The ABCs of Medicare Part D

The sign-up period for a massive federal program to help older and disabled Americans pay for prescription drugs ends Monday, and it remains as controversial as ever.

In December 2003, the Medicare Modernization Act created Medicare Part D, a drug benefit that immediately drew fire from both the left and right. While some touted it as landmark legislation to address a growing and urgent need, it was also called a windfall for drugmakers and insurers, a budgetbuster, and a nightmarish journey into a complex world of benefit plans for seniors. The benefit took effect Jan. 1.

After a shaky start last November, the sign-up process seems to have gone more smoothly lately. Those eligible for Medicare who don't sign up for Part D by Monday and want coverage in the future will pay higher premiums - unless they qualify for a low-income exemption or have what is called "creditable" coverage through another source, such as a retirement plan.

In recent weeks, President Bush and other Republican leaders have begun to characterize the program as a great success. "The Medicare Part D Prescription Drug Plan is a win-win for American seniors," House Speaker Dennis Hastert (R) said last week. "Today more than 30 million seniors recognize that and have enrolled in this plan that will help them get much-needed prescription drugs at a lower cost than was originally estimated."

But critics say the program falls far short both in concept and execution. "The Bush administration has left behind the neediest Americans, the men and women who were supposed to benefit most from drug coverage," said Robert Hayes, president of the Medicare Rights Center, a healthcare advocacy group in New York.

As the program marks a major milestone Monday, here are answers to some of the most common questions about it:

The administration says that by the end of the sign-up period Monday, it expects nearly 90 percent of the roughly 42.5 million Americans eligible for Medicare Part D to have some kind of drug coverage. It also estimates that the average beneficiary will save more than $1,100 this year alone. About 9 million people signed up on their own. Others were moved from prior drug programs, were automatically signed up by their insurers, or have equivalent coverage through retirement programs.

But critics say the government's coverage numbers have been manipulated and are far too optimistic. "[B]y our conservative analysis, about 10 million older adults and disabled Americans still lack drug coverage," Mr. Hayes says.

Despite calls for an extension from members of Congress and interest groups, both Mr. Bush and Michael Leavitt, secretary of Health and Human Services, have said that the deadline is firm - with one exception: low-income Americans eligible for Part D (about $15,000 yearly income for singles, $20,000 for couples), who get an indefinite reprieve. The administration estimates that about half of the 5.7 million eligible Americans who haven't signed up for Part D are in this low-income group.

The Congressional Budget Office has calculated that extending the deadline to the end of the year would cost an additional $100 million.

The cost of the plan rises 1 percent per month for those who are eligible, and it rises at that rate for as long as they wait. The next time eligibles will be allowed to join a plan is seven months away (Jan. 1, 2007), so they'll have to pay at least 7 percent more.

The administration says the average person who signs up will pay about $25 per month in premiums. That's about $12 lower than earlier estimates. But the figure varies according to the plan selected: Some have premiums below $10 per month.

When the plan was being debated and voted on in Congress in late 2003, the cost was estimated to be about $395 billion over the next decade. But a more recent estimate of $724 billion nearly doubles that, troubling many fiscal conservatives.

After the enrollee pays a $250 deductible, Part D pays three-quarters of the cost of covered medicines up to $2,250. Between $2,250 and $5,100, it pays nothing, the so-called doughnut hole in the plan. Above $5,100, Part D kicks in again, paying 95 percent of the cost.

Some seniors have thought that the $2,250 figure included only their contribution, but both payments made by either the enrollee or their plan count, so enrollees may reach the $2,250 figure faster than they expected. At least one study suggests that many enrollees may hit the doughnut hole next fall, just in time to be angered at politicians running for reelection.

Are seniors satisfied with the program?

65 percent of seniors enrolled in Part D were happy with it, a Washington Post/ABC News poll found in April.

More than 80 percent reported no problems in filling prescriptions under the new plan, according to a Kaiser Family Foundation poll in early April.

42 percent of respondents in a CBS/New York Times poll this month said their prescription-drug expenses have gone down, while 19 percent say they have gone up. The CBS/Times poll also found that three-quarters of respondents said the drug program was difficult or somewhat difficult to understand.