Medicare Chief Acknowledges Benefit Snags

Times Staff Writer

A top Bush administration official acknowledged Thursday that the Medicare prescription program was too complicated for many of its intended beneficiaries to understand and said simplifying it was a top priority.

“Simplification is absolutely the next step in this process, now that we’ve got the benefit in place,” Medicare Administrator Mark B. McClellan said during a Senate hearing on problems the program has had since its Jan. 1 introduction.

At the same time, McClellan opened the door to a possible extension of the May 15 deadline for signing up -- a step the administration has opposed but critics have said is needed to give seniors time to figure out the program’s options. Under current rules, if Medicare recipients fail to enroll before May 15, they will have to pay higher monthly premiums permanently.

McClellan’s comments may be the first sign that the administration recognizes that the complex program may have to be retooled to succeed.

Hundreds of thousands of seniors enrolled in the benefit program have run into delays or outright refusals in getting medications. Many pharmacists have yet to be paid by the private drug plans that contract with Medicare to deliver the government-subsidized benefit. At least 20 states stepped in with financial guarantees to make sure beneficiaries could get the medicines they needed; the administration agreed to reimburse the states.


The White House has promoted the drug benefit as a historic accomplishment and the most significant improvement to Medicare since its establishment in 1965. Spokesman Trent Duffy said Thursday that President Bush remained committed to the program, even though Bush didn’t mention it in his State of the Union message this week.

Separately, the Medicare agency released estimates indicating that the drug benefit would cost less than expected: $678 billion over the next 10 years instead of the $737 billion projected last year. The average monthly premium for seniors this year is expected to be about $25, or 22% less than the $32 estimated in August.

McClellan said the main reason for the lower estimates was “robust competition” among the private insurers offering coverage. Other data released by the government suggested another factor might be at work: The previously rapid rate of increase in drug costs has slowed dramatically in the last two years because of a shift to generic medicines and other reasons.

The hearing before the Senate Special Committee on Aging was the first congressional effort to examine why the program got off to such a rocky start. McClellan heard from senators of both parties, and from supporters and detractors of the program.

Most were not willing to go as far as Sen. Hillary Rodham Clinton (D-N.Y.), who said: “I believe we should scrap this and start over.” Clinton voted against the plan in 2003, supporting a Democratic alternative.

Sen. Conrad Burns (R-Mont.), who voted for the program, said Medicare’s outreach efforts had flopped. He called one manual for beneficiaries “a bureaucrat’s dream but a nightmare to seniors.”

One of the most telling exchanges occurred between McClellan and Sen. Ron Wyden (D-Ore.), who urged simplifying the program by creating several standard coverage packages that seniors could choose from. Such an arrangement has seemed to work well for Medigap plans, which offer private insurance to supplement Medicare’s medical benefits.

Under the drug benefit, seniors must pick from dozens of plans, each with its own list of covered medications, cost-sharing policies and internal rules.

“I voted for this program, and I want to make it work,” Wyden said; but in Oregon there are 70 different drug plans to pick from, he said, and “older people say they can’t compare.”

Wyden told McClellan: “I think you have done great damage to the cause of private-sector choice in healthcare.”

At first, McClellan resisted Wyden’s suggestion that the program should be retooled, saying instead that seniors could get help from volunteers to make decisions. But he relented, saying he agreed with the goal of simplifying the program.

The administration has been trying to head off legislative changes to the program, fearing that political support for it will evaporate if it is opened for debate again. But the committee’s chairman, Sen. Gordon H. Smith (R-Ore.), served notice that such changes were coming.

Smith has introduced a bill to waive co-payments for seniors in assisted-living facilities, as is done for those in nursing homes. That policy, however, creates an incentive for low-income seniors with high drug bills to go into nursing homes, when they might be able to live as comfortably in less-costly assisted-living facilities.

Other senators have filed legislation to extend the enrollment deadline and make other changes.

“Put quite simply, the program as implemented today is just too confusing,” Sen. Thomas R. Carper (D-Del.) said. “What we have done is put in place a program that for a lot of our seniors is incomprehensible.”