Is New Medicare MD Insurance Price below $100 a Month Good News?

October 31, 2011 in Health Insurance, Medicare, News

Well — like $3.49-a-gallon gas which is really $3.50 when you look closely at the sign while you’re pumping the gas –  Medicare MD insurance is only 10 cents below $100.

But that’s good news, right? The answer: Yes, No, and Maybe.

Here’s the background.  The Health and Human Services (HHS) department announced October 27 that the 2012 Medicare Part B premium will be $99.90.  As explained in an earier Healthcare Savvy post, Medicare Part B primarily covers doctors charges. As explained in another earlier Healthcare Savvy post, the Part B premium has been $96.40 for most Medicare subscribers since January 1, 2009. But it was $110 and change a month for those subscribers that signed up for Medicare Part B in 2010 and $115 and a few cents for those who signed up in 2011. 

Mostly that’s people who turned 65 in those years but it applied to all new 2010/2011 subscribers, including younger disabled people and older seniors that continued to work past 65 and received employer sponsored insurance until they signed up for B at whatever age. (Despite conventional wisdom, Medicare insurance is means tested and about 5% of subscribers nationwide — those with incomes over $85,000 — pay more than these amounts.  This blog post ignores the situation for these “poor” senior citizens.)

Now for the Yes, No and Maybe

First, Yes, this is good news for many, primarily seniors aged 65-67. For the about 2,000,000 of us who signed up for Part B in the last two years, we’re seeing a $10 or $15 dollar a month “savings.” Added to a 3%-plus increase in monthly Social Security payments and — on average — lower Part D Standalone Drug Plan premiums, this is all good news.  In addition, in Massachusetts at least, Medicare Part C Medicare Advantage and private Medigap plans (90% of seniors subscribe to one or the other of these or some other form of supplemental Medicare insurance) went up only slightly on average.

So – net-net — the HHS announcement is most likely good news for those between 65-67 years of age. Don’t spend it all in one place, as they say.

Second, No. the HHS announcement is not such good news for those that signed up for Medicare Part B in 2009 or previously. They get their first Part B premium increase in three years (as well as — of course — their first Social Security increase). This group includes the vast majority of Medicare subscribers and — net-net and  highly oversimplified — they probably at least break even on B and face only a slight overall Medicare increase.

Third, Long term this may be another example of kicking the can down the road to our grandkids. The numbers behind the 3% increase don’t add up.

Healthcare costs in general are up a much higher percentage over the last three years. As are healthcare insurance premiums. 

Also the MedPAC group — a sort of Congressional-Budget-Office-like non-partisan accounting and advisory group dedicated to the Centers of Medicare/Medicaid Services (CMS) — estimated in May 2011, just five months ago, that Part B premiums would be around $106. CMS claims the reason that the increase in October is smaller than MedPAC estimated in May is because the pool of payees expanded more than expected due to the Social Security increase.  OK, maybe, but… MedPAC was off by a factor of three??? It’s particularly unclear whether the CMS and/or MedPAC is factoring in the inevitable “doc fix.” 

Finally HHS claims the premium is what it is because of the new free “wellness visit” and free screening tests added to Medicare in 2011 by the Patient Protection and Affordable Care Act. As good as these benefits are, they certainly could not have had an effect on long-term health care outcomes after only a few months.

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