2007 Medicare prescription drug plans

Private health insurers that market Medicare prescription drug plans in 2007 will offer more plans, several of which will have lower premiums and more of which will provide coverage during the so-called "doughnut hole," Bush administration officials said on Friday, the New York Times reports.

Health insurers on Sunday began to market 2007 Medicare prescription drug plans, and the six-week open enrollment period for the 2007 plan year begins on Nov. 15. In 2007, all states except Alaska and Hawaii will have more than 50 Medicare prescription drug plans available, and 23 states will have at least 55 plans available. Most states in 2006 had 40 Medicare prescription drug plans available (Pear, New York Times, 10/1). Seventeen health insurers will market nationwide Medicare prescription drug plans in 2007, compared with nine in 2006, administration officials said (Zhang/Fuhrmans, Wall Street Journal, 9/30). Almost none of the health insurers that marketed Medicare prescription drug plans in 2006 will end participation in the program in 2007 (Lopes, Washington Times, 9/30).


The Medicare prescription drug plans in 2007 will have an average monthly premium of $24, the same as in 2006, which is 40% less than first estimated for 2007 (New York Times, 10/1). Medicare beneficiaries who are satisfied with their current prescription drug plans will not have to take action to remain in their plans in 2007, administration officials said. However, Medicare beneficiaries who do not switch prescription drug plans might experience changes in their plan premiums, copayments or formularies (Wall Street Journal, 9/30). CMS Administrator Mark McClellan said that 83% of Medicare beneficiaries currently enrolled in prescription drug plans will have the ability to switch to a lower-priced plan in 2007 (Washington Times, 9/30). In 2007, the lowest-priced Medicare prescription drug plan will have a monthly premium of about $10, compared with about $2 in 2006, according to administration officials (Wall Street Journal, 9/30). The highest-priced Medicare prescription drug plan in 2007 will have a monthly premium of more than $110 (New York Times, 10/1). According to the Wall Street Journal, many of the "more expensive plans in 2006 have come down in price to compete with the low-cost options" that proved popular with Medicare beneficiaries. Aetna in 2007 will reduce monthly premiums for Medicare prescription drug plans by 5% to 13%, and Cigna will reduce monthly premiums by 10% to 30%. Humana, which had the second-highest Medicare prescription drug plan enrollment in 2006 -- will increase monthly premiums for some plans in 2007, but plans marketed by the company will remain the lowest-priced in 38 states (Wall Street Journal, 9/30). Medicare prescription drug plans will have a median monthly premium of $33.40 in 2007, compared with $36.01 in 2006, according to Avalere Health (Salganik, Baltimore Sun, 9/30).


Medicare prescription drug plans in 2007 will cover an average of 4,390 medications, an increase of 13% from 2006 (New York Times, 10/1). In addition, fewer Medicare prescription drugs plans will use prior authorization requirements or other utilization techniques, CQ HealthBeat reports (Carey, CQ HealthBeat, 9/29). In most states, about 15 or 16 Medicare prescription drug plans will offer coverage during the doughnut hole, in most cases only for generic medications, according to Avalere (Wall Street Journal, 9/30). Under the doughnut hole, Medicare beneficiaries are responsible for 100% of annual prescription drug costs between $2,250 and $5,100. Medicare covers 95% of annual prescription drug costs that exceed $5,100 (Kaiser Daily Health Policy Report, 9/25). CMS will release more detailed information on Medicare prescription drug plan formularies and copays in mid-October (Baltimore Sun, 9/30). According to the Times, the "existence of so many plans provides some evidence to support the theory that the federal government can stimulate fierce competition among private insurers -- regulated and subsidized by the government -- to help control health costs for beneficiaries and taxpayers" (New York Times, 10/1).


McClellan said, "As a result of robust competition and smart choices by seniors, plans are adding drugs, removing options that were not popular and providing more options with enhanced coverage" (Wall Street Journal, 9/30). McClellan said that the increased number of Medicare prescription drugs plans in 2007 will not lead to confusion for beneficiaries because they are not required to switch plans and because CMS has improved the "plan finder" tool on the Medicare Web site. "What we were looking for and got was a shift in the options available," McClellan said, adding, "There are still a lot of plans, but there are now a range of options with increased enhanced plans and coverage options" (Washington Times, 9/30). Ron Pollack, executive director of Families USA, said, "The incredible confusion that persisted in the past year about the Medicare drug program is about to get worse" (CQ HealthBeat, 9/30). He added, "There will be more plans to choose from -- and those plan will continue to be different from one another. And, instead of a six-month enrollment period, there will only be a one-and-a-half-month period this year." Karen Ignagni, president and CEO of America's Health Insurance Plans, said, "Private plans are exceeding expectations by offering low premiums and expanding benefits" (Baltimore Sun, 9/30). House Ways and Means Committee Chair Bill Thomas (R-Calif.) said, "The announcement today ... shows once again that when competition is injected into Medicare, seniors win" (CQ HealthBeat, 9/30). Deane Beebe, a spokesperson for the Medicare Rights Center, said that beneficiaries "don't want dozens of choices." She added, "They want one affordable drug benefit they can count on when it comes time to fill their prescription" (Freking, AP/Philadelphia Inquirer, 9/30).

Broadcast Coverage

APM's "Marketplace" on Friday reported on details of Medicare prescription drug plans for 2007. The segment includes comments from Stuart Altman, dean of the Heller School for Social Policy and Management at Brandeis University; Beebe; and Leslie Norwalk, deputy administrator for CMS (Palmer, "Marketplace," APM, 9/29). The complete transcript and audio of the segment in RealPlayer are available online. In addition, C-SPAN's "Q&A" on Sunday included an interview with McClellan about the Medicare prescription drug benefit, the U.S. health care system, his future plans and other issues (Lamb, "Q&A," C-SPAN, 10/1). The complete transcript is available online. The complete segment is available online in RealPlayer.

Kaisernetwork.orgThis article is republished with kind permission from our friends at the The Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery of in-depth coverage of health policy developments, debates and discussions. The Kaiser Daily Health Policy Report is published for Kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. Copyright 2006 Advisory Board Company and Kaiser Family Foundation. All rights reserved.


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