CHICAGO (Reuters) - (The
writer is a Reuters columnist. The opinions expressed
are his own.)
Medicare turned 49 years old last week, and the program celebrated
with some good financial news for seniors: Premiums will not rise in
2015 for the third consecutive year.
The question now: How long can the good news persist? Worries about
Medicare’s long-range financial health persist, but for now
persistent low healthcare cost inflation will translate into a
monthly premium of $104.90 next year for Part B (outpatient
services), according to the Medicare trustees. Meanwhile, the
Centers for Medicare & Medicaid Services (CMS) says the average
premium for a basic Part D prescription drug plan will rise by about
$1, to $32 per month.
The Part B premium has been $104.90 since 2012 - except for 2011,
when it actually dropped by about $15, to $99.90. The moderation is
good news for seniors, since premiums are deducted from Social
Security checks. Beneficiaries will keep all of next year’s Social
Security cost-of-living adjustment, which likely will be about 1.7
percent.
Meanwhile, the average Part D premium has been $30 or $31 since
2011. That’s because of a dramatic shift to cheap generic drugs, and
innovation by plan providers competing for customers.
“Seniors can expect to see more of what they’ve been getting over
the last few years, which is increasing effort by Part D insurers to
offer very-low-premium plans,” says Matthew Eyles, executive vice
president of Avalere Health, a consulting firm specializing in
healthcare.
As in recent years, Eyles says, the best deals will be found in
plans that require enrollment in preferred pharmacy networks. Those
plans offer lower premiums and co-pays. “We’ll also see plans
limiting or eliminating deductibles, and encouraging the use of
generics by offering them free or at nominal prices," says Eyles.
But the average figures mask a more complicated story. Part D
enrollees will find significant regional variations in premiums
around the country. CMS data shows average premiums will be as low
as $21.19 in New Mexico, and $25.83 in Florida - but as high as
$39.74 in Idaho and Utah.
Eyles says it is not entirely clear why premiums will vary so
extensively, although the prices tend to track the overall cost of
healthcare, and are related to the overall healthiness of seniors by
state.
“The plan providers have to submit bids for regions that take into
account differences in the enrolled populations, including
prescribing and utilization patterns,” he says. “It could be that
one state tends to have more people using statins, or a diabetes
medication.”
Another complication in Part D is the "doughnut hole," the gap in
coverage for Part D enrollees with high drug costs. Higher-cost
plans are available to provide gap coverage, but the hole’s size is
being shrunk under a provision of the Affordable Care Act (ACA), and
the gap is set to disappear in 2020.
The coverage gap begins after you and your drug plan have spent a
certain amount for covered drugs. Next year the gap starts at $2,960
(up from $2,850 this year) and ends after you’ve spent $4,700 (up
from $4,550 this year).
Seniors who enter the gap also get discounts on brand-name and
generic drugs, and those breaks will be larger next year. Enrollees
will pay 45 percent of the cost of brand-name drugs in 2015 (down
from 47.5 percent this year) and 65 percent of the cost of generic
drugs (down from 72 percent this year).
Can the recent good news on lower healthcare costs continue
indefinitely? Medicare spending reflects our overall health economy
- and the big picture is that the United States does not have
effective controls on spending growth. Healthcare outlays have
quadrupled since the 1950s as a percentage of gross domestic
product, to 17.7 percent in 2011. What's more, our spending is more
than double any other major industrialized nation, according to the
Organization for Economic Cooperation and Development.
Still, our per capita Medicare spending growth averaged 2 percent
from 2009 to 2012 - and it was nearly zero last year.
The Obama administration often points to the ACA, but outside
experts are more skeptical. Research published this month by Health
Affairs, a leading health policy and research and journal, credited
70 percent of the recent spending slowdown to the slack economy.
Absent further changes in the structure of our healthcare system,
the researchers expect higher healthcare inflation to resume as the
economy improves.
“A significant amount of it is due to the economic slowdown,” says
Eyles, "although we know that changes in the way providers deliver
care, and how providers are being paid are also making a difference
in the overall rate of growth.”
For more from Mark Miller, see http://link.reuters.com/qyk97s
(Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance.
Editing by Douglas Royalty)
Medicare turned 49 years old last week, and the program celebrated
with some good financial news for seniors: Premiums will not rise in
2015 for the third consecutive year.
