CMS Projects Stable Premium Costs for Medicare Part D in 2017

WASHINGTON, D.C. (August 3, 2016)—Medicare announced that the average basic premium for a Medicare Part D prescription drug plan in 2017 is projected to remain relatively stable at an estimated $34 per month. This represents an increase of approximately $1.50 over the actual average premium of $32.56 in 2016.

“Stable Medicare prescription drug plan premiums help seniors and people with disabilities afford their prescription drugs,” said Andy Slavitt, Acting Administrator of the Centers for Medicare & Medicaid Services (CMS). “However, I remain increasingly concerned about the rising cost of drugs, especially high-cost specialty drugs, and the impact of these costs on the Medicare program.”

The stability in average basic Medicare Part D premiums for enrollees comes despite the fact that Part D costs continue to increase faster than other parts of Medicare, largely driven by high-cost specialty drugs and their effect on spending in the catastrophic benefit phase. Although private prescription drug plans receive capitated payments for portions of the Part D benefit, Medicare is directly responsible for 80 percent of the cost of drugs purchased by beneficiaries while in the catastrophic benefit phase.

As the recent 2016 Medicare Trustees report noted, growth in the costs of prescription drugs paid by Medicare continue to exceed growth in other Medicare costs and overall health expenditures. Medicare Part D expenditures per enrollee are estimated to increase by an average of 5.8 percent annually through 2025, higher than the combined per-enrollee growth rate for Medicare Parts A and B (4.0 percent). The report found that these costs are trending higher than previously predicted, particularly for specialty drugs. In addition, a March 2016 Department of Health and Human Services report provided a detailed analysis of high-cost prescription drug spending trends.

Today’s projection for the average premium for 2017 is based on bids submitted by drug and health plans for basic drug coverage for the 2017 benefit year and calculated by the independent CMS Office of the Actuary.

Seniors and people with disabilities are continuing to see savings on out of pocket drug costs as the Affordable Care Act closes the Medicare Part D “donut hole” over time. Since the enactment of the Affordable Care Act, more than 10.7 million seniors and people with disabilities have received discounts of over $20.8 billion on prescription drugs, an average of $1,945 per beneficiary.

The upcoming annual Medicare open enrollment period begins on October 15, 2016, and ends on December 7, 2016. During this time, people with Medicare can choose health and drug plans for 2017 by comparing their current coverage and plan quality ratings to other plan offerings, or choose to remain in Original Medicare. CMS anticipates releasing the premiums and costs for Medicare health and drug plans for the 2017 calendar year in mid-September.

Visit cms.gov for more information.