Medicare Drug Plans Rise $1 a Month

The average Medicare drug benefit plan will cost $30 a month next year, a $1-a-month increase from this year’s average premium, federal officials said Wednesday afternoon.

The officials portrayed the estimated new cost as a very small price increase, while saying many older Americans will pay less out-of-pocket for brand-name pharmaceutical drugs under the health care law enacted in Washington in March.

Dr. Donald M. Berwick, administrator of the Centers for Medicare and Medicaid Services, said 99 percent of older and disabled Americans who receive drugs under the Medicare plan would also be able to find coverage later this year at lower prices than they now pay.

“Shopping’s going to be a lot easier,” Dr. Berwick said in a conference call with reporters.

The benchmark prices were based on bids submitted by the private insurers who provide Medicare drug benefits. More information on individual plans will be posted on the Medicare Web site over the next two months before open enrollment starts in November.

Many people add supplemental insurance, and more than 10 million low-income people qualify for subsidies to pay more of the cost of drugs, the agency said in a news release Wednesday.

Paul Spitalnic, a Medicare actuary, said most year-over-year premium increases have been in a similarly low range since Medicare began providing prescription drug benefits in 2006.

But the estimated total cost of the drug benefits to taxpayers has fallen significantly because of lower drug price increases, generic competition, and added negotiating authority bestowed under the new law, Mr. Spitalnic said.

Congress never took up proposals to give Medicare even more sweeping powers to negotiate drug prices, however. That would have cost the Obama administration the support of the pharmaceutical industry during the health care debate.

In return for guarantees from the White House and Senate Finance Committee to not consider direct Medicare price negotiation and not allow people to buy prescription drugs at Canadian prices, the drug industry backed the legislation. Moreover, the industry agreed to phase out a drug coverage gap for Medicare recipients known as the “doughnut hole” between basic coverage and catastrophic coverage.

Next year, those drugs will cost 50 percent less, and the coverage gap will gradually disappear entirely. That means millions of older Americans will actually pay less out of pocket over coming years, as well as barely higher monthly premiums, the Medicare administrators said.

According to Dr. Berwick, “These premiums plus discounts for brand name drugs under the act make medicines more affordable in 2011 and after.”