Since 2006, a privatized Medicare prescription drug program has been offered to seniors. The Part D program provides drug coverage through numerous private insurance companies, and it seeks to control prices through competition between the plans. Unfortunately, seniors face a complex and confusing array of choices in this program, and few have been able to effectively "vote with their pocketbooks" for plans that offer the best value. Due to the difficulty involved in comparing plan offerings year after year, only a small percentage of beneficiaries change plans, which undermines market competition. Drug prices continue to increase at alarming rates.
For many years, the National Committee to Preserve Social Security and Medicare has advocated for the provision of universal prescription drug coverage through the Original Medicare program. This approach would provide seniors a simple, familiar benefit, and it would harness the combined purchasing power of all Medicare beneficiaries to contain the skyrocketing cost of prescription drugs. We continue to work toward this goal.
In 2010, the National Committee and allied organizations successfully advocated for a major improvement in the Part D program - the elimination of the "donut hole" coverage gap. The donut hole required beneficiaries to cover 100 percent of their drug expenses after a threshold was reached ($2,700 in 2009), and it exposed seniors with long-term illnesses to substantial and unusual costs. The new health reform law, the Affordable Care Act , will phase out the donut hole by 2020. For 2012, a 50 percent discount on brand-name drugs will be applied at the pharmacy, as well as a 14 percent reduction for generic drugs. The Affordable Care Act also made improvements to the Part D enrollment process and in benefits for beneficiaries with substantial care needs.
However, many more improvements are needed. Seniors are given only seven weeks each year to make difficult decisions about their prescription drug coverage, and they are then locked into the plans they select for an entire year. This year's Annual Coordinated Election Period (ACEP) begins on October 15, 2011 and lasts until December 7, 2011. It is only during this open enrollment period that most seniors are permitted to enroll in a Part D plan, drop Part D coverage or switch to a different plan. While most seniors will be locked into the plans they select for all of 2012, plans are allowed to make significant changes to their prices, formulary and benefits throughout the year. In addition, many plans have already announced significant changes to their coverage for next year. We strongly encourage you to closely examine how your current coverage will change in 2012. It might be to your advantage to choose another plan that better matches your prescription needs and your cost expectations.
We believe it is essential for seniors to be given the most accurate information possible about Part D so they can make informed decisions about whether to enroll in the prescription drug benefit program and how to pick a plan that best serves their needs. For this reason, we have compiled the best answers available to the questions most frequently asked by seniors and their caregivers in order to help the American public better understand this program. As new information becomes available, we will continue to update this material.