That will serve as a disincentive for some beneficiaries to enroll in a plan. It is a way to ensure some plans attract healthier people.

The whole purpose of this drug benefit was to get drug coverage in the hands of all Medicare beneficiaries. Where are the people? That's the question.

Of those 17 million, only about one million seem to have enrolled so far.

The conventional view on Wall Street is that the Medicare formularies mimic commercial formularies, and that's incorrect. These formularies are more stringent than what you see in the private sector.

Many of the plans that set out into this market, set out with expectations that they would have a larger base of beneficiaries. I do expect you will see some of the smaller, newer plans dropping out.

It's a fascinating social experiment in using private sector resources to deliver a social benefit. What Congress did was completely unprecedented — they created new markets and new products.