Beware of Scare Tactics about Obamacare

Todd's picture
Regardless of your political sensibilities, intentionally scaring people with inaccurate and incomplete information is unethical.  The tactic of frightening senior citizens in order to advance a political agenda has become far too common.  When a new client asked me not about the security and peace of mind that Medicare would bring him but instead about how he would pay for his medical care once "Medicare premiums double or triple in the next two years" I decided things had gone too far.
 
Over the past few weeks I have been getting a lot of questions about rumors that Obamacare is going to cause Medicare premiums to double or triple by 2014.   It seems to have started with an email circulating that states as part of Obamacare (known more formally as the Patient Protection and Affordable Care Act, or PPACA) the Medicare premium will increase to $247 in 2014. The short answer to the question of the whether these figures for Medicare insurance premiums are accurate is no.
 
In the last few years, the standard monthly premiums for Medicare Part B have been set as follows:
2009 $96.40*
2010 $110.50*
2011 $115.40*
2012 $99.90*
(The actual premiums paid by some Medicare participants may be slightly higher or lower than these standard amounts.  For example, many beneficiaries paid less than the listed amounts in 2010 and 2011 because of the "hold-harmless" provision of Medicare which states that if the dollar increase in your Medicare Part B premium is bigger than the dollar increase in your Social Security check, you don't have to pay the difference.)
 
As for future Medicare Part B premium rates, the information cited in the rumors that this email has generated is wrong on two counts: No provision of the health care legislation passed during the Obama administration sets Medicare premium rates, nor is a whopping jump of over 100% to a $247.00 monthly premium in 2014 a realistic figure.  New Medicare premium rates come out each fall and take effect in January.   Medicare beneficiaries as a group are required to pay one-fourth the cost of running Medicare, and annual premiums are set at a figure calculated to achieve that level of revenue.  In other words, Medicare beneficiaries receive a 75% subsidy for Part B, with every $1 in Part B premiums for enrollees matched by $3 in general revenues.
 
Although the annual premium rates aren't officially set until they are announced each fall, Medicare administrators track trends and anticipated changes and use them to formulate projections of Medicare premiums for the next several years.  According to the most recent report (https://www.cms.gov/ReportsTrustFunds/downloads/tr2011.pdf) of the system's trustees, issued in May 2011, those projected premiums (as listed on page 218) are:
 
2013: $110.50
2014: $115.80 
2015: $120.80
2016: $126.00
2017: $132.70
2018: $140.30
2019: $148.40 
2020: $158.60
 
I hope this helps put your mind at ease! Please share this with your friends who have also heard this terrible untruth!