A rise in Medicare Half B premiums means “America’s Seniors Are Paying the Value for Biden’s Inflation Disaster”
— The headline of a press launch from Sen. Rick Scott (R-Fla.)
[UPDATED at 4:15 p.m. ET]
Republicans blame President Joe Biden for this 12 months’s historic surge in inflation, mirrored in increased costs for nearly every little thing — from automobiles and gasoline to meals and housing. They see final month’s 6.2% annual inflation charge — the best in a long time and principally pushed by a rise in client spending and provide points associated to the covid-19 pandemic — as a ticket to taking again management of Congress in subsequent 12 months’s midterm elections.
A key voting bloc will probably be older People, and the GOP goals for instance how a lot worse life has grown for them beneath the Biden administration.
Sen. Rick Scott (R-Fla.) issued a press launch Nov. 16 suggesting that rising basic inflation was behind the big improve in subsequent 12 months’s commonplace premiums for Medicare Half B, which covers doctor and a few drug prices and different outpatient companies.
“Sen. Rick Scott: America’s Seniors Are Paying the Value for Biden’s Inflation Disaster” was the headline. The senator’s assertion inside that press launch mentioned, “We should be LOWERING well being care and drug costs and strengthening this important program for seniors and future generations, not crippling the system and leaving households to pay the associated fee.” The press launch from Scott says he’s “slamming Biden’s inaction to deal with the inflation disaster he and Washington Democrats have created with reckless spending and socialist insurance policies, which is anticipated to trigger important value will increase on [senior] residents and Medicare recipients.” Scott’s assertion in that very same press launch additionally says the administration’s “reckless spending” will depart U.S. seniors “paying HUNDREDS extra for the care they want.”
We puzzled whether or not these factors had been true. Was the climbing annual inflation charge over the previous a number of months responsible for the rise in Medicare Half B premiums?
We reached out to Scott’s workplace for extra element however obtained no reply. Upon additional investigation, we discovered there may be little, if any, connection between basic inflation prior to now few months and the rise in Medicare Half B premiums.
What’s the Standing of Medicare Premiums?
Medicare Half B premiums have been rising steadily for many years to maintain up with rising well being spending.
The U.S. inflation charge, for years held at bay, has been above 4% since April, hitting 6.2% in October, the best charge in a long time.
On Nov. 12, the Facilities for Medicare & Medicaid Companies introduced that the usual month-to-month premium for Medicare Half B would rise to $170.10 in 2022, from $148.50 this 12 months. The 14.5% improve is the biggest one-year improve in this system’s historical past.
Scott’s press launch refers back to the CMS report.
CMS cited three principal components for the rise: rising well being care prices, a transfer by Congress final 12 months that held the premium improve to only $3 a month due to the pandemic, and the necessity to elevate cash for a potential unprecedented surge in drug prices. Inflation was not on that record.
Actually, half of the premium improve was as a consequence of ensuring this system was prepared in case Medicare subsequent 12 months decides to start out overlaying Aduhelm, a brand new Alzheimer’s drug priced at $56,000 per 12 months, per affected person. It’s been estimated that whole Medicare spending for the drug for one 12 months alone could be practically $29 billion, way over every other drug.
How Huge a Hit Will Seniors Really feel?
The Half B premium is usually subtracted robotically from enrollees’ Social Safety checks. As a result of Social Safety recipients will obtain a 5.9% cost-of-living improve subsequent 12 months — about $91 month-to-month for the typical beneficiary — they’ll nonetheless see a web achieve, although a bit will probably be eaten away by the hike in Medicare premiums.
Some Medicare beneficiaries gained’t face a 14.5% improve, nevertheless, as a result of a “hold-harmless” provision in federal regulation protects them from a lower of their Social Safety funds. However that rule gained’t apply for many enrollees in 2022 as a result of the rise of their month-to-month profit checks will cowl the upper month-to-month premium, mentioned Juliette Cubanski, deputy director of this system on Medicare coverage at KFF.
What Position Does Inflation Play?
A number of Medicare specialists mentioned the spike within the basic inflation charge has little or nothing to do with the Medicare premium improve. Actually, Medicare is essentially immune from inflation, as a result of this system units costs for hospitals and medical doctors.
