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Medicare Premiums and Deductibles Rising

New Drug Benefits Kick In Next Year But So Do Higher Premiums, Deductibles

September 17, 2005
Medicare beneficiaries will be paying more next year for physician coverage, at the same time that new premiums for the program's voluntary drug benefit kick in. The premiums for physician coverage will rise $88.50, a 13 percent jump.

"The sharp increase in Medicare premiums is ironic and painful in a year that the Administration is offering billions of dollars in subsidies to the drug and insurance industries as part of its ideological campaign to privatize Medicare," said Robert M. Hayes, president of the Medicare Rights Center.

The premium is increasing mostly because of rapid growth in the use of physician services, lab tests and other outpatient services covered under Medicare's Part B, according to the Centers for Medicare and Medicaid Services. This year, beneficiaries are paying $78.20 a month in Medicare Part B premiums.

Besides the increase in the Part B premium, the deductible is rising from $110 this year to $124 next year. The deductible is the amount beneficiaries must pay each year before outpatient coverage starts. Also increasing is the deductible for a hospital stay of 60 days or less, going up $40 to $952.

The Part B premium increase will be significant for some beneficiaries who depend heavily on Social Security income. For most, it is taken automatically out of their monthly checks.

"This year’s 13.2 percent jump in the Medicare premiums will hurt millions of older and disabled Americans living on fixed incomes," Hayes said. "More men and women will face harsh choices in meeting basic human needs – health, food and housing. The Medicare premium jump will be triple the cost of living increase people with Social Security can expect in 2006."

The Administration defended the increase.

"People on Medicare are going to be getting much more in benefits than they would have otherwise received," said Herb Kuhn, director of the Center for Medicare Management..

The Part B premium could rise again, if Congress, as expected, increases Medicare payments to physicians. Under current law Medicare reimbursement would drop next year, and physicians have been lobbying for an increase.

When the Medicare drug benefit starts next year, beneficiaries who sign up for it often will pay another monthly premium; the national average is $32.20. Costs of drug coverage will vary, however, and some plans may be cheaper. Many low-income people can sign up for extra government assistance to pay for the new drug coverage.

However, many of those eligible for extra assistance do not get it.

"Only one in ten older and disabled Americans eligible for that assistance actually get it. That is because of shameful bureaucratic hurdles that bar the neediest Americans from the assistance they will need, in the year ahead, more than ever," according to Hayes.

"The Administration should not hide the hardship these increases will cause our parents and grandparents. The Administration should restore a sense of fiscal responsibility to Medicare. And the Administration should tear down the bureaucratic barriers people face to securing assistance to pay these record high premiums."

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