Rising costs for Medicare

[sg41028188]

Medicare Part B went up to $170 per month from $148, the reason given by the government is due to rising costs of Alzheimer's drug cost?

Who are these trying to fool, who is responsible for increasing drug prices?

Medicare is an eyewash, to begin with, along with this Part B which will be forcefully taken out of the social security check we have to buy additional plans to cover everything else?

The big talk of COLA adjustment is to be readjusted with Medicare's rise in premium!

What percentage of people can work till they are 70+? To get full social security benefits?

This country is just like any other where they are at least honest and not boast of being the best in the world!

It is a shame to be governed by people who only work towards their vote bank! 

AARP advocacy never really worked to reduce drugs cost neither the concerns of seniors are paid attention to!

For many seniors who I am sure to feel the same way I do!

[GailL1]

I think it would be a good idea for seniors to learn how Medicare actually works and what you pay for and when you pay for it.  

Part A is what you pay for during your working years with those payroll deductions and your employer match.  It is basically the HI portion of your Medicare coverage - Hospital Insurance.  This is also the one that has a Trust Fund which is slowly being depleted because of several reasons but I am not going to get into that now.  The Social Security Trustees who analysis the SS and Medicare Trust Funds every year say that the Medicare HI Trust Fund will be declared insolvent in 2026 unless more money comes into it or less expenses come out of it.  Now what that insolvency actually means is that it is an estimated time when the Trust Fund for Medicare Part A will reach a point when it will only be able to pay out 90% instead of 100% - meaning there is a shortfall that the law says when it reaches a certain point that it will only pay out a percentage of what is due to be paid.

Part B is the (SMI) Supplemental Medical Insurance part of Medicare - it pays for Doctors, other providers, lab work, vaccines, DME, and Infusion drugs done in an outpatient location.  The SMI Medicare insurance is paid by the beneficiaries and the government.  Normally, the split is 25% of the cost of the program is born by the beneficiaries in their Part B premiums and 75% of the cost is born by the government out of the General Fund.    Don't forget that just because you are paying the normal premium ( $ 170.10 for 2022), many higher income folks are paying a whole lot more because of the Income Related Monthly Adjusted Amount (IRMMA) which ties their Part B premiums to their income (joint income if MFJ).

Infusion drugs covered by Part B are things like chemo therapy, drugs to treat rheumatoid arthritis and several others - these are the most expensive of drugs - many are life-saving or life extending.  The new Alzheimer drug is one of those infusion drugs -  it has yet to be approved by inclusion in Medicare - the FDA approved it in the fall of 2021 but there is lots of controversy about it.  Cost being just one - A single treatment cost of $ 56,000 is just part of the cost that Medicare PART B will have to cover because people who might get it at a very specific time in their illness will also have to have many monitoring test during the therapy.

Part C - is in essence Medicare Advantage - it covers the same things that Traditional Medicare covers just in a differ way.  

Part D is the Medicare Prescription Drug program - it works very similar to Medicare Part B. 

Cost of Living Adjustment for many government income programs, including Social Security,  is based on the Consumer Price Index that shows how prices are rising, falling or staying about the same.  The period of time measured is Sept thru Sept. then announce in late Oct or Nov. each year.  

The Social Security law contains a clause called the Hold Harmless Clause - that basically says that a beneficiary's Social Security benefit can NEVER be reduced from one year to the next because of Part B premiums.  So in some years there is medical inflation (think 2020 COVID cost) yet if there is NO COLA or a relatively small one, premiums do not go up in relation to what they could have  - the government pays a bigger share out of the general fund.  Then when we do get a bigger one, they make up a bit of it - there is about $ 2.00 - $ 3.00 of this in the current increase in Part B premiums for 2022.  

I know it is kind of confusing but it works the way it works - nothing in government is simple.

If you are low income, there are programs (called the Medicare Savings Programs) which helps people pay Part B & Part D premiums and much, if not all of their drug cost.  It is what we do as a society - "Fair Share".

