2016 was an eventful year for Medicare. Premiums went up for certain beneficiaries, but not others, and certain things that Medicare didn't cover before were added to the list of benefits. In addition, some changes were recently announced that will go into effect in the new year, and the incoming Republican administration could certainly shake things up. Here's a recap of the changes to Medicare that took effect in 2016 and the changes that are still to come.
Medicare got more expensive in 2016
Medicare got more expensive in 2016, in terms of both premiums and deductibles, although some of the changes didn't affect all beneficiaries.
Specifically, Medicare Part B premiums rose by 16% to $121.80, but this only affected about 30% of beneficiaries. There is a "hold harmless" clause in the law that says if no cost-of-living-adjustment (COLA) is given to Social Security recipients, Medicare premiums for Social Security recipients can't increase either. Since about 70% of Medicare beneficiaries have their Part B premiums paid directly from their Social Security benefits, the increase didn't affect them.
The other 30% includes people who are eligible for Medicare but have not started collecting Social Security, as well as new enrollees, regardless of whether they collect Social Security.
Part B deductibles also increased, from $147 to $166. Many beneficiaries have supplemental insurance plans that cover the deductible, but an increase like this is often passed on to the beneficiaries in the form of higher premiums. In addition, Part A (hospital insurance) deductibles for hospital admissions rose by $28 to $1,288, which covers up to 60 days of covered hospital care. From 61 to 90 days, the coinsurance payment rose by $7 to $322. Also, the coinsurance amount for skilled nursing facilities (applied from the 21st through 100th days) increased by $3.50 to $161.
Finally, Medicare Part D premiums for prescription drug coverage increased by an average of 8%, and more plans are using the maximum allowable deductible of $360. And the number of plans offered dropped to the smallest amount ever in the history of Medicare Part D coverage.
It's worth mentioning, however, that the increases were not nearly as severe as originally projected in the 2015 Medicare Trustees' Report. For example, Part B premiums were originally expected to rise by 52% to $159.30, and Part B deductibles were expected to rise to $223.
What cost increases are taking effect in 2017?
Since Social Security beneficiaries received a COLA for 2017, albeit a small one, Medicare Part B premiums are increasing for everyone. The 70% of beneficiaries who pay their premiums from Social Security will see an increase to $109, about $4 more than the current level. The other 30% can expect a 10% increase in their Part B premiums to $134. Keep in mind that this premium applies to all new 2017 Medicare recipients as well.
In addition, other Medicare cost changes for 2017 are:
- Part B deductibles are increasing by 10% to $183.
- Part A deductibles for hospital stays are rising by another $28 to $1,316.
- Part A coinsurance amounts are increasing to $329 (hospital stays 61-90 days) and $164.50 (skilled nursing 21-100 days).
- Part D premiums will increase by about 9%, on average.
What could change under the Trump administration?
The changes that could be made to Medicare during 2017 (if any) depend on who gets their way -- President-elect Donald Trump or the Republican-controlled Congress. It's no secret that Medicare isn't in the best financial shape, and both parties have different ideas of how the problem should be fixed.
Most Republicans want to cut Medicare or begin to phase it out entirely. In fact, the 2016 GOP platform proposes raising the age of Medicare eligibility in the short term and eventually replacing Medicare with a government contribution toward a health plan of the beneficiary's choice.
In sharp contrast, Trump has pledged to save Medicare and preserve benefits. As he said at one of his campaign rallies: "What we are going to do is we're going to save Medicare, we're going to save Social Security, we are not going to raise the age, and we're not going to do all the things that everyone else is talking about doing. They are all talking about doing it and you don't have to."
Trump plans to save Medicare by creating enough economic growth to significantly boost the tax revenue flowing into the program, as well as by eliminating fraud and waste and allowing Medicare to negotiate drug prices.
The bottom line is that there could be serious changes coming to Medicare in the near future -- it's just a question of what form those changes will take.