Part D From Outer Space
While seniors are confronted with an overwhelming number of choices, insurers are benefiting from a massive Congressional giveaway. Insurers got generous payments to offer the coverage. And when the inevitable shakeout occurs among the 260 sellers, a cluster of mega-carriers like Aetna, WellPoint, UnitedHealthcare and CIGNA will reap the most from the Congressional largesse.
The size of these big insurers' marketing and operations budgets for Part D shows how important the new Medicare is to them. UnitedHealth Group is spending $75 million, Aetna $50 million and CIGNA $40 million. Humana, a large regional carrier looking to switch seniors to the company's other products, is spending $80 million. Steve Brueckner, Humana's vice president of senior products, says that Part D offers "an unprecedented opportunity to establish relationships."
Indeed it does. Drug companies are also eyeing new customers, especially among enrollees who could not in the past pay for drugs. They, too, are designing marketing strategies around Part D. Bob Dole, former senator turned Viagra pitchman, is selling the benefit on behalf of Pfizer. AstraZeneca is funneling $10 million to the National Council on the Aging (NCOA) to pay for vans and laptop computers that state insurance counselors can use to sign people up.
For politicians, of course, the goal was not just money but votes. Last summer at a meeting of some fifty healthcare lobbyists, a parade of Republicans, led by cheerleader DeLay, urged the lobbyists to help launch a national advocacy campaign to sell Part D, saying the effort would pay dividends in the 2006 midterm elections. That campaign is roaring across the country with the Medicare Rx Education Network, whose membership roster reads like a Who's Who of the business and medical establishment, leading the promotional charge. The network's star is none other than ex-Senator Breaux, who chairs the effort from his Washington law firm, Patton Boggs, one of the capital's premier lobbying outfits. Breaux has been placing op-eds and letters to the editor in newspapers urging seniors to sign up. The network has sent out six mailings to everyone eligible for Medicare, using the government's Medicare Rx Education logo. These mailings' return address is the US Chamber of Commerce. Seniors who also see the Medicare Rx Education logo on government publications can be forgiven if they are confused about who is sending the message.
In its pro-Part D public relations efforts, Medicare Today--a creation of the Healthcare Leadership Council, an organization of hospitals, drug companies, device makers and academic medical centers--has enlisted more than 300 other organizations, ranging from the Blue Cross Blue Shield Association to Wal-Mart Pharmacies, which have contributed $6 million toward "outreach." Since July Medicare Today has held 1,000 events around the country promoting Part D to seniors, and it has stationed representatives in pharmacies and grocery stores to answer questions and help them use the web tool. "We believe this is the right fix for Medicare and it's the right evolution for the twenty-first century, and we're trying to get people to take advantage of it," explains Michael Freeman, executive vice president of the Healthcare Leadership Council.
the initial reluctance of seniors--despite the fevered push to sign up the 20 million older Americans still eligible but not yet enrolled--may reflect an intuitive wariness of a program that while helping them in the short run may doom Medicare in the long run. At the Christmas press conference, Secretary Leavitt said seniors would "never have to worry about high drug costs in the future." But they do. In the end, a drug benefit based on the free market may kill Medicare. It's bad enough that Congress underestimated the true cost of Part D by at least $150 billion. But in its most devastating concession to Big Pharma, Congress forbade the government to negotiate with pharmaceutical companies over drug prices--a deliberate and crucial omission. In essence, Congress bet on insurance carriers and competition to keep drug prices under control--something the market has done poorly.
With Part D causing a virtual epidemic of headaches and complaints, there will be plenty of pressure on Congress to fix the mess. Representative Jan Schakowsky, a progressive Illinois Democrat, has introduced a bill to standardize benefits and require the government to negotiate prices with pharmaceutical firms. Passing such needed reform will be difficult, if not impossible. But Part D will not work in the long run unless Congress mandates price negotiations and ends the formulary free-for-all. Without standardized formularies, sellers can change the drugs they cover at any time--forcing seniors to pay out of pocket, find another insurer, get their doctors to change their treatment plans or file for an exception.
Even with standardized formularies, runaway drug prices could cause Congress ultimately to conclude that Medicare is simply too expensive--and transform it into a means-tested welfare program that would make doctor, hospital and drug benefits available only to the very poorest seniors. That would end Medicare as we know it. Maybe that was the real goal of Part D all along.