New Alzheimer’s Drug Responsible for Medicare Premium Hike

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You’ve heard the news. Medicare Part B premiums are increasing in 2022. The jump in price is a whopping 14.5% – the highest in the program’s history. Naturally, this is cause for concern for many Medicare beneficiaries, and everyone wants to know what is contributing to the premium hike. Of course, we all know inflation has been at an all-time high lately, but with Social Security benefits only increasing by 5.9%, why the even bigger jump in Medicare premiums?

There are a handful of factors contributing to the Part B premium increase. We’ll touch on each of those and then explore the one factor responsible for at least half of the increase – the new Alzheimer’s drug, Aduhelm.

Factors Involved in the Part B Premium Increase

Before talking about the main culprit, let’s review the other reasons we’re seeing a big increase in the Part B premium in 2022.

First, the infamous COVID-19. Congress limited increases for premiums for 2021 due to the financial hardship COVID was imparting on the country. (The Part B premium increase was only $3 in 2021.) However, it did indicate that The Centers for Medicare and Medicaid Services (CMS) would need to repay those minimal increases in the future. We’re seeing the start of that payback in 2022.

Second, the cost of healthcare continues to increase. Healthcare expenses for the older population tend to be much higher, which is why many Medicare product premiums see such significant increases over the years. COVID may have played a role in this aspect as well since it has caused an excessive healthcare expense in the last two years.

While those two factors account for a portion of the Part B premium increase, our biggest culprit is the drug Aduhelm.

Elegant Senior Woman enjoying a cup of tea as she researches why the new Alzheimers drug is making her medicare premiums are going up.
Aduhelm is the newest drug designed to slow cognitive deterioration in individuals with Alzheimer’s.

Aduhelm’s Role in Medicare’s Premium Hike

Aduhelm is the newest drug designed to slow cognitive deterioration in individuals with Alzheimer’s. The Food and Drug Administration (FDA) approved Aduhelm in June 2021. CMS has not determined whether Aduhelm will be included in Medicare coverage, but the 2022 Part B premium hike indicates that the drug could be approved in the future. Aduhelm is expected to cost $56,000 per year per patient.

Is CMS increasing Part B premiums because it plans to approve Aduhelm for Medicare coverage? Maybe, but some laws require the premium to be set by estimated costs. CMS must set each year’s Part B premium at 25% of the program’s estimated costs. So for the 2022 premiums, it had to add in the possibility of the cost of Aduhelm.

Alzheimer’s affects approximately 6 million Americans – most of whom are 65 and older and on Medicare. Just five years ago, in 2017, approximately 2 million beneficiaries were prescribed treatments for Alzheimer’s. Even if just a quarter of those individuals took Aduhelm, the annual spending would be nearly $30 billion. (The cost for drugs included in Part B was $37 billion in 2019.)

While Aduhelm is a prescription, it is covered under Part B (instead of Part D) because Aduhelm is administered intravenously at a doctor’s office. Part B picks up about 80% of covered services, so the program would be responsible for most of the drug’s cost. However, that does leave 20% left for either the patient or the Medicare supplement or Medicare Advantage plan. Could this cause a ripple effect that generates a premium increase in those products as well?

We’ve seen the first effects of the possibility of including high-cost drugs in Medicare coverage. What remains to be seen is if coverage gets approved, and if it does, how many providers will be keen to prescribe Aduhelm. There are known side effects, such as brain swelling and bleeding, that cause concern. 

How to Reduce your Medicare Costs

If you are struggling to pay for your Medicare coverage, please give our office a call. While we can’t change your Part B premium, there are programs we can discuss, and we can look at your other areas of coverage to see if there are cost-saving opportunities elsewhere. Our consultations are completely complimentary, so you’ve got nothing to lose! Call our office today to schedule your appointment.


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