Editorial: Medicare headache

Tuesday, Sept. 6, 2005 | 8:56 a.m.

Nearly two years ago Congress passed legislation to guarantee that, starting in 2006, Medicare recipients would get reimbursed for some of their prescription drug costs. Instead of just treating prescription drugs as any other benefit offered by Medicare, however, Congress required that Medicare's 42 million recipients would have to sign up with an insurance company in order to receive this new benefit. Shortly before passage of the legislation in 2003, we wrote that there was no need for a middleman, that the federal government should simply provide the drug benefit directly. Now, as the program is close to getting under way, it is clearer than ever why confusion, not simplicity, will pervade this program.

Beginning Oct. 1, health insurers can officially begin marketing their prescription drug plans to the more than 40 million Medicare beneficiaries. Most Medicare recipients are 65 and older, and in the next several months they can expect to be inundated with direct mailings from insurers trying to get them to enroll in their plans. As the Sun's Michelle Swafford reported Friday, while it is uncertain just how many companies will offer drug plans in Nevada, 19 insurers have applied with the Centers for Medicare and Medicaid Services to provide prescription drugs.

In addition to having to sort through a bewildering array of offers, if Medicare recipients don't enroll right away they will be penalized. If Medicare recipients aren't enrolled with a plan by May 15, they will be assessed a 1 percent increase in their premiums for each month they fail to sign up. That's not all. Once enrolled, they can't move to another plan until the following year. That means if a senior selects an insurer that ultimately provides a lousy plan, he is stuck with it.

The reason for this mess is that the Republican-controlled Congress bowed to the influence of insurers, companies that make large campaign contributions to the GOP and which stand to profit handsomely from this legislation. It also is telling that the same legislation that handed over the administration of the prescription drug benefit to insurers also contained a provision barring the federal government from using its considerable sway in purchasing power to negotiate discounts on drug prices from pharmaceutical companies. In the end, it is the drug companies, not seniors, that stand to benefit most from this expansion of Medicare coverage.