The Bush administration and a plethora of partners have begun to roll out an ambitious campaign to prepare Medicare beneficiaries for the prescription-drug benefit that will begin next year, but significant obstacles must be overcome if they are to be able to meet their target of enrolling 28 million to 30 million people.
If not, Congress may be forced to step in and extend the time allotted for senior citizens and the disabled in Medicare to get access to drug coverage without being hit with potentially substantial penalties for signing up late. Medicare beneficiaries will have from Nov. 15, 2005, until May 15, 2006, to choose a prescription plan under the new Medicare Part D.
President Bush and Health and Human Services Secretary Mike Leavitt have given speeches in the past two weeks promoting the drug benefit as part of the “Medicare Covers America Tour.” Leavitt also traveled to Florida this week.
At an event yesterday hosted by the drug company Pfizer and a coalition of patient-advocacy groups and others, former Sen. Bob Dole (R-Kan.) emphasized the importance of spreading the word about the drug benefit now.
“We’re getting an early start,” he said, because the Medicare population can be difficult to reach. Dole touted the value of the drug benefit and urged seniors in the audience to educate themselves about their options but stressed, “You do not have to make any decisions right away.”
In fact, Medicare beneficiaries are not allowed to make final decisions until October, when the Centers for Medicare and Medicaid Services (CMS) plans to announce what private health-insurance companies are offering Medicare drug coverage in different regions of the country. Once the options are revealed, CMS, the Social Security Administration (SSA), state agencies, the health plans and private organizations will intensify a campaign to explain the benefit.
Dole said he might participate in as many as five Pfizer-sponsored events around the country. AARP and other groups — including some that fought the bill that created the drug benefit — also are engaged in outreach.
In a June report to Congress, the Medicare Payment Advisory Commission (MedPAC) outlined the challenges facing the administration. “To begin receiving benefits by Jan. 1, beneficiaries must navigate a tight timeline,” MedPAC states. CMS and other entities “will have little time to educate beneficiaries about their choices, help those who are qualified apply for low-income subsidies, and help beneficiaries make informed decisions,” the report states.
CMS seeks to reach people through their former employers, unions, senior citizens’ centers, churches and other organizations upon which Medicare beneficiaries depend for counsel. The administration predicts that as many as 30 million people will sign up during the open enrollment period that ends next May. These estimates are based on the assessments of Wall Street analysts who predict Medicare drug coverage will be a boon for insurance companies. About 43 million people will be on Medicare in 2006, CMS projects.
Only between 6 million and 8 million Medicare beneficiaries would have to choose a prescription plan for that estimate to be proved accurate because most of the 28 million to 30 million will be signed up automatically, CMS deputy administrator Leslie Norwalk said.
Medicare beneficiaries who currently receive drug benefits under Medicaid will have a plan chosen for them by CMS if they do not select one of their own. Medicare-Medicaid “dual eligibles,” those receiving drug benefits from former employers and those who belong to existing Medicare Advantage private health plans make up about 22 million people, or nearly half of the Medicare population.
The administration’s experience with the temporary Medicare drug-discount program provides lessons for the rollout of Part D, according to MedPAC. The cards became effective June 1, 2004, and are meant to fill the void until the full benefit debuts next year. Although 15.4 million people could have received discount cards, only 5.8 million had signed up by the end of 2004 and most of them were automatically enrolled, MedPAC found.
Citing the “relatively ineffective” efforts to enroll people in the card program, MedPAC recommends auto-enrollment in the full drug benefit for more beneficiaries, especially those with low incomes.
The administration plans to focus its outreach efforts on low-income seniors and disabled people who qualify for the most generous benefits. The SSA and CMS already have identified and notified people likely to be eligible for heavily subsidized coverage. “We want to get the low-income piece as complete as possible” before actual plan enrollment begins in November, Norwalk said. The success of efforts to reach the low-income population could be indicative of the overall success of the drug benefit, she added.
American Enterprise Institute scholar Joseph Antos said that enrolling up to 30 million people by next May “is a highly questionable prospect. … I don’t know what it’s based on.” Antos suggested that the take-up in the first year would be closer to 20 million to 25 million.
“Everyone is just guessing about that,” agreed Paul Ginsburg, president of the Center for Studying Health System Change.
Urban Institute President Robert Reischauer, the former Congressional Budget Office director who also serves as vice chairman of MedPAC, said he is optimistic about the longer-term prospects of the drug benefit. “If people don’t enroll in the first month, it’s not the end of the world,” he said.
“Enrollment will be better than the pessimists fear and lower than what the administration would like,” said Reischauer. “The process will take a number of years, probably, to get up to a steady state in terms of enrollment,” he said.
If enrollment turns out to be disappointingly low, the administration and Congress would feel pressure to take steps to capture the people who fall through the cracks during the first go-around.
The current law would apply a permanent penalty in the form of higher premiums on Medicare beneficiaries who do not join a drug plan by May 15. The mechanism is intended to discourage beneficiaries from waiting to obtain drug coverage until their costs are high and is analogous to a long-standing policy for physician coverage under Medicare Part B and to private-sector practice for employer-sponsored health insurance.
The penalties, however, would be politically unpalatable if millions of seniors and disabled people find themselves confronted with high costs if they try to enroll for 2007 or after.
Congress either could anticipate lackluster enrollment and try to expand the period for 2006 or look back in a few years and “grandfather” beneficiaries who did not move quickly enough to avoid the penalties.
Reischauer said, “I will give you a rash prediction. … Two years from now, we will have a ‘forgiveness’ bill’” to protect people who enroll late.