Outcry Over HealthCare.Gov Launch Almost Matches Outcry Over Medicare Part D Launch

This blog recently examined the similarities between the partial government shutdown in 1995/96 and the recently ended shutdown of 2013 (Government Shutdown, 1995—1996: The More Things Change….). The country (or at least Washington, D.C.) is experiencing another bout of déjà vu, this time involving the glitch-filled launch of the HealthCare.gov website that individuals can use to sign up for health insurance. In 2006, the federal government rolled out what was at that point the biggest new health care benefit in 40 years – Medicare Part D – and that rollout featured its own share of glitches, and similar calls for delays, requests for amendments, and the filing of lawsuits.

To review, Medicare Part D, the prescription drug benefit, was included as part of the Medicare Modernization Act of 2003. Enrollment for the new benefit started November 15, 2005. So the time period between enactment of the law and its full implementation was slightly more than two years, compared to the three-and-a-half year rollout of the Affordable Care Act. Like the Navigators that are helping individuals sign up for new health coverage (see “Attorneys General for 13 States Raise Concerns Regarding Exchange Navigators,”) the Bush administration in 2005 provided assistance to help train local partners, such as the State Health Insurance Assistance Programs, senior centers, faith-based organizations and others to guide beneficiaries in making choices about prescription drug coverage.

By the end of 2005, about 24 million Medicare beneficiaries had signed up for a Part D plan, 1 million voluntarily and the rest because they were dually eligible for Medicare and Medicaid or were enrolled in a Medicare managed care plan.


By the beginning of 2006, however, problems with the implementation of the plan became more public. Some residents of long-term care facilities who had signed up for Part D coverage through pharmacies located in the facility where they lived were told the LTC’s pharmacy did not qualify to offer prescription drug benefits; CMS had to issue further guidance to ensure that coverage residents had paid for was honored.

Medicare Part D required that individuals who were dually eligible for Medicare and Medicaid but received a drug benefit through Medicaid would receive the benefit through a Part D plan as of January 1, 2006. But many Medicaid recipients discovered that had no drug coverage at the beginning of the year because their Medicare Part D coverage had not started yet. Many states had to provide temporary coverage for this vulnerable population until the Part D benefit became available. At the end of February, CMS Administrator McClellan told the National Governors’ Association that his agency was working to ensure that states are repaid quickly for the drug costs they covered as the Medicaid population transitioned to Part D. The Bush administration later reimbursed the states for this temporary coverage.

Then-CMS Administrator Mark McClellan, at a February 2, 2006, hearing of the Senate Special Committee on Aging, said he was “very concerned” about the ability of seniors to obtain their drugs when they visited the pharmacy. He acknowledged the Medicare Part D program had some glitches, but said the CMS was doing what it could to address them. “We are finding and fixing them,” he said.

Dual Eligibles

At that hearing, Committee Chairman Gordon Smith (R-Ore.), said that although more than 24 million beneficiaries had enrolled as of mid-January, there had been significant problems with the system. “It is most unfortunate that many of the problems reported involve the so-called dual eligibles. These often are the poorest and most vulnerable Americans who rely on medications to manage their chronic physical and mental illnesses,” he said.

A report issued by the HHS Office of Inspector General in January 2006 noted that dual eligibles were particularly vulnerable to problems navigating the new benefit options because they faced greater health and resource challenges than other Medicare beneficiaries. Thirty-eight percent of dual eligibles had cognitive or mental impairments. Over a third were disabled. On average, dual eligibles used at least ten more prescription drugs than non-dual eligible beneficiaries.

Problems with dual eligibles were the focus of another hearing in mid-February, this time by the Senate Finance Committee. Chairman Charles Grassley (R-Iowa) said. “Things have not gone as well as they should have. I’m not going to let up on this until it’s crystal clear that the agency has gotten the start-up issues under control.”

On February 15, 2006, then HHS Secretary Michael Leavitt told the House Energy and Commerce Committee that it was too early for Congress to enact legislation to address Medicare Part D problems. He acknowledged glitches, but said the administration could address them through regulation. In addition, he emphasized, seniors already were experiencing “substantial savings” as a result of the benefit. “This is a good deal for seniors,” he said.

In response to critics, Leavitt also explained that an extension of the May 15, 2006, deadline for signing up for plans was not needed. Seniors were signing up at a rate of 250,000 per week, Leavitt said, adding that he expected between 28 million and 30 million people to enroll in the first year.

Medicaid Clawback

42 U.S.C. §1396u-5(c) (Social Security Act sec. 1935) required that all states “shall provide” for paying the Secretary a portion of the costs of providing drugs under Part D to dually eligible  individuals as set by the statutory formula. CMS calculated what each state owed based on the statutory formula and sent each state an annual bill describing the state’s monthly clawback payments. If the states did not pay the required amount, the federal government would offset the amount owed, plus interest, against the share of federal Medicaid reimbursement  that it would have otherwise received.

In March, the states of Texas, Kentucky, Maine, Missouri, and New Jersey asked the U.S. Supreme Court to hear their claim that the requirement that states contribute to financing the Part D prescription drug benefit for dual eligibles imposed a discriminatory tax upon them and infringed on their budgetary processes, in violation of constitutional principles. The states argued that the “clawback” provision was unconstitutional because it taxed the states in their sovereign capacities, commandeered the appropriations powers of state legislatures to fund the Medicare program, and violated the states’ rights to a republican form of government.

The Court denied the states’ request.

Enrollment Deadline

Throughout the spring, members of Congress asked the Bush administration to extend enrollment past the May 15, 2006 deadline. “A deadline at some point is necessary, but May 15 does not seem like an appropriate date given all the confusion, the complexity and the errors,” said Rep. Pete Stark (D-Calif) at a House committee hearing in early May. Various proposals floated at the time would have extended the deadline to the end of the year. McClellan said a deadline was necessary to spur seniors to sign up for the benefit. “Seniors are focusing in on this because of the deadline,” he said.

By the time the May 15 deadline came, 30 million Medicare beneficiaries had signed up for the benefit.  When McClellan returned to the Senate in June for another hearing on the program, enrollment had surged to 38 million beneficiaries, or 90 percent of eligible beneficiaries.