Ex­perts fore­see big pre­mium rise for Medi­care drug plan

Ben­e­fi­cia­ries have un­til Dec 7 to weigh a lower-cost plan

Kuwait Times - - HEALTH & SCIENCE -

WASH­ING­TON: With time run­ning out on open en­roll­ment sea­son, many se­niors are fac­ing sharply higher pre­mi­ums for Medi­care’s pop­u­lar prescription drug pro­gram. The rea­son: ris­ing drug costs have over­taken a long stretch of stable pre­mi­ums. Ben­e­fi­cia­ries have un­til Dec 7 to see if there’s a lower-cost plan that will cover their med­i­ca­tions in 2016. Con­sumer ad­vo­cates and ex­perts say it will pay to shop around this sign-up sea­son. “Pre­mi­ums are go­ing up. De­ductibles are go­ing up,” said Tri­cia Neu­man, a Medi­care ex­pert with the non­par­ti­san Kaiser Fam­ily Foun­da­tion. “There is some po­ten­tial to save a lot of money by switch­ing plans.” Gov­ern­ment spend­ing on the pro­gram also has risen sig­nif­i­cantly, driven by pricey new drugs, no­tably for hep­ati­tis C in­fec­tion. The cost for the hep­ati­tis drugs in the Medi­care pro­gram is ex­pected to be $9.2 bil­lion this year, a near dou­bling from 2014. Be­cause of the prescription pro­gram’s fi­nan­cial struc­ture, tax­pay­ers cover most of the cost for ex­pen­sive med­i­ca­tions. Three out of four adults in­fected with hep­ati­tis C are baby boomers, the group now en­ter­ing Medi­care. Also known as “Part D,” Medi­care’s prescription plan serves about 40 mil­lion older and dis­abled peo­ple. Ben­e­fits are pro­vided through a va­ri­ety of in­sur­ance ar­range­ments. Stand­alone drug plans that work with tra­di­tional Medi­care are the most pop­u­lar, ac­count­ing for more than half of ben­e­fi­cia­ries - about 24 mil­lion peo­ple. Sal Natale, a re­tired den­tist who lives near Tampa, Florida, said prescription pre­mi­ums for him and his wife are go­ing up about 30 per­cent next year, and he doesn’t see a good al­ter­na­tive.

Drug costs

“I’m just go­ing to grin and bear and hope it starts mod­er­at­ing,” Natale said. The couple is signed up in the Hu­mana En­hanced plan, one of the top 10. Na­tion­ally, pre­mi­ums for that plan are go­ing up by about $13 a month, ac­cord­ing to the Kaiser foun­da­tion. In­di­ca­tors sig­nal ris­ing costs across the pro­gram. Among them: in­de­pen­dent es­ti­mates by Kaiser and the con­sult­ing firm Avalere Health show in­creas­ing pre­mi­ums for stand-alone drug plans. The av­er­age pre­mium will rise from $36.68 to $41.46 per month next year, or 13 per­cent, ac­cord­ing to Kaiser. Even if many ben­e­fi­cia­ries switch to lower-cost op­tions, it’s likely to be the big­gest in­crease since 2009. The max­i­mum de­ductible for prescription cov­er­age will rise by $40, to $360. That’s the big­gest in­crease in the de­ductible since the in­cep­tion of Part D in 2006. The de­ductible is the amount of drug costs that ben­e­fi­cia­ries must pay each year be­fore their in­sur­ance kicks in.

Tax­payer ex­pen­di­tures for the “cat­a­strophic” por­tion of the ben­e­fit - in which ben­e­fi­cia­ries with high drug bills pay only 5 per­cent of the cost - will rise by $4.5 bil­lion in 2016, an in­crease of more than 14 per­cent. Spend­ing for cat­a­strophic cov­er­age has dou­bled in just a short time, from $15.5 bil­lion in 2012 to an es­ti­mated $31.2 bil­lion this year. The analy­ses from Kaiser and Avalere are seem­ingly at odds with the mes­sage com­ing from the Obama ad­min­is­tra­tion, which es­ti­mates that drug pre­mi­ums will re­main stable in 2016, av­er­ag­ing $32.50 a month. But the ad­min­is­tra­tion and the in­de­pen­dent an­a­lysts mea­sure dif­fer­ently. For ex­am­ple, the ad­min­is­tra­tion ad­justs its num­ber for the es­ti­mated im­pact of peo­ple as­sumed to be switch­ing to lower-pre­mium plans.

Break­through drugs

The out­side an­a­lysts don’t make sim­i­lar as­sump­tions. In­stead, they fo­cus on what’s hap­pen­ing to pre­mi­ums in the plans for which peo­ple are cur­rently signed up. Na­tion­ally, av­er­age pre­mi­ums are go­ing up by more than 15 per­cent in five of the top eight plans, ac­cord­ing to the Kaiser study. Two plans will see sin­gle-digit in­creases. One plan Sil­verScript Choice - will see a small re­duc­tion. The most pop­u­lar plan - AARP Medi­careRx Pre­ferred - will go up from $50.19 to $60.79, a 21 per­cent in­crease.

Sean Ca­vanaugh, deputy ad­min­is­tra­tor at the Cen­ters for Medi­care and Med­i­caid Ser­vices, said the ad­min­is­tra­tion has a good track record with its es­ti­mates. “We do think ours is more il­lus­tra­tive of what ben­e­fi­cia­ries ac­tu­ally ex­pe­ri­ence,” he said. Ca­vanaugh did say the ad­min­is­tra­tion is con­cerned about the cost of new break­through drugs. The in­sur­ers who de­liver Medi­care’s prescription ben­e­fit have lim­ited op­tions for bar­gain­ing down the prices of those med­i­ca­tions, be­cause usu­ally there’s no com­pet­ing al­ter­na­tive. “The chal­lenge in the Part D pro­gram is around high­cost spe­cialty drugs,” said Ca­vanaugh. “We cer­tainly have to be con­cerned about any­thing that’s driv­ing that much cost in our pro­gram.” With polls show­ing that drug costs are the top health care is­sue for the pub­lic, pres­i­den­tial can­di­dates are weigh­ing in. Op­tions they pro­pose range from giv­ing Medi­care direct author­ity to ne­go­ti­ate drug prices, backed by Demo­crat Hil­lary Rod­ham Clin­ton, to speed­ing up ap­proval of new drugs, ad­vanced by Repub­li­can Jeb Bush.

Con­sumer ad­vo­cates are skep­ti­cal that se­niors shop­ping for bet­ter deals will be suf­fi­cient to blunt the cost in­creases. Find­ing a new plan can be over­whelm­ing, said Bon­nie Burns, a long­time Medi­care coun­selor with non­profit Cal­i­for­nia Health Ad­vo­cates. “Peo­ple can’t deal with the com­plex­ity of de­ductibles, cov­er­age tiers, and prior ap­proval,” she said. Natale, the Florida re­tiree, says he’s not sure what the right an­swer is. He’s wary of gov­ern­ment con­trols on pri­vate in­dus­try, but the re­lent­less growth of costs wor­ries him. “I really don’t think I have much of an op­tion for pro­tect­ing me and my wife if I get some se­ri­ous ill­ness and I need big­time drugs,” he said. — AP

Sal Natale looks over a Medi­care brochure at his home in Semi­nole, Fla. Ris­ing drug costs are start­ing to hit Medi­care’s pop­u­lar prescription drug pro­gram, with many se­nior cit­i­zens look­ing at dou­ble digit pre­mium in­creases next year. — AP

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