Despite the best efforts of the Bush Administration’s public relations machine, Americans made it clear last year that they were in no mood to privatize Social Security. But the Administration had already won a quieter victory with an equally successful social insurance program, Medicare. Part D, the new prescription drug benefit that took effect January 1, looks like the first step on the way to destroying Medicare as a benefit for all senior Americans.
It’s too early to tell whether Medicare Part D will be a flop like its predecessor, a drug discount card program that attracted only 15 percent of eligible seniors. But it may well be. So far only about 1 million have voluntarily signed up–fewer than 5 percent of the 21 million eligible seniors, most of whom have been without prescription coverage. At a carefully scripted press conference just before Christmas, Health and Human Services Secretary Michael Leavitt put a positive spin on the numbers, noting that another 21 million seniors were receiving coverage. But most of those enrollees were low-income people the government automatically enrolled, or those already receiving drug benefits elsewhere. The new plan is not yet reaching most of the people it’s designed to help.
Unlike other Medicare benefits, Part D is modeled on the country’s dysfunctional commercial health insurance system. With Medicare Parts A and B, which cover hospital services and doctor visits, the government pays providers directly. Under Part D, the government pays some 260 private insurers–including pharmacy benefit managers, HMOs and pharmacies–to provide the coverage. If seniors want the benefit, they must buy it from one of those private carriers. To force them to sign up, Congress imposed a financial penalty (growing more onerous over time) for those who don’t get on board by May 15.
Medicare Part D represents the free market run amok. “You don’t have to understand every detail and every option,” Medicare administrator Dr. Mark McClellan told the Los Angeles Times. “People just need to focus on what they want.” Easier said than done. In some counties, seniors have forty or fifty choices of plans–a jumble of insurance options with monthly premiums ranging from zero to more than $60. The government has allowed sellers to mold Part D coverage into hundreds of combinations of deductibles; co-insurance (a percentage of the drug cost consumers pay); drug utilization techniques (such as trying cheaper generic drugs first); and drug tiers, with their own dizzying array of co-payments (the flat amount consumers pay for each drug). Co-payments differ depending on whether people buy generics, preferred brand drugs, non-preferred brand drugs or specialty drugs–and depending on whether they buy from an in-network pharmacy where the insurer has negotiated good discounts or from an out-of-network pharmacy where it hasn’t. Adding to the confusion is the fact that there’s no standard nomenclature; sellers can use any fanciful name they think will lure buyers to their plan. They can also cover whatever drugs they want to; prescription formularies are not standardized either.
And what happens when seniors are understandably flummoxed by the overabundance of options? They’re sent to a complicated web tool for answers–even though, according to one survey, three-quarters of seniors say they have never gone online.