Competition among health plans to administer Medicare's new prescription drug benefit will lower the government's cost of providing the benefit, according to the CMS, and those savings will be passed along to beneficiaries in the form of lower monthly premiums. As a result of "robust competition" during the bidding process, the new Medicare drug benefit will cost the federal government $15 less per beneficiary per month in the program's first year compared with an earlier estimate. Beneficiaries will pay $5 less per month in the first year of the program than had been estimated, according to the agency.
In March, the CMS said the cost of the benefit to the federal government would be $109.18 per beneficiary per month. Based on the undisclosed number of bids they have received from health plans and others seeking to administer the benefit, the agency revised the cost to $94.08 when the benefit takes effect on Jan. 1, 2006. Monthly premiums for beneficiaries participating in the benefit will average $32.20, down from an earlier estimate of $37.37. Monthly premiums for physician and hospital services have not been released yet.
The CMS is continuing to review the bids and did not issue any new figures on how much the drug benefit will cost in the near or long term. In October, Medicare-approved health plans can begin marketing their drug benefit plans to beneficiaries. Beneficiaries can begin signing up on Nov. 15.