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Medicare drug premiums to go down in 2012

August 04, 2011|Noam N. Levey, Washington Bureau

Medicare beneficiaries will see average premiums for the Part D drug benefit decline next year, the Obama administration announced Thursday, offering some relief at a time when pressure is mounting to cut the federal health insurance program in the face of rising medical costs.

The Part D drug benefit, created under the Bush administration, allows seniors and others on Medicare to sign up for a privately administered, government-subsidized health plan to get their prescriptions.

Very popular with beneficiaries, the program has also proven far less costly than budget analysts originally expected, in part because of competition among private plans and because of growing use of less expensive generic drugs.

In 2012, the average Part D plan will charge seniors about $30 a month, according to the Department of Health and Human Services.

That’s down from $30.76 in 2011 and marks the second time since the drug benefit began being offered in 2006 that average premiums are declining.

The Obama administration has been working to strengthen the drug benefit with the help of the new healthcare law the president signed last year. The law slowly phases out the coverage gap known as the doughnut hole, long viewed as a weakness in the program.

Last year some 4 million seniors received $250 rebate checks when they fell into the coverage gap, thanks to the law.  This year, under the law, those who hit the doughnut hole will get 50% discounts on their prescriptions.

Administration officials also announced Thursday that more than 17 million Medicare beneficiaries had taken advantage of preventive services such as cancer screenings that are now being offered without co-pays, another new benefit of the law.

While celebrated by the Obama administration, the widely acknowledged success of the Part D program has also fueled calls from conservatives to expand privatization of the Medicare program.

And many House Republicans pointed to the drug program in pushing their plan to replace the current government health insurance program with a system of vouchers that seniors would use to purchase private health coverage.

Dr. Don Berwick, who oversees the Medicare and Medicaid program, cautioned Thursday that the broader privatization championed by House Budget Committee Chairman Paul Ryan (R-Wis.) would actually mean higher costs for seniors.

“The Ryan plan is very draconian from the point of view of the beneficiaries,” Berwick said. “We’re able to offer the benefits of this kind of choice and competitive force under the current Medicare program.”

An independent analysis of the House Republican proposal by the nonpartisan Congressional Budget Office estimated that the voucher system would force seniors on average to pay $6,000 more out of pocket for their medical care.

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