Medicare Prescription Drug Benefit Monthly Premiums To Increase By 12% To $28 In 2009

Main Category: Medicare / Medicaid / SCHIP
Article Date: 18 Aug 2008 - 1:00 PDT

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Acting CMS Administrator Kerry Weems on Thursday said that average Medicare prescription drug benefit premiums would be $28 per month in 2009, an increase of 12% over this year's monthly premium, CQ HealthBeat reports. The increase equals $3 per month. Federal analysts in 2003 estimated that average monthly premiums in 2009 would be $44.12 (Reichard, CQ HealthBeat, 8/14). The new projected premium is about 37% less than what CMS forecasted in 2006 when the drug benefit began, Weems said (LaMendola, South Florida Sun-Sentinel, 8/15).

There are about 17.4 million beneficiaries enrolled in drug-only plans and about 7.6 million beneficiaries enrolled in plans that offer comprehensive coverage, including drug benefits, the AP/USA Today reports (Freking, AP/USA Today, 8/14). The $28 is the average premium for both drug-only plans and drug coverage offered by private Medicare Advantage plans. Monthly premiums for drug-only plans are projected to increase from $27 this year to $31 next year, and premiums for MA drug plans are expected to increase from $18 per month this year to $21 next year (CQ HealthBeat, 8/14). According to CMS, the increase reflects rising drug costs, higher projections for catastrophic drug coverage and the end of a demonstration project.

CMS spokesperson Jeff Nelligan on Thursday said that although premiums are increasing, overall projected spending for the program is less than originally estimated. The 10-year cost of the drug benefit initially was forecasted at $634 billion; however, new estimates put it at about $395 billion, Nelligan said (Bloomberg/Arizona Daily Star, 8/15). Medicare's actuary estimates that the drug benefit will cost about $37.2 billion this year and about $46.4 billion in 2009, a 25% increase. The actuary originally estimated that the benefit would cost $68 billion this year and $74 billion in 2009 (CQ HealthBeat, 8/14).

Weems said, "Measured by enrollment, lower costs than originally expected and persistently high satisfaction rates, the Part D drug benefit program has in a short time become a stable, familiar and vital part of Medicare" (Young, The Hill, 8/14).

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