Policy & Regulation News

Will Medicare Part D Prescription Drug Plans Stabilize?

By Jacqueline DiChiara

- As Medicare – established along with Medicaid on July 30, 1965 – formally hits its 5-decade anniversary this week, the healthcare industry turns over a new financial leaf upon considering where new spending and saving focuses lie.

Medicare Part D prescription drug plan

Where is Medicare – the second-largest social insurance program with nearly 54 million beneficiaries and total expenditures topping $610 billion – heading next in terms of projected spending trends?

According to new projections from the Centers for Medicare & Medicaid Services (CMS), next year’s average premium for a basic Medicare Part D prescription drug plan will “remain stable” at $32.50 per month. Such news perhaps contradicts reports that total Part D costs per capita increased by nearly 11 percent last year, a spike caused by the ripple effect high cost specialty drugs had on spending during a “catastrophic benefit phase,” CMS confirms.

Premium growth for total Medicare payments to reinsurance plans has more than tripled. However, CMS confirms per-Medicare enrollee spending growth remains “historically low,” hovering a little over 1 percent over the past 5 years. CMS additionally notes the Medicare Trust Fund will likely stay solvent for the next 15 years. This period of time is 13 years beyond earlier 2009 predictions which precede implementation of the Affordable Care Act (ACA).

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  • CMS confirms there is still more work to be done. “Seniors and people with disabilities are continuing to benefit from stable prescription drug premiums and a competitive and transparent marketplace for Medicare drug plans,” says Acting CMS Administrator, Andy Slavitt. “While this is good news, we must ensure that Medicare Part D remains affordable for Medicare beneficiaries so that they can have access to the prescription drugs that they need,” he adds.

    CMS additionally states both seniors and the disabled are continuously saving money on out-of-pocket drug costs “as the ACA closes the Part D donut hole.” Once the ACA was implemented, 9.4 million seniors and those with disabilities saved $15 billion on prescription drugs, says CMS. The average amount of savings per beneficiary is nearly $1,600, CMS confirms.

    “For the past five years – for plan years 2011-2015 – the average Medicare Part D monthly premium for a basic plan has been between $30 and $32. Today’s projection for the average premium for 2016 is based on bids submitted by drug and health plans for basic drug coverage for the 2016 benefit year and calculated by the independent CMS Office of the Actuary,” states CMS. “The upcoming annual open enrollment period – which begins October 15 and ends December 7 – allows people with Medicare to choose health and drug plans next year by comparing their current coverage and plan quality ratings to other plan offerings,” the organization adds, confirming new benefit choices kick in beginning in January. 

    Cheers to the next 5 decades of Medicare and its continued financial advancement and progression to promote high quality healthcare for all.