Medicare Sees Smaller Than Expected Premium Increase, While Private Insurance Rates Jump By 9 Percent

HHS has announced that the annual increases in premiums for seniors in Medicare Part B will be somewhat lower than expected and is attributing the change to “historically low healthcare utilization rates, due in part to the health reform law’s investment in prevention; and the 3.6 percent Social Security cost-of-living hike announced earlier this month.” Washington Post’s Sarah Kliff has the details:

Most seniors will see a $3.50 bump in their monthly premiums in 2012, from $96.40 up to $99.90. That’s lower than the $106 premium that the Medicare Trustees Report had projected in May. About a quarter of Medicare beneficiaries, particularly those who are newer enrollees and have higher income (and had been paying higher premiums), will actually see a reduction in their monthly payments.

This is the third piece of good Medicare news that the administration has rolled out this year. Earlier, the White House announced decreases in the average premiums for Medicare’s prescription drug plan as well as for Medicare Advantage, the managed-care alternative to traditional fee-for-service coverage.

Now recall that premiums in employer-sponsored health insurance market increased more than expected — by 9 percent — despite the historically low utilization rates (a result of the recession). As Austin Frakt has explained, the causes of premium changes are somewhat complex, but it makes one wonder about the wisdom of the GOP’s plan to shift seniors from Medicare into private coverage. At the very least this comparison isn’t very flattering for private insurers or their abilities to control health care spending.

And note one more thing: while the increases in private premiums attract waves of media attention — and no shortage of Republicans happy to blame the spikes on the Affordable Care Act — the small increase in Medicare premiums will likely go underreported and uncredited.