WASHINGTON (AP) — Good news for seniors: The
government says Medicare's basic monthly premium will rise less than expected
next year, by $3.50 for most.
It could be good, too, for President Barack Obama
and Democrats struggling for older Americans' votes in a close election.
At $99.90 per month, the 2012 Part B premium for
outpatient care will be about $7 less than projected as recently as May. The
additional money that most seniors will pay works out to about 10 percent of
the average Social Security cost-of-living increase they'll also be due.
Some recently enrolled younger retirees will
actually pay less. They were charged $115.40 a month this year, and they'll see
that go down to $99.90.
The main reason for lower-than-expected premiums
seems to be the connection between Social Security COLAs and Medicare. Some
also cite a moderation in health care costs.
But the Obama administration is hoping seniors will
get a simpler takeaway message: Medicare is under sound management.
Older voters went for Republicans in the 2010
elections, after Obama's health care overhaul law cut Medicare spending to help
finance coverage for the uninsured. Since then, the administration has worked
hard to reverse any perception that Obama is steering Medicare into decline.
Health and Human Services Secretary Kathleen
Sebelius said it's "pretty remarkable" that premiums will stay in check.
She reassured seniors that they have nothing to fear from the health care law.
"Thanks to the Affordable Care Act, Medicare
is providing better benefits at lower cost," said Sebelius.
Republicans weren't buying it.
A spokeswoman for Sen. Orrin Hatch of Utah said the
brunt of the health law's Medicare cuts are still to come. "More
importantly," added Antonia Ferrier, "lower Medicare premiums are
being driven by lower than average Medicare spending due to the slow
economy" — not the health care law. Hatch is the ranking Republican on the
Senate panel overseeing Medicare.
A spokeswoman for House Ways and Means Chairman
Dave Camp, R-Mich., said premiums are more affordable because seniors on tight
budgets are spending less on health care in a troubled economy.
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.
AARP, the seniors lobby, reacted warily to
Thursday's 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.
For the average retiree, the Medicare news means
they will have to fork over only a small part of a long-awaited Social Security
increase next year for premiums.
Premiums have been frozen at the 2008 level of
$96.40 a month for about three-fourths of Medicare beneficiaries. That was due
to the lack of a Social Security COLA during the depths of the economic
downturn. But Social Security recently announced a raise averaging $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.
A leading nonpartisan expert on Medicare said she
doubted election-year politics were behind the lower-than-expected premiums for
2012.
"Changes in premiums are obviously important
to seniors, but the numbers are based on what the law requires and determined
by independent actuaries rather than politics," said Tricia Neuman of the
Kaiser Family Foundation.
Neuman said the explanation probably concerns the
relationship between Medicare premiums and Social Security cost of living
adjustments.
By law, the Part B premium is set to cover 25
percent of the cost of Medicare's outpatient care benefit.
But premiums have been frozen for most
beneficiaries because federal law also says that an individual's Medicare
premium cannot go up more than his Social Security COLA, with some exceptions.
That left a relatively small share of
beneficiaries, including recent enrollees, bearing the brunt of higher Medicare
costs. Indeed, the "standard premium" for 2011 rose to $115.40, and
new enrollees were charged that amount. Upper-income retirees pay even more,
but premiums for the poor are covered by Medicaid.
Back in May, government experts were forecasting 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 the final COLA increase turned
out to be much bigger, a 3.6 percent raise. And 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. Administration officials say
they've also seen a slow-down in the use of health care services throughout the
economy, not just among seniors.
Associated Press writer Stephen Ohlemacher
contributed to this report.
Copyright
2011 The Associated Press.
