Medicare Premiums Set to Rise for All

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The head of the Medicare program has announced that next year's premiums will increase. And for the first time, richer people will have to pay more than others. Of the 42 million Americans who use Medicare, officials estimate that 1.5 million will face higher premiums because of their income.

STEVE INSKEEP, host:

Changes are coming for the elderly and disabled who get their health insurance through Medicare. Administration officials have announced premium increases for Medicare recipients. And for the first time, richer people will have to pay more than others. Here's NPR's Joanne Silberner.

JOANNE SILBERNER: Starting January 1st, there will be a five dollar increase in monthly payments for Medicare Part B. Part B covers, among other things, doctor's bills, and it will run $93 a month. The increase is smaller than the national healthcare inflation rate. Medicare head Mark McClellan is pleased.

Mr. MARK MCCLELLAN (Administrator, Centers for Medicare and Medicaid Services): This is the smallest percentage increase in the Part B premium since 2001 and it's less than half of the dollar increase in the premium for 2006.

SILBERNER: Robert Hayes heads the Medicare Rights Center, an advocacy group for Medicare recipients that, at times, has criticized the program. He says some people will have to struggle to pay the increase, but overall...

Mr. ROBERT HAYES (President, Medicare Rights Center): This is good news. I think if every private insurance company were able to reach some of the efficiencies of the Medicare program, we finally could begin to capture some restraints on healthcare spending in the country.

SILBERNER: But Hayes is worried about that other change that's coming on January 1st: higher payments for richer people. A Medicare recipient with an income between $100,000 and $150,000 a year will pay an extra $31 a month.

Mr. HAYES: It's a relatively small increase at this point, but what has made Medicare great is not just its financial efficiencies but also the fact that it's politically supported because we're all in it together, rich and poor, East Coast, West Coast, Midwest; we're all in it together and that's a very valuable thing.

SILBERNER: But Medicare's McClellan says the higher prices for richer people are needed.

Mr. MCCLELLAN: These income-related premiums will reduce Medicare costs by an estimated $7.7 billion over the next five years and more than $20 billion over the next 10 years, and that's an important step towards improving Medicare's sustainability to provide effective coverage for everyone who needs it in the future.

SILBERNER: Of the 42 million people on Medicare, officials estimate that one-and a half million will have to pay the higher premiums because of their income.

Joanne Silberner, NPR News, Washington.

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