Medicare - New rates for 2019, some history too.

About one month ago (October 12) CMS announced the Medicare cost-sharing factors for 2019. The table below compares 2019 with 2018, together with a couple of historical years. 

                                                                                                                                  2019                     2018    

Part A Deductible per hospital admission                                             $1,364.00           $1,340.00

Part A full buy-in premium                                                                         $   437.00           $   422.00

Part B annual deductible                                                                            $    185.00             $   183.00

Part B standard monthly participant premium                                   $     135.50            $   134.00

Part B full buy-in premium                                                                        $     542.00            $    536.00

                                                                                                                                  2000   .

Part A Deductible per hospital admission                                              $   776.00

Part A full buy-in premium                                                                          $   301.00 

Part B annual deductible                                                                            $    100.00

Part B standard monthly participant premium                                   $       45.50

Part B full buy-in premium                                                                        $    182.00

                                                                                                                                  1980      .    

Part A Deductible per hospital admission                                            $    180.00

Part A full buy-in premium                                                                       $       78.00 

Part B annual deductible                                                                           $       60.00

Part B standard monthly participant premium                                  $         9.60

Part B full buy-in premium                                                                       $       38.40

Notes to the Table

1.  The good news is that the increase to participant cost for 2019 is very small.  This reflects continued moderation in the rate of increase of medical costs that began in roughly 2003.  Costs rose faster prior to 2003 and less so afterward.  Looking back over the 39 years 1980-2019, the Part B premiums rose by more than 14 Xs, the average annual increase was 7%. 

2.  About 92% of Part B participants pay the standard Part B premium. By CMS rules, about 3% pay less, and about 5% pay more.  

3. Deductibles have risen steadily over the years.  The Part A deductible rose about 5% per year on average, the Part B deductible 3%.  Premiums over the years would have risen much higher, if deductibles had not also increased.    

This table does not show one of the most significant facts about Medicare:  its budgeted income has not kept pace with expenditures. As a result, Medicare has run budget deficits for many years.  In fact, its actuaries calculate Medicare has accumulated future unfunded liabilities of well over $40 trillion.  That is 7-8 times total Federal spending anticipated for 2019. Any private insurance company having proportional unfunded liabilities, would be bankrupt. 

4.  The table does show Part A and Part B “full buy-in premiums” even though in the real world, no one pays those premiums.  Those are the premiums Medicare participants would pay – if they paid the full premium to cover Meidcare’s budgeted cost. For example, in 2019, the full buy-in premium for Part A plus Part B is $979, or $11,748 per year – per person.   Just keep in mind even those premiums, as high as they are, are not nearly high enough to cover Medicare expenditures.  

5.  For anyone who might be interested, when Medicare started, January 1, 1966, the Part A deductible was $40, the Part B deductible was $50, and the Part B monthly premium was $3.00.  Those numbers seem impossibly low today.  How times have changed.