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Medicare premium hike in ’12 less than expected

WASHINGTON - Medicare’s basic monthly premium will be much lower than expected next year, the government said yesterday. That could pay political dividends for President Obama and for Democrats struggling to win over seniors in a close election.

The new Part B premium for outpatient care will be $99.90 a month for 2012, or about $7 less than projected as recently as May.

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The bottom line: Most seniors will pay an additional $3.50 a month next year, instead of $10.20, as forecast earlier.

Some younger retirees who enrolled recently will actually pay less. They have been paying up to $115.40 a month. Instead, they’ll also pay $99.90 next year.

The main reason for lower-than-expected premiums has to do with the interaction between Social Security cost of living adjustments and Medicare.

But the Obama administration is hoping seniors will get a simple takeaway message: Medicare is under sound management. Older voters went for Republicans in the 2010 elections, after Obama’s health care overhaul law cut Medicare spending to help finance coverage for the uninsured. Since then, the administration has doubled down to reverse any perception that Obama is steering Medicare into decline.

The Medicare news means the majority of seniors will have to fork over only a small part of a long-awaited Social Security increase next year for premiums.

‘Medicare is providing better benefits at lower cost.’

Kathleen Sebelius, Secretary, Health and Human Services
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Premiums have been frozen at the 2008 level of $96.40 a month for about three-fourths of beneficiaries. That was due to the lack of a Social Security cost-of-living adjustment during the depths of the economic downturn. But Social Security recently announced a cost of living raise in monthly checks averaging $39 for 2012.

Kathleen Sebelius, secretary of Health and Human Services, said it’s “pretty remarkable’’ that premiums will stay in check. Seniors have nothing to fear from the health care law, she suggested. “Thanks to the Affordable Care Act, Medicare is providing better benefits at lower cost,’’ said Sebelius.

Earlier this year, officials had said that premiums for Medicare’s prescription benefit would remain unchanged for 2012, on average. Similarly, average premiums for popular Medicare Advantage plans will dip slightly in 2012. But those announcements do not have as much impact. Averages used by the government don’t reflect individual experiences. And fewer beneficiaries are enrolled in either of those two benefits.

The Part B premium is one number that most of the 48 million people on Medicare can connect with.

Upper-income retirees pay more, and premiums for low-income beneficiaries are covered by Medicaid. But middle-class beneficiaries on tight budgets watch the Part B figure.

A leading nonpartisan expert on Medicare said she doubted election-year politics are behind the lower-than-expected premiums for 2012. “Changes in premiums are obviously important to seniors, but the numbers are based on what the law requires and determined by independent actuaries, rather than politics,’’ said Tricia Neuman of the Kaiser Family Foundation.

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