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Medicare Drug Program News
Finding Coverage for Donut Hole is More Restricted,
Expensive for 2007
But CMS says drug program
is costing less than
expected
 November 29, 2006 – The biggest problem with the
Medicare drug program has been the lack of coverage – with no lack of
premium – for senior citizens when they fall into the "donut hole." This
is when beneficiaries are responsible for 100% of prescription drug
costs between $2,250 and $5,100, and still must pay monthly premiums. KaiserNet.org reports that to find plans that offer coverage in the
"donut hole" at a reasonable cost will be even harder in 2007.
 Fewer Medicare Prescription Drug Benefit Plans
Cover Brand-Name Medications During 'Doughnut Hole' in 2007
Purchasing Medicare prescription drug plans that
offer coverage during the so-called "doughnut hole" will be "more
restricted and more expensive" for beneficiaries in 2007, the
Los Angeles Times
reports.
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Every Senior Citizen Should Reevaluate Their Drug
Plan Choice
By Tucker Sutherland, editor
November 16, 2006 – The enrollment period for the
Medicare drug program opened yesterday and all senior citizens should
review their current drug plan and other options – some new – that are
available to them. Many plans have changed (prices and/or benefits) and
for many seniors their personal situations may have changed. For
example, some took no drugs in 2006, but see a need in 2007, which would
drastically change the type of plan they choose.
Read
more...
Most Senior Citizens Say Medicare Drug Plans have
Saved Them Money
Seniors pleased with Medicare Modernization Act (MMA)
that created drug benefit has increased from 26% in 2004 to 47%
November 21, 2006 – According to the latest WSJ
Online/Harris Interactive Health-Care Poll, the Medicare Part D drug
benefit has been highly successful among senior citizens in its first
year. Most who are enrolled in a Medicare drug plan say they are
satisfied with their current plan (75%) and are not likely to switch
next year (73%). In fact, large majorities say their plans have been
easy to use (82%) and have saved them money (70%).
Read
more...
Read the latest news
on
Medicare
or
Medicare Drug Program |
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Beneficiaries are responsible for 100% of
prescription drug costs during the doughnut hole in the standard drug
benefit for 2007, but they can purchase plans that offer some coverage
during the gap for a higher premium.
Although more plans will offer coverage of generic
drugs during the doughnut hole next year, the number of plans offering
coverage of brand-name medications will decrease from 33 to 27,
according to a recent
Kaiser Family
Foundation study cited by the Times.
For example,
Humana's
drug plan Complete Medicare, which enrolls about 410,000 beneficiaries,
covered both generic and brand-name drugs during the doughnut hole in
2006 but in 2007 will cover only generic medications as a way to reduce
costs.
Some experts say the change in the Humana plan
"raises a new complication for Democrats vowing to reform the
prescription drug program," according to the Times. In addition, the
change "shows that the actions of insurers ... can have a profound
effect on seniors' pocketbooks," the Times reports.
Democrats have proposed authorizing Medicare to
negotiate with pharmaceutical companies to lower drug prices, but such
negotiations "may or may not resolve such problems," according to the
Times.
Robert Laszewski, a health care industry
consultant, said, "When an insurance company has a plan design that it
cannot make money on, it can be pretty ruthless in what it does to
correct that."
Humana spokesperson Dick Brown said, "After
reviewing the 2006 experience with our complete plan that covered brand
drugs through the coverage gap, it became clear to us that we could not
continue to do that in 2007 and be able to offer it at an affordable
premium."
He added, "When we bid for the 2006 plans, we
assumed other companies would do as we did and offer one plan that
covered brand drugs through the gap. That did not happen. We under
priced the plan based on that erroneous assumption."
Humana in 2006 paid $1.33 in benefits for each $1
it took in under the PDP complete plan, according to the insurer
(Alonso-Zaldivar, Los Angeles Times, 11/29).
Medicare Prescription Drug Benefit Cost Almost $13B
Less in 2006 Than Expected, According to CMS
The Medicare prescription drug benefit will cost
$30 billion in 2006, a 30% decrease from a previous estimate of $43
billion, according to
CMS, the
AP/Houston
Chronicle reports (Freking, AP/Houston Chronicle, 11/29). CMS
said that the decrease resulted from:
● $7.5 billion in savings from
lower-than-expected enrollment;
● $6.9 billion in savings from competition; and
● $3.7 billion in savings from
lower-than-expected increases in prescription drug prices in the two
years prior to the launch of the program.
Higher-than-expected costs in other areas, such as
catastrophic coverage, partially offset the decrease in the cost of the
benefit, CMS said.
CMS also estimated that the Medicare prescription
drug benefit will cost $729 billion through 2015, compared with a
previous estimate of $926 billion. CMS actuary John Shatto said that
lower-than-expected increases in prescription drug prices account for
about $141 billion of the estimated decrease in the cost of the Medicare
prescription drug benefit through 2015 and that competition accounts for
about $55 billion.
He also said that lower-than-expected enrollment
will have a less significant effect on the cost of the drug benefit over
the long term. "Those with very high drug spending are the ones that are
going to sign up for Part D," Shatto said, adding, "Those with little
drug spending are the ones who did not sign up for Part D. That's what's
creating a smaller (effect)."
Implications, Comments
According to the
AP/Albany Times
Union, the decrease in the cost of the drug benefit "could
make it harder for Democrats to make changes" to the program,
"particularly with surveys showing high satisfaction rates among
beneficiaries."
President Bush earlier this month said, "The costs
have been driven down not by the government but by the collective voices
of millions of consumers."
Rep. Pete Stark (D-Calif.) said, "Republicans would
have you believe that the drug and insurance companies have sacrificed
profits in the name of competition, but nothing could be further from
the truth."
He added, "In fact, the dirty little secret is that
costs are lower because of low enrollment and a slowdown in drug
spending" (Freking, AP/Albany Times Union, 11/29).
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