Health insurers marketing Medicare plans to seniors.

Earlier this month California insurers, including a handful of local companies, began marketing their Medicare Part D Prescription Drug plans which are designed to help senior citizens afford drug coverage with the help of government discounts.

The federal government approved the plan in 2003 after Medicare participants went without any help from the program in paying for prescription drugs. Now, people over 65 have the option of buying prescription drug coverage as a stand-alone benefit or purchasing as part of a comprehensive private Medicare plan.

Local insurers Health Net and Blue Cross of California are both offering little as $5.41 ?? coverage to Medicare beneficiaries with plans ranging from just under $18 to under $36 per month. Part D critics initially claimed that not enough companies would participate in the discounting program, but those fears have not materialized.

Eligible people, no matter where they live, generally have over a dozen plans to choose from, and Californians can buy into a standalone plan for as little as $5.41 per month, according to the Centers for Medicare & Medicaid Services.

"Everyone in Medicare who lives in California, no matter what their income or how they get their health care, can choose coverage that reflects what they want, including lower cost, more complete coverage, and convenient access," said CMS Administrator Mark B. McClellan, M.D, Ph.D. in a news release.

Blue Cross of California in Thousand Oaks will be marketing three different plans ranging from $20.04 per month to $35.29 per month which will provide discounts for generic and brand name drugs and can be purchased alone or as part of other plans. Health Net in Woodland Hills will be offering two plans at $17.65 and $21.99 per month, respectively.

Investors hoping insurers are going to be raking in the profits by enrolling new members may have to bring their expectations down to earth, however. Insurers are making sure their rates are competitive in order to attract more members from the senior population.

Health Net is one of the larger figures in the world of Medicare plans, and has told investors to expect margins of 2 to 3 percent from the new plans, which is somewhat lower than what some analysts had predicted.

David Friedman, chief operations officer of government programs for Health Net of California said he did not know whether the company was on the lower end of the profit scale, but said the company was happy with its margins.

He said the company is hoping to enroll 200,000 new members in its stand-alone plans, and the company has informed members who are--already enrolled in a private Medicare Advantage plan that they will automatically get discounts, Friedman said.

Health Net, having bid below the average among health plans, will also get part of the "instant market share" that the discount programs create. For Medicare eligible people who also have low enough incomes to qualify for Medicaid, the government is providing a fully subsidized benefit and automatically enrolling them in plans. Health Net of California will be assigned about 125,000 of those people, Friedman said.

Friedman said the company is bracing for a rush of inquiries about the new plans.

"I think there eventually will be a lot of interest when all of the confusion dies down, there is a lot of confusion at the moment," Friedman said. "We're specifically waiting a little while longer to launch our advertising campaign, and the theme is that we have answers to a very complicated program."