/publications/issue/2005/2005-10/2005-10-9904

Cost of Medicare Rx Benefit Drops, CMS Says

Author: Ken Rankin

The Medicare Part D prescription drug benefit will not take effect until January 1, 2006, but federal officials are already predicting that the average monthly premiums paid by seniors participating in the program will be at least 13% lower than originally expected.

Thanks to "robust competition among drug plans" offering the new drug benefit for seniors, the average monthly premium charged to Medicaid recipients will be $32.20—"about $5 less per month than previously estimated," Centers for Medicare and Medicaid Services (CMS) officials said.

There is even better news: competition among prescription plans will lower the cost of the program to the government by another $15 per month for each beneficiary. This change will amount to "billions of dollars in reduced costs to taxpayers in the first year of the program," Medicare officials said.

According to CMS, prescription drug plans offering the new Medicare benefit "can reduce their costs below the average by taking steps, such as effectively negotiating lower prices for drugs, by encouraging the use of generic drugs?and by helping physicians and patients avoid medications that are contraindicated or that may cause costly errors."

Mr. Rankin is a freelance medical writer.