Some Medicare recipients will see jump in premium costs next year

Oct 21 2009

"The basic Medicare premium will shoot up next year by 15 percent, to $110.50 a month, federal officials said Monday," The New York Times reports. "The increase means that monthly premiums would top $100 for the first time, a stark indication of the rise in medical costs that is driving the debate in Congress about a broad overhaul of the health care system."

The increase would affect about 27 percent of Medicare beneficiaries, who "will have to pay higher premiums or have the additional amounts paid on their behalf. The other 73 percent will be shielded from the increase because, under federal law, their Medicare premiums cannot go up more than the increase in their Social Security benefits, and Social Security officials announced last week that there would be no increase in benefits in 2010 because inflation had been extremely low." Secretary of Health and Human Services Kathleen Sebelius "urged the Senate to approve a bill, already passed by the House, to block the scheduled increase in Medicare premiums." Those facing higher premiums include "new Medicare beneficiaries, high-income people and those whose Medicare premiums are paid by Medicaid" (Pear, 10/19).

Meanwhile, the proposed Medicare cuts in Congressional health care legislation would hit certain insurers harder than others, Bloomberg reports. The cuts would "halve earnings growth over the next decade for UnitedHealth Group Inc., the largest U.S. insurer, and wipe them out completely for Humana Inc. if the health-care bill approved by a Senate panel last week becomes law, a Goldman Sachs Group Inc. analysis said. Cigna Inc. will be least affected among the five largest insurers, given its low numbers in Medicare and commercial policies where profit margins are likely to drop, said Matthew Borsch, a Goldman analyst, in a note to clients today. Overall, the three companies, along with WellPoint Inc. and Aetna Inc. will see earnings growth cut in half, to 5 percent, under the plan passed by the Senate Finance Committee Oct. 14, he said" (Nussbaum, 10/19).