Medicare Part B Premiums – Fairness?
A separate article discusses increases in Medicare Part B Premiums due to the income levels of insureds Medicare Part B Premiums–High Income Individuals.
An interesting wrinkle in the Social Security Act protects beneficiaries from having their net monthly benefits reduced by increases in Medicare Part B premiums. This provision keeps the Medicare Part B premium assessed to Social Security recipients from being raised in years, like 2009, when there is no Cost of Living Adjustment to Social Security benefits. A second wrinkle specifies that estimated costs for 25% of Medicare Part B will be assessed against insureds, to limit the government’s contribution to 75% of costs.
About 73% of insureds are receiving Social Security benefits; these are the folks who can’t be assessed any increase in costs under the first “wrinkle” above.
Total medical costs for 2010 are expected to rise about 4% from 2009.
Under the second wrinkle above, the total increase in cost for 2010 is charged against the 27%of insureds who do not receive Social Security benefits; to cover the required costs, the premium increase for this 27% of insureds was 15%. The premiums for 25% of this 27% are paid by state welfare agencies, transferring most of the cost increase from the federal government to the state governments.
The final 2% of insureds have to pay four times the actual increase in Medicare costs to protect the other recipients from a reduction in their net benefit. This discrepancy will get worse annually as long as there is no COLA adjustment to Social Security benefits, which may be for years. How will the adjustment be made when COLA does return—will premiums be equalized, or will the medical cost increase be applied ratably to both the low and higher premiums?
Medicare insureds who do not collect Social Security benefits in 2010 are being treated unfairly, and will continue to be treated unfairly for life.
