Editorial
June 5, 2006

When the initial enrollment period for the new Medicare drug program ended last month, both Republicans and Democrats sifted through the data to find political ammunition. Republican leaders called the program a major success because of a wide choice of plans, lower-than-expected costs and strong enrollment. Democrats branded it an abysmal failure because of widespread confusion among the elderly and a structure that catered more to pharmaceutical and insurance companies than to the beneficiaries. In truth, the new drug program has scored some real successes after a staggeringly bad start, but it seems to have left some beneficiaries worse off.

To its credit, the administration seems to have resolved most of the bureaucratic and computer problems that initially left tens of thousands of people unable to obtain essential medicines quickly. Complaints at pharmacies have dropped precipitously, and callers who once found it impossible to get through to congested help lines now typically wait only a few minutes when trying to reach either Medicare or most individual health plans.

Anecdotal reports tell of beneficiaries who are delighted at big savings on their drug bills now that insurance is picking up most of the tab. But polls show a mixed picture. A New York Times/CBS News poll last month, for example, found that 42 percent of those already enrolled said they were spending less on prescription drugs, 19 percent were spending more, and 30 percent were spending the same amount.

Consumers have been given a vast array of choices among dozens of plans, making it possible to choose coverage that provides the right blend of benefits and costs for each individual. The only problem is too much choice so many options that consumers can't find their way through the maze. That problem should diminish as Medicare presses the health plans to limit their offerings and some weaker plans drop out entirely. On the bright side, competition has helped keep average monthly premiums much lower than originally forecast only $25 a month, compared with a projected $37 per month. And the projected cost to the government this year has dropped sharply to $30.5 billion for 2006, down from $38.1 billion.

Enrollment looks reasonably successful, although less so than the administration implies. Officials say that more than 38 million Medicare beneficiaries roughly 90 percent of the people on Medicare now have "some kind of prescription drug coverage." But most of those people already had coverage, through employers, unions or other government programs. All Medicare has done is subsidize some of it.

The more telling statistic is how many people signed up who previously had little or no drug coverage. That pool has been estimated at 11 million to 14 million, or possibly more. At least 4.5 million of them remain uninsured, according to the administration, so the enrollment drive could have missed some 30 to 40 percent of this target group.

Most troubling of all, officials estimate that three million of these people are poor enough to qualify for hefty subsidies that would cover the vast majority of their drug bills. This is the most glaring failure in the enrollment drive. It will need to be rectified by a vigorous outreach effort.

At this point, it is not clear how successful the plans have been at negotiating low drug prices with the manufacturers (some consumer and Congressional surveys suggest the savings are meager or nonexistent) or how many people are better off with the program than they were without it. Nor is it clear whether the program has attracted enough healthy beneficiaries to subsidize the chronically ill and thus hold down premiums.

Most important will be the impact Medicare drug coverage has on patients' health. A recent evaluation found that patients whose drug benefits were capped used fewer drugs than patients whose benefits were not capped. They also ended up in the hospital or the emergency room more often and generally had worse clinical outcomes. Analysts will need to monitor the new drug benefit closely to see whether its cost-sharing arrangements have the same negative effects.