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Insurers Start Flood of Ads for Medicare Drug Options
By Tony Pugh, San Jose Mercury News
October 1, 2005
Starting today, millions of Medicare beneficiaries will be flooded with advertising and solicitations from insurance companies inviting them to sign up for dozens of prescription drug plans with different premiums and benefits.
More than 40 options will be available in almost every state, the Bush administration said Friday.
Most prescription drug plans will deviate from the standard minimum benefit defined by Congress.
When it begins on Jan. 1, 2006, Medicare's new prescription drug benefit will mark a major turning point in the program's 40-year history.
Slated to cost more than $720 billion over the next decade, the drug benefit is one of the most generous health offerings in U.S. history and will provide immediate relief and life-saving assistance for millions of elderly and disabled Medicare enrollees who struggle with high prescription drug costs.
That help will not come cheaply, however.
The benefit will push Medicare drug spending to a projected $70 billion next year and help drive total Medicare spending from roughly $332 billion this year to $425 billion in 2006, according to Medicare actuaries.
The drug coverage is voluntary except for certain low-income beneficiaries who will be automatically enrolled in a plan if they don't choose one on their own.
Medicare officials are urging program enrollees to consider cost, coverage and convenience when selecting a plan.
But they caution that the new coverage isn't for everyone. In fact, only 28 million to 30 million of Medicare's estimated 43 million members are expected to join.
Those who definitely should join are the estimated 12 million Medicare members with no drug coverage.
Those who already have drug coverage through a former employer or union may find that they're better off without the Medicare benefit.
The new benefit was a long time coming and still has many detractors and doubters.
Instead of using Medicare's 43 million members as leverage to negotiate lower drug prices, the Republican-led Congress, backed by the Bush administration, opted to cover enrollees through the private insurance market.
The hope is that competition among the many plans will keep drug prices down.
Medicare officials expect the discounts negotiated by the plans to net average drug savings of 15 percent in 2006, 19 percent in 2008 and 23 percent by 2010.
Because Medicare's senior and disabled enrollees are generally sicker and take more drugs than other segments of the population, Congress provided large subsidies to insurers as incentives to compete for this once-unattractive market.
Additionally, the plans hope to sell other forms of insurance to their Medicare drug plan members.
By law, plans offering coverage must cover at least two drugs in each therapeutic class, but Medicare officials expect many plans to exceed those requirements.
Critics of the 2003 Medicare law, which set up the drug benefit, have attacked the standard benefit as inadequate. Dr. Mark McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said Friday, "Most plans will offer benefits that go well beyond the standard Medicare coverage."
Beneficiaries will soon be deluged with marketing material and application forms.
Advertisements will run in newspapers and magazines and on radio, television, billboards, posters and the Internet.
Many beneficiaries will also receive telephone calls, offering drug coverage and other health-related products.
The policy director of the AARP, John Rother, said he had no idea how many beneficiaries would enroll.
"The jury is out in terms of enrollment and public acceptance," Rother said.
"Half of Medicare beneficiaries have no clue that the new program is on its way."
He said the benefit would be a lifesaver to millions of Americans, adding, "People will get the medicines they need to stay alive."
Virtually all plans have lists of preferred drugs, known as formularies. The Bush administration said those lists included most of the drugs used by Medicare beneficiaries.
New York Times contributed to this story.
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