Medicare Part D plan premiums will rise slightly in 2008 to an average of $25, up from about $22 in 2007, the Centers for Medicare & Medicaid Services has announced.
CMS emphasized that the rise in premiums is a result of "technical adjustments required by law" and does not reflect the bidding process undergone by health and prescription drug plans. The $25 average is nearly 40 percent lower than the original 2003 premium estimates for 2008.
"Competition and smart choices have been two important factors in holding down the cost of the Medicare drug benefit," said Herb Kuhn, CMS' acting deputy administrator. "The fact that premiums are nearly 40 percent below the original projections indicates that we are indeed getting great value out of this program."
Some 87 percent of Medicare beneficiaries in stand-alone prescription drug plans could avoid any premium increase by enrolling in plans that cost the same or less than they pay now, CMS added.
"Part D sponsors continue to exceed expectations in terms of the savings, choice and satisfaction they offer to America's Medicare beneficiaries," said Mark Merritt, president of the Pharmaceutical Care Management Association.
CMS also said premiums for Medicare drug plans - those that are managed by private insurance companies and typically feature lower out-of-pocket costs for beneficiaries - stand to drop in 2008. Average MA premiums in 2007 were $7 less than the premiums for prescription drug plans in traditional fee-for-service Medicare, CMS said. In 2008, the average MA plans' premiums are projected to be $11 less than FFS rates.
The costs for MA plans are partially funded by levied premiums for beneficiaries in traditional fee-for-service Medicare. Whether the lowered 2008 premiums for MA drug plans will affect FFS beneficiaries' premiums is unclear. Currently, CMS pays 12 percent more to insurers managing MA plans than to traditional FFS Medicare plans.