CMS projects 10-year cost of Medicare drug plan 8% lower

Share this content:

The Centers for Medicare & Medicaid Services now predicts that the Medicare drug benefit will cost billions less than it previously estimated.

In 2006, the net cost of the Medicare Part D benefit to the federal government is projected to be $30.5 billion, which is 20% less than the government's previous estimate of $38.1 billion, CMS Administrator Mark McClellan said last week during a hearing of the Senate Special Committee on Aging.

CMS estimates that the 10-year cost of the program will fall to $678 billion from $737 billion, a decrease of 8%. The estimated costs have shrunk because drug plans are offering lower premiums than expected, there is strong competition to cut drug costs and because beneficiaries "are choosing the plans that offer them the best deal," McClellan said.

The average monthly premium for beneficiaries is estimated to be about $25. That compares to CMS's estimate last August of $32.20 per month. The new projects are expected to be a total of $130 billion less between 2006 and 2015 as a result of the savings.