State Insurance Commissioners Question CMS on Promotion of Medicare Prescription Drug Benefit
In an "attempt to persuade beneficiaries to enroll" in the Medicare drug benefit program, CMS is requiring Medigap insurers to use "misleading language" to suggest the new program is a better value for beneficiaries than their current policies, according to a letter to the agency from the National Association of Insurance Commissioners, the New York Times reports.
Under the new Medicare law, Medigap insurers are required to send a notice to policyholders to explain coverage options that will be available in 2006, when the new prescription drug benefit will take effect. CMS has instructed insurers to tell beneficiaries in the first paragraph of the notice that the new drug benefit "will provide greater value than your current coverage." NAIC, which represents state insurance commissioners in all 50 states, said that while an explanation of drug coverage options would be helpful for beneficiaries, CMS has "gone beyond the scope and purpose of the law" by requiring such language.
In their Oct. 4 letter to CMS, the commissioners wrote that the federal government was using "precisely the type of 'push' advertising technique that the NAIC and its members consistently oppose and prohibit at the state regulatory level." The letter said that the value of the drug benefit programs is contingent on many factors, such as medical conditions, drug costs and financial situations, the Times reports. The commissioners indicated that they were "speaking not as Republicans or Democrats but as professional insurance regulators responsible for protecting consumers," according to the Times. Kansas Insurance Commissioner Sandy Praeger (R) said, "As regulators, we should focus on getting facts and information to people, not on cheerleading for a particular plan or a particular type of coverage."
Bush administration officials denied that the statements about the value of the new drug benefit are misleading, saying that the program would save beneficiaries an average of $1,000 annually. HHS has posted a statement on its Web site saying the new program "clearly offers a much better value to beneficiaries than Medigap, including comprehensive drug coverage at a lower cost to the beneficiary."
CMS Administrator Mark McClellan said, "Beneficiaries will generally be better off with the new drug benefit because they can get a 75% federal subsidy and protection against very high costs, which is not available in Medigap plans" (Pear, New York Times, 11/7).
The San Francisco Chronicle on Sunday looked at spending projections for Medicare and Medicaid, as health care costs have been rising "far faster in recent years" than the inflation rate and a "surge" of baby boomers will soon enter retirement. In 2003, Medicare and Medicaid outlays accounted for 3.9% of the gross domestic product, but by 2050, spending for the programs could reach 21.3% of GDP, according to Congressional Budget Office estimates.
Currently, the entire federal budget accounts for 20% of the GDP; Medicare and Medicaid could be "on a trajectory to either crowd out other programs or boost federal outlays as a share of the economy," the Chronicle reports. However, Democrats and Republicans alike have been "unwilling to face the future costs" of the programs and have focused their attention on Social Security reform instead, the Chronicle reports. "Social Security is the easier of the two problems to solve," Thomas Saving, a Texas A&M economist and public member of the Social Security and Medicare trust funds, said. Saving added that the "financial problem in Medicare is five times as great," with a projected $62 trillion unfunded liability for Medicare in 75 years, versus a $12 trillion gap for Social Security in the same period. He said the Medicaid program faces similar funding problems since its annual costs are nearly equal those of Medicare (Abate, San Francisco Chronicle, 11/7).