Financial Picture Looking Better For Part D

News about financing the massive Medicare Part D program is good these days — or at least better. The Medicare prescription drug benefit is expected to cost $30.5 billion this year, CMS Administrator Mark McClellan told the Senate Special Committee on Aging on Feb. 2. That's 20 percent less than the government's previous estimate of $38.1 billion. Estimated costs have decreased in part because drug plans are offering lower premiums than expected and, says McClellan, because enrollees are shopping for the best deals. The lower premiums stem, in part, from stronger-than-expected competition among Medicare Advantage plans.

Operating the program from 2006 to 2015 is now expected to cost about $678 billion, a huge number, but one that is 8 percent lower than the $737 billion projected cost released last summer.

The news gets better on the micro, as well as the macro, level. The average monthly premium for an enrollee is expected to be about $25 per month. In August, the average was projected to be $32.20 per month. That is a significant difference for people on a low fixed income.

Still, McClellan acknowledged that there have been snags in rolling out Part D. Reports about the confusion enrollees experience in selecting the right plan for themselves have been rampant. In addition, senators want assurances that the Part D plans reimburse states and pharmacies that have paid for beneficiaries' medications in a timely manner. “We make no excuses for these problems,” McClellan told the committee. “They are important, they are ours to solve, and we are finding and fixing them.”

Which is to say that Medicare Part D is far from out of the woods. In fact, the next month or so will be critical. The Kaiser Family Foundation says that 45 percent of eligible people have enrolled in the program, 29 percent do not plan to enroll, and 23 percent are unsure. Meanwhile, the May 15 deadline for enrollment looms.

“A substantial number of beneficiaries are already enrolled, but a lot turns on what those who are on the fence decide to do between now and May 15,” says Drew Altman, president and CEO of Kaiser Family Foundation.