Every December, the Social Security Administration sends Americans receiving a monthly Social Security benefit a statement of the “New Benefit Amount” for the following year. Sometimes the amount doesn’t change from year to year, but occasionally it does. My statement arrived two weeks ago, informing me that on January 3, 2014 my benefit will increase by 1.5 percent because of a rise in the cost of living.
However, there are deductions from the gross monthly benefit amount, which are itemized on the statement. No deduction for Medicare Part A, of course. That’s the part of Medicare which pays for visits to doctors for approved medical services. [Note: I stand corrected here by a perceptive reader. See the comment section below. Part A covers hospitalization, not doctor visits.] It’s also the part of health insurance for elderly Americans entitled to collect Social Security which is truly single-payer. (And the only health insurance in America which is.) You pay in as long as you work; the government pays out after you turn 65, for as long as you live.
[This is not a primer on Medicare, so I am limiting my observations to original Medicare, which is still in place for anyone who wants it. There are some byways available, routing coverage through Medicare-affiliated plans managed by for-profit insurance companies. I can’t speak to those, and won’t, except to voice my suspicion that they’re probably not the way to go. Shareholders in those insurance companies will disagree with me. But you can see where I’m headed here, so I’d better stop.]
The first deduction from the gross monthly Social Security benefit is the premium for Medicare Part B. This is optional. But anyone getting older would be a fool not to opt for it because Part B is the part of Medicare that covers you for visits to doctors for approved medical services. You don’t have Part B? You pay for every visit out of pocket, or you don’t go.
The Part B premium money stays with the government, which also administers that part of Medicare — just like in those European countries that opponents of single-payer health coverage in our Congress call “socialist.” Neither Medicare Part A (which is entirely single-payer) nor Medicare Part B (to which you contribute monthly premium once you’ve stopped working) asks you to pay anything else, after a tiny co-pay per year.
But what about medication? AdminIstered in hospital, it’s usually covered by Part A. Taken at home, it wasn’t covered at all until Medicare Part D came along. [Just so you know, Part D was hailed at the time of its enactment as one of the (few) achievements of George W. Bush’s administration. Interestingly, no pharmaceutical or insurance companies objected to its passage. Hmmm.]
Prescription drugs were — and remain — extraordinarily expensive in the United States. Pre-Part D, if you were really sick, and not really rich, they sucked up all available income and then some. Medicate or eat. Not a great choice.
Part D could therefore be seen as truly remarkable progress in a truly pig-headed country. (Which happens to be my country, so the First Amendment to the Constitution permits me to call it that. If I were French or English, which I occasionally think might be nice to try, I would have to mind my own business on this subject or get punched in the nose by some redneck.)
However, when you get to be 65, you may rethink your views about the “remarkable progress” encomium. Of course you always understood that there would be a premium for this relatively new drug coverage. But it, too, could be deducted from your monthly Social Security benefit, so you didn’t have to actually pay out of pocket.
Or it could be not deducted, as you chose; you might prefer to be billed directly. Or you might prefer not to participate at all. (American freedom at work!) If you’ve always been perfectly healthy, and pay out of pocket for no more than one or two rounds of doctor-prescribed antibiotics a year, non-participation might seem a good idea. Why pay a monthly premium for what you don’t yet need?
“Yet” is the operative word. Five or ten years down the road, when you’re older and suddenly sicker, you can’t just sign on for your Part D coverage. You will have to pay a penalty every month, on top of the monthly premium, for the rest of your life, based on a percentage of the average national premium each month you didn’t pay since you were eligible for the coverage. (I didn’t make this up. It’s what it says in the handbook helpfully titled, “Medicare and YOU: 2014.“) Bummer, no? Understandably, very few of us, if any, elect not to join up as soon as we can.
Okay, so what kind of Part D deduction are we talking about here? [And this is what has got me so steamed up.]
Well, the first three things you need to understand is that (1) the premium may come out of your government Social Security benefit but it gets sent to a for-profit insurance company of your choice that’s licensed to administer Part D in your state; (2) each insurance company sets its own premium; and (3) the premium has gone up up every year since the inception of Part D (presumably because there’s no law against raising it) — even when your Social Security benefit doesn’t!
There’s more: each insurance company gets to decide what drugs it will include in its “formulary” ( a list of the drugs it “covers”). Yours isn’t covered? Tough. Your doctor will have to try to treat you with something that is covered. (Insurer as medical supervisor, so to speak.) Your insurer of choice also gets to decide what it will charge you for the medication it has contracted to help you pay for. That’s right: there’s not only an annual deductible — unless you pay a significantly higher monthly premium — but a co-pay for each approved prescription filled, calculated as a percentage of the whole: smaller for generics, larger for brands. (And you thought your medicine was going to be free once you paid the premium? Hah! Think again.) Of course the prices of the drugs go up each year (right in step with the monthly premium), which also drives up the dollar amount of the co-pay. [Medicare and YOU: 2014 tells me the insurer I chose for my coverage will be charging me up to $76 for a thirty-day supply of a non-generic medication this year. Nice to be warned.]
And then there’s the “doughnut hole” — that sweet spot between the point where you and the insurer combined have spent $2,850 for covered drugs and the point where the amount of such expenditure reaches $4,550. Once you’re in the “hole” — described legislatively, and less pejoratively, as “the coverage gap” — you’re on your own. You pay for everything all by yourself, even though you’re still paying the monthly premium!
Knowing all that, you can imagine my surprise on learning that in 2014, $101 in Part D premium will be deducted from my infinitesimally increased Social Security benefit every month. (Not quite wiping out the increase, but almost.) That premium comes to $1,212 annually, whether I ever have a prescription filled in 2014 or not.
I’m not a hothead. But when I think about it, I must conclude that I will be diverting $1,212 of my Social Security benefits to my insurance company in 2014 to compensate it for paying about two thirds of the first $2,850 in costs of covered medication that I may need over the course of the year. (So far I haven’t come close in any year since Part D began.) In addition, the size of the premium compensates the insurer for underwriting the risk that an over-65 person like myself might run up more than $4,550 in costs of covered medication before the end of the year, at which time the insurer would have to begin coughing up all but 5% of those costs until December 31. After that, we all go back to square one — with increased premium, new formulary, new drug pricing, new co-pay beginning in January 2015.
For me, as I have parenthetically stated above, this is still somewhat theoretical: I have not yet come close to reaching the doughnut hole in any year since Part D was enacted. So think of this post as an expression of premium sticker shock. Nina flying off the deep end.
Because yes, even in my dotage I continue to be outraged that I live in a country where the bottom line drives everything, including federal legislation supposedly designed to “help” the elderly sick but principally engineered to grow profits for large pharmaceutical and insurance corporations.
Okay, I’ve got that out of my system now. Instead of ranting and raving, what I should be doing is counting my blessings that I’m not yet — how that “yet” keeps creeping in! — really sick and making every effort to stay un-sick for as long as possible. So I’m going to tuck away my heads-up statement from the Social Security Administration in a large folder marked “2014” and try to forget the whole thing until 2015. (At which time you may hear from me again.)
You have to pick your battles.
Thanks for reading.