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Medicare Drug Plan, Version 2.0

He's the top official in charge of the new Medicare drug benefit, and already Heath and Human Services Secretary Mike Leavitt says the program needs changes.

In fact, Leavitt tells CBS News the Department of Health and Human Services is considering what he calls Medicare 2.0 to fix the troubled program that's just barely two months old.

Leavitt told CBS News correspondent Wyatt Andrews Medicare Part D 2.0 will be simpler and more streamlined.

Two major reforms are under consideration. First, not allowing an insurance company to drop — in mid year — a drug it promised seniors would be covered. Second, Leavitt says the government will likely be expelling some insurance companies because of poor customer service.

That's important because the decision to allow 30 or more plans in every state created great confusion.

"We have many plans," Leavitt says. "My guess is there will be fewer plans next time."

Leavitt, who has traveled to more than 90 cities to explain the new benefit, says his agency is also fixing problems that gave Medicare an early black eye: long wait times reaching the Medicare help line, and the way low-income seniors were switched into plans that did not cover their drugs.


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"These are problems that we own," Leavitt says. "They are ours to fix and we are moving about getting them fixed."

One recent controversy surrounds Leavitt's claim that seniors are saving money on drugs across the board, because insurance plans in the system created competition and is driving costs down.

"The price is going down," Leavitt says. "We're very happy about that."

But House Democrats in a study claim that brand name drug prices are still going up, in some cases by more than 10 percent.

Andrews asked Leavitt why all drug prices weren't down now.

"You'd be best to ask an economist that question," Leavitt replies. "But I will tell you overtime, markets will find not just the best price, but the most efficient price."

Most Democrats would reform the new drug benefit to have the government negotiate the lowest prices on drugs — the same way Veterans Affairs does now. But Leavitt says the Administration believes the current system — using multiple insurance companies — will eventually give seniors the best deal.

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