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Medicare Part D: A Successful Public–Private Partnership


Six years ago, in one of the most contentious presidential elections in history, an unexpected consensus emerged. Both candidates agreed that Medicare should provide access to prescription drug coverage to Medicare beneficiaries. While the country remained divided on an array of issues, voters sent a clear message on a Medicare drug benefit: get it done.

Nearly six years later, 39 million beneficiaries have prescription drug coverage. They are expected to save, on average, 50 percent of the cost of their drugs, or $1,100 per year, and their premiums are proving to be about a third lower than expected. Competition among participating health insurance plans coupled with plans' cost-saving tools and techniques is expected to help save taxpayers more than $200 billion over the next decade.

How the Medicare drug benefit became one of this country's most remarkable success stories yields powerful lessons for the new benefit and for future public–private partnerships.

A Shared Goal
Six years ago, millions of elderly Americans, most of them living on fixed incomes, had few ways to contend with the rising cost of prescription drugs other than to delay getting their prescriptions filled, take fewer pills than prescribed, or save on other expenses by such dire strategies as skipping meals. The problem was clear and the nation resolved to embark on the most ambitious public-private partnership since Medicare was adopted 40 years ago.

For the benefit to succeed, it would demand unprecedented collaboration within the health care community and a commitment to public–private partnerships. In 2003, Congress passed the Medicare Modernization Act, challenging the marketplace to bring affordable prescription drugs—and peace of mind—to elderly Americans like Barbara Stetson, an 81-year-old Maine resident who has had three strokes and takes nine medications. She had been "frantic," she says, unable to afford her medications and depressed by the fear that she had become a burden to her children by living too long—a tragic and all too typical situation.

Addressing Implementation Challenges
Opposition to the public–private approach was strong in some quarters, with media accounts highlighting the difficulties of implementation. From the beginning, hardly a day went by without new stories of fear and confusion among beneficiaries and anger among pharmacists and others caught in the early stages of the benefit's implementation.

Those stories have been overshadowed by a much bigger story: the new program is working well. Barbara Stetson and millions of people like her are no longer frantic. They have affordable drug coverage at long last.

What happened? The short answer is that both the private and the public partners have taken their responsibilities seriously and have worked exceptionally hard, cooperatively, and effectively to meet and overcome the inevitable problems accompanying the most significant strengthening of the Medicare program since its enactment in 1965.

Still, implementation challenges emerged. To alleviate the burdens placed on beneficiaries and pharmacists during the transition period, plans providing the new prescription drug benefit strongly supported extending the transition period—some extending their programs by up to 180 days for certain beneficiaries to help ease the transition into the new program.

Moreover, Part D plans worked tirelessly to improve their customer service capabilities. They succeeded in radically reducing call center waiting times, and through broad outreach efforts, particularly to pharmacists and consumer advocates, they addressed concerns about continuity of care.

Insurers have also worked to address other health care practitioners' concerns with the new program. For example, America's Health Insurance Plans (AHIP) and the American Medical Association (AMA) partnered to develop a standardized form for physicians to use in requesting coverage of non-formulary drugs, replacing plan-to-plan administrative variations burdening doctors' offices. Such common-sense initiatives illustrate the determination of Part D participants to identify and remove roadblocks to the success of the program wherever possible, and with all deliberate speed.

Where Do We Go From Here?
But there is more to be done. For example, we need to consider: ensuring that the asset test does not arbitrarily exclude low-income beneficiaries from participating in the Part D subsidy; ensuring that every beneficiary has the coverage most appropriate for his or her needs; repealing the "lock-in" requirement to allow beneficiaries to enroll in a Medicare Advantage plan secure in the knowledge that they can change their mind if it is not the right delivery system for them; increasing funding for the State Health Insurance Programs (SHIPs) to ensure that beneficiaries have a trusted third party with whom to consult about their coverage options.

These challenges should not overshadow what has been accomplished thus far. Barbara Stetson, for example, was happy to discover that all of the drugs she needed were covered by her plan's formulary despite media reports to the contrary that had caused her to fear major out-of-pocket costs. She remembers "all those people agonizing on TV" over all the things that could go wrong with the program.

As November approaches, we are likely in for a new season of politically motivated criticisms. Nonetheless, it is important to stay focused on the key reason why the Part D program is working so well for so many. The partners in this new public-private partnership have risen to the challenge.

It's been said, "To avoid criticism, do nothing, say nothing, be nothing." It's easy for critics to say that government agencies are chronically unresponsive. CMS is proving them wrong. By the same token it's easy for critics to say that the competitive marketplace is not the right model for health care. Health insurers are proving them wrong. In the end, experience preempts ideology. Our members understand that Medicare beneficiaries are depending upon them. They have worked hard to deliver more benefits than the legislation promised and at a lower cost. They have worked hard to rapidly implement the new program and will continue working hard to address issues brought forward by advocates, physicians, and pharmacists. That's our commitment to upholding our responsibility in the public–private partnership.

Karen Ignagni is president and CEO of America's Health Insurance Plans (AHIP), the trade association representing the nation's health maintenance organizations.

The views presented in this commentary are those of the author and should not be attributed to The Commonwealth Fund or its directors, officers, or staff.

Publication Details



K. Ignagni, Medicare Part D: A Successful Public–Private Partnership, The Commonwealth Fund, July 2006