projected, because of the very competitive bids from insurers and other providers.

Dr. Mark McClellan the administrator for Medicare and Medicaid Services, says that some seniors who sign up for the program may not even pay any premiums at all.

McClellan says that based on the actual bids that they have received, the benefit cost per person is going to be 14 percent lower, and an average monthly premium for the prescription drug plan, will be $32.20.

That is apparently $5 less per month than earlier estimated.

The Medicare law which has been controversial with both Democrats and Republicans, alarmed many lawmakers when projections, released earlier this year, put the cost of the new drug benefit at $724 billion for the 10 years starting in 2006.

This was much higher than the $400 billion the White House told Congress it would cost for 2004-2013, before the legislation was passed in 2003.

To date McClellan has declined to detail how many bids had been received, or from whom, and it seems federal officials are unclear as to how many seniors will actually sign up for the plan.

Approval for bids from the providers is not expected until next month.

The expectation is that insurers, some employers and perhaps pharmacy chains, will bid to provide the coverage; they will then provide drugs to seniors who sign up for their plans and Medicare will reimburse them.

McClellan says that about one-third of Medicare beneficiaries will also qualify for extra help in paying their premiums if their income is below $14,000 a year.

The Bush administration has been pushing to get older Americans to sign up for the new prescription drug benefit, passed as part of Medicare reform.

But critics say the prescription drug program is too complex, and difficult for many elderly people to manage.

According to Robert Hayes of the Medicare Rights Center, federal officials were acting as 'hucksters' and making an already complicated process even more confusing.