Part B Premiums Level As Taxpayer Support Increases

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Medicare Part B premiums and deductibles will remain unchanged from the past two years, a development that administration officials attribute to lower Medicare spending growth.

While this is good news for Americans over age 65, it is important to keep in mind that Medicare is increasingly dependent on general tax revenues. Premiums only cover 25 percent of the costs for Part B, which deals with physician and outpatient hospital services.

Medicare is expected to remain one of the major cost-drivers of the federal budget even if many uncertain cost savings actually happen.

For the 49 million Americans enrolled in Medicare Part B, monthly premiums will remain at $104.90 next year, and deductibles will stay at $147. Administration officials note that since passage of the Affordable Care Act four years ago, annual per capita Medicare spending growth has averaged only 0.8 percent.

Per capita spending, however, is not the whole picture. In addition to that growth, there are simply more Medicare beneficiaries to be served as the population ages.

Reform efforts have encouraged greater cost-sharing in Medicare to lessen the burden on general government revenues. This should ideally be done as part of a comprehensive effort to put the entire federal budget on a more sustainable track, as suggested by both the National Commission on Fiscal Responsibility and Reform (Simpson-Bowles) and the Debt Reduction Task Force (Domenici-Rivlin).

One of the Domenici-Rivlin recommendations was that Part B premiums be gradually raised to cover 35 percent of the program’s costs. 

External links:
Medicare Part B Premiums and Deductibles to Remain the Same (HHS)
General Revenues Increasingly Finance Medicare Spending (Concord)
Federal Budget Growth Is Concentrated in Entitlements and Interest Costs (Concord)
Domenici-Rivlin Debt Reduction Task Force
Simpson-Bowles Fiscal Commission

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