Medicare Yearly Premium to Rise 38.5% to $297.60

Nearly 31 million aged and disabled Medicare recipients will have to pay about $300 a year in premiums on Jan. 1, an unprecedented 38.5% jump over the current $214, White House and health officials said today.

The Department of Health and Human Services said the Medicare premium that covers medical services, such as doctor’s care, will jump from $17.90 a month this year to $24.80 in 1988--more than $83 a year--mainly because the cost of physicians’ services for the elderly is rising much faster than expected.

Medicare recipients will be required to pay a total of $297.60 a year, compared to the $214.80 this year.

Hospital Charges to Rise

Also to increase under Medicare is the amount a patient must pay a hospital for the first day of hospitalization, rising from $520 this year to $540 in 1988.

Medicare provides health benefits to people 65 or older and the permanently disabled.

A senior White House official said that while the increase is the largest in the program’s 22-year history, it will be offset by an expected 4.2% cost-of-living increase in Social Security benefits, averaging just under $500 a year.

Glenn Hackbarth, deputy HHS chief of health care financing administration, said the increase in premiums would have been larger than 38.5%, but a policy decision was made “to hold down the premium for this year and to spend down some of the contingency reserve” in the Medicare trust fund, which represents the difference between assets and liabilities.

Reasons given by health officials for the increase include the volume and complexity of doctors’ services to Medicare beneficiaries and the growth in the average charge for each service. Also, Medicare recipients are using more outpatient services.

The program is divided into two parts--Part A or institutional care, which is financed by payroll deductions, and Part B or supplemental medical services, which is paid by voluntary monthly premiums that are matched by the government and are designed to cover 25% of the Part B costs.