Thursday, November 15, 2007

Higher premiums, Growing Out of Pocket Costs & Doughnut Holes

It’s Medicare Open enrollment time again. A painful annual ritual for American seniors who, in order to receive prescription drug coverage under Medicare’s privatized Part D program, must wade through pounds of statistics, charts and cost analyses just to determine if their current plan will even serve their needs next year.

Why, is this so complicated? Welcome to the world of privatized Medicare where each year most of these private insurers switch their formularies (in other words, drop drugs), require generics and increase premiums and co-payments. 75% of seniors will face a premium increase this year if they don’t switch plans.

However, it truly could be hazardous to beneficiaries’ fiscal and physical health if they don't shop around rather than stick with their current plan out of loyalty, confusion or fear of the unknown.

According to the National Seniors Law Center, the premium for the least expensive plan in New York will go up 167%, 90% in Florida and 44% in Pennsylvania. More than 2.5 million low-income seniors must switch plans this year to avoid having to pay out-of-pocket costs for the first time.

A survey by the consulting firm, Avalere Health, reports that in many states Part D premiums are doubling for the second year in a row. The popular Humana PDP Standard Plan charged $6.44 a month in Maryland when it first marketed its plan to seniors, two years ago. Last year’s premium doubled to $13 and now the premium will more than double again to $27.20. More than 80% of Part D enrollees are in the top ten drug plans and all but two have raised their premiums. AARP’s Medicare RX Plan-Saver is the most popular plan and, according to Avalere’s research, will increase its premium an average of 65% in 2008.

But as the insurance industry knows very well, it’s human nature is to stick with what you know. So far, that has been true for Medicare beneficiaries even to their detriment. The increasingly daunting task of analyzing a myriad of private drug plans’ (52 drug-only plans nationwide in 2008) formularies, co-payment, and premium schedules each and every year is an absurd burden which benefits insurers not seniors.

It didn’t have to be this way. Seniors want and need a prescription drug benefit under Medicare which would provide stable and consistent coverage which manages costs with no gaps in coverage like the so-called “doughnut hole”. What they’ve gotten with this privatized program is an overly complicated process that puts insurers’ bottom lines ahead of seniors’ needs.

For more information on how to navigate the Part D enrollment maze here is a link to our Frequently Asked Questions guide.

You can also find out more about the privatization of Medicare and Part D on our website.

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