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October 6, 2022 Washington Wire No comments
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Biden’s misleading Medicare premium drop boast

Capital Journal (Pierre, SD)

President Joe Biden boasted of a decrease in premiums for Medicare Part B as the "first" reduction "in more than a decade." That's true. But he neglected to mention the drop follows a large increase the prior year, partly due to anticipated Alzheimer's drug expenses, which didn't actually materialize.

The seesawing premiums have seniors paying $5.20 less per month for 2023 than they're paying this year, but $16.40 more compared with 2021.

In a Sept. 27 Rose Garden speech, in which Biden touted provisions in the Inflation Reduction Act that will lower prescription drug costs for some Medicare beneficiaries (we've explained those before), the president added that there was more good news for seniors with Medicare Part B, which covers physician and outpatient services.

Biden, Sept. 27: "The Department of Health and Human Services announced that the premium for Part B will, in fact, decrease this year. That's a fee you pay — that's a fee you pay for Medicare to cover your visits to your doctor. For years, that fee has gone up. Now, for the first time in more than a decade, it's going to go down."

This is a prime example of what we'd call a "true, but" claim. It's technically true: Part B premiums will go down for 2023, and it's the first time that has happened since 2012. But — there's more to the story. And the context around this claim makes it less of a noteworthy event.

As STAT pointed out in its morning newsletter on Sept. 28, the 2023 monthly premium is 11 percent more than the 2021 premium.

Here's what has happened: Last year, the Centers for Medicare & Medicaid Services announced that the monthly Part B premium would be going up from $148.50 in 2021 to $170.10 in 2022. That $21.60, or 14.5 percent, increase was "the largest increase in dollar terms since the start of the program, even though premiums have risen faster in percentage terms on three other occasions in the last 20 years – 2016 (16.1 percent), 2010 (14.6 percent), and 2005 (17.4 percent)," the nonpartisan Kaiser Family Foundation said in a report this year.

In announcing the premium hike, CMS explained that it was due, in part, to COVID-19 expenses and a pandemic-related limit to premium increases the prior year. It also noted uncertainty around potential Medicare spending on Alzheimer's drugs, specifically Aduhelm, which is given intravenously in a clinic or hospital. These types of physician-administered drugs are covered under Part B, not Part D, which covers pharmacy prescriptions. CMS said an analysis was still ongoing at the time to decide whether Medicare would cover Aduhelm. The drug had been approved by the Food and Drug Administration on June 7, 2021, through an accelerated approval process that was criticized by health experts, including three scientists who resigned from an FDA advisory committee over the agency's decision.

"By law, the Medicare Part B monthly premium must equal 25 percent of the estimated total Part B costs for enrollees age 65 and over," CMS said, so it had to include "additional contingency reserves" to potentially cover Aduhelm.

At the time, the drug was supposed to cost $56,000 a year.

Several months later, Biogen, the drug's manufacturer, dropped the price by about half. Then, in January of this year, CMS proposed that Medicare cover Aduhelm only for seniors in clinical trials, citing the FDA's accelerated approval process and questions about whether the drug's benefits outweigh the risks. In April, that decision was made final.

So when it came time to set the 2023 Part B premiums, a lot had changed in terms of expected costs for the Alzheimer's drug.

CMS explained this in its press release announcing the monthly premium of $164.90 for next year. "Lower-than-projected spending on both Aduhelm and other Part B items and services resulted in much larger reserves in the Part B account of the Supplementary Medical Insurance (SMI) Trust Fund, which can be used to limit future Part B premium increases," CMS said. "The decrease in the 2023 Part B premium aligns with the CMS recommendation in a May 2022 report that excess SMI reserves be passed along to people with Medicare Part B coverage."

We're certain the drop in Part B premiums "for the first time in more than a decade" is welcome news to seniors. But it follows a sizable hike the year before.

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