Elderly should expect another big jump in Medicare premiums

Wednesday, July 12, 2006

WASHINGTON -- The elderly will face another double-digit rise in their Medicare premiums next year, resulting in monthly payments of nearly $100.

The monthly premiums for supplementary medical insurance will rise from $88.50 to at least $98.40, the Bush administration projected Tuesday. That's an 11.2 percent increase, and it's possible the amount will be slightly higher.

The projections assume that Congress will reduce Medicare payment rates for physicians by about 4.7 percent next year. Many analysts don't believe such a cut will occur, and that means the cost of the insurance would go higher than current projections.

Mark McClellan, administrator for the Centers for Medicare and Medicaid Services, said the higher premiums are being generated through an increase in the volume of care provided Medicare patients.

Doctors make greater use of imaging, physical therapy, lab tests and physician-administered drugs.

Physicians say that the increased volume usually equates to better care and healthier patients, but a fact sheet released by CMS on Tuesday said "use of these services varies substantially across practices and geographic areas, with no clear impacts on health."

"We can't keep pumping more money into a payment system that is not sustainable," McClellan said.

The premiums that beneficiaries pay help fund physician services and outpatient care, also known as Medicare Part B. Taxpayers also fund the program.

About 7 million of the poorest beneficiaries get their premiums paid for through government programs, and some retirees get help from their former employer as well. But the large majority of the nation's 43 million beneficiaries will have to pay the increase, McClellan noted.

Kirsten Sloan of the AARP said that one way to slow costs for seniors is to slow costs throughout the health care system through greater use of technology. She said legislation designed to take the paper work out of medical care could save money and reduce medical errors.

"We're going on several years of repeated double-digit increases, and it's also roughly three times the rate of the Social Security (cost-of-living) increase," said Sloan, the AARP's national coordinator for health issues. "It puts a real squeeze, particularly on moderate-income seniors."

While McClellan said the Part B increases were going up faster than recent projections, he also noted that premiums for the new drug benefit have been lower than projected. The average premium was projected a year ago to be about $37 a month, but that average dropped to $24 a month as seniors and the disabled flocked to plans offering lower monthly premiums.


On the Net:

Centers for Medicare and Medicaid Services: http://www.cms.hhs.gov

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