Independent estimates for the Medicare Part D prescription drug benefit for the FY 2008 budget cycle show that net Medicare costs are 30 percent less — $189 billion lower — than were originally predicted when the benefit was created in 2003, HHS Secretary Mike Leavitt announced today. In addition, based on strong, competitive bids by health care plans for 2007, average monthly premiums will be approximately $22 for beneficiaries, down from $23 in 2006, if enrollees remain in their current plans. The initial estimate for 2006 premiums was $37.
“Our new estimates provide clear evidence that consumer choice is working,” Secretary Leavitt said. “Government interference will result in fewer choices and less consumer satisfaction. Actuaries have told us that government interference will not lead to lower drug prices either.”
According to actuaries with the Centers for Medicare & Medicaid Services (CMS), the updated Medicare Part D baseline of payments to Part D plans for the FY 2008 budget cycle has decreased from last summer?s mid-session review numbers by $113 billion over the next ten years (2007 – 2016). Importantly, of the $113 billion reduction, $96 billion is a direct result of competition and significantly lower Part D bids.
“Part D drug plans produced greater-than-expected savings by competing for Medicare beneficiaries and aggressively negotiating with drug companies,” said Acting CMS Administrator Leslie V. Norwalk. “Strong, competitive bids and informed beneficiary choices are bringing down premiums yet again. The bottom line from the news today is that beneficiaries are paying less in premiums and taxpayers are seeing billions of dollars in savings.”