I could go further and tell you ways we could bring in more revenues into the programs - including Social Security.  But for now - I have given you as simple an explanation as I can.  It does help to understand how it all works together to create the whole Medicare program.

This is mostly about Part B premiums but if you want to discuss drug cost as in Part D - we can do that too.  But again one has to understand how various programs work in order to discuss them.

[somarco]

@sg41028188 the DC explanation is smoke and mirrors. 

Aduhelm is FDA approved (a questionable move causing folks to scratch heads) but has not YET been authorized by CMS. It may never receive CMS approval, and even if it does I doubt it will ever be one of the medications that is REQUIRED to be included in all plan formularies.

The COLA formula changes based on the whims of Congress. It bears no relation whatsoever to the oft quoted CPI for general goods and services.

Overall drug prices will not come down on brand names. Government price controls are a salve that accomplishes nothing in the long run. Squeeze the balloon on one end and the other end bulges.

Orignal Medicare is a great program in spite of its' flaws. It is the only health insurance program that does not impose managed care. You are free to use any provider without restriction.

Those of us on original Medicare don't face the same challenges as the folks who must navigate the managed care maze, constantly fighting their insurance carrier for approval. Managed care plans have rules for tests and procedures. If you don't have pre-approval your claim may not be paid. Use a non-par provider your claim may not be paid . . . or you can be balance billed.

The average SS benefit is around $1400. Those who are "average" will see about $80 more in their monthly benefit next year.

Many people are complaining about the COLA increase in relation to the premiums they pay. For those living on SS benefits alone, the REAL challenge is being able to pay for food, utilities, gasoline, etc.

If someone is having trouble paying their B premium they have much bigger problems caused by inflation . . . and THAT is tied back to DC in the mismangement of the economy.

[john258]

Drug prices do not reflect anything but how much profit the maker wants to make. They have no relation to cost of creating or mfg. the drug . This goes back years and prices have always been set by the Drug Maker. We had the red book for years which told all how much to charge.

Every Insurance Carrier or medical program provider now gets discounts from drug makers. Most other countries control drug prices and that is is why drugs coming back into the US from Canada are cheaper is an example. Medicare works with suppliers of medical services for dsicounts and is the gold standard Insurance Carriers go after when they do the same. Drug Mfg. stopped that from happening so they do not have to deal with medicare. Drug prices would come down if that was ended and would be a good first step. In the end govt. price control will be the answer.

[Tonster521]

@john258 Here is a link to an article from January 2021 by the Rand Corporation regarding drug prices. https://www.rand.org/news/press/2021/01/28.html 

The study reviews brand drugs and generic drugs separately and in aggregate. It should be noted the consistent area where drug prices were lower in the USA was generic drugs where prices were 84% of the average paid in other countries. Brand drugs were significantly greater. As you may or may not know, brand drugs may take up to 12 years and $millions before the drug is approved by the FDA. Those costs are recovered during the brand patent protection period. One concept that may be a method to reduce the higher brand drug prices is to spread such costs over a longer period of time allowing a reasonable profit margin with a cap. Thereafter, the generic companies may take over.

[john258]

Nice long article but nothing new. It says we have the highest prices of any country and we all knew that. Really the article say nothing that has not been said for years. Generic drug came in to being to create so called competition. Problem is they come into being years late. Some States even require drug store to use Generic if possible unless Dr. ordering the drug for someone says they can not.

Sadly    a lot of development costs are paid for by Govt. not drug Co. but they claim credit for recovering costs in setting prices. Look at insulin increase. Happened because someone purchased the Mfg and wanted to make more money so they raised prices.

This entire area has never been based on free market and cost to create product, but on how much money do you want to make.

The answer is simple. Price control. Until that happens we have high prices and articles that are a farce, and sadly to many people who do not understand the entire subject creating long articles that really say or do nothing.

You want to end the problem. Price Control does it period.

