MedPAC Talks Medicare Part B Premium Basics

The nonpartisan congressional Medicare Payment Advisory Commission (MedPAC) released a draft overview of the Medicare Part B premium at its March meeting that shows how quickly Part B spending has grown in recent years. The average cost per Part B participant rose from $5,744 in 2017 to $8,621 in 2024. Total spending reached $535 billion for 62 million people in 2024.

Part B is funded through three sources: beneficiary premiums (25%), annual government contributions from general revenues (about 73%), and interest (about 2%). Because costs continue to rise, the standard Part B premium rose from $185 in 2025 to $202.90 in 2026.

Many Medicare Advantage plans reduce some or all of a beneficiary’s Part B premium. This year, about 29% of enrollees are enrolled in plans that lower premiums, with a median savings of $61 a month. Medicaid may also cover premiums for dually eligible beneficiaries.

Several commissioners said Part B spending trends deserve more focus and recommend a deeper examination of the major drivers of cost growth across service categories (e.g., prescription drugs, physician services, outpatient facility services) with greater emphasis on areas of spending growth.

Additional MedPAC Payment Basics on other payment systems are available online.

For more information or if you have questions, contact Kimberly Greck, ACR Senior Economic Policy Analyst.