A new analysis by a leading private research firm estimates that more than 3 million beneficiaries will see their current drug plan eliminated as Medicare tries to winnow down duplicative and confusing coverage, in order to offer consumers more meaningful choices. Instead of 40 or more plans in each state, beneficiaries would pick from 30 or so.
"As a result of this policy, there are going to be fewer plans offered in 2011," said Bonnie Washington, a senior analyst with Avalere Health, which produced the study. "There is still going to be robust choice for beneficiaries, but those who have to change plans could experience some disruption and inconvenience."
While seniors would not lose Medicare coverage, they could see changes in their premiums and copayments.
Medicare officials dismissed the Avalere estimate without offering their own number. "Anybody who is producing that kind of analysis is simply guessing," said Jonathan Blum, deputy administrator for Medicare.
Avalere's Washington said the analysis used Medicare's specifications.
For example, Medicare has already notified insurers they will no longer be able to offer more than one "basic" drug plan in any given location. Several major prescription plans, including CVS-Caremark and AARP, offered two basic options throughout the country this year, Washington said. Eliminating that particular kind of duplication would force 2.75 million beneficiaries to find new coverage, according to Avalere's estimate.
When other changes are taken into account, as many as 3.7 million Medicare recipients may have to switch, the analysis concluded. That's about 20 percent of the 17.5 million enrolled in stand-alone drug plans.
Founded by a former Clinton administration budget official, Avalere serves industry and government clients with in-depth research on Medicare and Medicaid.
Former Medicare chief Leslie Norwalk said the change might make things easier for people signing up for a drug plan the first time, but harder for those already in the program.
"If you're in a plan that you like and you have to change it, it will be disruptive," said Norwalk, acting administrator under President George W. Bush. "It depends on how (Medicare) handles it to try to make it as seamless as possible."
Insurance industry representatives declined to comment, saying privately that the companies do not want to antagonize Medicare.
Reducing the number of drug plans has long been a goal for consumer advocates. This year, nearly 1,600 plans offered a dizzying range of options, many of which were not significantly different.
But Medicare is going ahead with the consolidation in a hard-fought election year. Republicans have barraged seniors with charges that Obama and the Democrats raided the program to expand coverage for younger generations under the health care overhaul. Obama's promise that people can keep health plans they like was made in the context of that broader debate, but the president has repeatedly assured seniors their Medicare benefits are safe.
"Some opponents of the [health care] law may say that this is taking away choices, but we have heard from our members for years that the [drug coverage] options can be confusing," said Nora Super, AARP's top health care lobbyist. The seniors lobby supports the change. AARP's public policy branch is separate from its business side, which sponsors Medicare and other insurance plans.
Medicare official Blum said the agency is working with insurers to keep disruptions to a minimum. For example, seniors could be automatically reassigned to a comparable plan offered by their insurance company. Premiums may not necessarily be any higher, Medicare officials said.
"We are not reducing the number of quality plans," said Blum, adding that having fewer, more distinct choices will benefit seniors.
Besides eliminating duplicative basic coverage, insurers that offer more than one enhanced coverage plan will have to show the second plan clearly offers better value. Medicare is expected to release its list of drug plans for 2011 late next month.
Separately, an AARP report issued Wednesday found that retail prices for brand name drugs widely used by seniors rose by 8.3 percent last year, far outpacing general inflation.