Since President George W. Bush signed the Medicare Modernization Act into law on December 8, 2003, it has been criticized as too expensive (estimates range from $409 billion to $534 billion for costs to be incurred through 2013) and too complex for seniors to understand. In their new study Private Discounts, Public Subsidies: How the Medicare Prescription Drug Discount Card Really Works, AEI's Joseph Antos and Ximena Pinell compare the prescription drug discount program with other discount programs and find that it can, in fact, provide substantial savings to seniors but that enrollment requires better consumer access to program information than is currently available.
The drug discount card program mandated in the Medicare Modernization Act offers prescription drugs at savings between 5 and 50 percent greater than existing plans. Low-income seniors who lack insurance coverage can receive a $600 annual cash subsidy and access special discounts offered by drug manufacturers. Based upon estimates for prescription drugs from the Medicare website, Antos and Pinell argue that between June and December of this year, beneficiaries could save between one-half to three-quarters of their total prescription drug costs, and they present case studies with price comparisons between already existing prescription drug programs and the new Medicare discount program.
All Medicare beneficiaries who do not already have prescription drug coverage under the Medicaid program may enroll in the new program, and Medicare discount cards can be obtained through pharmacies and health plans operating under the Medicare Advantage program for an enrollment fee of no more than $30--which is waived for seniors whose income does not exceed 135 percent of the federal poverty level. The program aims to enable consumers to compare prices for drugs anywhere in the country, thereby promoting competition through price transparency.
As of the first week of June, only 2.9 million seniors were enrolled in the program, 2.4 million of whom had been automatically enrolled under Medicare managed-care plans. Antos and Pinell find that the newness of the program and the extensive criticism, coupled with the limited availability of information on the Medicare website, have inhibited enrollment, and they credit the Access to Benefits Coalition with attempting to counter these difficulties and provide a clearing-house for consumer-friendly information regarding the program.
