Is the new prescription drug benefit in last years legislation responsible for the big premium increase?
No, because the drug coverage will have its own separate premium when it takes effect beginning in 2006. In the interim, a prescription drug discount card program began in June 2004, but it also has nothing to do with the premium increase. Are any other parts of the new law responsible for the premium hike? To a significant extent, yes. In particular, the new legislation increased payments to physicians by 1.5 percent, in contrast to what would have been a reduction of 4.5 percent in compensation to doctors under previous law. That change is intended to encourage doctors to continue accepting Medicare patients. The provision of new preventive benefits, such as routine physicals and diabetes screening, which will begin in 2005 also contributes in small measure to the premium increase. What other factors beyond the new law are responsible for the big premium increase? Most important is the overall rise in medical costs well above the general inflation rate. Those same cost increases thro
