Medicare premiums

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Medicare's outpatient premiums projected to rise 11 percent next year

Wednesday, July 12, 2006

Susan Jaffe

Plain Dealer Reporter

The 42 million older and disabled Americans on Medicare can expect yet another

hike in their monthly premiums for doctor visits and other outpatient services,

Medicare chief Mark McClellan said Tuesday.

 

Next year's monthly premium for Part B outpatient coverage is projected to be

$98.40, an 11 percent increase over this year and a 68 percent increase since

2003.

 

By law, beneficiaries pay Part B premiums based on 25 percent of the total cost.

The actual premium amount for 2007 will be set sometime in the fall.

 

It could rise even higher than Tuesday's estimate if doctors succeed in

persuading Congress to erase a 5.1 percent pay cut that is scheduled to take

effect next year. But seniors won't have to pay more if Congress also adopts

changes the American Medical Association is advocating to revise the formula for

calculating premium increases.

 

" Patients should not pay higher premiums because of a flawed formula, " said Tim

Maglione, spokesman for the Ohio State Medical Association.

 

McClellan said that costs are going up because more people are turning 65 and

they need more expensive medical care.

 

Costs are rising faster than inflation, faster than the economy and " greater

than our ability to pay, " he said.

 

Medicare chief actuary Richard Foster explained in a written statement that the

largest single factor in the premium increase - responsible for about a quarter

of the raise - is the need to restore the Part B reserve fund to an adequate

level.

 

McClellan also reported other increases in Medicare's budget, including smaller

than expected growth in the cost of the new Medicare drug benefit. That amounts

to about a 9 percent increase next year, Foster said.

 

Another big contributor to Medicare's medical bills is the rising cost of

hospital stays, which is estimated to rise 10 percent this year compared to 2

percent in 2002.

 

McClellan said Medicare's continued rising costs underscore the need to ensure

accurate payments to health-care providers and base those payments on better

quality care.

 

To reach this Plain Dealer reporter:

 

sjaffe, 216-999-4822