Consumers want options when it comes to affordable health care. There are plenty under the federal government's new prescription drug insurance program, though there may be too many. And those options might not be the ones consumers want.
But if frustration prevents older and disabled Illinoisans from signing up for a Medicare Part D plan in the next few weeks, they may have fewer options in the near future.
The federal government expanded the Medicare program in January, offering prescription drug coverage to seniors and disabled people through private insurance companies. Supporters say private companies will compete for business by offering affordable drug plans that pay for a wide range of medications. They believe competition will drive down drug prices and save money for the federal government and 43 million Americans.
Illinoisans have until May 15 to choose from about 45 plans offered by more than a dozen insurance companies. Yet the Medicare Rights Center, a New York-based consumer watchdog group, says the federal program offers too many options and not enough information to make useful comparisons.
Before people started signing up last fall, a federal official urged families to compare plans by focusing on three factors: cost, coverage and convenience. Mark McClellan, the administrator of the Centers for Medicare and Medicaid Services, says consumers are most worried about finding a drug plan that costs them little out of their own pockets, covers the drugs they need and is accepted by their local pharmacists.
Comparing apples to apples, however, is difficult, according to analyst Jack Hoadley. He's a research professor at the Health Policy Institute at Georgetown University in Washington, D.C., and has testified to Congress about Medicare Part D.
He says the program lacks standard options because each insurance plan has its own set of rules about which drugs it covers. Some also require customers to try cheaper alternatives of a drug before the insurance pays for a refill of a more expensive, brand-name version.
Although seniors can get help from specially trained social service agencies and from Medicare resources, Hoadley says the details of the program are too confusing. As a result, people don't have a good sense about which plans are best for them.
Illinoisans have until May 15 to choose from about 45 plans offered by more than a dozen insurance companies. Yet the Medicare Rights Center, a New York-based consumer watchdog group, says the federal program offers too many options and not enough information to make useful comparisons.
"What Congress tried to do was create a private market [for prescription drug insurance]," he says. "But we've created one that fails some of the market tests. People don't have all the information they need to make good choices."
Frustration could prevent some people from making a choice at all.
Nationwide, only about half of the 43 million eligible people had enrolled by mid-January, according to the Henry J. Kaiser Family Foundation. About 8 million picked a plan themselves. Another 6 million low-income people were automatically assigned to a plan by the time the benefit started.
In all, the government projected nearly 30 million people would sign up this year. If enrollment sags, those who already selected a plan could have a new set of choices to make next year.
According to Hoadley, drug plans that fail to attract enough business to cover their costs might not be around next year. That means some seniors and disabled people would have to find new plans, opening the door for more questions and concerns.
In addition, insurance companies could start finding ways to lower their costs. In the second or third year of the program, Hoadley believes companies could tighten their belts even more and stop covering some of the expensive drugs altogether.
The potential good news is that as competition weeds out the weaker players Illinoisans could have fewer plans to consider. At the same time, the surviving plans that pick up additional customers could gain more leverage in negotiating lower drug prices.
One opponent of Medicare changes says that won't happen. Ralph Martire, executive director of the Center for Tax and Budget Accountability in Chicago, says insurance companies won't secure lower drug prices because the health care industry lacks fundamental elements of a competitive market. Like gasoline, health care is essential, he says, so consumers don't have a true ability to decide whether to buy a drug at a particular price. They have to buy their drugs to stay healthy.
Martire says he does agree the drug plans could save money for themselves and for the federal government, but not because they gain power to negotiate with pharmaceutical companies. Rather, they could save money because they make people jump through hoops and discourage them from using the prescription drug insurance in the first place.
"The more hurdles we put into place, the more we increase costs, the more we drive low-income and middle-income families to not seek medical services," he says. "We're going to save money because less people are going to receive treatment, but the prices we're going to pay for the drugs are going to [continue to increase]."
Hoadley says it's too soon to know whether drug companies are succeeding in lowering drug prices.
Further, he suggests that if the private sector fails to send signals to consumers about which plans are most viable, then Congress might be charged with drafting new legislation to make the Medicare program more attractive.
A spokesperson for U.S. Rep. John Shimkus, a Collinsville Republican, also says it's too early to make that call. "Judging the program in the first month and a half, saying it's doomed, is certainly not the approach we would take," says Mo Zilly, Shimkus' legislative director. "There may need to be some tweaking of the program, and Congress has the ability to do that."
For instance, she says, "We support, and John has fought for, making sure we have any willing pharmacy fill these prescriptions. We don't want people to be forced into mail order, and we want them to have a choice between plans."
Another federal lawmaker says the Medicare program should offer an entirely different choice. U.S. Sen. Richard Durbin, a Springfield Democrat, says seniors should be able to decide whether to participate in a basic, national drug program or to opt out for an alternative insurance plan in the private sector.
As is, he calls Medicare Part D "an unsalvageable fiasco" with "built-in unfairness" because seniors have trouble getting the most up-to-date information. Even if some seniors use the Internet or call the 1-800-MEDICARE hotline, he says, they cannot make informed decisions because details can change the next day.
He says consumers also have lost bargaining power because they no longer have one drug program that negotiates as a single, nationwide unit on their behalf.
"I think Medicare ought to bargain with the pharmaceutical companies," Durbin says. "It's bulk discount. [Think of] Medicare: A potential of 40 million customers. What pharmaceutical company would opt out? They won't. They will bargain."
Hoadley says offering fewer options also would be a good thing. He, too, favors a more standardized program similar to former President Bill Clinton's proposal for a single plan per region, rather than 45 different ones. The gov-ernment could compromise, he says, by accepting fewer bids from insurance companies who want to participate.
Arriving at a compromise will be difficult, however, given that health care is often caught up in partisan politics.
Durbin says he has proposed such changes as extending the time to enroll until the end of the year and allowing seniors to opt out of a plan without penalty. Yet he urges seniors to make a decision based on the current options before May 15, as major legislative changes are unlikely.
Hoadley agrees. "So much depends on the political winds, as well as having more time to see how this plays out."
Bethany Carson can be reached at capitolbureau@aol.com.
Illinois Issues, March 2006
