Good news for retirees: Lower Medicare Part B premiums may be coming
Millions of Americans are anxiously awaiting the amount of their Social Security Cost of Living Adjustment (COLA) for 2023. However, even the most optimistic estimates of the magnitude of the increase are unlikely to be accurate. high enough to offset the higher real costs older people incur.
One of the main reasons this is the case is that Social Security’s COLA calculation doesn’t include Medicare Part B premiums. And those premiums jumped 14.5% in 2022. But there’s potentially good news for retirees: a drop in Medicare Part B premiums could be on the way.
Bad news for a biotech is good news for Medicare Part B
You might be wondering how Medicare Part B premiums could drop. After all, inflation is higher than it has been for four decades. Almost everything you buy these days is more expensive.
To answer this question, we must first understand why Medicare Part B premiums jumped so high in 2022. The Centers for Medicare and Medicaid Services (CMS) identified several reasons for the sharp increase in November 2021. The one that received the most attention, however, was that the agency anticipated potentially large cost increases related to biogenicit is (BIB 0.40%) Aduhelm, drug against Alzheimer’s disease.
Biogen obtained U.S. Food and Drug Administration (FDA) approval for Aduhelm in June 2021. The biotech company has set an initial price for the drug at $56,000. An estimated 6.5 million Americans age 65 and older have Alzheimer’s disease. The increased cost to CMS of paying Aduhelm would have been enormous.
However, the wheels fell off the cart for Aduhelm. In April 2022, CMS announced that it was effectively limiting coverage of the drug only to Medicare patients in licensed clinical trials. Less than a month later, Biogen scaled back its sales efforts for Aduhelm, virtually relegating it to the trash can in the United States.
These developments set the stage for an important decision by US Department of Health and Human Services (HHS) Secretary Xavier Becerra. In a public statement, Becerra said Medicare Part B premiums will be “adjusted downward” because previous projections of higher costs associated with Aduhelm are no longer applicable.
The big question
Don’t pop the corks on the champagne bottles just yet, though. There’s still a big unanswered question: Will Medicare Part B premiums actually be lower in 2023 than they are in 2022 or will the rate of increase just be lower than it would have been otherwise? We won’t know the answer to that question until the fall.
Becerra said he originally hoped to reduce Medicare Part B premiums sooner after calculating the cost savings of not having to pay for Aduhelm. However, CMS determined this was not a viable option. Instead, the decision was made to pass savings on to Medicare beneficiaries in 2023 Part B premiums.
Next year’s Medicare Part B premiums may be lower than they are now. Perhaps the savings associated with Aduhelm will more than offset all other factors contributing to higher premiums.
It is also possible that Medicare Part B premiums will remain at current levels. CMS has not increased Part B premiums in four of the past 20 years.
However, probably the safest bet at this point is that the Medicare Part B premium increase for 2023 will be relatively modest. But that will no doubt be well below what it would have been had CMS decided to fully cover Aduhelm. This is still good news for retirees.