Real government drug help not likely to start until 2006

WASHINGTON -- You're 65, maybe older, and tired of paying hundreds, maybe thousands, of dollars for drugs.

So how is the government going to help?

Bills passed by the House and the Senate at week's end offer the first Medicare subsidies for drugs taken outside the hospital. They also would change Medicare to give older people more choices and hold down costs for a program forecast to go broke.

Congressional negotiators still must settle differences between the plans, with difficult compromises ahead on writing a single bill. But the basic outline of the benefit has come into view, albeit a bewildering one at times.

For starters, the prescription drug benefit is not going to begin until 2006.

In the meantime, you can buy a government-backed discount drug card for $25 or $30 that will offer some savings. The Bush administration estimates that you could save 15 percent, which means a $500 prescription drug bill would fall to $425 -- not much of a gain after you pay for the card.

If you are poor, or close to it, you will get more help. Several hundred dollars will be credited toward your card and you will not have to pay the enrollment fee.

How poor is poor? If you earn less than about $12,000 per year, or about $16,400 for a couple, you will get extra help in both the Senate and House bills -- $600 from the Senate or $800 from the House. For those who are a little better off, earning close to $13,500, the House would kick in $500. The Senate would offer nothing more.

The real action on the prescription drugs comes in 2006, when a full drug plan is added to Medicare. But that will not be any easier to understand.

There are two ways you can get your drugs partly paid for.

One means joining a private health plan.

This could be managed care: a health maintenance organization, which limits your choice of doctors to those on a list, or a preferred provider organization, which has looser rules and allows you to see doctors outside the network for an extra charge.

The HMOs exist in Medicare now. The PPOs will be new. Lawmakers expect them to be soliciting business starting in 2006.

PPOs as Medicare's future

Some see these PPOs as the future of Medicare and they would have to offer you at least basic drug coverage. There may be other advantages to joining one -- for example, preventive care such as free doctors' visits or extra services that include eyeglasses. If some Republicans get their way, you could pay a lower premium if you pick a particularly efficient plan.

Another option is staying in regular Medicare.

If you do this, you still will get help paying for medicines, through a complicated formula.

The first decision is whether to sign up for the new drug benefits.

There will be a powerful incentive to do just that right away. If you do not join the program when you first become eligible, the government will consider how sick or healthy you are and adjust premiums accordingly when you do sign up.

The reasoning is that if can people wait until they are ill and then join, the plan will be filled with sick people and will be much more expensive for everyone.

If you join, you will have to pay about $35 per month, or $420 per year. You will pay that premium every month, regardless of any drug expenses. For low-income people, some or all of the premiums would be waived.

Even after you have signed up and are paying the monthly premium, the government is not going to help with the first $250 or $275 of your drug costs each year.

Once bills exceed that amount, how much Medicare kicks in depends on what becomes law.

Under the House plan, the government would pay 80 percent of all drug spending between $251 and $2,000, and you would have to pay the other 20 percent. Subsidies would suspend at that point, not resuming until you had spent $3,500 of your own money on prescriptions (at that point, your total drug bill will have reached $4,900). The government would then pay 100 percent for the rest of the year.

If you have an income of $60,000 yourself or $120,000 as a couple, then this final piece, the catastrophic coverage, would not kick in until you had spent even more of your own money. The threshold rises on a sliding scale, but the most anyone would have to spend on their own is $12,000, which would apply to those earning above $200,000.

The Senate plan uses a similar structure but the numbers are different.

The government would pay half of your costs from $276 to $4,500. There would be no additional coverage until you had spent $3,700 of your own money (for a total drug bill of about $5,800). The government would pay 90 percent for everything above that amount.

Experts estimate that by 2006, the average senior citizen's bill for prescriptions will total $3,160. Under the House plan, that person would pay $1,760 and the government would pay $1,400. Under the Senate plan, the amount owed would be a little less: $1,718.

As complicated as that is, your situation may be even more complex if you already have some drug coverage. Things will not change for those who are covered because they are poor enough to qualify for Medicaid. But retirees who get coverage from an employer could see the employer cut back.

For all the tangled details, at least some drug aid is coming.

"Every president has been promising that," said Emily Thompson, 77, who lives at Leisure World, a retirement community in Silver Spring, Md. "I hope something happens this time."

Lenore Cooper, another Leisure World resident, is doing fine with the current system but is relieved to see action on Capitol Hill. "I know some people are deciding whether they need the medicine or the food on the table -- so I consider myself one of the lucky ones."