Millions of Americans are anxiously waiting to see how much of the 2023 Social Security Cost of Living (COLA) adjustment. However, even the most optimistic estimates of the size of the increase may not be high enough to offset the actual higher costs incurred by seniors.
One of the main reasons for this is that Social Security’s COLA doesn’t include Medicare Part B premiums. Those premiums jumped 14.5% in 2022. But there’s likely to be some good news for retirees: Lower health insurance Part B premiums may be on the way.
Bad news for biotechnology is good news for Medicare Part B
You may be wondering how Medicare Part B premiums can go down. After all, inflation is higher than it has been in four decades. Almost everything you buy these days is more expensive.
To answer this question, we first need to understand why Medicare Part B premiums will rise so much in 2022. The Centers for Medicare and Medicaid Services (CMS) identified several reasons for the sharp increase in November 2021. The reason that received the most attention, although The agency anticipates potentially significant cost increases related to Biogen‘s (Bahrain Islamic Bank) 0.40%) Alzheimer’s disease drug Aduhelm.
Biogen won U.S. Food and Drug Administration (FDA) approval for Aduhelm in June 2021. The biotech company has set an initial price for the drug at $56,000. An estimated 6.5 million Americans age 65 and older have Alzheimer’s disease. The increased cost to CMS to pay for Aduhelm was enormous.
However, the wheels fell off the carriage of Aduhelm. In April 2022, CMS announced that it was effectively limiting drug coverage only to Medicare patients in authorized clinical trials. Less than a month later, Biogen reduced its sales efforts at Aduhelm, almost all to the US trash heap.
These developments paved the way for an important decision by US Secretary of Health and Human Services (HHS) Xavier Becerra. In a public statement, Becerra said Medicare Part B premiums will be “adjusted downward” because previous expectations of higher costs associated with Aduhelm are no longer viable.
The big question
Don’t pop the corks on champagne bottles just yet, though. There is still a big unanswered question: Will Medicare Part B premiums actually be lower in 2023 than they were in 2022 or will only the rate of increase be lower than they would have otherwise? We won’t know the answer to that question until the fall.
Besera said he initially hoped to lower Medicare Part B premiums sooner after accounting for the cost savings from not having to pay for Aduhelm. However, CMS decided this was not a viable option. Instead, the decision was made to pass the savings on to Medicare beneficiaries in 2023 Part B installments.
Next year’s Medicare Part B premiums could be lower than they are now. Perhaps the savings associated with Aduhelm will offset all other factors that contribute to higher premiums.
There is also a possibility that Medicare Part B premiums will remain at current levels. CMS hasn’t raised Part B premiums in four of the past 20 years.
However, perhaps the safest bet at this point is that the 2023 Medicare Part B premium increase will be relatively modest. But without a doubt it would be much less than it would have been if CMS had decided to cover Aduhelm completely. This is still good news for retirees.