Retirees borrowing on homes to pay for prescription drugs

By Nancy McVicar and Bob LaMendola
Health Writers
Posted September 28 2003


Raymond and Etta King are in their 70s, but these are not their golden years.

They had to take out a second mortgage on their North Lauderdale condo to help pay for their prescription drugs, and
she still works as a medical secretary to make ends meet.

He needs more than $10,000 in prescription drugs each year; she requires more than $3,000.

Like most of the 41 million Americans on Medicare -- the federal insurance plan for the elderly and disabled -- the
Kings are waiting to see whether Congress will pass a new prescription drug law by year's end, and whether it will
offer them any meaningful relief.

From what they have learned about the proposals before Congress, they don't hold out much hope.

"Even if they pass it, we don't get a benefit out of it until 2006. Two years later may be too late for people in our
age group," Etta King said. "This is four or five years that we've been pleading for a drug plan. The drug companies
are having a field day with us, and [we] need these drugs to survive."

If this Congress passes a drug bill that President Bush signs, it most likely will help some, provide no help to
others, and still leave many, like the Kings, paying thousands of dollars out-of-pocket.

Some, like Phyllis Geist of Tamarac, would still be better off continuing to buy their drugs from Canada than signing
up for the proposed Medicare drug plans.

So far, the House and Senate have passed differing prescription drug bills. The Senate's is 1,100 pages long; the
House's is 700. Both bills would authorize $400 billion over 10 years to help seniors pay for prescriptions.

A conference committee made up of 10 Republicans and seven Democrats has the task of resolving the major differences
between the House and Senate versions and coming up with a compromise by Oct. 17, so both chambers can vote.

Bush met with the committee at the White House on Thursday in an effort to move the negotiations along, but the chances
look slim.

Large blocs of House members have vowed not to vote for a final bill that does not closely resemble their original
bill, and a group of 37 senators has said the same about the bill they passed.

If the bill does pass this year, becoming effective in 2006, the conference committee has agreed that in the interim
seniors should get a drug discount card that would provide an estimated 15 percent off their prescriptions, with the
exact amount to be set by private companies that would issue the cards for the Medicare program.

"Fifteen percent off a $200 drug," Etta King said. "Is that helping someone who has eight to 10 drugs they need to
take?"

As now written, the two congressional plans target their help to somewhat different segments of the population.

The average senior takes $3,160 worth of medicine each year, according to research by the Henry J. Kaiser Family
Foundation.

The House bill gives bigger price breaks to people with low drug costs and those with very high costs.

The Senate version does better for people with modest to high costs.

Under the House plan, after paying the premium and deductible, seniors signing up for a Medicare drug benefit would
begin saving money once their drug bills reach about $800 a year.

Under the Senate plan, they would not break even unless they pay about $1,100 a year.

Both plans have a "doughnut hole" in which Medicare would cover none of a senior's drugs once their annual bills
reached a certain amount ($2,000 in the House, $4,500 in the Senate). The coverage would kick in again later (at $4,900
a year in the House, $5,800 in the Senate).

Above those levels, the House plan would cover 100 percent of bills, the Senate plan only 90 percent.

Some seniors say they would just as soon pass on the current proposals and push for something better next year.

"Two bad bills don't make a good bill," said Tony Franchetta, 67, of Wellington, president of the Florida Alliance of
Retired Americans. "I think the best thing that could happen would be if both of those bad bills would be turned down
and the prescription drug bill issue had to be addressed during the presidential election."

Franchetta said both bills are poorly designed, do nothing to control drug costs, and leave major gaps in coverage so
that sick people will have to pay the total cost of expensive drugs out of pocket.

"You could be dead before the benefit kicks in again," he said. "The bills are way too complicated. Bring a drug
benefit under Medicare and by negotiating [with pharmaceutical companies] you could bring the prices down to just about
what they are in Canada," Franchetta said. "That would be cost containment. It's just that simple, and the money spent
could go twice as far."

The projected $400 billion cost under the current bills is an increase in Medicare spending of 12 percent. Yet that
represents only 25 percent of the estimated $1.8 billion in drugs America's seniors will need between 2004 and 2013,
according to the Congressional Budget Office.

An analysis of drug spending by some representative seniors in South Florida shows the proposed bills would not be a
panacea, and that some would be better off continuing in their Medicare HMO, buying their drugs at a lower cost from
Canada, or a combination of the two.

Raymond and Etta King

Drug bills: $13,000 plus

Proposed drug benefit: not nearly enough

The Kings are in a Medicare HMO that provides $800 worth of drug coverage every six months -- $500 for generics and
$300 for brand name drugs, but it barely makes a dent in their drug bill.

"My husband maxes that out in one shot," Etta King said. "He is a kidney patient, on dialysis, and one drug he needs,
ProAmatine, is $457 a month."

The Kings are getting some price relief by ordering some of their drugs from Canada. The ProAmatine is $350 there for a
three-month supply, a considerable reduction.

"Canada has been our savior," Etta King said.

The Kings worry that their Medicare HMO may cut their drug benefit as of Jan. 1, and to make matters worse, the
pharmaceutical industry and the federal government are trying to shut off the flow of drugs from Canada where the cost
is as much as 50 percent less than it is here.

