MEDICAIRE PART B PREMIUMS

The official formula for determining Part B premiums was established by Congress decades ago. The standard premium amount for each year is always calculated on the level of Medicare health care costs in the previous year — and reflects the fact that the government pays 75 percent of Part B costs and beneficiaries pay 25 percent.

This process is in no way affected by the new health care law, officially known as the Affordable Care Act. The law does, however, contain provisions to reduce the rate of Medicare costs over time (without reducing guaranteed benefits), and if this plays out as planned, it could hold Part B premiums down or possibly even lower them.

The standard Part B premium for 2012 will not be known until later this year. And there is no way of accurately predicting what it will be in 2014 or any future years.

Part B premiums affected by Social Security COLA

However, another much older law did affect Part B premiums in 2010 and 2011 in an unprecedented way. That law prohibits a premium increase in any year when there is no Social Security cost-of-living adjustment (COLA). So in the past two years when — for the first time in more than 30 years — there was no COLA, most people's premiums were frozen at the 2009 level, $96.40 a month.

But this "hold harmless" provision did not apply to about 25 percent of Medicare beneficiaries. They include people who did not have their premiums deducted from Social Security benefits (but paid Medicare directly), those who were new to Medicare, and those who paid higher premiums because their incomes were above a certain level.

These people bore the brunt of rising Medicare costs. Therefore, their standard Part B premiums were $110.50 a month in 2010 and $115.40 in 2011 (or more if they paid the higher-income surcharge) — whereas everybody else still paid $96.40.

Right now, nobody knows whether there will be a Social Security COLA next year and how this will affect 2012 premiums.

Higher income-related premiums

While the email makes bogus predictions about future increases in the standard Part B premium, the new law does make two changes that affect Medicare premiums.

Ever since 2007, under a law passed in 2003, people with Medicare have paid a surcharge on their Part B premiums if their modified adjusted gross income, as shown on their latest tax return, is higher than $85,000 for a single person or $170,000 for a married couple filing joint returns.

Currently, fewer than 1 in 20 beneficiaries pays higher-income premiums. But that percentage is likely to grow in coming years — and this development is the result of the new health care law. The law froze the income brackets at 2010 levels through 2019, which means that more older Americans will become liable for the surcharge — up from 5 percent now to 14 percent by 2019, according to an estimate from the Kaiser Family Foundation.

The new law also required the same wealthier beneficiaries to pay a premium surcharge for Medicare Part D prescription drug coverage for the first time, starting in January 2011.

For details of these surcharges, see the Social Security publication "Rules for Higher-Income Beneficiaries."

Patricia Barry is a senior editor with the AARP Bulletin.

Medicare Cost Control

The idea of Medicare as a money-saving program may seem hard to grasp. After all, hasn’t Medicare spending risen dramatically over time? Yes, it has: adjusting for overall inflation, Medicare spending per beneficiary rose more than 400 percent from 1969 to 2009.

But inflation-adjusted premiums on private health insurance rose more than 700 percent over the same period. So while it’s true that Medicare has done an inadequate job of controlling costs, the private sector has done much worse. And if we deny Medicare to 65- and 66-year-olds, we’ll be forcing them to get private insurance — if they can — that will cost much more than it would have cost to provide the same coverage through Medicare.

Medicare Cost Control

And here’s what you need to know: Medicare actually saves money — a lot of money — compared with relying on private insurance companies. And this in turn means that pushing people out of Medicare, in addition to depriving many Americans of needed care, would almost surely end up increasing total health care costs.

The Republican idea for killing Medicare is not new

Medicare is a good system. Cost control is what is lacking. When we speak of cost control, right wingers seem to only see cutting at the consumption side. That is, take it out of the sick old people hides. They never think about cost cutting at the supplier side because the supplier is the private insurance companies; their sacred free market cow.

The Republican idea for killing Medicare is not new. They've never been on the people's side, but rather on the corporations’ side. The voucher system proposed by Paul Ryan is a death sentence to Medicare. The vouchers will not keep pace with the rates of inflation or income increases/decreases. As a result, seniors will be left holding the bag, so to speak.

For once in your lives show some compassion towards your fellow seniors, and stop scaring them into submission. Medicare cost control should not be one sided. Sick seniors lack the power to shop, negotiate, and fight insurance companies and medical providers in a market-based environment. That is why Medicare, as well as Social Security, is a social contract between the government and its citizens. But Republicans keep referring to these two programs as "entitlements" when they are fully funded by tax payers through out their working lives.

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Vouxhercare

Medicare is a government-run insurance system that directly pays health-care providers. Vouchercare would cut checks to insurance companies instead. Specifically, the program would pay a fixed amount toward private health insurance — higher for the poor, lower for the rich, but not varying at all with the actual level of premiums. If you couldn’t afford a policy adequate for your needs, even with the voucher, that would be your problem.

And most seniors wouldn’t be able to afford adequate coverage. A Congressional Budget Office analysis found that to get coverage equivalent to what they have now, older Americans would have to pay vastly more out of pocket under the Paul Ryan plan than they would if Medicare as we know it was preserved. Based on the budget office estimates, the typical senior would end up paying around $6,000 more out of pocket in the plan’s first year of operation.