The base Medicare Part D bid figures are still falling, but not
as fast as they were last year.
Insurers are continuing to bid hard for
Medicare Part D prescription drug plan business, but not quite as hard as they
were bidding for Medicare drug plan business a year ago.
The Centers for Medicare and Medicaid Services
(CMS) has given clues about insurers’ level of passion for Medicare drug
plan business in a new report on the bidding process for the 2020 Medicare plan
program.
The national average monthly bid amount for
the 2020 Medicare drug plan program has fallen to $47.59, down 7.2% from the
average for the 2019 program.
The average monthly base beneficiary premium
fell to $32.74, down 1.4% from the 2019 average.
Insurers now see the Medicare plan market
as an attractive market, because earnings on health insurance are not
sensitive to changes in stock prices or interest rates, Medicare program rules
and subsidies limit claim risk, and federal policymakers have made efforts to
keep Medicare program rules and subsidies more stable than the federal rules
and subsidies for insurers selling new individual major medical insurance.
Even though vigorous bidding has helped to
push down key Medicare drug plan price indicators for 2020, the rate of
decrease is lower than it was for the 2019 program year.
For the 2019 program year, the national average
monthly bid amount was down 11%, and the average monthly base beneficiary
premium was down 5.2%.
The Medicare Part D
Drug Coverage Program
The Medicare plan annual enrollment period for
2020 coverage will start Oct. 15 and end Dec. 7.
President George W. Bush signed the bill that
created the Medicare drug benefits program, the Medicare Modernization Act of
2003 bill, in 2003.
Medicare drug benefits coverage came to life
in January 2006.
Private insurers provide the coverage.
Stand-alone Medicare drug plans and drug
benefits built into Medicare Advantage plans now cover prescription costs
for about 46 million people, according to CMS.
Medicare drug plans offered by units of CVS
Aetna, UnitedHealth Group Inc. and Humana Inc. account for about 60% of
stand-alone Medicare drug plan sales, according to a Mark Farrah Associates analysis of CMS enrollment reports.
A web broker, eHealth Inc., says its
“constrained lifetime value of commissions per approved member” is $257 per
Medicare Part D drug plan enrollee, compared with $167 per individual major
medical insurance buyer, $983 per month per Medicare Advantage coverage
buyer, and $65 per month per dental insurance buyer. The web broker has
noted that the lifetime commission value figure includes factors other than the
contracted commission rates, such as carrier mix and expected policy churn.
Documents related to the new 2020 Medicare
plan rate announcements are available here.
Allison Bell, ThinkAdvisor's insurance editor,
previously was LifeHealthPro's health insurance editor. She has a bachelor's
degree in economics from Washington University in St. Louis and a master's
degree in journalism from the Medill School of Journalism at Northwestern
University. She can be reached at abell@alm.com or on Twitter at
@Think_Allison.
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