The amount of money that an individual’s Social Security cost-of-living increase (COLA) will be in 2023 is something that millions of Americans are eagerly anticipating. Even the most optimistic estimates for the size of the increase may not be high enough to compensate for seniors’ actual higher expenditures.
The fact that Social Security’s COLA calculations does not include the Medicare Part B premiums is one of the main reasons. And in 2022, the costs went up 14.5 percent. However, retirees may be relieved to hear that lower Medicare Part B premiums are on the way.
A biotech’s bad news is great news for Medicare Part B
You might be bewildered as to how Medicare Part B premiums could possibly go down. After all, prices have been increasing at a higher rate than they have in four decades. Everything you purchase these days is more pricey on average.
To answer that question, we must first comprehend why Medicare Part B premiums rose so dramatically in 2022. The Centers for Medicaid and Medicare Services (CMS) provided several explanations for the dramatic rise in April 2021. However, it was the CMS’s prediction of enormous bill increases linked to Biogen’s Alzheimer’s disease drug Aduhelm that generated the most buzz.
In June 2021, the FDA authorized Biogen to market Aduhelm. The drug’s starting price was set at $56,000 by the biotech firm. Alzheimer’s disease affects 6.5 million Americans aged 65 and older. The CMS costs for Aduhelm would have been enormous.
Aduhelm, on the other hand, hit a roadblock. In April 2022, CMS announced that it would restrict coverage for the drug solely to Medicare patients enrolled in authorized clinical trials. Biogen quickly reduced its marketing efforts for Aduhelm, effectively relegating it to the garbage heap in the United States.
These developments lay the groundwork for a crucial HHS Secretary Xavier Becerra decision. In a press release, Becerra said that Medicare Part B premiums will be “adjusted downwards” because the prior projections of higher costs linked with Aduhelm are no longer accurate.
The big question
But don’t celebrate just yet. There’s still a major uncertainty: Will Medicare Part B premiums really be cheaper in 2023 than they are today, or will only the rate of cost increase be lower? We will not know the answer to this until later in the fall.
After the cost savings from not paying for Aduhelm were estimated, Creerra said he had intended to reduce Medicare Part B premiums sooner. CMS determined, however, that this wasn’t a practical option. Instead, in 2023, the price savings would be passed on to Medicare beneficiaries.
It’s quite possible that in 2023 the Medicare Part B premiums will be lower than what they are now. Perhaps, in the end, all other factors that are contributing to higher premiums will outweigh any Aduhelm-related savings.
Based on current trends, the Medicare Part B premium hike for 2023 is most likely to be modest. However, it will without a doubt be well under what it could have been had CMS opted to fully cover Aduhelm. That is still excellent news for retirees.