The basic Medicare Part B premium today is $104.90. Under normal circumstances it would rise to $120.70 in 2016. I say normal circumstances, but since when is a 15% increase in Medicare premiums normal?
Either health care costs for Part B services have skyrocketed in the last year which is not consistent with the Obama administration’s narrative OR the previous year’s premiums were set too low to begin with. My guess is a combination of both.
Because there is no Social Security COLA in 2016, under the hold harmless provision the Part B premium will not be raised at all for 70% of those on Medicare, but that doesn’t change the fact that to support the program the premium should be $120.70.
Now let’s assume a more modest growth in costs during 2016 of 6%. That means beginning in 2017 the premium needs to be $127.90 for everyone.
Given an average monthly benefit of about $1,300, any 2017 COLA would have to exceed 1.7% just to cover the premium increase from $104.90 to $127.90 in this example.
In other words, in 2017 it will be harder to see an actual net gain in the Social Security benefit for most people. My example uses only a 6% cost increase, imagine if it is 15% like 2016?
Well in that case, the new premium would be $138.80 which means in order to receive any net gain in the Social Security benefit the COLA would have to exceed 2.6% … good luck with that.
In other words, Medicare, just like any insurance company must eventually balance premiums with costs which if not done properly ultimately means a large premium increase … or they play games and find a way to shift more to taxpayers in general.