A Simple Rx for Part D


Jan 13, 2006

This commentary originally appeared in United Press International on January 13, 2006.

WASHINGTON, Jan. 13 (UPI) -- The federal government's new Medicare prescription-drug benefit program for the elderly and disabled, which went into effect Jan. 1, has gotten off to a slow start.

This has prompted calls by some for scrapping the program altogether. That would be a mistake.

The prescription-drug plan, known as Medicare Part D, has promised low prices by offering prescription-drug coverage through competing insurance companies. For the average beneficiary, Medicare Part D will pay for about half the prescription-drug costs. Monthly premiums will vary depending on the plan, but the standard plan will cost about $32 per month. That's in addition to the Medicare Part B monthly premiums of $88.50 for 2006.

But many of the 43 million senior citizens eligible for the program have failed to sign up since enrollments began Nov. 15. They have until May 15 to enroll without paying a penalty of 1 percent per month on their premiums.

The penalty for delaying may not seem like a lot, but it adds up quickly. A 66-year-old beneficiary who waits until she is 70 to enroll in a drug plan would pay nearly 50 percent more in premiums every month than if she signed up today.

Critics of Part D have said its complexity, high cost and array of choices are responsible for keeping many older Americans from enrolling.

Beneficiaries in many locations can choose from more than 30 drug plans -- and from more than 60 plans in some areas -- with varying levels of premiums, deductibles, co-payments and pharmacy networks.

All the needed information is available to seniors on the Internet, but many older Americans don't have computers, or aren't comfortable on the Internet even if they do. Even those who get information on www.medicare.gov often find it confusing, because it's not written in simple language that's easy for an ordinary citizen to understand.

But failing to sign up would be a mistake for most seniors. Medicare Part D is a major improvement in coverage for the elderly and is heavily subsidized by the federal government.

Here's some simple advice for Medicare beneficiaries and those who are advising them:

It's easy to get confused by the array of plan choices, but it's important not to get lost in the trees while navigating the forest of Part D. The key decision is whether or not to enroll, and if you do, whether the drugs you use are mostly covered by the plan. The other details can be sorted out over time.

If you're on Medicare and have a low income, or don't have drug coverage, you should enroll in some prescription-drug insurance plan under Medicare Part D -- even if you're not sure if it's the best one. You can always switch plans later without paying a penalty. The federal government is paying about three-quarters of the cost of Part D for all seniors. And there are additional subsidies for those with low incomes. This is simply too good an offer to pass up. If you're currently receiving drug coverage through Medicaid, you're automatically enrolled in an insurance plan under Part D, but you can also switch plans later without penalty.

If you're on Medicare and have prescription-drug coverage from your employer, call the administrator or human resources department at work to find out if your current plan is as good as the standard Part D benefit (your employer will know). If it is, stay with your existing plan and you won't be penalized for enrolling in Part D in the future. If your employer-provided insurance isn't as good as the standard Medicare plan, then you should probably enroll in Part D.

If you're on Medicare but have purchased your own prescription-drug coverage through Medigap, you should already have received a notice from your plan. The notice should have explained the changes to the insurance policy, and whether your current plan satisfies the requirements of Part D plans (it probably doesn't). In most cases, you should switch to Part D.

If you're on Medicare and currently healthy, it still may be worthwhile to sign up now. Low or zero-premium plans are available in most areas. These plans typically provide smaller discounts on drug prices but provide protection against catastrophic drug expenses and allow beneficiaries to switch into more generous plans without penalty as their future demand for prescription drugs changes.

Elected officials and policymakers shouldn't write off Part D as a failure just because there hasn't been a rush of early enrollments. There are a lot of confusing choices facing seniors, and many of them are understandably having a hard time making these decisions quickly on their own.

This suggests that extending the enrollment period to the end of 2006 may be beneficial. However, scrapping the program so soon would be akin to filling a prescription for some real malady and then dumping the pills in the trash.

Outside View © 2006 United Press International

Geoffrey Joyce is an economist at the RAND Corporation, a non-profit research organization.

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