Online Extra... Stay or Switch?
By: Patricia Barry; Source: AARP Bulletin Date Posted: 2006-12-06 12:54:00-05:00
By Patricia Barry
December 2006
As beneficiaries choose their Medicare prescription drug plans, they may find that what worked for them in 2006 may not be the best option in 2007.
Almost all plans will have new costs and benefits next year. An AARP Bulletin analysis of options for 2007 clearly shows that whether enrollees pay more or less out of pocket depends entirely on the drugs they take and how those drugs fit into the new coverage choices available—and the only way to find that out is to compare plans again.
But how many realize this? More than 80 percent of enrollees say they're happy with their current plans and unlikely to switch in 2007, according to an AARP poll.
The concern is that "many people will miss out on saving money because they don't want to make the effort to check whether their [current] plan is the best choice for them," says Suzanne Jackson, director of the Health Insurance Counseling Project at George Washington University Law School in Washington. Comparing plans, she says, "is time well spent."
The sign-up period for Part D began Nov. 15 and ends Dec. 31. Enrollees who take no action will automatically stay in their current plan in 2007.
The Bulletin analysis shows that the landscape of plan options for 2007 has changed dramatically for two groups now enrolled in "stand-alone" drug plans that cover drugs only and have the largest enrollments:
- Enrollees who use no or very few drugs will find fewer stand-alone plans in 2007 with very low premiums. Although every state will have at least one plan with a monthly premium under $20, plans with premiums under $11 will be offered in only 13 states, down from 35 in 2006. Only California and New York will have plans costing less (by a few cents) than $10 a month.
- Enrollees who use numerous or costly drugs and want plans that fill in the coverage gap — the notorious "doughnut hole" in which enrollees must pay 100 percent of their prescription costs before catastrophic coverage kicks in — will also see a big change. Although at least 11 plans in each state will cover generic drugs in the gap, far more than this year, gap coverage for brand names will be scarcer and less generous. Next year 6.6 million beneficiaries in 13 states will have no access to stand-alone plans offering brand names in the gap, up from 375,000 in four states in 2006, according to a recent study by Families USA, a Washington-based consumer health group.
These two developments are in large part the result of changes the insurance company Humana has made in its policies. Among its three stand-alone plans, Humana in 2006 attracted 2.1 million enrollees to its low-cost Standard plan, which in seven states had premiums as low as $1.87 a month. In 2007, the Standard plan's premiums, though still among the lowest in the country, range from $10.60 to $18.20.
Humana's Complete plan, with 418,000 enrollees, offered generous gap coverage in all but four states in 2006. Next year it will cost more (with premiums ranging from $69.50 to $88.40 a month) but will exclude brand-name drugs in the gap, covering only generics.
This plan attracted people with the highest drug costs in 2006 and proved uneconomical, says Humana executive Scott Latimer, M.D. "We really didn't think we would be the only plan on a close to national basis to offer a gap filler with both brands and generics," he says. Among other stand-alone plans offering brand-name coverage in the gap in 2007, there will be only one available in each of 37 states and the District of Columbia. Monthly premiums for these plans range from $72.80 to $135.70.
This does not mean that everyone will pay more for their drugs next year. In the complex tradeoffs of Part D plan pricing, the Bulletin analysis found some surprises. For example, someone may be in a plan that raises premiums in 2007 yet costs less overall—because it covers more of that person's drugs than in 2006 or lowers its prices.
Using the Plan Finder tool on the Medicare website, the Bulletin ran numbers for several beneficiaries, including those profiled here (see side-bar,top right), to see whether they should consider switching plans for 2007. The results surprised them—and underscored the advantages of making careful comparisons. To compare plans, see side-bar, top right.
Who Pays More, Who Pays Less For Prescriptions in 2007?
Four people, four different sets of drugs. Two are enrolled in “stand-alone” Medicare plans that provide only drugs. One is in a Medicare HMO. One has no plan yet.
Here’s how their annual costs (including premiums) would change in 2007, whether they make no change or switch to the plan in their area that would cost them the least money.
Additional Related Links
See How the Medicare Comparison Affects Four 50-plus Americans (Photo Gallery)
Medicare Part D: The Sequel (November 2006)
Quick Route Through Medicare Drug Plan Finder
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