AARP Study Makes Medicare Recommendations

June 18, 2001 ( - A study commissioned by the American Association of Retired Persons analyzes the potential costs of alternate plan designs, examining how premium subsidy levels would affect patterns of participation.

The study recommends that lawmakers:

  • Balance an adequate benefit with affordable contributions
  • Encourage people to enroll as soon as eligible
  • Restrict or avoid later enrollment, which might occur on an as-needed basis
  • Make enrollment automatic with the choice being to opt-out, not to opt-in
  • Offer catastrophic coverage to attract higher-income beneficiaries
  • Deduct premiums from monthly Social Security checks
  • Keep the program design simple
  • Use pharmacy benefit manager cost-containment techniques to encourage efficient spending on prescription drugs
  • Balance individual flexibility in choice of drugs with savings and affordability.

William M Mercer conducted the study. It comprises an actuarial analysis, which applies basic insurance principles to the design of a Medicare prescription drug benefit and makes recommendations to policy makers who are currently searching for the best way to add a voluntary prescription drug benefit to Medicare.

– Camilla Klein