Seniors brace for pricier drug coverage in ’09

updated 7:46 p.m. ET Nov. 13, 2008

WASHINGTON - Robert Clark describes himself as a bit of a tightwad. So he's a little perplexed about the news from his Medicare drug plan. His monthly premium will rise from about $25 a month to about $41 a month next year. And his wife, June, will face the same increase.

Clark, of Cumming, Ga., emphasized he just wants to be treated fairly. "I've always been careful about my money," he said. "I don't understand why it has to double."

While the increase falls short of a doubling, it's clear the Clarks, as well as millions of other seniors and the disabled, face hefty premium increases next year for prescription drug coverage.

Among the top 10 drug plans in terms of enrollment, the average monthly premium will increase anywhere from 8 percent to 63.7 percent, according to an analysis from Avalere Health, a management consulting firm. At the same time, those plans are reducing the number of medicines that they'll cover by about 9 percent.

The most popular plans will cover about 2,100 drugs, on average, a drop from slightly more than 2,300 drugs in 2008, Avalere found.

In short, the plans generally are asking Medicare beneficiaries to pay more for less during an increasingly difficult economic time.

"A number of factors are pushing plan pricing up," said Dan Mendelson, president of Avalere. "Seniors are using more branded and generic drugs. Drug prices went up a little bit as well. But perhaps most important, a number of plans — notably Humana — concluded that they underpriced and are making up for lost time."

A new drug benefit under Medicare kicked in at the beginning of 2006. All 44 million elderly and disabled beneficiaries can enroll in a private drug plan approved and heavily subsidized by the federal government. But the government subsidy next year, $53.97 a month for the typical enrollee, only covers part of the costs. All but the poorest participants also pay monthly premiums and co-payments, a share of cost when filling each prescription.

Participants don't have to stick with the same company, though. From Saturday through Dec. 31, they can choose prescription drug coverage from dozens upon dozens of insurance plans operating in their state.

"I'm going to shop around," Clark said.

Federal officials urge seniors to follow Clark's example, even though polling indicates that most won't, in large measure because of widespread satisfaction with the program, referred to as Medicare Part D.

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