Medicare has handed out a rare piece of good news for consumers, announcing that insurance premiums for its prescription drug programs will not increase in 2012. The agency said competition for consumer business among private insurers would keep rates stable.
Premiums for Medicare's Part D prescription drug coverage averaged $30.76 a month in 2011, the agency said. It said the average premium in 2012 would be about $30 a month.
Many Medicare beneficiaries will actually see their overall drug costs decline, the agency added. Provisions of the Affordable Care Act (ACA) have increased government drug payments to consumers in the program's drug coverage gap, known as the donut hole.
In 2011, the gap begins when total drug payments—by consumers and their health plans—reach $2,840, according to the Medicare Rights Center. The ACA provides consumers a 50 percent discount on brand-name drugs and a 7 percent discount on generic drugs while they are in the donut hole. The gap ends after total costs—including the discounts—have reached $6,448. "In a standard Part D plan," the Center says, "consumers are responsible for a $310 deductible and coinsurance of 25 percent before they reach the donut hole."
The agency said 900,000 Medicare beneficiaries have so far hit the donut hole and received drug discounts. Another 17 million Medicare users have taken advantage of free and reduced-price wellness services required by the health reform law. Medicare provides benefits to 47 million people.
"The Affordable Care Act is delivering on its promise of better health care for people with Medicare," U.S. Health & Human Services Secretary Kathleen Sebelius said in a prepared statement. "People with Medicare who hit the donut hole are paying less for their prescription drugs, 17 million Americans have received free preventive services and prescription drug premiums will remain low. These are important steps that are making a difference in the lives of millions of Americans right now."
Medicare also said consumer costs are being held down by greater use of lower-cost generic drugs. In the coming 18 months, an unusually large number of brand-name drugs are scheduled to lose their patent protection. Rapid price declines of as much as 80 percent occur after such drugs become available in generic form.
While average Part D drug premiums may not be rising, consumers should shop carefully for the best coverage. There can be big premium differences among individual plans. Besides overall premiums, policies also can differ in terms of what they charge for individual drugs, annual deductibles, and co-pays on prescriptions.
Further, Medicare insurance rates differ by state and locality. Details of 2012 coverage plans will be available later this year before the program's annual open enrollment period begins. This year, open enrollment is set to begin Oct. 15 extend to Dec. 7. Unlike past years, a consumer's ability to later change their coverage plans will be sharply narrowed.