[Tonster521]

@john258 You may have missed the fact that USA generic drugs were only 84% of the average paid in other countries. That means 16% cheaper. It is the branded drugs that are patent protected that are higher priced. You referred to Canada as a comparison. If you researched the Canadian pharma industry, you will find little to no innovation. Most of Canadian research is focused on developing generic versions of brand drugs that other Pharmaceutical Companies develop at approximately $1 Billion to $ Billion per drug. Here is a link that provides pertinent info about the Canadian Pharmaceutical industry https://www.ic.gc.ca/eic/site/lsg-pdsv.nsf/eng/h_hn01703.html Scroll down to R&D Activities and you will see that Canadian Pharma spends about $1 Billion on R&D. Further, scroll down to the Leading Companies in Canada and you will find only one (1) Canadian company, Apotex, in the top ten. Apotex is a generic manufacturer. The other nine (9) companies are multinationals from the USA, Switzerland, Germany,and the United Kingdom. It will be a rare event for a Canadian pharmaceutical company (any size) to develop a drug solution for an illness. Canada looks to others for leadership in drug development. The Canadian healthcare system is also subsidized via certain taxes (i.e., $1.00 or more per gallon/liter of gasoline) which supports drug pricing. It appears you support price controls by the government. However, here is a link from the Congressional Budget Office (CBO) addressing R&D wherein price controls are not mentioned. https://www.cbo.gov/publication/57126 I will agree that these articles are long and one needs to stay focused in order to comprehend the data. However, if you read and comprehend the first page called, At a Glance, you will learn that R&D in the USA totaled $83 Billion in 2019. Innovation occurs (drug treatment/solutions) when R&D is part of the business model. I would bet "a dime to a dollar" that there will be more solutions with $83 Billion of R&D than just $1 Billion. Moreover, the CBO does not mention price controls. There is a section that addresses Basic Research which is probably Academia and Grant driven. It will never support the $Billion or more needed to develop a drug treatment/solution for a devastating illness. The CBO references tax credits as the way to finance continued R&D and innovation as well as patent protection. Lastly, I am adding another link that provides the History of Generic Drugs. https://consumer.healthday.com/encyclopedia/drug-center-16/misc-drugs-news-218/history-of-generic-dr... Should you read the article, you will learn that generic drugs have been available for 60 or more years. However, in 1984,legislation was enacted to alleviate the cumbersome FDA approval process and it's costs as well. Thereafter, the generic drug industry began to grow exponentially and the rest is history. I recall working with the roll out of the brand/generic drug benefits in our employer sponsored welfare benefit plans that covered approximately 160,000 employees and approximately !00,000 retirees and surviving spouses on 1985. At that time,folks initially feared generic drugs.However, with continued education via meetings and written material, folks realized that the active ingredients of brand and generic were the same.

In summary, you raised a number of points without any supporting documentation. So, at best, those are your opinions which you are entitled too. However, documentations will enhance your credibility. Price controls have never worked. Would you want your pay as an employee or an independent contractor or a business owner governed by a price control?  I believe the your answer is no. 

[john258]

What I gave you are facts from being associated with this business for years before I retired. Go ahead and prove any of them wrong. I do not need articles on this subject. One needs to know the full subject and then they understand the full subject. Sadly that does not take place now, and that is why the problem is not solved and we all pay the price. There isno free market in this area and never has been. It all started with the red book. You want to solve the problem then the US follows what every other country has done. Price control by the govt.

Go check out the Ben and Jerry rule on salaries which was used some time ago. It worked well for them. We already have price control in quite a number of areas so any one working today has to answer yes to your question. When  there is a free market the market does that, and today that is happening in quite a number of places. What we need is to let the experts do their work on a problem and it will be solved. When I was first introduced to pricing in this area the person who explained it to me said it was designed for high prices and big profits and not in the best internists of anyone but the business owners. Price fixing  to benefit  the business owner, and hurt all others.

[bb5292936]

I agree with the author of the article regarding Medicare pending increase. It seems that every time we have a COLA increase, medicare has a parallel increase as well. AARP we need your advocacy to resolve this situation.