Higher Income
Senior Citizens May be in For Sticker Shock on Medicare Drug Premiums
Change took
effect in January extending income-related provisions to Medicare Part D
By Mary Agnes
Carey, KHN Staff Writer
Feb. 14, 2011 -
The Obama administration often touts the health-law provision that over
the next decade will close the unpopular "doughnut hole" - a gap in
Medicare prescription drug coverage. But officials rarely cite another
provision, one that might cause sticker shock among some seniors.
Starting this year, more affluent beneficiaries will have to pay higher
premiums for their drug benefits.
Since 2007,
Medicare beneficiaries with incomes of $85,000 ($170,000 for couples)
have had to pay more on a
sliding scale than the standard premium for Medicare Part B, which
covers physician and outpatient services. The health law extended this
"income relating" to Medicare Part D, which covers prescription drugs.
The change took effect in January.
Affordable Care Act improvements kicked in for 2011 –
Welcome to Medicare now free for senior citizens in original Medicare -
see video - Feb. 10, 2011
In addition, the
law froze the income thresholds that determine which seniors pay the
additional costs. That means those thresholds won't be adjusted for
inflation through 2019, and more and more seniors will fall into this
group.
In 2011, the
standard Medicare Part B monthly premium is $115.40; higher income
beneficiaries will pay between $161.50 and $369.10. Part D premiums vary
widely depending on the specific plan, but the national average is
$32.34; higher income seniors will pay between $44 and $101, according
to the Kaiser Family Foundation.
Some seniors'
advocates fear that requiring wealthier seniors to pay higher Medicare
premiums will encourage those beneficiaries to leave the program and get
private insurance. And, since seniors with higher incomes tend to be
healthier, their departure could drive up costs for the sicker seniors
left behind.
"Where is that
line where it becomes too much and then you have a two-tiered system?"
said Nora Super, director of government relations for health at the
seniors' group AARP.
Others say it
makes perfect sense to require seniors with higher incomes to pay more
for Medicare. "Given where we are fiscally in this country, I really
don't have a big problem with making that argument that we ought to be
asking seniors in that income category to pay a larger share of the
value of the benefit they are receiving," said James Capretta, a fellow
at the Ethics and Public Policy Center, a conservative think tank.
Capretta also said he doubted that seniors could get a better deal from
a private insurer than from Medicare.
The federal
health program for the elderly and disabled currently covers about 47
million enrollees, and the number is expected to rise to 60 million by
2019.
According to the
Centers for Medicare and Medicaid Services, this year 1.7 million
seniors will pay the higher premium for Medicare Part B coverage and
822,000 will pay it for Part D coverage.
The percentage
of seniors paying the higher premium for Part B has remained at about 5
percent of beneficiaries since 2007. Now, with inflation adjusting gone,
about 5.7 million seniors will be paying the higher Part B premiums by
2019; that’s about 10 percent of the total. Nearly 3.4 million
beneficiaries will be paying more for their Part D coverage, according
to CMS.
The Kaiser
Family Foundation, in a separate
analysis, estimated that those figures could be substantially
higher. Kaiser projected that by 2019, 7.8 million beneficiaries will be
paying the higher Part B premiums and of that group, 4.2 million also
would pay the higher Part D premiums. Kaiser also estimated the combined
premium costs in 2011 would range from $206 to $471 per month. By 2019,
that price tag would be $299 to $683 per month, depending on
beneficiaries’ income. (KHN is an editorially independent program of the
foundation.)
By 2019, nearly
one-fifth of Part B beneficiaries who enroll in the program for the
first time will pay income-related premiums for their physician and
outpatient coverage, according to the Foundation.
AARP lobbied
against increasing premiums for higher-income seniors, but the pleas
"sort of fell on deaf ears," Super says, in part because Democrats need
money to finance the health law. The Medicare income-relating provisions
will raise about $36 billion through 2019, according to the
Congressional Budget Office. AARP continues to oppose the provision and
hopes to have it taken out of the law.
Meanwhile, AARP
and other seniors groups are concerned that charging wealthier seniors
more could encourage insurers to create policies that would be more
attractive than Medicare.
"If you're
paying $400 a month you might be able to find insurance in the private
market that would be less than that," said Maria Freese, government
relations and policy director for the National Committee to Preserve
Social Security and Medicare. "If you’re healthier we need to keep you
in the system in order to keep costs low for everybody else."
Capretta said
the odds are "very low" that wealthier seniors would leave Medicare in
droves or that insurers would build new products to cover them. "You
take an awful big risk by opting out of Medicare, which is guaranteed
issue, community-rated insurance. I don't think a lot of people would do
that."
Jonathan Blum,
deputy CMS administrator and director of the agency's Center for
Medicare, said he's not aware of any seniors who have left the program
because they had to pay more for their Part B coverage, and he added
that CMS is “confident that higher-income beneficiaries will stay in the
Part D program based upon the history and the fact that the Part D
benefit is more generous."
He also said
that while higher-income seniors would be required to pay more for their
drug coverage, the benefit is more generous this year, pointing to the
50 percent discount for brand-name prescription drugs once seniors hit
the "doughnut
hole."
Feb. 14, 2011 -
The Obama administration often touts the health-law provision that over
the next decade will close the unpopular "doughnut hole" - a gap in
Medicare prescription drug coverage. But officials rarely cite another
provision, one that might cause sticker shock among some seniors.
Starting this year, more affluent beneficiaries will have to pay higher
premiums for their drug benefits. 