Medicare Prescription Drug Costs Unlikely to Rise in 2012

New data from the U.S. Department of Health and Human Services (HHS) indicates that 17 million seniors with Medicare plans received free preventive services this year while 900,000 Medicare beneficiaries who hit the prescription drug "doughnut hole" have received a 50 percent discount on their prescription drugs.

The average monthly premium for Medicare’s prescription program is not expected to go up next year, the agency said Thursday.

The government-subsidized prescription plan for seniors will not increase by the time 2012 rolls around, and is projected to cost seniors an average of $30 a month in 2012, down from $30.76 this year, according to the administration.

HHS officials attributed the decrease to growing use of cheaper generics drugs and competition within the program, which is delivered through private insurance companies.

"This decline in the average creates more risk for plans like 'Humana' and 'United Health' that have a significant portion of the Part D members," said Peter Costa, a Wells Fargo analyst.

Costa said one possible reason for the lower bids could be last year's joint venture between Humana and Wal-Mart Stores to offer Medicare drug coverage with the lowest premiums in the country.

Medicare also expects to see costs drop as a number of top-selling brand name drugs get generic competition. The government subsidizes the gap between the premium patients pay and the amount that insurers bid to the program.

“The Affordable Care Act is delivering on its promise of better health care for people with Medicare,” said HHS Secretary Kathleen Sebelius.

“People with Medicare who hit the donut hole are paying less for their prescription drugs, 17 million Americans have received free preventive services and prescription drug premiums will remain low. These are important steps that are making a difference in the lives of millions of Americans right now.”

The voluntary benefit pays for medicines for seniors and disabled Medicare patients who have signed up for separate drug insurance plans through private insurers such as Aetna Inc, Humana Inc and UnitedHealth.

On Wednesday, the U.S. Centers for Medicare and Medicaid Services (CMS) released the 2012 nationwide bid information for Part D. The average bid by insurers declined to $84.50 a month, down 2.9 percent from 2011's $87.05.