Medicare Premiums To Rise Again

Seniors' Medicare premiums for doctors' visits are set to go up $5 per month next year, the government announced Tuesday.

Most beneficiaries will now pay $93.50 per month — a 5.6 percent rise over this year's premiums. But Medicare officials warned that the costs could go higher if doctors' groups are successful in their bid to prevent Medicare fee cuts.

Next year there will also be higher premiums for wealthier beneficiaries. According to The Associated Press, individuals with incomes of more than $80,000 and couples with incomes of more than $160,000 will see their premiums rise to at least $106 a month. The news agency says premiums for the wealthiest beneficiaries will go up to $162.

Outgoing Medicare chief Mark McClellan, M.D., said 2007's premiums are the smallest Part B increase since 2001. Seniors Part B costs went up 12% last year and 17% the year before.

McClellan blamed the $5 rise on a larger volume and cost of outpatient services at U.S. hospitals. Medicare proposed a regulation this summer that would pare back hospitals' reimbursement unless they agree to post limited quality information on the Internet.

Sen. Orrin Hatch, R-Utah, a member of the Finance Committee, pegged this year's increase as evidence that Medicare's policies "are working and working well."

But Democrats warned that Medicare beneficiaries face mounting costs, and they blamed Republicans for not doing more to reign in health care spending. "That's what's pushing Part B up," said Sen. Max Baucus, D-Mont., the senior Democrat on the Finance Committee.

As Medicare made its announcement Tuesday, doctors' groups, including the American Medical Association, were on Capitol Hill lobbying lawmakers to stave off a scheduled 5% cut in Medicare physicians' fees.

Cuts have been scheduled nearly every year since 1997, and each year doctors have managed to escape cuts, often by last-minute action from Congress.

McClellan warned that the $93.50 in Part B premiums assumes that doctors will take the cut. "If that weren't to happen, the cost increases would be bigger," McClellan told reporters by telephone. If Congress votes to freeze doctors' fees instead of cutting them, seniors' costs would go up another $1.50 per month, he said.

Sen. Ron Wyden, D-Ore., another Finance Committee member, is among Democrats warning that seniors would face even higher costs as some of them enter the prescription drug benefit's "donut hole." Medicare stops paying drug costs after $2,250 and does not pay again until costs reach $5,100 or beneficiaries spend $3,600 of their own money.
"Taken along with Part B, it's a double whammy," he says.

SOURCES: Mark McClellan, M.D., administrator, Centers for Medicare and Medicaid Services. Sen. Orrin Hatch, R-Utah. Sen. Max Baucus, D-Mont. Sen. Ron Wyden, D-Ore., The Associated Press.

By Todd Zwillich
Reviewed by Louise Chang