Private, Individual Drug Coverage in the Current Medicare Market

Reliance on the private market to offer drug coverage to Medicare beneficiaries is a hallmark of the two congressional bills now in conference. When evaluating these bills, it is useful to consider issues related to Medigap and Medicare+Choice&#8212two current private, individual drug coverage plans for Medicare beneficiaries. Lessons gleaned from these examples suggest that individual market initiatives addressing drug coverage will need to find ways to achieve better participation (of plans and beneficiaries) than currently exist in the Medigap and Medicare+Choice markets. Financial subsidy levels, regulations concerning access, and geographic variation also will need to be addressed in new private, nongroup initiatives on Medicare drug coverage.

This brief uses the 2003 House and Senate bills to provide concrete examples of likely private market approaches. With respect to some issues, these two drug benefit proposals include measures that ameliorate identified problems with Medigap and the Medicare+Choice program. In other cases, the proposals ignore lessons learned from these programs.