By Rebecca Adams, CQ HealthBeat Associate Editor
October 27, 2011 -- Medicare beneficiaries will pay standard outpatient care premiums next year of $99.90 per month, $3.50 more than most paid in 2011, Department of Health and Human Services officials said. The deductible for outpatient care will decrease by $22.
The moderate increase is the first rise in outpatient premiums for most Medicare patients since 2008. By law, outpatient premiums are tied to Social Security cost-of-living (COLA) increases, which seniors have not gotten in recent years. Medicare Part B premiums for about three-fourths of beneficiaries do not rise in years when beneficiaries' Social Security checks do not go up.
However, about one-fourth of Medicare patients are in groups that have not been shielded from outpatient premium increases in recent years. Those beneficiaries include new enrollees, higher-income Medicare beneficiaries and patients who also are eligible for Medicaid, the federal-state program for the poor and people with disabilities. The premiums for those patients will fall by $15.50 in 2012, from $115.40 to $99.90.
The premiums for Part B outpatient care are $6.70 lower per month than had predicted earlier this year. The Medicare Trustees had projected that Part B outpatient premiums would be $106.60 in 2012.
One reason why premiums will be lower than expected is because spending growth has been lower than anticipated, Medicare administrator Donald Berwick said on a call with reporters.
Another important factor is related to the fact that now the bulk of Medicare beneficiaries will be getting a premium increase next year, thanks to the Social Security COLAs. So that means any increases in health costs will be spread out over many more beneficiaries and not borne by the one-forth of beneficiaries who aren't shielded from increases in years when the Social Security COLAs don't materialize.
"More people are sharing in the smaller-than-expected increases in costs," said Berwick.
Even though most Medicare patients will face a slight increase in their outpatient premiums, the boost in their Social Security checks should allow those in typical situations to come out financially ahead. Beneficiaries will get a 3.6 percent cost-of-living adjustment for Social Security, which translates into about $43 a month for the average senior.
Patients who are sick enough to get inpatient hospital treatment will have to pay $24 more—or $1,156 in 2012, compared to this year's $1,132—for a deductible that covers the first 60 days of their care. The costs for patients will rise in 2012 by $6 for the next period of hospital treatment through 90 days, and by $12 for hospital care beyond 90 days. Medicare officials said those hikes were far below typical increases.
Advocates for seniors were happy with the news.
"Most beneficiaries will see a modest increase in monthly premium costs, far lower than what was initially projected, and some will see a significant decrease," said Medicare Rights Center President Joe Baker, who attributed some of the change the 2010 health care law (PL 111-148, PL 111-152).
AARP Legislative Policy Director David Certner said that the group was happy that most Medicare beneficiaries will have a lower increase than they originally thought.
"Millions of America's seniors are struggling with higher expenses—particularly higher health care costs, lower incomes, depleted savings and reduced home equity or homes lost to foreclosure, and this small increase is welcome news," said Certner.
Earlier this year, HHS officials said that average Medicare Advantage premiums for seniors in managed care plans would fall by four percent and premiums paid for Medicare's prescription drug plans would remain flat.
The estimates assume that Congress will prevent a nearly 30 percent cut in physician payments from occurring in January. From 2003 to 2011, Congress has voted to override reductions in doctors' Medicare rates.
