On November 12, 2021, the Centers for Medicare & Medicaid Services (CMS) released 2022 Medicare cost-sharing, premium and co-pay amounts. Most significantly, the monthly Part B premium is increasing from $148.50 in 2021 to $170.10 in 2022. The Part B deductible is increasing $30, to $233. All of the 2022 figures are available in a CMS Fact Sheet posted here; and on our site at https://medicareadvocacy.org/medicare-cost-sharing-rates-premiums-deductibles/.
Inside Health Policy (Nov. 12, 2021) notes that senior CMS officials explained that
the 5.9% adjustment in 2022 Social Security benefits will more than cover the increase for most Medicare beneficiaries.”
According to an article published by AARP (updated Nov. 15, 2021), the Social Security cost-of-living adjustment (COLA), the largest in 30 years, “is estimated to average $71.40 per recipient. So even after the increase in the Medicare Part B premium, most Social Security recipients, whose Part B premiums are typically deducted from their Social Security benefits, will still see a net increase in their monthly check.
Further, according to Inside Health Policy (Nov. 12, 2021),
CMS says half of the reason for the largest Medicare Part B premium increase in 15 years is due to building up the Part B Medicare trust fund to take into account the potential cost of the controversial drug Aduhelm — in case CMS approves its coverage — while the other half is due to usual cost growth combined with the need to make up for Congress’ move to decrease premiums in 2021.
With respect to Congress’ previous action to address premiums, in late 2020 a bipartisan spending deal included a provision aimed at keeping 2021 Part B premiums in check, which were projected to increase by as much as $50 for some beneficiaries, largely due to Medicare spending on the COVID pandemic. As noted in the above-referenced AARP article (as well as another AARP article from October 2020), “because of the pandemic, Congress took action to significantly lower the expected Part B premium increase” for 2021, and thus “the Part B premium increased only $3 a month. Congress directed CMS to pay back that reduced premium over time and that payback is starting in 2022.”
The impact of the high cost of prescription drugs on Medicare spending is clear – including anticipated costs for the potential coverage of just one drug under Part B. The day that CMS released the 2022 figures, House Energy & Commerce Chair Frank Pallone issued a statement calling on Congress to address the high cost of prescription drugs:
Today’s announcement from CMS confirms the need for Congress to finally give Medicare the ability to negotiate lower prescription drug costs and establish a rebate for drugs that increase faster than inflation. Skyrocketing drug prices not only make it harder for seniors to afford the lifesaving drugs they need, but also drive up their health care premiums for doctor’s visits and outpatient care. This double financial whammy simply cannot continue, and that’s why Congress must pass the bicameral Medicare prescription drug agreement that was included in the Build Back Better Act last week. We simply cannot wait any longer to provide real relief to seniors.
Congress is poised to pass legislation that could make an impact on the high cost of at least some drugs. But when assessing rising Medicare costs, policymakers continue to ignore the fact that overpayments to Medicare Advantage (MA) plans negatively impact Medicare’s finances. The Medicare Payment Advisory Commission (MedPAC) noted in a March 2021 report to Congress that Medicare payments to MA plans average 104% of spending in traditional Medicare. As discussed in another CMA Alert this week, MA plans receive billions of dollars in overpayments based on a flawed payment system. The Kaiser Family Foundation (KFF) released a report in August 2021 outlining how Medicare spending is higher and growing faster per person for beneficiaries in MA than in traditional Medicare. Despite most plans submitting bids below the local benchmarks, KFF notes that the MA program “has never generated savings relative to traditional Medicare” and while higher payments have led to coverage of some limited extra benefits for plan enrollees, “the higher payments have also led to higher Medicare spending than would have occurred under traditional Medicare and higher Medicare Part B premiums paid by all beneficiaries, including those in traditional Medicare.”
In short, by addressing the high cost of prescription drugs and reining in overpayments to private Medicare Advantage plans, policymakers can keep Medicare costs – including those borne by all beneficiaries – lower. They can also use such savings, as intended by the Build Back Better Act, to reinvest in Medicare by expanding benefits for all beneficiaries, which would be an important step towards leveling the playing field between traditional Medicare and Medicare Advantage. Policymakers just need to find the courage to do so.
November 18, 2022 – D. Lipschutz