The new drug benefit has cost less than expected so far, but other Medicare spending, particularly Part B, has exceeded expectations because of rapid growth in outpatient utilization, according to a midyear budget review. Meanwhile, projected Medicaid expenditures for 2006-10 are down $30 billion because of cost-containment policies implemented primarily on the state level, officials said. The five-year projection for the Medicare Part D drug program fell $34 billion, while the five-year projections for Part A, covering hospital care, and Part B, covering physician services, were up $17 billion and $30 billion, respectively.
As a result, beneficiaries' monthly premiums for the standard Medicare program are expected to rise at least 11.2% to $98.40. The actual increase could be greater because the projection assumes physician rates will be cut about 4.7% next year. In previous years, Congress has averted deep cuts in physician reimbursement. The CMS said Part D premiums have been 40% lower than expected, partly because of competition in the drug industry. -- by Matthew DoBias