Program comes in 13B under budget

A number of factors have contributed to the lower cost.
WASHINGTON (AP) -- The Medicare drug benefit has cost nearly 13 billion less than expected this year, a rare federal program coming in under budget.
President Bush credits competition among the dozens of private insurance companies administering the program for the cost coming in at 30 billion in 2006, about 30 percent below the projected 43 billion.
But figures provided to The Associated Press by the agency that oversees the benefit show two other key factors: lower-than-expected enrollment and drug prices that went up less than expected before the benefit kicked in.
"The costs have been driven down not by the government but by the collective voices of millions of consumers," Bush said during an interview shortly before the Nov. 7 elections.
Democrats say they can cut costs further by having the government directly negotiate drug prices with pharmaceutical companies on behalf of beneficiaries. Rep. Nancy Pelosi, the incoming House speaker, says granting the government that authority will be one of her priorities for the new Congress' first 100 hours.
Details scanty
Why the program has been costing less than anticipated will be an important element of that debate. To date, however, there has been little detailed analysis of how the savings are being achieved.
The Centers for Medicare and Medicaid Services, the federal agency that oversees the new drug benefit for the elderly and disabled, provided the AP with its accounting of where the program saved money this year.
Lower than projected enrollment: 7.5 billion.
Competition: 6.9 billion.
Drug prices rising less than expected in the two years before the benefit even began: 3.7 billion.
Offsetting the savings somewhat were higher costs in some areas, including for catastrophic drug expenses -- those that occur when people have drug bills of more than 5,100. Those additional costs bring the net savings down to nearly 13 billion.
The savings being achieved by the program could make it harder for Democrats to make changes, particularly with surveys showing high satisfaction rates among seniors and the disabled. So Democratic lawmakers may focus on where the savings are coming from.
After Congress created the drug benefit in 2003, Medicare officials estimated that 39 million people would enroll or get their coverage through employers who receive a tax credit for providing a benefit.
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