A new report by Altarum reveals that health care prices are once again increasing, for private payers, though not for Medicare. If there’s any good news for working people it’s that health care prices are not up as much as inflation.
If you’re not yet on Medicare, you’re likely to face higher premiums and/or out-of-pocket costs beginning in 2023. Right now, health care prices are up nearly five percent, whereas overall prices are up 8.5 percent. So, your health insurance costs might not rise as much as your costs for housing and food, but given how high premiums are already, even a five percent increase could mean $420 or more a year in additional costs.
If you look at the data over the last couple of decades, health care prices are up way more than prices overall. Over the last 22 years, health care prices have more than doubled, up 110.3 percent. Overall, prices have climbed 71 percent.
What’s interesting is that Medicare prices dropped by nearly one percent in July, below where they were 18 months ago. Medicare did not raise provider rates for either hospitals or physicians. In stark contrast, private payers have seen a 7.2 percent increase in hospital prices over that time span.
The Medicare Advantage factor: Altarum is focused on the prices the government sets for providers and not the prices that Medicare Advantage plans pay. Historically, Medicare Advantage plans have paid providers about what traditional Medicare pays. They can effectively piggyback off of Medicare rates. But, we are now beginning to see higher Medicare Advantage payments to some providers, including dialysis facilities and that could be a harbinger for higher costs in Medicare Advantage.
The federal government should be setting Medicare Advantage provider rates at the same level as traditional Medicare and not wasting federal tax dollars allowing Medicare Advantage plans to negotiate their own rates. To the extent they get lower rates, they are more than likely contracting with l0w-quality providers, as Medicare rates are already significantly lower than commercial insurers. To the extent they pay higher rates, they are driving up Medicare spending needlessly.
Here’s more from Just Care:
- Social Security benefits should rise around 9 percent in 2023
- Four things to think about when choosing between traditional Medicare and Medicare Advantage plans
- MedPAC: Traditional Medicare consistently costs less than Medicare Advantage
- Coronavirus: Get your flu shot early!
- Costs in Medicare Advantage present barrier to care
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