Health Inc.

Generic Drugs Mean Savings For Private Medicare Plans

Listen up, you Medicare gloom-and-doomers.

A generic pill.

More generics mean more savings for Medicare Advantage. iStockphoto.com hide caption

itoggle caption iStockphoto.com

Predictions that the federal health law's reduction of government subsidies to Medicare Advantage plans would wreck them aren't coming to pass just yet.

Premiums for the privately run plans are dropping a little for next year, about 1 percent on average, the government says. Yet the benefits are holding pretty steady.

Yes, it's true the cuts to the Medicare Advantage program don't actually kick in until 2012. But health plans next year face a funding freeze and are already bracing for the future.

Even so, all but a handful managed to maintain or reduce monthly premiums while keeping virtually all their benefits intact, including extras traditional Medicare doesn't offer.

How's that possible? Well, a bunch of big brand-name drugs popular with seniors are set to go generic in 2011. So the insurers will be able to save a lot of money by moving people to the cheaper knockoffs of those medicines, including cholesterol-fighter Lipitor, blood-thinner Plavix and blood pressure medicine Cozaar, according to an analysis by Avalere Health.

Insurers are "doing everything they can to keep coverage as affordable as possible" for the 11 million people in Medicare Advantage plans, says a statement from Karen Ignagni, head of the trade group America's Health Insurance Plans.

But she warned, "as deep cuts go into effect in the coming years, government experts have forecasted that millions of seniors will experience higher costs, reduced benefits and fewer choices."

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