No Public Plan Option in Medicare Part D

via: Heritage

Rep. Hoyer talking to President Obama

Last Sunday, in an appearance on FOX News Sunday with Chris Wallace House Majority Leader Steny Hoyer (D-MD) repeated yet another justification for including a “public plan” option in health care legislation. Since other advocates of a public plan have recently been offering the same justification, it is worth taking a moment to point out that the claim is factually incorrect.

HOYER: Chris, can I just say something? When they adopted a prescription drug program, they provided for the possibility of a public option in their own plan if it wasn’t available

While liberals certainly wanted to include a “public plan” option in the Medicare Part D prescription drug program that Congress enacted in 2003, in fact the final legislation did not include such an option. Indeed, it actually contained a provision explicitly preventing the offering of Medicare drug coverage through a “public plan.” Specifically, section 1860D–41(a)13 of the “Medicare Prescription Drug, Improvement, and Modernization Act of 2003,” (42 U.S. Code §1395w-151(a)13) defines the entities that may sponsor a Medicare prescription drug plans in a manner that disqualifies any “governmental entity” from being a plan sponsor. The provision reads:

PDP SPONSOR — The term ‘PDP sponsor’ means a nongovernmental entity that is certified under this part as meeting the requirements and standards of this part for such a sponsor.

While the law does include provisions for “fallback” plans, the statutory prohibition on government entities being plan sponsors applies to both any regular plan and any fallback plan. Furthermore, section 1860D–11(g)(1)(B)v of the law also specifically prohibits HHS from entering into a contract with a single entity to provide fallback plans throughout the country (42 U.S. Code §1395w–111(g)(1)(B)v). The idea of a fallback plan was included because, prior to the MMA, there were no such things as “stand alone” prescription drug plans. Although there was great confidence that the private sector would respond enthusiastically to the new program — which happened, causing liberals to then complain that there were too many choices for seniors — no one really knew for certain how many plans would enter the market or whether there would be competing plans offered in sparsely populated areas. Obviously, those circumstances do not apply in the current debate, since every part the country has long had multiple, competing private insurers offering major medical coverage. In any event, HHS never needed to use the provisions in MMA permitting it to contract with private entities to offer “fallback” plans in areas where regular plans were not available, since from the start of the program multiple, qualified, private sponsors applied to offer regular plans throughout the country. Thus, since the inception of the Part D program any Medicare enrollee living anywhere has had a choice of competing, private, “at-risk” prescription drug plans. This is also another example of why it is important to actually read the legislation — just so there is no confusion later. Heritage fellow Dennis Smith c0-authored this post.


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