Poor understanding of the new Medicare Part D drug benefit program resulted in low favorability ratings when it launched in 2005, just as unfamiliarity is resulting in low enthusiasm for the soon-to-come health insurance exchanges.

A new report from the Center on Health Insurance Reforms at Georgetown University examines how lessons learned when launching the drug benefit program can ease HIX rollout across the nation. The Robert Wood Johnson Foundation sponsored creation of the report.

“Like the exchanges, Part D required extensive outreach and education in a short time frame,” report authors explain. “And, like the exchanges, Part D also required ongoing coordination among federal and state agencies and private plan sponsors. But there are also differences between the two programs. Whereas Part D was a new benefit added to Medicare and run by the federal government, the success of exchanges depends heavily on continued state involvement and cooperation. And, whereas the target population for Part D was relatively easily identified and reachable through Medicare’s existing means of communication, the target population for exchanges--primarily the uninsured--is more diverse, and there is no existing formal mechanism for communicating with them.”

Other changes included Part D having more implementation funding available than exchanges, and policymakers that opposed the drug benefit program later sought to help enroll their constituents, a scenario that may not be repeated as many conservative policymakers today continue efforts to impede insurance exchanges.

But there are similarities to doubts that surfaced about Part D’s viability and the same doubts now for HIX. Between enactment of the Part D law in December 2003 and the benefits starting in January 2006, there were concerns of having sufficient plan sponsors to support the program, just as there are now for HIX. By the time open enrollment started for Part D, enrollees had ample choices. The new report notes that many insurers will be attracted to exchanges by the availability of premium tax credits for potential enrollees.

Part D program readiness by January 2006 was a big worry but it got launched on schedule. “Although the information system demands for the exchanges are much greater than they were for CMS in implementing Part D, the federal government and states are actively testing the necessary systems,” according to the report. There were still more concerns about Part D premium costs being too high for many to afford and the actual costs were lower. Now with fears of “sticker shock” when insurance exchanges launch, report authors note that for most consumers, premium increases because of the higher risk profile of many enrollees “will likely be mitigated by federal premium and cost-sharing subsidies. Some early rate filings suggest that the fear of rate shock may be overstated.”

Education and outreach, however, was a challenge for Part D and will be for exchanges. Some initiatives that worked to promote Part D can be reused this time around, but early efforts have fizzled and the environment is more hostile, the report states. “Some of the difficulty stems from widespread misinformation about the law, ongoing legal challenges, a polarized political atmosphere, and congressional rejection of the Administration’s request for additional implementation funds. However, a major educational campaign is expected to start during the summer.”

The report, “Launching the Medicare Part D Program: Lessons for the New Health Insurance Marketplaces,” is available here.

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