Medicare Drug Premiums to Go Up in 2013
Millions of retirees 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 Avalere Health, a company that analyzes the highly competitive Medicare supplemental insurance market.
Avalere’s 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.
The Affordable Care Act does not appear to be the cause of the increases. The law is improving the prescription benefit by slowly 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 announced with double-digit premium increases were: the Humana Walmart-Preferred Rx Plan (23 percent); First Health Part D Premier (18 percent); First Health Part D Value Plus (17 percent); Cigna Medicare Rx Plan One (15 percent); Express Scripts Medicare-Value (13 percent); the HealthSpring Prescription 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 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., 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.
Medicare’s open enrollment period begins 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.
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.