Move Afoot in Congress to Waive Drug Plan Late Fee

Despite a stony silence from the White House, Congress is warming up to the idea of waiving the penalty for seniors who missed Monday’s sign-up deadline for the Medicare drug benefit -- and doing so in time for the fall elections.

Forgiving the penalty for this year is seen as a compromise between Republicans who firmly resisted pressure to extend the sign-up period and Democrats who argued that beneficiaries needed more time to figure out the biggest and most complicated change to the program in 40 years.

Even so, waiving the penalties for this year is unlikely to quell all critics of the drug benefit. Many Democrats also want to give seniors a one-time chance this year to switch among the private prescription plans providing the coverage. And some want the government to negotiate drug prices directly with manufacturers. That would save money, they say, and the savings could be used to narrow the “doughnut hole.”

The doughnut hole is a coverage gap built into the program to save the government money. When seniors’ total drug costs reach $2,250 for the year, they must pay the next $2,850 in costs themselves, after which Medicare pays 95% of all further drug expenses.

“The penalty issue and the doughnut hole are going to be hitting around the time of the election,” said Drew Altman, president of the Kaiser Family Foundation. “It will be a lot easier to solve the enrollment penalty than to plug the doughnut hole.”

Also on Monday, the California Legislature passed a bill extending the state’s emergency prescription coverage program through January 2007. The help is currently available to low-income and disabled residents who receive medical benefits from both state and federal programs. California set up its fail-safe system after thousands of beneficiaries reported trouble getting prescriptions filled under the Medicare benefit.

In Washington, the congressional proposal to waive the late enrollment penalty came from a senior House Republican, Rep. Nancy L. Johnson of Connecticut, chair of the Ways and Means health subcommittee and one of the authors of the drug benefit. It’s needed, she said, because Democratic critics have frightened some seniors into staying on the sidelines.

“As we come up to the [enrollment] deadline, I wanted to do something to cut the worry,” said Johnson. “Some of my colleagues have really behaved shamefully with regard to this program. I have never seen such a concerted effort by those in the other party to scare people from even looking into extraordinary benefits that are being provided.”

Johnson’s proposal would allow seniors who failed to sign up by Monday to do so without a penalty when open enrollment for 2007 starts on Nov. 15. Currently, these seniors would face a surcharge on their monthly premiums that starts small, but rises with time.

Constituencies including the insurance industry and seniors groups, such as AARP, have expressed support for Johnson’s idea. In an interview, she said she was confident that the White House and Senate Republicans would go along.

But the ranking Democrat on the health subcommittee, Rep. Pete Stark of Fremont, issued a press release denouncing Johnson’s plan. “Mrs. Johnson always talks about listening to her constituents,” Stark said in the statement. “But if she thinks waiving the penalty is all they’re asking for, she needs to have her hearing checked.”

Her proposal “would leave millions of people who made rushed choices leading up to the deadline locked into plans that may not cover the necessary medications,” he said.

Under the program, seniors must choose among scores of plans offered by private insurance companies and HMOs, each with different premiums, lists of drugs covered and price structures. Many seniors have reported problems figuring out which program to choose.

Despite a rough start to the program in January, administration officials appeared to be closing in on their goal of assuring that 90% of seniors have some form of prescription coverage. Medicare’s website and toll-free number reported heavy volume Monday, and callers sometimes had to wait a few minutes to get through. Medicare has 43 million elderly and disabled beneficiaries.

Johnson said the cost of waiving the penalty would be minimal, since it would work out to about $2.50 a month for every senior who procrastinated. Closing the doughnut hole would be far more costly, adding billions to the program’s price tag. One private study last year estimated that nearly 40% of beneficiaries would hit the coverage gap at some point this year.

Times staff writer Nancy Vogel in Sacramento contributed to this report.