Medicare Part D: What is it?

Medicare Part D is a federal program created with the promise that it would help lower the costs of prescription drugs for Medicare beneficiaries in the United States. It was enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and went into effect on January 1, 2006.

The drug benefit is not part of the 'Original' Medicare program, which includes Part A for hospital care and Part B for physician and outpatient care. The benefit has instead been outsourced to private insurance companies who then receive federal subsidies.

The program is designed in such a way that the participating insurance plans can change the drugs they cover anytime while the consumer is “locked in” for the entire year. Currently, there are 80-120 plans per state with each plan drastically varying in its premiums, deductibles, coverage gaps, lists of drugs they carry, restrictions on drug availability, drug prices, and participating pharmacies. There is also no standard terminology, so sellers can call the plan anything they want. They can also cover whatever drugs they want. Medicare is also banned from using its bargaining clout to negotiate for lower drug prices, adding billions to the drug companies' bottom lines at the expense of the American taxpayer.

How legislation intended to lower prescription drug costs for Medicare recipients became such a sweetheart deal to medical insurance and drug companies is well documented. Former Congressman Billy Tauzin, who steered the bill through the House, retired soon after and took a $2 million a year job as president of Pharmaceutical Research and Manufacturers of America (PhRMA), the main industry lobbying group. Medicare boss Thomas Scully, who threatened to fire Medicare Chief Actuary Richard Foster if he reported how much the bill would actually cost, was negotiating for a new job as a pharmaceutical lobbyist as the bill was moving through Congress.

With the corrupting influence of the revolving door between lawmakers and lobbyists nowhere more evident than in the crafting and passage of the bill that created Medicare Part D, it is no wonder that it became such a disaster. It is time we fix Medicare Part D.