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Actuary: Medicare Drug Benefit Has High Tax Cost

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NU Online News Service, March 19, 2004, 5:41 p.m. EST – The new Medicare prescription drug benefit could cost every U.S. resident an average of $511 in taxes apiece by 2016.[@@]

Kathie Ely, an actuary in the Hartford office of Milliman USA, has published that prediction in the latest issue of a Milliman health practice newsletter.

President Bush gave birth to the new Medicare drug benefit Dec. 8, 2003, when he signed the Medicare Prescription Drug, Improvement and Modernization Act. The drug benefit provision will take effect in 2006.

The benefit will cost an average of $111 in taxes per U.S. resident in 2006. That total could rise to about $511 in 2016 and $2,370 in 2026, Ely estimates.

Ely’s forecast assumes that prescription drug costs will continue to rise 15% per year.

Ely notes that the Medicare drug benefit program would pay only about 34% of Medicare beneficiaries’ total drug costs over the next 10 years and that the beneficiaries would pay about 66% of the costs.