Medicare Part D

Having read so much about Medicare Part D, I did some calculations to determine the true cost savings to the participant in such a plan. I selected a plan with monthly premium of $32.00, $250.00 annual deductible and $17.00 co-pay for preferred brand drugs, costing an average of $70.00 retail for a 30-day supply. I also assumed that all medication would be in the insurer?s formulatory, in the needed quantities. (This is a best-case scenario, since otherwise out of pocket costs could rise dramatically.)

A participant must require $770.00 per year in drugs to break even. The savings would grow to $1,130.00 as the cost of drugs reached $2,250.00, remaining at that level until $5,100.00; at that point the out of pocket outlay would be $3,970.00, a saving of 22%.

Had Medicare negotiated a quite realistic 35% discount for participants, and provided catastrophic coverage for the very few requiring more than $5,100.00 in drugs annually, the savings for the individual in every category would have matched or exceeded those of the current plan.

Furthermore, the cost of providing the catastrophic plan would have been much less than the projected annual government outlay of $30.5 billion.

But then the insurance companies would be deprived of the bonanza, and the drug companies might have achieved lower earnings! Bingo!