Democrat Disputes Medicare
Prescription Drug Plan Calculations

Rep. Henry A. Waxman (D-Calif.) says Medicare officials have a problem with their math.

The Bush administration said last month that beneficiaries who stay in their Medicare prescription drug plan will pay an average of $24 a month in premiums next year, the same as this year.

But according to Waxman, average prescription drug premiums in what is known as Medicare Part D will rise to $29 a month in 2007. He cited an analysis by the Democratic staff of the House Government Reform Committee, on which he is the ranking minority member.

"The department's numbers appear to be wrong, and they disguise significant increases in premiums for Medicare drug plans," Waxman wrote in a letter to Health and Human Services Secretary Mike Leavitt yesterday. "The release of erroneous information about the cost of premiums -- whether deliberate or not -- is a disservice to millions of seniors and a discredit to the department."

Mark B. McClellan, the head of the Centers for Medicare and Medicaid Services, stood by the administration's estimate. He called Waxman's analysis "misleading" and said it might discourage the 23 million people enrolled in the Medicare drug benefit from evaluating all options.

The discrepancy arises from the different ways that the two sides calculated average premiums. The administration average is based on both stand-alone Medicare plans that cover drugs only and heavily subsidized, HMO-style "Medicare Advantage" plans that offer a broad range of health care and do not charge a separate premium for drug coverage. Waxman's staff focused on the stand-alone plans, since 90 percent of seniors enrolled in the drug benefit choose such plans.

"The congressman's analysis is inaccurate and misleading because it is selective, measuring just one of the plan options beneficiaries can use to get their prescription drugs," McClellan said in a statement.

Waxman said Medicare officials are being "unrealistic" by putting the Medicare Advantage plans on the same footing as the more popular drug-only plans.

"The only way the Administration's numbers can possibly add up is by including artificial estimates of the costs of drug coverage in Medicare managed care plans," he said in a statement. "Most seniors won't abandon traditional Medicare just to keep the costs of their drug coverage from going up, nor should they have to."

He said the assertion that premiums will remain nearly flat in 2007 was reminiscent of the administration's assurances to Congress in 2003 that the drug benefit would cost $400 billion over 10 years -- even though federal actuaries at the time were estimating the true cost as more than $500 billion.

McClellan said the estimated cost of the benefit has dropped lately as the insurance companies that offer the federally subsidized drug coverage have charged lower-than-expected premiums while competing to lure seniors to their plans.

McClellan plans today to announce improvements to the CMS Drug Plan Finder, a tool available on the Medicare Web site to help beneficiaries choose a drug plan. Open enrollment for 2007 will begin Nov. 15.