• Breaking the Promise of Medicare:
  • Bush Signs Medicare Bill
  • $2.6 Billion Head Start for HMOs
  • Three Top Medicare Officials Jump Ship
• Keeping the Promise of Medicare:
  • AFT Works To Rein in Drug Costs, Keep Medicare as National Provider
• Medicare Discount Drug Cards To Be Ready in June
• Feds Charge Medco Executives with Accepting Kickbacks
• New Hampshire, Boston To Defy FDA on Drug Reimportation
• Employee Health Benefits Rose 10 Percent Nationwide in 2003
• PET Scan Significantly Improves Ability To Predict Brain Impairment
• Just How Much Does That Purchase Benefit Charity?
• Pet Care Savings: Just in Time for the New Year
• Quote of Note: New Hampshire Defies Ban on Reimporting Drugs
• Web Site of the Week: http://www.unionvoice.org/ct/VdzeeVM1wdX5/

Breaking the Promise of Medicare:

Bush Signs Medicare Bill
President Bush signed the Medicare bill into law Dec. 8 in Washington, D.C., in front of thousands of lobbyists, campaign donors and politicians, plus a number of seniors flown in for the occasion. Despite this attempt to put the best possible public face on the bill, older Americans remain divided over the changes it makes to Medicare. A Dec. 3-5 Washington Post/ABC News poll finds that 47 percent of people ages 65 and older said they disapproved of the changes, while 26 percent said they approved and 28 percent had no opinion. The survey found that the public at large is divided over the changes: 38 percent say they disapprove, 32 percent approve and 30 percent expressed no opinion. A CNN/USA Today poll, conducted about the same time, found that about 75 percent of respondents said the benefit is too complicated for beneficiaries to understand. A whopping 84 percent of respondents ages 65 and older expressed that concern. Opponents of the measure--including AFT staff and about 300 seniors--rallied on Capitol Hill later that day. Participants heard Sen. Edward Kennedy (D-Mass.) proclaim, "We have only just begun to fight." Kennedy, joined by House Democratic Leader Nancy Pelosi (Calif.) and other congressional leaders, called the measure "a cruel hoax that does nothing to reduce the high cost of prescription drugs" and pledged to "repeal huge portions of the new law." AFT retirees and members of the Alliance for Retired Americans remain very vocal in opposition, as do many AARP members. That organization reports that 15,000 members have resigned over its support for the Medicare bill. Some 3,000 unhappy AARP members have joined the Alliance in recent weeks.

$2.6 Billion Head Start for HMOs
Although the new prescription drug benefit does not take effect until 2006, the law will pay Medicare HMOs an extra $1.3 billion in 2004 and 2005, about 120 percent of what the program pays for traditional coverage. Medicare HMOs currently serve 4.6 million of the 41 million people with Medicare in the United States. Critics of the financial incentives for Medicare HMOs claim that these payments give HMOs an unfair competitive edge. Many HMOs have not decided whether to participate in the new program because profits, despite the early bonus, may not be large enough. In recent years, the number of Medicare eligibles in HMOs has been declining due to increasing costs, declining services and uncertain coverage.

Three Top Medicare Officials Jump Ship
Top administration officials aren't waiting to see how the controversial new Medicare law plays with the public. The member of President Bush's Cabinet who oversees the Medicare program announced in early December that he will resign before the new Medicare prescription drug benefit takes effect in 2006. Tommy Thompson, secretary of Health and Human Services, vows that he will have everything set up and operating smoothly before he leaves. Beating him out the door are Thomas Grissom, director of the Center for Medicare Management, who accepted a position with Boston Scientific Corp., a medical device manufacturer, and Thomas Scully, administrator of the Centers for Medicare and Medicaid Services (CMS), who earlier submitted his resignation effective Dec. 16. Scully said he decided to leave the agency in May for personal reasons, but Bush administration officials requested that he remain at CMS to work on the Medicare bill. Scully agreed and received an ethics waiver from HHS that allowed him to work on the bill and negotiate with potential new employers at the same time. Five private firms are bidding for Scully's services, offering as much as five times his current $134,000-a-year salary.


