Medicare drug premiums to remain stable in 2011

CMS says a slight rate increase for Part D insurance, combined with discounts required by the health reform law, will make medications more affordable.

By David Glendinning — Posted Sept. 1, 2010

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Average monthly premiums for seniors enrolled in the Medicare drug benefit will increase by only $1 in 2011, bringing the total average premium to $30, the Centers for Medicare & Medicaid Services announced Aug. 18.

The estimate is based on the bids that drug plans submitted to the government to participate in the Part D program next year. The premiums paid by seniors are set so that they will cover about a quarter of the total cost of basic drug coverage.

"Most Medicare prescription drug plan premiums should remain relatively stable next year, and all beneficiaries should compare their coverage under their current plan with the plans that will be offered in 2011 when that information becomes available in October," said Jonathan Blum, deputy administrator and director of the CMS Center for Medicare.

The Obama administration said many drugs would become even more affordable next year due to provisions in the health system reform law enacted in March. Seniors who hit the Part D coverage gap, or "doughnut hole," in 2011 will receive deep discounts on brand-name and selected generic drugs they purchase up until the program's catastrophic coverage kicks in. The discounts are a step in the reform law's process of closing the coverage gap completely for enrollees.

In addition, low-income seniors continue to be eligible for additional government help with their premiums. CMS said fewer enrollees in this category would need to be switched to different drug plans in 2011 to avoid having them charged premiums under their current plans.

The low expected increase in premiums is one benefit of a program that has proved less costly than originally thought, said Karen Ignagni, president and CEO of America's Health Insurance Plans. The estimated 10-year total cost of Part D is now $260 billion less than originally projected.

"Medicare beneficiaries continue to have access to high-quality, affordable prescription drug coverage as a result of Part D plans' success in encouraging the use of generic drugs and designing and managing Part D prescription drug benefits to keep them affordable," she said.

CMS Administrator Donald Berwick, MD, said more information about the 2011 plans would become available to Medicare enrollees in the coming months.

"People with Medicare will be able to get the most up-to-date information about the Part D and Medicare Advantage plans at and 1-800-MEDICARE in October, well before the annual open enrollment period begins in November," he said.

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