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Medicare Drug Plan Premiums Jump by 25 Percent |
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Seniors are paying nearly 25 percent more in premiums for their 2008 Medicare Part D prescription drug coverage than they did for their 2007 coverage, according to a new report by the Center for Economic and Policy Research (CEPR).
Changes in the Cost of Medicare Prescription Drug Plans, 2007-2008 suggests the increased premium costs may be the result of insurers deliberately setting low introductory premiums when the program began in January 2006 to attract seniors—and later springing the higher costs on participants.
It is possible that the insurers taking part in Part D are following the same pattern as the insurers who participated in the Medicare Plus Choice program in the mid-nineties. Insurers in that program originally charged low premiums in order to gain market share. They then raised their premiums sharply in subsequent years in order to cover their costs.
The average increase will drive costs up for the average single participant by $57.70 a year to $293 and for the average couple, the annual premium jumps from $470.60 a year to $586 a year.
Medicare Part D is a voluntary prescription drug program and its benefits are provided only through private plans, either stand-alone prescription drug plans or Medicare Advantage plans. Congress passed the Medicare drug legislation by a slim margin—and several lawmakers likely would not have voted for the bill had they been told the true cost. While the Bush administration claimed the legislation would cost $400 million over 10 years, Congress learned that Medicare’s chief actuary had estimated the true cost of the program at $534 billion.
In August, we reported that seniors in Medicare’s Part D prescription drug program are more likely to pay at least $300 a month for medicines than those on other plans, according to a study published by the journal Health Affairs.The new CEPR brief looks at each of the 50 states and analyzes the number of plans offered in 2008, the number of plans offering coverage “in the gap” or “donut hole” between initial coverage and the catastrophic level, the number of plans dropping “in the gap” coverage and the average dollar and percentage increase in premium cost.
Addressing the problem of plans that drop gap or “donut hole” coverage, the repot says:
This is worth noting, since selecting plans has proved to be an ordeal for many beneficiaries, taking an average of more than eight hours, according to a survey conducted for the Medicare Payments Advisory Commission. The 3-4 plans dropping coverage in most states imply that roughly 20 percent of the plans that offered coverage in the gap in 2007 will not be offering coverage in 2008. The beneficiaries that signed up for these plans presumably selected them because they anticipated substantial drug expenses. For this group, the need to select a new plan is likely to be an especially large burden if they cannot rely on the assistance of a family member or health care professional.
The report also warns:
if this rate of increase is sustained for any substantial period of time, then it will have a noticeable impact on living standards.
The CEPR report also points out that the premium hikes are not the only increased costs seniors in the Medicare drug plan may face:
It is also worth noting that the increase in the premium only captures one potential source of increased prescription drug costs. If the plans charge higher deductibles, co-payments, or cover a smaller portion of the drugs needed by beneficiaries, then drug spending will also increase.
For information on the Medicare prescription drug program, click here and to learn more about the AFL-CIO’s health care reform efforts, click here.
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Some so called “retired” working families have to do without some medications. Are these the Golden Years? I hope not.