MA-PD premiums continue to be lower than PDP premiums. On average, in
2007, the MA-PD premiums prior to rebates are about $7 lower than those
for PDPs. In 2008, they will average $11 lower. The lower MA-PD bids and
premiums reflect the effects of aggressive competition as well as lower
costs resulting from better care coordination and drug benefit
management techniques. In practice, many MA-PD plans also apply a
portion of their rebates from Parts A and B to reduce their Part D
premiums, in many cases to zero.
“The fact that premiums are nearly 40 percent below the original
projections indicates that we are indeed getting great value out of this
program,” added Kuhn. “And, when paired with the many new preventive
benefits and this year’s national education tour to let people know
about the importance of prevention, people on Medicare are living
better, healthier lives, and saving money because of this new
prescription drug benefit.” He added that, “the information contained in
the new bids for 2008 is likely to further reduce the projected cost of
the Part D program beyond 2008.”
Under Part D, beneficiaries with low incomes can receive valuable extra
assistance with their drug plan premiums and cost-sharing. Nearly 9.5
million beneficiaries are currently receiving extra help through the
Part D program. To avoid a premium for these low income beneficiaries
and to avoid any gap in coverage, about 1 in 6 of these beneficiaries
will be assigned by CMS to a new plan sponsor in their coverage area on a
random basis (effective January 1, 2008). These beneficiaries will be
able to switch to another plan if they choose. The average value of the
Part D benefit, premium subsidy, and cost-sharing subsidy for low-income
enrollees is estimated to be about $3,660 per year in 2008 ($3,353 in
2007).
“By any measure, 2007 has been a good year for Medicare’s Part D
prescription drug benefit, and 2008 is shaping up to be yet another good
year for the program. Millions of Medicare beneficiaries now have
coverage through Part D and the vast majority are very satisfied with
their benefits. Furthermore, the program is 30 percent less expensive
overall for the first 10 years than originally estimated,” said Kuhn.
“To build on this success, we will continue to work with beneficiaries
through our local grassroots efforts, which include counseling
beneficiaries so that they can make informed choices about the plans
that will best meet their needs in 2008.”
CONTACT: CMS Public Affairs
(202) 690-6145
DEPARTMENT OF HEALTH & HUMAN SERVICES
Centers for Medicare & Medicaid Services Room 303-D
200 Independence Avenue, SW Washington, DC 20201
External Affairs Office
As reference, here are the weighted average monthly premiums for a
standard or basic Medicare Part D prescription drug plan reported by HHS
since the beginning of the Medicare Part D program: