Competition and choice apparently have held the line on premiums for Medicare prescription drug coverage. The New York Times reports that next year’s premiums will be about $24 a month, the same as this year and about 40 percent less than initial estimates for 2007. CMS Administrator Dr. Mark McClellan said some individual insurers that offer coverage under contract to Medicare may increase prices, but that the “vast majority” of beneficiaries will pay the same or less than in 2006. The government estimated in March 2005 that average drug premiums would be $37 a month in 2006 and $41 in 2007. Five months later the government lowered its 2006 estimate to $32 a month and in June this year reported the average premium is $24. Private insurers compete for market share by offering low premiums and extensive benefits. But some consultants have warned that insurers may be operating at or below cost to attract beneficiaries and will not be able to maintain low premiums.
