2005 Medicare Rates Announced

2005 MEDICARE PART B PREMIUM
AND OTHER COST SHARING RATES ANNOUNCED:
WILL BENEFICIARIES BE ABLE TO AFFORD MEDICARE?

As Congress and most Americans focused on one final summer weekend last Friday, the Medicare administration announced the largest-ever increase in the Medicare Part B premium. This increase, which will begin in January, means beneficiaries will pay $78.20 per month in 2005, up from $66.60 in 2004.

Some officials have suggested that this increase is due to the forthcoming Medicare prescription drug benefit, or that it will help the solvency of the Medicare Part A Trust Fund, or that it can be attributed to the new check-up benefit (to be available only for brand new Medicare enrollees beginning in 2005). Not one of these suggestions is true. What’s more, the monthly Part B premium will increase again in 2006, and even more in 2007, when, for the first time, people with higher incomes will be charged based on their incomes.

Lest there be any confusion, consider the following:

1. Anyone who suggests that the increase is due to the need to shore up the Part A Trust Fund and/or to pay for the new prescription drug benefit does not know or understand Medicare, or is trying to fool people - or both. The Part B premium funds Part B (largely physician and outpatient services). It does NOT fund Part A (hospital and other inpatient and home care services). It does not provide income to the Medicare Part A Trust Fund; that comes from shared contributions made by employers and employees.

2. The new prescription drug plan doesn't begin until 2006 and will have its own separate monthly premium, now estimated to be about $35 per month.

3. If people think this Part B premium is high, wait until 2007 (long after the election), when the Part B premium will increase as it does each year. In addition, for the first time ever, people with higher incomes will pay even more. The Part B premium will be indexed so that individuals who make more than $80,000 annually and couples making more then $160,000 will pay even higher premiums.

So why is the Part B premium increasing so much? Certainly some of the answer is the general increasing cost of health care. Some is from delayed increases to physician fees. But the increase is also due to windfall payments called “bonus payments” in the new Medicare law, which were promised by the administration and Congress to private plans that join the Medicare program.

In addition to the Part B premium increase Medicare beneficiaries’ other cost-sharing responsibilities will also increase dramatically in 2005:

Part A Premium - for people with 30-39 Social Security quarters: $206/month
for people with less than 30 quarters: $375/month

Part A Hospital Deductible: $912 (From $876 in 2004)

Beneficiary Hospital Co-payments: $228 for days 61-90 (From $219 in 2004)
$456 for days 91–150 (From $438 in 2004)

Skilled Nursing Facility Co-payment: $114 for days 21-100 (From $109.50 in 2004)

Part B Deductible: $110 per year (From $100 in 2004)

Think of it - next year already strapped older people and people with disabilities will be paying more every month and for all their health care to help pay bonuses to entice private plans into Medicare. This will happen even though private plans have left Medicare beneficiaries high and dry throughout the country and have not yet saved the program a nickel.

Medicare beneficiaries are not wealthy; in 2001 their median family income was only $20,600. They can’t afford these high premiums and co-payments. They certainly can’t afford to help pay private plans. Too many may soon begin to drop out of Medicare Part B entirely and forego necessary health care. The dramatic increase in beneficiary co-payment responsibilities coinciding with increased payments to private plans leads one to wonder: Who is Medicare for anyway?