“Imagine what it would be like if a grocery store never displayed the price of anything. And the price you’re charged might be totally different from the price the next customer is charged for the same product. In fact, suppose you couldn’t even pick your own groceries.”  This is how drugs are sold to people in the United States, according to Dr. David Belk in his truecostofhealthcare.org website.

Dr Belk writes about the scam being perpetrated by pharmacies and insurance companies – and the victims are people with health insurance and Medicare Part D. Folks paying $15 to $30 per month (or more) for a Medicare Part D plan should pay attention to this.

Dr Belk points out that many drugs are now generic, and pharmacies get them for pennies per pill.  And yet, Part D plans require seniors to pay a $4 to $10 co-pay using their Part D card.  According to Dr. Berk:

“The co-pays are still based entirely on the insurance plan, so the same medicine in the same pharmacy might cost $5, $10 or $25 for a months supply. What’s more, people might pay several hundred dollars a year to get prescription drug coverage on their insurance, even though that coverage increases the cost of many medications and cost the insurance company nothing. It’s like buying a book of coupons that say “one for the price of two” at your local grocery store. You can see why they didn’t want to tell you about it.”

I find myself apologizing to clients who are signing up for Part D even though they don’t need it. They don’t take any drugs, or use one or two generics. I tell them Part D is voluntary – but they will be penalized if they decide to wait to enroll at some later date. I tell them, if they want to get into the Part D system, they should enroll in the lowest-cost plan – but that plan has a $320 deductible. That means these healthy people will probably never meet the deductible throughout the year.

They will pay $15 per month but will still pay full price for their drugs – until they pay their $320 deductible. And, if they don’t use their Part D card to purchase their generics, they will get a lower price (as described above by Dr. Belk). But if they want their drug purchases to be applied toward their deductible, they need to use their Part D card – and pay a higher price.

What’s wrong with this picture?

The problem is that there are 1,100 Part D plans offered across the county (30 in Arizona), and insurance companies negotiate prices and set the co-pays for each drug. I wrote about large price differences from plan to plan last week, using the Lipitor generic as a prime example.

Part D is one more example of how messed up the American health care system is – and why it is so much more expensive than other countries’ systems.  Why do Americans, those with health insurance and Medicare, allow themselves to be ripped off?

Seniors who have gone into the Part D donut hole will be getting a check from Social Security for $250, and scam artists are using this news to their advantage.  Apparently, crooks have been calling seniors telling them they need to provide personal information in order to get the $250 rebate check.  In fact, seniors and younger Medicare beneficiaries do not need to do anything to get their rebate check because Medicare has their prescription expense information. When a person hits the donut hole, a $250 rebate check will be generated and mailed to the address that Medicare has on record for that person.

A person enrolled in a Medicare Part D drug plan falls into the donut hole when what she has paid out-of-pocket for prescriptions and what her drug plan has paid for her prescriptions add up to $2,830.  Part D drug plans are offered by insurance companies and the companies send out monthly statements to people enrolled in their plans. These statements tell people how close they are to the donut hole each month.

When a person falls into the donut hole, she will then have to pay 100% of the cost of her prescriptions. People who take two or three brand name prescriptions are likely to go into the donut hole.  The more expensive the prescriptions are, the sooner the person will go into the donut hole.

The $250 rebate check is small consolation, but next year more relief is on the way.  In 2011, seniors who go into the donut hole will pay only 50% of the cost of their prescriptions.  The pharmaceutical companies  have “generously” offered to cut the cost of drugs by 50% for people who fall into the donut hole.  The Affordable Health Care Act that was passed this year requires drug companies to agree to this discount in order to participate in Part D.

Because so many scammers are targeting seniors, Medicare is spending millions of dollars in radio, television, and newspaper advertising to tell seniors not to give out personal information over the phone. If someone calls saying they are from Medicare or Social Security, the senior should not speak to them.  Medicare and Social Security do not call seniors.

CLICK HERE FOR A DETAILED EXPLANATION OF PART D AND THE DONUT HOLE.