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Medicare Resource Center
by Julia Bencomo Lobaco, AARP VIVA, February 2004
Good health was not one of the fruits Catalina Broyles picked during her 25 years as a campesina in the fields of Arizona and California. By age 54, she was on disability from exposure to pesticides. Now 67, she struggles with diabetes, glaucoma, high cholesterol and osteoporosis.
That daily struggle is compounded by a low income and her husband's medical needs. "We have to pick between food or medicine," the El Mirage, Arizona resident says. "Sometimes I don't take my medicine because we have nothing to buy it with."
Beginning in June 2004, she and husband James will each be eligible for a discount card to help cover the more than $360 a month they pay for medications. The card—costing up to $30 per person and offering an estimated average savings of 15 percent—is the first benefit available to beneficiaries under the Medicare reform law signed by President Bush in December 2003.
The Broyleses also will be among those eligible for low-income subsidies set to begin January 1, 2006. "I hope this is true and that it is soon. It would help us a lot," Mexican-born Catalina says
The couple depends on Social Security, receiving about $18,000 a year. Catalina's portion is $460 a month. Because their annual income is below the $19,500 threshold for couples, under the voluntary new prescription drug benefit they would pay a monthly premium based on a sliding scale; an annual $50 deductible; and 15 percent of their drug costs. By enrolling, they would reduce their total monthly drug costs to less than $150.
If Catalina were living alone, she would be eligible for the most generous benefits. The discount card would be free and include a $600 credit in 2004 and 2005. In 2006, enrolling in the program would mean she would pay no premium, no deductible, and pay $1 for generics and $3 for brand-name prescriptions.
The 10-year, $400 billion legislation, which stirred furious debate in Congress and garnered AARP's backing, is still galvanizing supporters and critics, including Hispanics.
"I think the Latino community will be helped more than any other segment of the population," says U.S. Rep. Lincoln Díaz-Balart (R-Fla.), whose 21st Congressional district includes portions of metro Miami and is more than 50 percent Hispanic. "[This law] will help in an extraordinary and very exceptional way. Most of the seniors in my district will benefit."
His colleague, U.S. Rep. Ciro D. Rodríguez (D-Texas), disagrees. "This Medicare [law] is not a first step, it is a false step. It does not lower the price of prescription drugs, it prohibits the government from negotiating lower drug prices," says the chairman of the Congressional Hispanic Caucus. "Currently one in every six Hispanics on Medicare lives below the federal poverty level. This [law] does nothing to ease the burdens of their medical conditions, but compounds the difficulties they will face."
And there are other concerns. "The problem is how you define 'low-income,' " says Eugenio Arene, executive director of the Council of Latino Agencies in Washington, D.C. "The guidelines for low-income people are too low. You are leaving out those who are right on the edge, those who are making between $19,500 and $25,000 a year, and struggling."
Miami resident Baruj Salinas, 68, isn't impressed by the changes, either. "To me, it's like no law was passed. You have to be really sick before you can spend the kind of money you need to spend before you get any benefits." The Cuban-born artist and art teacher spends about $250 a year for thyroid medication and would actually pay more if he opted to enroll in the prescription drug benefit program. "My concern is for those who have no insurance," he says. "I think Congress should focus on that."
Puerto Ricans, however, were deemed winners by Manuel Mirabal, president of the National Puerto Rican Coalition Inc., which represents seven million Puerto Ricans on the mainland and in Puerto Rico. "This new law takes an important step toward parity in federal funding of health care services and reimbursement rates to hospitals serving Medicare beneficiaries in Puerto Rico," he says. "These critical issues affecting our elderly have gone unaddressed for too long."
Puerto Rico could receive up to $4.4 billion in federal funding over 10 years, an estimated $3.1 billion of which could be used for the island's 250,000 low-income Medicare beneficiaries eligible for prescription-drug subsidies under the new law. The island's 500,000 Medicare beneficiaries would have access to improved hospital health care services, Mirabal says.
John Rother, AARP's director of public policy, recognizes the law's shortcomings, but reminds critics: "This establishes for the first time a prescription drug benefit in law. That will allow us to improve and build on it in the future. That's $400 billion to help seniors over the next 10 years."
Addressing the fear that the Medicare changes would prompt employers to eliminate retiree drug benefits, AARP pushed for and helped win financial incentives for employers to maintain coverage. The organization will continue being "very visible" as it fights for improvements, Rother says. "I think the message is that this is incomplete. It's a good start, but there are important issues we need to pursue."
Among those, he lists greater cost containment to keep prices more affordable, including pushing for simpler guidelines for legally obtaining lower-cost drugs from Canada; making sure there is educational outreach so those eligible will sign up; and eliminating or narrowing the coverage gap, or "donut hole," which requires more out-of-pocket expenses for beneficiaries.
One of the law's most controversial provisions, and one opponents unsuccessfully targeted for elimination, calls for a six-year "demonstration project" during which private companies could compete directly with Medicare in six metropolitan areas. In a victory for AARP, the organization fought for and won the pilot project instead of proposed nationwide permanent legislation. The pilot--set to begin in 2010--cannot be extended or expanded without new legislation.
The idea scares Gabriela Lemus nonetheless. As vice president of legislation and policy for the League of United Latin American Citizens (LULAC), the nation's largest and oldest Hispanic advocacy group, she watched closely as the bill made its way through Congress and opposed it every step of the way. "I don't buy it," she says of the experiment. She thinks the project will become a nationwide effort. With Hispanics being the most uninsured group in the United States, Lemus fears privatization will lead to the dismantling of Medicare and even more uninsured.
AARP's Rother insists "that's not going to happen." And analysts have had mixed reactions as to whether such a pilot would even get off the ground or how successful it might be if it were implemented.
National Council of La Raza (NCLR), the nation's largest Hispanic civil rights organization, did not take a position on the bill. "We didn't have the analytical staff or time to delve into it deeply enough," said NCLR President Raúl Yzaguirre. "There were many contradictory messages and we don't take positions on things we haven't studied thoroughly."
A member of the for-profit AARP Services Inc. (ASI) board, Yzaguirre does counter accusations that AARP has a conflict of interest in supporting the legislation. ASI manages products and services offered to AARP members by third parties--including supplemental insurance with prescription drug coverage.
He believes, however, that AARP's policy positions are not influenced "one iota" by income-generating or -losing considerations. "I feel very proud to [affirm] the organization's integrity in those terms," he says.
In the final analysis, Yzaguirre says, "Regardless whether you are for or against the law, we need to make sure the Latino community takes full advantage of whatever benefits there are."
He echoes John Rother's sentiment that an educational outreach campaign is critical. He urges AARP and the U.S. Department of Health and Human Services to begin an information campaign as soon as possible and make all materials available in Spanish and English. NCLR will happily participate in the outreach effort, he said.
Yzaguirre is ready for action on another front: "There's certainly agreement within AARP that the law needs a lot of fixing. So let's get to work on fixing it right away."
Now find out what the new Medicare drug benefit will mean to you and read four examples of winners and losers under the new plan.
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