Medicare News for 2009

For the first time in eight years, Medicare premiums are going to remain unchanged for 2009.  What is the reason for the sudden change?  Well, due to a hospice payments accounting error, there is a surplus of capital available and therefore premiums are not going up, however with health care costs consistently outpacing inflation, it seems as if this move is more of a political maneuver rather than simply accounting for long-term costs.

Victoria Colliver, of the SFGate, had this to say about the situation, “From 2005 to 2007, about $9.3 billion in hospice payments mistakenly had been taken out of the portion of Medicare that beneficiaries pay premiums for, which includes outpatient doctor visits, home health services, physician-administered drugs and medical equipment. Those payments should have come out of Medicare’s Part A hospital fund and have been repaid this year to the fund supported by premiums, known as Part B.”

“It was painful to catch up, but now we have one year in which we can get rid of the catch-up amount and use that to offset the premium increases that otherwise would have happened,” said Richard Foster, Medicare’s chief actuary, estimating that next year’s increases would have been about 8.5 percent.

This is not a long term solution by any means, in fact this is a a one-time event that does nothing to address the core issue of:

• Compensating physicians properly for care
• Making healthcare affordable

What will the next few years look like for both patients and physicians?  Foster said the formula will cause a 20% reduction in physician payments for Part B Medicare services in 2010.  And this predicament will prove to not be beneficial for either party.

So Medicare patients, enjoy next year’s premiums, however please understand that there are deeper issues that need to be resolved in order to have a fully functional health care ecosystem.