GOP Wavers On Penalties In Medicare Drug Plan

By Amy Goldstein and Shailagh Murray
Washington Post Staff Writers
Saturday, May 13, 2006

As older Americans face a nationwide deadline Monday to sign up for Medicare prescription drug coverage, key Republicans are examining ways to remove or reduce financial penalties the Bush administration plans to charge people who try to join the program after the enrollment cutoff, according to lawmakers and legislative aides.

GOP lawmakers are reluctant to talk openly of their plans before midnight on May 15, for fear of counteracting a cheerleading blitz that President Bush and his top health advisers have undertaken to spur a last-minute surge in enrollment.

Still, motivated by Republicans' concerns about their prospects in the fall elections and by persistent confusion about the new drug benefit, several of Congress's architects of the program have concluded that it would be unwise to punish people who miss the deadline. The rethinking of the penalties, by Senate Finance Committee Chairman Charles E. Grassley (R-Iowa), House Ways and Means health subcommittee Chairman Nancy L. Johnson (R-Conn.), and others, marks the first time Republicans have broken with the White House over the program.

The GOP's unease with the penalties, in the days before the enrollment deadline, marks the latest bump in the government's efforts over the past six months to launch a 2003 law that created the biggest expansion in the history of Medicare, the health insurance program for 42.5 million elderly and disabled Americans.

Since its passage, Bush and congressional Republicans have trumpeted the benefit as one of the GOP's signature domestic policy achievements of recent years. Democrats, for their part, have denounced the program as giving older people too little help while handing profits to private insurance companies that provide the coverage with federal subsidies.

The issue has taken on especially strong political overtones in recent months, as GOP political fortunes have slumped and both parties are eager to use the drug issue in appealing to elderly voters in the fall elections. Johnson, for instance, is facing a strong challenge for reelection.

In recent days, administration officials have drawn attention to public opinion polls suggesting that people who have signed up for coverage tend to be satisfied with it and that the program's popularity is rising. But the picture is murky. A recent Washington Post-ABC News poll found that 37 percent of the public approves of Bush's handling of prescription drug benefits, about the same as shortly after the law passed. But the poll also showed that the percentage disapproving has risen slightly. In an April survey of older Americans by the Kaiser Family Foundation, 55 percent said they did not sufficiently understand the new benefit.

The number of people who have enrolled so far -- or will enroll later on -- is important, financially as well as politically. The larger the enrollment, the less expensive premiums for the drug coverage will be in the future, because the private health plans that sell drug policies will have to charge more if they cannot attract large numbers of healthy older people who will not use a lot of expensive medicine.

Under the program's rules, Medicare beneficiaries had a six-month window, starting last November, to choose from a wide and sometimes bewildering array of drug insurance policies. After Monday's deadline, eligible people who did not sign up are barred from joining the program until Nov. 15, when a six-week sign-up period begins. In addition, they will have to pay a late fee.

The financial penalties are an attempt to motivate relatively healthy Medicare patients to sign up right away, rather than waiting until their health falters and they need more prescription drugs. The late fee, based on 1 percent of the national average price of the insurance premiums for the drug coverage, starts out relatively small. It starts at an extra $1.98 per month if they sign up later this year, but it mushrooms the longer people wait to get coverage.

Democrats and other critics of the law have been calling for the deadline to be eliminated. That step would go further than most of the GOP ideas circulating on Capitol Hill, in which sign-ups would still be restricted to the enrollment periods but the financial punishment for waiting would be lessened or perhaps dropped.

Grassley confirmed in an interview that one alternative would keep penalties for older people who sign up late only if they have relatively large incomes, although he said he would decide which option seems best once it become clear after the deadline exactly how many people on Medicare have -- and have not -- signed up. "I'll worry about what we have to do when I see the numbers," Grassley said.

The Bush administration, which has argued strenuously for keeping both the deadline and the late fees, refused to respond yesterday to the Republicans' concern about the penalties. "We've not been focused on it. We've really been focused on getting to May 15," said Mark B. McClellan, administrator of the Centers for Medicare and Medicaid Services (CMS), who was stumping through New England yesterday encouraging older people to sign up. He said he planned to hit five more states before the end of the weekend.

Ron Pollack, executive director of Families USA, a liberal consumer health lobby, said the administration "is playing brinksmanship and doing whatever it can to get everyone to enroll," but he said keeping the penalties and deadline after Monday "seems like a politically suicidal thing to do."

McClellan was one of several high-ranking federal health officials who, together with allies in local communities, are conducting about 1,000 events around the country to encourage Medicare patients to sign up. McClellan said about 300,000 people a day -- an all-time high -- have been calling Medicare phone banks this week with questions about drug benefits and that the agency had hired an extra "6,000 hands on deck manning the phones."

At UnitedHealth Group, the insurer that has sold the greatest number of Medicare drug policies so far, through its alliance with AARP, Senior Vice President Reed V. Tuckson said, "we have now gone to 24-hour days, seven days a week. We have live people to handle the volume."

The effects of this last-minute blitz remain unclear, but the administration is trying hard to create an image that the program is succeeding. This week, health officials issued updated enrollment figures that indicate that 37 million of the 42.5 million people on Medicare now have access to some form of drug benefit. About 21 million of those people have picked or were automatically enrolled in a drug policy or an HMO with drug benefits; the rest got coverage from unrelated sources.

Of the 6 million people who still lack drug coverage based on the administration figures, a disproportionately large share -- about 3.2 million -- have relatively low incomes. CMS announced a few days ago that it would eliminate deadlines and penalties for that group.

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