Tags: MediGas | Benefit | for | Seniors?

MediGas Benefit for Seniors?

Tuesday, 18 April 2006 12:00 AM

Last month we did a thought experiment that compared Medicare with an imaginary MediTrans government program, thinking through how seniors buying cars would respond if given benefits and incentives similar to Medicare program benefits. (See:

Today we'll do a similar experiment on the new Medicare drug benefit. Let's call it MediTrans Part G (for Gas), or MediGas, providing gas benefits for MediTrans customers. And, as suitable for discussing gas, we'll look at the lighter side.

We liken the Medicare drug benefit program to gas because people on Medicare needing prescription drugs often need them for the rest of their lives, just as personal motor cars need gas throughout their lifetimes.

When seniors using MediTrans to buy new cars complained that their gas bills for their new Hummers were costing too much, the politicians responded with the MediGas benefit.

Although the legislative history and resultant laws and regulations were complicated, magazines and newspapers responded with a series of articles about how to choose a plan, what to consider among the options, how to compare cost, convenience and gas needs, what the late-enrollment penalty meant, and the ever-present Q&A to answer readers' questions. Gas advocacy groups sprang up to help seniors figure out the gas benefit and push their own agendas.

Rather than a one-size-fits-all discount program paralleling the increasingly regulated MediTrans Part C (for Car) program, politicians decided to encourage competition among private companies by letting private companies offer different plans covering different benefits and gas products with different premiums. Some plans with low premiums appealed to people who didn't drive much but wanted coverage for an occasional vacation or emergency family trip. Other plans were aimed at folks who drive from Southern California to Las Vegas most every weekend.

Yet others targeted motor home travelers even though the government recently took motor homes off its list of approved motor vehicles; as of today, government officials weren't sure if Part G coverage would cover motor home fill-ups.

Some politicians complained about the program. Sen. Yral Mahdore said: "The wheels are coming off MediTrans and MediGas. We should scrap them and start over. Gas stations are gouging seniors while claiming increased costs. Let's just force them to eat any extra costs, just like we do with doctors."

One advocacy group asked: "Why is MediGas a Failure? In a Nutshell: 1. Unlike MediTrans Part C, MediGas does not let me use my MediTrans card, forcing me to sign up with a private MediGas plan. 2. MediGas does not allow government to negotiate gas prices, leaving me with high gas costs and wasting money. 3. Unlike MediTrans, MediGas does not guarantee I can get the gas I need."

Sen. Nore Denywe, who voted in favor of the gas benefit, responded by saying that "recipients have too many choices of plans. I think there's too much private-sector gas choice goin' on out there. Why waste money on the private sector when the government is perfectly capable of wasting money on its own?"

These same senators were sponsoring a MediTrans Part F (for Food) plan, "MediFood," with limited menu choices to keep food and obesity costs down.

The MediGas plan seemed complicated. After an annual $250 deductible, the government-sponsored 75 percent discount covered only the first $2,250 worth of gas every year. Then subscribing seniors didn't get any government gas benefit at all until they had spent $3,600 out of pocket, the so-called "Gas Gap." After that, they got a 95 percent discount, which pleased motor home and Hummer drivers.

All the major gas companies sponsored several plans. Some plans covered the Gas Gap but had a higher premium.

Unfortunately, most gas station attendants weren't highly trained in handling federal government paperwork or dealing with customers whose MediGas debit cards refused to work at the pump. At first, long lines at gas pumps were common.

Some independent stations didn't sign up. They didn't want to have to hire more staff to help customers trying to figure out whether or not gas would be covered, and for how much. They also didn't have to hire lawyers to write the plans and lobby Congress. As a result, the non-participating stations found themselves selling gas for $1.50 a gallon instead of the $3.50 participating stations had to charge to cover their new overhead.

Participating MediGas gas stations then found their volume of sales going down because the government prohibited any special price deal for their lower-cost non-MediGas customers. All participating MediGas stations had to give their "best gas price" to MediGas customers.

Ylas Ztrawhcs, age 65, is glad she didn't sign up for the MediGas plan. In an imagined interview, she said:

"I watched a lot of my friends spend a lot of their time figuring out which plan to buy. Then they fussed trying to understand the plan they'd bought into, especially when they found themselves paying more in MediGas premiums than it would cost to fill up at non-participating pumps. Some people got so upset and raised such a ruckus in the gas station that the police came and took them away for disorderly conduct. Me, I was bicycling, visiting family and friends, square-dancing, attending religious services and otherwise enjoying myself while my friends were in the clink."

A more serious take-home lesson applied to your own do-it-yourself prescription plan: If you don't have a special benefit or plan which requires you to find a participating pharmacy, look for non-participating pharmacies specializing in cash rather than insurance or benefit plan payment. You'll usually get a better deal.

Robert J. Cihak, M.D., is a Senior Fellow and Board Member of the Discovery Institute and a past president of the Association of American Physicians and Surgeons. Michael Arnold Glueck, M.D., is a Visiting Fellow in Economics and Citizenship at the International Trade Education Foundation of the Washington International Trade Council.

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Last month we did a thought experiment that compared Medicare with an imaginary MediTrans government program, thinking through how seniors buying cars would respond if given benefits and incentives similar to Medicare program benefits. (See: Today we'll do a...
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Tuesday, 18 April 2006 12:00 AM
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