There will be three "standard" Part B premium levels next year, a situation brought about by the freezing of Social Security cost-of-living adjustments in 2010 and 2011. Under existing law, when COLAs do not rise, standard Part B premiums must be frozen too — but only for people whose premiums are deducted from their Social Security checks. This means that in 2011 many people will pay the same premiums as they did in 2009 or 2010, but others will pay the new higher standard amount for 2011.
Medicare premium increases, Part B premiums in 2014
There is no question Medicare premiums are going up and up as are Medicare taxes. But to blame that on Obamacare is misdirected. Premiums are going up primarily because of the underlying use of health care services by a growing Medicare population and by the cost of each of those services.
Higher Income Seniors Hit With Medicare Doctor And Drug Premium Hikes For 2011
There’s a predictably complicated explanation for why this not-so-wealthy 5% have to pay more. By law, Part B premiums paid by all Medicare participants must cover 25% of Medicare’s costs for doctors’ visits and outpatient services. But a 1987 “hold harmless” provision, designed to keep recipients’ Social Security net checks from shrinking, provides that for retirees who have Part B premiums deducted from their Social Security checks, the standard premium can’t go up in any year by more than the extra dollars they’re getting as a cost of living adjustment in their Social Security checks. This provision doesn’t protect those who are better off, getting Social Security for the first time, or don’t have Medicare premiums withheld.
Annual Statistical Supplement, 2011
Beginning January 1, 2006, upon voluntary enrollment in either a stand-alone PDP or an integrated Medicare Advantage plan that offers Part D coverage in its benefit, subsidized prescription drug coverage. Most FDA-approved drugs and biologicals are covered. However, plans may set up formularies for their drug coverage, subject to certain statutory standards. (Drugs currently covered in Parts A and B remain covered there.) Part D coverage can consist of either standard coverage or an alternative design that provides the same actuarial value. (For an additional premium, plans may also offer supplemental coverage exceeding the value of basic coverage.) Standard Part D coverage is defined for 2006 as having a $250 deductible, with 25 percent coinsurance (or other actuarially equivalent amounts) for drug costs above the deductible and below the initial coverage limit of $2,250. The beneficiary is then responsible for all costs until the $3,600 out-of-pocket limit (which is equivalent to total drug costs of $5,100) is reached. For higher costs, there is catastrophic coverage; it requires enrollees to pay the greater of 5 percent coinsurance or a small copay ($2 for generic or preferred multisource brand and $5 for other drugs). After 2006, these benefit parameters are indexed to the growth in per capita Part D spending (see Table 2.C1). In determining out-of-pocket costs, only those amounts actually paid by the enrollee or another individual (and not reimbursed through insurance) are counted; the exception is cost-sharing assistance from Medicare’s low-income subsidies (certain beneficiaries with low incomes and modest assets will be eligible for certain subsidies that eliminate or reduce their Part D premiums, cost-sharing, or both) and from State Pharmacy Assistance Programs. A beneficiary premium, representing 25.5 percent of the cost of basic coverage on average, is required (except for certain low-income beneficiaries, as previously mentioned, who may pay a reduced or no premium). For PDPs and the drug portion of Medicare Advantage plans, the premium will be determined by a bid process; each plan’s premium will be 25.5 percent of the national weighted average plus or minus the difference between the plan’s bid and the average. To help them gain experience with the Medicare population, plans will be protected by a system of risk corridors, which allow Part D to assist with unexpected costs and to share in unexpected savings; after 2007, the risk corridors became less protective. To encourage employer and union plans to continue prescription drug coverage to Medicare retirees, subsidies to these plans are authorized; the plan must meet or exceed the value of standard Part D coverage, and the subsidy pays 28 percent of the allowable costs associated with enrollee prescription drug costs between a specified cost threshold ($250 in 2006, indexed thereafter) and a specified cost limit ($5,000 in 2006, indexed thereafter).
Medicare Reform Stage 2: Moving to a Premium Support Program
Aaron and Reischauer, for example, opposed using the lowest-cost-plan bid as the benchmark for a “premium free” option. They expressed an understandable concern that it would attract enrollees into a plan that might be efficient but would be characterized by a “Spartan delivery system”; such a plan, they feared, might not be able to absorb the influx of large enrollment of low-income persons without compromising quality of care. Aaron and Reischauer, “The Medicare Reform Debate,” p. 23. But this problem could be alleviated, as noted, by using an average of the three or five lowest-cost bids in a region. In either case, lifting the cap on the government contribution to the lowest-cost plan (or the average of the lowest-cost plans setting the government payment) could generate even greater savings. In the FEHBP, for example, there is a 75 percent cap on the government contribution to employees’ choice of health plan under the existing payment formula. As a practical matter, this means that federal workers and their families must pick up 25 percent of the cost of any plan, no matter how efficient that lower-cost plan is in delivering benefits. An effective consumer-choice system would encourage consumers to secure 100 percent of the costs for picking less expensive plans. Thus, The Heritage Foundation recommended the removal of the 75 percent cap on the defined contribution in the FEHBP. See Angela M. Antonelli and Peter B. Sperry, eds., A Budget for America: A Mandate for Leadership Project (Washington, D.C.: The Heritage Foundation, 2001), pp. 331–332.
Medicare Advantage 2014 Spotlight: Plan Availability and Premiums
While many organizations offer Medicare Advantage plans, a few – particularly Humana, United Healthcare, and the Blue Cross and Blue Shield (BCBS) affiliates – have particularly large geographic spread and these organizations historically account for a disproportionate share of enrollment. In 2014, 44 percent of available plans are being offered by one of these three firms or affiliates (Table A4). Plans offered by these firms are available to most beneficiaries. Nationwide, 83 percent of Medicare beneficiaries will have access to one or more Humana plans, 73 percent will have access to a BCBS affiliated plan (including BCBS plans offered by Wellpoint), and 68 percent will have access to a United Healthcare plan (Exhibit 5; Table A5). The general availability of these firms’ products has not noticeably changed from 2013 to 2014. However, the similarities in BCBS offerings from 2013 to 2014 obscure a decline in availability of BCBS branded Wellpoint plans (declining from 88 plans to 55 plans between 2013 and 2014), which is mostly offset by the growth in plans offered by other BCBS affiliates (growing from 205 plans to 233 plans between 2013 and 2014).