In 2018, we’ve seen CMS work to lower prescription drug costs, specifically attempting to decrease Medicare Part D premiums for Medicare beneficiaries. Though there seems to be mixed reactions to the effort.

The “Declining Costs”

To understand what’s been happening in this space, we look to an article in Health Payer Intelligence. The article points to the claim from CMS that premiums will potentially decrease from “$33.59 in 2018 to $32.50 in 2019.” This supports other tactics from CMS to bring prescription drug costs down, and, according to the article, to drive better competition among health plans. This is particularly important to seniors, dual-eligibles, and other low-income populations that fill Medicare’s ranks. Health plans will be impacted in a big way, and will need to understand their members to be successful under the changes taking effect in 2019.

The “Hidden Costs”

The New York Times also covered the announcement from CMS, but they took a much different stance. They argued that decreasing premiums shouldn’t be the focus of this conversation, stating “the stability in the premiums belies much larger growth in the cost for taxpayers.” They claim that the data refutes the claim that Medicare Part D is a competition-inducing, cost-saving program. In fact, numbers show a 72 percent increase in the amount it cost taxpayers in the last nine years. To be fair, the article also notes enrollment has doubled in almost the same time period, and the costs of drugs have been growing as well. However, reinsurance, which is reportedly “not reflected in premiums,” has also been increasing. Per this article: “That means enrollees don’t have to spend as much as they otherwise would to trigger the reinsurance program. Although this is of great benefit to enrollees, it also pushes up taxpayer liability for the program.”

“Additionally, insurance company plans exhibiting less of an effort to manage the use of high-cost drugs had higher reinsurance costs.”

Medicare Part D Premium Implications for Health Plans

Whether you consider the Medicare Part D premiums glass to be “half-full” or “half-empty,” health insurance companies will have to prepare for the implications on payers and members alike. For example, as premiums decline and the final rule makes more options available to consumers, plans will have accommodate the swell by becoming administratively more efficient. Whereas suggested solutions to the problem of reinsurance mentioned in the Time article “include increasing the liability of insurance company plans in the catastrophic range and decreasing the liability of taxpayers.” Plans that want to get a competitive edge will need to take extra steps to improve workflows, medication adherence, and more.