Medicare coverage will soon cost you more

If you're on Medicare, you know that this generous government benefit isn't free. Coverage for some services, like physician visits and outpatient prescription drugs, requires that you pay a monthly premium. And before most claims are paid, you have to meet an annual deductible.

Those costs are about to grow.

Earlier this month, Congress passed a law that fixed a chronic glitch in the program. It was known as the Sustainable Growth Rate or SGR, and it adjusted physician payment rates downward each year to compensate for overall growth in costs for physician services. Each year's adjustment amounted to about 1% or 2%, but Congress deferred them every year starting in 2003. That added up to a total adjustment of 21% that was scheduled to take effect this year.

Congress could have deferred the adjustment yet again, leaving an even bigger cut scheduled to take effect in 2016. However, in a rare show of bipartisanship, it permanently eliminated the SGR, so that physicians no longer face the annual threat that their Medicare fees will shrink.

However, the SGR fix came with a few added provisions. Among them are new costs for beneficiaries to offset part of the expense of eliminating the planned fee reductions.

Premiums for outpatient coverage under Part B of the program and for prescription drugs under Part D will rise for most beneficiaries, and there will be an additional increase for some with higher incomes. And private Medigap plans, which supplement Medicare by covering some of the program's gaps, will no longer be permitted to provide coverage for the Part B deductible, which is currently $147 a year. The idea is to discourage beneficiaries from using services they don't really need.

These changes are fairly modest. The larger premiums for those with higher incomes will affect only about 2% of beneficiaries. And most enrollees can afford an extra $147 in deductible cost a year. However, the changes may portend a developing trend.

Medicare will place a growing burden on the federal deficit over the next few decades as the number of beneficiaries rises and medical costs continue to skyrocket. Congressional attention will focus with growing urgency on ways to control expenses. Increased cost sharing by beneficiaries will likely gain increasing attention as one approach.

Is it fair to ask the elderly to pay more for their health care? That's a debate we can expect to hear more about in the years ahead.

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