As members of Congress pressure one another to discard ideas for reforming the nation’s health care system, they also might want to seriously consider how to incorporate a recent success story into any final legislation.

Roll Call Executive Editor Mort Kondracke suggested in a column that the 2003 Medicare prescription drug law could serve as a model for health care reform. “Passed amid rancor and predictions of catastrophe, the law has proved to be an enormous success – much cheaper than expected and overwhelmingly popular with seniors,” he wrote.

The program is garnering widespread attention because it offers robust coverage that promotes choice and fierce competition among private insurers at a cost that has turned out to be much lower than anticipated, observes Cara Jareb, director of retiree medical consulting for Watson Wyatt Worldwide in Arlington, Va.

Monthly premiums are $28 when they were expected to be $44, while Medicare Part D beneficiaries can choose from 1,689 plans administered by private insurers.

The program shows how a public-private partnership can promote innovative plan design and superior service, according to Noel Obourn, who manages a team of licensed benefit advisers who provide a Medicare coordinator function for employers through Burlingame, Calif.-based Extend Health, Inc.

“If that type of reform were to get legs in the pre-Medicare population, we could see similarly positive results,” she predicts.

But there are caveats along the way. For example, Obourn says adverse selection could undermine group plans if there’s no incentive for the employer to subsidize anything other than a default plan that’s run by the federal government.

Alain C. Enthoven, Ph.D., an emeritus professor of public and private management at Stanford University, sees merit in the Medicare Part D program but cautions that the absence of a standardized drug formulary makes it extremely difficult to compare plans.

His suggestion to Congress is that prescription drug coverage be integrated into primary medical care so that doctors can thoroughly study all of the appropriate drug interventions and decide one will result in total optimization for the health plan, including lowering costs and improving outcomes. “Who better to judge that than cost-conscious doctors?” he asks.

One notable aspect of the program that has stirred controversy is the so-called doughnut hole – a coverage gap through which each Medicare beneficiary is responsible for paying prescription drug costs between $2,700 and $6,100 a year.

President Obama has suggested that Medicare beneficiaries whose spending falls within the gap receive a discount of at least 50% on their scripts so that scores of older Americans who live on a fixed income don’t end up rationing care.

“I think most companies that offered retiree medical coverage didn’t find that the prescription drug coverage matched what they had been providing,” Jareb says. “So in many cases they kept their own coverage and simply took the retiree for a subsidy, which is an option under Part D, rather than subjecting their retirees to the coverage gap.”

Obourn recalls a recent conversation with former House Majority Leader Richard Gephardt (D-Mo.), a newly appointed member of her company’s board of directors whose sense is that Medicare Part D is being held up as a program worthy of emulating for broad-based health care reform right alongside the entire Medicare reform landscape over the past decade, including the Medicare Advantage program.

“It is only a 5-year-old program, but has grown significantly and produced terrific results for both consumers and private insurance companies,” she says.

Guest blogger Bruce Shutan is a former managing editor of Employee Benefit News and a  freelance writer based in Los Angeles.

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