As the May 15 deadline to sign up for a new Medicare prescription drug plan approaches, calls for a delay are getting louder. The Bush administration is rejecting those calls without much explanation, perhaps because the issue is more complex than it appears.
As approved by Congress, the 2003 Medicare law stipulates that current beneficiaries have from Nov. 15, 2005, to May 15, 2006 to sign up for new prescription drug coverage. If they don't act, they'll have to wait until the next open enrollment period for coverage starting next January — plus pay a 1 percent per-month penalty for missing the deadline. That means at a minimum, their premiums will be 6 percent higher — not just next year, but for the rest of their lives.
Given the confusion surrounding the start of the benefit, a growing number of lawmakers are calling for a delay of that enrollment cutoff. "Now you all have heard from your senior citizens," said Sen. Bill Nelson (D-FL) on the Senate floor last week. "They are confused, they are bewildered and in some cases they are frightened about this deadline coming up," he said in pushing an amendment to next year's budget that would have extended the deadline. The amendment failed on a 49-49 tie, after pressure by Republican leaders to support the Bush administration.
But now, the president himself is hearing the pleas. At a Medicare town hall meeting in Maryland last week, Wendy Meyeroff told the Mr. Bush she is trying — so far unsuccessfully — to help her 75-year-old mother, who lives alone in New Jersey. "I'm trying to walk her through it, but she doesn't know what to tell me," Meyeroff said. "I don't know how to help her. I've punched her stuff into Medicare.gov — I've got the basics, but it's still too much for her to afford. And I don't know where to tell her to go and get help. She wants to know if you guys will roll back the May 15th deadline."
"No," replied the President. "And the reason why is there's got to be a fixed time for people to sign up. We want people to realize there is — now is the time."
What Mr. Bush did not say is that the main reason for the administration's opposition is that insurance companies would have a fit.
Of course those aren't the exact words Karen Ignagni uses. She heads the insurance industry trade group America's Health Insurance Plans. She said the private firms offering the drug benefit based their business models on an enrollment period ending May 15. "When we did bid a year ago, the idea was the open enrollment period would run approximately five months. Changing the open enrollment period, then, would change the conditions on which the bidding was based," she said.
And that could change who might sign up — and when. Based on experience in both the under-65 and senior health insurance markets, Ignagni said, "what we know is that in a given period of time, individuals who have very high health care costs may end up joining a plan early on. Individuals who have moderate health costs may end up being the next group that joins, and the people who have very low health care costs will be the third group."
In other words, the people who stand to benefit the most will be the first to enroll. And those who are healthiest — and so will benefit less — won't sign up until they are in effect coerced by a deadline and threat of a penalty. However, insurers need healthy people to join, in order to offset the risk from the sicker people — or else the plans won't be financially viable.
Keeping enrollment open would also mean that signup for this year's plans would overlap with the open enrollment period for next year, which starts in November. And next year's plans are likely to cover different drugs and have different premiums than those being offered now, multiplying the confusion.
One possible compromise, says Ignagni, would be to end enrollment on schedule but waive the financial penalty for next year.
Congress has less than eight weeks to decide.