Keeping the Promise of Medicare:

AFT Works To Rein in Drug Costs, Keep Medicare as National Provider
In the wake of the passage of the Bush Medicare bill, the AFT has been working hard with supporters of traditional Medicare to truly strengthen the program. The immediate focus is holding down drug costs and keeping Medicare as a national provider of a standard drug benefit. The union has been meeting regularly with Medicare supporters in Congress to develop a unified approach to reform to lower drug prices, guarantee coverage and strengthen traditional Medicare, one of the federal government's most efficient and successful programs. The union is supporting the Medicare Prescription Drug Price Reduction Act of 2003, introduced earlier this month by U.S. Rep. Chet Edwards, House minority leader Nancy Pelosi and Senate minority leader Tom Daschle. The bill would repeal the new Medicare law's provision prohibiting Medicare from using the purchasing power of over 40 million beneficiaries to negotiate lower drug prices. In a letter to all 100 senators, the AFT joined the AFL-CIO, the Alliance for Retired Americans and some 20 unions, consumer, senior and civil rights groups in backing Medicare in negotiating drug prices. In recent years, the letter said, drug prices have grown 17 percent annually, seven times the general inflation rate. It cited the Veterans Administration, which has such negotiating authority, as a highly successful model.


Medicare Discount Drug Cards To Be Ready in June
The new Medicare drug discount card is scheduled to be available in June 2004. Rules released by the Bush administration require companies that sell a discount card to offer price reductions on at least one medication per category in 209 categories of drugs. Discount card sponsors will be allowed to change their prices and their list of covered drugs weekly. It is estimated that the cards, which will cost about $30 a year, will provide an average discount of 10 percent to 15 percent, with some drugs discounted as much as 25 percent. Only 7.3 million Medicare beneficiaries are expected to buy the card. Seniors with incomes below 135 percent of the federal poverty line ($12,123 for an individual or $16,362 for a couple) will get the card free and a credit worth $600 (embedded in the card like a prepaid telephone card). Families USA, however, reports that the law does not set any rules about base prices, leaving many questions about the extent and value of the coverage. Insurance companies, pharmacy benefit managers, drug makers and other organizations will be able to apply to sell the drug discount cards in coming weeks. AARP has not yet decided whether it will distribute the card.


Feds Charge Medco Executives with Accepting Kickbacks
In an amendment to an earlier suit, the U.S. Justice Department Dec. 9 charged two top executives, Robert Blyskal and Diane Collins, of New Jersey-based pharmacy benefit manager Medco Health Solutions, with paying an insurer $87.4 million in kickbacks to secure a contract. According to the complaint, filed in federal court in Philadelphia, Medco paid $87.4 million during the last two quarters of 2001 to an insurer in supposed reimbursements for transition costs. However, DOJ alleges that the money was in fact intended to influence the awarding of a PBM contract. The complaint does not name the insurer, but the Wall Street Journal reports that Oxford Health Plans--which has contracted with Medco to manage drug benefits for its 1.4 million members--confirmed that it is the insurer named in the complaint. The new complaint expands a civil lawsuit filed in September by DOJ charging that Medco improperly switched, canceled and destroyed mail-order prescriptions to defraud patients, practices that are part of a "systemic pattern of conduct" since 1995. The new Medicare law relies heavily on PBMs like Medco to negotiate drug prices.


New Hampshire, Boston To Defy FDA on Drug Reimportation
New Hampshire's Republican Gov. Craig Benson announced last week that his state will challenge his party's federal HHS secretary and the Food and Drug Administration (FDA) over reimporting lower-cost U. S.-made prescription drugs from Canada. Benson said the state will set up a Web site to provide residents with access to Canadian pharmacies certified as safe by New Hampshire's Department of Health and Human Services. Under the new Medicare law, drugs can only be reimported if the FDA certifies them as safe--something it has been very reluctant to do. Although several other states are said to be considering similar actions, New Hampshire is the first state to openly defy the FDA. On Dec. 9, Boston Mayor Thomas Menino (D) announced that the city plans to reimport drugs from Canada for some 7,000 city employees and retirees.


Employee Health Benefits Rose 10 Percent Nationwide in 2003
U.S. employers shifted an unprecedented share of health care costs to employees in 2003, slowing healthcare costs more sharply than expected. A new wave of cost shifting is likely next year, according to a study released Dec. 8 by Mercer Human Resource Consulting. According to the study, which surveyed 3,000 public and private employers, employer healthcare costs increased 10.1 percent in 2003, compared with 14.7 percent in 2002 and 11.2 percent in 2001. Analysts had predicted that employer healthcare costs would increase 14 percent in 2003. About 25 percent of employers said they will increase employee contributions for healthcare in 2004; 23 percent said they will increase cost-sharing charges in health plans, and more than 10 percent said they will reduce covered services.

