A new comprehensive Kaiser Family Foundation report analyzes key trends that have shaped the Medicare Part D marketplace since the program launched nine years ago, providing a detailed assessment of changes in plan availability, enrollment, premiums and cost sharing in both private stand-alone drug plans, and Medicare Advantage drug plans.
After a period of steady increases, premiums and cost sharing for drugs have been relatively stable since 2010. Medicare beneficiaries enrolled in stand-alone Part D plans this year typically pay $40 for a 30-day supply of a preferred brand-name drug, up $12 or 43 percent since 2006, and $85 for a 30-day supply of a non-preferred brand-name drug, up $30 or 55 percent since 2006. In contrast, the typical monthly cost sharing for generics ($2 for preferred and $5 for non-preferred generics) is no more expensive now than when the program began. These trends have most likely contributed to greater use of generics among Medicare’s 37 million Part D plan enrollees, and modest growth in Medicare Part D spending overall.
Other findings from Medicare Part D in Its Ninth Year: The 2014 Marketplace and Key Trends, 2006-2014 include:
- Average monthly premiums in stand-alone Part D plans have been essentially flat since 2010, but there is significant variation across plans – for example, from $12.80 per month to $111.40 per month for plans offering the basic Part D benefit. Premiums for older, established plans have generally increased more rapidly than the national average, while newer plans tend to enter with relatively low premiums in order to build enrollment. As a result, beneficiaries who stay in the same plan tend to pay more over time, and earlier research finds that relatively few enrollees switch plans voluntarily in a given year.
- In 2014, 72 percent of stand-alone plans include a preferred pharmacy network, which offers the lowest cost sharing for enrollees. This represents a sharp increase since 2011, when just 7 percent of plans used preferred pharmacy networks. In some plans, there are limitations on access to preferred pharmacies within a reasonable travel distance, which could make it difficult for enrollees in these plans to take advantage of this lower cost sharing.
- About 11 million enrollees with low incomes receive extra help through the Low-Income Subsidy program, which reduces their cost sharing, and fully or partially covers their drug plan premiums if they are enrolled in designated plans. However, about 1.3 million low-income enrollees are enrolled in higher-cost stand-alone plans, and are paying a premium, averaging $17.85 per month, more than in any previous year. While some of these enrollees may be choosing to stick with their current plans, and pay monthly premiums, others may be unaware that there are plans available to them at no cost.
The report is authored by researchers at the Foundation, Georgetown University, and NORC at the University of Chicago.