Can you believe it?

Even we missed out on this information. Congratulations to our fine media for keeping everybody in the dark until after the bill was passed. From the wires: (excerpts)

Analysts: Medicare Drug Costs Will Rise

Seniors will face annual increases in premiums and deductibles - and a growing gap in coverage - for the prescription drugs they buy under the new Medicare law, budget analysts say.

For example, the $250 annual deductible at the start of the program in 2006 is projected to rise to $445 by 2013.

[In the first year of the program] after [$2,250 in drug costs], there would be no further coverage until beneficiaries' drug bills for the year reached $5,100, leaving a gap of $2,850 that they would have to pay out of their own pockets.

But after just one year, the Congressional Budget Office projects that seniors would see their $250 deductible and the $2,850 gap for which there is no coverage both jump 10 percent.

By 2013, the eighth year of the program, the deductible and the coverage gap are both projected to grow by 78 percent.

In other words, seniors would pay a $445 deductible and those with the largest drug bills would be entirely responsible for more than $5,000 in drug costs.

... the lawmakers [made the] decision to tie the cost of the program to increases in drug costs from inflation, new costly drugs coming on the market and expected increases in drug purchases ...

"The numbers inflate with the cost of the program. I think that's a good provision," said [Senator Don] Nickles, who voted against the bill.

But David Certner, an official of AARP, said: "One of our complaints has been that this benefit would become more unaffordable over time if pegged to drug costs. This bill does not do enough to hold down drug costs."

What the hell is going on? Nickles likes the provision, yet votes against the bill. Somebody from AARP is unhappy, but the organization supported the bill.

We think that accounting for inflation is important, but the focus on the drug cost inflation may make it rough for seniors. Their benefits (e.g Social Security) are usually pegged to general inflation which includes elements such as the cost of housing, energy, and so on. If drugs have a higher inflation rate - which seems likely - over time the Medicare benefit will diminish in value. There are a couple of ways to tackle this problem. One way is to keep the benefit to seniors constant by paying more as drug costs escalate, though at greater cost to the treasury. Another approach is to use market power to restrain the costs - like Wal-Mart does.

Yet the Congress decided to do neither.

posted by Quiddity at 11/25/2003 06:51:00 PM