Medicare raises Part B premium 17%, the largest monthly increase ever
September 7, 2004
WASHINGTON - The Department of Health and Human Services (HHS) has raised the monthly premium paid by beneficiaries enrolled in Medicare Part B by a whopping 17.5% from $66.60 to $78.20 - the largest such increase in the program’s history.
The price increase reflects general growth in health care costs, higher payments to physicians and Medicare Advantage coordinated care health plans under the Medicare Modernization Act (MMA), and building trust fund reserves, according to HHS.
"The new premiums reflect an enhanced Medicare that is providing seniors and people with disabilities with strengthened access to physician services and new preventive benefits, such as the new 'Welcome to Medicare' physical and screening exams, as well as improved Medicare Advantage plan choices that reduce beneficiaries' health care costs," said CMS Administrator Mark B. McClellan.
Not everyone agreed with that assessment.
"The largest premium hike in Medicare’s history isn’t â€˜immediate help,’ it’s the wrong direction for our seniors," said Kerry-Edwards campaign spokesperson Phil Singer. "The choice in this election is clear: if voters want a president who gives billions to the drug companies, stick with George Bush. Â If voters want a president who will lead America in a new direction and put the needs of seniors first, vote for John Kerry."
Medicare deductibles and premiums are updated annually in accordance with formulas set by law. By law, the federal government picks up about 75% of the cost of Part B benefits and the Part B premium covers the remaining 25%. About three-fourths of the 2005 increase is due to additional costs for Part B, and almost one-fourth for building reserves. The principal contributing factor to the increased cost of Medicare Part B benefits, accounting for about four-fifths of the higher benefit costs, is higher payments in Medicare's traditional plan. Most importantly, the recent Medicare law prevented physician payments from falling significantly. In 2005, payment rates for physicians will increase by 1.5%, preventing a 4.5% reduction that could have threatened access to high-quality physician services, according to HHS.