Medicare Prices Are About to Shoot Up. Here’s Why.


The federal government is raising the price of Medicare by double-digit percentages, it announced last week. The huge hike comes amidst rising costs due to the pandemic, which has impacted health care costs across the board, as well as coverage of a new Alzheimer's drug that has sparked controversy over its high prices.

In 2022, Part B premiums for the lowest income bracket will jump 14.5%, from $148.50 a month to $170.10.

The Centers for Medicare and Medicaid Services (CMS), which administers the Medicare program, was prepared to answer the protests over the price hike. It noted that Social Security payouts will rise by 5.9% because of a cost-of-living adjustment (COLA) in 2022, the biggest increase in three decades. That, CMS claims, will offset some of the pricing bump.

"Most people with Medicare will see a significant net increase in Social Security benefits,” said CMS in a statement. “For example, a retired worker who currently receives $1,565 per month from Social Security can expect to receive a net increase of $70.40 more per month after the Medicare Part B premium is deducted."

But advocates for seniors point out that the COLA will be eaten up entirely by the Medicare jump. It marks the biggest year-to-year increase for Medicare since 2016, at a time when the pandemic has driven up costs of healthcare, food, housing and almost every other necessity.

And it’s more than double the 7% increase CMS had projected for 2022 back in August. A rule passed by Congress last year also limited the amount premiums could be raised in 2020 due to the pandemic, which plunged the country into a recession.

New Alzheimer’s Drug Impacts Pricing

Some of the Medicare pricing jump is tied to the introduction of Aduhelm, a new Alzheimer’s treatment drug that gained approval by the U.S. Food and Administration (FDA) in June.

The drug has a steep price tag at $56,000 per year. CMS is still grappling with how to cover the drug, which is the first treatment for Alzheimer’s that can remove amyloid, the sticky substance in patients’ brains that contributes to memory loss.

Aduhelm has been shown to treat memory loss, and it’s the first new Alzheimer’s treatment drug released since 2003. It’s targeted to those who have just developed Alzheimer’s, about 2.25 million people.

CNN reports that CMS believes about $10 of the Medicare pricing hike, or nearly half, is attributable to Aduhelm. CMS is rumored to be considering not even covering Aduhelm, which is rare—Medicare covers nearly every drug approved by the FDA. Physicians’ offices administer the drug, so it can’t be covered under Part D, which includes drugs purchased at pharmacies.

Medicare enrollees generally pay 20% of their Part B medications. That would be a hefty $11,500 out-of-pocket payment for those prescribed Aduhelm.

These significant changes may impact your budgeting and plan choices in 2022. It’s important to understand and plan for pricing increases. Contact Jay to learn more about Medicare Part B costs and how you can adjust.

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