Drug Program Big Opportunity for Insurers

The prescription drug plan so far has got mixed patient reviews but for insurers it could be an opportunity to get a bigger foothold in Medicare itself.

The program, known as Medicare Part D, has enrolled about 18 million people. But as The New York Times notes, if it develops as insurers hope it will, Part D could pave the way for a much greater private presence in other types of Medicare policies.

Such policies include the Medicare Advantage, which are operated by the private insurers but subsidized by Medicare.

The head of a major insurer said the program is part of a broader Medicare opportunity for his company because many people with Part D cards would be interested in a Medicare Advantage plan where the profits are much higher.

For a full Medicare Advantage health policy, the government pays the insurer $900 to $2,000 a month beyond whatever premium the patient pays. Such revenues can generate margins of 3 percent to 5 percent.

Critics of the prescription drug program, who include some senior Democrats, have asked the Congressional Budget Office to examine the issue.