Confusion remains as drug-plan deadline nears

More than three months after the launch of one of America's biggest social welfare programs since the 1960s, nearly everyone agrees that takeoff has been less than silky smooth.

The new Medicare drug benefit has been criticized as unnecessarily complex and confusing, and as an overly explosive expansion of the federal government. One of the most sensitive issues associated with the program has been the transfer of the more than 6 million "dual eligibles" - the poor and disabled who previously received drugs through Medicaid - into the new drug plan.

Nearly everyone agrees that some seniors with many expensive prescriptions could save thousands of dollars annually through the program. But first they must sign up, choosing from among dozens of plans offered by private providers.

The initial deadline to join is just a month off, May 15. After that, the cost of the plan, known as Medicare Part D, will rise 1 percent per month for anyone who is eligible but fails to sign up. Since the next enrollment period will be seven months away, that means a minimum of a 7 percent hike in out-of-pocket costs for those who wait. And they'll pay that higher fee for as long as they use the plan.

Who should sign up for the benefit and for which plan depends on several factors. For one thing, the drug benefit plans, offered by private insurers, vary from state to state: Florida has 43 to consider, for example. Massachusetts offers 45. Each plan has its own formulary, or list of drugs it covers. Applicants need to match their prescriptions with the plan that best fits them.

Those who take no prescription drugs - and don't expect to in the future - would have nothing to gain from signing up, though they should be aware that if they want to join in the future, the cost will be higher.

Then there are those over age 65 who still work and have healthcare coverage through their employer or have private insurance that covers drugs. They also may be better off not signing up, at least for now. But those who have this "credible" insurance need to make sure they obtain a document from their insurer stating as much if they want to sign up for the Medicare plan later without penalty.

With so many variables, anyone's head might be left spinning. The problem is that Medicare Part D offers too much choice, says Barry Schwartz, a professor of psychology at Swarthmore College in Pennsylvania and author of "The Paradox of Choice: Why More Is Less."

"That would be true even if you were offering [this plan] to 21-year-olds who attend Ivy League colleges," he says.

While the American economy is based on the idea of offering consumers choices, researchers have found that having too many options can be a paralyzing, instead of liberating, experience.

For example, a study of 401(k) retirement plans conducted at Columbia University found that companies that offer too many mutual funds for employees to invest in actually see lower participation rates in their plans, Professor Schwartz says. "You've got the problem of information overload," he says. "You've got the fear of choosing wrong, of making a mistake."

The tragedy for Medicare Part D is that people who would benefit may shy away, he says. "Here you have the government giving people a gift that could be worth several thousand dollars," he says, "and you have to bully people into signing up."

Page: 1 | 2