Medicare prescription drug coverage

A friend writes: In July, a close friend of mine celebrated his 65th birthday. My friend, who I’ll call Howard, spent the weeks leading up to his birthday reviewing his options for Medicare enrollment, carefully picking the plans that made most sense for him: a Part A plan for hospitalizations; a Part B plan for office visits; and a Part D plan to cover the cost of prescriptions. [Editor’s note: Enrollment in Part A is automatic for Americans over 65; Part B is voluntary but requires a premium; Part D is also voluntary and premium-based. If you don’t sign up when you’re first eligible, you may pay a penalty. Like everything else in our health-care system, it’s complicated.]

“But Howard is a generally healthy guy. He sees a doctor a few times a year, usually for routine check-ups or physical therapy appointments for various aches and pains. He rarely takes prescription medications, so he was particularly careful when picking a Part D plan. He didn’t want to spent a lot of money on a plan he would never use, but he didn’t want to pay a penalty, either, for failure to enroll in a Part D plan on time.

“After reviewing his options, Howard picked the Humana-Walmart plan for Part D. It was the cheapest plan available to him at just $14 per month, but it came with a $300 deductible. That means that Howard would have to pay for his first $300 worth of prescription drugs out of pocket, with no reimbursement from Humana-Walmart. After that, the prescriptions would be mostly covered, with Howard still chipping in a copayment. Since the mandate for enrollment in a Part D plan doesn’t kick in immediately, Howard waited until September to sign up.

“In October, Howard needed a routine colonoscopy. Medicare would cover the services, but first he needed to take the prep medication to clear his digestive tract before surgery. His doctor told him the prescription name and Howard set out to weigh his options for payment.

“First, he called his old HMO, Group Health Cooperative of South-Central Wisconsin, a non-profit cooperative staff-model organization through which Howard had coverage for more than twenty-five years before signing up for Medicare. Their in-house pharmacy told him that, since his insurance wouldn’t cover the cost, he would have to pay full price out of pocket–a whopping $12.10.

“That sounded like a pretty good deal, but Howard is a deliberate guy, and he called around to check on his options. After about a half hour on the line of the Humana-Walmart plan’s 1-800 number, he spoke to someone who could answer his question. He could buy the medication through the plan, and it would contribute toward his deductible, for about $38.

“Howard was understandably shocked by the huge discrepancy. How could the exact same drug cost over three times more through his insurance provider? Finally, he called Walmart, too, to check on the full price of the medication without insurance. They told him that, without insurance, he would pay $32. He called Walgreens, too, who told him they charge $25 for the medication–a great deal if you’ve just been to Walmart; not so great if you’re familiar with the local cooperative HMO.

“Howard’s choice was clear, but the whole situation was baffling. How can one prescription vary so greatly in cost, and how can it cost so much more with insurance than without? Does Walmart know that they’re charging their own insurance customers more than someone without Walmart’s Part D? And how can the consumer be expected to sort through this mess every time he needs a medication?”

Jeanne Pinder

Jeanne Pinder  is the founder and CEO of ClearHealthCosts. She worked at The New York Times for almost 25 years as a reporter, editor and human resources executive, then volunteered for a buyout and founded...