Part D was less popular than Obamacare when it launched

June 21, 2013

Welcome to Health Reform Watch, Sarah Kliff’s regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Sarah with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition, and read previous columns here.

Health and Human Services is in the opening throes of attempting to enroll millions of Americans in a brand new, and relatively unpopular, health insurance program. It's a massive task only made more difficult by widespread opposition and political divisions.

But it is, as Sabrina Corlette puts it, "not the federal government's first time at the rodeo."

Eight years ago, the federal government rolled out Medicare Part D, a prescription drug benefit. For the first time ever, Medicare was launching a benefit administered exclusively through private health insurance plans. The benefit was not popular: In the spring of 2005, when enrollment efforts ramped up, polls showed Medicare Part D to be less popular than the Affordable Care Act. Fewer Americans felt they understood how it worked, too.

Corlette and her colleagues at Georgetown University's Center on Health Insurance Reforms recently finished one of the more in-depth comparisons between the roll out of Medicare Part D in 2005 and the Affordable Care Act now.

"A few months ago, when we were out at forums and talking to reporters and policy experts, we kept hearing over and over again comparisons to Part D," Corlette says. "The concerns about whether the federal government would be ready, whether plans would participate and will people know about it."

They did not have to dig too deep to find similarities between the two, especially when it comes to concerns about participation in the new program and the cost of premiums. To start, neither was especially popular in the months prior to their launch. Part D was even less liked: 21 percent of the public had a favorable opinion of the program in April 2005 compared to 35 percent in April 2013 for the Affordable Care Act.

Americans felt like they didn't understand Part D, either. And back in November 2005, nobody had any clue about whether costs would be affordable enough to entice seniors into the new program:

In advance of the program's start, the Congressional Budget Office had projected that average premiums would be about $35 per month. But since this market for drug plans was new, there was uncertainty about the accuracy of this estimate. Actual premiums in the first year would be driven primarily by plan sponsors' estimates of the cost of offering the benefit and strategies about how to approach a new market.

A year later, things didn't seem much better. Just before the start of enrollment, in October 2006, "only one in five seniors expected to enroll in Part D." The rest either hadn't made up their mind, or thought they already had similar coverage.

Seniors, it turned out, were not exactly great at predicting their behaviors: 53 percent of Medicare beneficiaries ended up enrolling in the new benefit. The CBO was off by a bit too, with the average drug plan costing $29 per month rather than $35.

This isn't to say the roll out went off without a hitch; it faced some pretty significant problems. Many seniors eligible for a low-income senior never received it, when federal agencies failed to share information on a timely basis. When seniors called the 1-800-Medicare phone number for help, a review found the agency "only responded to calls accurately and completely only about two-thirds of the time."

Some of these problems got fixed: Medicare hired additional staff and increased training in an effort to improve the call centers. Some didn't: Four years after the launch of Part D, research shows many seniors still missing out on the low-income subsidy.

So, what does this tell us about Obamacare? We know that, much like Part D, the health reform law faces a lot of uncertainty (this was also true, a few decades ago, of the original Medicare program itself). What we don't know yet is how that uncertainty gets resolved, although we are starting to get some clues.

Premium bids on the health exchanges, for example, are coming in slightly lower than the Congressional Budget Office projections. Call centers are starting up right now, but it's still hard to predict what call volume they will receive in the coming months.

The Obama administration has approached the health law's launch a bit differently than Part D, especially when it comes to an outreach and education campaign.  Medicare Part D had a sweeping, year-long campaign that began well in advance of the program's launch.

The Obama administration has decided to focus its efforts differently. It will do most of its outreach push in the late summer and early fall. The White House and its allies worry that if they begin their pitch too soon they'll be selling a product that is nowhere near landing on the shelves.

"Medicare Part D started in the spring of 2005 with outreach," Corlette says. "This time around, the administration has made a clear decision that they're not going to fully launch until mid-summer. What's hard to tell is how much of it is a resource issue. What I have heard communications experts say is that you can't just say there's a great new benefit, but no phone number to call for it."

Corlette and her co-authors make the case that the health-care law is significantly more complex, which makes the roll out a bigger lift. While Medicare beneficiaries are a specific demographic (seniors over 65), the uninsured are more disverse. The Affordable Care Act requires more government systems to work together smoothly than Part D ever did.

"The IT issues for Part D were less complex but not insignificant," Corlette says. "Particularly around the low-income subsidy and the information exchange that had to happen between Social Security and the state Medicaid programs. That was not uncomplicated and there were a lot of questions about whether that would be ready."

Still, it does seem as if Medicare has learned some lessons from the Part D launch already. In 2006, the agency saw an influx of enrollees on Dec. 31, the last day of open enrollment. On Jan. 1, many showed up at the pharmacy looking for their medications but the pharmacists had no record yet of the coverage. This time, the Obama administration did things a bit differently.

"Now if you want your coverage to start on Jan. 1, you need to sign up by Dec. 15," Corlette says. "They're giving themselves a cushion to make sure that things are worked out, and trying to mitigate those kinds of problems."

KLIFF NOTES: Top health policy reads from around the Web.

Could some Mississippi counties be left out of the health exchange? "Insurance Commissioner Mike Chaney says two insurers have announced offerings so far, planning to serve 46 counties. Unless more companies sign up or the existing companies expand their plans, consumers in the remaining counties won't be able to buy health insurance through the online exchange. Coverage under those policies begins Jan. 1." The Associated PressEd Note: It's too early to say whether some Mississippi counties won't have health exchange options. The health law includes two multi-state plans, which will sell most states next year, and could end up in Mississippi.

Health and Human Services expects its new Obamacare call centers to receive 42 million calls this year. "Within days, the company that handles a daily average of more than 60,000 calls about Medicare will be deluged by new inquiries about health insurance under the Affordable Care Act. The six Medicare call centers run by Vangent, a company based in Arlington County, will answer questions about the health-care law from the 34 states that opted out of running their own online health insurance marketplaces or decided to operate them jointly with the federal government." Susan Jaffe in the Washington Post.

Michigan's Medicaid expansion is still in limbo. "The Republican-dominated Michigan Senate adjourned Thursday without voting to provide medical insurance to hundreds of thousands of low-income adults under the federal health care law, prompting an uncharacteristically angry Gov. Rick Snyder to demand an up-or-down vote. 'Take a vote, not a vacation,' the Republican governor said during a late afternoon Capitol news conference in which he implored every state resident to ask GOP senators to vote on Medicaid expansion soon." David Eggert in the Associated Press.

 

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