By law, the standard Part B premium is set to represent 25 percent of expected costs in the program for the following year. So beneficiaries not protected by the COLA freeze bore the brunt of higher costs over the past two years. But in 2012, everyone will share those costs. That, together with lower-than-expected cost increases in the program — in part because of changes brought about by the new health care law, the Affordable Care Act — accounts for the relatively small increase in the standard premium, Medicare officials say.
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.
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).
How to Reform Medicare: First Stage to Fix the Current Program
The significant differences in official long-term projections, including projections of the program’s unfunded liability, reflect the differences in agency assumptions, particularly about the likelihood of the continuation of current law. The Medicare Trustees and the Congressional Budget Office (CBO) are required to make projections under current law, which assumes, for example, that the large Medicare Part A payment reductions are sustainable and that the projected 29.4 percent reduction in Medicare physician payment will be implemented in 2012. The Office of the Actuary in the Centers for Medicare and Medicaid Services (CMS) makes projections based on the premise that key elements of current law are simply “unworkable.” See John D. Shatto and M. Kent Clemens, “Projected Medicare Expenditures Under an Illustrative Scenario with Alternative Payment Updates to Medicare Providers,” Centers for Medicare and Medicaid Services, Office of the Actuary, May 13, 2011, at https://www.cms.gov/ReportsTrustFunds/downloads/2010TRAlternativeScenario.pdf (September 19, 2011).