Clarifying the Benefits of Part D for Ezra Klein

Clarifying the Benefits of Part D for Ezra Klein

06.09.11 | By Kate Connors

Ezra Klein's column in yesterday's Washington Post on the Medicare prescription drug benefit discusses why costs in Part D have come in beneath expectations. He makes some fair points. But Ezra overlooks the program's unique design that is helping to keep costs far below initial projections and coverage affordable for beneficiaries.

Part D is offered through private health plans alongside traditional Medicare Part A and B coverage, or combined with a health plan's Part C coverage. Each plan submits an annual bid, which reflects the plan's expected cost to provide prescription drug coverage for the average beneficiary. These bids determine the average monthly beneficiary premium in Part D. Consequently, plans that submit competitive bids may secure lower-than-average premiums and attract more enrollees.
In fact, the Medicare Trustees have found that continued "aggressive" bidding is lowering Part D spending forecasts, according to the 2011 Medicare Trustees report: "For 2009, actual prescription drug spending was somewhat lower than the average plan bid. In 2010, bids increased but by less than the expected trend, thus reducing this differential. For 2011 and beyond, the bids are projected to ultimately converge to between 1 and 2 percent lower than actual spending due to aggressive plan bidding."
Part D is a great success and is only getting better. This year, the coverage gap discount program will provide increased access to needed medicines by reducing out-of-pocket costs for eligible Medicare beneficiaries in the coverage gap and by 2020, the gap will be permanently closed.
Most importantly, about 28 million Medicare beneficiaries have drug coverage and an astounding 85 percent are satisfied with that drug coverage in Part D. It's a program that works.

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