Medicare Part B — which covers doctor visits, outpatient procedures, certain home health services, and durable medical equipment — will see its largest increase in monthly premiums ever next year, rising from $148.50 in 2021 to $170.10 in 2022, according to an announcement from the U.S. Centers for Medicare & Medicaid Services (CMS), the federal agency that oversees Medicare.
At the same time, though, Social Security retirement benefits will see their largest cost-of-living adjustment (COLA) in 30 years, an increase of 5.9%. This increase in Social Security benefits will more than offset the rise in Medicare Part B premiums for most Medicare enrollees, according to CMS.
Multiple reasons behind the Medicare Part B premium increase
The announcement from CMS gave three main reasons behind the large increase in Medicare Part B premiums, which by law must equal 25% of the expected cost of all services provided under Part B to enrollees ages 65 and older. The first — and most straightforward — reason is that health care costs have gone up, a trend driven in part by the ongoing COVID-19 pandemic.
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The second reason is that for 2021, an act of Congress limited the regular increase in Part B premiums in an effort to reduce out-of-pocket expenses during the pandemic — but required CMS to make up for this smaller increase by raising premiums even more in future years, starting in 2022. So part of the latest increase is just making up for collecting less than 25% of expenses in premiums in 2021. Monthly Part B premiums increased by only $3 in 2021.
The third reason is that there is an unusual degree of uncertainty regarding health care costs under Part B starting next year, in large part because of the recent approval by the U.S. Food and Drug Administration (FDA) of Aduhelm (aducanumab), a drug designed to treat Alzheimer’s disease that must be administered by doctors. FDA approval of Aduhelm was extremely controversial due to the small benefit the drug had in clinical trials, and its enormous cost — estimated at $56,000 per year, according to AARP in an article on the Part B premium increase. While Medicare doesn’t currently cover Aduhelm (except on a limited case-by-case basis), CMS explained that it had to consider the possibility of coverage starting sometime in 2022, and plan accordingly for the cost of this drug.
Under current law, Medicare is not allowed to negotiate drug prices with pharmaceutical companies — if the program covers a drug, it must pay the price set by the company. Many Democrats in Congress support lifting this restriction, allowing Medicare to negotiate drug prices in at least some situations in an effort both to reduce costs for seniors who pay Medicare premiums, and to limit overall health care spending by the federal government without reducing prescription drug coverage. The Build Back Better Act, a spending package that is currently the subject of negotiations among Democrats in Congress, is widely expected to contain a provision that will let Medicare negotiate the price of certain prescription drugs.
Want to learn more about saving on your diabetes care? Read “Save Money on Medicines,” “How Your Healthcare Team Can Help You Save on Medications” and “Do’s and Don’t’s for Saving Money With Diabetes.”