Medicare drug benefit could face a downward spiral

The Medicare Drug Benefit needs to enroll people who don’t need drugs, otherwise premiums will rise dramatically and encourage disenrollment among those who sign up initially. That’s the message from a new Kaiser Family Foundation report (The Impact of Enrollment in the Medicare Prescription Drug Benefit on Premiums).

Medicare Part D (the drug benefit) is designed so that enrollees pay 25 percent of the cost on average. If only the big drug users sign up, the 25 percent will be calculated on a higher number. This will affect premiums in 2007 and later.

The Congressional Budget Office (CBO) has estimated enrollment at 80 percent of eligibles. The Center for Medicare and Medicaid Services (CMS) has estimated 91 percent. These numbers are based on enrollment levels in Medicare Part B (outpatient coverage), which is also voluntary. However, there is a key distinction. Medicare beneficiaries are presumed to want Part B, unless they opt out. Anyone who wants Part D has to go out and sign up.

The Bush administration has been hard at work pitching the drug benefit to seniors. They have their work cut out for them and I won’t be upset if they don’t succeed.

October 28, 2005

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