Medicare price increase-FYI

[Guest guest]

Most people will have to pay 5.6 percent more for basic Medicare coverage next

year, but more affluent beneficiaries can expect increases as high as 83.2

percent as the federal government for the first time requires wealthier seniors

to pay higher premiums, Medicare officials announced today.

http://www.washingtonpost.com/wp-dyn/content/article/2006/09/12/AR2006091201029.\

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The standard monthly premium for Part B -- which covers doctors' visits,

diagnostic tests and outpatient hospital care -- will rise to $93.50, up from

$88.50 this year, said Mark McClellan, head of the Centers for Medicare and

Medicaid Services. Individuals with an annual income of more than $80,000 (or

more than $160,000 for a married couple) will face monthly premiums of $106 to

$162.10, depending on income, he said.

About 1.5 million of the 42 million Americans enrolled in the program would have

to pay the new income-based premiums, mandated by Congress as part of the 2003

law that created the Medicare drug benefit.

McClellan said the new means-tested premiums would save Medicare $7.7 billion

during the next five years and $20 billion during the next 10, helping to shore

up a program whose troubled finances are threatened by a growing numbers of

beneficiaries and rising health care costs.

And even at the higher rates, Medicare remains a good deal, he said. The richest

beneficiaries, those with incomes of more than $200,000 a year, would pay just

under $2,000 a year in premiums, while receiving an average of $4,300 a year in

benefits.

" They still get a significant subsidy, just not quite as large as lower income

beneficiaries, " McClellan said. " That still makes it a very attractive insurance

package. "

Critics of the income-based premiums say they will drive away healthier

beneficiaries among the more affluent seniors, undermining both the program's

heretofore broad political support and its finances.

" At first glance, it may seem fair to salvage a failing system by having the

wealthy carry a larger share of the load, " Benton, executive director of

the Senior Citizens League, a Washington area advocacy group, said in a

statement. " But as wealthy seniors abandon Medicare as it becomes more expensive

and choose private insurance instead, only the oldest and sickest will be stuck

in Medicare, driving up costs for everyone left behind. "

Medicare officials said they expected 9,000 people to drop out of the program

next year because of the new income-based premiums, and 30,000 to leave by 2010.

In the grand scheme of things, that's not a lot, they said.

" I don't see any substantial adverse impacts in participation on Medicare and I

definitely see a very positive impact on making Medicare sustainable for the

long term, " McClellan said. " Everybody will continue to get a subsidy but will

be able to serve more people for a longer period . . . It's a very tiny fraction

of Medicare beneficiaries. "

Medicare officials had been projecting a higher increase in the standard

premium, but there has been an unexpected slowing in the volume of services and

tests that doctors are ordering for their Medicare patients, they said.

Officials said the standard premium increase of 5.6 percent is the smallest

premium increase since 2001, and trails the projected 6 percent increase in per

capita health spending next year and projected 7 percent increase in

prescription drug costs. Also, premiums in the Medicare drug benefit, known as

Part D, are expected to remain flat, McClellan said.

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