MEDICARE PART B PREMIUM INCREASE

Monthly premiums for Medicare Part B - which covers physician services, outpatient hospital care some home health services and durable medical equipment - will increase 17% to $78.20 in 2005. The $11.60 monthly increase scheduled to take effect Jan. 1 is the single largest dollar increase in Medicare's history, according to the Times (Harris, New York Times, 9/4). Premiums rose 13.5% this year and 8.7% last year, the Wall Street Journal reports (Lueck, Wall Street Journal, 9/7). The average monthly Social Security stipend is $922 this year. A recent BostonGlobe editorial notes, that “unless they get more aid - and most will not - the premium will be taken out of their Social Security checks and will eat into the cost-of-living adjustment for next year.”

Administration officials and Republicans in Congress have said that beneficiaries will receive more for their money, including new coverage for preventive health services. But Medicare actuaries told Congress recently that only 14 cents of the increase in premiums was attributable to the new benefits: an initial physical examination for new beneficiaries and screening tests for diabetes and high cholesterol. The actuaries said that $1.60 of the increase in premiums resulted from an increase in payments to health maintenance organizations and other private plans. Much of the remainder was due to an increase in Medicare payments to doctors and higher overall medical costs.

The Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan said the premium increase in part reflects the need to build up reserves in the Medicare Part B trust fund, as well as to cover expanded benefits called for in the new Medicare prescription drug law (Connolly, Washington Post , 9/4). McClellan added that the increased premiums would help ensure that beneficiaries have access to doctors ( Wall Street Journal, 9/7). He said some of the Part B premium increase will be offset for beneficiaries enrolling in private plans, which often have lower out of pocket expenses and provide more benefits ( New York Times, 9/4). "On net, Medicare beneficiaries are saving money," McClellan said. Medicare officials also said that the 2005 cost-of-living increase in Social Security payments -- which will be announced in the coming months -- likely will be greater than the Part B premium increase for most beneficiaries (Neuman, Los Angeles Times , 9/4).

The Kerry campaign said that the Bush administration made the announcement on a Friday before the Labor Day holiday weekend to try to "conceal the bad news," according to the Washington Times ( Washington Times, 9/5). The Wall Street Journal reports that Medicare premium increases traditionally are announced in mid-October, along with changes in Social Security payments. If the Bush administration had maintained that schedule, the increase would have been announced just prior to the November election, according to the Journal ( Wall Street Journal, 9/7). McClellan said that the administration was simply "getting these numbers out as soon as we can."

-Adapted from: Kaiser Daily Health Policy Report Tuesday, September 07, 2004; Boston Globe Editorial “ Protecting Medicare”, September 14, 2004 and “ Low-Income Non-Applicants to Get Medicare Drug Cards” By Robert Pear, The New York Times, Sept. 22, 2004.

09/2004