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The current standard Medicare Part B premium is $202.90 a month. That equals about 25% of the cost of Part B. The average American worker with employer coverage pays about 26% of premium for family coverage.
Remember, Medicare payroll taxes only fund Part A of Medicare. Part D and B are funded via premiums and general tax revenue.
Combined, Connie and I pay $1,925.60 per month for Parts B and D and Plan G Medigap. That is over ten times my monthly employer payroll deduction the day before I retired.
Our Medigap is high, over $300 a month each. That’s because my employer dropped our Medicare supplement coverage and we ended up with age based premiums. Premium-wise having Medicare is not necessarily a bargain.
However, the good news is despite high premiums, our out-of-pocket costs are limited to the Part B deductible which, considering the expenses we are incurring, is a blessing indeed.
Would I like lower premiums? Absolutely. Do I think what we are paying is unfair? No.
Premiums for any health insurance are driven by the cost and use of healthcare by the people in the group be it Medicare, an ACA plan or employer plan (most of whom don’t even use insurance, but are self-funded). Because of this, a non-profit insurance company like a Blue Cross plan can have higher premiums than a for-profit.
The rhetoric about insurance company profits and CEO pay is quite irrelevant in the overall context of premiums. They represent a small percentage (2-5%) of each premium anyone pays. Health insurance company profit margins are no higher, sometimes lower, than those of regulated utilities.
The large corporate profits people refer to are driven by the volume of policies in effect and sometimes include foreign sales and other lines of business. It’s not because of a high premiums on individual policies. Premiums are reviewed for actuarial soundness and if they generate excess revenue after the fact beyond legal thresholds, money must be returned.
Premiums reflect how we use healthcare, the type of care we use and the price of each component of that care. That’s where our focus needs to be, but that is not easy because we all want the best, latest technology, most convenient, fastest care, we don’t want a third party interfering and we want it all to be at that undefined “affordable” price.
That will never exist because in the minds of people there is no amount of money spent on healthcare that is affordable. I just picked up an Rx yesterday and the co-pay was $255, that’s not a financial burden, but I would still rather have spent the same $255 on a new golf club I had my eye on…and that would certainly have been considered affordable. Perhaps like $200 tattoo for some people.
What Americans want will never happen. That is why other countries bury the collective cost in taxes and its citizens are willing to do with a bit less in convenience while not worrying about the cost of each service they receive.
I tell people that if you don’t want to change the system, stop complaining about the one you have.
Dick, could you please comment on Mark Cuban’s effort to lower drug prices with his Cost Plus Drug Company? I see with Part D coverage selecting a pharmacy such as CVS is often less helpful in getting a prescription filled (very expensive that is!) but one can fill it with MCCPDC at a VERY reasonable cost outside the Part D coverage. He talks about pharmacy benefit managers and their control of the system.
Perhaps you would complain for once?
Yesterday I read that Senate Democrats have introduced a bill that will cap out of pocket expenses for traditional Medicare to $5000 annually. To me that sounds like the beginning of the end of the Medigap product but they say it will make Medigap more competitive with Medicare Advantage. What do you think ? I suspect that eventually all of Medicare will be an HMO.
In my opinion ,Advantage works well until it doesn’t .I have two friends much older than I and we live in a state (Mass.) known for excellent healthcare. One of them has a group Advantage plan , which presumably is better than what an individual can buy . When she needed rehab she was sent to a 1 star facility at an unreasonable distance from home. An aide dropped her and they refused to take her to the hospital so she called 911 herself . Her daughter was able to get transferred to a 3 star SNF, the highest in her Advantage network, and closer to home
In contrast , my friend fwith Medigap could choose his SNF (5 star) , within easy driving distance from home so that his elderly wife could visit without difficulty.
Here’s a great example of what’s driving up the government’s costs for Medicare. I have a new medical issue that requires a specialist – all who are difficult to get an appointment with. I booked an appointment with one 3 months out. Later I found one I could see a month earlier. I’m going to keep both appointments, effectively giving me a free 2nd opinion. I wouldn’t do that if I was paying.