Dem health bill would raise drug premiums

Congressional Budget Office Director Douglas Elmendorf said Medicare recipients would pay less out of pocket for prescriptions under the legislation.

But for those who do not spend as much annually on drugs, the changes could result in higher insurance premiums without any added benefits.

The bill would increase drug insurance coverage under the Medicare Part D drug program by closing the "doughnut hole," the coverage level at which seniors become ineligible for the benefit. The Medicare drug benefit provides insurance for seniors when they spend less or more than the doughnut hole levels.

While the proposed changes would lead to lower drug costs for some Medicare beneficiaries, the push to increase coverage would increase costs for drug and insurance companies, resulting in higher drug benefit premiums for seniors. The average premium would increase by approximately 5 percent in 2011 and by 20 percent over the next decade.

Elmendorf said the legislation would save the government $30 billion in Medicare drug spending over 10 years. The cost reductions come from one provision cutting rebates to pharmaceutical companies who sell drugs to both Medicare and Medicaid beneficiaries.

Republicans, who called for the CBO study of the proposed Medicare drug benefit changes, highlighted the expected increase in premiums.

Rep. Dave Camp (Mich.), the top Republican on the House Ways and Means Committee, said the CBO analysis was more evidence the bill would lead to more health costs for seniors.

“Healthcare reform should make health care more affordable, not more expensive," Camp said. "Clearly, it is time to scrap this bill and start over with open, bipartisan talks.”

But Democrats touted the parts of the CBO study that suggest seniors' overall drug costs would go down.

"This CBO score confirms that our reforms will make prescription drug costs more affordable for seniors -- and that drug companies can no longer reap enormous profits at their expense," said Rep. George Miller (D-Calif.), the chairman of the House Education and Labor Committee who helped draft the legislation.