The Price of Medicare Part D
Background: If you are a senior and have Medicare, then Part A (hospital costs) is included at no extra charge. If you chose to have Medicare Part B (which pays 80% of doctor costs) you paid $174 in 2024 and will pay $185 in 2025 (assuming that you do not incur an IRMAA surcharge due to your income). This post does not discuss Medicare Part C which is obtained from a private company in lieu of Medicare Part B. Those who choose Medicare Part B may optionally purchase a supplementary plan, from a private company, to pay the remaining 20% (of doctor costs) not covered by Part B; However, they are required to purchase Part D (drug coverage) from a private company or prove that they are otherwise covered for drug costs. This requirement commences when your Medicare Part B coverage initially starts. If you do not comply with this requirement (fail to have drug coverage even if you take no drugs) then when you need drug coverage you will be financially penalized with a surcharge in addition to the Part D plan cost for the rest of your life.
Problem: Starting 1 January 2025, those with Part D private plans under traditional Medicare have their out of pocket drug cost capped at $2000. However this cap does not apply to drugs that are not covered under your particular private plan. This rule change, made by government, was not supposed to have any impact on your Part D premiums. However many of the private companies have increased their premiums significantly. A number of plan premiums have increased over 500% and some over 1000% from 2024 to 2025. To make it worse some drugs covered in 2024 are no longer covered in 2025. These private companies are allowed to automatically renew your plan (regardless of extreme premium increases) unless you chose to change plans or not renew. Many people, who take few to no drugs, having had very low cost drug plans in 2024 were unpleasantly surprised with high cost premium bills for 2025. They should have gone through the effort to review these plans prior to being locked in by the end of the year’s enrollment window. However many quite reasonably thought that premiums would increase but only by a small amount commensurate with the inflation rate and as such did not review or make changes.
Proposes Solutions: If the government continues to allows Medicare to mandate that Part B participants are required to purchase a drug plan where the plan cost is solely at the desecration of the private company providing it, then the government should also cap the maximum annual percentage increase that the private company can charge when automatically renewing participants without their positive consent. The practice of companies assuming consent due to the participant not replying to the offer needs to be prohibited.
The current system is certainly not a Free Market … In order to have a Free Market, participants must have the right to refuse the purchase of any plan. I propose that the best solution is to eliminate the Medicare mandate requiring participants to buy a drug plan from a private company.