Medicare Prescription Costs to Drop in 2012

The Department of Health and Human Services announced on Thursday that Medicare participants are expected to see a drop in prescription costs next year. Medicare Part D, which is a portion of the health insurance program specifically dedicated to prescription benefits, will see costs decline slightly from 2011.

Part D Premium Costs to Average $30 a Month

According to the HHS, the monthly premium for Medicare Part D will average around $30 a month. This is a slight drop from the 2011 average of $30.76.

The voluntary benefit pays for medicine for seniors and disabled Medicare patients who chose to sign up for separate drug insurance. The insurance is obtained through private companies such as Aetna, Inc., Humana, Inc. and UnitedHealth.

To keep costs low for patients, the government subsidizes the gap between the premium paid and the amount that insurers bid to the program. Luckily for patients, the costs next year will be a little lower.

Generic Drugs and Wal-Mart Venture Contribute to Drop

HHS officials noted the decrease in the plan’s premium can be attributed to a number of factors. With many brand-name drug companies losing their patents this year, resulting in a generic drug takeover in 2012, costs will be driven down from as much as $200 a month to as low as $10 a month.

With costs set to drop so considerably, insurers have even lowered their bid (the contribution they make to the plan) assuming it will be much cheaper for them, the patients and the government to cover drug expenses.

Some speculate that another reason for the drop in costs is last year’s joint venture between Humana and Wal-Mart Stores. The two are set to offer drug coverage with the lowest premiums in the country.

With premium costs dropping and generic drugs infiltrating the market, 2012 looks to be a good year for Medicare Part D recipients.