The study also found:

• Prescription drug coverage costs for large employers increased 16.1 percent in 2003, compared with 16.9 percent in 2002 and 17.8 percent in 2001.
• About 28 percent of employers in 2003 offered health coverage to retired employees not eligible for Medicare, compared with 29 percent in 2002 and 46 percent in 1993.
• About 21 percent of employers in 2003 offered supplemental health coverage to retired employees enrolled in Medicare, compared with 23 percent in 2002 and 40 percent in 1993.
• The cost of health and dental insurance averaged $6,215 per employee, an increase from $5,646 in 2002.
• The average employee contribution for HMO single coverage increased to 35 percent of the premium in 2003 from 31 percent of the premium in 2002, and the average employee contribution for HMO family coverage increased to 57 percent of the premium in 2003 from 50 percent of the premium in 2002.
• About 27 percent of employees were enrolled in HMOs in 2003, compared with 29 percent in 2002 and 32 percent in 2000.
• About 54 percent of employees were enrolled in preferred provider organizations in 2003, compared with 50 percent in 2002 and 44 percent in 2000; about 34 percent of PPOs included individual deductibles of $1,000 or more, compared with 20 percent in 2002, and the median out-of-pocket maximum for PPOs increased to $2,000 in 2003 from $1,500 in 2002.

PET Scan Significantly Improves Ability To Predict Brain Impairment
Doctors may have a new weapon in their efforts to diagnose and treat Alzheimer's disease and dementia earlier. In a four-year study of more than 150 patients, researchers at UCLA have found that using positron emission tomography, commonly called PET, brings a 30 percent improvement in doctors' ability to predict whether the condition of patients with early memory complaints would significantly worsen years after their initial examination.


Just How Much Does That Purchase Benefit Charity?
The Better Business Bureau's Wise Giving Alliance, a national charity watchdog, advises holiday shoppers to look carefully at product promotions that benefit charities to see if the advertiser clearly discloses the amount of the purchase price that will go to the charitable organization. In most instances, the amount going to charity is usually less than 10 percent of the purchase price, according to the Alliance. But that small portion can add up to big bucks for the charity. It is estimated that in 2003, charities will cumulatively receive almost $1 billion from cause-related marketing.

More info: http://www.give.org/.


Pet Care Savings: Just in Time for the New Year
AFT PLUS offers programs for members, their families and their pets. It's holiday time and even your pets may want something special. As you prepare for the new year, this may be the best time to look into saving money on pet care. AFT PLUS has two programs to help you save money. Pet Insurance allows you to continue with your current veterinarian. Policies include older pets, accident-only coverage and more. For specifics, call 866/473-7387 or go to www.unionplus.org/pets and click on Pet Health Insurance. Pet Assure Veterinary Care Savings saves you 25 percent off your bill at participating veterinarians for a monthly fee (discounted 40 percent for AFT members). Savings include preventive care, shots, surgery, medications and more. To sign up, or to find participating veterinarians in your area, call 888/789-PETS (7387) or go to www.unionplus.org/pets. Use code UP2003.


Quote of Note: New Hampshire Defies Ban on Reimporting Drugs
"The FDA and drug companies have been spreading this notion that it [reimporting drugs] is unsafe, but I have a different take. We have a lot of people who are not taking prescription drugs because they can't afford them. I think there's a liability for sitting still."

Gov. Craig Benson
New Hampshire

Web Site of the Week: http://www.unionvoice.org/ct/VdzeeVM1wdX5/ 
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Happy Holidays! May the New Year Be Good to All of Us!
See you in January.

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Contributors and sources: Bill Cunningham, Shantel Edmonds, Inside AFT, Alliance for Retired Americans Friday Alert, Medicare Rights Center, USA Today, Washington Post, New York Times, Wall Street Journal, Boston Globe, Las Vegas Sun, Salt Lake City Tribune, Richmond Times-Dispatch, Kaiser Health Policy Report, Alliance Against Telemarketing Fraud, Better Business Bureau. Frank Stella, editor; Annette Licitra, copyeditor; Renee Turner, design.