Independence

More and more studies are validating the value of the new Temporary Drug Discount Card program, and, despite a spate of bad press, more and more seniors seem to be figuring out for themselves that this is a good deal.

Bob Helms of the American Enterprise Institute hosted a briefing on Wednesday that focused on a benchmark study by Joe Antos and Ximena Pinell of AEI that provides a detailed comparison of prices and savings available through the card plans.

Bottom line: The new Medicare approved drug cards win hands down.

During the briefing, Joe gave an overview of ?Private Discounts, Public Subsidies?, focusing on all of the benefits available through the new program to typical seniors ? the value of the discounts negotiated by the drug card plans, the $600 low-income subsidy, and the wrap-around savings programs of major pharmaceutical companies.

By taking advantage of all of these savings, Joe showed that a typical low-income senior could save between half and three-quarters on his or her drugs for the rest of this year. The study shows 10 to 38% savings for moderate-income beneficiaries. And even higher-income seniors who don?t have drug coverage likely will find that the Medicare drug cards offer them the best deals, with savings of up to 24%. AEI found that prices available on June 1 through the cards were 5 to 50% lower than prices offered by well-known discounters.

Howard Bedlin of the National Council on the Aging said during the forum that low-income seniors absolutely, positively should sign up; they?ve got nothing to lose (the cards are free) and a lot to gain (the subsidies and savings are substantial).

In my response to the paper, I reported on some research that shows that AEI?s finding are in line with other studies:

? The Center for Medicare and Medicaid Services anticipates savings of more than 85% off national average retail prices when the drug card discounts, the $600 transitional assistance, and the manufacturer wrap-around programs are combined.

? The Lewin Group in another study found that the drug price discounts combined with the $600 subsidy provided savings ranging from 29% to 92% for low-income seniors.

? Business Roundtable: This study shows that seniors will receive $24.1 billion in new drug benefits as a result of MMA between 2004 and 2006.

This study breaks down savings on a state by state and district by district basis. For example, the BRT?s estimate of the total benefit to Virginia seniors in 2004 and 2005: $131.7 million. That?s nothing to sneeze at.

Julie Goon of CMS said more than 3.5 million seniors have signed up for the drug cards so far. That?s a significant number for the first month (which includes automatic enrollment of those participating in Medicare Advantage health plans).

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The first-year results of Aetna HealthFund?s consumer-directed offering are in, showing lower medical costs and increased use of preventive care. Aetna reviewed claims and utilization data from 2003 for 13,500 members participating in its Health Reimbursement Arrangement plan (a form of health savings accounts for company-based health insurance).

? Employers offering these plans as an option ?experienced low medical cost increases of 3.7 percent,? compared to double-digit increases for most employers.

? Companies that substituted the Aetna HealthFund for all employees had the biggest savings ? a cost decrease of 11 percent!

And people are not skimping on care: The study shows that ?member utilization of some preventive care measures increased by as much as 23 percent, and diabetic members either maintained or increased the frequency with which they received important tests and screenings.?

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Finally, I spent Thursday in Tallahassee, Florida, the state that gets my vote for being the strongest supporter of consumer-directed care. Gov. Jeb Bush is traveling the state holding town hall meetings, primarily with small business owners and employees, promoting Health Savings Accounts.

He helped pass a new law that just went into effect requiring all companies selling insurance to small businesses in the state to offer HSAs.

Treasury Secretary John Snow traveled to Miami to join Gov. Bush for a town hall meeting on HSAs about a week ago, and they jointly authored a commentary article in the Miami Herald saying that HSAs will lower the cost of health-care insurance and used as an example Kellstrom Industries in South Florida.

?A few years ago, as many other employers, Kellstrom was facing 30 percent increases in health-insurance costs,? they wrote. ?It decided to switch carriers and offer its employees a variety of plans, including some from Humana with higher deductibles and a medical-reimbursement account. Five percent of the employees chose the plans with higher deductibles, and the company saved more than $150,000 in the first year alone.?

So there is much to celebrate this Fourth of July. Happy Independence Day!

Grace-Marie Turner

(Our round up of studies and news and opinion articles will return next week.)

UPCOMING EVENTS:

Consumer-Directed Health Care: The Next Big Thing?

Briefing sponsored by the Alliance for Health Reform and The Robert Wood Johnson Foundation

Friday, July 9, 12:15 p.m. to 2 p.m.

Room 325, Russell Senate Office Building

Washington, DC

For additional information and registration information, go to: http://www.allhealth.org/event_reg.asp.

Health Policy Matters is a weekly newsletter containing commentary on health policy developments, summaries of timely and informative studies and articles on free-market health reform, and notices of upcoming events. It features research and writings by participants in the Health Policy Consensus Group. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about this newsletter and our organization, please visit our website at http://www.galen.org/.

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