CMS’ head Mark McClellan believes that over 90% of Medicare beneficiaries will have drug coverage after Monday’s deadline for Part D enrollment. That may be true, but that does NOT mean Part D enrollment is at 90%.
As has been ably reported in many places including this blog, before Part D most Medicare-eligible folks already had coverage from their Medicare Advantage plan, their employer, through their retirement plan, Tricare, or another source.
That left about 16 million without any drug coverage (out of the 43 million total eligibles). With the latest stats indicating there remain 4.5 million seniors without drug coverage, it looks like Part D will just pass the “adverse selection test” of a minimum of 70% of eligibles enrolled (my sense is a program of this type actually requires much higher enrollment, near 90%, to mitigate the risk of adverse selection).
Where does that leave us? There is a complex risk share program in place designed to protect Part D plan sponsors from adverse selection, a program that is in large part subsidized by taxpayers. However, there remains significant risk inherent in the program, a risk that private insurers would not have taken on without the taxpayers< backing them up.
So, we have a self-described conservative government using public funds and public policy to support private industry’s entrance into a new market.
Doesn’t sound very “conservative” to me. If Part D isn’t attractive enough for private companies to enter into on their own, why are we bribing them to do so? Are we not implicitly agreeing to commit public funds to this program? And if so, why didn’t we just cover drugs under Medicare, thereby avoiding all the doughnut hole, enrollment, dual-eligible and associated troubles?
May
18
My understanding of why we did not “just cover drugs under Medicare” is (1) doing so would have been significantly more expensive to taxpayers than what we have now, (2) many seniors who already have drug coverage from prior employers and other plans didn’t want to give that coverage up, and (3) if Congress wanted beneficiary premiums to fund about 25% of the cost (like for Part B), it would have required a premium considerably higher than most seniors were willing to pay.
BC – my understanding and yours are not consistent. And I don’t think your points are internally consistent.
Part D sponsors are not in this to lose money (although they might) – that being the case, either the taxpayers or the seniors or both have to pay for the plans costs. so either 1 or 3 can be correct, or neither, but not both.
My take is the politics drove the process – what would have driven lower costs, the Feds negotiating with pharma manufacturers, was taken off the table. Thus the biggest weapon was denied to policy developers.
Staying with your 1), there are several layers of taxpayers subsidy with Part D, and it is highly likely costs to the taxpayers will be quite high due to these subsidies (see other posts for details).
Re 2, the rules could have been written to require employers presently offering Medicare Supplement to continue doing so, but the larger employers lobbied hard against this.
Re 3), there is no free lunch.