Health: Take Two Aspirin and Read This Now

(3 of 4)

Some insurers blame pharmacists for lacking the right software or failing to carry out stated policies, while pharmacists say Part D has been a disaster for them too. Many of them have been handing out prescriptions but don't expect reimbursements from Medicare until early February. That cash-flow crunch is putting some pharmacies in danger. Art Whitney of Rockland, Calif., borrowed $500,000 to cover what he owes his wholesaler. "I've been in business since '87, and I've never borrowed a nickel," he says.

Why shift so many people, particularly those least equipped to handle a chaotic change, all at once into a system with so many moving parts? Health-care advocates have been asking that question for at least two years. In January 2004, the Kaiser Family Foundation, a nonpartisan health-care research group, published a report predicting that dual eligibles would be "overwhelmed" by a sudden change to Part D. The report of a Kaiser gathering of Medicaid directors from 11 states held last November to discuss concerns about the Part D transition reads like a screenplay for the horror stories that followed. "It wasn't that they didn't know," says Drew Altman, president of the foundation.

In an interview with TIME last week, Mark McClellan, administrator of the Centers for Medicare and Medicaid Services, said most people entered the new system without encountering trouble. He attributed much of the difficulty of those who did to the huge number of people who enrolled or switched plans at the end of December. Although assigned to plans, dual eligibles had the right to change by Dec. 31 to one that best suited their needs. The Medicare bureaucracy is still catching up with all that data, McClellan says. "Those are the issues that we're working through right now."

McClellan, along with the insurers, is closely watching whether the bad publicity from the start of Part D will affect enrollment. The pace of voluntary enrollment so far is picking up, with 2.6 million people signing up since Dec. 13. High enrollment is crucial to the program's success. Any insurance program relies on pooling the risk of a large group of people, and insurers that can't capture enough members will eventually have to shut down.

Any talk of turning Medicare into market share, of course, is catnip to Democrats, who are ready to use the Medicare mess against Republicans in the November midterm elections. Seniors tend to turn out for midterms in higher numbers than younger people, "so there's a real opportunity here," says Democratic pollster Mark Mellman. The Democratic Congressional Campaign Committee is advising candidates to visit senior centers and press the argument that the drug benefit was written by and for the health-care lobby. Those candidates hope to point out, for example, that drug manufacturers lobbied to avoid negotiating drug prices directly with Medicare. Instead, Medicare provides funds to insurers, which use intermediaries called pharmacy benefit managers, who then negotiate with the drugmakers. That system breaks Medicare into smaller purchasing pools, and drugmakers get higher prices. Insurers, meanwhile, successfully lobbied for a provision that limits potential losses in the first two years.