I was shocked when I opened a letter from United Health, my Medicare Part D drug insurance company, to find my monthly premium would go up to $42.60 from $18.30, a whopping $132.79% leap. “What gives!?”, I said to the customer rep who took my call. “Well…” she began; but before she could continue, I wailed, “my only medication is a generic costing $4 a month. I never came close to the $315 deduction!” She asked for my patience while she explained that CMS, the governing authority for Medicare, decreed that, beginning in 2011, drug companies can offer only one basic and no more than two ‘enhanced’ plans per region. As a result, my plan had to be eliminated and its members shifted into another, more costly plan.
Unbeknownst to me, a study conducted by research group, Avalere Health, saw this coming last September. Their analysis showed that, because of this ruling, average monthly premiums for the 10 top insurance drug plans, affecting 70% of Medicare Part D enrollees would increase by at least 10 % in 2011. Dan Mendelson, CEO of Avalere, forecasted that many beneficiaries would face even more dramatic changes in their 2011 insurance premiums and would have to shop around to find a better plan. Clearly, our government’s efforts toward its stated goal of providing affordable health care aren’t working. And whatever happened to “‘if you like your plan, you can keep it”?
Luckily, I found one, just one, plan in my area that compared with the Medicare Part D plan I had last year. But, what if I couldn’t have found another plan? Given my current low prescription drug needs and good health, I would like to drop drug coverage altogether rather than pay a ridiculous amount for something I don’t need. However, Medicare attempts to keep people like me in Medicare Part D or a drug plan that meets their standards by inflicting penalties for dropping out. The base penalty goes up every year and grows monthly so the longer you’re not covered by insurance, the larger the penalty. On top of that, once you rejoin the Medicare Part D program, that penalty is added to the regular premium every month for as long as you are insured under the program.
Here’s how it works: The penalty is calculated by multiplying 1% of the “national base beneficiary premium” of the year you rejoined Medicare Part D ($32.34 in 2011) times the number of months that you were eligible but didn’t join a Medicare drug plan or were covered with a government standard prescription drug plan. The final amount is then added to your monthly premium every month thereafter. Since the “national base beneficiary premium” will most likely increase every year, your penalty amount will also increase every year. Insidious, isn’t it?
Conceivably, if I could find a Medicare Part D drug plan with a higher deductible, I would choose that and have an even lower monthly premium. I am willing to shoulder a $600 or higher deductible considering my low med needs. However, that’s not possible. CMS has also decreed that the highest deductible that any plan can offer is $315. And if I signed up for a private drug insurance plan offering a higher deductible, I would be susceptible to the Medicare ‘drop-out’ penalty because such a plan wouldn’t comply with the government standard even though I would be covered for prescription drug insurance.
This, I fear, is a microcosm of what will happen when the really big Affordable Care Act changes take effect in 2014. The mandated state insurance exchanges that will be instituted then will be limited to only 5 types of government stipulated health plans. The only one with a truly affordable, high deductible, health insurance plan will be limited to people under the age of 30. As seen here, the plans offered in the exchange will be subject to even more regulation resulting in even higher insurance rates.