More Than 5M Have Voluntarily Enrolled in Medicare Drug Benefit

A total of more than five million Medicare beneficiaries have voluntarily signed up for the prescription drug benefit, including about 1.5 million beneficiaries who voluntarily enrolled in the last 30 days, the Bush administration said on Wednesday, the Palm Beach Post reports (Lipman, Palm Beach Post, 2/23). In total, 25.4 million beneficiaries now have prescription drug coverage, HHS Secretary Mike Leavitt said (Reichard, CQ HealthBeat, 2/22).

Of the more than five million beneficiaries who signed up on their own, 500,000 are enrolled in Medicare Advantage plans, and 4.9 million are enrolled in stand-alone plans (Palm Beach Post, 2/23).

According to HHS, the 25.4 million total includes:

• About 4.9 million beneficiaries enrolled in stand-alone plans;
  
  
• 6.2 million dual eligibles -- individuals eligible for both Medicaid and Medicare who were automatically enrolled in the drug benefit, including 560,000 in MA plans;
  
  
• 4.7 million beneficiaries in MA plans;
  
  
• About 6.4 million retirees who receive drug benefits through unions or former employers that receive a subsidy from Medicare;
  
  
• One million retirees with employer-sponsored drug coverage to supplement Medicare drug benefits and 500,000 retirees with drug benefits as good as those offered by Medicare; and
  
  
• 3.1 million retirees enrolled in TRICARE -- the military health program -- or the Federal Employee Health Benefits Program (HHS release, 2/22).

CMS Administrator Mark McClellan said the data show that beneficiaries are enrolling in the drug benefit at a faster rate now than at the end of December 2005 (Palm Beach Post, 2/23).

Leavitt said the enrollment figures are on track with the administration's goal of having "28 to 30 million enrollees" in the first year of the drug benefit (Davis, Arkansas Democrat-Gazette, 2/22). He added, "We wouldn't have 250,000 to 400,000 people a week enrolling if it wasn't a good deal for seniors" (AP/Wall Street Journal, 2/23).

Leavitt also said it is likely that the number of insurers sponsoring Medicare drug plans will decline, adding, "I am convinced the marketplace is going to simplify the program" (Alonso-Zaldivar, Los Angeles Times, 2/23).

Ron Pollack, executive director of Families USA, said, "The vast majority of the seniors counted by the administration's enrollment report had drug coverage before the [drug benefit] began" (Palm Beach Post, 2/23). Pollack added, "The only real number that is worth focusing on is the approximately four million to five million who now have prescription drug coverage who did not have it prior to the start of the program. Unfortunately, the administration is trying to mask that failure with an exaggerated number that has nothing to do with new people who gained coverage" (Krasner, Boston Globe, 2/23).

Sen. Carl Levin (D-Mich.) said, "I can't debate numbers. I can only reflect that there's real deep anger and hostility at all the snafus, all the problems" (AP/Wall Street Journal, 2/23).

Tricia Neuman, a Kaiser Family Foundation vice president and director of its Medicare Policy Project, said, "The numbers are moving in the right direction. But enrollment is lower and slower than projected" (Los Angeles Times, 2/23).

In other Medicare news, a report from Credit Suisse finds that 11 companies in Standard & Poor's 500-stock index each expect to receive at least $50 million between 2006 and 2009 from subsidies the government will pay the companies for continuing to offer drug benefits to their retirees, the Wall Street Journal reports. Under the drug benefit, the government pays employers 28% of each retiree's drug costs between $250 and $5,000, for up to $1,330 per retiree, with the aim of encouraging employers to continue providing retiree drug benefits rather than shifting retirees to Medicare.

Employers collect the subsidy, which is not taxed, on their contribution to retiree drug coverage, as well as retirees' out-of-pocket drug spending.

According to the report, which was prepared by Credit Suisse accounting analyst David Zion, spending on retiree benefits will decline by as much as 37% for some companies, including General Motors and Newell Rubbermaid. GM expects to collect $1.1 billon -- or 6% of its anticipated retiree benefits spending from 2006 to 2009 -- from the subsidy, while Newell Rubbermaid expects to collect $48 million, or about 37% of its projected spending on retiree benefits, the report finds.

At least 16 companies expect the subsidy to offset about 10% of their retiree benefit spending, according to the report. The subsidy also lowers the retiree-benefit obligation companies must report, "which in turn creates paper income even before the subsidy is received," according to the Journal. For instance, GM has reduced its retiree-benefit obligation by $4.1 billion, or 7%, and 18 companies have lowered their retiree-benefit obligations by more than 15% (Francis, Wall Street Journal, 2/23). CBS' "Evening News" on Wednesday reported on low enrollment by low-income Medicare beneficiaries in the benefit.

The segment includes comments from Leavitt; Pollack; and Medicare beneficiaries (Andrews, "Evening News," CBS, 2/22).

The complete segment is available online in RealPlayer.