Medicare B Premium History

Medicare is a national health insurance plan available to seniors age 65 and older and the disabled. Medicare Part A, also called hospital insurance, helps covers hospitalization and related costs. Most people who have worked at least 10 years of their adult lives are eligible to receive Part A at no cost. Medicare Part B, also called medical insurance, helps covers outpatient care, including doctor visits. Most people pay a standard premium for Part B. The premium changes periodically, often yearly.

History

• After many failed attempts by President Truman in the 1940s to launch a national health insurance, Medicare, a national health insurance for the elderly, finally went into effect in 1965. It was begun with two parts as a reflection of a congressional debate over what should be fully covered and what should be partially covered. Part A became the premium-free hospitalization coverage and part B became the optional premium-required outpatient coverage. In 1972 Medicare was made available to disabled persons of all ages. In 1997 Part C was added; it allows participants to receive care through their own private insurance plans. Part D, which offers prescription drugs, went into effect in 2006.

Premiums

• The first Part B premium, in 1965, was $3 per month. It was intended to finance 50 percent of the program's cost. The remaining 50 percent was to be covered by general revenues. In 1972 federal legislation limited annual premium increases. Monthly premiums increased roughly 50 cents each year until the early 1980s. By that time premium contribution--$12.20 a month in 1983--accounted for less than 25 percent of the cost. Since that time, Congress has set the premiums at 25 percent of the program costs. By 1995 the monthly cost was $46.10. By 2005 it was $78.20 a month. Beginning in 2007 high-income beneficiaries were required to pay higher premiums. By 2010 most beneficiaries paid $96.40 a month.

Issues

• Between premiums that cover only 25 percent of cost, medical costs that have risen more steeply than increases in income or taxes, and as a result of the recession beginning in 2008, the Medicare fund is expected to run out of money in 2017. Possible solutions to this pressing problem include raising taxes, raising premiums and reducing service coverage.

Benefits

• The range of benefits Medicare Part B offers is large. It covers ambulance service, artificial limbs, blood, rehabilitation programs, chemotherapy, diabetes supplies and services, doctor appointments, medical equipment, emergency services, many laboratory tests and preventive services. This is just a partial list.

Misconceptions

• Medicare does not pay for everything. For many services, Medicare Part B pays 80 percent of a Medicare-approved cost. Medicare assigns costs to many services and equipments and only recognizes the cost assigned, rather than whatever cost a provider may bill. The patient is responsible for all costs above the percentage Medicare will pay of the cost Medicare recognizes.