Medicare Part B Premiums In 2009 Will Not Increase For Most Beneficiaries

Main Category: Medicare / Medicaid / SCHIP
Article Date: 23 Sep 2008 - 12:00 PDT

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CMS on Friday announced that monthly outpatient care premiums for about 95% of Medicare recipients will remain at $96.40 in 2009, the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 9/20). The premium covers a portion of the costs of physician services, home health care and certain durable medical equipment. The outpatient deductible for beneficiaries also will remain unchanged at $135. Premiums for the outpatient benefit, known as Part B, will increase only for single beneficiaries with annual incomes greater than $85,000 and couples with incomes greater than $170,000 (Young, The Hill, 9/19).

The announcement marks the first time since 2000 that rates will not increase, and only the fifth time since 1976 (Freking, AP/Seattle Post-Intelligencer, 9/19). Health care costs increased compared to inflation this year, but other atypical factors led to the static premiums, according to Medicare officials. The AP/Post-Intelligencer reports that $9.3 billion in hospice payments that mistakenly were taken from the outpatient benefit fund from 2005 to 2007 were returned to Part B, helping to offset premium increases. In addition, Part B premiums have increased in recent years in part because Medicare was building reserves to offset changes made to physician payments, but those reserves now are complete. Richard Foster, head actuary for Medicare, said, "It was painful to catch up, but now we have one year in which we can get rid of the catch-up amount and use that to offset the premium increases that otherwise would have happened" (San Francisco Chronicle, 9/20). However, Foster said, "In the future, we're going to have to go back to raising the premiums to match the increase in expenditures" (AP/Seattle Post-Intelligencer, 9/19).

Deductibles for inpatient services will rise by $44 to $1,068 in 2009. The benefit, known as Part A, covers the first 60 days of hospital care, with patients facing daily copayments beyond that point (Carey, CQ HealthBeat, 9/19).

Increase Expected in 2010
The Chronicle reports that the unusual occurrences that led to unchanged premiums in 2009 will not extend to 2010 (San Francisco Chronicle, 9/20). According to CQ HealthBeat, the financial buffer that allowed premiums to remain unchanged in 2009 likely will not exist in 2010 because lawmakers likely will offset a planned 20% reduction in Medicare physician reimbursement rates. "It is reasonably likely (lawmakers) won't let a 20% reduction in Medicare fees stand," Foster said (CQ HealthBeat, 9/19). He added, "Next year is going to be a little ugly, I'm afraid" (San Francisco Chronicle, 9/20).

Comments
AARP in an e-mail statement said, "Lawmakers should not use (the) announcement as an excuse to rest. The average 73-year-old in Medicare has seen his or her premium double since joining the program," adding, "Americans old and young continue to struggle with skyrocketing health care costs" (Chicago Tribune, 9/20). AARP added, "And the weakening economy is only making it harder for people ... to pay health care bills" (CongressDaily, 9/19). Robert Hayes, president of the Medicare Rights Center, said, "News that health care premiums are not going up is rare these days. The stability in the Part B premium is good news for people with Medicare struggling to cope with rising prescription drug costs and medical bills." He said, "Congress and the next president should look closely at the Medicare program as a model for health reform in 2009" (San Francisco Chronicle, 9/20).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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