NU Online News Service, April 24, 2:26 p.m. — Washington
A top Health Insurance Association of America executive says private health insurers want to be part of any new Medicare prescription drug benefit, but only if the program is broad-based and not prone to adverse selection.
Donald Young, president of the Washington-based group, said today at a press briefing that proposals to create a drug-only insurance plan would not work, because only those with high drug costs would purchase the plan, leading to adverse selection and excessive costs.
“If private insurers are to play a role in the delivey of a Medicare prescription drug benefit, it cannot be under the structure of a drug-only insurance product that results in adverse selection and high premiums that would not be attractive to the great majority of seniors,” Young said.
Young’s comments came as Congress and the White House continued efforts to develop a Medicare prescription drug benefit.
Among the proposals on the table is one that would allow private health plans and insurers to arrange and deliver Medicare benefits.
Young said that while HIAA supports an approach based on market-based competition, it has serious doubts about whether drug-only insurance is a viable mechanism for delivering a prescription drug benefit.
Young noted that unlike traditional insurance risks, which are unpredictable, prescription drug use is predictable and budgetable.
Thus, he said, only those expecting high costs are likely to purchase the product. This would lead to adverse selection, Young said, quickly rendering the market unstable.
Although HIAA has not developed its own proposal for providing a Medicare drug benefit through private insurers, Young said the best way of doing so is by making the benefit an integral part of the Medicare benefit package.
Moreover, he said, the program must be designed to ensure high beneficiary participation. so that per beneficiary costs and premiums can remain financially viable over the long-term.
The most viable product would be one that offers a core set of benefits, including prescription drug coverage, but allows for some flexibility, Young said.