Thousands of Minnesotans covered by Medicare health plans are confronting the pain of rising drug costs.
A Star Tribune analysis shows that about 1 in 5 Medicare enrollees in plans from private insurers are facing double-digit percentage increases in premiums, with the jumps for next year confined to plans that include prescription drugs. Depending on the plan, the increases will tack anywhere from $8 to $43 per month onto premium costs.
The big premium increases aren’t inevitable. Premiums for many Medicare plans are either flat or down for 2016, so advisers are urging seniors to shop around.
“They can use this as the opportunity to look for something that might be better,” said Tom Kornfield, a vice president with Avalere Health, a consulting firm that analyzes Medicare options.
The higher pharmacy costs come as many seniors on fixed incomes face the prospect of no cost-of-living increase from Social Security next year.
That, in turn, means that about 30 percent of Medicare beneficiaries could be looking at 50 percent hikes for the Part B portion of the program for outpatient care, although Congress might intervene.
“Health care is a significant cost to older adults, who often live on fixed incomes,” said Dawn Simonson, executive director of the Metropolitan Area Agency on Aging. “So, that’s an important factor in terms of someone’s overall financial stability.”
The annual open enrollment period for Medicare plans began Oct. 15. The sign-up period ends Dec. 7.
About 900,000 Minnesotans are covered by the Medicare health insurance program for seniors, including 667,000 who carry Part D prescription drug coverage, according to the Kaiser Family Foundation.
Seniors can buy drug coverage either through stand-alone plans that they pair with another source of medical coverage, or as part of a Medicare plan sold by private insurers.
The Star Tribune analysis of state and federal data focused on Medicare health plans that covered about 410,000 people in Minnesota as of October, including about 210,000 in plans with drug coverage.
About 87,000 enrollees in plans with Part D coverage are facing jumps of 11 to 30 percent, according to the analysis, while another 108,000 are facing single-digit increases. About 15,000 people will see premium decreases.
Most in Medicare plans lacking Part D coverage will see flat rates for 2016 or a drop in premiums.
The Star Tribune analysis did not include people who are covered through stand-alone drug plans, employer-sponsored plans for retirees or people in “Medigap” supplemental policies.
One of the bigger jumps is at Minnetonka-based Medica, where premiums for one health option will grow from $152.80 to $196.40 a month. For the 9,000-some people now in that plan, premiums would rise by about $500 for the year.
“The premium increases are really reflecting what is a nationwide challenge right now, which is the increasing costs of prescription drugs,” said Andrew Davis, vice president for Medicare products with Medica.
Davis added that Medica is introducing a Medicare plan for 2016 that includes Part D coverage at a lower price. The plan offers fewer features.
Three plans that include Part D benefits will be more expensive next year at Minneapolis-based UCare. The biggest hike comes to $20 per month, or about 17 percent, for a plan that now covers about 16,000 people.
“We’re seeing higher costs for generics … and the high-cost brand drugs are going up,” said Ghita Worcester, senior vice president of public affairs and chief marketing officer at UCare.
Double-digit premium increases also are in the works for certain plans from Bloomington-based HealthPartners and Kentucky-based Humana.
All four insurers have at least one Medicare plan with flat or lower premiums for 2016. At Blue Cross and Blue Shield of Minnesota, only one of six Medicare plans will feature a premium increase.
“Right now, Blue Cross has the upper hand on experience — the ratio of claims to premium income — and is able to get that lower rate approved,” said Harlan Johnson, an insurance agent in Pequot Lakes.
For the Medicare beneficiaries who are facing premium increases, one strategy is to buy a health plan without drug coverage from one insurer and pair it with a stand-alone Part D plan from another, said Johnson. Premiums for stand-alone plans in Minnesota are expected to increase on average by just 3 percent next year, according to a Kaiser Family Foundation report issued this month.
Of course, not all medical plans can be paired with Part D coverage from another company. And premium increases don’t tell the whole story about what’s the best deal.
Medicare enrollees will want to look closely at the details of their pharmacy coverage to see if there have been changes in the list of drugs covered, said Juliette Cubanski of the Kaiser Family Foundation.
“If a plan drops a drug from its formulary, that means the beneficiary is entirely on the hook for the out-of-pocket costs of that medication,” Cubanski said. “Those are definitely the details that people need to understand, particularly if they’re taking medications that are very expensive.”
At Medica, about 8,400 people will find that one of their drugs is no longer covered. At Blue Cross, a four-tier formulary is becoming a six-tier one, with copays and deductibles dependent on which tier a medicine is assigned.
Overall, the state Board on Aging says more Part D plans will have an annual deductible in 2016 than is now the case.
“The sticker shock comes after they go to the pharmacy in January,” wrote Shawnee Christenson, an agent with Crosstown Insurance in New Hope, in an e-mail. “This is when they often realize that their cost for generics have risen, and that they now have a $360 deductible.”
MaryJo Webster contributed.