The 42 million Americans on Medicare will face a dizzying array of choices for government-subsidized prescription drug coverage next month when private health insurance companies begin jockeying to sign them up for the new benefit.
Ten large insurers have been given the green light to market the new drug plans to consumers starting Oct. 1, Medicare officials said yesterday. Because other companies will offer coverage on a regional basis, participants in every state will have at least 11 providers to choose from. In some they will have as many as 20 choices, with some providers offering multiple plans.
Enrollment begins Nov. 15. Coverage takes effect Jan. 1.
"Medicare is taking a historic step," said Mark B. McClellan, administrator for the Centers for Medicare and Medicaid Services. "Thanks to the strong competitive response, everyone with Medicare will be able to choose a drug plan that addresses their individual concerns about cost and coverage and convenience. These premiums will be lower than expected in many cases."
No details were available about specific plans yesterday. McClellan said that plans with premiums of less than $20 a month will be available in every state. Plans with premiums exceeding $37 should be rare, he said.
Beneficiaries also can choose to get drug coverage through Medicare Advantage plans, which offer comprehensive health care through HMO and PPO-like systems and serve about 10 percent of Medicare beneficiaries.
The new drug benefit, passed amid furious political wrangling on Capitol Hill in 2003, is the most significant and expensive expansion of Medicare since the creation of the federal health program for the elderly and disabled in 1965.
The cost to the federal government is expected to be $720 billion over the first 10 years. The benefit is being rolled out at a time of persistent budget deficits and mounting expenditures for military operations in Iraq and Afghanistan and relief and recovery efforts from hurricanes Katrina and Rita. The fiscal pressures are so daunting that some conservative Republican lawmakers have called for delaying implementation of the new benefit, but the Bush administration has rejected that idea.
In general, the drug benefit will work like this: After an individual pays a $250 annual deductible, Medicare will cover 75 percent of drug costs up to $2,250. The coverage then stops until the recipient has spent an additional $2,850 out of pocket, after which Medicare covers 95 percent of drug costs.
President Bush has said the new benefit will save retirees an average of $1,300 a year. The government expects as many as 30 million people will sign up for it for 2006.
There are about 1.75 million Medicare beneficiaries in the District, Maryland and Virginia. Eighteen providers will offer stand-alone drug plans in Maryland and D.C., and 16 will do so in Virginia. Several Medicare Advantage plans in each area will offer the drug benefit, as well.
Tricia Neuman, director of the Medicare Policy Project at the nonprofit Kaiser Family Foundation, said the large number of providers means the new benefit is off to a good start. But there is still uncertainty over how many people will enroll, how easily they will sort through the options and whether some providers will drop out over time.
"Choices can present opportunities, but the question is: What will seniors do when they face so many choices?" Neuman said. "Some will comparison shop, others might be heavily influenced by marketing and some may be paralyzed by so many choices. . . . Not everybody should sign up, because some people already have adequate coverage."
Robert M. Hayes, president of the Medicare Rights Center, a nonprofit group that helps seniors navigate Medicare rules and benefits, said the number and complexity of the plans mean consumers will be hard-pressed to make informed decisions. The fact that so many companies will be angling for market share by emphasizing the most appealing features of their plans, and perhaps playing down the negative ones, will only make the task harder. And because the companies can make their pitches through telemarketing, there are concerns about fraud and identity theft, Hayes said.
"It's going to be open season for bad guys to exploit vulnerable older Americans," he said. "Some legitimate companies will play by the rules, but let's face it -- it's an open invitation for confused consumers to give out personal information."
McClellan said the government has hired private contractors to help it detect fraudulent schemes and improper business practices.
The Medicare agency also will provide tools to help consumers find a plan that best fits their needs, he said. On Sunday, Parade magazine will carry an insert with basic information about the drug benefit. Beginning in mid-October, consumers will be able to call an 800 number and check the agency's Web site (www.medicare.gov) to get help with plans. Also, next month, the "Medicare & You" handbook distributed to beneficiaries each year will contain details about plan choices.
"Based on costs, coverage and convenience, we will help people find a personalized plan that is best for their specific needs," McClellan said. "We want to make sure seniors get the help and support they need. . . . There are going to be a lot of resources to help people sort through the information."
The 10 companies that will offer the benefits nationwide are Aetna Life Insurance Co., Connecticut General Life Insurance Co., Coventry Health & Life Insurance, Medco Containment Life Insurance Co., Memberhealth Inc., Pacificare Life and Health Insurance Co., Silverscript Insurance Co., Unicare, United Health Care Insurance Co. and Wellcare Health Plans.