Ask the Medicare Specialist

QUESTION:

From Mary Lou: I read where the Medicare Part B premium is going up almost 15% in 2022. Why did it jump so much and what are the implications and consequences for those of us on Medicare moving forward?

ANSWER:

Not only is the premium increasing from $148.50 to $170.10 in 2022, the Part B deductible that those on Supplements letters Plan N and G pay, is also going up 15%, from $203 to $233. Both are the biggest year to year increases in the history of Medicare. I’m extremely upset Congress didn’t take action to keep this from happening, especially with all the COVID money that has been thrown around the last 18 months. There’s also a proposed $1.75 trillion spending bill being discussed and none of that money is being earmarked to reduce the costs for Medicare beneficiaries. I don’t understand why a chunk couldn’t have gone or won’t be used to stabilize the Medicare Trust Funds so Part B premiums and deductibles don’t need to be increased in the coming years. It seems like senior citizens, many who worked 40 and 50 years and live on very fixed incomes, were shortchanged when it came to COVID stimulus. In no way am I saying there weren’t businesses and people who desperately needed COVID funds, but the government handed out money to rich business owners and corporations who didn’t need it as well as hundreds of billions in extra unemployment dollars to people who chose not to go back to work because it was more lucrative to stay home. Meanwhile, all seniors got were two small checks and this gut punch.

I know there’s a 5.9% Cost of Living Increase (COLA) in Social Security next year. But for someone who’s only receiving $1,500, more than 25% of their additional money will be eaten up by the $23/month increase in Part B premiums, while the other 75% and more will disappear at the gas pump and grocery store with inflation being what it is right now. It’s insulting for the Centers for Medicare and Medicaid to state, “This significant COLA increase will more than cover the increase in the Medicare Part B monthly premium.”

To make matters worse, the Part A hospital deductible will be increased from $1,484 to $1,565. This won’t be felt for those on Supplements right away since their plans cover that cost. However, Supplement companies will be forced to pay out more in claims when Medicare covers less of the bill and costs for medical services increase. When that occurs, profit margins go down and, in turn, Supplement companies will request and be awarded higher than normal rate increases.

And that’s just one way this all affects those currently on Medicare. Higher Part B and Supplement premiums, higher Stand-Alone Part D deductibles which are inching towards $500, and ever-increasing drug costs will force many off Supplements and into Advantage Plans. This isn’t a huge issue since Advantage Plans have never been a better value with low premiums and copays as well as extremely generous ancillary benefits like dental, vision, OTC, and more that many plans offer. However, the reason the excellent value HMO’s and PPO’s currently provide is due to companies who have plans with four- and five-star ratings being rewarded with extra funding from CMS, much of which is being poured back into benefits. But God help seniors if Advantage Plan companies end up having those reimbursements cut because that will mean higher premiums and co-pays, the possibility of deductibles for medications, and reduced ancillary benefits that could result in thousands of dollars more in annual out-of-pocket expenses for seniors.

Why did we see the record increases? COVID is being tossed around as one reason. However, I believe it’s the increased use and cost of medications that are administered in an outpatient setting and paid for at 80% by Medicare Part B instead of Part D. We are seeing more and more clients utilizing expensive infused and injected drugs like Remicade for Rheumatoid arthritis and Prolia for bone loss, among others. I’ve also read several articles suggesting the increases are precautionary in case Medicare approves the Alzheimer’s drug Aduhelm, the cost of which is expected to be over $50,000 per year per patient.

The concept of any medication being reimbursed at $50,000 is preposterous and the increased costs of brand name medications is also out of control. Why Medicare and the Federal government allows the fleecing of taxpayer funded and subsidized health insurance programs like the ACA (Obamacare), Medicare, and Medicaid, makes zero fiscal sense. The United States is literally subsidizing the rest of the worlds’ drug costs. Brand name drugs retail for 50% to 500% more in the US than in every other country.

In 2020 alone, the top 10 highest grossing drug manufactures did $426 billion in revenue according to Pharmaceutical Technology, and organization who touts themselves as “the leading site for news in the pharmaceutical industry.” And according to Statista, a global research and data agency, these companies also made a combined $94 billion dollars profit in 2018. You the taxpayer, the worker, the senior citizen have made these companies, many of which aren’t even American based, some of the richest and most powerful in the world. They are influencing and lobbying our lawmakers to keep drug costs ridiculously inflated at the expense of US citizens.

Here are some ugly facts and examples of just how screwed up our prescription drug situation is.

In 2013, prior to the passage of the Affordable Care Act, I estimate that the average brand name drug retailed for $100 to $150 for a 30-day supply. I distinctly remember telling my clients the rule of thumb was you could take two brand name medications and not have to worry about falling into the Donut Hole. Now, the average cost is $500 to $700 for a 30-day supply and almost anyone who is prescribed just one is certain to reach the Donut Hole.

We were told back in 2014 that the Donut Hole was going away. That was a flat out lie. It’s gone away in name only and is now referred the “Coverage Gap” by CMS. Meanwhile, millions more seniors find themselves in the Donut Hole than 10 years ago. Around the same time, there was an announcement that led us to believe there was a breakthrough worthy of celebration; Pharmaceutical companies were going to discount their medications to seniors who were in the Donut Hole by 75%. That was a complete scam too. Big Pharma simply raised prices on brand name drugs 400% to 500% while lawmakers looked the other way.

Here’s another example of how the American taxpayer is being taken advantage of. A 30-day supply of Januvia, a common diabetic medication, retails in the United States for $525 on average. The same exact medication, manufactured by the same exact company, and comes in the same exact packaging, can be purchased in Canada for $45. I could write an entire column dedicated to nothing but similar scenarios on countless other medications.

I have two suggestions if you’re as upset as I am: Call your elected officials and ask them what they plan on doing about the inequitable costs of medications for Americans versus the rest of the world, and the huge increases in Medicare. And if your Supplement, prescriptions, or out of pocket costs are increasing, contact us at The Health Insurance Store. We know of many ways to offset those costs.