By Mary Agnes Carey, CQ HealthBeat Associate Editor
October 5, 2007—Consumers who stay in their current Medicare prescription drug plans will see on average a 21 percent increase in their monthly premiums next year, according to an analysis released Friday by the firm Avalere Health.
Using newly released data from the Centers for Medicare and Medicaid Services (CMS) and Avalere's own analysis tools, the firm computed an "enrollment weighted" average premium for the Medicare Part D marketplace. Avalere said that under its method, premiums of plans with the most enrollees are assigned a heavier weight relative to plans with low enrollment. A premium increase for a prescription drug plan, or PDP, with three million enrollees would have a greater impact than a premium increase for a plan with 10,000 enrollees.
The top 10 PDP sponsors in Medicare have more than 80 percent of the people enrolled in stand-alone PDPs and all raised their premiums, with the exception of two: CVS Caremark's Silver Script plan, which will be 25 percent cheaper in 2008, and First Health's Part D premier plan, which will cost 4 percent less. Avalere's analysis also found that the Humana PDP Standard plan, which currently has the second-highest enrollment, raised its premium an average of 69 percent, while the largest increase, 89 percent, is United's Medicare Rx AARP Plan-Saver PDP, which as of July had more than 900,000 enrollees, according to Avalere.
"The reality of the Medicare experience is that beneficiaries have been very loyal thus far to their initial plan selections," Avalere President Dan Mendelson said in a statement. "If consumers stick to their choices again, they are likely to see a dramatic increase in their monthly premiums. But consumers who shop around may be able to find lower cost alternatives."
CMS Spokesman Jeff Nelligan reiterated Friday that beneficiaries have many choices for their prescription drug coverage. "More than 90 percent of Medicare beneficiaries in a stand-alone Part D prescription drug plan will have access to at least one plan in 2008 with premiums lower than they are paying this year," he said in a statement. In every state, beneficiaries will have access to at least one plan with premiums of less than $20 a month, and a choice of at least five plans with premiums of less than $25 a month.
Chris Curran, Humana's director of corporate communications, said that Humana's 2008 member premiums, set by CMS after the company filed its bids in June 2007, "are largely the function of changes in the government's formula since last year, as well as overall medical trend." Curran added that Humana's premiums are below the government's national benchmark in 41 states and Puerto Rico. "In fact, 97 percent of our [Medicare managed care plans that offer prescription drug coverage] members have the same or lower premiums in 2008 than they had in 2007," Curran said.
Peter Ashkenaz, a spokesman for United, noted that since premiums vary by region, beneficiaries would see increases based on a regional basis rather than on a national average.
