Rising Medicare premiums mean a big increase for some

Dan Gorenstein Oct 9, 2015
HTML EMBED:
COPY

Rising Medicare premiums mean a big increase for some

Dan Gorenstein Oct 9, 2015
HTML EMBED:
COPY

Remember that super moon last week? A strange confluence of events led to something freaky. It turns out, this is pretty much a super moon moment for Medicare.

“This year is wacky, and that’s the technical term,” joked Tricia Neuman, the director of Medicare policy with the Kaiser Family Foundation.

Neuman explains that two things tend to happen every year. First, Social Security benefits rise. Second, premiums for Medicare Part B — which covers inpatient treatment, the cost of doctors and certain drugs — also rise. But what makes this such an unusual year is that Social Security benefits are flat for 2016.

Robert Damler, an actuary with the consultant group Milliman, said that means a bunch of people by law are protected, or held harmless, from paying more for that Part B coverage. 

“Seventy percent of the people will have zero percent increase, and then 30 percent of the population will have a 52 percent increase,” he said .

Given Medicare Part B enrollment, that’s like 15 million people picking up the tab for 50 million. Because many of the people facing increases are low-income, state Medicaid offices cover the premium hikes, which this year total $2.1 billion. 

“All of a sudden you have this shot out of the blue,” said Matt Salo, head of the National Association of Medicaid Directors. “If you are California, it’s ‘Well, here’s an additional $300 million you have to come up with.”

States just can’t print money,” he added.

Salo called this “code red” time, with states looking to Washington for help. The Department of Health and Human Services, which oversees Medicare, has some discretion in how much states may have to pay. It’s unclear how much HHS Secretary Sylvia Burwell could limit the financial hit.

Salo said there are two nearly identical bills in both the House and Senate that would limit the states’ share of premium increase, but the trick is to find that money from somewhere. 

“You can never bank on Congress riding to the rescues,” Salo said. 

So states are drawing up contingency plans, which could mean cutting pay to doctors and hospitals, cutting back on healthcare for the poor or both.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.