Rise in Medicare Premiums Much Smaller than Rise in Private Insurance Premiums

Proof Again that Private Insurance in Superior to Medicare – No Wait, That’s Not It

The hallmark of Conservative Republican plans for Medicare is to end it as a government health insurance program, and to transform it into a subsidized private insurance program.  The argument, these Conservatives make, is that competition in the private sector will hold down costs.  The problem with this argument, facts, figures and logic just keep getting in the way.

The 2012 increases in basic Medicare Part B premiums has been announced, and it is about 3.5%.  This is less than expected and far less than the 9% increase in private health insurance plans that has just taken place.

Premiums for most Medicare beneficiaries have been frozen at $96.40 a month since 2008. Kathleen Sebelius, the secretary of health and human services, said the small increase in premiums, amounting to less than 4 percent in four years, was “pretty remarkable.” Average premiums paid by workers for employer-sponsored health insurance have increased far more — well over 20 percent since 2008, according to the Kaiser Family Foundation.

Here is a further explanation.

Jonathan D. Blum, deputy administrator of the federal Centers for Medicare and Medicaid Services, said officials were seeing “much lower utilization and spending growth” in Medicare than they had expected.

The public – private partnerships that produced Medicare Advantage programs and the prescription drug program also have good news.

Medicare officials said the modest increase in premiums for coverage of doctors’ services was part of a welcome trend. Earlier this year they announced that average premiums for private Medicare Advantage plans would decrease by 4 percent and that premiums for Medicare’s prescription drug plans would be virtually unchanged in 2012. Both types of plans are operated by insurance companies under contract with the government.

And while Conservatives will point to those results as being evidence that private insurance can work, the fact that Medicare Part B premiums are not rising very fast points to the explanation that it is Medicare’s control of health care expenses, not private competition that is working. 

Of course the Medicare Advantage plans and the prescription plans are group policies, open to everyone and at the same premium regardless of age or health.  The Republican plan would replace these programs with individual private insurance, and the question is still out there as to what insurance companies are going to insure a 75 year old person with serious health issues?

All of this leaves the still unanswered question about the Paul Ryan plan to save Medicare by destroying it.  If private insurance does hold down health care costs, why hasn’t it done so?  Conservatives, get back to us when you have an answer.