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Medicare premiums to rise less than expected: How much?

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(CBS/AP) Seniors expecting big Medicare hikes can breathe a sigh of relief: Premiums will rise by only $3.50 at most.

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"Thanks to the Affordable Care Act, Medicare is providing better benefits at lower cost," said Health and Human Services Secretary Kathleen Sebelius. She reassured seniors that they have nothing to fear from the health care law, and said called keeping premiums in check "pretty remarkable."

The 2012 Part B premium for outpatient care will be $99.90 per month - about $7 less than projected as recently as May. The extra cash that most seniors will pay works out to about 10 percent of the average Social Security cost-of-living increase that's coming their way.

Some folks will even pay less. Younger retirees who recently enrolled were charged $115.40 a month this year, but they too will drop down to $99.90.

What's behind the lower-than expected premium prices? Some cite the relationship between Social Security cost of living adjustments (COLA) and Medicare, while others cite a moderation of health care costs.

Medicare's Part B annual deductible, the amount beneficiaries pay before their coverage begins, will also drop next year to $140 - a decrease of $22. The hospital deductible, however, will increase by $24, to $1,156, for those admitted as inpatients. One doesn't cancel out the other since a minority of beneficiaries are hospitalized in any given year.

The bottom line from the Obama administration? Medicare is under sound management.

Republicans weren't buying it.

"Lower Medicare premiums are being driven by lower than average Medicare spending due to the slow economy" - not the health care law, said added Antonia Ferrier, spokeswoman Sen. Orrin Hatch of Utah - the ranking Republican on the panel overseeing Medicare.

What do retirees have to say about the news?

Senior lobby AARP reacted warily to the announcement. Policy director David Certner said there's still a chance Congress could cut Medicare and Social Security as part of a budget deal. "These changes would far outweigh today's good news," he said.

Premiums have been frozen at the 2008 level of $96.40 a month for about three-fourths of Medicare beneficiaries because of a lack of a Social Security COLA during the depths of the economic downturn. But Social Security recently announced a raise of an average of $39 a month for 2012.

The Part B premium is one number that most of the 48 million people on Medicare can connect with. Average premiums for prescription coverage and for popular Medicare Advantage plans will stay flat or dip slightly for 2012, but fewer beneficiaries opt for those benefits.

Back in May, government experts forecasted a Medicare a premium of $106.60 for 2012. At that time, they were also projecting a Social Security COLA of just 0.7 percent - but it turned out to be a much bigger 3.6 percent raise. That meant rising Medicare costs could be spread among many more people, resulting in smaller individual increases.

"More people are sharing the smaller-than-expected increase, so that is spread over a larger number of people," said Medicare chief Don Berwick.

What do you think of the new Medicare premiums?

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