“That is so false that it’s annoying,” Paul Ginsburg, a professor of well being coverage on the Sol Value College of Public Coverage on the College of Southern California, mentioned of Scott’s declare that basic inflation is behind the premium improve. “The impact of the inflation spike up to now on costs is zero as a result of Medicare controls costs.”
Medicare Half B premiums, he mentioned, replicate modifications within the quantity of well being companies delivered and a dearer combine of medicine. “Premiums are monitoring spending, solely a portion of which displays costs,” Ginsburg mentioned. “I can’t see that the administration actually had any discretion” in setting the premium improve because of the have to construct a reserve to pay for the Alzheimer’s drug and make up for the lowered improve final 12 months, he mentioned.
Stephen Zuckerman, co-director of the City Institute’s well being coverage middle, mentioned an increase in wages attributable to inflation might spur a small enhance in Medicare spending as a result of wages assist decide how a lot this system pays suppliers. However, he mentioned, such a rise must happen for quite a lot of months to have an effect on premiums. Continued hovering inflation might affect 2023 Medicare premiums, not these for 2022. “The declare that premium will increase are as a consequence of inflation within the final couple of months doesn’t make sense,” Zuckerman mentioned.
CMS confronted the problem of attempting to estimate prices for an costly drug not but lined by Medicare. “It’s a very tough projection to make, they usually need to have sufficient contingency reserved,” mentioned Gretchen Jacobson, a vice chairman of the nonpartisan Commonwealth Fund.
Scott mentioned in a press launch concerning the 2022 improve in Medicare Half B premiums that “America’s seniors are paying the worth for Biden’s inflation disaster.”
Although his assertion comprises a sliver of reality, Scott’s assertion ignores important information that create a special impression.
As an example, Medicare coverage specialists mentioned, present basic inflation has little, if something, to do with the rise in premiums. CMS mentioned the rise was wanted to place away cash in case Medicare begins paying for an Alzheimer’s drug that might add tens of billions in prices in a single 12 months and to make up for congressional motion final 12 months that held down premiums.
We charge the declare Principally False.
Phone interview and emails with Juliette Cubanski, deputy director of the Program on Medicare Coverage at KFF, Nov. 24, 2021.
Phone interview with Stephen Zuckerman, co-director of the Well being Coverage Heart on the City Institute, Nov. 19, 2021.
Phone interview with Paul Ginsburg, professor of well being coverage on the Sol Value College of Public Coverage on the College of Southern California, Nov. 18, 2021.
Phone interview with Gretchen Jacobson, vice chairman of the Medicare program on the Commonwealth Fund, Nov. 18, 2021.
Phone interview with Joe Antos, senior fellow with American Enterprise Institute, Nov. 18, 2021.
Sen. Rick Scott’s press launch, Nov. 16, 2021.
Statista, month-to-month inflation charges, accessed Nov. 19, 2021.
Facilities for Medicare & Medicaid Companies press launch about Medicare Half B premiums, accessed Nov. 19, 2021.
Medicareresources.org’s reality sheet concerning the Medicare hold-harmless provision, accessed Nov. 19, 2021.
Medicareresources.org reality sheet about excessive earners not topic to the hold-harmless provision, accessed Nov. 19, 2021.
Social Safety weblog concerning the hold-harmless provision, accessed Nov. 19, 2021.
AARP weblog concerning the biggest-ever improve in Medicare Half B premiums, accessed Nov. 18, 2021.
Medicare Trustees Report, 2021 (see web page 90 for Medicare Half B premiums by 12 months since program inception).
KFF temporary on the affect Aduhelm might have on Medicare prices, accessed Nov. 18, 2021.
CMS’ “2022 Medicare Components A & B Premiums and Deductibles/2022 Medicare Half D Earnings-Associated Month-to-month Adjustment Quantities” report, accessed Nov. 12, 2021.
KHN (Kaiser Well being Information) is a nationwide newsroom that produces in-depth journalism about well being points. Along with Coverage Evaluation and Polling, KHN is among the three main working applications at KFF (Kaiser Household Basis). KFF is an endowed nonprofit group offering data on well being points to the nation.
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