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The Consumer Take: 'Incredible' Job on Medicare Drug Benefit, But Too Many Choices Could Cause Backlash

NOVEMBER 1, 2005 -- Researchers and lobbyists savvy about the viewpoint of Medicare drug beneficiaries said Tuesday that the Bush administration has done a great job of attracting prescription drug plans, but expressed doubt about the high number of choices and quality of tools currently available to help consumers sort through the options.

These were representative of the views expressed by a consumer panel at a Washington conference on the Medicare prescription drug benefit.

Congress could face a backlash from seniors depending on how it handles their concerns, cautioned one of the panelists at the National Medicare Prescription Drug Congress, sponsored by the policy journal Health Affairs and the consulting firm Avalere Health.

Efforts by the Centers for Medicare and Medicaid Services to bring prescription drug and managed care options into Medicare drew praise from the panel, which included AARP policy director John Rother, Kaiser Family Foundation Vice President Tricia Neuman, and University of Maryland Professor Bruce Stuart.

"CMS has done an incredible job bringing everything together," Newman said. "To say that plans have stepped up is a world-class understatement." She also praised the enthusiastic efforts of Social Security Administration staff to link up low-income beneficiaries with the comprehensive drug benefits they can receive under the Medicare overhaul law (PL 108-173).

But Neuman said most beneficiaries will have at least 40 choices to sort through on average, and may have difficulty comparing out-of-pocket costs charged by plans when they take multiple medications and fall into the "donut hole"—the portion of coverage in many Medicare drug plans in which beneficiaries will have to pay 100 percent of prescription drug costs.

Neuman expressed hope that planned additions to the "Plan Finder" on CMS's Medicare Web site would simplify "apples to apples" comparisons of out-of-pocket costs. Medicare has said features simplifying plan comparisons will be in place before enrollment begins Nov. 15. "I'm really hoping the Plan Finder will put it all together," Neuman said.

Neuman said it's unclear if the volume of plans from which many beneficiaries will choose will be a deterrent to enrollment.

She wondered if a study about jam sold at supermarkets might hold lessons for how drug beneficiaries would react to their choices. The study, by Sheena S. Iyengar of Columbia University and Mark R. Lepper of Stanford University, showed that shoppers were more likely to buy from a display that had six choices of jam compared to one that had 24 choices.

The drug plans "do vary in significant ways," she noted. Neuman said her sense is that seniors want one-on-one counseling and advice on which plan to select.

Stuart said research is needed to identify the way that beneficiaries will behave once their expenditures reach the donut hole. Evidence suggests that with other types of health coverage they are less likely to go to the doctor and get preventive care if their insurance coverage runs out.

"I know we all heard the expression, 'let a thousand flowers bloom,' but I don't think the drafters ever anticipated this much choice," said Rother. All of those choices could segment people with higher drug spending into certain plans and those with lower spending into other plans, he noted. That would lead to unaffordable premiums eventually to the higher spending beneficiaries, causing instability by forcing them to switch plans, he said.

There could be "a little bit of backlash among beneficiaries around the issue of choice," he said. "Maybe private plan consolidation [in Medicare] could be thought of as an upside if there are fewer plans and the better plans prevail."

Rother predicted that managed care plans in Medicare, which are expected to have more generous drug benefits, will attract many beneficiaries. But that in turn could lead to a return to demands for a consumer bill of rights for people enrolled in managed care plans, he suggested.

Rother also predicted that beneficiaries will react strongly to rising drug costs, creating more pressure on Congress to allow access to cheaper foreign drugs and to grant the Health and Human Services secretary negotiating authority over prices charged in Medicare.

Corrects who performed study measuring consumer reaction to large number of choices.

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