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Medicare may raise US seniors' health-insurance premiums by 12 percent next year because of higher payments to doctors, a government report showed.
The increase would push premiums for doctor visits deducted from Social Security checks up 49 percent over three years to $87.70 a month, the health-insurance program's trustees said in an annual report yesterday. Medicare, which covers more than 41 million elderly and disabled Americans, annually adjusts patient premiums and deductibles for hospital care.
"This is actually worse than I thought," said Joseph Antos, a health-care policy analyst at the American Enterprise Institute, a Washington policy research group, in an interview yesterday.
The program's out-of-pocket costs have been rising faster than pension benefits under the government's Social Security program. While Medicare premiums rose 13.5 percent last year and 17.4 percent in 2005, Social Security checks increased by 2.7 percent in 2004 and 2 percent this year. The retirement program's trustees projected a 2.2 percent raise for next year.
Indigent patients may receive aid from Medicaid, the government health-insurance plan for the poor, in paying their premiums, the Centers for Medicare and Medicaid Services said. In dollar terms, patient premiums may consume the full cost-of- living increase in an individual's Social Security check and can't exceed it, the agency said.
Payments to Doctors
Medicare needs to raise premiums to build a bigger financial cushion against rising treatment costs, trustees said in yesterday's report. Past premium increases resulted from a 2003 law reversing cuts in Medicare payments to doctors. Patients bear 25 percent of physician costs, and Medicare pays the rest.
"Correcting this situation would require a 12 percent increase in the 2006 premium," wrote the trustees, which include Treasury Secretary John Snow and Health and Human Services Secretary Michael Leavitt, in the report. "This increase would need to be larger" if Congress raises payments to physicians for next year.
Final premiums and deductibles for 2006 won't be set by the government for at least five months. Last year, the trustees' premium prediction was low by 10 cents, and their estimated deductible was high by $4.
Patients' maximum out-of-pocket liability for hospitalization would rise 4.8 percent to $956 a year, according to the trustees' estimates. Deductibles for those who stay overnight in hospitals rose 4.1 percent this year and 4.3 percent last year.
Prescription Coverage
"It will be interesting if this actually occurs," Kirsten Sloan, director of Medicare issues for the 36-million member AARP, said in an interview yesterday. "We are always concerned about out-of-pocket spending for Medicare beneficiaries."
Medicare will expand coverage of prescription medicines next year. The premium for the optional coverage will be $37.37 a month on top of the doctor-visit premiums, the trustees estimated.
"The average increase that seniors will perceive will be 60 percent, and that's a phenomenal number," said the American Enterprise Institute's Antos. "What this almost certainly means is that in the fall, when this is revealed for the second time, there will be a political uproar."
The trustees estimated that premiums for physicians' care would remain at $87.70 for 2007 and 2008. Uwe Reinhardt, a Princeton University economist, said that isn't likely.
"I'd be very surprised if it stayed that low," he said in an interview yesterday.
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