November 28, 2007

Medicare Drug Plan Premiums Rise By Almost 25% in 2007

For Immediate Release: November 28, 2007
Contact: Alan Barber, (202) 293-5380 x115

Washington, DC:  From 2007 to 2008 the average premium for Medicare Part D prescription drug plans rose by 24.5 percent from 2007 to 2008. This rise will result in an average premium price of $293 per year, or $57.70 more than last year.

A new issue brief from the Center for Economic and Policy Research, “Changes in the Costs of Medicare Prescription Drug Plans, 2007-2008” examines prescription drug plan costs nationally and on a state-by-state basis and finds a surprisingly large increase in average cost going into 2008. Even though this increase is somewhat lower than originally projected, costs will exceed projections as early as 2010 if this trend continues.

The brief looks at each of the 50 states and analyzes the number of plans offered in 2008, the number of plans offering coverage ‘in the gap’ between initial coverage and the catastrophic level, the number of plans dropping ‘in the gap’ coverage, and the average dollar and percentage increase in premium cost.

“In looking at the data, it is worth noting that on average, 20% of the plans offering coverage in the gap have been dropped,” according to Dean Baker, co-director of CEPR. “Since the plan selection process can take up to 8 hours, this represents a particularly large burden for a significant number of participants in the plan.”  

The brief used data from the Centers for Medicare & Medicaid Services’ Medicare Advantage/ Part D Contract and Enrollment data section and from the Census Bureau’s summary income data from the Current Population Survey.

Read the full issue brief here.