A November 27 New York Times editorial declared the Medicare prescription drug benefit, set to take effect in 2006, “a promising beginning.” The Times' editorial board endorsed the plan when it became law in 2003, writing in a November 19, 2003, editorial: “Despite its shortcomings, the Medicare prescription drug bill heading for a vote in Congress is worthy of passage.” The editorial added that “the bill is strongest when it comes to the most important target groups: elderly people with low incomes or very high drug bills.” But both editorials ignored a component of the law that gives insurers the power under certain circumstances to make changes to beneficiaries' policies on 60 days' notice -- including restricting coverage and increasing co-payments and out-of-pocket costs -- while beneficiaries can switch plans only once per year during a limited period.

In the November 27 editorial, the Times also dismissed other drawbacks associated with the plan -- which its news pages have detailed -- including its complexity, limited choice due to pharmacy participation, and potentially abusive marketing by private insurers, stating that such problems, “while irksome, can be remedied later.” Under Medicare's new drug benefit, beneficiaries select coverage from dozens of plans provided by private insurers with some variation by region.

In the same editorial, the Times touted the flexibility that the plan reportedly offers beneficiaries. Asserting that “no decision is irrevocable,” the editorial explains that “beneficiaries can change plans once a year.” What the Times didn't mention was that insurers can alter their coverage on 60 days notice, which means that beneficiaries can be stuck for several months with new terms -- including higher costs and restricted coverage -- that they had not previously agreed to.

Under Medicare guidelines, an insurer can change the cost tier placement of a drug, affecting the out-of-pocket cost to the beneficiary, if the insurer receives new information about the drug. If, for example, the Food and Drug Administration rules that one drug is preferred over another for treatment of the same condition, the insurer might opt to provide less coverage for the non-preferred drug, or the insurer might elect to cease covering the drug altogether. In addition, according to a June 15 article by New York Times reporter Robert Pear, insurers typically seek to cover fewer drugs for various conditions in order to reduce costs with large-volume discounts.

Such changes can be sought by insurers once per month beginning in March 2006. If approved, they can produce higher co-insurance costs and out-of-pocket expenses for seniors. As the Times itself reported in a January 22 article by Pear: “Beneficiaries who sign up with a drug plan are generally locked in for a year. Insurers can end coverage for a particular drug, or increase the co-payment, if they give 60 days' notice to patients and the government.”

As Pear also reported in a November 13 article, a survey by the Kaiser Family Foundation and the Harvard School of Public Health found that just 35 percent of seniors polled reported that they understood the plan. Moreover, the article noted that because pharmacies can refuse to participate, beneficiaries in certain areas might have very limited options for obtaining medication.

A separate Times article by Pear, published the same day as the November 27 editorial, reported that Medicare has already received more than 100 complaints concerning aggressive marketing tactics employed by insurers; enrollment in the plan began November 15, 2005, and continues through May 15, 2006. Alleged violations reported thus far include door-to-door solicitation and misrepresentations of products. According to the complaints, some companies have requested personal information, including credit card, financial institution and social security numbers, from potential beneficiaries.

Nevertheless, the Times raised but dismissed the plan's “drawbacks” at the beginning of the November 27 editorial: “Many of the critics [of the plan] are right,” but the problems “can be remedied later.”

From the November 27 New York Times editorial:

The enrollment period for Medicare's new prescription drug benefit opened this month amid complaints about its complexity, its drawbacks and its seemingly irrational structure. Many of the critics are right. But the new program is still an important new benefit - the largest expansion of Medicare in decades and a vital step to bringing Medicare into the modern era. The problems, while irksome, can be remedied later.

[...]

All elderly Americans can use software on the Medicare Web site to help pick the best plan for them.The Web site may be daunting to those who are inexperienced with the Internet, but it should offer their computer-savvy friends and advisers a valuable tool to sort through the options. No decision is irrevocable - beneficiaries can change plans once a year.

Beneficiaries can type in such data as the drugs and dosages they use, the pharmacies they patronize, and the premiums and deductibles they would prefer. Presto, they get a list of plans that meet their criteria, the estimated annual cost of those plans, and, with another click of the mouse, suggestions on how to cut costs further by picking cheaper drugs.

