Friday Alert   June 30, 2006
Alliance for Retired Americans
888 16th Street, N.W. -  Washington DC, 20006 - (202) 974-8222 - www.retiredamericans.or

House Democrats Unveil a Fix for Part D
On Tuesday, House Democrats outlined their "Prescription for Change," improvements to the Medicare Part D drug program to ensure that seniors and people with disabilities can access affordable prescription drugs.  Currently, seniors and the disabled select from dozens of plans offered in their state by private insurers.  The Democratic proposal would let beneficiaries choose a plan administered by the federal government.  The "Prescription for Change" would also require Medicare to leverage its bargaining power and negotiate lower prices with drug companies; extend the enrollment deadline to December 31st without penalty; stop drug plans from increasing co-payments and creating burdensome administrative hurdles during the year; and ensure moderate-income Medicare beneficiaries get the drug coverage assistance they need by eliminating barriers. Democrats envision using the money that is saved through price negotiation to close the "doughnut hole" gap in coverage that will affect an estimated 6.9 million people this year, according to The Washington Post.  Speakers at Tuesday's announcement noted the recent study from the advocacy group, Families USA, which found that the Veterans Affairs' prices for drugs were consistently lower than prices charged by Part D plans.  The median price difference was 46 percent.  "The 'Prescription for Change' addresses the problems that have made Part D such a disaster," said Edward Coyle, Executive Director of the Alliance.  "This is an opportunity for Congress to rectify its mistakes."

House Renews Older Americans Act
The House voted last week to reauthorize the Older Americans Act (OAA), but included alarming changes to the important Senior Community Service Employment Program (SCSEP).  At the urging of the Bush administration, the bill included a provision that would require the program to place 30 percent of participating seniors into unsubsidized jobs in the private sector by 2011.  In addition, a four-year limit on participation in the program would be imposed.  As it works now, the employment program, administered by nonprofits, provides minimum wage jobs to seniors to work at charities and perform community services.  The Senate bill was marked-up this week in the Retirement Security and Aging Subcommittee of the Health, Education, Labor and Pensions (HELP) Committee and next goes to the full HELP Committee.  "The SCSEP is a great program that benefits both seniors and the community as a whole," said Ruben Burks, Secretary-Treasurer of the Alliance.  "We can't let provisions leak into the Older Americans Act that will weaken the program."  Despite bipartisan support in Congress, many aging advocates have concerns with both bills.

Health Care Costs Weigh on Retirees
Thirty-seven percent of respondents to a Wall Street Journal poll said their living expenses in retirement are higher than they anticipated, a number likely to grow as more people reach retirement age without accurately estimating the impact of health costs in their golden years.  Even with Medicare coverage, Fidelity Investments projects that a 65-year old couple will need $200,000 to cover 20 years of medical costs, according to USA Today.  To make matters worse, as health care costs continue to skyrocket annually, most U.S. employers are planning to scale back the health benefits they offer retirees.  A recent survey conducted by consultants Watson Wyatt found that 14% of the companies polled plan to stop providing retiree health coverage for future retirees entirely.  "It seems like the average American worker just cannot get a break," said George J. Kourpias, President of the Alliance.  "As we are forced to work much later in life to afford over-priced prescription drugs and health costs in our retirement, and watch our pensions be taken away, Congress tries to destroy helpful programs like Social Security, Medicare and Medicaid.  It's not right."

Medicare to Encourage Preventive Care
Medicare plans to launch a campaign this summer to inform beneficiaries of their recently expanded preventive services and improve seniors' low use of the services.  Treatments for serious illnesses eat up the majority of Medicare's $336 billion budget.  Officials are hoping benefits such as "Welcome to Medicare" physical exams, blood tests, and diabetes screening and training will encourage beneficiaries to seek more preventive care, and lower costs related to the complications of chronic diseases.  Currently, only 2% of eligible seniors take advantage of the physical exam, while Medicare paid nearly $13 billion for potentially preventable hospitalizations, according to an analysis using data from 2001.

Drug Companies Use Doctors' Charities Illicitly to Curry Favor
Across the country, doctors in private practice have set up tax-exempt charities collecting millions of dollars from drug companies and medical device makers, according to the New York Times.  Because they operate mainly under the radar, the tax-exempt organizations represent what some doctors, as well as regulators and other experts say is a growing flow of industry money.  The payments can bias the treatment decisions of physicians and lead to doubtful research findings.  Critics also say the arrangements pave the way for both conflicts of interest and misuse of funds.  A government attorney with the federal Health and Human Services Department said that if the contributions amount to payments or gifts to doctors who then use or recommend a certain drug or device, companies could even be breaking anti-kickback laws.  The Times cited as an example a case where a doctor defending the drug Natrecor, produced by the Fremont, California firm Scios, said that the drug posed no kidney risks.  Several days earlier, however, Scios itself had sent a safety alert to doctors warning against the outpatient use of Natrecor.

Did You Know...
New retirees tend to spend more money during their first five to seven years of retirement than they did when they were working, according to financial planner John Sestina in USA Today.  Travel, hobbies, seeing grandchildren, and gifts were listed as key reasons for the rise in spending.

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