Starting in 2007, monthly premiums for Medicare will be tied to income. This new rate plan will be phased in over the next three years and will raise premiums for higher income seniors. Premium surcharges will be largest in the highest income brackets ($80,000 for individuals and $160,000 for couples) and by the end of the three year phase-in, the wealthiest seniors will be paying three times as much premium as middle-income seniors.

Some experts fear this will cause higher income seniors to leave the program and rely on private insurance, leaving only the poorest seniors in the program.

A study published in the New England Journal of Medicine concludes that medical expenditures provide reasonable value as measured by increased life expectancy. The study was funded by the National Insitute on Aging. Between 1960 and 2000, life expectancy increased by seven years.

“The growing numbers of older Americans is a story that we can be proud of, and medical expenditures have played an increasingly important role in this success,” says Richard M. Suzman, Ph.D., Director of the Behavioral and Social Research Program at the NIA. Further, Suzman points out, “If the study had been able to factor in the improved functioning and quality of life of older people, the value of such medical spending would have looked even better, especially for the older population.”

Study Links Medical Spending to Life Expectancy Gains

Medicare has issued $50 million in reimbursements. Checks have been issued to 230,000 Medicare drug plan participants as refunds of premiums that they have paid this year. The problem is that all of these refund checks were issued by mistake.

Recipients of the checks will also get a letter telling them that their premiums will no longer be deducted from their Social Security checks. This is also a mistake.

Once found, the erroneous letters and checks were quickly followed up by a second letter explaining that the refunds were issued by mistake and that the money will have to be returned.

Many Medicare drug plan participants have their premiums automatically deducted from their Social Security checks. While transmitting some information on this group of people to Social Security, they were accidentally eliminated which caused the deductions to stop. It will take until October to resume deduction of premiums but the prescription drug coverage will continue for all beneficiaries that were involved.

For more info see Senior Journal.

A research team, led by Daniel L. McFadden, Ph.D., of the University of California, Berkeley, and a Nobel Laureate in Economics, interviewed Medicare-eligible persons age 65 or older about the new Medicare Part D prescription drug program. The interviews were conducted just prior to the start of open enrollment in November and then again in May and June, after the open enrollment period closed. The results, to be published in Health Affairs show that the target goal of having 90% of persons age 65 and older enrolled in Medicare’s prescription drug coverage has been met. However, they found that there were groups of eligible persons who did not enroll, even though it would be in their best interest to do so.

Therefore, the authors note, a significant number of older people who might benefit from enrollment remain uncovered, and further educating these groups that the Part D program is in their self-interest should continue to be a health policy priority. A notable proportion of the seniors surveyed said they were less satisfied with Medicare and the government overall as a result of their experience with the program.