InfoStat | 09-27-16

Nationwide 2017 Medicare Premium Trends Encouraging But State-Level Cost Differences Very Concerning

Sizable cost differences exist among states when comparing average premiums & deductibles

Premium and deductible trends for Medicare Advantage and Part D are quite positive for 2017 on the national level but a state-by-state analysis reveals significant disparities in average costs. Whether examining premiums or deductibles, the differences between the averages in the most expensive states and the least expensive are substantial.

Nationally, the average premium for Medicare Advantage plans will be slightly lower in 2017 as compared to 2016 ($62.48 versus $64.92). This average takes all U.S. Medicare Advantage plans into consideration and does not weight the averages by enrollment. 29% of these 2017 Medicare Advantage plans will have a $0 premium (though enrollees must continue to pay their normal Medicare Part B premium obligations). The average drug deductible amount will rise marginally to $164.71 in 2017 Medicare Advantage plans from $162.67 in 2016.

With respect to Medicare Part drug plans, the U.S. average premium ($53.22) in 2017 will be less than a dollar more expensive than the average premium in 2016. The average deducible nationally will be around $10 more expensive in 2017 than was the case in 2016 ($227.43 versus $217.37).

However, significant differences in costs are apparent when examined at the state-level and, given the fixed incomes of many enrollees, the more costly states are of particular concern.

Medicare Advantage

Florida was the clear winner when comparing average Medicare Advantage premiums among states. The Sunshine State’s 2017 Medicare Advantage plans have an average premium of $19.24. North Dakota, in contrast, is over 6 times that amount with an average premium of $120.90.. South Dakota is similarly expensive with an average premium of $111.68.

Prescription drug deductible comparisons were a thorny issue for Medicare Advantage plans. There were significant instances where deductible amounts were missing within the government data for 2017 plans. From a methodological perspective, $0.00 deductibles were calculated into the averages but blank cells were not.

In 2017, the maximum allowable drug deductible for Medicare Advantage and Part D plans is $400 though plans can offer deductibles below that amount1. The lowest average deductible was $65.33 in the state of Pennsylvania. The most expensive average deductible, given the limitations of the underlying data, was Nebraska at $302.21. Nebraska’s average deductible was over 4 and a half times the average deductible in Pennsylvania.

The below table provides a state-by-state comparison of the average premiums and deductibles of Medicare Advantage plans. There were no records for Medicare Advantage plans within the state of Alaska for 2017 so the table contains “N/A” for both the premium and deductible averages in that state.

2017 Medicare Advantage Plans By State

STATEAVG PREMIUMAVG DEDUCTIBLE
ALABAMA$48.58$162.75
ALASKAN/AN/A
ARIZONA$54.45$141.37
ARKANSAS$42.74$179.70
CALIFORNIA$34.12$99.40
COLORADO$86.94$226.87
CONNECTICUT$64.07$100.23
DELAWARE$59.31$104.62
FLORIDA$19.24$148.11
GEORGIA$35.56$198.48
HAWAII$96.84$202.71
IDAHO$70.76$130.00
ILLINOIS$65.72$278.42
INDIANA$43.87$148.24
IOWA$23.37$184.81
KANSAS$68.01$225.50
KENTUCKY$46.26$185.91
LOUISIANA$35.77$254.07
MAINE$45.27$71.59
MARYLAND$54.69$94.16
MASSACHUSETTS$93.29$222.98
MICHIGAN$96.62$185.18
MINNESOTA$107.48$217.65
MISSISSIPPI$34.60$280.25
MISSOURI$44.95$133.54
MONTANA$50.56$180.38
NEBRASKA$34.56$302.21
NEVADA$47.98$71.25
NEW HAMPSHIRE$55.06$180.62
NEW JERSEY$70.78$215.21
NEW MEXICO$79.13$182.55
NEW YORK$52.55$123.89
NORTH CAROLINA$37.33$211.89
NORTH DAKOTA$120.90$152.41
OHIO$68.93$113.55
OKLAHOMA$54.80$109.42
OREGON$78.02$139.84
PENNSYLVANIA$81.68$65.33
RHODE ISLAND$59.67$119.00
SOUTH CAROLINA$35.04$226.52
SOUTH DAKOTA$111.68$157.43
TENNESSEE$46.61$84.87
TEXAS$71.11$173.32
UTAH$31.46$180.96
VERMONT$49.83$209.15
VIRGINIA$43.90$266.69
WASHINGTON$83.35$152.00
WASHINGTON D.C.$47.89$180.83
WEST VIRGINIA$55.93$202.25
WISCONSIN$82.78$231.65
WYOMING$40.73$221.25

Medicare Part D

When examining Medicare Part D trends on the state level, we found that lowest average premium was in Hawaii. At $43.95, the Aloha State had an average premium among 2017 Part D plans that is 17% lower than the national average of $53.22. In comparison, California had the highest average premium for their 2017 Part D plans. Its average premium of $65.90 is 24% higher than the national average. Compared to the average premium in Hawaii, California’s average Part D premium was about 50% more expensive.

