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Gov't Raises Medicare Premiums Again
By Kevin Freking, Associated Press
September 16, 2005
Senior citizens and the disabled will have to pay a monthly Medicare
premium of $88.50 next year for doctor's visits and other services, a
$10.30 boost in the fee.
The 13.2 percent increase in premiums for Medicare Part B was in line with
what government actuaries had been predicting. Even so, the Bush
administration tried to lessen the pain of the announcement by touting the
prescription drug benefit that begins Jan. 1.
Under the program, millions of low-income Americans will have their
prescription drug costs covered almost entirely, and many other
beneficiaries should see their out-of-pocket costs for prescription drugs
decrease.
"Next year, people on Medicare will be getting much more in benefits than
they had previously received," said Herb Kuhn, director of the Center for
Medicare Management, part of the Health and Human Services Department.
Beneficiaries, through their premiums and other fees, pay about a quarter
of the expenses for Part B, or supplemental insurance. Taxpayers pick up
the other 75 percent.
Kuhn said an increase in the number and intensity of services that doctors
provide is driving the increase in the premiums. The volume of physician
services grew at a rate of 6.3 percent last year and is expected to grow
5.6 percent this year. The volume of hospital outpatient services has
grown at a similar rate.
Kuhn said the Centers for Medicare and Medicaid Services did not have a
good understanding of whether the increasing volume of lab tests, office
visits and the administering of drugs by physicians was entirely
necessary.
"We're still trying to understand how much value we're getting for that,"
Kuhn said.
CMS officials say the rapid growth in services proves the need to move
away from a reimbursement system that pays simply for more services,
regardless of their impact.
The American Medical Association, in press releases issued earlier this
year, defended the increase in services by noting that conditions once
requiring hospitalization are now routinely treated in a physician's
office at a lower cost to the government and patients.
"Americans are living longer than ever, more are entering Medicare, and
chronic disease continues to increase, which naturally leads to an
increased need for physician services," Dr. James Rohack, a member of the
AMA Board of Trustees, said at the time.
For the nearly 42 million Americans on Medicare, the part B benefit is
voluntary. Premiums for the benefit increased 17.4 percent in 2005, and
13.5 percent the year before. Most senior citizens have the premium
deducted from their Social Security check. It's not yet known how much the
coming increase will eat into that check, because officials have not yet
announced what next year's cost-of-living increase will be for Social
Security.
For 2005, about 40 percent of the average cost-of-living increase went to
pay for the increase in Part B premiums.
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