Here’s why:

• Medicare Part B Premium in 2007 appears artificially low.  When the premium for 2007 was announced, Medicare’s Secretary based it on current law, under which payments to doctors are supposed to be cut 5%.  Congress, however, is considering changes that would increase reimbursements to doctors, even though the premium for 2007 has already become effective.  If this happens, the government will have to make up the difference by increasing premiums much more in following years.  The base Part B premiums for beneficiaries with incomes less than $80,000 could increase by as much as 17% in 2008.  If so, the increase will be even more stratospheric for seniors affected by Means Testing who pay a much higher percentage of the premium than lower income seniors.
• Medicare Part D insurers will lose “risk protections.” During the first two years of Part D, insurers received special protections against losses that will no longer be available in 2008.  Analysts expect this to drive up premiums and other costs as insurers will likely pass losses on in higher costs to beneficiaries.  In addition, insurers are likely to reevaluate their participation in Part D next year because only a handful of companies insure the lion’s share of Part D beneficiaries.
• Medicare’s finances are in trouble.  Congress is expected to consider numerous proposals to put Medicare back on sounder financial footing this year.  Recent proposals have included higher premiums, deductibles and co-insurance, and the expansion of Means Testing to persons with incomes lower than $80,000.

TSCL is studying measures that would help keep the lid on rising Medicare costs but opposes measures that simply shift a greater burden of the cost to beneficiaries.  TSCL also supports the repeal of Means Testing.

Sources:  “Medicare premiums and Deductibles for 2007,” CMS, September 12, 2006.  “Deal on Medicare Physicians Payments Likely This Year,” Kaiser Daily Health Policy Reports, September 29, 2006.

January 2007