Medicare Insurers to Offer More Options in ’07

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Medicare Insurers to Offer More Options in '07

By ROBERT PEAR

Published: October 1, 2006

WASHINGTON, Sept. 30 — Medicare beneficiaries will have access to more

options for prescription drug coverage in 2007, with many insurers

offering better value and a larger number of medications, the Bush

administration said Friday. But the potential for confusion may also

increase.

The administration said beneficiaries who were satisfied with their

current drug coverage would not have to do anything when the six-week

open enrollment period begins Nov. 15. Consumer advocates, however,

said beneficiaries should carefully review the options because prices

have changed, often by significant amounts.

Insurers can begin marketing their 2007 options on Sunday.

The drug program got off to a chaotic start in January. But the Bush

administration, realizing that health care could be a potent issue for

Democrats in midterm elections this fall, appears to have solved many

of the biggest problems.

Many experts had predicted a shakeout in the market for drug coverage,

which is offered through dozens of private insurers subsidized by the

government. But it did not occur.

In most states, Medicare beneficiaries had a choice of slightly more

than 40 free-standing drug plans this year. In 2007, every state but

Alaska and Hawaii will have more than 50 drug plans, and 23 states

will have 55 or more.

The number of national drug plans offering coverage in every state

will rise to 17 next year, from 9 this year. In New York, 61 drug

plans will be available, up from 46 this year.

K. Gorman, a former Medicare official who is now a health care

consultant, said, " Over all, Medicare beneficiaries can expect to see

low drug premiums and higher levels of benefits. "

To support the assertion that drug plans will offer better value,

Medicare officials said the average premium for drug coverage next

year would be $24 a month. That is the same as this year and 40

percent less than first estimated for 2007. But, the officials said,

the average number of drugs covered by insurers will increase by 13

percent, to 4,390 next year.

Monthly premiums in 2007 will range from a low of $9.50, under a drug

plan offered by the HIP Insurance Company of New York, to a high of

more than $110 under plans offered by Sierra Health Services in New

Jersey and some other states.

Francis B. Olsen, senior vice president of HIP Insurance in New York,

said his company was now charging $40.70 a month for " virtually the

same coverage " that would cost $9.50 a month next year. Clearly, he

said, " it will be a better bargain for beneficiaries. " Humana has the

lowest premium this year: $1.87 a month in a seven-state region that

includes Iowa, Minnesota and North and South Dakota.

The number of drug plans available in 2006 and 2007 far exceeds what

members of Congress expected when they created the program three years

ago. The existence of so many plans provides some evidence to support

the theory that the federal government can stimulate fierce

competition among private insurers — regulated and subsidized by the

government — to help control health costs for beneficiaries and taxpayers.

" As a result of robust competition and smart choices by seniors, plans

are adding drugs, removing options that were not popular, and

providing more options with enhanced coverage, " said Dr. Mark B.

McClellan, administrator of the Centers for Medicare and Medicaid

Services.

But Deane R. Beebe of the Medicare Rights Center, a counseling and

advocacy group, said beneficiaries should not be lulled into complacency.

" Your drug plan might have worked for you this year, but you can't

assume that it will be affordable or cover the drugs you need next

year, " Ms. Beebe said. " You should go back to the drawing board to

determine whether your current plan or another one would best meet

your needs. "

Congress defined a standard benefit, which includes a significant gap

in coverage, also known as a doughnut hole. Medicare officials

encouraged insurers to help close the gap in 2007, and many companies

responded. For premiums ranging typically from $40 to $50 a month,

beneficiaries can enroll in plans that provide extra benefits,

including coverage in the gap for generic and sometimes for brand-name

drugs.

While many companies are in the market, enrollment is concentrated in

drug plans offered by just a handful of companies. Two companies,

UnitedHealth and Humana, attracted almost half of the people in

prescription drug plans this year, but that could change.

Humana, which offered the lowest premiums in many states this year, is

raising some of its charges in 2007, and other companies have cut

their premiums to compete more effectively.

To illustrate the need for caution in the marketplace, Ms. Beebe

pointed to changes in the most comprehensive plan offered by Humana.

In New York, the premium for this plan, known as Humana Complete, will

be $82.10 a month in 2007, up from $47.93 this year. But the plan,

which covers both generic and brand-name drugs in the gap this year,

will cover only generic products in the gap next year, according to

data provided by the government and the company.

T. Noland Jr., a spokesman for Humana, said other companies

were lowering their premiums " in response to our leadership. "

Even though UnitedHealth often charged higher premiums than other

insurers this year, it won many subscribers because it had a product

endorsed by AARP, the lobby for older Americans. UnitedHealth offered

one drug plan under the AARP name this year, but in 2007, it will

offer three, including a so-called saver plan priced below the

cheapest Humana plan in several states.