New Medicare Cost Estimates Will Cause Enormous

Seniors’ Out-of-Pocket Costs Will Skyrocket; New Estimates Also Show that Millions of

The following is the statement of Ron Pollack, Executive Director of Families USA, about the new Medicare drug cost information made public this week:

The new cost estimates released this week for the Medicare law show that America's seniors will experience two huge problems in the next decade: First, the out-of-pocket drug costs most seniors must pay will continue to skyrocket. Second, approximately 3.5 million seniors are now expected to lose the retiree drug benefits they receive from their previous employers.

"Under the new Medicare law, seniors' out-of-pocket drug costs will increase in tandem with increases in the program's escalating costs. As a result, the very skimpy drug benefits in the new program will get worse and worse with each passing year.

"In 2006, most seniors will pay an annual premium of $420 for drug coverage. Within a decade, that premium will increase to $816. Simultaneously, the drug deductible will grow from $250 to $472. And, worst of all, the huge gap in coverage in which seniors will have to pay 100 percent of their drug costs—the so-called "doughnut hole"—will grow from $2,850 to $5,382.

"This financial disaster for America's seniors could be avoided if Medicare were allowed to negotiate with the drug companies for cheaper prices. The Department of Veterans Affairs (VA) does this very successfully for America's veterans, resulting in much lower drug prices. Even  former Health and Human Services Secretary Tommy Thompson made clear, at his retirement press conference, that he wished he had been given the power to negotiate for lower drug prices.

"The new Medicare data also show that, despite $48 billion in taxpayer subsidies to employers over the next decade, the number of workers who will still receive retiree drug coverage that is better than Medicare's skimpy benefit will decline from 7.6 million to 4.1 million—a major loss for 3.5 million seniors.

"It is tragically clear that seniors will find that, under the new Medicare law, the costs of medicines will become increasingly unaffordable."

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

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202-628-3030 · Email: info@familiesusa.org · www.familiesusa.org