Medicare Bill Will Victimize Recipients Of Company Drug Plans (WSJ)

[wellst0nev0ter]

Leading the News: U.S. Drug Subsidy Benefits Employers
Ellen E. Schultz and Theo Francis.

Some companies with many retired workers are expected to post big earnings gains for 2003 or 2004, thanks to accounting guidelines for subsidies under the federal prescription-drug program.

When Congress approved prescription-drug benefits for Medicare recipients last year, it granted benefits for the 65% of large employers with retiree health-care plans, providing funds for companies that maintained their prescription-drug coverage for retirees.

The program is supposed to encourage employers to retain prescription-drug coverage.

But companies are entitled to the subsidy regardless of how much of the cost they pick up themselves. As a result, it does nothing to halt the current rush by some employers to shift more costs to retirees.

In fact, benefits consultants are designing employer-sponsored prescription plans to save companies more money by unloading costs on their former workers without losing out on the new subsidy.

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Some of the biggest accounting gains are expected to show up at such companies as Lucent Technologies Inc., which has 240,000 retirees and dependents, General Motors Corp., Dow Chemical Co., and SBC Communications Inc. All are members of the Employers' Coalition on Medicare, which lobbied for the subsidy. Some of these companies won't take the gains immediately.

<snip>

The new federal program calls for employers to be reimbursed for 28% of the cost for prescriptions of more than $250 per retiree, up to an annual subsidy of $1,330 per retiree, beginning in 2006. The subsidy will be significant at companies with thousands of retirees ages 65 or older, because prescription-drug costs make up a large part of the expenses that employers incur for seniors under their retiree medical plans.

Thanks to a little-noticed provision in the new law, the government will calculate the subsidy based on both what the employer spends for prescription drugs and what the retiree spends.

So if an employer and a retiree each pay $1,000 toward the retiree's medical costs, the employer's subsidy is calculated on the full $2,000, bringing the company a total subsidy of $490, rather than the $210 that it would get if it received a subsidy only on its share.

[lovedems]

1. Oh, this is going to piss some seniors off!

As if AARP didn't have enough headaches, I have the feeling they are going to be in more trouble now.

What else can they do to further enhance corporate profiteering? What programs have not been touched yet? What should we expect?

[wellst0nev0ter]

2. Hey, They Weren't Kidding When They Said It Was An "Imperfect Bill"

I think this is the first time Congress has passed a bill that they openly and readily admit was bullshit.

[The Zanti Regent]

3. The REAL reason why AARP supported the destruction of Medicare

THE bean counters at AARP are in ecstasy over all the money they will save in payouts. After all, the new law forbids private plans from reimbursing prescriptions that fall under the new Mediscare law

AARP is, after all, an insurance company first!