CBO: Medicare drug premiums up, spending down

The Capitol's chief bean-counters, the Congressional Budget Office, have ruled on new House legislation governing Medicare prescription coverage. And in some unwelcome news for the over-65s, drug premiums are set to rise by about 5 percent in 2011 and the hike would grow to 20 percent by 2019. Nevertheless, the advocacy group AARP deemed the CBO report as evidence that "healthcare reform will lower drug spending."

That's because CBO expects Medicare beneficiaries would end up spending less on prescription drugs overall, because those higher premiums would finance an eventual shutoff of the dreaded doughnut-hole gap in drug coverage. And the legislation would save the government $30 billion from 2010 to 2019.

Already, the spinning has begun: Republican Rep. Dave Camp, who received the CBO report from director Douglas Elmendorf, said "the vast majority of seniors" would end up paying more for drugs and coverage, and called on Democrats to scrap the reform bill and start over. The nonpartisan Elmendorf, however, said that while beneficiaries who use fewer drugs would pay more overall, those who use more drugs would pay less--and on average, beneficiaries will pay less. As you know, nuance isn't much appreciated in a partisan fight. Doing straightforward math? Even less.

- see the New York Times story
- read the coverage from Bloomberg