"It's very scary, like a black cloud," she said. "We have enough to worry about to follow the doctor's orders so we can
survive for the rest of our lives."

If Raymond King had to pay all his drug bills out of pocket in the United States, they would add up to about $10,175.

Under the Senate's version of the prescription drug bill, he would pay $420 a year in premiums, and $4,136 for his
drugs, a total of $4,556. Under the House version, he would pay the same $420 premium and $3,500 for drugs, unless his
income exceeded $60,000.

Above that, the more Medicare recipients earn, the more they would pay.

Etta King's annual drug costs are about $3,144, closer to the estimated $3,160 spent by the typical senior in the
United States.

Under the Senate version of the bill, she would pay $420 in premiums per year and her out-of-pocket drug costs would be
$1,709.50. With the House version, she would pay $1,744.

But if they opted to leave their HMO and go to back to traditional Medicare in order to get the new drug benefit, Etta
King thinks the couple would also have to buy a Medicare supplement to cover other medical costs traditional Medicare
doesn't pay.

So in addition to the $420 in premiums and the $250 to $275 deductible required for drug coverage, they also would have
to purchase supplemental coverage that could cost them another $300 or more per month, she said.

"Medicare only pays 80 percent of your other medical bills, and you have to pay 20 percent, so you need a supplement to
cover those costs and the first day in the hospital. My husband has been in and out of the hospital," she said.

Susan Miller

Drug bill: $5,800

Proposed drug benefit:

some help

Stricken with Parkinson's disease, Susan Miller of Hollywood downs a fistful of pills every day and probably will have
to do so for the rest of her life. Her drugs cost almost $500 a month, with her HMO covering the first $100.

She is not impressed by the amount of prescription coverage the proposals offer. She pays $4,600 a year out of pocket.
The Senate bill would lower her annual drug cost to $4,107.50, a House version would cut it to $3,920.

"It's something. It's not very good. They ought to do better than that," Miller said. "We're going to go spend $87
billion to go blow up Iraq. I'm really resentful of that. They should keep the money at home. They spend money on all
sorts of frivolous things but medicine is something essential to people."

Miller, 54, who qualifies for Medicare because she is disabled, collects $500 a month in Social Security and her
husband has a modest income as a computer technician.

That leaves little money for her pills: the three drugs for her Parkinson's and one to counteract their effects and one
for pain.

"We're right up against it financially," Miller said. "I think it's essential that Medicare have drug coverage."

Phyllis Geist

Drug bill: $3,700

Proposed drug benefit: Canada still cheaper

Even if Congress reaches a compromise on the drug benefit, Phyllis Geist of Tamarac would still be better off buying
from Canada as she does now.

Geist said she was forced to go to a Canadian storefront in Lauderhill because her prescription bills kept climbing, to
the point where it bit too big a hole in the family budget.

"We really don't like going to Canada because you don't know who you're dealing with, but what are you going to do,"
said her husband, Howard Geist.

The drugs she takes would cost $3,700 a year at the drugstore. Even with HMO coverage, her bills came to $3,100 a year.
By buying through Canada, she now pays $1,700.

Congress offers no help to her or others in her position. Counting the monthly premium and deductible, her out-of-
pocket costs for prescriptions would be $2,000 under a Senate plan and $2,300 under a House plan.

"We need a better drug benefit" than what Congress is offering, Howard Geist said. "If we could save money, we would go
for it. It's strictly a money decision. There's no free lunch. I'm not looking for anybody's gifts. But it has to be
better than this."

Howard Geist would get no help from Washington's plans, either. He doesn't need it. As a veteran, he gets his medicine
from the Department of Veterans Affairs in Miami for $7 a month for each of his three prescriptions.

Harriet Korf

Drug bill: $3,000

Proposed drug benefit:

could save money

Many seniors said they are thoroughly confused by the complexity of the drug benefits proposed in Congress, and don't
think they would be helped much.

"I wouldn't sign up for it. It would cost me too much money," said Harriet Korf of Boynton Beach. Korf didn't realize
that she falls into the group that could save money under both the House and Senate plans.

Korf has no drug coverage now and pays about $3,000 a year out of her own pocket for a cholesterol drug, two blood
pressure pills and a diuretic for water retention.

Under both proposals, she would pay just over $2,000, including the $35 monthly premium and a $250 to $275 deductible.

Evelyn Garofalo

Drug bill: $936

Proposed drug benefit: wouldn't help

If Congress passed a drug benefit, it would cost Medicare recipients $35 a month. Not much, but too much for Evelyn
Garofalo, 60, of Pompano Beach, who is disabled.

She has two prescriptions for generic drugs, which are cheaper than brand names and are covered by her HMO. She pays a
$10 monthly co-payment for each, less than the cost of the proposed plans.

"I can't afford to have them take any more out of my Social Security for something that won't help," said Garofalo. "I
wouldn't switch back."

But she hopes that Congress passes a drug benefit, because she realizes she may someday need different medications that
would hit her hard in the pocketbook despite the HMO coverage.

"Anything is better than nothing. A dollar off would be better than what we have now," Garofalo said.

Nancy McVicar can be reached at [log in to unmask] or 954-356-4593.

Bob LaMendola can be reached at [log in to unmask] or 954-356-4526.

SOURCE: The South Florida Sun-Sentinel
http://tinyurl.com/oy4g

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