CMS Announces Part B Premium Increase

On Friday, the Centers for Medicare & Medicaid Services (CMS) announced the Medicare Part B standard monthly premium would be increasing by 15% ($21.60) in 2022, from $148.50 to $170.10. While this significant jump is the largest in 15 years, for most beneficiaries, the 5.9% cost-of-living adjustment (COLA) to Social Security benefits in 2022—the largest COLA in 30 years—will absorb the increase.

Among the key reasons CMS cites for the premium spike is the need for a contingency reserve to cover the potential costs of the expensive and controversial Alzheimer’s drug Aduhelm, for which a coverage decision is expected next year.

As previous Kaiser Family Foundation analysis shows, Aduhelm could significantly increase Medicare spending and premiums:

• If one million Medicare beneficiaries were to receive the drug, Medicare spending on Aduhelm alone would exceed $57 billion dollars in a single year—far surpassing spending on all other Part B-covered drugs combined, and roughly equating to what Medicare paid for all hospital outpatient services in 2019.
• Since Part B premiums must equal 25% of projected annual Part B expenditures, the billions of dollars in new spending would increase premiums for all 56 million Part B enrollees.
• Beneficiaries would also face high out-of-pocket costs, both for the drug itself and for related medical services. Their 20% coinsurance would be about $11,500 for one year of Aduhelm. This is nearly 40% of the median annual income for a Medicare beneficiary in 2019 ($29,650). And because Aduhelm is not a cure for Alzheimer’s disease, patients could incur these costs over multiple years.

Friday’s announcement shows just how exposed people with Medicare and the program are to high and rising drug prices in both Part B—which covers outpatient care and provider-administered drugs—and Part D—the prescription drug program. It also underscores the need for swift, meaningful solutions, including those in the latest version of the budget reconciliation bill that would allow Medicare to negotiate drug prices, limit annual price hikes and out-of-pocket costs, and realign financial incentives.

We urge Congress to build on these policies in the final bill, to ensure Medicare can best fulfill its promise of affordable coverage and care. We specifically support making Medicare’s low-income assistance programs—the Medicare Savings Programs (MSPs) and the Part D Low-Income Subsidy (LIS)—more available and accessible.

For those who qualify, MSPs and LIS can be a lifeline, helping them afford their coverage and prescription drugs. But the programs’ complex application processes and outdated eligibility thresholds unnecessarily limit participation. In recent years, over 40% of Medicare Rights’ helpline callers who were struggling with affordability and screened for Part D assistance did not qualify due to overly stringent financial rules. Absent congressional action to expand this assistance and control the underlying prices, more and more beneficiaries may find the cost of care, help paying these costs—or both—to be out of reach.

The budget reconciliation bill presents lawmakers with the opportunity to prevent this. Coupling drug pricing reforms with updates to MSP and LIS—including eliminating the programs’ asset limits and aligning eligibility at 200% FPL—would best provide immediate and lasting relief to people with Medicare and their families. It would also strengthen Medicare. As the non-partisan Congressional Budget Office (CBO) previously noted, making prescription drugs more affordable would improve adherence and outcomes. This, in turn, would reduce the need for, and federal spending on, other more costly services, like hospital care paid for by Part A.

Join us in urging Congress to meet the moment.

Read more about Medicare prescription drug coverage in Medicare Interactive.