FOR IMMEDIATE RELEASE, Thursday, May 11, 2006
CONTACT: Yoni Cohen, (202) 225-3202

WASHINGTON, D.C. -- U.S. Representative Pete Stark (D-CA), Ranking Democrat on the Ways and Means Health Subcommittee with jurisdiction over Medicare, issued the following fact sheet debunking Administration spin on the prescription drug program. 

MYTH: The Bush Administration has met or exceeded its enrollment goals.

REALITY: The President lowered the goalposts. In December of 2003, shortly after passage of the Medicare Modernization Act, the Bush Administration projected 40.7 million seniors and people with disabilities would enroll in Medicare Part D in 2006 [FY 2005 President’s Budget, Table D1, 12/13/03, revised 02/01/04]. But in May of 2006, the Administration used real participation numbers, which are lower than expected, to reduce its 2006 goal to only 29.2 million beneficiaries [2006 Trustees Report on Medicare, Page 147, 05/01/06].

MYTH: Thirty-seven million beneficiaries have “enrolled.”

REALITY: Fewer than 10 million seniors and people with disabilities have enrolled or been enrolled. According to CMS, 8.9 million beneficiaries have enrolled or been enrolled in stand-alone prescription drug plans. About one million beneficiaries have newly enrolled in Medicare Advantage plans with drug coverage (The other 4.9 million people with coverage through Medicare Advantage plans had enrolled prior to Part D.) [CMS News Releases, 4/20/06 and 5/10/06].

The other 27 million people for which the Administration is disingenuously claiming credit had coverage prior to Part D – or currently have coverage unrelated to the Medicare prescription drug program. The Administration should neither claim nor receive credit for (a) the 5.9 million people who last year had prescription drug coverage through Medicaid and were this year automatically enrolled in Part D, (b) the 6.9 million people who were last year covered through retiree plans that are this year taking a government subsidy, and (c) the 9.3 million people who are this year eligible for coverage through their current employer (e.g. the working aged), as federal or military retirees, or through the Veterans Administration or Indian Health Service. Nor should the Administration claim or receive credit for (d) the above-referenced 4.9 million people who were last year covered through Medicare Advantage plans [CMS News Release, 5/10/06]. 

MYTH: The program has nearly met its goal of ensuring drug coverage for all beneficiaries. 

REALITY: Nine million of the 17.7 million people who either lacked or had limited prescription drug coverage before Part D continue to lack coverage [The Truth on Part D Enrollment, Medicare Rights Center, 05/10/06 and Tracking Prescription Drug Coverage under Medicare, The Kaiser Family Foundation, 02/06]. The net increase in coverage is less than nine million. Many of the 10 million people who this year enrolled or were enrolled in stand-alone or Medicare Advantage plans last year had coverage through Medigap or through retiree plans that have since cut coverage in response to Part D.

MYTH: Democrats don’t want people to enroll. 

REALITY: While Democrats believe the program is flawed, they are encouraging people to sign up and are pushing legislation to increase enrollment. According to the nonpartisan Congressional Budget Office, a Democratic proposal to extend the enrollment deadline and waive the corresponding late enrollment penalty would increase participation by an additional one million people this year. In addition, more than seven million people would pay lower penalties for the rest of their lives [Congressional Budget Office Letter to Representative Stark, 05/01/06].

MYTH: Only Congress can extend the deadline. 

REALITY: CMS has the authority to extend the deadline. In early April, the agency extended the deadline for certain low-income beneficiaries to August. Citing a clause in the Medicare prescription drug law that provided for “special enrollment periods” given “exceptional circumstances,” CMS acted without Congressional approval to help a subset of beneficiaries [Medicare Modernization Act, Section 1860D-1(b)3(C)]. Given numerous implementation problems, the same authority could be used to extend the deadline for all beneficiaries.

MYTH: “Competition” has lowered the overall cost of the program. 

REALITY: The primary reason the program’s projected cost recently decreased is due to an overall decline in drug spending. The National Health Expenditure Surveys for 2004 and 2005 showed slower overall growth in drug spending than was initially anticipated. These data are from prior to Part D’s implementation and are entirely unrelated to the program. A secondary reason for a lower projected cost is reduced participation estimates [See first Myth/Reality].

MYTH: Beneficiaries are saving money because insurance companies have negotiated for steep drug discounts.

REALITY: Prices under the private drug plans in Part D are 75 percent higher than those negotiated by the Veterans Administration. Prices are also 60 percent higher than in Canada, 5 percent higher than at Drugstore.com, and 2 percent higher than at Costco [New Medicare Drug Plans Fail to Provide Meaningful Drug Price Discounts in the San Francisco Bay Area, Committee on Government Reform, Minority Staff, 03/06/06]. They are even higher than the prices in the preceding drug discount card program [Medicare Drug Plan Prices Are Higher Than Medicare Drug Card Prices, Committee on Government Reform, Minority Staff, 02/21/06]. The Medicare Modernization Act prohibited the government from using the clout of more than 40 million beneficiaries to negotiate for lower prices. The MMA also divided the population into smaller groups, also undermining the ability of the private sector to negotiate. To the extent beneficiaries are saving money, they are doing so thanks to government subsidies, not good discounts.

MYTH: All seniors and people with disabilities are saving money.

REALITY: Millions of the poorest and most vulnerable beneficiaries now pay more for drugs than they did before. According to the Medicare Rx Education Network – a group heavily financed by the pharmaceutical industry – 23 percent of seniors and people with disabilities are paying more for prescription drugs than they did before enrolling in a Medicare Part D plan [Medicare Rx Education Network Survey of Seniors, KRC Research, 04/03/06]. A majority of those paying more received prescription drug coverage through Medicaid last year, but were this year automatically enrolled in Part D. Copayments were generally lower under Medicaid than they are for Part D and did not rise annually as they will under Part D.

MYTH: Democrats want the program to fail.

REALITY: Democrats have introduced multiple bills to improve the Medicare prescription drug program. Three of many examples follow. The Medicare Informed Choice Act, H.R. 3861, would extend the enrollment deadline through December 31, waive the corresponding late enrollment penalty, and allow people to switch plans once during the year. The Medicare Prescription Drug Savings and Choice Act, H.R. 752, would enable seniors and people with disabilities to enroll in a Medicare-administered drug benefit and require Medicare to negotiate for lower drug prices. The Medicare Prescription Drug Emergency Guarantee Act, H.R. 4685, would ensure that people leave pharmacies with all necessary drugs.