The metamorphosis of Medicare takes another step forward this month. Or backward, depending on your perspective.
If you’re eligible for Medicare or have a loved one who is, get ready for another round of trying to figure out a wide array of prescription drug plans and Medicare Advantage plans. After introducing private-public partnerships last year to consumers, Medicare is offering its first annual open enrollment for Part D coverage from Nov. 15 to Dec. 31. For those who make their selection before Dec. 8, new plans will take effect on Jan. 1.
In California, Medicare beneficiaries will have 55 plans to choose from, each offered by private health insurance companies hoping to make Medicare money.
Federal officials and insurance groups say new guidelines and increased competition give consumers more choices and better prices. But some consumer groups and health advocates say more expansive use of private health insurers in Medicare is making things worse, rather than better. Not only is the government making the process too complicated, some say the Bush administration is basically dismantling the country’s only national health plan.
“This is very disturbing,” says Bonnie Burns — training and policy specialist for California Health Advocates, an education and advocacy group serving California’s 4.1 million Medicare beneficiaries.
“The way Medicare functioned 10 years ago was, by definition, a national health plan for people over 65,” Burns says. “And it was working pretty well. What we’re seeing with these layers and layers of privatization is the dismantling of that. And that should have us all worried.”
By stimulating competition for Medicare dollars, federal officials hope to keep health care costs down for Medicare recipients and taxpayers.
Mark McClellan, former CMS administrator, says it’s working.
“As a result of robust competition and smart choices by seniors, plans are adding drugs, removing options that were not popular and providing more options with enhanced coverage,” McClellan told reporters when new guidelines were announced last month.
“What we were looking for and got was a shift in the options available,” McClellan said, adding, “There are still a lot of plans, but there are now a range of options with increased enhanced plans and coverage options.”
More than 38 million Medicare patients — about 90% of the total — now have some form of additional drug coverage. According to Medicare statistics, more than three million prescriptions are filled every day through Medicare drug plans, saving patients an average of $1,200 a year.
California, with the largest population in the country and a high percentage of Medicare beneficiaries, inspires some of the hottest competition for Medicare dollars. Close to two dozen companies are offering Medicare plans.
“As a result of the strong competition in California, Medicare coverage will include options that cost less and also that provide coverage that goes beyond Medicare’s standard benefit,” McClellan said.
The insurance industry also is pleased.
“Private plans are exceeding expectations by offering low premiums and expanding benefits,” Karen Ignagni, president and CEO of America’s Health Insurance Plans, said last month.
HHS Secretary Mike Leavitt says the number and variety of programs offered in California offers something for everyone.
“Thanks to the range of options available, everyone in Medicare who lives in California will be able to choose a prescription drug plan that addresses their individual concerns about cost, coverage and convenience,” Leavitt says.
Although the wide range of choices is touted as a good thing by proponents, critics — including Burns and Ron Pollack, executive director of Families USA — say too many variables and options make the process unwieldy and confusing.
“The incredible confusion that persisted in the past year about the Medicare drug program is about to get worse,” Pollack says. “There will be more plans to choose from … and instead of a six-month enrollment period, there will only be a one-and-a-half-month period this year.”
Last year, seniors had three choices:
- Basic Medicare coverage;
- Stand-alone drug plan that covers medication costs; and
- Medicare Advantage plan, essentially an HMO, some with drug coverage, some without.
This year, those three options are still on the table but they’re not alone. Medicare has added private fee-for-service plans, a Medicare Savings Account and a Blue Cross PPO.
The fee-for-service, savings account and PPO plans allow patients to choose doctor and hospital, as long as the provider accepts Medicare, and almost all health care providers accept Medicare, the single largest purchaser of health care in the country. These plans generally have high deductible rates and/or larger copays than Medicare Advantage plans. Some fee-for-service and PPO plans have no monthly premium.
Prescription drug plans are also changing. In California this year, 14 plans — twice as many as last year — are offering continuous coverage without a “doughnut hole,” a gap in coverage when patients must pay out-of-pocket for drugs.
There are also more plans that offer zero-deductible options, meaning seniors don’t have to pay a certain amount out-of-pocket before coverage begins. This year, 33 plans offer zero deductible, up from 28 last year.
Monthly premiums range from about $10 to more than $200. The lowest premium in California this year is $9.70, compared with $5.61 last year. Several plans offer premiums below $20 a month. Plans offering mostly generic drugs through the doughnut hole coverage gap are available for less than $50 a month.
Part D premiums in 2006 averaged $31.72 a month. Next year the average will rise slightly to $31.95 a month. That average includes Medicare Advantage plans, where prices are dropping, and stand-alone plans, where costs are rising.
Californians who elect not to buy prescription drug or HMO plans to augment their Medicare coverage have another option to reduce drug costs. Medicare patients with no coverage for prescription drugs can get prescription drugs at discount Medi-Cal rates under the California Prescription Drug Discount Program for Medicare Recipients. This program includes people over age 65 and those younger than 65 who are disabled and have a Medicare card. Residents do not have to be Medi-Cal beneficiaries to use the discount drug program.