Confusion remains as drug-plan deadline nears

In order to maximize savings, some seniors must sign up - and choose from dozens of different insurance plans - by May 15.

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."

The government's Centers for Medicare & Medicaid Services (CMS), which runs the drug benefit program, seems to be listening. Last week, CMS administrator Mark McClellan said that each drug-plan provider would be limited to offering only two plans next year. This year each company could offer three different plans.

The CMS has been scurrying to answer seniors' questions and urging them to join before the May 15 deadline. Just one of its initiatives has been a $30 million program in which it teams with state agencies to contact potential enrollees.

In a drug benefit progress report released last week, Mike Leavitt, the secretary of Health and Human Services, noted that more than 27 million eligible seniors have been signed up, not far short of the CMS goal of 28 million to 30 million by May 15. About 42 million Americans would qualify for the drug benefit. In addition, Secretary Leavitt said waiting times on the 1-800-MEDICARE telephone help line have been reduced from about 4-1/2 minutes in January to just 28 seconds in mid-March.

The cost to participants has been lower than expected, too. CMS had estimated that the average enrollee would pay about $37 per month. Instead, the average premium has been about $25 per month, he said, with some people paying less than $2 per month. One private study, the progress report said, showed seniors without any current drug coverage would see their annual drug costs drop from an average of $1,905 today to $626.

A new survey offered more good news. Nearly 4 out of 5 people (78 percent) who voluntarily signed up for the Medicare drug benefit are satisfied with their coverage, according to the Medicare Rx Education Network, a broad coalition of healthcare organizations. A majority (58 percent) reported it was not difficult to sign up for a plan. But 38 percent said it was difficult, and 82 percent said they would advise others to get help in choosing a plan.

The transfer of vulnerable "dual eligible" citizens particularly has bothered Robert Moffit, director of the Center for Health Policy Studies at The Heritage Foundation, a conservative Washington think tank. "We begged Congress not to do this, to just leave these people alone," he says. "They insisted on coercing them into the new drug program. So for all of the talk about personal freedom and choice, that's garbage. Those people were forced into the Medicare program regardless of their wishes on the matter." The transfer, he says, "turned out to be a big nightmare at the state level."

In the long term, Medicare Part D is going to be "a fabulously expensive drug benefit," Mr. Moffit predicts. "It was a stunning act of fiscal irresponsibility by the Republican leadership in Congress."

People may like their plan now, but he warns of a "doughnut hole" in the coverage. After a participant and his plan provider combine to spend $2,250 on drugs in a given year, the provider doesn't pay anything again until $5,100 has been spent. A Heritage Foundation study predicts that many participants will hit this "doughnut hole" next fall - and perhaps change their minds about the plan - just in time to vote in congressional elections.

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