Medicare D, the drug benefit for seniors, is an odd duck. It was structured by the pharmaceutical companies for their own benefit, and prohibited Medicare from negotiating for lower drug prices. They offered a huge array of plans at the outset.
The principle behind non-negotiation was that the market works better than the ham-handed government, that companies offering all those varied plans would compete and bring drug prices down. Here’s how it works … scratch that. It doesn’t. Medicare D now enters its third year, and drug prices have gone up instead of down.
Here’s another facet of the market that seniors are learning about – bait and switch. Premiums for the top ten plans offered have gone up now on average of 21%. The second largest provider, Humana, offered a low price in 2006 ($9.51 per month), and captured 2,133,187 clients, the second largest overall. Since that time they have raised their premiums by 71% ($25.82). That’s right – 71%.
How can they get away with this? Simple – complexity. The rigmarole required to switch plans is so stifling that most people don’t bother – they just stick with their current plan.
Humana is gaming the system – the whole of Medicare D was an elaborate game. The pharmaceuticals got us. They got us good.
Piece of Mindful 