Many retirees switch from employer sponsored health care insurance to Medicare coverage when they are eligible at age 65, or upon retirement. Medicare Part B insurance helps pay for doctors’ visits, outpatient care, labs (x-rays and blood work), and medical equipment. To the surprise of many, Medicare Part B premiums went up from $148.50 a month to $170.10 in 2022. This 14.5% premium increase was the largest Medicare increase in the history of Medicare, and far exceeded the national inflation rate of 7% year-over-year at December 2021, as well as the Social Security Income increase of 5.9% for 2022. For context, the base Medicare Part B premium increase in 2021 was just $3 a month.
Obviously, the Medicare premium increase was disheartening. For higher income earners who are subject to IRMAA, a Medicare Part B and Part D premium surcharge based on income, the annual premium increases were even higher.
Many have questioned why the premium increase is so much, both historically and in context to our current economic environment. Reports indicate the premium increase may relate to the inclusion of coverage for a new Alzheimer’s drug, Aduhelm, by Biogen. Aduhelm is hoped to slow the progression of early-stage dementia which cripples Alzheimer’s patients. Biogen’s initial launch price was $56,000 per year, negotiated down to $28,200 per year, after the CEO Michael Vournatsos noted the financial hurdle was making access to the drug challenging.
The Centers for Medicare and Medicaid Services specifically referenced Biogen’s Aduhelm in their justification for the premium increase. However, the report also mentioned rising healthcare costs due to the COVID-19 pandemic. The AAPR, as well as Health and Human Services Secretary Xavier Becerra have asked Medicare to reassess the Part B premium increase, especially given the December announcement in which Biogen dropped the price of Aduhelm by 50%. However, higher medical premiums in public and private industries might be here to stay.