The Medicare.gov Plan Finder has 2012 information available, and there will be 30 stand-alone Part D plans sold in Arizona next year.

From a quick review of 2012 Part D plans, it looks like the two most popular stand-alone plans increased their monthly premiums by less than one dollar. (I can’t mention the names of plans because I am an insurance agent and somebody might say I’m promoting them.)

I had a call from a client who said her Part D premium is going from $25 to $70. At first I thought she was probably confused by the materials she received from her Part D plan.  But I discovered that her premium is, indeed, going up that much!  This Unicare Part D plan was one of the lowest cost plans without a deductible.  I don’t know why anyone would stay in this plan – and I have a few clients in this plan I need to call!

If a plan has a large premium increase, or drops coverage of some drugs, thousands of seniors who don’t pay attention will get a very big shock in January when they get their Part D bill or go to fill a prescription. But in January they will be locked into that Part D plan for all of 2012 – and Medicare won’t make an exception for them just because they didn’t read their mail.

Everyone enrolled in a Part D or Medicare Advantage needs to read the mail they have recently received from their plan, called the “Annual Notice of Change” (ANOC). The ANOC provides information on any changes that are being made to their plan for 2012.

Part D Changes to look for: 

Did the premium increase substantially?

Are all your drugs still covered by the plan – and will the co-pay be around the same price as for 2011? Sometimes plans will move a drug from tier 2 (with a co-pay of $45) to tier 3 (with a co-pay of $80).

Medicare beneficiaries have until December 7th to put in an enrollment form for a new Part D plan that would start on January 1.  Insurance agents can talk about plan details as of today, October 1, but they can’t take an enrollment form until October 15th.  The Medicare Open Enrollment Period is now October 15th to December 7th.

In 2008, Medicare spent $68.3 billion dollars on drugs purchased through Part D plans.  This is too much money! Seventy-five percent of the $68.3 billion was spent on brand name drugs like Lipitor, Plavix, and Nexium.

Generics used to treat high cholesterol cost less than $10, while brand drugs cost $100 or more. Although most people on Medicare use generics, the chart below shows how the higher cost of brand drugs overwhelms the Part D budget.  If everyone used generics, the Medicare Part D budget could be cut by billions of dollars.

In 2008 Medicare spent $68.3 billion
on drugs purchased  through Part D.

Lipitor is going generic soon. Fosamax now has a generic replacement, so Part D plans are not covering this drug for treating osteoporosis. I learned this when I was searching for a Part D drug plan for a client and discovered that Fosamax was not on any plans’ formularies (list of drugs covered).

See my recent post on the top ten drugs purchased through Part D.

FOR MORE INFORMATION ON YOUR MEDICARE CHOICES SEE ARIZONAMEDICARENEWS.COM

I wanted to find the cost to Medicare for Part D, the drug plan for Medicare beneficiaries that went into effect in 2006.  I googled “Part D Medicare budget” and got very good information.

In 2010, Part D made up 13.4% of the Medicare budget, or 68 billion dollars.  So even with seniors paying premiums for their Part D plans that range from $15 to $90 per month, Medicare still paid out $68 billion in 2010 to pay for their drugs!

Then I came across an opinion piece From Forbes magazine (Nov. 20, 2009). The entire piece can be read by clicking on this link, but here are some parts I found particularly interesting:

Bruce Barlett wrote in Forbes:

…Recall the situation in 2003. The Bush administration was already projecting the largest deficit in American history–$475 billion in fiscal year 2004, according to the July 2003 mid-session budget review. But a big election was coming up that Bush and his party were desperately fearful of losing. So they decided to win it by buying the votes of America’s seniors by giving them an expensive new program to pay for their prescription drugs.

Recall, too, that Medicare was already broke in every meaningful sense of the term. According to the 2003 Medicare trustees report, spending for Medicare was projected to rise much more rapidly than the payroll tax as the baby boomers retired. Consequently, the rational thing for Congress to do would have been to find ways of cutting its costs. Instead, Republicans voted to vastly increase them–and the federal deficit–by $395 billion between 2004 and 2013.

However, the Bush administration knew this figure was not accurate because Medicare’s chief actuary, Richard Foster, had concluded, well before passage, that the more likely cost would be $534 billion. Tom Scully, a Republican political appointee at the Department of Health and Human Services, threatened to fire him if he dared to make that information public before the vote. (See this report by the HHS inspector general and this article by Foster.)

…the drug benefit had no dedicated financing, no offsets and no revenue-raisers; 100% of the cost simply added to the federal budget deficit, whereas the health reform measures now being debated [in 2009] will be paid for with a combination of spending cuts and tax increases, adding nothing to the deficit over the next 10 years, according to the Congressional Budget Office. (See here for the Senate bill estimate and here for the House bill.)

….It astonishes me that a party enacting anything like the drug benefit would have the chutzpah to view itself as fiscally responsible in any sense of the term. As far as I am concerned, any Republican who voted for the Medicare drug benefit has no right to criticize anything the Democrats have done in terms of adding to the national debt. Space prohibits listing all their names, but the final Senate vote can be found here and the House vote here.

Bruce Bartlett is a former Treasury Department economist