With respect to drug deductibles for 2017 Medicare Part D plans, the state with the lowest average is South Carolina ($199.74). This amount is 12% lower than the national average ($227.43). Alaska, in contrast, has the highest average deductible for their 2017 Part D plans. Alaska’s average cost of $271.88 is about 20% higher than the national average and 36% higher than average deductible in South Carolina.

2017 Medicare Part D Plans By State

STATEAVG PREMIUMAVG DEDUCTIBLE
ALABAMA$52.10$227.05
ALASKA$52.11$271.88
ARIZONA$47.92$237.50
ARKANSAS$48.39$237.25
CALIFORNIA$65.90$215.91
COLORADO$61.03$226.19
CONNECTICUT$49.07$210.53
DELAWARE$46.49$232.22
FLORIDA$62.86$215.83
GEORGIA$54.30$217.38
HAWAII$43.95$254.71
IDAHO$65.06$223.41
ILLINOIS$51.15$245.24
INDIANA$54.23$220.00
IOWA$50.99$236.25
KANSAS$59.76$216.00
KENTUCKY$54.23$220.00
LOUISIANA$46.68$237.78
MAINE$52.39$219.76
MARYLAND$46.49$232.22
MASSACHUSETTS$49.07$210.53
MICHIGAN$48.75$236.67
MINNESOTA$49.87$236.25
MISSISSIPPI$44.92$231.76
MISSOURI$57.95$222.86
MONTANA$50.99$236.25
NEBRASKA$50.99$236.25
NEVADA$60.50$226.19
NEW HAMPSHIRE$52.39$219.76
NEW JERSEY$57.29$224.74
NEW MEXICO$44.14$245.24
NEW YORK$50.02$224.41
NORTH CAROLINA$50.19$222.50
NORTH DAKOTA$50.99$236.25
OHIO$54.11$209.25
OKLAHOMA$53.66$230.75
OREGON$55.45$212.11
PENNSYLVANIA$59.51$206.36
RHODE ISLAND$49.07$210.53
SOUTH CAROLINA$48.26$199.74
SOUTH DAKOTA$50.99$236.25
TENNESSEE$52.10$227.05
TEXAS$53.89$245.24
UTAH$65.06$223.41
VERMONT$49.07$210.53
VIRGINIA$53.99$224.29
WASHINGTON$55.45$212.11
WASHINGTON D.C.$46.49$232.22
WEST VIRGINIA$59.51$206.36
WISCONSIN$64.52$212.50
WYOMING$50.99$236.25

Conclusion

Little inflation in 2017 average premium and deductible costs is welcome news for Part D and Medicare Advantage enrollees. However, a close inspection of the data reveals very different Medicare insurance markets across the United States. A combination of factors (e.g. insurer participation, local medical claims and healthcare delivery costs) has created a situation where:

  • The average Medicare Advantage premium in the most expensive state is over six times the expense of the least expensive state
  • The average Medicare Advantage drug deductible in the most expensive state is over four times the expense of the least expensive state
  • The average Part D premium in the most expensive state is 50% more than the average in the least expensive state
  • The average Part D drug deductible in the most expensive state is 36% more expensive than the least expensive state

For Medicare Advantage enrollees, some counties do have $0 premium plans. Nationally, about 29% of Medicare Advantage plans have $0 premium (though, as mentioned earlier, enrollees are still responsible to pay their Medicare Part B premiums). For Medicare beneficiaries living in areas without those options or who prefer stand-alone Part D drug plans, the state-by-state cost differences in premiums and deductibles raise questions regarding what can be done to improve the situation.

Author

This report was written by Kev Coleman, Head of Research & Data for HealthPocket. Correspondence regarding this study can be directed to kevin.coleman@healthpocket.com.

Kev Coleman on Google+

Methodology

Premiums and deductibles for Medicare health and drug plans were obtained from the 2017 MA and PDP Landscape Source Files available at cms.gov on September 22, 2016 (https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/index.html?redirect=/PrescriptionDrugCovGenIn/ last accessed on September 22, 2016).

Sanctioned plans and Special Needs Plans (SNPs) were not included in the analysis. Additionally, premium averages and deductible averages excluded plans where the data was not present (i.e. blank) in the government landscape files. No adjustment was made for market share of each plan. All analysis assumes the accuracy of the underlying government data.

Sources:

1Centers for Medicare & Medicaid Services. Announcement of Calendar Year (CY) 2017 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter CMS. (April 4, 2016). p.68. https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2017.pdf. Last accessed September 23, 2016.

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