Monday, November 28, 2011

Obamacare Not a Rock-Solid Deal for Seniors

The Associated Press ran a story yesterday on the Medicare “doughnut hole” changes included in Obamacare, which provides some anecdotal examples of potential savings.  But the most important numbers quoted in the article are these:  Only about two million Americans out of 47 million Medicare beneficiaries have benefited from the new discount program.  That means a very small percentage of program participants actually are receiving benefits from Obamacare.

Second, the true savings for beneficiaries in the doughnut hole may in reality be less than they appear; if the richer benefits in the coverage gap just prompt seniors to continue buying more expensive brand-name drugs rather than using less costly generics, they won’t really have “saved” much.  (It also would increase health costs, not lower them.)

Last but not least, all seniors will be paying higher Part D premiums in order for a select group of beneficiaries to receive richer coverage.  The Congressional Budget Office estimated that “the law would lead to an average increase in premiums for Part D beneficiaries of about 4 percent in 2011, rising to about 9 percent in 2019.”  That means that 17 million seniors are paying higher premiums, but only about 400,000 beneficiaries passing through the doughnut hole will actually receive the full benefit of the discount regime established in the law. (Many of the beneficiaries in the “doughnut hole” are low-income seniors, and the Medicare program already covered their additional costs in the coverage gap prior to Obamacare.)  Some would categorize this redistributive scenario as “spreading the wealth around.”

Of course, Big Pharma is virtually guaranteed to benefit from its “rock-solid deal” struck behind closed doors with President Obama and Congressional Democrats.  But will seniors actually benefit from this portion of Obamacare?  The evidence is clear that most beneficiaries won’t.