Experts foresee big premium increases for Medicare drug plan

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. Stand-alone 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.

“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.

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 high-cost 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 big-time drugs,” he said.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

A firefighter stands in silence before a panel bearing the names of L. John Regelbrugge and Kris Regelbrugge during the ten-year remembrance of the Oso landslide on Friday, March 22, 2024, at the Oso Landslide Memorial in Oso, Washington. (Ryan Berry / The Herald)
‘Flood of emotions’ as Oso Landslide Memorial opens on 10th anniversary

Friends, family and first responders held a moment of silence at 10:37 a.m. at the new 2-acre memorial off Highway 530.

Julie Petersen poses for a photo with images of her sister Christina Jefferds and Jefferds’ grand daughter Sanoah Violet Huestis next to a memorial for Sanoah at her home on March 20, 2024 in Arlington, Washington. Peterson wears her sister’s favorite color and one of her bangles. (Annie Barker / The Herald)
‘It just all came down’: An oral history of the Oso mudslide

Ten years later, The Daily Herald spoke with dozens of people — first responders, family, survivors — touched by the deadliest slide in U.S. history.

Victims of the Oso mudslide on March 22, 2014. (Courtesy photos)
Remembering the 43 lives lost in the Oso mudslide

The slide wiped out a neighborhood along Highway 530 in 2014. “Even though you feel like you’re alone in your grief, you’re really not.”

Director Lucia Schmit, right, and Deputy Director Dara Salmon inside the Snohomish County Department of Emergency Management on Friday, March 8, 2024, in Everett, Washington. (Ryan Berry / The Herald)
How Oso slide changed local emergency response ‘on virtually every level’

“In a decade, we have just really, really advanced,” through hard-earned lessons applied to the pandemic, floods and opioids.

Ron and Gail Thompson at their home on Monday, March 4, 2024 in Oso, Washington. (Olivia Vanni / The Herald)
In shadow of scarred Oso hillside, mudslide’s wounds still feel fresh

Locals reflected on living with grief and finding meaning in the wake of a catastrophe “nothing like you can ever imagine” in 2014.

The view of Mountain Loop Mine out the window of a second floor classroom at Fairmount Elementary on Wednesday, Jan. 10, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
County: Everett mining yard violated order halting work next to school

At least 10 reports accused OMA Construction of violating a stop-work order next to Fairmount Elementary. A judge will hear the case.

Imagine Children's Museum's incoming CEO, Elizabeth "Elee" Wood. (Photo provided by Imagine Children's Museum)
Imagine Children’s Museum in Everett will welcome new CEO in June

Nancy Johnson, who has led Imagine Children’s Museum in Everett for 25 years, will retire in June.

Kelli Littlejohn, who was 11 when her older sister Melissa Lee was murdered, speaks to a group of investigators and deputies to thank them for bringing closure to her family after over 30 years on Thursday, March 28, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
‘She can rest in peace’: Jury convicts Bothell man in 1993 killing

Even after police arrested Alan Dean in 2020, it was unclear if he would stand trial. He was convicted Thursday in the murder of Melissa Lee, 15.

Ariel Garcia, 4, was last seen Wednesday morning in an apartment in the 4800 block of Vesper Dr. (Photo provided by Everett Police)
Everett police searching for missing child, 4

Ariel Garcia was last seen Wednesday at an apartment in the 4800 block of Vesper Drive. The child was missing under “suspicious circumstances.”

The rezoned property, seen here from the Hillside Vista luxury development, is surrounded on two sides by modern neighborhoods Monday, March 25, 2024, in Lake Stevens, Washington. (Ryan Berry / The Herald)
Despite petition, Lake Stevens OKs rezone for new 96-home development

The change faced resistance from some residents, who worried about the effects of more density in the neighborhood.

Rep. Suzan DelBene, left, introduces Xichitl Torres Small, center, Undersecretary for Rural Development with the U.S. Department of Agriculture during a talk at Thomas Family Farms on Monday, April 3, 2023, in Snohomish, Washington. (Olivia Vanni / The Herald)
Under new federal program, Washingtonians can file taxes for free

At a press conference Wednesday, U.S. Rep. Suzan DelBene called the Direct File program safe, easy and secure.

Former Snohomish County sheriff’s deputy Jeremie Zeller appears in court for sentencing on multiple counts of misdemeanor theft Wednesday, March 27, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
Ex-sheriff’s deputy sentenced to 1 week of jail time for hardware theft

Jeremie Zeller, 47, stole merchandise from Home Depot in south Everett, where he worked overtime as a security guard.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.