Premiums and Cost-Sharing Features in Medicare's New Prescription Drug Program, 2006

The Medicare drug benefit that Congress created in 2003 aims to provide more private plan options for senior and disabled beneficiaries in Medicare, with increased payments to attract sponsors and to support added benefits attractive to enrollees, especially in rural areas. The effects of these changes and additional payments are highly visible, with a total of 1,314 Medicare Advantage plans and 1,429 stand-alone prescription drug plans being offered. Beneficiaries in most states have a large range of choices, with at least 40 stand-alone drug plans, and, in some areas, dozens of Medicare Advantage options. This brief provides a comprehensive look at premiums, deductibles, and selected cost-sharing features of Medicare Advantage prescription drug plans in 2006, including Medicare HMOs, new regional (and traditional local) PPOs, and private fee-for-service plans, and compares them to stand-alone Medicare drug plans. The new analysis finds that Medicare Advantage plans on average charge less for their drug coverage ($18 per month) than stand-alone drug plans ($37 per month).