Medicare Drug Premiums to Rise about 12 Percent a Month in 2009

By Anna Boyd
August 17th 2008

Medicare’s beneficiaries will see about a $3 increase in their monthly premiums for prescription drug coverage in 2009, federal reports said on Thursday.

This increase of 12 percent will boost the monthly premium to $28 for standard drug coverage. It seems to be three reasons behind this premium increase, according to Kerry Weems, acting administrator of the U.S. Centers for Medicare and Medicaid Services.

“First, there is a trend in prescription drug cost growth generally – prices tend to increase because of price increases for existing drugs, the growth in the average number of prescriptions per person, and the introduction of new drugs,” he said.

Despite the increase, monthly premiums are still below what was projected when the program was approved in 2003, Medicare officials said.

Even so, the costs supported by beneficiaries cover only one-fourth of the Medicare’s cost, while the government pays for the rest. Medicare will spend about $36 billion this year to subsidize drug coverage.

According to the latest statistics, 25.4 million Medicare beneficiaries are enrolled in the Part D drug plan. About 7.6 million are enrolled in plans that provide comprehensive health coverage. About 10 million people get drug coverage for little or no cost because of additional government subsidies.

Despite the increase, “Part D continues to come in under budget, achieve consistently high satisfaction rates, and with it millions of Americans are living healthier, better lives,” Weems said.