washingtonpost.com  > Politics > Special Reports > Taxes and Spending > Medicare

Millions to Be Automatically Enrolled in Medicare Drug Plan

By Ceci Connolly
Washington Post Staff Writer
Saturday, January 22, 2005; Page A04

After a lackluster response to its Medicare drug discount card, the Bush administration announced yesterday that it will automatically enroll millions of low-income seniors in the full drug benefit program when registration begins next fall.

Other retirees will have until May 2006 to choose a prescription plan -- or pay higher fees if they enroll after that date -- under the final regulations, published yesterday.

_____Medicare Legislation_____
Special Report: Full Coverage

As a result of legislation passed in late 2003, Medicare will, for the first time in its 40-year history, provide outpatient prescription drug benefits as of Jan. 1, 2006. Beneficiaries can begin signing up for the voluntary coverage in October.

Yesterday, the administration released more than 1,100 pages of rules, comments and explanations of how the huge new program will work. Seniors in traditional Medicare plans will be able to purchase drug coverage separately through insurance plans or switch to a managed-care plan that includes medications. Starting in 2006, beneficiaries will also have the option of enrolling in a preferred provider organization, or PPO, a type of plan that allows "out of network" care for a higher fee.

"The new drug benefit is expected to provide beneficiaries with drug cost savings of 15 percent initially, rising to 23 percent within 5 years," said a fact sheet from the federal Centers for Medicare and Medicaid Services.

On average, for a stand-alone prescription plan, a beneficiary will pay a $35 monthly premium, plus a $250 annual deductible, and 25 percent of the next $2,000 worth of drugs. After that, seniors will pay the full price of their medications until their total outlay for the year reaches $5,100, at which time Medicare will pick up 95 percent of additional costs.

In the interim, the government has offered the drug discount cards to seniors. In addition, about 7 million low-income retirees were eligible for $1,200 worth of free medication between June 2004 and the end of this year, but just 1.7 million took advantage of the provision.

To ensure higher participation in the comprehensive program, officials intend to automatically enroll "dual eligibles" -- people who qualify for Medicare but receive drug coverage through Medicaid. But Robert Hayes, president of the Medicare Rights Center, a nonprofit advocacy group, said the regulations do not indicate precisely when that would occur or guarantee the same level of coverage.

"Even though they say they're automatically enrolled, more than half those people will lose their real access to their medicine," he said.

Ron Pollack, executive director of the consumer group Families USA, said he is disappointed to see that CMS now estimates Medicare will cover just 11.9 million of the 14.5 million eligible for low-income drug subsidies.

Private employers and the states stand to benefit financially from the new program. An analysis by PricewaterhouseCoopers of Medicare's expected $407 billion in direct pharmaceutical spending found that about half will go to beneficiaries, about 27 percent to employers, 18 percent to drugmakers in new sales and 4 percent in relief to state governments.

Katie Mahoney, manager of health care policy at the U.S. Chamber of Commerce, said early release of the regulations will enable more companies to adjust the coverage they offer their retirees. Businesses that offer retirees a comparable prescription drug benefit will receive a 28 percent subsidy from the government -- valued at up to $1,000 per retiree.

Many details will be left up to the private insurers that will compete for Medicare customers.

Under the law, CMS received $1 billion over two years to educate consumers about the new program. Part of the money is being given to State Health Insurance Assistance Programs, which provide community-based one-on-one counseling.


© 2005 The Washington Post Company