Numbers in Drug Plan Contested

A day after the deadline to sign up for the new Medicare drug program, Bush administration officials Tuesday declared it a clear success, but 3 million low-income seniors who could benefit most from its subsidies remained on the sidelines.

Final numbers are not yet available, but early estimates showed that months of effort to explain the program’s benefits to low-income seniors failed to persuade many of them to sign up.

“That is clearly some major unfinished business,” said James P. Firman, president of the nonprofit National Council on Aging. “Phase one is complete, but there is a lot more to be done.”

Preliminary figures released after the enrollment period ended at midnight Monday indicated that more than 38 million seniors would now have prescription coverage through Medicare or another source, and administration officials said the total was expected to rise when final numbers come in.

That means the program, despite a stumbling start, will surpass the goal of ensuring that 90% of seniors have some form of drug coverage, said Health and Human Services Secretary Mike Leavitt.

“It is one of the biggest changes that will have occurred in our nation’s history in healthcare,” Leavitt declared.

Regarded as President Bush’s most significant domestic policy initiative, Medicare Part D enables seniors to buy coverage for outpatient prescriptions through dozens of competing private insurers -- 47 in California alone.

Although seniors complained about the complexity of the program, recent polls indicated that most who have signed up were satisfied with their coverage.

“Anybody who had any doubt that seniors could choose coverage that gives them what they want at lower cost needs to look at what we did here,” Medicare Administrator Mark B. McClellan told reporters.

“No question it has been some effort for them to get into coverage,” he said. “But they are saying it has been worth the effort.”

Many Democrats, however, say the program is rife with pitfalls that make any victory celebration premature.

Some have questioned the accuracy of the administration’s enrollment numbers.

And senators from both parties joined to address one problem Tuesday by vowing to move quickly on legislation that would waive a late enrollment penalty for seniors who missed the deadline this week.

For many of the low-income seniors who have yet to enroll, a major stumbling block appears to be an asset test, advocates say.

Individuals with $11,500 or more in savings (couples with $23,000 or more) do not qualify for subsidies. Some of these seniors may have limited incomes that make them reluctant to sign up for the program, which requires monthly premiums and regular co-payments.

AARP, the seniors’ advocacy and lobbying group, has called on Congress to eliminate the asset test, but there is no agreement among Republicans and Democrats on the issue.

For middle-class seniors already signed up, a potentially big problem also looms. It’s called the doughnut hole, a coverage gap built into the benefit to save the government money. When seniors’ total drug costs reach $2,250 for the year, they must pay the next $2,850 in pharmacy bills themselves, after which Medicare pays 95% of all further drug expenses.

Nearly 40% of seniors may be at risk of falling into the gap, and by some calculations, it will start to be widely felt around Labor Day. The coverage gap could anger seniors, thereby turning the prescription program into a political liability come election day.

“The big issue about this program no longer has to do with who has enrolled. The issue is how it’s going to work between now and November,” said Robert J. Blendon of the Harvard School of Public Health, an expert on public opinion and healthcare issues. “A very large number of people who have signed up are not aware their card is going to stop paying bills at a certain point.”

How seniors react to the coverage gap will be key to the program’s future. “We will know a lot more about how satisfied people are with their choices when more of them start hitting the doughnut hole,” said Firman.

McClellan, the Medicare administrator, suggested that private insurers could figure out how to close the gap. About one-fourth of seniors have signed up for plans that offer at least some coverage -- usually generic drugs -- in the gap, he said. And Medicare is urging insurers to offer more such options for 2007, although they would probably mean higher monthly premiums.

A better option would be to allow Medicare to negotiate lower prices with drug manufacturers, said Rep. Pete Stark (D-Fremont), the ranking Democrat on the House Ways and Means health subcommittee. Currently, that is expressly forbidden by Congress.

“I’m sure that costs will escalate to the point where even Republicans will see the point of letting the [HHS] secretary negotiate to hold down prices,” said Stark. “When Medicare was created in 1965, the law prohibited setting fees for hospitals and doctors. And that’s what we do now.”

Stark also charged that the administration is “playing a numbers game” with estimates that imply more than 38 million seniors are benefiting from the program. The number refers to those with any drug coverage, not only those enrolled in Medicare prescription plans.

There are a total of 42.5 million elderly and disabled Medicare beneficiaries. Of the more than 38 million the administration claims credit for, roughly 21 million are enrolled in private plans providing the new drug benefit. Another 7 million are retirees in corporate plans now partly subsidized by Medicare.

The remaining number have coverage from a variety of sources. Some are still working and are covered by employer plans.

Others are federal retirees with government coverage. And others have coverage from a former employer that is not coordinated with Medicare.