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Medicare makes plans to profit

Premiums for three of the most popular Medicare prescription drug plans will go up substantially next year. John Dimsdale explores the dramatic cost change from the plans' inception three years ago.

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John Dimsdale: Tomorrow begins the six-week open enrollment period for Medicare prescription plans. Seniors will be well-advised to look at the changes this year. A lot of premiums are going up. Here’s John Dimsdale.


John Dimsdale: Washington consulting firm Avalere Health compared the Medicare prescription drug plans for next year. Premiums for the three most popular plans are going up an average 27 percent. That’s faster than overall drug prices.

Avalere’s Lindsey Spindle says these plans started out three years ago with generous benefits and low premiums to attract customers.

Lindsey Spindle: Now that they have solidified their customer base, they’re trying to maintain their customers’ loyalty, but they also have to achieve profitability.

Many plans are boosting patient co-pays and cutting benefits.

Medicare expert Marilyn Moon, at the American Institutes for Research, says insurance companies may be counting on seniors to stick with their existing plan.

Marilyn Moon: They don’t like to change, and as a consequence many plans may find they don’t have to offer the lowest possible prices.

Not all plans are raising premiums, so Moon says it pays to shop around.

In Washington, I’m John Dimsdale for Marketplace.

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