Sunday, March 06, 2005

Is the New Medicare Drug Plan as Bad as Claimed?

The New York Times > National > Defying Experts, Insurers Join Medicare Drug Plan: "The new Medicare drug benefit passed a major milestone in recent weeks as a substantial number of big insurance companies said they would offer prescription drug coverage to Medicare beneficiaries next year, defying the predictions of many industry experts.

Some companies intend to offer the new benefit nationwide. Others will offer it in certain states or regions. It is too soon to know how many of the 41 million Medicare beneficiaries will enroll. But it is increasingly clear that they will at least have access to drug coverage offered by commercial insurers, Blue Cross and Blue Shield plans, and pharmacy benefit managers. "

The new law relies heavily on competing private plans to deliver the Medicare drug benefit. If too few plans participate, the government can intervene. But the Bush administration and business groups want to avoid that at all costs because they do not want the government to manage the benefit, set prices or decide which drugs are covered. "

"It's a reasonable risk for a new line of business," said Robert E. Meehan, vice president of Horizon Blue Cross and Blue Shield of New Jersey. "In the last eight weeks, some of the early naysayers have come around and said they will be involved in the new program. We could have five well-known providers offering drug coverage to Medicare beneficiaries in New Jersey."

One reason for the keen interest, he said, is that "there's a lot of money at stake." The Bush administration estimates that Medicare payments to private plans for the drug benefit will total $59 billion in 2006 and will double in five years.

"The demographics are positive," Mr. Meehan said. "Lots of people are coming into Medicare. But seniors don't like to switch insurance coverage. If our competitors pick up these people, it might be hard to persuade them to switch to our plan."

President Bush's commitment is also a factor. "We have a strong sense that he wants to make this work," Mr. Meehan said. "If Bush had not been re-elected, we may have re-evaluated our decision."

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