From the November 19, 2003, New York Times editorial:

Despite its shortcomings, the Medicare prescription drug bill heading for a vote in Congress is worthy of passage. Fears that the legislation contains seeds that will ultimately destroy the traditional Medicare program strike us as overblown. Our own chief qualm is that the country, with deficits looming as far as prognosticators can see, cannot afford a program that will cost, at a minimum, $400 billion over 10 years.

Millions of middle-income Americans will get only modest help from the program, and they will have to cope with a crazy-quilt pattern of benefits. But fortunately, the bill is strongest when it comes to the most important target groups: elderly people with low incomes or very high drug bills.

[...]

If the prescription drug bill is passed, Congress will have created not one but two fiscal train wrecks several years down the line. Some legislators will vote for the drug plan and figure that when the bills ratchet up after 2006, future Congresses will have to give up on some of the current tax cuts when they expire. Others will vote for the drug bill with the idea of taking the political gain now and hoping that the monster deficits over the horizon will force cutbacks on entitlements later in the decade.

Our own choice would be to rescind the Bush administration's reckless tax cuts for the wealthy to pay for drug coverage of benefit to all. But any lawmakers who voted for the tax cuts cannot in good conscience support the drug bill unless they are ready to stand up and explain what should happen when the train wrecks occur.

From Pear's November 13 New York Times article:

In a survey issued this week by the Kaiser Family Foundation and the Harvard School of Public Health, only 35 percent of people 65 and older said they understood the new drug benefit. Those who said they understood it were more likely to have a favorable impression of it.

[...]

The new prescription drug plans, though heavily subsidized by Medicare, are marketed and administered by private insurers like Aetna, Humana, PacifiCare and UnitedHealth Group.

The Bush administration and Republicans in Congress chose this approach for two reasons. They firmly believe that competition among private plans will hold down costs, and they do not want the government to specify which drugs will be covered.

[...]

But that does not mean that a person's local pharmacy will be in every plan.

''In some rural areas,'' Ms. [Suzi] Lenker [who coordinates insurance counseling for the Kansas Department on Aging] reported, ''beneficiaries say: 'There are 40 Medicare drug plans to choose from, but my pharmacy takes only one or two plans. How does that give me choice?' ''

From Pear's November 27 New York Times article:

Bush administration officials say they have received scores of complaints about the aggressive tactics used by some insurance companies and agents to market Medicare's new prescription drug benefit.

The officials said they would take disciplinary action if they found that the tactics had broken federal rules.

Possible violations reported to Medicare officials in the past few weeks include uninvited door-to-door solicitation of business and misrepresentation of insurance products.

Federal officials have issued rules and a 53,000-word set of guidelines for marketing the drug benefit. The guidelines allow use of insurance agents, including independent agents who represent more than one company, but stipulate that insurers are responsible for the conduct of their agents.

[...]

Christopher Eisenberg, director of health plan accountability at the federal Medicare agency, said the federal government had received ''more than 100 complaints concerning misconduct by independent agents'' marketing Medicare products.

''This is developing into a major compliance concern,'' Mr. Eisenberg said, and ''it appears to be growing.''

Part of the problem is that the federal government and the states share responsibility for regulating the sale and marketing of Medicare drug plans, and the division of labor is not always clear.

Insurance agents are generally licensed and regulated by state government agencies. But the federal government regulates prescription drug plans and managed care plans, known as Medicare Advantage plans. When insurers sign contracts with Medicare, they promise to comply with all federal standards.

In some cases, Mr. Eisenberg said, when the federal government tried to investigate complaints, insurers said they had little control over the agents. ''We are not receptive to that argument,'' he said.

From Pear's June 15 New York Times article:

Hundreds of insurers -- more than initially expected -- have filed applications with the government to provide Medicare drug coverage, which they see as a potentially profitable new line of business. With so many companies seeking a piece of this potentially vast market, Medicare officials can be more aggressive in setting terms and conditions to prevent discrimination against sick people with high drug costs.

In requiring coverage for a wide range of drugs, officials said, they are following ''best practices'' used in the private sector and for Medicaid and the Federal Employees Health Benefits Program. And they noted that under the 2003 Medicare law, formularies cannot discriminate against any beneficiaries.

[...]

In reviewing prescription drug plans, federal officials have been lobbied from all sides. Beneficiaries generally want as many drugs as possible on each formulary, and the drug companies stand to benefit if more of their products are covered.

But insurers and pharmacy benefit managers typically want to limit the number and types of drugs, so they can obtain large-volume discounts from manufacturers. The challenge for Medicare officials is to balance these competing goals.