Report: Premium Hikes for Top Medicare Drug Plans

Medication costsBy RICARDO ALONSO-ZALDIVAR

WASHINGTON (AP) - Millions of seniors enrolled in some of the most popular Medicare prescription drug plans face double-digit premium hikes next year if they don't shop for a better deal, says a private firm that analyzes the highly competitive market.

Seven of the top 10 prescription plans are raising their premiums by 11 percent to 23 percent, according to a report this week by Avalere Health.

It's a reality check on a stream of upbeat Medicare announcements from the Obama administration, all against the backdrop of a hard-fought election. In August, officials had announced that the average premium for basic prescription drug coverage will stay the same in 2013, at $30 a month.

The administration's number is accurate as an overall indicator for the entire market, but not very helpful to consumers individually since it doesn't reflect price swings in the real world.

"The average senior is going to benefit by carefully scrutinizing their situation, because every year the market changes," Avalere President Dan Mendelson said. Avalere crunched the numbers based on bid documents that the plans submitted to Medicare.

The report found premium increases for all top 10 prescription drug plans, known as PDPs. However, the most popular plan - AARP MedicareRx Preferred - is only going up 57 cents per month nationally, to $40.42 from the current $39.85.

President Barack Obama's health care law does not appear to be the cause of the increases. Indeed, the law is improving the prescription benefit by gradually closing a coverage gap called the "doughnut hole," which catches people with high drug costs. Instead, the price hikes appear to be driven by market dynamics, and some insurers are introducing new low-premium options to gain a competitive advantage on plans that are raising their prices.

The seven plans with double-digit premium increases were: the Humana (HUM) Walmart (WMT)-Preferred Rx Plan (23 percent); First Health (CVH) Part D Premier (18 percent); First Health Part D Value Plus (17 percent); Cigna (CI) Medicare Rx Plan One (15 percent); Express Scripts (ESRX) Medicare-Value (13 percent); the HealthSpring (HS) Drug Plan (12 percent); and Humana Enhanced (11 percent).

Another two plans in the top 10 also had single-digit increases. They were the SilverScript Basic (8 percent) and WellCare (WCG) Classic (3 percent).

On the plus side for consumers, a major new low-cost plan entered the market. Premiums for the AARP MedicareRx Saver Plus Plan will average $15 a month nationally, although it won't be available everywhere. That's $3.50 less than the current low-cost leader, the Humana Walmart plan, whose premiums are rising to $18.50.

The new AARP plan is run by UnitedHealth Group Inc. (UNH), the nation's largest health insurance company. United pays AARP for the right to use its name on a range of Medicare insurance products, a successful business strategy that has proven lucrative for both partners. When Humana and Walmart teamed up to offer their low-cost plan in 2011, United felt the competition.

"There is a real focus on the premium in this market," Mendelson said. "If a plan fields an offering with a low premium, it knows it can capture a significant number of customers."

Medicare spokesman Brian Cook did not dispute the Avalere estimates. "We continue to encourage seniors to shop around and find the plan that works best for them," he said.

Medicare's open enrollment season starts Oct. 15, and beneficiaries have a wide variety of choices of taxpayer-subsidized private prescription plans. Seniors and family members can use the online Medicare Plan Finder to input individual prescription lists and find plans in their area that cover them.

About 90 percent of Medicare's nearly 50 million beneficiaries have some form of drug coverage, with more than 17 million enrolled in private plans through the prescription drug program. Of those, 14 million are in the top 10 plans.

The Avalare numbers, released Monday, do have one silver lining for the Obama administration. When the projections are tweaked to account for seniors switching to lower-cost coverage, premiums for 2013 are likely to remain steady.

Separately, the administration recently announced that average premiums for Medicare Advantage insurance plans will barely inch up next year on average, while enrollment in the private medical plans will continue to rise. Many Medicare Advantage plans also combine prescription drug coverage in one package deal.

But the biggest premium announcement is yet to come.

Virtually all seniors pay the Part B premium for outpatient care, including those with traditional Medicare as well as those in private plans. Currently $99.90 a month, the Part B premium is expected to rise by about $7 for 2013, according to the government's own projections.



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Online:

Avalere study: http://tinyurl.com/8j9g5mm


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roxx

Who wrote this article? Its an advertisement for Obama and his healthcare plan and its impossible. Obamacare funding was begun with 716B eliminated from Medicare under the line for Medicare Advantage. It was kept with funding originally intended for Demonstation Projects. Will it be continued in 2013? Where is the money going to come from? The Senate refused to pass a budget for the past four years. We are even headed for the so called financial cliff at the end of the year Why on earth would you expect better from them once the election is over?

And of course premiuns are going up, so are taxes on just about everything and everyone. Even taxes on generous health plans are going up to the tune of 40%! Add that to the Trillion dollars in projected Obamacare taxes. What you read in that article was the deal between AARP aka United Health Care and the Obama administration to get seniors to vote the very same politicians who are rationing their care in the future and their handshake with AOL, etc. And its no surprise that costs are going up and up and up.

We may be the 47% but despite Mr Romneys rational, we dont want Mr Obama to keep us that way. We all want better and we dont want to pay politicians to pander or to reward their buddies. And we can all read between the lines.

September 25 2012 at 4:48 PM Report abuse +2 rate up rate down Reply
1 reply to roxx's comment
chris1011

Your ignorance will not get you anywhere in this world.

September 25 2012 at 5:47 PM Report abuse -2 rate up rate down Reply
2 replies to chris1011's comment
jdykbpl45

Really, Chris? Obama, the messiah, said costs would go down.Did he lie to us?

September 25 2012 at 6:14 PM Report abuse +3 rate up rate down
democracks0

Yours sure hasn't gotten you anywhere Chrissy. LOL

September 25 2012 at 9:17 PM Report abuse +1 rate up rate down