Medicare beneficiaries will be paying a higher premium for Part B insurance in 2025. Unfortunately, this is nothing new. Medicare premiums have been rising every year for decades now. The 2025 increase, though, is receiving an unusual amount of attention, probably because of the media's hyper-focus on inflation in general.

Part B premiums will rise 2.7% (or $10.50 per month) for the average beneficiary. This exceeds the 2025 Social Security COLA of 2.5% (which also is not unusual). While seniors on fixed incomes already grappling with higher costs clearly won't be happy paying an extra $10.50 per month for Medicare, the increase is in keeping with years past and part of a trend.

Health insurance premiums in general have been climbing, driven in part by soaring health care costs. The median increase in private marketplace premiums will be 7% in 2025, while premiums for employer-sponsored plans are expected to rise nine percent. The website Stretch Dollar attributes the spike in premiums to several factors, including:

*Higher labor costs in the health care sector.

*Hospital market consolidation gives insurance companies less negotiating power.

*The growing popularity of expensive specialty drugs like GLP-1 weight loss drugs and new gene therapies.

We don't need to feel too sorry for the nation's insurance behemoths, though. Unlike some other Western countries, profit motive is baked into our health coverage system. "All told, America's biggest health insurers raked in more than $41 billion in profit in 2022," reported the Penn Capital-Star - a "staggering sum of money" surpassing the GDP of some countries.

Annual premium hikes are to be expected given rising costs and massive inefficiencies in the U.S. health care system. In fact, Axios characterized ours as "one of the most inefficient health care systems among (the world's) high-income countries." Axios blames this, in part, on increased intervention in health care decisions by insurance companies (the 'managed care' model). "Administrative requirements that insurers sign off on care before it's delivered… cost time and money."

Unfortunately, this is the entire modus operendi of Medicare Advantage (MA), the privatized version of Medicare. MA insurers impose "prior authorizations" before patients can get certain treatments and procedures recommended by their doctors, often denying care that the publicly-run "traditional Medicare" routinely covers. The built-in profit motive of M.A. plans (who receive fixed payments from Medicare for each patient) incentivizes insurers to pay out less for patient care.

The traditional Medicare program is far from perfect, but it is far more efficient at delivering care because it has no profit motive. In fact, traditional Medicare is one of the most efficiently administered health insurance programs. Traditional Medicare's administrative costs are a scant two percent, while private insurance companies spend some 12-18% of their revenue on overhead.

This is not to say that traditional Medicare can't be improved. The same trends in health care costs that buffet the private markets affect Medicare as well. The Obama and Biden administrations attempted to cut Medicare's costs without compromising patient care. In fact, the Inflation Reduction Act of 2022 is expected to save the program $6 billion by 2026 by lowering prescription drug costs. This and other Democratic proposals to cut Medicare costs - and increase revenue - will now languish in a second Trump administration with a Republican-controlled Congress.

In fact, the Republican agenda (as laid out in Project 2025) is to undermine traditional Medicare by steering seniors toward for-profit Medicare Advantage plans. If successful, they will have realized Newt Gingrich's dream of leaving traditional Medicare to "wither on the vine." Seniors do not deserve that.

Despite the increase in annual premiums, Medicare remains one of the most popular federal programs. According to Kaiser Family Foundation, 90% percent of Medicare beneficiaries rate their coverage positively, including half who say it is "excellent." We and other advocates will continue to fight for a thriving Medicare program that prioritizes patients over profits.

Our senior health policy expert, Anne Montgomery, explains the choices confronting seniors during this year's Medicare open enrollment season on the "Your Earned This" podcast. Listen here.

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• A Bi-partisan Victory for Public Sector Workers & Their Families
• Meeting the Demand for Lower Drug Prices in Medicare
• What Does Project 2025 Bode for Older Americans? Hint: Nothing Good

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